Coinbase could experience fee compression in the long term, the CEO expects
Brian Armstrong, CEO of Coinbase, today treated the platform’s transaction fees as the company’s share listing on Nasdaq.
In a CNBC Squawk Box interview on Wednesday, Armstrong discussed public concerns over Coinbase’s massive income from transaction fees. As previously reported, almost 96% of Coinbase’s total revenue in 2020 was generated from transaction fees billed to users.
When asked about the potential impact of increased competition on transaction fees for Coinbase, Armstrong said the platform could see some fee reduction in the long run:
“We haven’t seen margin compression yet, and I wouldn’t really expect it to be the case in the short to medium term. Longer term, yes, I think there might be fee compression just like any other asset class out there. “
According to Armstrong, a large portion of the fees for crypto transactions comes from a retention fee that “has already been incorporated into the transaction fee”.
The CEO said Coinbase expects to gradually shift its focus to other revenue streams with products such as debit card, insert, Coinbase Earn educational program, and institutional custody business.
“We started investing in revenue streams that generate this green income […] These provide more stable, predictable revenue streams, and I anticipate that in five or ten years we will have maybe 50% or more of our revenue, ”said Armstrong.
As previously reported by Cointelegraph, Coinbase’s professional platform Coinbase Pro completed a major update of the fee structure in 2019 and increased some manufacturer fees by up to 233%. According to the update, Coinbase had direct sales of $ 1.1 billion in 2020, up from $ 482 million in 2019.