As crypto exchange Coinbase faces industry challenges and economic difficulties, the company is taking a hard look at where it can cut costs, CEO Brian Armstrong told CNBC’s Kate Rooney.

Shares of Coinbase have lost more than 70% of their value this year as the company grapples with the “crypto winter” associated with the collapse of Bitcoin and Ethereum. Armstrong said the decline is not unusual, as Coinbase has gone through four decline cycles in the 10 years since he founded the company.

Coinbase faces inflationary pressures and a potential recession, but Armstrong said the macro environment is reminiscent of what the company has faced in the past.

“We have this saying internally, I like to say it a lot, which is it’s never as good as it seems, it’s never as bad as it seems,” he said. “I think one of the reasons Coinbase has been so successful over the last 10 years is that we just try not to focus on short-term ups and downs.”

Coinbase cut 18% of its workforce in June, and Armstrong previously attributed the layoffs to a possible recession and the need to manage the company’s burn rate and increase efficiency.

Armstrong said the layoffs are intended to be a one-time event, but that “anything can happen.”

“I can’t tell you what the world will be like a year from now,” he said. Armstrong said Coinbase is looking closely at cutting costs related to marketing, third-party vendors and Amazon Web Services.

He added that the company strives to convert as many fixed costs as possible into variables. That could mean Coinbase’s Super Bowl ads are a thing of the past, though Armstrong said there will still be “a variety of Coinbase ads out there.”

The bear case for Coinbase is around potential pressure on trading fees, which represent more than 80% of revenue in the second quarter. Prominent short seller Jim Chanos is among those betting against Coinbase, arguing that it earns more from fees and as “competition increases among exchanges, you will see a compression of fees.”

Armstrong said fees will eventually decline, as they have in the stockbroking industry. But Coinbase has yet to see price sensitivity.

“I really think there’s going to be a margin squeeze, eventually that has to happen at some point because everything we build, you know, others, eventually you’re going to build it and it’s going to become a little more commercialized,” Armstrong said. “I’d like to get to a place where more than 50% of our revenue is subscriptions and services.”

That part of the business, subscriptions and services, grew to roughly 18% of revenue from 4% a year earlier. It includes interest income, Coinbase premium membership, blockchain rewards, and fees for storing crypto on the platform on behalf of customers.

Coinbase and the SEC

Company culture and remote work

Although Coinbase was launched in San Francisco, it has no official headquarters and none of its employees are required to work in an office.

Armstrong said he believes the remote structure has been positive for recruiting at the company, but that it has eroded some of the learning and development, creativity and trust. As a result, he said the company tries to bring employees together with some of their teammates in person at least once a quarter.

Coinbase’s mission statement says the company seeks to be a “refuge from division” and does not “engage in social or political activism.” Armstrong earned a lot of attention from CEOs in Silicon Valley and beyond for a blog post he wrote in 2020 stating that political debates about the candidates are prohibited.

Armstrong said he’s been “shocked” by the types of leaders approaching him to talk about it, but he thinks the company has become almost too famous for its mission.

“I just want to turn the page,” Armstrong said. “I’d rather be known more for our products and all the great innovations we’re doing, but, you know, in a way it was good that other companies found something interesting in them.”

“I think it’s a net positive,” he said. “It gave us access to an abundance of talent in small towns in different countries.”

WATCHING: Models show significant downside risks for crypto assets, says IDX’s Ben McMillan

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