Coinbase CEO Responds To Jim Chanos' Revenue Model Criticism

Brian Armstrong, CEO of Coinbase Global Inc COIN defended the crypto exchange’s long term revenue model.

What Happened: In an interview with CNBC on Tuesday, Armstrong was asked how he felt about short sellers like Jim Chanos betting on further downside for Coinbase based on its fees being eroded in the future.

See Also: HOW DOES COINBASE MAKE MONEY?

“Short term, we have not seen any fee compression to date, so that’s good,” said Armstrong.

“Generally, we see that, especially our retail customers, they’re not super price focused. They want to use the app that is trusted. It’s easy to use, they’re not going to lose their money, it has the products, the assets and the payment methods and the added functionality around staking.”

In the medium and long term, the CEO said he does expect there to be some level of margin compression eventually.

“It has to happen at some point because everything that we’re building, you know, others eventually are going to build it, and it’ll become a little more commoditized,” he said. 

The company’s focus on its subscription and services revenue comes from realizing that its trading fees are not going to account for a significant majority of its business in the future, explained the CEO.

See Also: Coinbase Phasing Out 'Pro' Exchange: What You Need To Know

Armstrong said that he would like to get to a place where more than 50% of the exchange’s revenue comes from subscriptions.

Price Action: COIN shares traded 2.77% higher to $73.05 on Wednesday. The leading cryptocurrency Bitcoin BTC/USD was trading at $21,447 at press time, down 0.08% over 24 hours as per data from Benzinga Pro.

Photo: Courtesy of coinbase.com