Coinbase CEO expects 50% of company's future revenues to come from non-trading businesses

Quick Take

  • Coinbase CEO Brian Armstrong expects the company’s non-trading businesses to grow substantially in the long term.
  • Armstrong said business lines such as custody, staking, and debit cards could account for 50% or more of Coinbase’s future revenues. 

Coinbase CEO Brian Armstrong expects the company's non-trading businesses to grow substantially in the long term.

In an interview with CNBC on Wednesday, Armstrong said, businesses like Coinbase Earn, debit cards, staking, and institutional custody could account for 50% or more of the company's revenue in the next "five or ten years."

At present, Coinbase's exchange business is its main revenue contributor. Last year, for instance, trading fees accounted for 86% of Coinbase's total revenue.

Armstrong said Coinbase hasn't seen any margin compression yet, and he wouldn't expect it to compress in the short term. "I don't expect fee compression in the short and medium-term, but longer-term, yes, I do think there could be compression, just like every other asset class out there."

To that end, Coinbase has started to invest in non-trading revenue streams and expects them to provide "steady" and "predictable" revenue in the future, said Armstrong.

Coinbase is getting listed on Nasdaq today. Armstrong said he hopes the company's direct listing will be viewed as a "landmark moment" for the crypto space. "It's creating a ton of value in the world," he said.

Armstrong further said that investing in both bitcoin and Coinbase stock could be a good bet because both are "great ideas."

Making a case for investing in Coinbase, Armstrong said, "we are not tied to any particular crypto asset, we are adding support for over 100 crypto-assets now, and there will be more and more in the future."

"We are also kind of what you might call an indexed bet or a levered bet on the crypto space more broadly because we are selling picks and shovels," Armstrong continued. "We are helping people access and use this new technology. So I think we are going to grow along with the crypto space."

As for how investors should value Coinbase, Armstrong said, "you could think of us as the first fintech that's vertically integrated."

"We own the customer relationship all the way down to integrating with the underlying rails themselves," he said.

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