Coinbase gets 96% of its revenue from transaction fees right now - but its CEO says the company aims to have other businesses like credit cards make up 50% of sales in the next 5-10 years
- Coinbase CEO Brian Armstrong said on Wednesday that the company plans to diversify its revenue stream away from transaction fees in the next five to 10 years.
- In 2020, 96% of the company's revenues were from fees it charged users.
- The CEO also said users can expect fee compression in the long term.
Coinbase CEO Brian Armstrong said on Wednesday that the company will diversify its revenue stream away from transaction fees over the next five to 10 years.
According to a company filing, 96% of the company's sales in 2020 came from fees it charged users. He anticipates that will decline to around 50% as new revenue streams like credit cards and staking services grow. Armstrong also said users can expect fee compression over the long term.
"We've started to monetize a number of things," he told CNBC in an interview on Wednesday, detailing a number of examples. "And my guess is that in five or 10 years, you'll see them being maybe even 50% or more of our revenue."
Currently, Coinbase is the largest cryptocurrency exchange in the US, and offers a wide variety of products including custodial accounts for institutions, digital wallets for retail investors, as well as its own US dollar stablecoin.
In 2019, the professional platform of Coinbase updated its fee structure by increasing some maker fees as high as 233%, as reported by CoinTelegraph. Coinbase then amassed $1.1 billion in direct revenue following this change in 2020, more than double the $482 million revenue it made in 2019.
Coinbase is going public via direct listing on the Nasdaq on Wednesday, viewed by many cryptocurrency bulls as a milestone for the digital currency ecosystem.
"Coinbase's listing is for crypto what Google's IPO was for the internet," Antoni Trenchev, co-founder and managing partner of Nexo, a regulated financial institution for digital assets with over $12 billion in assets under management, told Insider. "Just over 15 years on, it's hard to imagine life pre-Google."