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Coinbase CEO Brian Armstrong announced on Wednesday at the Bloomberg Invest Conference that despite the lawsuits from state and federal regulators targeting its crypto staking service and various other offerings, the cryptocurrency exchange Coinbase (COIN) remains committed to operating the staking service.
“We're not going to wind down our staking service,” Armstrong said. “Again, as these court cases play out, it's really business as usual.” He noted that the exchange’s staking service accounts for about 3% of overall net revenue.
His remarks followed the Securities and Exchange Commission's (SEC) lawsuit against Coinbase, which encompassed numerous infractions, including accusations of selling unregistered securities. Additionally, a coalition of ten states led by the Alabama Securities Commission targeted the exchange, leveling allegations that Coinbase's staking program had breached multiple state securities laws.
Coinbase's staking service plays a crucial role in the company's efforts to broaden its revenue streams, which have traditionally relied heavily on trading fees. In 2022, transaction fees accounted for approximately 90% of the company's revenue. However, as a result of an extended bear market in the crypto industry, some investors have shifted their focus away from trading, leading to a significant decline in Coinbase's earnings.
Armstrong insisted Coinbase would not be at risk of a bank-run-like rush of withdrawals similar to those some of its peers have suffered. “All the funds are backed one-to-one, and you don't have to take our word for it,” Armstrong said. “As a public company, we have auditors … who have gone in and verified all that.”
