Brian Armstrong, co-founder and chief executive officer of Coinbase
Photo: Michael Short/Bloomberg via Getty Images

Coinbase isn’t so contrarian after all

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Friday: Coinbase contrarians itself into a corner, FTX takes stock, and SWIFT tests CBDCs.

Off the chain

There are billions flowing into Web3 gaming, including a16z’s new $600 million fund. My worry is that no one seems to have asked gamers or developers, who roundly hate NFTs. Pay-for-play crypto games have crashed along with token prices. The challenge for the industry is to start with thinking about compelling gameplay first, rather than trying to graft it on as an afterthought to a business model. More funtech, less fintech.

— Owen Thomas (email | twitter)

The crypto contrarian contradiction

A week after saying it had no plan to pull back on hiring because downturns provide an opportunity to invest and grow, Coinbase has done a dramatic turnabout. The crypto exchange, humbled by both its falling stock price and tumbling tokens, is freezing hiring and hitting pause on new projects. You can only be so much of a contrarian.

So much for being “greedy when others are fearful,” as Coinbase CEO Brian Armstrong said last week.

  • A different message went out this week. Coinbase COO Emilie Choi told employees that given the market conditions, “we feel it’s prudent to slow hiring.”
  • “This is a confusing time,” she added, without explicitly noting the company’s own role in feeding that confusion.
  • The company also sent emails to employees announcing that Coinbase plans to freeze hiring for the next two weeks, suspend work on new projects and cut spending on AWS, according to The Information.
  • Coinbase said it will offer additional stock grants to employees whose equity rewards took a hit in the market’s steep downdraft.

“Market downturns can feel scary,” Choi said. Wall Street got spooked when Coinbase didn’t seem to be acknowledging reality last week on its earnings call.

  • Analysts were expecting Coinbase to follow the playbook of other tech companies by scaling back costs in a choppy market.
  • Bernstein analyst Harshita Rawat said it was “surprising” that the company was “defiantly planning to almost triple headcount this year” at a time when its revenue was expected to take a hit.
  • It’s also been a year since Coinbase went public, and investors want to see the company’s game plan for sustainable growth. “I think Coinbase finally got the memo on profitability,” Rawat told Protocol.

Wall Street applauded the pivot to prudence. Coinbase’s plan got the thumbs-up from investors: The stock climbed 7% Thursday as the details of its cost-cutting emerged. But crypto and the broader market are still struggling. For Coinbase, it’s no time to get greedy.

— Benjamin Pimentel (email | twitter)


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On the money

On Protocol: The SEC isn’t backing down from Ripple’s request for access to its emails without a fight. In a letter to a judge, the SEC argued that crucial documents it was ordered to release were protected by attorney-client privilege.

Bitcoin Argentina is launching a bitcoin education program in 40 schools. The nongovernmental organization is partnering with Built With Bitcoin to launch a crypto education initiative across 40 high schools in the Latin American nation.

The G7 finance ministers are calling for accelerated crypto regulation. The officials reportedly want the international Financial Stability Board to act quickly to rein in crypto markets, pointing to the UST-luna collapse as evidence of instability.

SWIFT is collaborating with Capgemini to test CBDC transfers. The international banking-transfer system is conducting experiments to figure out how domestic central bank digital currencies can be transferred across borders.

An arm of the U.S. Commerce Department wants your input on crypto. The International Trade Administration is inviting public comment on the establishment of a framework for enhancing U.S. competitiveness in the digital-asset industry as a followup to President Biden’s executive order on crypto in March.


Crypto was just the beginning. In case you were wondering what the grand plan behind the launch of FTX Stocks was, it’s to “become the ‘everything exchange’ and the ‘everything app’ when it comes to financial services and fintech in general,” FTX.US president Brett Harrison said.

Panama’s lawmakers approved a law that would allow citizens to spend cryptocurrency last month. President Laurentino Cortizo, who still has to sign off, isn’t completely sold. “It is an innovative law from what I have heard, it’s a good law,” he said at a Bloomberg conference. But he’s got concerns about whether it will preserve the country’s money-laundering controls.


Ripple harnesses the power of cryptocurrency and blockchain to help businesses in the U.S. and beyond innovate and grow. Learn how we are providing game-changing crypto solutions for companies in the U.S. and around the world.

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The chart

The NFT boom of 2021 was particularly good for creators, according to a report by a16z Crypto on the Web3 economy. NFT sales and royalties were far more lucrative than other ways of making money from music, art or online performance. The question now is whether the revenue stream is sustainable, with NFT prices and transaction volumes down dramatically from their peaks in 2021.

Thanks for reading — see you Monday!

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