Coinbase CFO: NFT is being regarded as a new opportunity to increase income to promote diversification of income sources

Coinbase is seeing NFT as a new revenue opportunity to facilitate diversification of transaction fees.

Coinbase Chief Financial Officer Alesia Haas also said that the company is not worried that online brokerages like Robinhood will "take the cake."

Coinbase Chief Financial Officer Alesia Haas said the company is exploring NFTs as a potential new line of business.

In an interview with Decrypt, Haas said that NFTs are a natural fit for Coinbase's platform, and that these tokens can provide the company with a new source of transaction fees.

NFTs are blockchain-based tokens that, unlike Bitcoin, represent unique ownership of digital or physical items. Everything from artwork to videos, tweets to concert tickets can be minted as NFTs. Although NFT has been around for several years (take the 2018 hit CryptoKitties as an example, which is an NFT game with a digital kitten theme), in recent months, driven by several large transactions, , NFT has entered the mainstream market. The most notable of these was a nearly $70 million auction in March - artist Beeple's NFT painting "Everydays: The First 5000 Days" was sold at Christie's for $69 million, and the winning bidder was MetaKovan, He is the founder and financier of Metapurse.eth, the world's largest NFT fund.

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Haas did not elaborate on when Coinbase could offer NFTs, nor did it say whether the company plans to create an NFT art marketplace similar to Nifty Gateway or Foundation, or simply act as an NFT resale platform. She also did not say how much the company might charge.

Note: Haas made the above remarks on the eve of Coinbase’s listing.

While the company is lucrative and valued at as much as $100 billion, skeptics say its business model, which relies heavily on transaction commissions, is unsustainable. In particular, they point out that Coinbase's high commissions (over 2%) will be challenged as companies such as Robinhood and PayPal expand their crypto businesses.

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Haas acknowledged that the company's margins could come under pressure in the future, but she doesn't see that as an immediate issue.

"It's true that fees are compressing for all assets over time. But I don't think (encryption fees) will be commoditized at this time," she added, adding that crypto trading is far more complex than stock trading, and other trading platforms lack sufficient The expertise and security infrastructure required to challenge Coinbase.

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Haas also pointed out that Coinbase’s revenue streams must be diversified; currently, 94% of its revenue comes from commissions on transactions in bitcoin and other cryptocurrencies.

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Part of the company’s strategy, she said, will be to encourage existing users to gain exposure to a growing number of new products, including those related to lending and staking, part of a DeFi space that’s heating up as the crypto industry continues to mature. Haas also said that Coinbase's business cannot be lumped into one category.

“We are focused on long-term growth and will continue to diversify our products. Right now we are focused on investing, but what is interesting is that we see over 20% of our users using multiple products, including staking, yield, and lending,” Haas said .

Meanwhile, Coinbase CEO Brian Armstrong expects the company's non-transactional businesses (such as Coinbase Earn, debit cards, staking, and institutional custody) to grow significantly in the long run, likely accounting for 10% of the company's assets in the next five or ten years. More than 50% of the total business. Currently, Coinbase's exchange business is its main source of income. In the last year, transaction fees accounted for 86% of Coinbase’s total revenue.

In the long-term, Coinbase also believes that the conversion of various assets into tokens on the blockchain will be at the heart of a growing trend.

Haas predicts that this will eventually include a wide variety of company stocks, not just Coinbase’s own stock, but traditionally large companies like Walmart. And there are already some "green shoots" emerging around these efforts.

In a conversation with Decrypt, Haas also addressed "whether Coinbase will change the company's fiscal policy to hold more cryptocurrencies on its balance sheet." According to the documents submitted by Coinbase to the US Securities and Exchange Commission in February this year, as of the end of 2020, Coinbase held USDC worth USD 48.9 million. In addition to USDC, Coinbase also held encrypted assets with a total cost of USD 62.3 million. For investment and operating purposes, the fair value as of December 31, 2020 is $188 million, which includes 4,487 Bitcoins, as well as Ethereum and other crypto assets.

Although the current value of these assets may have risen significantly given the current bull market, some industry figures believe that Coinbase should hold more crypto assets, especially after companies such as Tesla (Tesla) and Square announced that they are buying Bitcoin. occasion.

Haas said that Coinbase must take care to provide sufficient cash for working capital and reserve requirements, but the current policy allows it to invest 10% of its surplus cash in crypto assets. She added that the company is considering adjusting this policy to allow Coinbase to hold more crypto assets.

This article is from Decrypt, the original author: Jeff John Roberts

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