Coinbase reduces staff by 14% amid AI growth. shares increase

Coinbase CEO Brian Armstrong announced on Tuesday the decision to let go of approximately 14% of the staff.

This decision is influenced by market instability and the rapid changes in operations driven by AI.

This decision arrives just before Coinbase releases its first-quarter financial results, slated for Thursday. The stock saw a nearly 4% increase in premarket activity.

In a staff memo, which he shared on X early Tuesday, Armstrong explained this step as critical for preparing the company for its "next chapter of growth" amid the present crypto market slump.

He pointed to two "forces converging simultaneously": the current crypto market downturn and "AI transforming how business functions."

Even though the cryptocurrency realm is "about to embark on its next wave of growth," he mentioned, "our operations still fluctuate with each quarter... we are presently in a bearish market and must modify our cost layout to emerge more streamlined, agile, and effective for our future expansion."

He further noted, regarding AI, "The capacity of what smaller, focused teams can achieve has been altered significantly, and it’s evolving rapidly."

Armstrong emphasised the need to "recreate Coinbase to be lean, swift, and AI-centric. We need to regain the agility and focus we had during our start-up phase, with AI as our central force."

This move by Coinbase is in line with a bigger pattern of technology industry layoffs linked to increased AI investment.

Earlier this year, Block announced its intention to cut "nearly half" of its workforce, citing an opportunity to advance using smaller, talented teams empowered by AI to streamline processes.

Others, like Pinterest, CrowdStrike, and Chegg, have also announced job reductions, blaming these changes on AI reshaping the nature of their operations.

Coinbase maintains its commitment to the crypto sector. Armstrong remains optimistic about crypto’s potential, highlighting areas like stablecoins, tokenization, and prediction markets as future growth catalysts.

Throughout the cryptocurrency sector, exchanges are transitioning from hype-driven, return-focused models that propelled initial growth to more stable approaches focused on steady revenue, regulatory compliance, and institutional engagement.

This isn't Coinbase’s first experience with layoffs during a crypto decline, as it implemented major reductions during the market downturn of 2022.