Coinbase, the world’s second-largest crypto exchange, is launching its subscription service, Coinbase One, in 35 countries in a bid to retain users and grow its recurring revenue streams as the crypto economy struggles through a bearish market.
Coinbase One was originally introduced in fall 2021 in beta and will be available publicly today onward in the U.S., United Kingdom, Germany and Ireland, the company exclusively told TechCrunch+. The company will roll the service out in 31 other European countries in the coming months.
The subscription service offers a host of features, including no trading charges, higher staking rewards, 24/7 customer support and pre-filed tax return documents, according to Phil McDonnell, senior director of product management at Coinbase.
In the past, a lot of Coinbase’s revenue came from trading fees, especially during the bull market, but as the crypto winter drags on, the company is looking to other areas to drive growth and diversify its revenue streams.
“Maybe 18 months ago, it was very transactional,” McDonnell said. “People come in, trade, pay a fee, and that was the relationship. Through the bull market 18 months to two years ago, there was tons of growth, but we wanted customers to stay […] That was the inspiration. How do we build a longer, deeper relationship with our customers and make it a win-win?”
That strategy seems to be working, at least for now. Coinbase’s subscription and services revenue rose a whopping 138% to $361.7 million in the first quarter of 2023, from $152 million a year earlier. Overall, subscription and services revenues grew over 17x to $793 million in 2022 from less than $50 million in 2020, per the company’s Q4 2022 shareholder letter.
“We are making a trade-off with zero-fee trading to set it up so customers win, and we think we’ll win in the long term,” McDonnell said.
European focus and future plans
Coinbase is specifically focusing on expanding its presence in Europe, McDonnell said.
“Europe is a large market for crypto and they’re pretty engaged [users] overall. So we’re really investing there and going deep in those markets,” he added.
Other major markets the service will come to include the Netherlands, Belgium, Sweden, Norway, Portugal, Poland, Austria, Denmark and the Czech Republic.
McDonnell said the subscription service has resonated with users through the public beta-testing period, and the exchange continues to see “growth every single month … It has been interesting to see the growth throughout the bear market and that will continue to scale.”
While some features offered with Coinbase One seem to be targeted at power users on the platform, it appears the service has gained traction with occasional traders, too. “You would think the heavy users who want to trade a lot sign up, and that’s true, but a large number of users, who don’t trade as much or aren’t as active, are very engaged as well,” McDonnell noted. “Our business has transformed [and Coinbase’s] quarterly statements show this.”
Coinbase is working with crypto companies like Messari, Alto IRA, CoinTracker and Blockworks as well as insurance provider Lemonade to offer deals as part of the subscription.
“We want to roll out more partnerships, and we’re having conversations there,” McDonnell said. The service currently doesn’t have any DeFi or NFT-specific partners, but he said the company is “looking at that” for the future.
The company aims to add more features to the service and has seemingly sought inspiration from how Amazon built its Prime service. “We want to add new benefits to the products we’re launching and will continue to add to this service, too. Similar to how Amazon approached Prime — it started with free shipping and then they added things like free video, and so on,” McDonnell said.
Existing and new subscribers to Coinbase One will be able to mint, or claim, a commemorative “Founding Member” NFT of a 3D blue-and-white rocket ship if they sign up before May 25 to show they were early adopters of the subscription service.