Coinbase Lays Off 14% of its Workforce… Has AI Taken Even Jobs Amidst the Downturn?

▲ Source: Coinbase Blog ©Coinreaders

Global major virtual asset exchange Coinbase (COIN) is causing a significant stir in the industry by initiating a large-scale workforce reduction, laying off 14% of its total employees, citing the introduction of artificial intelligence (AI) technology and market downturn.

According to cryptocurrency specialized media Watcher.guru on May 5 (local time), Coinbase CEO Brian Armstrong officially announced via social media X that the company would reduce its global workforce by 14%. He pointed to the rise of artificial intelligence technology, which is fundamentally changing work methods, along with the virtual asset downturn, as the background for this restructuring, stating that approximately 700 employees would leave the company as a result.

Those laid off will receive a severance package generously including at least 16 weeks of base pay and an additional 2 weeks of pay per year of service. Additionally, the next round of company stock grants and 6 months of health insurance will be supported, with special transition assistance for employment visa holders and different compensation packages for overseas employees. Coinbase estimated that the restructuring costs, including this workforce reduction and severance payments, would amount to up to $60 million.

Following Armstrong's bombshell announcement, Coinbase's stock price plummeted by nearly 4% during Tuesday's trading. Amidst the overall slump in virtual asset-related stocks, Coinbase's stock has also struggled, falling by more than 15% this year alone. While it is a highly volatile stock, having experienced more than 54 price changes exceeding 5% over the past year, the market is taking this layoff news seriously but not to the extent of fundamentally altering its perception of the company's fundamentals.

Ironically, just one day before the stock price plunge, on Monday, the U.S. Senate unveiled a new compromise for the U.S. cryptocurrency market structure bill, the CLARITY Act, which led to a rise in stock prices. The revised bill's wording was viewed positively as it underwent review by the Senate Banking Committee and paved the way for the U.S. Treasury Department and the Commodity Futures Trading Commission (CFTC) to establish specific detailed regulations.

However, according to this new bill update, virtual asset platforms like Coinbase will be completely prohibited from paying returns on idle stablecoin balances deposited by customers. Amidst the double challenge of drastic workforce restructuring and an increasingly tighter regulatory net, Wall Street's attention is focused on what new breakthrough Coinbase will demonstrate by leveraging artificial intelligence.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*