Coinbase’s Asian expansion: wrong place, wrong time?

The Southeast Asia crypto market is growing rapidly, and Nasdaq-listed crypto exchange Coinbase wants in on the action.

The company has identified the region as an area for expansion. However, its timing and competitive position make success an uphill battle, particularly since the firm has just extended a hiring freeze that will likely delay expansion plans. The freeze not only means a pause on its hiring efforts but also rescinding employment offers already made.

Photo credit: Coinbase

Coinbase is heavily reliant on the US

Much of Coinbase’s revenue comes from transaction fees, which it charges for every trade it brokers. These fees made up 87% of Coinbase’s total 2021 revenue of US$7.8 billion.

As of April 2022, users from the US made up the largest segment of Coinbase’s customers (54%), followed by those from the UK, Germany, Spain, and France, respectively.

The US alone pulled in 82% of the exchange’s total revenue in Q1 2022, demonstrating the disproportionate significance the market has on Coinbase’s top line.

Competition in the US is driving APAC expansion

Recently, Coinbase has faced competitive pressure in the US. Binance.US offers extremely low spot trading fees of 0.1%, compared to Coinbase’s flat 1% transaction fee, while FTX charges an even lower 0.07%.

“I think it is one of [Coinbase’s] efforts to expand, as the US business is under pressure,” Mizuho Americas senior fintech analyst Dan Dolev tells Tech In Asia.

According to a Chainalysis report, the Asia-Pacific region is the fourth-largest crypto market in the world, with transaction activity up 706% between June 2020 and June 2021.

The report also identified Vietnam, Thailand, and the Philippines as markets with good potential – the countries came in first, 12th, and 15th on the report’s Global Crypto Adoption Index, respectively.

Coinbase isn’t new to the region, having already established a beachhead when it launched its services in Singapore in 2015. However, it has only made more aggressive moves into the wider Asia Pacific area recently.

“A key first step of our strategy is to hire experienced regional and country leaders across the globe. We are now kicking off an extensive global expansion strategy, with hiring and investment plans which will ultimately allow Coinbase to serve customers more locally,” Nana Murugesan, vice president of international and business development at Coinbase, said in February 2022.

While the company’s original plan to triple its employee numbers has been reversed due to the market downturn, Coinbase’s website still has open positions for roles in the region. Notable ones include country directors for Indonesia and the Philippines, a regional managing director for Southeast Asia and Oceania, an associate general counsel for the Asia Pacific, as well as a director of business operations and strategy for the region.

Meanwhile, a noteworthy recent hire is Durgesh Kaushik, the former head of Snap India and Southeast Asia, who was appointed by Coinbase as senior director of market expansion and tasked to spearhead the company’s operations in emerging markets.

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