Coinbase Packs Up 14% of Its Entire Workforce… Did AI Even Take Jobs Amidst the Slump?

▲ Source: Coinbase Blog ©Coinreaders

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

According to crypto media Watcher.Guru on May 5 (local time), Coinbase CEO Brian Armstrong officially announced via social media X that the company would cut 14% of its global workforce. He pointed to the bear market for virtual assets, along with the rise of artificial intelligence technology fundamentally changing work methods, as the background for this restructuring, stating that approximately 700 employees would leave the company.

Those laid off will receive a generous severance package, including a minimum of 16 weeks of base pay and an additional two weeks of pay per year of service. This will be accompanied by the next scheduled company stock grant, six months of health insurance, special transition support 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 stock plunged nearly 4% during Tuesday's trading. Amidst the overall slump in virtual asset-related stocks, Coinbase's stock has also struggled, falling more than 15% this year alone. Although it is a highly volatile stock, having experienced more than 54 instances of over 5% price fluctuations in the past year, the market is taking the news of the layoffs seriously but does not believe it will fundamentally change perceptions of the company's fundamentals.

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

However, this new bill update will completely prohibit virtual asset platforms like Coinbase from paying profits on idle stablecoin balances deposited by customers in the future. Amidst the dual challenges of drastic workforce restructuring and an increasingly tight regulatory framework, Wall Street's attention is focused on what new breakthroughs Coinbase will demonstrate by leveraging artificial intelligence.

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