Coinbase Slows Hiring as Crypto Market Faces Severe Dips

Given all the turmoil at the moment in the crypto space, perhaps it was inevitable that Coinbase would slow its hiring. It’s a remarkable about-face for the crypto exchange, which was growing at a rapid clip for much of 2022.

“Heading into this year, we planned to triple the size of the company,” Emilie Choi, Coinbase’s President and Chief Operating Officer, wrote in a May 16 Medium posting. “Given current market conditions, we feel it’s prudent to slow hiring and reassess our headcount needs against our highest-priority business goals. Headcount growth is a key input to our financial model, and this is an important action to ensure we manage our business to the scenarios we planned for, specifically the potential Adjusted EBITDA we are aiming to manage to.”

Nonetheless, Choi claims that the company has planned for this scenario: “Big picture: We know this is a confusing time and that market downturns can feel scary. But as we said at last week’s Town Hall, we plan for all market scenarios, and now we are starting to put some of those plans into practice.”

In May, the cryptocurrency market suffered a trillion-dollar implosion. The vaporization of Luna, an ultra-popular digital token, and the undermining of a few stablecoins (which attempt to back cryptocurrency with either U.S. dollars or their algorithmic equivalent), helped propel a broader selloff of crypto assets, including Bitcoin, the granddaddy of cryptocurrency.

As Forbes helpfully points out, the crypto market has melted down on a number of previous occasions, only to spring back at an even higher capitalization. But that’s probably little consolation to anyone who invested heavily in crypto right before the dip—or the companies that depend on a robust crypto market in order to survive and prosper.

Coinbase pays its software engineers notably high compensation, including a generous salary and stock options. That’s a reflection of startups’ need to compete aggressively for talent not only against rivals in the space, but also tech giants such as Apple, Google, and Microsoft. But given how much of that compensation hinges on shares, a bad dip in stock price—especially if it’s sustained for months or even years—can radically impact the ability to draw talent. Coinbase’s fortunes and future hiring could hinge on how fast the crypto market potentially rebounds.