Coinbase CEO: Following a Bitcoin Reserve Strategy "Is Too Risky"

On May 12th: Brian Armstrong, the CEO of Coinbase, disclosed that the cryptocurrency exchange had contemplated allocating 80% of its balance sheet to Bitcoin. However, the idea was abandoned due to concerns that it might "endanger the company." During a question-and-answer session with customers, executives were asked if they had missed the chance to accumulate BTC earlier since the company began operations eight years prior to the software company Strategy. Armstrong believed that Bitcoin's volatility made an aggressive strategy too risky, especially during the early stages of Coinbase when key milestones needed to be achieved in order to unlock additional funding rounds. "If our runway were to suddenly shorten from 18 months to 12 months, or even 10 months, that could completely destroy the company," Armstrong said. He explained that when Coinbase was still a startup, executives made a "deliberate choice" regarding risk because a significant drop in the BTC price at the wrong time would affect the growth of the exchange platform. Nevertheless, Armstrong emphasized that the company does hold Bitcoin on its balance sheet, currently accounting for approximately 25% of the net cash held in cryptocurrency. "We wouldn't allocate 80% to it; I think that would be overly risky," he added.