AI is triggering a wave of layoffs in crypto companies, Coinbase says "Inaction is the greatest risk"

Writing by: Zhao Ying

Source: Wall Street Insights

Artificial intelligence is becoming the core narrative of a new wave of layoffs in the cryptocurrency and fintech industries. Coinbase, PayPal, Gemini, and Crypto.com have consecutively cut jobs, citing automation and efficiency improvements as the main driving forces. However, critics point out that some companies may be using AI as a cover to hide the true costs of business decline and overexpansion.

According to Bloomberg, Coinbase CEO Brian Armstrong issued a firm tone on Tuesday regarding layoffs, warning that “the biggest risk now is not taking action,” and stated that the company is committed to becoming a “lean, fast, AI-native” organization. This statement marks a new height in the crypto industry executives publicly framing AI-driven restructuring.

The immediate market impact of this wave of layoffs is: the employment logic of crypto and fintech companies is being reshaped, with ongoing compression of technical and operational roles, and an accelerating trend toward flatter management structures. Investors need to judge whether this is a sign of industry efficiency leapfrogging or a cyclical contraction masked by AI.

Block Takes the Lead, Industry Follows

According to Bloomberg, the momentum of this round of layoffs significantly accelerated after Block announced large-scale job cuts. Block, the parent company of Square and Cash App, announced major layoffs earlier this year and listed AI as part of a broader restructuring plan. Subsequently, many industry peers adopted similar statements, framing layoffs as proactive preparations for an AI-driven future.

Coinbase has been particularly active in this process. Besides reducing staff, the company is also compressing management levels, requiring managers to operate in a “player-coach” mode, balancing execution and management functions. Blockchain infrastructure firm 0G Labs stated that after internal AI tools significantly improved productivity, they have reduced their staff size by 25%.

Questions Over “AI Whitewashing”

Critics are not entirely convinced by the above narrative. Many companies are facing more direct business pressures: activity in crypto asset trading has cooled significantly, digital asset prices remain below recent highs, and payment companies are struggling amid slowing growth and intensified competition.

Some companies also face internal difficulties. Block expanded massively during the pandemic boom, accumulating a large amount of redundancy; PayPal is still undergoing a comprehensive transformation led by new management. These backgrounds have led to accusations of “AI whitewashing”—that is, companies using artificial intelligence as a more respectable excuse to cover up layoffs caused by weak demand or overhiring.

Needham & Company analyst John Todaro openly questioned this: “Whenever I see layoffs where AI is listed as one of the reasons, I step back and ask: have we seen this in companies with a hot market?” He added, “I’m not sure I believe the AI explanation.”

Two Logics Coexist, Proportions Disputed

Some observers believe both explanations can be valid simultaneously. Raman Shalupau, founder of crypto job platform CryptoJobsList, estimates that the current layoffs are “roughly an 80/20 split across the industry—80% real efficiency gains from AI, and 20% from redundancy accumulated during the last bull market.”

This judgment implies that AI is indeed causing substantive reshaping of job structures, but the scale and speed vary by company. Even in companies that have not undergone large-scale layoffs, roles are being reorganized around automation tools, with some repetitive tasks being systematically replaced rather than taken over by new hires.