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Coinbase Wants to Bring on More Institutional Investors

Coinbase announced a new line of products this Tuesday to accelerate efforts to attract institutional investors. It said that it hopes the new line of product will unlock $10 billion of institutional investor money sitting on the sideline.   

Coinbase, a U.S. based cryptocurrency exchange, is hoping that more institutional investors will port on, after it launched a new line of products on Tuesday. The new line includes four products, namely Coinbase Custody, Coinbase Markets, The Coinbase Institutional Coverage Group and Coinbase Prime.

Vice president and general manager Adam White said they hope the new products will unlock “$10 billion of institutional investor money sitting on the sideline”. He added that the cryptocurrency market is seeing increased attention awareness and adoption.

This is at the backdrop of increasing interest for cryptocurrencies among institutional investors. One evidence for this is the increasing number of crypto hedge funds. Therefore, up from 20 in 2016, 175 last year and now 287. Additionally, the markets might soon see a cryptocurrency trading desk courtesy of Goldman Sachs.

White indicated that not many companies want to be first in testing the waters by launching products. But said “everyone wants to be second”. He said many will follow suit after Goldman Sachs.

The exchange is hoping that the new product line will deal with the most pressing issues for institutional investors who want to deal in crypto. One of those is security, or the fact that while fiat money in banks is insured, not so is with cryptocurrencies. With Coinbase Custody, the company hopes become a trusted custodian for cryptocurrencies. The company had no product to facilitate such a service although its exchange has stored more than $20 billion in cryptocurrency on behalf of customers. Coinbase Custody, which will now see the custody service provided. However, it is launching courtesy of the company’s partnership with a SEC-regulated broker-dealer.

Coinbase Institutional Coverage Group service is dedicated for banks and similar institutions. Therefore, it will be run from a New York City office. Coinbase Markets, the new electronic marketplace that provides a centralized pool of liquidity for all Coinbase’s products, will be run from an office in Chicago.

The company’s Coinbase Prime line of products is dedicated exclusively to institutional investors. It will have a separate interface from Coinbase’s GDAX but all investors have access to same pool of liquidity. White said they launched the Prime after institutional investors said the current infrastructure does not serve their needs.

Coinbase has traded $150 billion in assets and has more than 20 million customers. It is valued at $8 billion and recently acquired Earn.com. Last year, their revenue was $1 billion.

What is your take on initiatives by crypto companies to attract institutional investors? Are they doing enough? Share with us on Twitter and Telegram.

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David

David Kariuki is a journalist who has a wide range of experience reporting about modern technology solutions including cryptocurrencies. A graduate of Kenya's Moi University, he also writes for Hypergrid Business, Cryptomorrow, and Cleanleap, and has previously worked for Resources Quarterly and Construction Review magazines.

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