Coinbase Sets Sights on Wall Street, Announces Suite of Institutional Products

Crypto exchange launches four new tools and services developed to cater to institutional investors.

Top cryptocurrency exchange Coinbase has announced a set of four new products designed to facilitate institutional investors with an interest in trading cryptocurrencies, such as hedge funds and high-frequency trading firms.

In a blog post on Medium, Coinbase’s General Manager Adam White revealed that the exchange is looking to cater to the growing influx of institutional investors in the crypto market:

“The cryptocurrency market is maturing rapidly as more sophisticated institutional participants enter the space. In fact, in the past few months over 100 hedge funds were created that exclusively invest in and trade cryptocurrency. Some of the world’s largest financial institutions have also recently announced their plans to begin trading cryptocurrency.”

“This movement requires institutional grade products and services, something Coinbase has been developing with leading institutions and which we are proud to formally launch today,” White added.

The crypto market has seen increased interest from institutional investors during the past few months – in addition to the growing number of crypto hedge funds cropping up, banks such as Goldman Sachs are also setting up trading desks for cryptocurrencies. In response, crypto exchanges such as Coinbase are beginning to set up traditional financial markets infrastructure.

To cater to the growing interest of Wall Street, the San Francisco-based Coinbase, which recently announced the launch of a Coinbase Index Fund (a weighted tracker of all the cryptocurrencies listed on its GDAX trading platform), has released four new features.

The first of these is Coinbase Custody (which was originally announced last year) – Coinbase (with its experience in holding more than $20 billion in digital assets) has partnered with an SEC-regulated broker-dealer to provide a secure cryptocurrency storage service with stringent financial controls.

The second feature is called Coinbase Markets – this is a liquidity pool developed to support all Coinbase products and deliver a fast, efficient, and reliable exchange experience for all users (both retail and institutional). For this, the exchange will be opening an office in Chicago, to house the Coinbase Markets team of engineers.

The third new product is called Coinbase Prime – this is a platform which provides a host of tools and services to institutional investors looking to trade crypto. This includes the provision of services such as lending, margin financing, over-the-counter trading and market data and research products to qualified investors. Coinbase calls this “a missing piece of critical infrastructure needed for institutions”.

The last new service is called The Coinbase Institutional Coverage Group – this is a New York-based team that will cater exclusively to Coinbase’s institutional clients by providing “sales, sales trading, research, market operations, and client services support”, to help institutional traders navigate the complex and often confusing crypto market.

Despite a few growing pains (such as struggles to keep up with increased trading volume, the botched launch of Bitcoin Cash, allegations of insider trading, a lost legal battle with the IRS, and, more recently, lawsuits), Coinbase remains one of the more prominent success stories in the crypto world. The crypto exchange generated more than $1 billion of revenue in 2017, became the most downloaded app on the Apple App Store in the U.S., and has been dubbed a “crypto juggernaut” by Forbes, with investors clamoring to purchase shares in the company although shareholders are not allowed to sell their shares and Coinbase is not expected to fundraise again. Now, it appears CEO Brian Armstrong is seriously looking to expand beyond Main Street, and target the big fish.

Last month, it was also revealed that Coinbase was in talks with the U.S. Securities and Exchange Commission, (SEC), in a bid to register itself with the authority as a licensed brokerage and digital assets trading venue, which in turn will pave the way for further business expansion.