Coinbase is courting Wall Street after it announced plans to launch a range of new services aimed at institutional investors, who are finally beginning to embrace crypto.
The main new arrival is Coinbase Custody, a service first announced last year that provides specialist level services to allow institutions to hold bitcoin and other crypto with Coinbase. Right now, there’s precious difference in customer care regardless of whether they hold $1,000 or $10 million, but Custody is an effort go beyond that and offer a higher standard of service in line with what institutions require.
Specifically, that includes the use of an SEC-qualified custodian, third-party auditing and financial reporting validation, all of which Coinbase is getting via a range of partners.
“We have leveraged our experience safely storing more than $20 billion of cryptocurrency to create Coinbase Custody, the most secure crypto storage solution available,” Coinbase general manager Adam White wrote in a blog post.
Coinbase also announced a new platform dedicated to institutional customers called Prime.
Prime offers a trading service that’s customized to such customers, but it will also be expanded to cover lending and margin financing products, services like over-the-counter (OTC) trading and algorithmic orders, and market data and research products.
Finally, Coinbase is expanding its ranks by opening an office in Chicago. The primary focus of that location, White said, will be to work on providing a centralized pool of liquidity for Coinbase services. That, combined with other features, is aimed at driving better conditions for trading for institutional customers.
The moves makes sense. Coinbase is positioning itself as the go-to in the crypto ecosystem — something reiterated recently by new CTO Balaji Srinivasan — and beyond being a consumer name, the company needs to court the bigger players, who keen on crypto after seeing bitcoin stabilize after a crazy run in January and the introduction of bitcoin futures.
They also represent a lucrative customer segment that brings new revenue options, too.
As Coinbase CEO Brian Armstrong says on the Coinbase Custody website: “Over 100 hedge funds have been created in the past year exclusively to trade digital currency. By some estimates there is $10B of institutional money waiting on the sidelines to invest in digital currency today.”
Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.