Coinbase has announced the launch of several new products today aimed at on-boarding institutional investors into cryptocurrency markets.
The rapid influx of world’s large financial participants and their capital spurred Coinbase to develop the products. As we reported, the announcement follows company’s furious activity to maintain its position as the home for traditional financial institutions.
Adam White, General Manager at Coinbase, writes:
At Coinbase, we welcome these developments as they help accelerate the world’s adoption of cryptocurrency by bringing new capital, greater awareness, and additional infrastructure to the space. 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.
In keeping with Coinbase’s mission, White highlights its efforts to stay in line with SEC regulations for cryptocurrency trading, which has made the exchange a favorite among institutions cautious to enter the space.
Its new product, Coinbase Custody, partners Coinbase with an SEC-regulated broker-dealer for third-party auditing and financial reporting validation. The custodial product offering maintains a high standard of reporting validation that institutional firms require in broker-dealer relationships.
A second offering announced is Coinbase Markets, an electronic marketplace based out of Coinbase’s engineering office in Chicago.
‘Coinbase Markets provides a centralized pool of liquidity for all Coinbase products,’ White added. ‘Over the course of the year, Coinbase Markets will introduce new features like low latency performance, on-premise datacenter colocation services, institutional connectivity and access, and settlement and clearing services. These additions will allow for a more efficient price discovery process to occur, creating tighter markets, deeper liquidity, and increased certainty of execution.’
White believes that the new opening of the office in Chicago will position the company to tap into a larger talent pool of engineers who have “deep exchange infrastructure experience.” Presumably, this is because the engineers around the area are already experienced in traditional exchange-centered products as Chicago is a hub for finance. As previously reported, the tight blockchain talent pool has led exchanges to lure engineers away from banking firms.
The third product is Coinbase Prime, a software service that equips institutions with tools for trading cryptocurrency.
This product will fill a missing piece of critical infrastructure needed for institutions. Over the course of the year we intend to offer lending and margin financing products to qualified clients, high touch and low touch execution services like over-the-counter (OTC) trading and algorithmic orders, and new market data and research products.
This product launch builds on Coinbase’s previous efforts for building traditional investment types like margin trading into cryptocurrency.
Finally, Coinbase has created a new Institutional Coverage Group that focuses exclusively on supporting institutional clients (as opposed to retail clients). The support includes “sales, sales trading, research, market operations, and client services support,” White writes. The group will be based out of Coinbase’s New York office and touts an employee pool with impressive experience in the New York Stock Exchange, Morgan Stanley, plus regulatory bodies like the SEC and CFTC.
As recently as May 12, we reported a growing brain drain of traders and experts leaving finance firms to join cryptocurrency exchanges and startups, which Coinbase is capitalizing on.