Coinbase, “Reacting to Client Demand”, Opens OTC Trading Desk

"Perhaps the revolution began on the retail side...but... we need diversity and we need new participants."

Coinbase, the US’ most popular cryptocurrency exchange, has opened its over-the-counter trading desk for institutional customers, according to a news outlet called Cheddar.

The business first announced this plan in May, when it opened a new office in Chicago.

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Dreams of Grandeur

Coinbase was created in 2012, just in time to catch the wave of popularity and secure a spot in the new cryptocurrency market, and reached one million customers within a couple of years of operations. In the present day, the exchange handled $199 million in cryptocurrency trading over the last 24 hours, according to coinmarketcap.com.

Over the last year, Coinbase has been attempting to cash in on this popularity by targeting institutional investors, that is, companies that want to trade cryptocurrency in massive amounts.

To this end, it has been hiring people from places like Barclays, the New York Stock Exchange, BNY Mellon, and Fannie Mae, amongst others.

It has also launched a number of services intended to appeal to such parties, such as a custody service for those that want to store $10 million or more. OTC trading, which is when transactions are settled directly between an exchange and a customer, should also appeal to such entities.

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Christine Sandler, Head of Coverage at Coinbase, said in the interview with Cheddar that the timing of the launch was “opportunistic, we were just reacting to client demand.” She added that the team was considering amalgamating the custody and OTC services.

Sandler was asked how the courting of Wall Street fits with the company’s open-economy philosophy. “Perhaps the revolution began on the retail side, and we absolutely love and respect and take care of our 25 million retail clients, but we want the ecosystem to become broader and less volatile, and we want it to become a less homogenous marketplace, so we need diversity and we need new participants. Some of these participants are institutions. Some of them make markets for the benefit of all clients, and so ultimately that becomes a much more robust experience for all clients,” she replied.

Opportunism

She was asked if these institutional customers were worried by recent market collapse; she answered that actually, many are seeing this as a good opportunity to enter the market cheaply.

In October, the company’s president shot down rumours that the company intends to go public any time soon, explaining that the company needed to “diversifying [its] revenue streams”, which it appears to be doing.

For example, the exchange has only listed the top, most stable cryptocurrencies as a rule. However, interestingly, CEO Brian Armstrong said in September that “hundreds” of new tokens could be listed on the exchange. He may have been responding to the fact that the stability of cryptocurrencies had caused a massive drop in Coinbase’s business.

It also opened an index fund in March, but soon closed it due to lack of interest.

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