The cryptocurrency markets are still young and jostling with excitement. However, Coinbase could change the trading landscape of digital assets forever. According to a Business Insider story, the exchange is planning to up the ante of its prime broker business launched earlier this year. Known as Coinbase Prime, this arm of the company will be working to bring big investors and hedge funds into the crypto markets.
Taking Investment Lessons From Wall Street
Prime brokers are common on Wall Street, but the cryptocurrency markets have remained oblivious to them till now. It could be one of the reasons why institutional investors and hedge funds have been somewhat cautious while investing in these highly volatile markets.
Coinbase already claims to have brought a $20 billion hedge fund onto their platform, though they wouldn’t name the firm yet. It would be a big move for the platform as well since Coinbase has been one of the most popular exchanges for small investors. With its new offering, the platform has brought some ex-Wall Street execs to create a broker program that lets institutional investors interact with trading venues and exchanges. Coinbase is also expected to provide custody services. In fact, it could also bring margin finance services to the world of crypto.
Institutional investors can now borrow to trade, which could further be used to increase returns and get leverage from short positions. Clients will be able to find the best venues to trade, even if they are rival exchanges.
Moving Deeper Into the Crypto Space
Coinbase is busy building teams in Chicago, London, and New York. In fact, it has brought Barclays’ Hunter Merghart as the sales trader and NYSE’s Christine Sandler as co-head of institutional sales. From retail to venture capital, it is pursuing crypto activities that help in developing the market further.
According to Richard Johnson, a consultant at Greenwich Associates:
“Coinbase is pursuing a lot of different initiatives that make sense and take it closer to or are more similar to traditional finance: custody, financing, lending, security tokens, and the institutional portal. They have the resources to fund them and will surely have some successes.”