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Coinbase Paving the Way for Institutional Investors with Four New Products

Rick D. | May 15, 2018 | 8:45 pm
Coinbase
Altcoins

Coinbase Paving the Way for Institutional Investors with Four New Products

Rick D. | May 15, 2018 | 8:45 pm

Coinbase are attempting to lure institutional investors to the cryptocurrency market by launching four new products. The established digital currency exchange company announced today that they will introduce: Coinbase Custody, Coinbase Markets, The Coinbase Institutional Coverage Group, and Coinbase Prime.

Coinbase Respond to Feedback from Institutional Investors

For several years now those involved in the cryptocurrency space have spoken about institutional money flooding into the market. Many thought that the launch of Bitcoin futures by both the CME Group of the Cboe late last year would be the catalyst for traditional money managers and centres of wealth to take up positions in digital currency. However, it didn’t quite work out that way.

There appear to be a few obstacles in the way stopping institutions getting involved by the billions of dollars that they’re easily capable of. The main issues are infrastructural (it’s not easy for anyone to take up multi-million dollar positions in crypto) and also relate to security (crypto offers zero recourse or insurance if anything goes wrong).

It appears Coinbase are taking heed of these issues and attempting to provide a more welcoming platform to those institutions wishing to gain exposure to crypto by launching four new products. Their vice president and general manager, Adam White, told CNBC earlier today:

“We think this [Coinbase’s new product line] can unlock $10 billion of institutional investor money sitting on the sideline… We’re seeing a rapid increase in attention awareness and adoption in the cryptocurrency market.”

To tackle the issues of security, the company plans to launch Coinbase Custody. This would involve a partnership with an SEC-regulated broker-dealer that would securely store digital assets for clients.

The second product will be Coinbase Prime. This will be a trading platform separate from both GDAX and Coinbase itself. It will cater exclusively for institutions whilst drawing on the same liquidity pool. White commented:

“The feedback we heard from institutional investors was ‘Your infrastructure doesn’t meet our expectations… We heard that loud and clear.”

To facilitate the three platforms sharing the same pool of liquidity, Coinbase Markets will be the third product to be launched. This will be an electronic marketplace run from Chicago at a new office.

Finally, there will be the Coinbase Institutional Coverage Group. This will essentially represent a tailored form of customer service, again, aimed solely at institutions. It will be run out of New York City and will provide the kind of support that banks and other such hubs of financial activity are used to dealing with. They’ll also help to introduce the San Francisco-based exchange’s family of products to new clients curious about getting into crypto.

White believes that Coinbase’s launch of such products will cause others to follow suit with similar solutions tailored to institutions. He said:

“Very few want to be first, but everyone wants to be second… There will be fast followers.”

The news about the exchange’s plans to launch such trading options comes on the same day that market researchers Tabb stated that 2018 will be the year that institutional money finally makes it into cryptocurrency. In a report published earlier today, they stated that there were three main obstacles prohibiting any such inflow of funds: uncertainty about regulations, lack of market infrastructure, and lack of institutional-grade sources of market information. It seems that Coinbase are working towards making these obstacles a thing of the past.

White concluded by stating:

“This is our public demonstration [that] we are absolutely here to serve institutions investing heavily to do that.”

Featured image from Shutterstock.
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  • fujak

    lol….coinbase is hardly ‘paving the way……

    unless their products are ready to be launched in a few weeks they are far behind….

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      • fujak

        fuck off

    • CS41Y

      Is this just a personal distaste for coinbase or do you have something more enlightening than quotation marks and a sentence that doesn’t state much. Far behind what? Why must it be launched in a few weeks? What is a few weeks to you? How do you know anything about their plans, timetables, discussions with financial institutions that make today’s cryptocurrency market look like pocket change? And what’s with ending everything with multiple periods about? It just seems like you hate coinbase or the idea of allowing any sort of regulations to get involved. I love the idea of decentralized currencies, apps, networks, or whatever else a cryptocurrency is used for. I actually hate the term cryptocurrency since I think its a misnomer and greatly misleading to a lot of people. Especially older people who are ingrained in the traditional stock market and don’t know anything about a blockchain. They just see currency and automatically think its a currency not backed by a government or anything. Given that older investors take an almost rage filled angst view of cryptocurrencies there is clearly a lack of communication happening. Or you get the people who think its supposed to replace actual money. I would say its no more of a currency than gold or corn crops. Its also not as volatile as its made out to be when people stop looking at it as an official currency and falls right in line with the tradition stock market. Some cryptocurrencies see great gains quickly but its no different than facebook, amazon, Microsoft, and lots of companies whose stocks have skyrocketed. The vast majority of cryptocurrencies don’t change drastically. And most people who became rich of bitcoin bought a crap load of it when it was a penny, a dollar, or 100 dollars. Institutions could benefit from many cryptos easily just from cost reductions alone when transacting. Especially across national border lines. Showing companies what benefits it will give them, while setting up an infrastructure that they can utilize is not something that has really been done. The only institutions that oppose this are ones like VISA. And its not even institutions. Its the billionaires who can make up the rules of the current infrastructure in a way that its basically rigged against all but a small handful of people really making huge gains. But the market manipulations and misuse of people’s investments could have an encyclopedia written about it just on the 2008 financial crash alone. I think providing companies with assurances, traditional support centers, at least some type of good faith gesture to show investing in something like bitcoin (probably not the greatest example to do transactions with) may involve some risk but not anymore than other ways of doing business, and finally explain how networks will be able to pull off greater orders of magnitudes of transactions per second as more people adopt it. While cutting out the middleman (bankers and brokerage firms) which substantially reduces fees. Some cryptos don’t even have fees and anyone is free to utilize their product to make innovative applications that otherwise would cost much more money. Even if its just to make a pilot program to help sell an idea for the entrepreneur or a company looking to expand their business and types of products without having to spend thousands or millions of dollars. A support center can also create a campaign that dispels myths and shows unbiased statistics (the few available) from published and peer reviewed papers in academia. There aren’t many more scams involving cryptos and they should be easy to spot to anyone who is given an introductory course to cryptocurrencies. Like dentacoin makes these ridiculous claims about how it will reduce dental costs to at least a third of todays costs and provide dental care to poor countries. But doesn’t explain how paying a dentist in a make up token will do all of this. I mean part of the problem in poor countries is they lack doctors and dentists, not the costs. Crime, drug cartels, money laundering, etc. have been around long before I was born so any myth or suggestion this creates it just shows how ignorant some people can be. If I were a criminal I would rather use cash anyway. Its much harder to trace and with today’s technology even some clever people with regular salaries can create convincing treasure notes. Foreign governments can create exact replicas. North Korea is famously great at doing this. Judging comments from common people who have heard of bitcoin or investors who have heard of cryptocurrencies but really only hear of bitcoin I would say there is a great lack of educating the broader public on these things. And that bitcoin isn’t the cryptocurrency market. And cryptocurrencies at least right now aren’t meant to replace government notes. A lot of people would be surprised that they already use cryptocurrencies like xrp and don’t even know it. Even if you hate coinbase or are just a die hard crypto fan who refuses to tailor even small concessions of centralization this is only good news. Besides bitcoin was supposed to be decentralized but within a few years people needed special mining setups to even breakeven at some points in time. So bitcoin is basically run by mining conglomerates at this point and isn’t truly decentralized.

      • fujak

        i dont have a dislike for coinbase at all….in fact, i think the more players in the game the better for us all at this early stage…

        what i dislike are these articles that are so lightly researched and positively biased towards american based projects when crypto is so incredibly global and when america is so far behind asia….

        coinbase are behind Quoine as far as preparing to entice insittutional investors into the space….far behind….

        and the dots, well that’s just how i like to type… be thankful i don’t use things like ‘ur’ and know the difference between there, they’re and their..

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