Wall Street team at Coinbase is attracting in billion dollar hedge funds as it tries to fix the biggest pain point in cryptocurrency industry
Coinbase, one of the best and largest cryptocurrency exchange in the US to buy digital currencies. In the recent past Silicon vally based Cryptocurrency Firm hired some of the top shots from Wall Street for its long-term plan of addressing the stumbling block of cryptocurrency industry: Scarcity of prime broker package.
These wall street executives or brokers job is to facilitate the meaning full communication and business between the Institutional Investors (hedge fund or family funds or others) and exchanges or trading venues. It is believed this business model is hard to achieve in the crypto world, as lot of barriers and risks associated with it.
Coinbase, however, acutely trying to conquer these hurdles. It launched earlier this year a prime broker business, Coinbase Prime, joining a family of businesses spanning asset management, venture capital investing, and retail trading.
Coinbase being the largest cryptocurrency exchange is providing few of the services of traditional prime brokerage which include boarding large institutional investors and custody, which was recently announced by the company, and believed to be a success. Just after the launch of custody, Coinbase on boarded almost ten large institutional investors.
According to source and reported by businessinsider, Coinbase is getting ready to offer margin finance services in coming months. That means investors get to buy more on the margin from a brokerage to purchase digital currencies. It would be a kind of loan to investors from the brokerage. According to experts, this way the investors will borrow to trade, which will help in amplifying returns, and investors can leverage a short position.
Coinbase is looking to draft it so beautifully, it is very much possible that will help its institutional investors in finding the best business location to trade, and in that case, Coinbase will be facilitating business to its rivals as well.
Sources have confirmed that Coinbase has already on-boarded a $20 billion hedge fund through its prime business & the wall street gang at Coinbase is working to get other substantial institutional funds onto its platform. Meanwhile, the number of these wall street experts are increasing at Coinbase, and such hiring continuing. Coinbase entry in brokerage business is quite contrary.
The only issue could be, Since Coinbase is not SEC approved security exchange, it is not clear whether the authority would allow, and there would be more potential hurdles in doing this business. People with knowledge of the matter believes that SEC will not have much trouble for the company.
Considering the same and steps Coinbase taking, It would not be wrong to say that Coinbase may reshape the industry and many good things may yet to come with it.
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