Coinbase Prime Snags a $20 Billion Institutional Investor

Coinbase Prime, a crypto trading service targeted at institutional investors, has reportedly found a $20 billion client, according to Business Insider:

“Already, the firm has onboarded a $20 billion hedge fund through its prime business, [people familiar with the matter] said, declining to specify which fund.”

This latest news comes as institutional investments into crypto are becoming increasingly commonplace. Just yesterday, Peter Smith, the CEO of Blockchain Ltd, noted that although individual investment is falling, institutional investors have been attracted to crypto investing due to clearer regulations. However, Smith also added that institutional investors still need a better investment infrastructure for truly widespread adoption.

Coinbase has been trying to capitalize on that gap in the market. Coinbase Prime launched in May with the goal of bringing in $10 billion in institutional investment. It’s just one of the products in the new Coinbase Suite that targets institutions, which also includes:

  • Coinbase Markets: a “centralized pool of liquidity”
  • Coinbase Custody: a cold storage system
  • The Coinbase Institutional Coverage Group: the company’s customer service division

Despite all this publicity around institutional investment, it’s not yet known who the big investor is. Earlier this month, Bloomberg reported that Polychain Capital put assets into Coinbase Custody, making it one of the few institutional investors known to be a Coinbase customer. But Polychain only has a little over $1 billion in assets—needless to say, this hedge fund’s investment is likely much larger by comparison.

In the meantime, some individual investors are feeling left behind as Coinbase consolidates its services into a tiered system. In addition to introducing Coinbase Prime for institutions, the company also recently revamped its professional exchange (GDAX). Last month, GDAX was rebranded Coinbase Pro, which was received with much dissatisfaction due to performance issues.

Combined with restrictions on accounts, reneged offers, and unwise PR moves, Coinbase may be more appealing to institutional investors than individuals in the long run.

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