Earlier this year, Coinbase established its office in Chicago, among the major trading funds. This provided the firm with the opportunity of building relationships with traders, client in-person contact, and the ability to more effectively offer hedge funds. And now they have dipped toes into the cryptocurrency world with its recently launched institutional brokerage service. These include various services where investors can hold a large number of digital currencies, as well as trading capabilities like risk management and margin trading, allowing customers to use borrowed money.
While most of the services are for everyone, the major focus is on the institutional clients. According to Business Insider reports, a $20 billion hedge fund began using Coinbase Prime following its launch earlier this year, perhaps giving a sign that cryptocurrency could emerge as a mainstream asset among other alternative investments.
Not just Coinbase, but also Greyscale – a New York-based investment company that provides numerous options in cryptocurrency, is looking forward to $10 million in investments each week, more than half of which is coming from institutional investors.
A report states that a growing number of billionaires and hedge funds have made personal investments in Bitcoin or other cryptocurrencies. However, most of these visionaries have not allocated capital from their funds into the still nascent-class.
Even Circle – a fellow cryptocurrency giant has noted a 30% increase in new institutional clients in May this year. They have witnessed enough activity from large-scale buyers to double their minimum order size at the crypto trading desk to $500,000.
Earlier this week, Marc Larsy, who runs Avenue Capital Group – a $9.6 billion asset management firm – revealed that cryptocurrency amounts to about 1% of his total $1 billion personal net worth.
From the recent large-scale investments as well as prior backing from the New York Stock Exchange or Andreessen Horowitz, Coinbase is truly becoming the giant with their new introductions into the crypto world. However, they must recognize the need to improve their services if their reliability has to win over even more hedge funds.