Coinbase Goes After Institutional Customers Amid Investment Surge

US-based crypto exchange giant Coinbase is expanding its offer for institutional investors with a prime brokerage service, Coinbase Prime, building on its earlier success in attracting more than 8,000 customers in this market as of last March, the company said.

“Today we are doubling down on our commitment to serving the growing Institutional market by launching the beta version of Coinbase Prime, our fully integrated prime brokerage solution that provides best-in-class custody, advanced trading, data analytics, and prime services,” said Greg Tusar, Vice President for Institutional Product at Coinbase.

The service, developed under the Coinbase Institutional brand, is separate from the exchange and aims to accommodate the increasing interest of institutional investors.

In a May 13 letter to shareholders, Coinbase said that, in the first quarter of 2021, institutional customers generated USD 122bn worth of assets on its platform, more than retail investors who accounted for USD 101bn. This means that institutional investors represented about 55% of the total assets on Coinbase last quarter.

“Trading Volume for the first quarter of 2021 was USD 335bn, of which approximately USD 120bn was retail and USD 215 billion was institutional,” according to Coinbase.

The exchange said it is introducing a range of new features for institutional customers through Coinbase Prime, including:

  • “seamless” transfers between its segregated cold storage and trading balance;
  • access to more than 10 venues to enable deep liquidity;
  • smart order routing which is to automatically route customers’ order to the venue with good prices;
  • algorithms developed to minimize market impact and slippage;
  • detailed trade cost analysis reports to ensure transparency on how trades were executed;
  • improved user roles, fine-grained permissions, and sub-accounts;
  • crypto-native features such as staking and governance;
  • concierge support from the exchange’s coverage, account management, and trading team.

Meanwhile, Coinbase’s earlier attempts to attract institutional customers were not equally successful. In late 2018, the exchange decided to close its Coinbase Index Fund, which was a weighted basket of digital assets listed on the platform, due to lower-than-expected demand from retail, accredited, and institutional players.

In April this year, however, the exchange made major news when it went public on the Nasdaq stock exchange via a direct public offering (DPO) of its shares under the symbol ‘COIN’.

It had debuted at USD 381, reaching almost USD 430, while, per the latest Nasdaq data, its previous close was USD 242.

Recently, Coinbase said that it plans to bolster its users’ numbers to as high as 9 million by the end of the financial year by convincing crypto investors to pick it ahead of other trading platforms.

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