Coinbase Set To Make Investing Easy For Institutional Players
Coinbase has long been at the forefront of mainstream cryptocurrency investment. Now they are taking it one step further. Coinbase is set to release two cryptocurrency tools that will make it much easier for institutions and large hedge funds to invest in the space.
One of the main reasons that it took such a long time for large investors to become interested in the space, was lack of easy access. However, due to a clear demand from these types of investors, major companies such as the NYSE and NASDAQ have also started working on exchanges and tools to make it easy for institutions and hedge funds.
The two platforms that Coinbase will be releasing are called Coinbase Prime and Coinbase Custody. I will discuss each of them in detail below.
Coinbase Prime is a new exchange specifically tailored to the needs of institutional investors. They offer many tools to the investors that regular exchanges do not offer. These include: margin finance, high-touch execution including OTC block trading, and execution algorithms. The most important of these being OTC block trading. Previously, it was almost impossible for institutional players to buy in large chunks because buying coins on the market would significantly increase their own cost. This is because, when things are bought on the market in large quantities, the price continues to increase due to the large buy volume. OTC trading allows big players to buy all their coins at a set price, to avoid paying too much. This will still, in the medium-long term, significantly increase the price of cryptocurrencies due to decreased supply, even though it has no immediate affect on the market.
Coinbase Custody is essentially an ultra-secure wallet for institutions to store their cryptocurrency in. Coinbase is believed to have partnered with both the SEC and CFTC to set up this tool, insuring they are following all necessary procedures and guidelines. This product is clearly geared to extremely large hedge funds and institutions, as there appears to be a one-hundred thousand dollar fee just to join, as well as a minimum ten-million dollar deposit.
Although not everyone is totally on board yet with cryptocurrencies, developments such as these clearly show a rapidly changing attitude towards the space as a whole. We are likely to see many more developments such as these in the coming weeks and months, as the real money prepares to enter the market.
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Disclaimer: Nothing written in this or any other article on our website should be taken as financial or legal advice. Therefore, we cannot be held liable for any investments you make. Investing in cryptocurrencies is highly speculative, and you should never invest more than you are prepared to lose.
Written by Jack Baker