California-based cryptocurrency company Coinbase is looking to attract more institutional investors. According to live-streaming site Cheddar, the crypto wallet and exchange company has introduced an over-the-counter (OTC) trading desk specifically for the investment class in response to customer demand. It’s just one step in the company’s plans to be a versatile platform that is regulated by U.S. authorities.
Coinbase Director of Institutional Sales Christine Sandler explained of the new offering, “We launched our OTC business as a complement to our exchange business because we found a lot of institutions were using OTC as an on-ramp for crypto trading.” She adds that the platform will allow clients to leverage Coinbase’s exchange and OTC service and explains that the OTC desk could soon be combined with its custody platform, Coinbase Custody.
It will compete against other OTC services, including Goldman Sachs-backed Circle and the Gemini exchange. However, Sandler points out that Coinbase’s solution will be unique. She states, “Circle and a number of others have complementary products, but they also trade on a proprietary basis, so they are the counterparty to each transaction, while we, in fact, are matching client orders.”
The current market slump may have scared off some investors, but they weren’t true believers in crypto’s capabilities. Those that see the potential of digital currency are in for the long haul. Sandler adds, “From our crypto first clients, we’re hearing that nothing has changed with respect to technology, and they’re still absolutely committed to crypto … to the technology. I think that there’s one small silver lining to this volatility … [it’s] that crypto’s been front and center of the mainstream financial media for the last few weeks. I think that has driven … forced a lot of institutions to think, really, is this an opportunistic investment point for crypto at this point.”
Coinbase is hoping to be a fully regulated platform. It is working with the Securities and Exchange Commission (SEC) to become a licensed broker-dealer. It hopes to be able to introduce a range of crypto-related solutions, such as crypto securities and margin trades, as well as new data products not yet identified. Coinbase has also received authorization from the New York State Department of Financial Services to establish a regulated custody solution in the state.
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