Coinbase lures institutional investors into the cryptocurrency market
Coinbase Inc., one of the world's largest cryptographic exchanges, has launched a new service, offering its customers the depositary services which are aimed at safe storage of digital coins, just as it is with traditional securities.
However, the stock exchange now reports that this service has already attracted interest for 10 hedge funds and the companies which deal with asset management.
By the end of the year, Coinbase intends to expand this list to 100 major institutional customers, as well as to increase the amount of funds managed by the stock exchange up to5 billion dollars, claims Sam McIngvale, the head of this new division. The amount of the cryptocurrency assets which are owned by retail investors and are under the control of Coinbase currently exceeds $ 20 billion.
In this way, the Coinbase, based in San Francisco, has joined the companies offering or intending to offer asset storage services to institutional customers, which is very relevant for the industry which is often haunted by hacker attacks and cyber-theft. Such a service will allow most hedge funds and pension funds to invest in digital currencies, as many of them can only be deposited with regulated depositaries which meet the requirements of US supervisors. The availability of such services should facilitate the entry of new capital into the markets of the cryptocurrency - of course, if this segment succeeds in living together with the drop in the current price of cryptocurrency
In the opinion of Sam McIngvale, Coinbase is negotiating with the Securities and Exchange Commission(SEC) and the Financial Industry Regulatory Authority (FINRA)in order to ensure that its activities comply with the regulatory requirements.
“We have come to an understanding with the SEC and FINRA and have received a green light for the execution of the contracts and for the first deposit acceptance,”McIngvale points out. The company was not required to obtain official permission because its partner in providing the new service is a broker-dealer Electronic Transaction Clearing Inc, licensed by the SEC.
Depositary services are currently available for Bitcoin, Ethereum, Litecoin and BitcoinCach, while in the future, the company plans to extend support for other cryptocurrencies. Currently, the service is available in the US and Europe, but by the end of the year it will also reach Asia.
The new depositary service is part of Coinbase's strategy for diversifying income and expanding the range of products to institutional customers, McIngvale explains. The service is available to the customers wishing to invest at least $ 10 million.