Crypto News

How Coinbase Plans To Attract Institutions To Crypto Currency?

Coinbase, which is the largest digital coin exchange in the United States, is drawing up plans to attract an institutional investor to invest in virtual assets. For this purpose, the exchange has established its core principles for financial products focused on institutions. Until now, there have not been much of investments coming from them due to several reasons. That included lack of custodians and uncertain clouding the cryptocurrency market. Apart from this, the regulator is yet to grant its approval for an exchange-traded fund (ETF).

Fundamental Beliefs

In May, Coinbase has launched its suite of products meant for institutions, and now it is introducing a series of “fundamental beliefs” on how it could operate. The exchange will create its own business lines focused on the institutional investor, coindesk.com reported. This is an untapped area though it has immense potential for the big amount of investments. In a recent blog post, the company’s VP and GM, Adam White, indicated that it had developed five core principles towards creating institution-centric products.

The five core principles are fair and orderly market operations, providing fair access to every market participant, implementing transparent market rules, public disclosure of listing practices and market rules, and protecting clients “with institutional-grade infrastructure and processes.” White pointed out that these are fundamental beliefs that will guide the exchange to design, create and operate a suite of products. The objective of the company is to earn the most trusted venue for trading, storing and interacting with cryptos around the world.

Additionally, the company’s VP and GM said that these core rules would drive the exchange towards an open financial system one day if not immediately. The latest move comes after the exchange has unveiled Coinbase Custody on May 15. This was a product meant for institutional investors who are keen on digital coin adoption. Last month, the exchange started to accept deposits for the service to institutional investors. The exchange is compelled to retain its position before any big firms start to intrude the sector.

A few months ago, white commented, “At Coinbase, we welcome these developments as they help accelerate the world’s adoption of cryptocurrency by bringing new capital, greater awareness and additional infrastructure to space. This movement requires institutional grade products and services, something Coinbase has been developing with leading institutions and which we are proud to launch today formally.”

In Line With Regulations

Coinbase has already indicated that its aim is to toe the line that the SEC has formulated for trading in digital currencies. White said earlier that it is because of this reasons, the exchange has turned a favorite as far as institutions are concerned though they are cautious and waiting in the sidelines now.

Institutions and hedge funds are managing trillions of dollar assets, and the amount they have invested in crypto is a tiny figure. Therefore, there is enormous space to attract them to invest in digital coins. However, for this to happen clarity from the regulator is a key factor. Apart from that, the custodian issue should be resolved to enable them to invest in virtual assets freely.

About the author

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Andrew Romans

Andrew Romans is a Silicon Valley-based venture capitalist at 7BC.VC and Rubicon Venture Capital as well as an author of two top-10 books on Venture Capital on Amazon and Masters of Blockchain.

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