Coinbase CEO: Bitcoin And Cryptos Need Institutional Investors In Order to Grow
Brian Armstrong, known as the CEO and co-founder of Coinbase, the largest regulated crypto exchange in the United States, has recently decided to speak about how institutional investors are important for the crypto market. He spoke during Blockchain Week, an event which happened in New York City.
Armstrong affirmed that Coinbase was initially launched as a retail brokerage company and, because of this, it was initially aimed completely at retail investors. Soon, however, the company discovered that the crypto industry could only mature and grow truly when the institutional investors started to pour money on it.
According to the CEO of Coinbase, 90% of the money in the whole market is tied to institutional investors. They may be few in numbers, but they are certainly powerful and representative of the market.
After he realized that, Coinbase started its long road in order to get some more institutional support. The company collected data from the most important requirements in order to become a crypto provider for these clients and reached out to a few potential customers, too, in order to understand what would interest them in the blockchain technology.
A considerable challenge is that the structure to cater for this kind of investors simply did not exist before. For instance, Coinbase Custody needed to be a qualified custodian before these people were ready to put their money there. This takes effort and compliance with regulations in order to work as well as it can.
In order to be able to offer more to the investors, Coinbase started to create its own infrastructure and to draw more institutional money, which eventually culminated into the company being able to find a good number of institutional investors which are now a part of their business.
Armstrong affirmed that by enabling more features like over the desk (OTC) trading, they were able to see large block trades happening on the platform. After that, institutions started to have like 60% of the volume in the company. This turned them into a key segment in the company.
He affirmed that the custody solutions, the OTC market and Coinbase Pro were all important in giving the synergy necessary in order to evolve the company and to be more like a traditional financial platform, which also helped to lure some of these investors to Coinbase.
By emphasizing the strenght of trusted custodians, Armstrong talked about how important it was to do it right considering how many breaches the market often has.
Because of this, he affirmed that we are seeing the foundation of a next generation of the financial world. According to him, this will show how finance 1.0 will be overcome and large investors will be used to this new market soon, which will benefit them and crypto both.