Coinbase Pivots Due To The Increasing Emergence Of Institutional Involvement Into Crypto
Coinbase Pivoting Due To Institutions Increasingly Involved In Crypto
Coinbase has done two things which might signal a change in the focus for the largest US crypto exchange. They have shut down their PAC and shuttered their Chicago office. How are these two linked to a change in business focus and why they are happening now could be of great concern to anyone who relies on using Coinbase as a trading platform.
PAC Closure With No Reason Given
The first big news was that Coinbase filed with the American Federal Election Committee to close down its PAC (Political Action Committee). PACs are special organizations that collect money for political campaigns. They are independent organizations, that are used to lobby for favorable treatment in Washington.
Coinbase's PAC was set up in July of 2018 and became a founding member of the Blockchain Association in September. This group was intended to lobby for blockchain in Washington, D.C. However, Coinbase was definitely not the only benefactor of lobbying efforts. Many other companies have been on the receiving end of the lobbying efforts undertaken such as Protocol Labs, Digital Currency Group and Polychain Capital.
The Coinbase Director of Communications, Elliot Suthers, has not yet given a definitive reason for why the company had set up the PAC. Despite the rumors going around that it was lobbying for a while, nothing concrete has been announced by any company that has seemingly benefitted. He has also not said anything regarding the closure, to any news source.
Chicago Closure Show A Different Focus
The closure of Coinbase's Chicago office has left 30 employees laid off, with others moving to remote working contracts. Rumors surrounding the move speculate that it had to do with the scaling down of its high-frequency trade matching engine. This can only be explained by a slew of new offerings in the works within Coinbase. It would not make any sense otherwise.
Suthers did, however, give some clues as to where Coinbase is heading with regards to these latest moves. He particularly focused on the number of institutional investors that are beginning to get their feet wet with regards to the cryptocurrency market.
“Institutional is one of our fastest growing businesses and institutional customers are driving a lot of growth for us right now. We currently serve a broad spectrum of institutions from asset issuers and crypto funds at one end to university endowments and pension funds at the other. We want to be the first name any institution thinks of for crypto.”
This announcement shows clear signs of the company is gearing its new features and products to the high demands and expectations of institutional investors. He knows full well that the company taking bigger bets might not always pay off, but it is an important part of growing. Coinbase already has a large base of institutional investors. These range from crypto funds to university endowments, pension funds to asset issuers.
The company has seen a fantastic growth in the over-the-counter desk business, that has been going strong since it was introduced in November 2018. The custody business section of Coinbase holds over $700 million in customer assets and while this may pale in comparison to some traditional financial institutions it is certainly among the top tier of crypto exchanges. Coinbase is growing day in day out. Their Coinbae Pro platform is certainly something that many fledgling crypto financial companies are eager to imitate. They have 44 actively traded order books from users in over 53 different countries.
The company seems to be moving towards being a global financial powerhouse as its bets are all made with regards to cryptocurrencies being an integral part of the global financial landscape in ways that were never thought of before.
Singapore recently held a meeting between 20 of the largest crypto exchanges in the world. Coinbase was present, along with Binance and Galaxy Digital. The discussions focused on how to better integrate cryptocurrencies and digital assets into the global financial system. This is something that many in the crypto industry are viewing with mixed feelings.
On one hand, it would legitimize cryptocurrency in the eyes of many traditional sectors. However, more hard-line cryptocurrency advocates think that cryptocurrency will eventually eclipse all the traditional financial instruments much like email replaced both the post and fax machines. How mobile phones and Google have meant the death of home phones, directory pages, and handheld maps.
Whatever the future holds for cryptocurrency, these 20 exchanges believe that it will only happen if the financial system accepts cryptocurrency in as short a time as possible.