Already valued as high as $8 billion itself, the San Francisco-based cryptocurrency exchange, Coinbase has been focusing on the big institutional money of recent. This month they launched a custodial service and earlier this year, the exchange established Coinbase Prime, which is a suite of tools that were designed specifically for institutions. Coinbase also has an institutional coverage group based in New York City. The group provides a better quality of service to a specific class of clients, it actually looks like the strategy has started bearing fruits.
“People familiar with the matter” was cited by Business Insider, saying that a $20 billion hedge fund has been signed for the prime business. The Coinbase Prime team has been working on bringing into the trading venue additional massive hedge funds. It appears that not having a prime brokerage to use is the main obstacle for getting money trading crypto, the reason is that investors would not like to risk their money by exposing it directly to an exchange. A solution Coinbase adopted for that was to launch its own prime service, which is something only mega-banks have the privilege to on Wall Street.
The report revealed that the company is planning to offer margin finance as early as the end of the year. It will allow institutional investors to trade and borrow capital for increased leverage.
The retail side of the business is quite flourishing with the return of its promotional posts on Facebook. Brian Armstrong, the CEO, announced on social media that: “Facebook banned ads for crypto earlier this year. Proud to say we’ve now been whitelisted and are back introducing more people to an open financial system.”
Facebook updated its policy in June, after banning all crypto ads in January. It now gives room for promotional content from “pre-approved advertisers.” Coinbase position in the US market gave and the money it can afford to spend on lawyers gave it a place on the list.