By
Temitope Olatunji
April 18th, 2024
Coinbase will be offering its block trading facility on its professional trading platform GDAX which will allow institutional investors to trade digital currencies in bulk.
Cryptocurrency exchange Coinbase, has recently turned more aggressive in expanding its business and operations. currently, the crypto exchange is seen on a spree of acquisitions as well as hiring the top talent from the financial and institutional space. Moreover, the valuations of the crypto exchange have soared tremendously over the last eight months and the latest acquisition of Earn.com values it at $8 billion, says company’s own reports.
According to the latest report from Business Insider, the crypto exchange is now planning to open an office in Chicago and provide block-trading facilities in a bid to further expand its institutional client base on its professional trading platform GDAX. Institutional investors and traders often face a difficult time for getting their orders executed on a normal cryptocurrency exchange. This is because bulk orders can cause major price swings in the market and thus often remain to be traded less.
With block trading, the orders are usually circulated outside the exchange’s order books and all the transactions are published later on a delay. This helps to subside the effect that large orders can have on crypto price swings.
Coinbase plans to offer this service of block trading through its GDAX exchange which is currently one of the top ten cryptocurrency exchanges of the globe with daily trading volumes somewhere near around $315 million. Coinbase is also launching another service called Coinbase Custodian which will be a cryptocurrency storage facility for its institutional clients. The exchange operator claims these services will be quite similar to traditional banking custody services. However, this service will be only for those clients willing to store a minimum of $10 million worth of cryptocurrencies.
Last month, Gemini exchange headed by the much famous Winklevoss Twins started the block trading facility. Similarly, Circle – a Goldman Sachs-backed crypto trading desk started the facility of over-the-counter (OTC) orders for institutional investors with minimum Bitcoin orders starting from $500,000.
Chicago is one of the most preferred destinations for big professional firms and institutional investors and hence it might be one of the reasons for Coinbase to set up its operations there. In order to establish a strong foothold in the crypto trading space, Coinbase is seen hiring top talent from the financial institutional space.
Hunter Merghart – a former trading Director at Barclays has been recently hired by Coinbase. Merghart has a profound trading experience in the equity trading sector for over a decade and has served at top positions for big financial firms. Before Barclays, Merghart was the Vice President at RBC Capital Markets and was the Head of its cash equity trading desk.
Coinbase is also seen recently hiring a lot of people from New York Stock Exchange (NYSE). Christine Sandler, the former Head of Sales for NYSE Euronext recently joined Coinbase’s team as the Director of institutional sales. Eric Scro, ex-Head of finance at NYSE is also reportedly said to have joined the crypto exchange.
IT looks like Coinbase is pitching a head-on competition with the NYSE but experts believe that the crypto exchange has still a long way to go. ICE’s Head of data Lynn Martin told Business Standards: “You are talking about a market that really was built 225 years ago and has had multiple evolutions as a result of various crises to a very new market.”
“Crypto markets are very, very new. I like to say the guardrails haven’t been found yet in this market. The regulatory framework hasn’t been found yet in this market. That’s why you don’t find institutional users jumping in with feet first yet,” Martin added.
This year in March, Coinbase has also announced the launch of Crypto Index Fund and its new venture capital fund called Coinbase Ventures.