As cryptocurrencies gain popularity they’re attracting more than just small investors hoping to turn a few altcoins into a Lamborghini. The transition from geeky crypto hobby coin to serious financial investment (or decentralized global currency) has attracted the world’s largest financial institutions, and if institutional investment is what the crypto world needs to nudge into the mainstream, we may be nearly there. Several recent developments show that institutional investors are poised to break into the crypto space.
Coinbase recently announced plans to release a suite of products and services aimed at major institutional investors. Noting that “in the past few months over 100 hedge funds were created that exclusively invest in and trade cryptocurrency,” Coinbase will offer a “white glove” service called Coinbase Prime. The service will offer sophisticated trading and data tools to institutional investors based on its GDAX trading platform.
And there are other signs that Coinbase, which boasts more than 13 million user accounts, is pivoting towards institutional investors. The San Francisco-based exchange is setting up offices in New York, closer to potential hedge fund clients. They’ve also opened an office in Chicago, which will support the new Coinbase Markets. Markets “provides a centralized pool of liquidity for all Coinbase products…. will introduce new features like low latency performance, on-premise datacenter colocation services, institutional connectivity and access, and settlement and clearing services.”
In late April, Nasdaq CEO Adena Friedman told CNBC that “certainly Nasdaq would consider becoming a crypto exchange over time…If we do look at it and say ‘it’s time, people are ready for a more regulated market,’ for something that provides a fair experience for investors.”
Nasdaq also announced a partnership with crypto exchange Gemini. The collaboration will give Gemini access to Nasdaq’s surveillance technology to ensure a fair and “rules-based marketplace” for Gemini users, according to Gemini CEO Tyler Winklevoss.
As Coinbase noted in their announcement, hundreds of new hedge funds have been created in recent months to trade in cryptocurrencies. Spencer Bogart of Blockchain Capital recently told CNBC that Bitcoin is still a buying opportunity. “Every major bank is trying to do something in the [crypto] space. Either they’re going to be offering Bitcoin to their clients, they’re working on a custody platform or they’re opening up a trading desk.”
Hong Kong-based Binance, the world’s largest exchanges by volume, has just announced the creation of a $1 billion venture capital fund that will act as an incubator for developing blockchain projects. The fund is to invest in both startups and other blockchain funds. The first project to be funded is a new blockchain-based ride-hailing app created by Weixing Chen, the founder of ride-hailing service Kuaidi Dache.
The increase in institutional investors comes as no surprise at Saifu, where we have long believed that institutional investors would follow regulators into the crypto markets. Saifu offers bank-grade security, bringing safe and accessible crypto trading to investors of any size. We are excited to be part of bringing crypto into the mainstream.