Coinbase Emerges as a Dominant Force, Offering Cryptocurrency Services
In the ever-evolving world of cryptocurrency, Coinbase continues to make waves as a leading player. Brian Armstrong, the co-founder and CEO of Coinbase, has compared the company's use of crypto infrastructure to power businesses to Amazon's expansion of cloud infrastructure through AWS.
Coinbase Asset Management, an institutional digital asset manager and SEC-registered investment adviser, is at the forefront of this revolution. Eric Peters, the CEO of this division, sees securities such as bonds and stocks being issued in a digitally native form onchain, without the need for a parallel traditional security. He believes that Coinbase will be a leader in bringing securities issuance onchain once regulatory issues are cleared.
The investment strategy employed by Coinbase Asset Management focuses on generating stable income and obtaining exposure to the digital asset ecosystem for long-term diversification. In a significant move, Noah Holdings, a Chinese wealth manager, invested $50m in a digital yield fund managed by Olive, the overseas asset management arm of Noah, in cooperation with Coinbase.
Stablecoins, digital assets designed to maintain a stable value, are seen as a "killer app" by Peters. The passing of the GENIUS Act in the U.S. provides a federal framework for stablecoins, opening up new opportunities for their use as digital money to make payments and settle transactions onchain, without the need for traditional payment rails.
The entrance of traditional finance giants into the crypto industry is a "big deal", according to Peters. Larry Fink, chairman and CEO of BlackRock, has entered the crypto sphere, joining other luminaries such as Ray Dalio, former CEO of hedge fund Bridgewater Associates, and hedge fund manager Paul Tudor Jones, who have shown interest in crypto.
One River Digital Asset Management, a subsidiary of Coinbase, was founded in January 2021 and acquired by Coinbase in March 2023. The firm's biggest opportunity, according to Eric Peters, the founder and CIO of One River Digital Asset Management, is providing yield to investors who own crypto.
Coinbase is also developing products to help clients holding stablecoins or bitcoin earn an incremental yield. In July, Galaxy Digital completed the sale of over 80,000 bitcoins, valued at over $9bn, in one of the largest notional bitcoin transactions in crypto history.
Jay Clayton, the former chair of the U.S. Securities and Exchange Commission, is on Coinbase's global advisory council. He stated that Wall Street has been suspicious of crypto because it is the first financial innovation that started on Main Street. Eric Peters, CEO of Coinbase Asset Management, highlighted that one of the major focuses for the group is crypto-as-a-service (CaaS), a business that supplies infrastructure services.
As the market evolves, large trades can now be executed without significantly moving prices, according to Peters. Coinbase has provided the infrastructure for the issuance of 200 discount notes under regulatory supervision in Abu Dhabi. With the growing presence of institutions in the crypto space, it seems that the future of digital assets is bright.
