Coinbase is continuing to expand their offerings for commercial clients and recently created an Over The Counter (OTC) exchange for larger trader and institutions. Unlike a traditional exchange, an OTC exchange allows entities to trade directly with each other, with the safety that a regulated structure creates.
Many large-scale transactions are done on an OTC basis, with derivatives serving as a prime example. The costs involved are much lower, and the counterparties have a far higher degree of privacy.
The head of sales at Coinbase, Christine Sandler, told media that this new OTC exchange is being launched as a result of increasing demand from larger clients. She said that,
“We launched our OTC business as a complement to our exchange business because we found a lot of institutions were using OTC as an on-ramp for crypto trading.”
Coinbase is Creating Massive Opportunities
In addition to offering larger trading entities OTC services for cryptos, they also recently launched Coinbase Custody, which offers institutional investors custodial services for their crypto holdings.
Many large players in the world of finance want to gain access to cryptos, but so far, there is still a lot of suspicion surrounding how safe investing in them really is. A string of high profile hacks hasn’t done much to shore-up confidence, and Coinbase Custody could prove to be a popular commercial service for that reason.
Coinbase has also worked to grow their trading services via the acquisition of Venovate Marketplace, Inc., Digital Wealth LLC and securities dealer Keystone Capital Corp over the summer of this year. They also applied to be a fully regulated broker dealer by the U.S. Securities and Exchange Commission (SEC) around the same time.
Part of a Wider Movement
According to Coinbase President and COO Asiff Hirji,
“We are on the cusp on internet 3,” and, “We went from mainframe computing to distributed computing and created lots of value and amazing companies. Then, we went from distributed computing to cloud mobile – another wave of innovation, another wave of great companies being created. We are now creating a decentralized web.”
Cryptos have the potential to radically change how people interact, and it seems like some larger financial entities want to get in on the action. Whether or not they see cryptos as a sea-change in payment technology, or just a good financial speculation is anyone’s guess.
Many of the largest banks in the world are patenting blockchain technology, and making sure they have the intellectual property in place to compete should cryptos come into their own as a new way of doing business.
Goldman Sachs is Going Crypto Too
Ok, so Goldman Sachs is backing Circle, which isn’t exactly the same thing as a prop trading desk. Despite the fact that Goldman has been sending mixed messages on the crypto sector as a whole, it says a lot that they are willing to pledge millions for Circle and their ERC-20 based USDC stable coin.
Circle also just cemented partnerships with Abacus Protocol, BlockMyTalent, Opensea, AirSwap and Atomic Wallet. The Circle blog expanded on the news,
“The new supporters comes just days after we released the first attestation report on US dollar reserves backing USDC issued by independent accounting firm, Grant Thornton LLP.”
Having Goldman Sachs as a backer, and a legit accounting firm on-board will probably do a lot to support USDC as time goes on. Investors that worry about the security of a coin like Tether could have much more confidence in USDC, as it is transparent and has the blessing of a major force on Wall St.
Even though crypto prices have been under pressure all year, from the standpoint of trading infrastructure, things have never been better. When this translates into higher prices isn’t possible to know, but it’s unlikely that widening adoption of cryptos will be bearish for the sector in the medium-term.