Coinbase has seen a huge uptick in institutional clients over the past four weeks, according to a company executive.
Brett Tejpaul, Coinbase’s head of institutional sales, trading, custody and prime services, tells Thinking Crypto that the huge institutional influx is the reason the exchange’s over-the-counter (OTC) trading desk, which has been around for two years, has done 50% of its life-to-date volume in the past four weeks.
Tejpaul attributes that influx to a few factors: the “seminal” public endorsement of hedge fund legend Paul Tudor Jones of Bitcoin in May, hedge fund giant Renaissance Technologies recent venture into the Bitcoin futures market, and the secure storage offered by Coinbase Custody which is regulated by the New York Department of Financial Services.
Tejpaul also mentions Coinbase’s recent acquisition of Tagomi, a crypto prime brokerage platform. The acquisition gave Coinbase the ability to offer institutional clients “smart order routers,” according to the executive.
“Institutional clients want to be able to get the best price, and so if Bitcoin is trading on eight, nine, ten different exchanges, arguably more than that, we actually route to all those different exchanges through those smart order routers. So if the best possible price for Bitcoin in that split-second moment happens to exist on someone else’s exchange, we’re indifferent. We just buy that small piece and give our key investor the fill. So it’s a way that institutional investors can buy and sell, accessing the entirety of the marketplace, without any preference given to Coinbase’s own venue.”
Tejpaul says they’ve seen a variety of new institutional clients enter the industry, including the “household names” among macro hedge funds, family offices for high net worth individuals, and US-based university endowments. The across-the-board influx has added significant liquidity to the crypto marketplaces, he adds.
The executive notes that Coinbase has 35 million clients overall, of which, thousands are considered institutional.
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