Coinbase, the popular U.S.-based crypto exchange and wallet provider, has launched an OTC trading platform for institutional investors. The over-the-counter (OTC) trading allows institutional investors to conduct trade directly between each other. This is a bit different from conventional crypto exchange trading.
Coinbase’s Head of Sales Explains the Company’s Decision
While speaking to Cheddar, head of sales, Christine Sandler, said that the launch of OTC trading was due to growing institutional demand. Furthermore, Sandler added that the OTC business will be a complement to the existing exchange business. She also said that “a lot of institutions were using OTC as an on-ramp for crypto trading.”
“We felt this was a huge benefit to our clients to actually leverage both our exchange and our OTC business,” Sandler said.
However, for now, the OTC trading is available to Coinbase Prime Customers i.e. Financial institutions who want to trade business funds. Furthermore, Sandler also noted that the company can likely combine its OTC trading with Coinbase Custody. Coinbase launched the institutional-grade custodial service earlier this year in July. In October, Coinbase got approval from the New York State Department of Financial Services (NYDFS) as a qualified custodian firm.
Similarly, Coinbase first unveiled its plan of OTC trading in June 2018. That time, Coinbase CEO Asiff Hirji said that “the exchange is working to get regulatory licenses for crypto securities trading, margin and over-the-counter (OTC) trading, and new market data products.”
Uniqueness About the Exchange’s OTC Trading Facility
With the latest announcement, Coinbase has joined other big players offering cryptocurrency OTC trading services. Some of them include Genesis Trading, Circle, Kenetic Capital, iBit, and others. However, Sandler explained that Coinbase’s OTC trading service is unique over its competitors.
“Circle and a number of others have complementary products, but they also trade on a proprietary basis, so they are the counterparty to each transaction, while we, in fact, are matching client orders,” said Sandler.
Coinbase is systematically laying the groundwork to attract institutional players to the crypto market and make them comfortable. From Prime services to custody solutions, and now OTC trading, the company has come a long way in its journey over the years.
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