> AnCoinbase, which is one of the major cryptocurrency exchanges, has announced that it plans to set up shop in Chicago. Its goal is to support institutional investors who want to invest in the cryptocurrency market.
The trading platform’s new office in Chicago will feature block trading. Part of its plan is to make its GDAX platform more appealing to institutional investors. The plan was revealed by Business Insider which cited an anonymous source that is familiar with the matter. Coinbase is yet to make any official announcements regarding the Chicago office.
Block trading is appealing to institutional clients because it allows them to make larger orders. Most other exchanges usually provide this through their order book. Block trading is not common in the cryptocurrency market. This is because it can lead to valuation swings when there is involvment from large volume traders. Another reason is it lacks liquidity.
Coinbase seeks to overcome the above challenges by publishing the orders on a delayed cycle. They also plan to provide orders to market makers outside its main order book. The move will be of significant benefit to institutional investors, but also part of the company’s strategy to gain popularity. It might even be a competitive move to aim at keeping up with rival exchanges such as Gemini.
The Chicago office could be one of the major steps that Coinbase will take this year. The main goal is to attract institutional clients. Its decision to pursue an office in Chicago might be an influence of the city being one of the most attractive areas for institutional investors. Institutional investors also make larger contributions to the bottom line of any exchange, thus making them ideal targets. The exchange has also hired a significant number of C-level executives since the start of this year.
Coinbase is not the only exchange that is planning to pursue block trading. The New York-based Gemini exchange, which was founded by the Winklevoss twins,d announced on April 9th that it plans to introduce block trading for Ethereum (ETH) and Bitcoin (BTC). It is currently not clear when Coinbase will open the Chicago office because there has been no official communication from the company.
The increased interest in providing cryptocurrency trading options to institutional investors could be a great sign that the cryptocurrency market will offer even more in the future. It might thus be a good time for investors to jump on board although it is still important to exercise caution.