Category Archives: Asiff Hirji

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Coinbase Launches OTC Trading for Institutional Clients

Media outlet Cheddar has reported that major US-based cryptocurrency exchange Coinbase has launched an over-the-counter (OTC) cryptocurrency trading desk.

This move has been described as “opportunistic” since they were “reacting to client demand” geared towards broadening its customer base to include more institutional clients. Nevertheless, plans had been in motion since June and had only been waiting for a regulatory license, which Coinbase President and COO Asiff Hirji clarified that it would help the firm offer future services that include OTC trading.

OTC trading attracts large investors mostly classed as institutional investors, such as investment banks. These transaction types take place between two traders directly without the presence of a third-party order matching-system like regular cryptocurrency exchanges.

The service is currently available to Coinbase Prime customers, a service which was also launched to lure institutional investors such as cryptocurrency hedge funds that control large amounts of funds. Prime has sophisticated trading tools and was initially designed to also include OTC trading.

Coinbase’s head of sales Christine Sandler pointed out in the interview that the service was launched as a complementary service to its exchange business, noting that institutions were using OTC as an “on-ramp for cryptocurrency trading”. This she said is an opportunity for their clients to benefit by leveraging both the exchange and the OTC business.

In comparison, Sandler described Coinbase’s OTC agency as a platform that matches client orders directly, as opposed to Circle’s and other similar OTC services where such platforms trade on a “propriety basis” and are “counterparties to each transaction”.

Circle’s version of the OTC desk, referred to as Circle Trade, has a minimum ticket size of USD 250,000 for both individual and institutional investors.

Moving forward, Sandler said plans are in motion to expand the OTC service to include delayed settlement and possibly integrating with its Custody Solution as well. Launched in July, Custody Solution is Coinbase’s platform for hedge funds, exchanges and ICO teams.

On the subject of volatility, Sandler said that the stablecoin launch for all their clients about a month ago is one of the things they are “really excited about”, noting that USDC is “one of the most liquid stablecoins” trading right now and that stablecoins help mitigate against volatility.

 

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Coinbase Shoots Down IPO Plans, Plans 300 Crypto Listings

The President and Chief Operating Officer (COO) of prominent US-based cryptocurrency exchange platform Coinbase shared in an interview on Wednesday that there were no plans for an initial public offering (IPO) any time in the near future.

Instead, Coinbase will reportedly be focusing on a number of new diversifications, including listing up to 300 different coins.

Speaking to Bloomberg, Asiff Hirji responded to questioning regarding whether a Coinbase IPO was on the cards for 2019, saying, ”There’s not going to be an IPO any time soon. We have so much to do.” This shot down rumors stirred by CNBC host Ran Neuner in a Twitter post last week.

Hirji, who himself first brought up the potential for an IPO in 2017, does not rule out taking the company public when the time is right, although says diversifying revenue streams and adding more features to the platform is the top priority right now.

Bringing up the topic of expanding Coinbase’s cryptocurrency listings, the COO revealed plans to multiply the current standing of seven listings up to somewhere between 200 and 300 in the next year. Some of these will be offered in the US but the majority will be offered outside of the country, he shared, because of the Security and Exchange Commission’s (SEC) strict regulatory guidelines.

Another key area in future diversification Hirji pointed to was areas of the business that caters to institutional investors.

Over time, Hirji expects ”Coinbase institutional”, as Bloomberg’reporter referred to it, to become a large chunk of the company’s revenue source, ”more than its fair share”. Coinbase’s revenue model is right now 100% transactional, while diversification efforts could provide new avenues, such as fee-based custody services adding more stability and predictability to the revenue stream.

Upon completion of a new funding round that raised USD 300 million, Coinbase Inc is now valued at approximately USD 8 billion.

 

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Coinbase Valuation Hits $8 Billion Following $300 Million Investment

Coinbase, the largest crypto exchange headquartered in the United States, now has a valuation of over USD 8 billion following USD 300 million of investments during the Series E equity round. This is a 433% increase of Coinbase’s valuation, which was USD 1.5 billion in the summer of 2017. This investment round was led by Tiger Global Management, and included investments from Andreessen Horowitz, Y Combinator Continuity, Wellington Management, and Polychain.

This investment money will be used for global expansion, where Coinbase will be launching fiat to crypto trading in regulated markets worldwide. The money will also be used to accelerate the addition of as many crypto assets as possible. Coinbase President and COO Asiff Hirji said, “We see hundreds of cryptocurrencies that could be added to our platform today and we will lay the groundwork to support thousands in the future.” This is a major change from the fewer than ten cryptocurrencies listed currently. Already, this process has begun with the addition of 0x and USD Coin during the month of October 2018.

A major utilization of this investment money will be for building infrastructure to target institutional investors. Coinbase has already launched Coinbase Custody, which is now a qualified custodian in the United States. Institutional investors require a combination of qualified crypto custodians, crypto hedge funds, and proper investment products. It appears Coinbase will try to do all of these things. It is generally believed that institutional investors will cause the next big crypto rally.

Further, the exchange will use the investment money to build crypto utility applications, such as a Coinbase wallet, and will engage in partnerships to build new crypto and blockchain technology.

Coinbase is already dominant among United States crypto exchanges, with USD 1.3 billion of revenue projected in 2018, and this USD 300 million investment will likely increase this dominance.

 

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