The Custody Problem Could Be Solved!

Announcing the Coinbase Suite of Institutional Products

What's the story?

  • Coinbase is launching a professional trading platform exclusively for institutional clients
  • Coinbase will offer custodianship of the assets in partnership with an SEC-registered broker-dealer
  • Coinbase is also launching Coinbase markets which will introduce new features such as low latency performance, on-premise datacenter colocation services, institutional connectivity and access, and settlement and clearing services

Why Does This Matter?

Coinbase is trying to become the Goldman Sachs of the cryptocurrency world. Coinbase's new product offerings are to attempt to institutionalize a market that is very much dominated by retail investors. Most importantly, solving problems such as custodianship will bring a lot more money to the market. If you are a fund that has an AUM of more than $150MM you need your assets to be handled by a third-party custodian that has a broker-dealer licensed. Coinbase, I believe, is the only company on the market that can now handle this issue. Secondly, CIOs of large institutions would never invest in funds where self-custody existed. They now won't have to worry about that issue as Coinbase will be custodying the holdings of the funds that CIOs might be potentially investing in. The cryptocurrency investing market has been a very level-playing field over the past few years. While "whales" do exert influence on prices, the tools available to them are the same as the tools available to someone trading out of their basement. Now, large institutions can pay to have access to tools that will give them an advantage. Having a tool such as colocation datacenters will allow an HFT to get better price execution. I am not thrilled that Coinbase has been focusing on other products rather than focusing on their infrastructure and customer support, but these new products will definitely bring a lot of new money into the space, that couldn't invest previosly. 

Amazon is moving into blockchain with a new partnership

What's the story?

  • Amazon is partnering with blockchain startup Kaideo, a spinoff of Consensys
  • The partnership will allow companies using AWS to easily build on blockchain
  • Amazon will be focusing on the Ethereum blockchain

Why Does This Matter?

AWS is one of the largest cloud computing providers in the world. As many companies, both large and small, want to add blockchain to its repertoire. It would be an obvious feature that AWS would offer. Consensys has been leading the way with blockchain adoption in the enterprise space and they seem like an obvious fit for Amazon. At the moment, it's still very expensive to build blockchain platforms for the enterprise so this allows a Fortune 500 company like Coke to easily start a blockchain among its partners to share data, for example. This sounds like more marketing speak than anything else, but maybe this will increase enterprise adoption for Ethereum's public blockchain and/or private blockchain (I continue to remain skeptical of private blockchain.)

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