Coinbase Scores Major Whale for Institutional Brokerage Service: Report

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Industry giant Coinbase has scored a major win for its recently-launched institutional brokerage service, as a major hedge fund has begun using its platform to dip its toe into the fledgling cryptocurrency market.

Citing unnamed sources familiar with the matter, Business Insider reports that the $20 billion hedge fund — whose name was not disclosed by the sources — began using Coinbase Prime following its launch earlier this year, perhaps a sign that cryptocurrency is preparing to emerge as a mainstream asset, at least among alternative investments.

Earlier this year, Coinbase set up an office in Chicago, a location it likely chose due to reputation as a regional hub for professional trading firms. This provides the firm with the ability to more effectively offer hedge funds and institutional clients in-person support and develop personal relationships with traders.

The news follows the publication of a report indicating that Grayscale Investments — a New York-based firm that offers a range of cryptocurrency investment products wrapped as traditional financial instruments — is seeing $10 million in new investments every week, 56 percent of which is coming from institutional buyers.

Fellow cryptocurrency industry giant Circle has identified a similar uptick in interest from institutional clients. The firm recently reported that it experienced a 30 percent increase in new institutional clients in May and has seen enough activity from large-scale buyers to double the minimum order size at its cryptocurrency trading desk to $500,000.

As CCN reported, a growing number of hedge fund billionaires have made personal investments in bitcoin and other cryptocurrencies, though — with Peter Thiel being a notable exception — most of these visionaries have not allocated capital from their funds into this still-nascent asset class.

Just this week, Marc Lasry, who runs $9.6 billion asset management firm Avenue Capital Group, revealed that cryptocurrencies comprise about one percent of his estimated $1.7 billion in personal net worth. He further predicted that the bitcoin price could reach $40,000 within the next three to five years.

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Josiah is an assistant editor at CCN. A former ancient and medieval literature teacher, he has been reporting on cryptocurrency since 2014. He lives in rural North Carolina with his wife and children. He holds investment positions in bitcoin and other large-cap cryptocurrencies. Follow him on Twitter @Y3llowb1ackbird or email him directly at josiah.wilmoth(at)ccn.com.