Coinbase, a global cryptocurrency exchange platform, has witnessed unprecedented growth in the institutional market in the first quarter of 2021. Since 31 December 2020, the platform’s institutional holdings have grown by 170 per cent, from USD45 billion at the end of Q4 2020 to USD122 billion at the end Q1 2021.
Coinbase currently serves over 8,000 institutional clients, including hedge funds, asset managers, corporate, pensions, and endowments. Many of these institutional customers leverage Coinbase Custody, a secure, offline storage solution built around best-in-class key generation protocol to protect wallets. In addition, Coinbase Custody offers the industry’s leading insurance policy to provide further reassurance for investors.
Since inception in 2018, Coinbase Custody has seen a growing trend amongst all types of institutional investors seeking to capitalise on the value of cryptocurrencies. Coinbase Custody supports over 90 per cent of cryptocurrencies by market capitalisation and has witnessed a flurry of crypto-ETPs in recent months as investors have sought to gain cost-effective exposure to the market through proxies. Independent industry research compiled by leading analytics provider Apex:E3 supported this trend, showing that 132,594 bitcoins were purchased by institutional investors globally in Q1.
Drew Robinson, Head of Hedge Fund Sales at Coinbase, says: “Over the last 12 months, we have seen a growing interest from institutional investors seeking to take advantage of the crypto space. However, this year, interest from pension funds and hedge funds has skyrocketed, supported by the roll-out of crypto-ETPs as well as an increased understanding of the crypto economy.
“Over time we have seen a variety of factors pulling institutional investors into the space; these range from hedging against inflation, diversification of corporate balance sheets and the desire for broader engagement in the digital economy, including areas such as payments, payroll and cross border payments. Client demand is also playing a significant role.
“We are hugely proud of Coinbase Custody, which is built around industry-leading security, supported by third-party insurance. In addition to providing a compliant and secure custody solution, clients also have access to network participation and delegated proof of stake. It is this best-in-class solution which has led to our asset growth and we look forward to working with more partners as the institutional market develops.”
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