The Bitcoin exchange Coinbase is now becoming a major investor itself with a 500 million US dollar investment. Is the Coinbase Empire coming now?
Coinbase is now investing heavily in the crypto market itself. The portfolio not only includes Bitcoin, but is more broadly based. This makes it the first listed company to hold other crypto currencies such as Ethereum or DeFi tokens in its cash reserve in addition to BTC. Coinbase announces on August 20, 2021 its blog:
We are committed to investing $ 500 million of our cash and cash-like assets. Going forward, we will also invest 10% of quarterly net income in a diversified portfolio of crypto assets. This means that we will be the first publicly traded company to have Ethereum, Proof of Stake-Coins, DeFi-Token and many other crypto-assets that are supported for trading on our platform on its balance sheet.
In order to avoid conflicts of interest with investors and to avoid trouble with the SEC, purchases from Coinbase are only carried out over the counter (OTC). Coinbase assumes, however, that his example will set a precedent. In its blog post, the Bitcoin exchange is confident that “more and more companies will keep crypto assets on their balance sheets”.
Coinbase: “Customers determine investment strategy”
The investment should not be made in one fell swoop, but staggered. The Bitcoin exchange uses the average cost effect (also known as dollar cost averaging). Coinbase bases its selection of investments on the crypto portfolios of its customers:
Our crypto asset investment breakdown is determined by our aggregated crypto custody account balances – which means our clients will dictate our investment strategy. Our investments are continuously spread over a multi-year time window, using a strategy based on the average cost effect,
it says in the blog.
Coinbase is currently expanding. Coinbase Germany only launched this year. On August 19, 2021, Coinbase announced the launch of a branch in Japan. The Bitcoin exchange has cash reserves of over $ 4 billion.