Additionally, Coinbase will also be investing 10% of all future profits into digital assets. They hope to increase that percentage gradually over time.
We recently received board approval to purchase over $500M of crypto on our balance sheet to add to our existing holdings. And we’ll be investing 10% of all profit going forward in crypto. I expect this percentage to keep growing over time as the cryptoeconomy matures.
— Brian Armstrong (@brian_armstrong) August 19, 2021
Within the same day, Coinbase has also published a blog post announcing that this move will establish Coinbase as the first publicly traded company to hold Ethereum, Proof of Stake assets, DeFi tokens, and many other crypto assets that are available for trading on the platform.
The post mentions that the customers of Coinbase will drive their investment strategy.
The firm will also allocate 10% of its quarterly net income into various digital assets.
The major crypto exchange also noted that Coinbase would become the first publicly-traded firm to hold assets like Ethereum, Proof of Stake cryptocurrencies, DeFi tokens and other digital assets that are supported on its platform in addition to Bitcoin.
To avoid any conflict of interest with its customers, the trades required for cryptocurrency investment at the firm would be conducted through its over-the-counter desk or at a third party.
Coinbase further added that it might increase its allocation over time. The firm expects that more companies in the future will hold cryptocurrencies on their balance sheet as the industry matures.
Coinbase to future profits in crypto
Creating a buzz across financial markets globally as well as in fintech, Coinbase stirred the sentiments of investors and commoners alike by declaring that its balancesheet will be decked by the term “Crypto” as the company tends to invest in it, to get hold of $500 million, while putting aside 10% of its quarterly profits in its portfolio that centre around crypto.
Coinbase is first such public company to consider such initiative about specific crypto assets, finance chief Alyssa Haas notifies in her blog, ”Ethereum, Proof of Stake assets, DeFi tokens and many other crypto assets are supported for trading on our platform”.
CEO Brian Armstrong took to twitter to notify the world about his plans, expressing hopes for the ever expansive market.
Coinbase to future profits in cryptocurrency
Besides, company also hopes to variegate its crypto range of services and operations where trading remains at the centre.
As was expected, there was a splash in Bitcoin prices following such news, crossing above $47000 on Friday, as on August 20th, while it remained below $45000 mark for two days earlier.
This is worth mentioning that there are some companies whose holdings are ingrained with bitcoins, such as Tesla and Microstrategy while the aim has been to garner resilience towards inflation and also as a reaction to US dollar devaluation. Consequently, Citi considered reviewing Microstrategy’s ratings as it invests in Bitcoin.
Last week, Palantir disclosed its quarterly results highlighting its mammoth investment in gold worth $50 million with the intention to hedge against black swan events.
Coinbase to future profits in cryptography
That was the approach it employed in February, when it fined the trading platform BlockFi $50 million for offering an unregistered security.
Despite those complaints, crypto critic Rohan Grey said the ambiguity has actually helped the industry skirt the law.
“It’s mostly been non-regulation by enforcement,” said Grey, research director of the Digital Fiat Currency Institute, a group that supports the issuance of digital currencies by central banks, “because the SEC is worried that they can’t necessarily win the case.”
And the broader legal uncertainty around digital assets presents other challenges for regulators, too.
In a talk at the Brookings Institution on Monday, Commodity Futures Trading Commission Chairman Rostin Behnam spoke of a “regulatory vacuum” that has prompted the commission to start “thinking creatively” about how to apply its authority.
In short, entrepreneurs moved quickly into a legal gray area based on their interpretation of the law, agencies are now moving to enforce their own interpretations, and Congress might, at some point, pass legislation that codifies new rules.
For its part, the SEC has maintained that many digital assets count as securities, and its chairman, Gary Gensler, has said that most crypto exchanges are offering at least some securities, whether or not the companies acknowledge doing so.
Analysts raised a toast and rejoiced on seeing quarterly earnings that Coinbase reported last week, while they oppose stock’s association to bitcoin’s price and volatility but are still hopeful about its roadmap to lead strategic innovation for a long-term across the whole financial framework.
Haas declared that the investment will be made by crypto balances that the company holds, “over a multi-year window using a dollar cost averaging strategy”. She also said that Coinbase plans a long-term investment and “will only divest under select circumstances, such as an asset delisting from our platform”.
Reacting to the news, Oppenheimer’s Owen Lau played down the new investment policy to weaken the correlation between Coinbase and bitcoin “materially in the future”.
There’s always been a strong motivation among crypto people toward basically idealistic objectives, and although not everyone may agree with how they go about it — libertarianism is not a universally beloved way of thinking — it is strongly motivating for a lot of the people who have been working in this area for decades, and it is motivated by a belief that it can lead to a better society.
Peter, what is your case to people who see blockchain as merely a vehicle for financialization?
PV: I think Bitcoin is underrated — like, really underrated — in terms of its social impact.Bitcoin was a totally new way for humans to collaborate. Blockchains are not companies in the traditional sense.
His latest venture is a partnership with Bitcoin veteran Peter Vessenes to launch LAMINA1, a blockchain they call the “base layer for the Open Metaverse.”
I interviewed the two of them about their goals for the project, which is meant to provide the technical underpinnings for a creative, artist-friendly metaverse space. A condensed and edited version of the conversation follows:
Neal, people like to point out that your novel “Snow Crash” is a dystopian story, but its metaverse is basically a neutral technology. Do you see this project as trying to steer it in a more useful or noble direction?
NS: Trying to steer anything like this at a high level is probably not going to work.
We’ve seen a couple of CEOs make headlines after making big bets on Bitcoin(BTC-0.45%) this year. It isn’t always pretty. Michael Saylor at MicroStrategy(MSTR4.52%) has been vocal about parking his company’s cash in crypto, but he’s an acquired taste with his evangelical Bitcoin tweets. Tesla‘s (TSLA2.51%) Elon Musk was a more prolific Bitcoin backer, but the tide turned when he grew critical of the most valuable crypto’s energy efficiency and turned his attention to a meme coin.
It’s against this backdrop that Coinbase Global(COIN7.69%) founder and CEO Brian Armstrong is putting his company’s money where the leading cryptocurrency trading exchange’s mouth is.
We are long term investors and will only divest under select circumstances, such as an asset delisting from our platform.”
The post adds that future investments may be informed by its customers’ holdings, suggesting Coinbase may add an asset to its balance sheet should users make significant custodial deposits of a given crypto cryptocurrency.
Coinbase will make its trades on third-party platforms or via its over-the-counter trading desk to avoid creating conflicts of interest with its customers.
According to Crypto Treasuries, Coinbase is currently the eight-largest public company by Bitcoin holdings on its balance sheet, and the largest crypto exchange by value of BTC held in its treasury.
The news about new expenditures on crypto comes just a day after Coinbase completed its Japanese launch in partnership with Mitsubishi UFJ Financial Group (MUFG).