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Coinbase, the leading US-based cryptocurrency exchange, announced on Wednesday its intention to acquire Tagomi, a crypto prime brokerage platform.
At first glance, the acquisition seems to serve not only as a product and talent acquisition play but also as a way to acquire customers. According to the Coinbase blog, Tagomi has already obtained “traders, hedge funds, family offices including Paradigm, Pantera, Bitwise, Multicoin and many more” as clients.
The acquisition also plays into a larger trend at Coinbase of acquiring executives with Wall Street backgrounds. Just last month, Coinbase hired Brett Tejpaul as head of institutional coverage. He previously spent 17 years at Barclays.
The announcement also points out that Tagomi’s employees hail from various well-known firms such as Goldman Sachs, Citadel, KCG, Tower Research and USV.
This is not the first time that Tagomi and Coinbase have interacted. Tagomi previously poached Patrick Messall, Coinbase’s former head of institutional client services, to lead its client services. Tagomi also joined Facebook’s Libra Association which includes Coinbase as a member.
According to Coinbase,
“The addition of Tagomi will round out our product suite for the fast-growing institutional trading market. It will allow us to offer custody, professional trading features, and prime brokerage services on one platform, giving sophisticated investors the seamless, powerful trading experience they have come to expect in equities and FX markets.”
The acquisition coincides with another major player boosting its offerings for institutional traders. Crypto custodian BitGo has announced the launch of its new prime brokerage platform BitGo Prime. Nicholas Carmi, former head of financial services at BitGo, will lead the platform. He previously held roles at Tower Research, Deutsche Bank and Barclays.
New York-based Genesis Global Trading, a digital currency trading firm and subsidiary of Digital Currency Group, is another industry leader targeting institutional players. Genesis Global plans to launch a prime brokerage platform later this year, following its acquisition of Vo1t, a custody platform.
Coinbase’s focus on institutional investment comes on the heels of its latest features and benefits for retail traders who can now top up crypto balances when sending funds and also track the arrival of incoming crypto with an estimated time (ETA). When users send crypto on Coinbase, they’ll also be able to benefit from low Bitcoin network fees through the exchange’s transaction batching.
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