on the crypto
The San Francisco-based cryptocurrency exchange Coinbase is finally acquiring Tagomi, a prime brokerage platform specializing in digital asset trading.
New developments for institutional trading
In a Wednesday announcement, the two companies said the deal is expected to be finalized later this year, without revealing the financial terms. "We will integrate the Tagomi platform into our product suite and will form the basis for the future of our institutional trading business," said Shan Aggarwal, Head of Corporate Development at Coinbase.
In terms of integration mode, Aggarwal added: “Tagomi will continue to function for the foreseeable future. We are still thinking about long-term options. ”
A step towards prime brokerage ...
Coinbase's purchase of Tagomi has been in the pipeline since last year, when the deal was prematurely closed. Prime crypto brokerage, which offers institutional clients easier access to liquidity, custody, loans and other products, seems to be going through an excellent phase right now.
Genesis Trading recently purchased the Vo1t cryptocurrency portfolio in an attempt to become a prime broker. Similarly, London-based Bequant and BitGo have also announced the evolution towards prime brokerage services recently.
Coinbase said the acquisition comes during a breakthrough in the industry, with Paul Tudor Jones' recent statements acting as a compass in the process of accepting bitcoins by major hedge funds and macro-Investors.
Coinbase also claimed to have experienced a 100% increase in volume by professional and institutional operators in the past three months.
... and towards traditional institutional investments
Some may see the Tagomi affair as a way of reacting to a market that has proven to be slow, at least as regards the long-awaited arrival of traditional institutional investments. "We all thought there would be greater interest from the banking sector and asset managers, and Tagomi really created a product that could satisfy those customers," said Tagomi co-founder Marc Bhargava.
According to some opinions, Tagomi started looking for new opportunities because his commissions on exchange volumes of the order of $ 1 billion per year corresponded to only $ 1 million of revenue.
Tagomi focused on the best possible execution, which involves the sharing of purchase and sale orders in about 10 large crypto exchanges, including Coinbase, Binance and Gemini, and therefore the routing of customer transactions to those who offer the best prices.
Is there a conflict of interest?
When asked whether being owned by Coinbase created any kind of conflict of interest, Bhargava said that this is not necessarily the case. "We think we will still be able to offer truly exceptional prices to our customers," said Bhargava. “Obviously we will still have relationships with market makers. Over time, we will reveal which exchanges we will continue to work with. "