Major crypto exchange Coinbase is gearing up to make a foray into another aspect of the market, and it’s doing so the old-fashioned way. Earlier today, the San Francisco-based firm announced that it would be purchasing Tagomi, one of the industry’s top brokerage institutions.
Getting in on the Brokerage Frontier
As the announcement explained, Coinbase chose to make the purchase because it recognized that the crypto space is at an “infection point,” with more institutional investors coming in. The exchange has set out to provide a suite of services to attract these investors, and brokerage appears to be the next frontier to conquer.
By acquiring Tagomi, Coinbase is putting itself on the path to do just that. This isn’t the first time that Coinbase will be in talks to purchase Tagomi. Late last year, industry news source CoinDesk explained in a report that the exchange was in the process of acquiring the brokerage firm in a deal worth $150 million.
At the time, Tagomi had grown significantly. It had partnered with Binance.US, the American-facing arm of Binance, to provide institutional liquidity to its users. The firm also signed on to be a member of the Libra Association, the governing body for Facebook’s planned cryptocurrency, Libra. It’s worth noting that Coinbase is a member of the Association as well.
The firm’s lending and liquidity capabilities made it an alluring target. However, speaking with Cointelegraph, Coinbase’s Vice President of communications, Rachael Horwitz , said that all rumors were false.
Now, not so much. The financial details of the deal weren’t included in Coinbase’s announcement. The announcement also didn’t reveal any details concerning whether Coinbase will be making any changes to Tagomi’s leadership structure and employee count. Most likely, industry insiders will be seeing hints later on.
“We’re proud to build the foundation for the next wave of crypto investors by bringing onboard the first electronic prime brokerage in crypto. Even in a time of uncertainty, we view now more than ever as the time to push forward our mission of building the crypto-economy,” the announcement concluded.
Coinbase Goes After the Big Money
Brokerage is just one aspect of Coinbase’s multi-pronged strategy to target institutional investors. These investors – which include hedge funds, high net worth individuals, investment firms, etc. – have been moving more into crypto, as the asset class’ allure has become undeniable. So far, the exchange has set itself up to benefit from that.
The exchange already has Coinbase Pro, which provides crypto enthusiasts and professional traders with various tools, including algorithmic trading, API integration, and third-party platform support.
It also has Coinbase Custody, which allows investors to store large amounts of digital assets. The service already has a license from the New York State Department of Financial Services. It also got a Service Organization Control (SOC) Type 1 and a SOC Type 2 from major accounting firm Grant Thornton earlier this year.