Brian Armstrong, CEO of Coinbase, recently shared that his company’s custodian service is managing over $1 billion in cryptocurrency assets.
Speaking at Consensus, the Coinbase CEO revealed that the custodial portion of his U.S.-based exchange had received over $1 billion in cryptocurrency, marking a milestone development for the management of institutional and large capital investors. The comments were first reported by CoinDesk on May 15, as apart of the overall on-stage discussion that was recorded during the event.
Armstrong was asked by Wall Street Journal reporter and panel moderator Paul Vigna about the involvement of institutional investment in the industry of cryptocurrency, particularly keying in on Coinbase Custody. The CEO replied,
“We launched our custody 12 months ago, we’ve just crossed $1 billion AUM or institutions, 70 institutions have signed up, adding about $150 million AUM a month, so, to a large degree that has been a success.”
While some investors and analysts have viewed Coinbase’s custody program as a vault of sorts for the safe-keeping of cryptocurrency, Armstrong claims that investors are asking for much more. In a show of confidence for both industry adoption and education, institutional investors in Coinbase Custody have asked for an expansion in staking and voting services. According to Armstrong,
“They want to be staking and voting, doing governance on-chain. I think that will grow rapidly.”
Staking represents a dividend of sorts for Proof of Stake cryptocurrencies such as Cardano. Investors are issued payouts in proportion to the number of coins they are willing to pledge towards network resources, providing an incentive for keeping coins in a wallet as opposed to exchanges.
However, the natural question becomes how can large capital investors participate in staking, thereby gaining the benefits of interest on their coins, while still receiving the protective features of custodian programs. Coinbase is looking to support this industry development and more, by offering staking features and those related to on-chain voting and governance. Armstrong also revealed that Bitcoin remains the top asset for Coinbase Custody and institutional investors, but claims that interest in other currencies has been on the rise.
While the crypto markets are responding favorably to 2019’s market swing, the panelists as Consensus still think it will be a number of years before the massive hedge funds come into play. According to Union Square Ventures partner Fred Wilson, who joined Armstrong on stage,
“The token funds and venture funds will make up the first two big institutional funds. For them [traditional institutions] to take their chips and go all in, I don’t see that in the next year or two.”
He further added,
“When people read in the Wall Street Journal that institutions are coming to crypto they think Goldman is coming, but in reality, maybe 100 token funds in the U.S. and 100 in Asia are all in so far.”
Nonetheless, Armstrong offered a surprising figure that 60 percent of all trading volume on Coinbase Pro–a more involved version of the user-friendly application–comes from institutions, giving a broad look at the current landscape of investment into cryptocurrency.