Coinbase Launches New Version of Prime Brokerage in Bid to Diversify Revenue

Coinbase announced on Tuesday that it's launched a revamped version to its Prime brokerage platform, a move that is part of the company's plan to attract new corporate and Wall Street clients, or to upsell existing ones.

While the platform, known as Coinbase Prime, has been around for several years, the company says this is the first time it has integrated the full stack of features, which include the ability to trade, store and borrow against crypto assets.

According to Coinbase, its Institutional division—which caters to the likes of investment funds and big corporations—had over 8000 clients and $122 billion in assets in March. In a blog post, Coinbase described the revamped Prime service as aimed at banks, big investors and companies "looking to add crypto to your balance sheet."

In an interview with Decrypt, Coinbase's head of institutional sales, Brett Tejpaul said the Prime offering allows companies to receive intra-day loans for trading, and allows them immediate access to crypto funds they keep in cold storage.

"If you’re carrying a billion in crypto and want to sell, there's typically a time delay to get it out of cold storage. But now you can sell it right away," said Tejpaul, who said Coinbase is the first firm to offer a comprehensive prime brokerage service.

Coinbase is not the only firm seeking to offer prime brokerage, a term from the traditional financial world that describes a company that offers a wide variety of trading and financial services under one roof. Crypto trading giant Galaxy recently acquired BitGo, a firm known for its custody offerings, as part of a bid to brand itself as a prime broker.

Coinbase's announcement comes as shares in the company, which went public in mid-April, remain mired near an all-time low amid falling crypto prices. In addition to concerns over the decline in crypto prices, some Coinbase investors worry the company is overly-reliant on revenue from trading commissions, which typically fall significantly during bear markets.

According to Eric Turner, the VP of Market Intelligence at research firm, Messari, Coinbase's strategy to target big corporate and institutional customers could pay off.

"Coinbase has clearly found traction with institutional customers and their recent acquisitions have been targeted towards that audience. Building more institutional services that cover the investment lifecycle from execution to custody will help them diversify their transaction-based retail revenue which is lucrative but lumpy," Turner told Decrypt.

Coinbase's revamped Prime offering was facilitated in part by the company's recent acquisitions, which include the brokerage service Tagomi it purchased last year for a reported $100 million, as well as Skew, a data-provider it acquired in April for an undisclosed price.

According to Tejpaul, Coinbase Prime serves as an "on-ramp" for a dozen different trading forums, including the company's own exchange. He also noted Coinbase intends to provides Prime clients with access to DeFi services, but declined to provide a timeline for doing so.

Coinbase shares are currently trading around $225—nearly 50% below the high all-time of $429 they reached shortly after the company went public.