Why Coinbase will maintain its investment in Bitcoin?
Crypto exchange Coinbase has held Bitcoin and other crypto assets on its balance sheet since the firm’s inception in 2012. Head of Institutional Sales, Trading, Custody, and Prime Services at Coinbase, Brett Tejpaul, revealed this in a blog today. He said that the firm intends to maintain an investment in digital assets due to the “long-term potential of the crypto economy”
However, the Coinbase exec did not mention any specific amount with regard to the Bitcoin investment.
The company’s investment strategy in crypto assets required the firm to develop new policies with regard to investment, accounting, and taxes. It also established a “control environment” with the intention of receiving unqualified audit opinions on the crypto exchange’s financial statements.
Earlier today, the crypto exchange’s Form S-1 filing with the Securities and Exchange Commission (SEC) became public. According to the document, Coinbase earned $1.1 billion in revenue, as of last year.
Tejpaul believed that the use cases for digital assets are “expanding rapidly” among corporations, especially, as companies diversify their traditional portfolio management strategies and adopt crypto as an investment asset.
Other than Coinbase, public and private companies alike have invested in Bitcoin. According to data from Bitcointreasuries, MicroStrategy holds 90,531 BTC to date, which makes the publicly-traded firm the biggest institutional investor of the asset. In second place is Tesla, which holds 48,000 BTC. Overall, public, private firms and ETFs altogether hold 1,349,042 BTC (more than $60 billion at current prices) in their treasury or as assets under management.
Furthermore, Coinbase happens to be in the business of serving companies that are looking to crypto to “hedge or diversify their excess cash.” In another blog post, Tejpaul disclosed that the firm has already helped corporations diversify their investments with crypto assets.
On 1 December 2020, Coinbase said that MicroStrategy chose the crypto firm as its primary execution partner for its $425 million purchase of Bitcoin last year. Reports stated that the exchange was behind Tesla’s Bitcoin investment, which surged the asset’s price to the $50,000 range.