Coinbase has launched a new prime brokerage service for hedge funds with the crypto-unicorn attracting an unnamed $20 billion hedge fund according to Business Insider which says:
“The firm has onboarded a $20 billion hedge fund through its prime business, the people said, declining to specify which fund. The team is working on getting other large hedge funds onto its trading platform.”
Prime brokerage is a service usually provided by investment banks to hedge funds, with the prime broker managing the operational aspects of trading.
It allows hedge funds to borrow from Coinbase after putting down collateral, then they can trade on a number of crypto exchanges without putting down a balance or having to deal with private keys.
In the future, Coinbase may also provide best execution services where they can assist hedge funds in locating the best platform for a trade.
They are further preparing to offer margins by the end of the year, allowing asset managers to amplify their trade by going long or short.
Making this the latest move from Coinbase, which is trying to provide the infrastructure for institutional investors following the entrance of many Wall Street firms into crypto trading.