Coinbase is one of the more popular cryptocurrency exchanges and has helped onboard many users. For most, it’s their first exchange/crypto wallet. It’s safe, user-friendly, and educational. Coinbase serves both individual and institutional customers. However, their new partnership with BlackRock could institutionally take adoption to the next level. Hodl onto your Bitcoin as we break down this new partnership between two financial figureheads.
BlackRock is one of the biggest financial companies in the world. They are based out of NYC and are a company with multinational operations. Founded in 1988, they have been in the game a long time. That’s more than the GDP of most countries.
They have over 20,000 clients under management, both individual and institutional. By 2021, they had around $10 trillion under management globally.
This partnership certainly was good news for Coinbase. It has been hard for many exchanges to survive this bear market. Even as big as Coinbase is, it was still affected, having to lay off 20% of its staff in June. With this partnership and BTC/ETH trending up, it has rejuvenated things a bit, with the stock being up over 73% for the month.
The recent SEC scrutiny, including the market downturn, has left Coinbase stock sliding over 65% for the year.
BlackRock clients have expressed interest in getting more exposure to digital assets. To streamline this, they aim to integrate Aladdin with Coinbase Prime. Aladdin stands for (Asset, Liability, Debt, and Derivative Investment Network. It’s their proprietary financial software for client management.
Integrating the full spectrum that crypto has to offer must be daunting at this scale. So, Coinbase Prime aims to take the edge off when they seamlessly combine.
Coinbase prime already has over 13,000 institutional clients under management, but their new one is something to write home about. Coinbase Prime supports entire transactions from start to finish by managing staking, data/analytics, and reporting.
All this while providing trade and custody for hundreds of assets. One can use the Coinbase Prime interface or integrate it into different software.
Coinbase Custody Trust Company acts as the fiduciary under New York state law and is the custodian for Coinbase Prime. They are trusted and regulated by the New York Department of Financial Services. If that’s good enough for 13,000 clients already, it seems well-vetted for BlackRock to join the party.
This partnership helps cast a wide net getting new users exposure and onboarded, even with exchange-traded products like ETFs.
Of course, the more people using crypto, the better. That’s why so much comes down to the use case and network effect. With this nod from BlackRock, Coinbase could get some other significant partnerships from investment firms. Companies choosing to partner with a crypto company like Coinbase versus doing things in-house may popularize.