Coinbase CEO Brian Armstrong announced on Twitter that his company has received senior management approval to add digital assets to its balance sheet.
The purchase amount will be $ 500 million. In addition, Coinbase is going to automatically convert 10 percent of all its future income into crypto, and this is not just about Bitcoin. We tell you about the situation and its importance.
Recall that in February, when Coinbase was preparing to go public on the stock exchange, the company published the so-called S-1 report. He showed that the company has about $ 365 million worth of cryptocurrencies on its balance sheet . Of these, $ 230 million was in Bitcoin, $ 53 million in Ethereum, $ 49 million in stablecoins, and $ 34 million in other cryptoassets.
And although this is a considerable amount for investments in cryptocurrencies, the management of the trading giant decided not to stop at it. Now representatives of the organization will work to increase their own investment portfolio.
What cryptocurrencies does Coinbase buy?
Until now, the American crypto exchange had enough coins on its balance sheet to place it in fourth place in the ranking of public companies that own cryptocurrencies. However, there is one nuance in this – giants like MicroStrategy acquired their BTC last year, and in large volumes. Coinbase, on the other hand, has been around since 2012 and still hasn’t paid enough attention to direct investment in digital assets.
The management of the exchange adopted a new investment strategy after the excellent results in terms of profitability of the company this year. According to Decrypt, Coinbase earned $ 800 million in the first quarter of 2021, up to $ 1.6 billion in the second quarter . That is, the platform has additional capital for diversification.
According to the following quote from a recent post on the official Coinbase blog, the company may increase its crypto investment in the future. Here is a replica of the company’s representatives.
The distribution of investments in cryptoassets will be determined by the volume of our custodial cryptocurrency balances. Our clients will determine our investment strategy. The strategy for buying cryptocurrencies is designed for a period of several years with the possibility of averaging. We are long-term investors and will only sell assets under certain circumstances, such as their removal from our platform.
As representatives of Coinbase noted, they plan to communicate not only with Bitcoin, as the already mentioned MicroStrategy does. The giant will also invest in Ethereum, projects with a Proof-of-Stake consensus mechanism, tokens from the world of decentralized finance and other projects. This means that in the future, we can expect a transition to a similar practice on the part of other companies. Yet in the investment world, the example of the major players in the industry is very important.
Coinbase’s main sources of income are commissions from trades on the exchange platform. Due to the historical maximum of crypto trader activity this year, the company was able to demonstrate the best results against the background of Bitcoin bullran. Undoubtedly, the news of such a large investment in BTC and other top industry assets from one of the main market players in its field will have a very positive effect on prices.
We believe Coinbase’s decision will definitely have a positive impact on the cryptocurrency industry. It is important to remember that the platform went public in April 2021, which means that now its shares are traded on the stock markets. Accordingly, trust in such a company is high among traditional investors. This means that future purchases of Coinbase crypto for hundreds of millions of dollars will surely become an example for other market players.