Behind Coinbase’s quiet roll-out of OTC trading this month 

Finance


Coinbase is best-known for the popular U.S. cryptocurrency exchange that was on-boarding as many as 50,000 retail accounts per day during the crypto boom last year. But although it took off with ordinary investors, many institutions weren’t as eager to use it, according to Christine Sandler, the head of institutional sales.

The OTC “soft launch” began with a small network of clients like asset management firms. Sandler announced it in an interview with Cheddar this week. But she said it was important to debut it slowly with a ring of trusted institutions before they “blanketed the Earth” with a new product.

Sandler, who was head of electronic equity sales at Merrill Lynch and later Barclays during her 30-year career on Wall Street, described OTC as giving “an extra pair of hands” to facilitate a trade.

Clients can call Coinbase and say “I’d like to buy $1 million in bitcoin right now — what’s the spread?” Coinbase, in this case, finds willing buyers and sellers without tipping off the market that a big order is coming. Coinbase will then get a bid and an offer, and reflect that in multiple price quotes for the client.

Wall Street professional investors are slowly warming to crypto. Goldman Sachs-backed Circle has a “principal” OTC desk called Circle Trade with a minimum entry-point of $250,000. Principal trading desks use their own inventory complete customer orders and also provide liquidity for clients. Genesis Trading is another OTC option for crypto in addition to Gemini, a firm founded by Cameron and Tyler Winklevoss.

The Coinbase executives anecdotally started to notice an increase in OTC volumes and decided it was time to jump in.

“This is a really opportunistic way for us to counterbalance and offer something that’s different than our exchange trading but offers value to clients in a way that’s really safe,” Sandler said.



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