Coinbase Refutes Claims It Tested Proprietary Trading

Coinbase denied running a proprietary trading company, claiming that its risk solutions division intends to broaden institutional crypto participation beyond simply storing assets.

According to the Wall Street Journal, Coinbase created a group last year to utilize company capital to trade and stake cryptocurrency in order to generate profits. According to the newspaper, which cited “people familiar with the situation,” the crypto exchange engaged at least four prominent Wall Street traders for the business.

According to the Wall Street Journal, the organization performed a $100 million deal earlier this year as a test trade but eventually decided against pursuing proprietary trading.

Coinbase does not operate a proprietary trading business or act as a market maker, according to a blog post published on Thursday, and the piece appears to confuse “client-driven activity” with proprietary trading.

Proprietary trading occurs when a bank or other organization trades stocks, bonds, or other financial products under its own name – that is, with its own money rather than the money of its clients.

“Coinbase does purchase cryptocurrencies as principle on occasion, including for corporate treasury and operational needs,” the business noted.

“We do not consider this proprietary trading because the goal is not for Coinbase to profit from short-term rises in the value of the coin being traded,” according to the blog post.

According to BitcoinTreasuries, Coinbase now possesses around 4,500 bitcoins.

Beyond the blog post, a representative declined to comment.

Coinbase has launched a risk solutions team in order to assist institutional investors in participating in Web3 beyond holding cryptoassets, according to the company's blog.

“We are following a well-worn Wall Street path where financial services businesses provide clients with numerous options to gain exposure to new asset classes and mitigate certain risks,” Coinbase said. “We have tools and policies in place that are meant to manage conflicts of interest and reflect best practices in the financial services industry.”