Coinbase Completed $100M Transaction to Test Proprietary Trading: Report

The exchange hired at least four Wall Street traders to form a group called Coinbase Risk Solutions to use the firm's own cash to trade crypto.

AccessTimeIconSep 22, 2022 at 10:48 a.m. UTC
Updated Sep 22, 2022 at 6:01 p.m. UTC
Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

Jamie Crawley is a CoinDesk news reporter based in London.

Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

Cryptocurrency exchange Coinbase (COIN) completed a $100 million transaction as a test of its proprietary trading efforts earlier this year, according to a report by the Wall Street Journal on Thursday.

The exchange hired at least four Wall Street traders to form a group called Coinbase Risk Solutions to use the firm's own cash to trade crypto, the report said.

Proprietary trading is when a firm engages in trading of stocks, bonds, currencies or commodities using its own money as opposed to that of its clients. Such activity is fraught with risk and the potential of conflicts of interest for the financial firm should its trades have an effect on the prices of those assets, which could in turn hurt its clients.

Coinbase executives said in December that it did not engage in proprietary trading when they appeared in Congress.

However, with the price of digital assets encountering a downward trajectory throughout 2022, dragging Coinbase stock down in the process, Coinbase may have turned to trading on its platform as a means of creating new avenues for profit.

In response, Coinbase said the WSJ report had confused "client-driven activities" with proprietary trading.

"Coinbase does, from time to time, purchase cryptocurrency as principal, including for our corporate treasury and operational purposes," the exchange said.

"We do not view this as proprietary trading because its purpose is not for Coinbase to benefit from short-term increases in value of the cryptocurrency being traded."

CRS' role is to expand institutional participation in crypto by offering services to investors who are still getting to grip with digital assets, Coinbase added.

UPDATE (11:25 UTC, Sept. 22, 2022): Adds Coinbase response and links to blog post.










Read more about

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Jamie Crawley is a CoinDesk news reporter based in London.


Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


CoinDesk - Unknown

Jamie Crawley is a CoinDesk news reporter based in London.