Coinbase today launches its over-the-counter (OTC) trading desk for its Prime institutional clients, with plans to supplement delayed settlement and Coinbase custody. This move will reduce the cost of acquiring cryptocurrency for institutions and will help reduce overall market volatility.
Over-the-counter (OTC) trading takes place directly between the commercial parties rather than in an exchange. Many institutions (such as whales) use OTC as a mechanism to mitigate slippage and prevent loss of scalping, front-running and other volumes.
In an interview with Cheddar, Christine Sandler, Sales Manager of Coinbase, described the transition as "opportunistic" and an answer to customer demand.
In addition, Sandler states that Coinbase is launching the service to beat competitors Poloniex and Gemini. Poloniex acquired its OTC services in February, Circle Trade, in an acquisition, while the Winklevoss launched Gemini OTC in April.
Unlike Coinbase's competitors, Coinbase will not only "trade on a proprietary basis", but "also match customer orders". This bodes well for service users, resulting in lower commissions and lower settlement times.
According to Sandler, the service would allow operations to settle "in a transparent and instantaneous manner" with funds available for "immediate withdrawal" and with "no chance of a failed trade" and "no need to pursue wires and transfers of blockchain ".
Furthermore, Sandler states that this will not only impact institutional users. All Coinbase customers and the wider cryptocurrency markets could potentially benefit from lower volatility.
Stable Coinbase coin
In another daring move, Coinbase has also launched its own stable currency, USDC, in competition with the likes of Tether, True USD and USD. Speaking of his success, Sandler said that the USDC is "one of the most liquid stable currencies it is negotiating right now" and talks about its impact on markets in the broadest sense:
"When you think of volatility, think of the complement to how you mitigate that volatility for cryptocurrency users. [mitigates volatility]".
Market and global impact
Speaking of the recent market downturn, Sandler also states that there is a bright side. Institutions might think this is a great opportunity to enter at a lower price:
"There is a positive side to recent volatility, that cryptography has been central and central to mainstream media, and this has pushed many institutions to think about whether this is an opportunistic investment point."
Regardless of market conditions, the progress of Coinbase is helping to make the cryptocurrency available to everyone. Wider and easier access could have widespread ramifications. As Sandler eloquently stated:
"The opportunity for us to offer and have financial services for unbanked globally is really becoming a reality."
Disclaimer: The opinions of our writers are exclusively their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate approve any projects that may be mentioned or linked in this article. Buying and exchanging cryptocurrencies should be considered a high-risk activity. Please do your due diligence before taking any action related to the contents of this article. Finally, CryptoSlate assumes no responsibility in case of loss of money in the trade of cryptocurrencies.
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