Coinbase CEO: Institutions Are Depositing $200 to 400M Into Crypto Every Week

August 20, 2019 / by Crypto.IQ

Last week’s announcement of Coinbase buying Xapo’s institutional custody business certainly got everyone’s attention. But lost in that buzz was a nearly off-hand comment by CEO Brian Armstrong that begs a closer look.

In a Twitter statement shared on August 16th Armstrong tweeted:

 “Whether institutions were going to adopt crypto or not was an open question about 12 months ago. I think it’s safe to say we now know the answer. We’re seeing $200-400M a week in new crypto deposits come in from institutional customers.” 

The head of the top crypto exchange made the comments hours after confirming Coinbase’s acquisition of the institutional custody business of Xapo, one of its rivals, for a sum of $55 million. 

According to various reports, this move put Coinbase in the number one spot in the list of institutional cryptocurrency custodians, with digital assets worth more than $7 billion under its custody.

But his acknowledgement of the quantity of funds flowing into crypto is the answer to a question floating around since last year – whether traditional financial institutions were going to wade into the crypto space in force. 

Armstrong stated that the adoption of Bitcoin by institutions has moved from myth to reality in the last year. It has been noted in the Bitcoin run-up since April that retail investors still don’t seem to be too excited about Bitcoin right now. Which means it’s the institutions that are driving demand. Armstrong’s comments put a concrete number on that demand.

In spite of the recent dip in Bitcoin’s bull run in the past few weeks, Armstrong is still optimistic about the future, as more and more new institutional investment products continue to hit the crypto market.

These include the highly-anticipated Bitcoin futures offerings set to be launched by top crypto exchanges, like Binance and Bakkt. Meanwhile, the United States Securities and Exchange Commission has postponed its decision on Bitcoin exchange-traded fund (ETF) proposals till October this year.

In a blog post about the Coinbase-Xapo deal, Coinbase hinted about its plans for the future. The company said that apart from custody, they are excited to explore new ways of monetizing and leveraging digital assets, like staking, borrowing against cryptocurrency portfolios, and lending cryptocurrencies to counterparties.