Cryptocurrency
Behind ‘Prime Broker’ Buzzword Lies a Complex Strategy Game for Crypto Firms
As read on Coindesk, “It’s probably no coincidence that three major crypto firms – Coinbase, Genesis Trading and BitGo – have almost simultaneously announced plans to become prime brokers, a kind of fixer when it comes to financing and facilitating trades for institutional investors. “This type of vertical integration happens in every business, whether that’s […]
As read on Coindesk, “It’s probably no coincidence that three major crypto firms – Coinbase, Genesis Trading and BitGo – have almost simultaneously announced plans to become prime brokers, a kind of fixer when it comes to financing and facilitating trades for institutional investors.
“This type of vertical integration happens in every business, whether that’s Amazon running the internet or Coinbase trying to own the crypto space. Given the long road of the last couple of years, it’s maybe surprising there hasn’t been more M&A activity in the blockchain world.
“The big news this week was Coinbase’s acquisition of trading technology and execution platform Tagomi. BitGo Prime also launched its recently announced lending business and bolted on tax-reporting company Lumina. Last week, Genesis Trading (a subsidiary of CoinDesk parent firm Digital Currency Group) bought crypto custody provider Vo1t and spun up ‘Genesis Prime.’
“From starting out as a retail-focused cryptocurrency exchange, or a wallet provider, or an OTC desk, the ambitions of these firms (and others) to become crypto’s prime brokers is aspirational at this stage, as observers like BlockWorks Group co-founder Jason Yanowitz have noted. Indeed, the term ‘prime broker’ is suddenly the latest buzzword in crypto, observed Max Boonen, CEO of cryptocurrency liquidity provider B2C2.
“’What puzzles me a little bit is that some people are getting into prime brokerage, not based on a vision, but really because they are looking for the next big thing – and they don’t know what it is. So they are going after the buzzword,’ said Boonen…”