Coinbase Introduces Ethereum Staking for US Institutional Clients

Coinbase Prime – an integrated solution that offers secure custody, an advanced trading platform and prime services– has introduced an Ethereum staking service targeting corporate clients in the US.

Coinbase exchange described the addition of Ethereum to its staking options for US institutional investors as an important feature designed for financial institutions which want to enter the crypto money industry but hesitate about it.

The exchange said the staking service gives companies an opportunity to earn passive income by avoiding risks. The product offers yet another cryptocurrency on-ramp for institutions which have become interested in the industry’s explosive growth but have not always known how to get in.

Generating yield through staking plays an important role to big firms that often are looking for attractive places to invest their money.

Coinbase Prime also offers staking services for Solana, Polkadot, Cosmos, Tezos, and Celo tokens, the exchange said in a blog post on Monday.

Aaron Schnarch, the Vice President of Product, Custody at Coinbase, talked about the development and said institutional customers can create a wallet, decide how much to stake and start staking ETH in their Coinbase Prime account.

According to the exchange, withdrawal keys are held in Coinbase’s cold storage custody vault, and the staking process happens through the validation of new cryptocurrency transactions on a proof-of-stake blockchain.

Coinbase has launched its staking services to take advantage of “the Merge,” the highly anticipated upgrade of the Ethereum network.

Staking Rewards

Staking allows customers to earn a yield on their cryptocurrencies by putting them in a pool of assets, which helps support the liquidity and operations of a blockchain ecosystem. Staking is often compared to a high-yield savings account where investors can earn more than 20% in annual yield on some platforms.

However, that practice does not come without risks. Staking normally requires customers to store their money with a third-party called a “custodian,” who technically owns the funds while they are being staked. Few months ago, investors experienced huge losses of funds when custodians such as Celsius Networks, Voyager Digital, among others, went bankrupt after crypto markets crashed.

In January this year, institutional crypto custody firm Anchorage Digital introduced Ether staking for institutions.

The San Francisco-based federally chartered crypto bank started providing ETH holders with the opportunity to earn rewards for their holdings.

Anchorage also planned to expand its Ethereum blockchain service once the network moves to a proof-of-stake (PoS) mechanism later this year.

The Merge” – the upgrade that will shift the blockchain from a proof-of-work (PoW) consensus mechanism to Proof-of-Stake (PoS) alternative consensus mechanism – is expected to begin next month. The transition to PoS, which is intended to be faster and more energy efficient than PoW, is now anticipated to occur on September 19th.

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Hong Kong Crypto Exchange OSL Opens Institutions Investment in Security Tokens

OSL Digital Securities Limited (OSL), a major cryptocurrency exchange based in China, announced on Tuesday that it has become the first Type 1 SFC-licensed digital asset broker to offer sales of security tokens to professional investors in Hong Kong through private security token offerings (STOs).

According to the official statement, OSL is the first regulated digital assets brokerage firm in Hong Kong to facilitate sales of new asset-backed digital tokens classed as securities to global institutions.

OSL has been doing that for a while. So far, its institutional clients include the likes of Animoca Brands, Head & Shoulders Financial Group, China Fortune Financial Group Limited, Volmart, and Monmonkey Group Asset Management Limited.  

OSL hopes to see continued growth if this is what the market demands. The firm disclosed that it offers end-to-end services for the STO transaction, acting as the bookrunner, placing agent, fiscal and paying agent, transfer agent, registrar, calculation agent, tokenisation technology partner and trading venue.

According to OSL, each digital token represents a USD10,000 unit of a Bitcoin-linked coupon-rate USD bond. The company develops the tokens using the Ethereum blockchain, has a three-month tenor and carries a fixed and a bonus coupon linked to Bitcoin performance.

In this way, investors are not only able to indirectly own digital assets pegged to traditional financial assets, but also buy the digital assets with U.S. dollars, Bitcoin and Ether, the digital token of the Ethereum blockchain.

OSL CEO Wayne Trench talked about the development: “The OSL STO transaction is a viable model for security token issuance and distribution of digital tokens by regulated operators. We designed the issuance to demonstrate the immense value and ease of distribution for a security token issued on a public blockchain. Through the STO, OSL reaffirms its position as a pioneer in the Hong Kong digital asset market. Blockchain-based digital securities represent the future of capital markets and financial products, and this is a key step in the adoption of this innovative and efficient technology.”

Through STOs (private security token offerings), OSL is playing a key central role in STO issuances and other digital asset transactions in the future. Licensed partner brokers and banks can emulate its innovative action to offer such products.

OSL Digital Securities holds a license for Type 7 (automated trading service) and Type 1 (dealing in securities) regulated activities related to digital assets from the Hong Kong Securities and Futures Commission (SFC). As a licensed broker, OSL is authorised to issue and distribute digital securities through security token offerings to professional investors.

Tokenisation Providing Opportunity for Investments

There have been increasing talks of security tokens in the cryptocurrency industry. These are digital tokens that represent tradeable securities and are regulated under securities laws. They are pegged to financial assets such as real estate, bonds, and stocks, to avoid the volatility witnessed in cryptocurrencies.

Startups with less financial experience and regulatory know-how definitely find difficulty introducing such digital assets and also hit roadblocks with regulators.

On 28th January this year, the Hong Kong Monetary Authority (HKMA) and the SFC issued a joint circular, which for the first time, allowed registered institutions and licensed firms to offer digital asset investment services through a partnership with SFC-licensed virtual asset trading platforms.

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BlackRock Could Soon Offer Crypto Trading to Its Clients

Key Takeaways

  • BlackRock has plans to offer its investors crypto trading as well as the ability to borrow money with crypto collateral.
  • Various sources informed Coindesk of these plans. However, BlackRock has not officially confirmed these reports.
  • BlackRock is the world’s largest asset manager, with more than $10 trillion under management from institutional clients.

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The asset management giant BlackRock plans to offer cryptocurrency trading to its clients, according to sources interviewed by Coindesk.

Institutional Clients Will Likely Get Crypto Trading

According to those sources, BlackRock plans to give its institutional clients the ability to trade cryptocurrencies. Those clients would also be able to borrow money using crypto as collateral.

One source suggested that BlackRock will offer the service on its Asset, Liability, Debt and Derivative Investment Network, or “Aladdin.”

Another source provided further details of BlackRock’s plans, claiming that the firm aims to get “hands-on with … crypto” and that it is “looking for providers in the space.”

The third source said that about 20 BlackRock employees are currently investigating cryptocurrency and opined that those employees “see all the flow that everyone else is getting,” adding that “they want to start making some money from this.”

The sources did not indicate when the service might be introduced.

BlackRock Is Interested In Crypto

BlackRock has not confirmed those reports. However, it is known that the firm is considering blockchain. The firm began searching for a blockchain strategy lead for Aladdin last June. Prior to this, it posted job listings seeking a blockchain executive in December 2020.

While the CEO of BlackRock, Larry Fink, has said before that he was “fascinated” by Bitcoin, he has been quick to mention the lack of demand for cryptocurrency among institutional clients. Meanwhile, BlackRock Managing Director and Chief Investment Officer, Rick Rieder, called Bitcoin more functional than gold in November 2020.

The company is also apparently planning to launch an ETF that tracks blockchain companies, according to SEC filings seen in January.

BlackRock is the world’s largest asset management company, with more than $10 trillion in assets under management. Its clients include endowments, sovereign wealth funds, and public pension schemes.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.

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Visa Establishes Advisory Services, Helping Clients Maneuver their Crypto Journey

As part of efforts to expand the knowledge base of its clients and partners in their cryptocurrency journey, payment giant Visa has introduced a global crypto advisory practice as part of the consulting & analytics department. - 2021-12-08T171747.825.jpg

In a statement, Visa said that the percentage of crypto awareness among financial decision-makers has skyrocketed to 94% globally, necessitating a paradigm shift when helping clients build a strategy and product roadmap in this sector. 

Visa noted that the first step to getting involved in the crypto space is comprehending what this industry offers.

“For financial institutions eager to attract or retain customers with a crypto offering, retailers looking to delve into NFTs, or central banks exploring digital currencies, understanding the crypto ecosystem is a vital first step.”

At least 60 crypto platforms have been established connections with Visa, enabling the creation of a global network of product experts and consultants, as the demand for advisory services is getting higher. Their mandate entails helping financial institutions harness cryptocurrency opportunities and pilot new user innovations and experiences like CBDC-integrated consumer wallets and crypto reward programs.

Claudio Di Nella, the head of Visa consulting & analytics, Europe, welcomed this move and said:

“We’ve seen a material shift in our clients’ mindset in the last year, from a desire to explore and experiment with crypto, to actually building a strategy and product roadmap.”

Cryptocurrencies reflect a technological shift of money movement and digital ownership; every financial institution is urgently to develop their own crypto strategy in response to the new trend, according to Antony Cahill, deputy CEO, Visa, Europe.

Visa has been making significant steps in the crypto space. For instance, the payment service provider recently announced its plans to deploy a universal payment channel (UPC) that would enable different digital currencies such as CBDCs and private stablecoins to be interoperable with each other to make payments.

Moreover, in September, Visa started integrating cryptocurrency services into Brazil’s traditional banking systems. 

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Fidelity Digital Is Expanding Workforce By 70% Due To Crypto Demand

The institutional buy-in through major banks and adjacent firms continues this week. Fidelity Digital is the company’s enterprise-grade solution for digital assets. In a recent story first broken by Bloomberg this week, crypto demand is leading the Fidelity division to expand staffing by roughly 70%.

Fidelity Digital: Doubling Down

The report cites an interview with Fidelity Digital Assets president Tom Jessop, who specifically called out Ether as a high-interest product in particular.

Jessop noted that 2020 was “a real breakthrough year for the space, given the interest in Bitcoin when the pandemic started.” He added that the firm has seen “more interest in Ether, so we want to be ahead of that demand.”

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In present day, the digital division currently only offers custody, trading, and select services for Bitcoin; however, the asset list seems likely to expand, and Jessop also cited the firm’s desire to offer crypto trading “full-time for most of the week.”

Fidelity Investments is a Boston-based firm that oversees over $10T in assets under management. The expansion for the Fidelity Digital team is likely to result in hiring as many as 100 employees throughout Boston, Salt Lake City, and Dublin. The hiring spree will come on the heels of a November expansion late last year that brought in more than twenty engineers for development of the division’s trading and custody services.

In the first half of this year alone, Fidelity has filed for a Bitcoin ETF and announced Sherlock, an analytics tool for institutional investors in digital assets. The powerhouse investment firm also has a partnership with BlockFi, which enables institutional customers to leverage Bitcoin as collateral against cash loans. Fidelity has also made investments in firms such as Circle, the USDC stablecoin issuer. Circle is on the cusp of going public in a SPAC deal valuing the firm around $4.5B.

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Meanwhile, outside of the US, the firm has also partnered with UK-based broker TP ICAP and Zodia Custody to launch a crypto trading platform.

Related Reading | Central Bank Of Portugal Approves Licenses For Crypto Exchange

Institutional Integration

In recent weeks and months, institutions such as banks and credit cards seem to continue to hit the headlines with increasing initiatives in cryptocurrencies. In the past week alone, Swiss bank Sygnum has launched Ethereum 2.0 staking, Visa reported over $1B in crypto-card spending this year thus far, and a bank in Ukraine announced the launch of a Bitcoin trading feature.

Venture capital firms also continue to pour money into the crypto space, including the likes of crypto-dedicated firms.

BTC has been the horse and carriage for Fidelity Digital Assets service offerings, but that could soon be expanded as customers diversify in digital asset demands.  | Source: BTC-USD on

Related Reading | How Coinbase, Square, And Fidelity Will Support Bitcoin

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Tesla’s Bitcoin Investment is Revolutionary for Crypto but Other Firms May Not Do The Same Just Yet – JPMorgan

Tesla, the latest institutional giant to make a Bitcoin purchase, has rekindled a positive sentiment within the crypto market and sent BTC to a new all-time high of over $40K with its $1.5 billion endorsement.

With billionaire Elon Musk’s Tesla joining other institutions such as MicroStrategy and Square in adding Bitcoin to its treasury reserve, speculations have been spurred within the crypto sector as to who may possibly be the next firm to make a hefty BTC purchase. A report released by RBC analyst has even gone so far as to suggest that Apple should be the next one to join the wave of institutional investors backing Bitcoin. The report indicated that Apple could potentially generate as much as $40 billion in annual revenue with a Bitcoin endorsement.

JPMorgan strategists have also weighed in on institutional firms backing Bitcoin. They said that while Tesla endorsing Bitcoin was great for the industry, investors should not expect an institutional trend to start that easily. JPMorgan explained that this was due to the volatile nature of Bitcoin. The JPMorgan strategists, led by Nikolaos Panigirtzoglou said:

“The main issue with the idea that mainstream corporate treasurers will follow the example of Tesla is the volatility of Bitcoin.”

Strategists explained that typically, corporate treasury portfolios, which were usually made up of diversified assets such as money market funds and short-dated bonds, were compiled in a way where the accepted annualized volatility fluctuated around 1% of the total balance sheet.

However, even a 1% Bitcoin allocation to a company’s treasury reserve would send a company’s volatility from a standardized 1% to a spike of 8%, and not everyone can afford that, the experts explained.

Nevertheless, JPMorgan strategists also recognized and applauded Tesla’s Bitcoin investment, as it served to push Bitcoin to a new all-time high of over $40K. They wrote, “Irrespective of how many corporates eventually follow Tesla’s example, there is no doubt that this week’s announcement changed abruptly the near-term trajectory for Bitcoin by bolstering inflows and by helping Bitcoin to break out above $40K.” 

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Bitcoin (BTC) $ 25,664.88 3.78%
Ethereum (ETH) $ 1,744.21 5.69%
Litecoin (LTC) $ 76.71 14.35%
Bitcoin Cash (BCH) $ 101.66 8.74%