Coinbase acquires prime brokerage platform Tagomi
Coinbase will complete the acquisition of Tagomi later this year but has not disclosed any financial terms
Coinbase has announced that it has acquired Tagomi, an advanced brokerage platform for professional and institutional investors.
The San Francisco based company has said that it expects to complete the deal later this year, subject to regulatory approval. The firm has also not disclosed the terms of the deal.
Coinbase’s head of corporate development, Shan Aggarwal, has noted that the brokerage platform will continue its operations for now as the exchange ponders “long term options.”
Coinbase has long been the principal exchange for new retail investors looking to buy Bitcoin. However, in the past couple of years, the exchange has increased its offering to target professional investors and institutional buyers.
According to the exchange, acquiring Tagomi will see the exchange integrate the brokerage platform into Coinbase’s “product suite” and help it deliver to its institutional investors.
Increased demand from institutional investors
The deal to buy Tagomi is coming “at a time when the world’s most recognized professional investors and funds are giving increasing attention to the [crypto] asset class,” Coinbase wrote in the blog post.
Reports that Coinbase was set to acquire Tagomi first surfaced in 2019, with sources pointing to a deal worth $150 million. The two companies, however, refuted the claims at the time, denying that such a deal was imminent.
But the latest developments and Coinbase’s announcement comes on the back of increased activity around cryptocurrency prime brokerages.
The platform itself has seen increased demand from institutional investors since early last year. Apart from expanding its Coinbase Custody offering into new markets, the exchange has also added margin trading on its Coinbase Pro platform.
It also follows the recent acquisition of crypto custodian platform Volt by DCG-backed Genesis Trading as companies look to offer prime brokerage services.
Tagomi launched its services in 2018 and has grown to become one of the leading platforms, attracting some of the largest hedge funds, family offices and traders. Customers of the platform include Bitwise, Paradigm, Pantera and Muticoin.
Tagomi’s pricing is a pool of buy and sell orders from several platforms, mainly from 10 of the largest cryptocurrency exchanges. These exchanges are deemed to have “real volume,” and less chance of manipulation, which incidentally includes Coinbase. With the acquisition, Tagomi might have to look at another exchange from its pricing to avoid raising conflict of interest concerns.
OhNoCrypto
via https://www.ohnocrypto.com
Benson Toti, Khareem Sudlow
