Key Takeaways
- Coinbase received board approval to add $500 million in crypto to its balance sheet.
- Going forward, the company will allocate 10% of its profits into a diverse portfolio of crypto assets.
- Coinbase is the first publicly traded company to invest in crypto assets other than Bitcoin.
The largest U.S.-based crypto exchange Coinbase revealed long-term plans to invest in crypto assets.
Coinbase to Keep Crypto on Balance Sheet
Coinbase CEO Brian Armstrong announced Thursday that the publicly traded crypto exchange received board approval to add $500 million in crypto to its balance sheet, and to allocate 10% of its quarterly profits into a diverse portfolio of crypto assets going forward.
We recently received board approval to purchase over $500M of crypto on our balance sheet to add to our existing holdings. And we’ll be investing 10% of all profit going forward in crypto. I expect this percentage to keep growing over time as the cryptoeconomy matures.
— Brian Armstrong (@brian_armstrong) August 19, 2021
In a follow-up tweet, Armstrong stated he wants the company to operate more of its business in crypto. Coinbase believes the world is moving towards a more crypto-focused economy—a future where an increasing proportion of transactions will be based on crypto assets. The exchange looks to be leading by example, readying itself for this future.
In a Friday blog post, Coinbase Chief Financial Officer, Alesia Haas, revealed that Coinbase’s latest move marks its long-term commitment to investing in crypto:
“Our investments will be continually deployed over a multi-year window using a dollar-cost averaging strategy. We are long term investors and will only divest under select circumstances, such as an asset delisting from our platform.”
“This means we will become the first publicly traded company to hold Ethereum, Proof of Stake assets, DeFi tokens, and many other crypto assets supported for trading on our platform, in addition to Bitcoin, on our balance sheet,” she added.
The company may increase its allocation over time as cryptocurrency markets and industry mature.
According to a Wall Street Journal report, Coinbase has accumulated a $4 billion cash buffer—a sort of an insurance fund to deal with potential regulatory hurdles, increased compliance costs, cyberattacks, or periods of reduced trading.
Back in April, Coinbase made history as the first cryptocurrency company to go public, hitting a $103 billion valuation on the first day of trading. Instead of going the traditional IPO route, Coinbase listed directly, not raising any money in the process.
Disclaimer: At the time of writing this feature, the author owned Ethereum.
