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Coinbase Will Invest 10% Of Its Profits In Crypto Going Forward

Coinbase has announced that it plans to invest 10% of all profits in crypto. The exchange is one of the leading crypto exchanges in the world and with their profit margins, 10% will be a big investment going into crypto. All crypto purchases with crypto will be kept on the balance sheet going forward. And the CEO expects this percentage to go up with time.

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The exchange has recorded massive profits for the last year alone. Coinbase had announced a total profit of $.17 billion back in 2020. If this directive was in place then, Coinbase would have been putting $170 million in crypto holdings just for 2020 alone. Profit margins for 2021 are projected to be even larger for the year 2021. Given that the company had earlier gone public in the year. Increasing its total valuation.

It has previously been disclosed back in February that the exchange held crypto on its balance sheets, which is not a surprise. Their foremost offering is a way for people to exchange their crypto for both fiat and other cryptocurrencies. According to Brett Tejpaul, a Coinbase executive, the company has actually held bitcoin and other cryptocurrencies on its balance sheet since its founding in 2012. With plans to continue investing in crypto projects that they see long-term potential in.

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At the time of this disclosure though, it was not revealed the specific assets that the company held on its balance sheets. Bitcoin was the only specific one named, while others were kept secret.

Coinbase Puts $500 Million In Crypto

Coinbase CEO Brian Armstrong recently took to Twitter to announce that they had received approval from the board to purchase $500 million worth of crypto to put on the company’s balance sheet.

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

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Following the purchase, the company had to file a disclosure with the SEC outlining the crypto-assets that they had purchased. The report showed that the company had spent the majority of the allocated funds on Bitcoin. With significant investments made into the second leading cryptocurrency in the market, Ethereum. The disclosure outlines that $238 million was spent on cryptocurrencies, with $230 million invested in Bitcoin, while the remaining $53 million was invested in Ethereum.

The figures in the disclosure also included the allocation of 10% of the company’s profits into cryptocurrencies, bringing the complete total in the disclosure to $500 million. Going forward, the company plans to strengthen its positions in both Bitcoin and Ethereum with future profits. And is interested in opening positions in other promising cryptocurrencies as well. Leading to a well-rounded crypto portfolio for the company.

Crypto total market cap remains above $2 trillion | Source: Crypto Total Market Cap from TradingView.com
Featured image from The Guardian, chart from TradingView.com

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Wells Fargo Now Offers Cryptocurrency Investment To Clients

Wells Fargo had announced earlier in the year that they planned to offer cryptocurrency investments to clients. Something that was referred to as a “professionally managed” cryptocurrency investment. Now the bank has announced that it will begin offering cryptocurrency exposure to its high net worth clients.

The Wells Fargo Investment Institute had been working on a way for it to be able to best offer its clients an option to invest in cryptocurrency. Following a re-evaluation on the bank’s stance on crypto. “We think the cryptocurrency space has just kind of hit an evolution and maturation of its development that allows it now to be a viable investable asset,” Darrell Cronk told Insider back in May.

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Cronk, who is the President of Wells Fargo, alluded to the market size of the crypto market making it a good alternative investment for clients. The solution had been in the works for months as the Wells Fargo Investment Institute, which is the investment-research division of Wells Fargo Wealth and Investment Management, devised a way to provide this service to investors.

Getting Clients Exposed To Cryptocurrency

Wells Fargo will only be offering crypto exposure to some clients as part of its wealth management. These clients consist of high-net-worth individuals who want to get more exposure to the market without having to buy into cryptocurrencies themselves.

Total crypto market cap down following weekend rallying | Source: Crypto Total Market Cap on TradingView.com

Cronk revealed that this comes with “quite a bit of interest” from their clients. And Cronk’s strategy team has published the first-ever research report on cryptocurrencies by the institute.

“There’s a lot of education and informational work that has to be done. It is a complex topic, and while investors have interest, it is important that they understand it for what it is.” – Darrell Cronk, President, Wells Fargo

Banks Getting Into Cryptocurrencies

Wells Fargo is not the first bank to provide cryptocurrency exposure to its clients. Banks have reported that there continues to be increasing demand from clients for a way for them to get involved in digital assets. In fact, Wells Fargo comes behind a couple of big banks that have provided crypto investment options for their clients.

This survey carried out by Goldman Sachs revealed that 50% of the ultra-wealthy want increasing exposure to cryptocurrencies. To which Goldman Sachs has responded by offering clients the option to trade Bitcoin and Ether Options and Futures. Hopefully, other digital assets to be added to the mix.

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Big bank JP Morgan also ramped up investment in companies with Bitcoin exposure, banking on increasing demand for cryptocurrencies. While this deal between NCR and NYDIG will see customers be able to buy bitcoin across 650 banks.

As consumers demand more ways to get into the market, it is only natural to expect an influx of these types of products to help clients get more exposure to cryptocurrencies.

Featured image from Investor Junkie, chart from TradingView.com