Crypto exchange Coinbase says it does not engage in proprietary trading, a speculative investment practice that federal regulations known as the Volcker Rule restrict due to its role in the financial crisis of 2008.
In a new blog post, the California-based company refutes a Wall Street Journal claim that it uses its own money to speculate in crypto assets.
The newspaper, in an article published on September 22, reports that Coinbase has hired at least four senior traders to use the company’s equity to trade, stake and lock cryptocurrencies for profit. The report says the folks at Coinbase describe the activity as proprietary trading.
“Coinbase purchases cryptocurrency from time to time as a principal, including for our corporate cash and for operational purposes. We do not consider this to be proprietary trading as its purpose is not that Coinbase benefits from short-term increases in the value of the cryptocurrency traded.
Coinbase says it has formed a new team called Coinbase Risk Solutions (CRS), but it was launched to provide solutions and assistance to institutional investors seeking exposure to digital assets.
“CRS’s goal is to expand institutional participation in web3 beyond HODLing.
In doing so, we are following a well-trodden path on Wall Street where financial services firms offer multiple ways for their clients to gain exposure to new asset classes and manage certain risks. We have tools and policies in place that reflect best practices in the financial services industry and are designed to manage conflicts of interest.
Coinbase is facing proprietary trading allegations as its CEO, Brian Armstrong, calls crypto regulation a national security issue in the United States. The company is also gearing up to offer its services in the Netherlands after becoming the first major crypto exchange to gain approval from the Dutch Central Bank to operate in the country.
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