The recent listing of Coinbase, the largest cryptocurrency exchange in the US, on the Nasdaq stock market has attracted a lot of attention from investors and the public. Coinbase is valued at over $100 billion, making it one of the most valuable companies in the world. But who are the major shareholders of Coinbase, and what does this mean for the future of crypto?
One of the surprising facts about Coinbase is that two of its biggest owners are not crypto enthusiasts, but rather traditional asset managers: Blackrock and Vanguard. Together, these two firms own about 10% of Coinbase’s shares, according to data from Nasdaq.
Blackrock is the world’s largest asset manager, with over $9 trillion in assets under management. Vanguard is the second largest, with over $7 trillion. Both firms are known for their low-cost index funds and ETFs, which track the performance of various market segments.
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Why would these giants of the financial industry invest in Coinbase, a company that represents a new and disruptive technology? There are several possible reasons. First, Blackrock and Vanguard may see Coinbase as a way to diversify their portfolios and gain exposure to the fast-growing crypto sector.
Coinbase is not only an exchange, but also a platform that offers various services and products related to crypto, such as custody, staking, lending, and education. Coinbase also has a loyal and engaged customer base, with over 56 million verified users and 6.1 million monthly transacting users.
Second, Blackrock and Vanguard may recognize the potential of Coinbase to become a leader in the digital economy. Coinbase has a vision to create an open financial system for the world, where anyone can participate and benefit from crypto.
Coinbase is also actively involved in shaping the regulatory environment for crypto, by engaging with policymakers and regulators around the world. Coinbase has a reputation for being compliant and transparent, which may appeal to institutional investors who value trust and security.
Third, Blackrock and Vanguard may simply be following the market demand for Coinbase’s shares. As index fund providers, they have to buy and sell stocks according to their weight in the indexes they track.
For example, Coinbase is included in the Nasdaq Composite Index, which means that any fund that follows this index has to buy some amount of Coinbase’s shares. This creates a passive inflow of capital into Coinbase, regardless of its fundamentals or prospects.
Whatever the reasons behind their investments, Blackrock and Vanguard’s ownership of Coinbase is significant for several reasons. First, it shows that crypto is becoming more mainstream and accepted by traditional investors. Second, it gives Coinbase more credibility and legitimacy in the eyes of regulators and the public. Third, it creates a potential alignment of interests between Coinbase and its major shareholders, who may support its long-term vision and growth.
However, there are also some challenges and risks involved. For one thing, Blackrock and Vanguard’s ownership of Coinbase may create some conflicts of interest or tensions with other crypto stakeholders. For example, some crypto enthusiasts may see Blackrock and Vanguard as part of the old and centralized financial system that crypto aims to disrupt or replace. Some crypto innovators may also fear that Blackrock and Vanguard may exert undue influence or pressure on Coinbase’s decisions or policies, especially if they conflict with their own interests or views.
Another challenge is that Blackrock and Vanguard’s ownership of Coinbase may expose them to more volatility and uncertainty than they are used to. Crypto is a highly dynamic and unpredictable market, where prices can fluctuate dramatically in a short period of time. Crypto is also subject to various regulatory and legal risks, as different jurisdictions have different rules and attitudes towards crypto. Crypto is also prone to cyberattacks and hacks, which may compromise the security and integrity of the platforms and assets involved.
Blackrock and Vanguard’s ownership of Coinbase is a remarkable phenomenon that reflects the growing adoption and integration of crypto in the mainstream financial system. It also presents both opportunities and challenges for both parties, as well as for the wider crypto community and industry. It will be interesting to see how this relationship evolves over time, and what impact it will have on the future of crypto.