Coinbase, the leading US cryptocurrency exchange , has acquired One River Digital Asset Management, a cryptocurrency-focused institutional investment firm. The acquisition marks a significant move for Coinbase as it continues to expand its offerings for institutional clients.
Coinbase Acquires Crypto Asset Manager
With the acquisition, Coinbase will gain access to One River Digital Asset Management's institutional-grade investment expertise and technology, which will enhance its own institutional trading platform . Coinbase already offers a range of institutional services, including custody, trading, and staking, but the addition of One River's capabilities will make it an even more attractive option for institutional clients looking to invest in cryptocurrencies. After the move, One River Digital Asset Management will change its name to Coinbase Asset Management.
"We're thrilled to integrate One River's investing expertise into Coinbase. One River has pioneered institutional digital asset investing and we're looking forward to continuing their tradition of innovation," Brian Armstrong, the CEO of Coinbase, said in a blog post announcing the acquisition.
One River Digital Asset Management was founded in 2020 by a former Goldman Sachs partner, Sebastien Bea and a former Traxis and Fortress executive, Eric Peters. The firm offers institutional investors exposure to cryptocurrencies through a range of investment products, including digital asset index funds and Bitcoin futures trading strategies. After the early financing round in 2021, the company was valued at $186 million, while becoming one of the then-largest BTC holders.
The acquisition comes at a time when institutional interest in cryptocurrencies is growing. Many large institutional investors, such as hedge funds and asset managers, are beginning to allocate a portion of their portfolios to cryptocurrencies as a hedge against inflation and a potential store of value. By acquiring One River, Coinbase is positioning itself to capitalize on this trend and become a leader in institutional cryptocurrency investing.
The terms of the acquisition were not disclosed, but according to some industry sources, it might be one of the largest acquisitions in the cryptocurrency industry to date.
Acquisition after Partnership
Coinbase reported about purchasing One River a year after the two companies announced their mutual partnership to offer separately managed accounts (SMAs). One River announced the integration of a new product, ONE Digital SMA, on 13 February 2022. The product is powered by Coinbase Prime technology and is designed to allow institutional investors, particularly wealth managers, to access One River's trading expertise while holding all their assets directly on the Prime platform (Coinbase Custody). This integration provides institutional investors with a seamless and secure experience, streamlining their investment process.
Coinbase has been actively addressing the needs of institutional investors for some time now. In December of last year, Coinbase collaborated with Enfusion, a cloud-based portfolio management and risk system provider based in the Netherlands, to offer institutional investors seamless cryptocurrency trading.
Coinbase Beats Market Expectations but Reports Losses
Two weeks ago, the publicly-listed crypto exchange reported a loss of $557 million in the fourth quarter of 2022 as the net revenue plummeted 75 percent year-over-year to $605 million. However, the quarterly revenue exceeded the market estimation of $588 million.
Further, the latest net revenue strengthened from the previous quarter's dip of $576 million, thus coming in about 5 percent higher. However, the losses widened in the prior quarter.
Apart from lowering revenues, Coinbase is struggling with a lawsuit over the alleged infringement of trademarks. According to a legal filing submitted on 24 February 2023, NanoLabs, the issuer of NANO, has claimed that Coinbase's Nano Bitcoin and Nano Ether futures contract products, which have been available since June 2022, are infringing on trademark rights owned by the company. The filing was submitted in a Northern California District Court.
