Bay area-based cryptocurrency exchange Coinbase is set to acquire Tagomi, a prime brokerage platform focused on digital asset trading.
The two companies revealed the deal is expected to closer later this year, while they managed to not share the financial terms.
“We are going to be integrating the Tagomi platform into our product suite and…
it will form the foundation for the future of our institutional trading business,”
said Shan Aggarwal, head of corporate development at Coinbase.
In terms of how the setup will pan out, Aggarwal added: “Tagomi will continue to operate for the near future. We’re still thinking through long-term options.”
The Coinbase purchase of Tagomi has been in development since 2019 when the deal was “too soon”. A source familiar with both sides of the talks said it was an “all-stock deal” and “significantly less” than the $150 million reported last year.
Crypto prime brokerage, which offers institutional clients more convenient access to liquidity, custody, lending and other products, is definitely on a roll right now. Genesis Trading (owned by CoinDesk parent DCG) recently pulled in crypto custodian Vo1t in a chance to become a prime broker, London-based Bequant spring up a prime brokerage service in early May and BitGo announced a prime brokerage play in late May.
Coinbase’s buy comes at an intersection for the industry, with recent moves by Paul Tudor Jones serving as a signal for bitcoin acceptance from leading hedge fund and macro investors. Coinbase also said it has witnessed a 100% increase in volume from professional and institutional traders over the past quarter.
However, some commentators may see the Tagomi deal as consolidation in a slowed market, compared to the eagerly anticipated arrival of traditional institutional investment.
“We think we will still be able to deliver really great pricing to our clients,” said Bhargava.
“Obviously, we will still have market maker relationships. Over time, we’ll disclose which exchanges we continue to work with.”