20 Aug 2021 · 2 min read

Coinbase Plans to Spend More of its Cash on Crypto After USD 500M Buy

The crypto exchange giant Coinbase has stated that it wants to spend even more of its profits on buying cryptoassets – but has admitted that its plans will hinge on the sector’s growth prospects.

Source: AdobeStock / photo_gonzo

The company and its CEO Brian Armstrong were speaking after Coinbase unveiled plans to splash USD 500m of balance sheet funds on coins, including ethereum (ETH), as well as unspecified “proof-of-stake assets” and decentralized finance (DeFi) tokens “in addition to bitcoin (BTC).”

Armstrong made his announcement on Twitter, while the company also affirmed its plans in a blog post – explaining that it would be investing 10% of all of its quarterly profits in crypto purchases.

But Armstrong hinted that the move might lead the company yet further away from its still largely cash-based model. He wrote:

“I expect this percentage to keep growing over time as the cryptoeconomy matures. Hopefully, over time we can operate more of our business in crypto – today it is still a mix.”

The CEO claimed that the Coinbase board had signed off on the move after agreeing to a “change in our investment policy.”

The firm wrote that it had “committed to invest USD 500 million of our cash and cash equivalents” in the purchases. Per a filing made to American regulators in February, the firm has already made substantial BTC and ETH purchases, in addition to smaller amounts of stablecoins and unspecified altcoins.

According to Bitcoin Treasuries data, the company already has BTC 4,487 (around USD 211.4m at the time of writing) in its coffers.

And in a move likely designed to further attract the attention of long-term crypto folks, the company sought to assure shareholders and customers that the buy was no mere PR stunt.

Coinbase explained:

“We are long-term investors and will only divest under select circumstances, such as an asset delisting from our platform.”

The firm added that its purchases will be “executed via our over-the-counter desk or away from our exchange to avoid any conflict of interest with our customers.”

The news may have come a little too late for the financial markets in New York, but all eyes will doubtlessly be on the exchange’s share prices once Friday trading begins. However, Coinbase has enjoyed a good end to the week, with buoyant crypto prices pushing share prices up to over USD 248 – a rise of almost 1.6%, per Nasdaq data.

The company was also bolstered by the news this week that its Coinbase Japan subsidiary has officially opened its doors for business – becoming the first North American crypto exchange to open a trading platform in the lucrative East Asia region.

____

Learn more:
- Coinbase Plans to Spur ‘Commerce’-based Crypto Usage for Customers, Merchants
- Coinbase Stops Bitcoin SV Trading Following 5th Attack

- Crypto Exchange Self-Regulation Kicks In as Regulators Start to Kick
- Strike Issues a Live-or-Die No-Fee 'Challenge' to Coinbase, CashApp, Venmo

- BitClout Investors Coinbase & Blockchain.com Step Up Their Shilling Efforts
- Coinbase Mulls Ethereum Collateral Amid Lending Program Expansion

- Coinbase Says It Is Targeting More Users, Not Lower Fees
- Considering Working For Coinbase? Here's Their New Compensation Policy