Coinbase Responds to Wall Street Journal Proprietary Trading Allegations in New Blog Post
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Crypto exchange Coinbase says it does not engage in proprietary trading, a speculative investment practice that is restricted by a federal regulation known as the Volcker Rule because of its role in the 2008 financial crisis.
In a new blog post, the California-based company denies The Wall Street Journal’s claim that it uses its own money to speculate on crypto assets.
A newspaper article published on September 22 states that Coinbase hired at least four top traders to use the company’s own funds to trade, invest and lock up cryptocurrencies for profit. According to the report, people at Coinbase describe the activity as proprietary trading.
“Coinbase occasionally purchases cryptocurrencies as a principal, including for our company’s treasury and operational purposes. We do not consider this to be trading because it is not intended for Coinbase to benefit from a short-term increase in the value of the cryptocurrency being 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.
“TPS’s goal is to expand institutional participation in web3 beyond HODLing.
In doing so, we are following the path blazed by Wall Street, where financial services firms offer clients multiple ways to gain exposure to new asset classes and manage specific 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 faces accusations of proprietary trading as its CEO Brian Armstrong calls crypto surveillance a national security issue in the US. The company is also preparing to offer its services in the Netherlands after becoming the first major crypto exchange to receive approval from the Dutch central bank to operate in the country.
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