The NY A.G. report on crypto eludes to the idea that 20% of Coinbase trades are done by Coinbase. This is a misunderstanding, Coinbase doesn’t trade for the benefit of Coinbase… they fill Coinbase customer orders.
To quote Coinbase directly,
The report states: “Coinbase disclosed that almost twenty percent of executed volume on its platform was attributable to its own trading.”
Coinbase does not trade for the benefit of the company on a proprietary basis. In order to provide an easy-to-use customer experience, Coinbase Consumer quotes a price and then quickly fills the order from our exchange platform (Coinbase Markets). This takes advantage of the liquidity provided by the entire Coinbase ecosystem.
When Coinbase executes these trades, it does so on behalf of Coinbase Consumer customers, not itself.
In other words, Coinbase.com (and the related app), what they call “Coinbase Consumer,” lets customers buy and sell with the click of a button. However, Coinbase has to then fill these orders. 20% of their volume is that, the other 80% is people placing trades on platforms like Coinbase Pro.
In words, it is all customers hitting the buy and sell button, but when people use Coinbase Consumer… the Coinbase software quickly fills the order from the Coinbase Markets that others, like Coinbase Pro customers, access directly.
Bottomline: 0% of volume in the Coinbase markets is from Coinbase the company and 100% is from Coinbase customers. However, of that 100%, 20% comes through Coinbase Consumer (the Coinbase.com platform with the app that many use).
- Correcting the record: Coinbase does not engage in proprietary trading. Blog.Coinbase.com.