Bitcoin Global News (BGN)
March 29, 2019 -- ADVFN Crypto NewsWire -- The ability to stake
crypto coins on a network and earn interest for doing so is nothing
new at this point. Still, until today, there has not really been a
staking service that targets institutional clients
directly.
As of this morning, Coinbase is
looking to change that. Starting with the Tezos network’s XTZ coin,
they will be offering a 6.6 % return, counting their fees to hold
client coins in cold storage. Due to this choice, it is reasonable
to conclude that institutional investors already own a considerable
amount of XTZ at this point.
Simultaneously, it’s reasonable to
question this decision as well due to all of the controversy that
surrounded the Tezos project last year. If you do not already know
what this refers to, keep in mind that Tezos’s co-founder was
penalized by regulators for essentially falsifying numbers related
to Tezos, while he was working at Morgan Stanley.
On top of this, as CCN and others
point out, there was also a class-action lawsuit that claimed Tezos
was an unregistered securities offering, though even this fell
under its’ share of controversy due to the alleged checkered past
of one of its’ lead plaintiffs.
Despite all of this, Coinbase has
still decided to start their institutional staking service with
XTZ. Yes, as Coindesk points out, a 6.6% return is attractive to
any investor, especially with 30-Year United States treasury bonds
falling behind in this respect.
Still, investing in any crypto
project is risky, especially for large-scale investors that are
historically risk-averse. Because of this, Coinbase will offer full
insurance for all staked funds. What speaks to the likely success
of their endeavor for now is the fact that they already have
institutional partners signed up for this service, ahead of its’
launch.
What will be interesting to see is
what negative factors also arise from this, over time. For example,
if institutions can be fully insured when they stake, what’s to
stop risk-averse individual investors from calling for the same
thing? Since Coinbase has said they are currently confident in the
service’s performance over the next six months, it is reasonable to
expect that this will become clear over that period of
time.
By: BGN Editorial Staff