Cryptocurrency Exchange Coinbase Strengthens Its Industry Position by Acquiring Paradex


Leading cryptocurrency exchange Coinbase has announced its acquisition of digital currency trading platform Paradex as it seeks to maintain its position as one of the top players in cryptocurrency exchange.

Coinbase in a statement, said the move reflects the company’s desire to provide an expanded trading platform that is both flexible and responsive to the needs of its customers.

On its cryptocurrency exchange, Coinbase operates by acting as a trusted custodian for the digital assets of its users. Paradex on the other hand does not hold tokens on behalf of its customers, users instead trade peer-to-peer, directly from their own “wallets.” Paradex also offers hundreds of digital tokens for trading, while Coinbase only offers four.

“This will significantly enhance the proposition for our customers in terms of what they want to trade and how they want to trade it,”

Asiff Hirji, Coinbase president and chief operating officer told CNBC’s “Fast Money” on Wednesday.

Peer-to-peer trading has the advantage of removing the need for third-party custodianship and the associated security risks. In a blogpost, Coinbase described peer-to-peer trading as another step toward creating a truly decentralized crypto economy.

In 2017, Coinbase reported a revenue in excess of $1 billion as the price of bitcoin skyrocketed. The company has so far traded $150 billion in assets for more than 20 million customers. And this year the San Francisco-based company, was listed in the top 10 of the 2018 CNBC Disruptor 50 list.

Hirji said the new exchange will initially only be available to customers outside of the U.S. but added that it was working towards obtaining regulatory clearance to make the product available in the U.S.

“As soon as we can we’re going to turn it on in the U.S. We’re greatly increasing the number of things you can trade and we’re doing it in a compliant way.”

According to Coinbase, it would like to list as many assets as possible, but it has had to scale back mostly due to regulatory requirements.

“As soon as there is more clarity we will list them as long as they adhere to our framework,” Hirji explained. “But clarity is needed and I don’t think we’re close to that unfortunately.”

The company also announced plans to overhaul GDAX, its flagship trading platform which was designed for professional investors. GDAX and its new product, Coinbase Pro, will exist side-by-side until June 29 when all customers will be rolled over to the newer version.

Paradex will be integrated into that new product in the coming weeks, the company said.