Singapore state-owned fund invested in Coinbase: report

March 05, 2019 12:13
Coinbase office in San Francisco, California. The cryptocurrency exchange has received backing from institutions and firms such as GIC and Tiger Global Management. Photo: Bloomberg

Singapore state wealth fund GIC was among the entities that had backed the US$300 million funding round of US cryptocurrency exchange Coinbase last year, according to Bloomberg.

Coinbase, one of the largest platforms for buying and selling cryptocurrencies, announced the completion of a funding round in October 2018, with support from Tiger Global Management, Wellington Management, Andreessen Horowitz and others.

GIC's participation in the funding, however, wasn't known until last week, when Bloomberg reported the news, citing sources familiar with the matter.

The 2018 funding round is said to have taken Coinbase’s valuation to US$8 billion.

In an interview with Singapore-based digital media platform Mothership, GIC chief investment officer Jeffrey Jaensubhakij had said in the past that "cryptocurrency is something that goes against GIC’s investment mandate which is to ‘preserve and enhance the international purchasing power of the reserves we manage.’”

“Given that anybody can create a cryptocurrency very quickly, this raises the question of whether anyone will still stay with one or two cryptocurrencies which makes it highly speculative and not something that is set for institutional investors,” he said.

GIC chief executive officer Lim Chow Kiat added, "The biggest reasons why cryptocurrency is not attractive to institutional investors is because, it does not have regulatory safeguards.”

But now, given the news of the Coinbase investment, it suggests that GIC has shed its previous apprehensions about crypto-related investments. 

Founded in 2012, Coinbase saw its business boom as it gained tremendous popularity, with its brokerage accounts surging to over 20 million and transaction amount reaching over US$150 billion.

Backed by high-profile Silicon Valley investors including Andreessen Horowitz, Polychain Capital, Y Combinator’s Continuity fund, Draper Associates and Union Square Ventures, Coinbase has so far raised over US$546 million, according to Crunchbase.

The US-based cryptocurrency exchange allows its users to create their own cryptocurrency wallets and start buying or selling cryptocurrencies by connecting with their bank accounts, while offering payment processing systems and tools to merchants and businesses.

It mainly generates its revenues from the commissions on transactions on its platform, and the capital gain in its own crypto holdings.

According to documents seen by Bloomberg late last year, the firm was forecasting revenue for 2018 of almost US$1.3 billion. In 2017, the firm reportedly had US$1 billion in revenue.

As Singapore aims to become a financial technology hub in the region, another government-owned investment firm, Temasek Holdings, announced last October that it has invested in cryptocurrency exchange Binance, via its venture capital unit Vertex Ventures, as the exchange expands operations into the city-state, offering fiat and digital currencies exchange services.

Temasek also reportedly backed enterprise blockchain software firm and global banking consortium R3.

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