Coinbase Custody Starts Letting Institutional Investors Earn off of Their Tezos Holdings

Coinbase Custody has recently revealed it’s going to let institutional investors who use its platform, which are estimated to store around $600 million worth of crypto with it, stake or “bake” Tezos (XTZ) tokens for passive income.

According to the San Francisco-based cryptocurrency exchange’s announcement, institutional investors with Tezos on their accounts will be able to take advantage of the cryptocurrency’s staking model, as it doesn’t rely on mining like bitcoin or ether do.

Currently, anyone who holds roughly $10,000 worth of XTZ tokens – about 8,000 units – can participate in its proof-of-stake model by “baking” the tokens. This means users have to run a software node, and set it up through a somewhat technical process.

Coinbase’s new offering means institutional investors will be able to offload the technical aspect of staking to the cryptocurrency exchange, and be able to easily collect passive income. This, however, comes at the cost of Coinbase’s 20% commission for the service.

Per Fortune, the firm has revealed firms like Polychain Capital and Andreessen Horowitz’s crypto-focused investment fund are looking to use the new service. Tezos’ co-founder Kathleen Breitman was quoted as saying:

The launch of Tezos staking through Coinbase Custody serves an acute need that existed up until now—a way for institutional players who want to rely on a custodian while taking an active role in the network.

Tezos is notably expected to be the first of various proof-of-stake cryptocurrencies that’s set to be listed on Coinbase Custody, allowing investors to earn on their holdings. The offering is good for Coinbase, as it gives it an alternative revenue source that could make up for the fees it has been losing over the bear market and various #DeleteCoinbase campaigns.

The firm is also reportedly planning a service that will help customers participate in decentralized voting for projects like Tezos and MarkerDAO. While Coinbase’s Tezos staking is so far only available for institutional investors, there are other options for passive income in the crypto space.

The Compound Protocol, for examples, pays users interest on their ether and other ERC-20 tokens, while BlockFi allows users to create crypto deposit accounts and earn interest. The move has seen BlockFi received $25 million in crypto for deposits merely two weeks after launching the service.

Overstock CEO Sells Shares in His Company to Invest in Blockchain Projects

Patrick Byrne, the chief executive officer of Overstock.com (OSTK), has recently lashed out at investors who questioned his sale of 900,000 of his ‘founders shares’ in the company. Justifying his move, he revealed he needed the funds to invest in blockchain projects.

According to Business Insider, Byrne recently sent a letter to shareholders after the company’s stock prices plunged over 21% this week to their lowest since 2012, after he revealed he sold 500,000 of his shares earlier this week.

On Friday, the CEO revealed he sold an additional 400,000 shares, meaning he sold over 15% of his stake in the company. Although Overstock’s shares recovered on Friday, May 17, Byrne’s letter to shareholders was notable. In it, he wrote:

I simply had to supplement my nominal salary with stock sales in order to fulfill personal commitments to invest personally in blockchain projects such as Medici Land Governance, along with a need to meet charitable pledges.

The CEO added that he doesn’t plan on giving such an explanation again, justifying that he owes shareholders “staying within the law and not making decisions based on inside information, not explanations of my life and projects outside Overstock.”

He noted that the “unanticipated stir” caused by his sale was unexpected, and added “I had no idea that shareholders would demand explanations of why and how I might want to use my cash derived from my labor and my property to pursue my ends in life.”

Byrne is notably Overstock’s largest shareholder, and noted he told investors a year ago he would be making “significant sales” to fund different projects, including those related to blockchain technologies and, presumably, cryptocurrencies.

In fact, the libertarian sold 775,000 of his shares in September of last year, before this week’s sale. The stock’s price has fallen roughly 90% from its record high in January of 2018, when Overstock was benefitting from its cryptocurrency ventures and accompanying the cryptocurrency market’s performance.

In November of last year, Byrne revealed he had plans to sell Overstock’s retail business and go “all-in” on cryptocurrencies and blockchain technology. The CEO’s plan would see the company focus on its fully-owned subsidiary Medici Ventures, which has been invested in blockchain-related startups, after selling its retail business.

Overstock's price performance over the last two yearsSource: Yahoo Finance

Byrne has notably been battling short sellers targeting Overstock, as the firm competes with the likes of eBay and Amazon. Financial analytics firm S3 Partners has estimated short bets against it stand at $157 million, or 50% of its float. This makes it more targeted by short sellers than 99% of companies in the U.S.

Despite the company’s performance on exchanges, Overstock has since launched its tZERO security trading platform, and was one of the first companies to pay a “portion” of its taxes using bitcoin in Ohio.