As Bitcoin Prices Soar, Cryptocurrency ‘Unicorn’ Coinbase Levels Up With a New Hire
As the price of Bitcoin zooms to its highest ever heights, the cryptocurrency’s most valuable startup is preparing for adulthood.
Coinbase, one of the world’s first Bitcoin brokers, last appraised by investors at $1.6 billion in August, is adding a president and chief operations officer to its ranks. The so-called unicorn startup—industry jargon for private businesses valued at $1 billion or more—has selected Asiff Hirji, a former top executive at Hewlett Packard (HPE) and TD Ameritrade, as its number two ranking executive.
“It’s a huge hire for us,” says Brian Armstrong, CEO and co-founder of Coinbase and honoree on this year’s Fortune 40 Under 40 list. “This is going to give us a ton of leverage to grow our existing businesses.”
Most recently, Hirji had been advising portfolio companies, including Coinbase, for the Silicon Valley venture capital firm Andreessen Horowitz, which led a $25 million fundraising round in the company in 2013. To date, Coinbase has raised a total of $217 million, making it the world’s most well funded cryptocurrency venture.
“We’ve seen some of our highest trading days ever in the last few days,” Hirji says, noting that the volume of activity on Coinbase’s exchanges has increased eight-fold since June. (He declined to reveal exact figures.)
“This is no longer a fringe thing just for fan boys,” Hirji says. “The Wall Street crowd and traditional old guard in the financial world are jumping in as well.”
Indeed, several exchanges, including Chicago’s CME Group, have announced plans to offer Bitcoin futures contracts. Other companies, like Square (SQ), are riding the Bitcoin buzz by letting people buy and sell the cryptocurrency on its Cash App.
The newfound competition means Coinbase must continue to innovate to stay ahead. With the new hire, Armstrong said he planned to focus more on leading the product vision and launching new business units.
In recent months, Coinbase debuted Toshi, a WeChat-like app with cryptocurrency at its core. The company also unveiled a custodian service that offers to securely store cryptocurrency holdings for institutional investors, like hedge funds.
“As the asset class becomes more mainstream, more opportunities are going to present themselves,” Armstrong says.
Coinbase faces regulatory challenges as well. A court recently ruled that Coinbase must report information on 14,355 customers to the IRS for tax accounting purposes, an outcome Armstrong regards as a partial victory.
“Overall we’re pretty happy with the result,” Armstrong says, noting that the IRS, which originally sought information on all Coinbase customers, would narrow its scope by 97%. “We would have rather it had gone down to zero,” he adds.
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As mainstream interest in Bitcoin continues to heat up, there’s been no shortage of financial tycoons weighing in on the cryptocurrency’s promise and perils. J.P. Morgan Chase (JPM) CEO Jamie Dimon recently called the cryptocurrency a “fraud,” while a Nobel Prize-winning former economist at the World Bank said that it should be “outlawed.”
Asked his opinion about those disparaging remarks, Hirji remains unruffled.
“I think the Dimon quote will end up there with the Ballmer quote on the iPhone and the Ken Olsen quote on the PC,” Hirji says, referring to former Microsoft CEO Steve Ballmer’s miscalculation about the world’s transition to mobile devices and the founder of Digital Equipment Corporation’s misstep about the personal computer before him.
“It’s going to be in that pantheon,” he says.