According to Coinbase’s official blog, the onboarding of a “set of world-class clients that includes leading crypto hedge funds, exchanges, and ICO teams” will commence. What does that mean for institutional investors? Essentially, Coinbase Custody will open its doors to eligible financial institutions and hedge funds, providing them with “battle-tested cold storage for crypto assets, an institutional-grade broker-dealer and reporting services, and a comprehensive client coverage program.”
Coinbase currently harbors over $20 billion in crypto assets. This newly announced initiative offers an independent solution for institutional investors and an arsenal of tools that include:
Coinbase took the time to leverage the expertise of Electronic Transaction Clearing (ETC), an SEC-registered broker and Financial Industry Regulatory Authority (FINRA) member subject to regulatory financial reporting and auditing. Coinbase Custody offers support for its existing suite of cryptocurrencies to retail investors (which include Bitcoin, Ethereum, Litecoin and Bitcoin Cash). Hot wallets, in addition to cold storage, will be segregated to facilitate scheduled withdrawals and transactional flexibility.
According to Cointelegraph, Coinbase will offer Coinbase Custody to Asian institutional investors later this year while simultaneously working with US federal regulators to obtain its own federal banking license. Obtaining a federal banking license with US authorities could be huge for Coinbase — it would be one of the biggest financial institutions to offer cryptocurrency investment products on top of traditional securities products. Coinbase Custody is currently open to clients in both the U.S. and Europe.
This announcement pits Coinbase in an interesting position — rumors have been circulating that Robinhood has also been speaking to U.S. authorities to potentially obtain a federal banking license that would expand upon its current stock and cryptocurrency trading platform for retail investors. As cryptocurrency continues to establish itself as a prominent vehicle for investment in the financial industry, it will be interesting to see which fin-tech startups and traditional banking institutions will gain a foothold amongst the general public.