Coinbase has been one busy cryptocurrency exchange lately. Their latest move targets massive institutional investors with the launch of Coinbase Custody.
Coinbase, the San Francisco-based exchange, has grown in size as the value of Bitcoin and other cryptocurrencies shot up over the years. Founded in 2012, the exchange now boasts of over $20 billion in crypto assets. They have over 20 million users, and they’re making a huge push to bring in some of the financial world’s heaviest hitters by launching Coinbase Custody.
Go Big or Go Home
The cryptocurrency exchange states that the mission of this new service is to make “digital currency investment accessible to every eligible financial institution and hedge fund in the world.” The battle plan for this mission is to combine the exchange’s cold storage ability with a client coverage program and an institutional-grade broker-dealer and its reporting services.
The launch of this new service is expected. This new service is part and parcel of a slew of new institutional investor-focused services the exchange announced a few months ago, such as Coinbase Prime and Coinbase Markets.
This is a strong move by the exchange and, over the long-term, a smart one. The financial behemoths that once mocked Bitcoin and other virtual currencies are now starting to make their way into the cryptocurrency market. They smell profit, and they’re putting their considerable financial resources behind these initial forays.
Coinbase Custody is officially open for business, providing secure storage of crypto assets for institutions in both the US and Europe. Before the end of the year, we hope to bring this offering to Asia as well. https://t.co/KDtMQ5TT3B
— Coinbase (@coinbase) July 2, 2018
To be honest, this is a good move for the cryptocurrency space as well. An infusion of massive capital not only helps bring further legitimacy to the market, but it should also help buoy prices as well. As Coinbase CEO Brian Armstrong notes:
Over 100 hedge funds have been created in the past year exclusively to trade digital currency. By some estimates there is $10B of institutional money waiting on the sidelines to invest in digital currency today.
Coinbase is certainly expanding, and there have been a fair number of changes over the last year. The GDAX platform was renamed to Coinbase Pro, bringing a change to the UI. The exchange also announced support for Ethereum Classic, as well as their intention not to add any more digital currencies for the foreseeable future.
It is to be hoped that Coinbase will provide better customer support to the new heavy hitters coming in that they’ve given their rank-and-file users over the last year. The platform was caught unprepared for their rapid growth as millions of people jumped onto the crypto investing bandwagon. To be fair, they have beefed up their support staff and have cut down the backlog by 95 percent. Of course, one would assume that a corporate hedge fund or other institutional investor with millions of dollars will get instantaneous customer support in comparison to a normal user with a few thousand dollars invested in the platform.
Snarkiness aside, this is a positive development. Coinbase Custody aims to protect their clients’ crypto wealth by multiple layers of security, on-chain segregation of crypto assets, strong cold storage auditing and reporting, and split, offline private keys that require a quorum of agents (spread across multiple geographic locations) to sign any transaction.
Do you think the launch of Coinbase Custody will make the cryptocurrency space stronger? Let us know in the comments below.
Images courtesy of Shutterstock and Twitter/@coinbase.