One of the largest challenges of any institutional investor has just been solved by Coinbase. This challenge is where and how does such an institution – such as a hedge fund – store its millions of dollars worth of cryptocurrencies without fear of the funds being hacked and stolen as is the case with the numerous exchanges that have fallen victim to cyber crooks.
Here is where Coinbase comes in. The crypto exchange now is offering what it calls Coinbase Custody: a new storage service for institutional investors. The exchange made the announcement via twitter as follows:
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
Further investigating the new service, we find that Coinbase Custody’s mission is to make cryptocurrency investment accessible to every eligible financial institution and hedge fund around the world. Coinbase intends on being the most trusted and easiest-to-use crypto custody service available. This service will include cold storage of the clients digital assets as well as an institutional-grade broker-dealer and its reporting services. There is also a comprehensive client storage program.
Coinbase has pioneered digital storage for the last 6 years and has a track record of being in custody of up to $20 Billion in crypto assets. This experience and expertise in the industry will allow the crypto exchange to offer the following additional unique features for its clients:
- On-chain segregation of crypto assets
- Split, offline private keys that require a quorum of geographically distributed agents to use cryptographic hardware to sign transactions
- Multiple layers of security
- Robust cold storage auditing and reporting
Coinbase’s CEO, Brain Armstrong, is quoted as saying the following back in December when Coinbase announced its plans for the Custody services:
Over 100 hedge funds have been created in the past year exclusively to trade digital currency. An even greater number of traditional institutional investors are starting to look at trading digital assets (including family offices, sovereign wealth funds, traditional hedge funds, and more).
He would later add that the number one concern of these institutions with regards to cryptocurrencies was guaranteed security.
When we speak with these institutions, they tell us that the number one thing preventing them from getting started is the existence of a digital asset custodian that they can trust to store client funds securely.
So what is next for Coinbase?
The exchange plans on doing the following moving forward:
- Supporting more crypto assets other than BTC, ETH, LTC, ETC and BCH
- Addition of flexible access to funds in the form of secure, segregated hot wallets and scheduled withdrawals for maximum flexibility
- Crypto-first features such as proof of stake and distributed governance
In conclusion, Coinbase is doing all the right things to attract the much needed institutional investors that have been predicted to be capable of bringing in trillions of dollars in to the crypto markets. Perhaps it is true that today, June 2nd, is the official kick off of the 2018 Crypto Bullish season!
[Photo source, blog.coinbase.com]
