Image Courtesy: Coinbase
Popular cryptocurrency exchange Coinbase has recently got an official approval from New York State regulator to provide safe and secure custody services for digital currencies. The New York State Department of Financial Services (NYDFS) has given an official approval to Coinbase Custody Trust Company LLC, to operate as “limited purpose trust company”.
The Coinbase Custody Trust is a wholly owned subsidiary of Coinbase Inc. As part of the latest approval, Coinbase Custody will provide secure storage solutions for top 6 cryptocurrencies including Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Ripple (XRP) and Litecoin (LTC).
The inclusion of XRP for Coinbase Custody storage comes as a surprise considering that the Coinbase exchange has not yet listed the cryptocurrency. Hence, everyone is now speculating whether Coinbase is soon planning to list XRP on its crypto trading platform.
Financial Services Superintendent Maria T. Vullo showered praises on NYDFS for its decision, saying “Today’s approval further demonstrates that the state regulatory system is the best arena in which to responsibly supervise the growing fintech industry within a sound and compliant framework.”
Targeting Institutional Players
Earlier this year in July, the company launched the Coinbase Custody service targeting businesses and institutional players. With multiple exchange hacks reported this year causing a loss of millions of dollars, safe and secure custody solutions are the demand of the crypto industry.
While launching the custodial services, Coinbase said: “Coinbase Custody is a combination of Coinbase’s battle-tested cold storage for crypto assets, an institutional-grade broker-dealer and its reporting services, and a comprehensive client coverage program.”
To get financial institutions to participate in the crypto industry, it is necessary that a conducive environment is first created. This includes developing crypto institutional products and storage services which will help to cement their trust and confidence in the crypto market.
The Coinbase Custody will incorporate a range of security measures like “robust cold storage auditing and reporting”, “on-chain segregation of crypto assets,” and “offline, multi-sig and geographically distributed transaction protection”.
Coinbase CEO and President - Asiff Hirji lauded the decision by NYDFS saying that the regulator has been a strong advocate for the responsible growth on the crypto industry. Hirji added: “The New York State Limited Purpose Trust charter, which now enables Coinbase Custody to act as a Qualified Custodian for crypto assets, builds on our unparalleled success as a crypto custodian while holding the company to the same exacting fiduciary standards and oversight of other, mature financial institutions operating in New York.”
Note that the Coinbase Custody Trust is a separate entity from Coinbase. Hence its funds and accounts will be organized separately from the existing capital held by Coinbase.