By Josiah Wilmoth
U.S. bitcoin exchange Coinbase has announced a digital currency custodial service built specifically for institutional investors. Named Coinbase Custody, this product will provide institutions with a secure and compliant service in which to store their crypto assets.
Coinbase Launches Cryptocurrency Custodial Service for Institutional Investors
Coinbase CEO Brian Armstrong made the announcement in a blog post, explaining that there is as much as $10 billion of institutional money waiting on the industry sidelines because investors do not have access to a trustworthy and compliant crypto asset custodian.
“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,” Armstrong said.
The service will likely attract interest from the more than 120 digital currency-focused hedge funds — most of which launched this year — as well as mega hedge fund firms that plan to enter the bitcoin ecosystem once futures contracts are actively trading.
Security and Compliance
Several other digital currency custodial services currently exist; however, they support a limited range of assets. Payment service Xapo, for instance, restricts its institutional vault service to bitcoin holdings, while cryptocurrency exchange Gemini supports bitcoin and ether. Coinbase Custody will support all major crypto assets, including bitcoin, ether, litecoin, as well as ICO tokens built to the ERC20 standard (meaning that they transact across the ethereum blockchain).
In addition to high levels of cyber and physical security, the fully-regulated service will have strict financial controls to ensure assets remain secure, and clients will have access to dedicated account representatives and phone support. Accounts can also be structured to accommodate multiple users with separate permissions.
The product is restricted to institutional investors — retail investors can already access custodial services through the main Coinbase platform — and it has a minimum deposit of $10 million. Account setup will cost $100,000, and clients will pay a maintenance fee of 10 basis points per month on assets stored.
Coinbase says the service will begin rolling out to clients in 2018.
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