Last week Coinbase’s Custody service went live and started accepting deposits from institutional investors. In a report from Bloomberg, it is said that the new custodial service has already provided services for 10 large hedge funds and family offices. The new Coinbase Custody service provides a way for institutional investors to store and safeguard digital currencies in a manner similar to how traditional securities are stored.
Coinbase has projected a goal of providing services for at least 100 institutional customers by the end of 2018. Coinbase Custody’s product lead, Sam McIngvale, gave a statement to Bloomberg claiming as of current they are already storing more than $20 billion in cryptocurrency assets for clients such as retail investors.
Currently, custodial services are only available for Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, but the company plans on expanding to offer more support for other cryptocurrencies in the future. They have also announced they are in talks to provide services to exchanges and startups that have issued their own coins.
While Coinbase has been known to consistently meet with the Securities and Exchange Commission and other financial regulators, the official launch of it’s custodial service was not an issue and did not need specific approval as they are partnered with Electronic Transaction Clearing Inc, a company which already had the green light to offer such services.
“We sort of have an understanding with the SEC and Finra, and it allows us to execute contracts with clients and take the first deposits. The company didn’t need an official approval, as it partnered for the service with SEC-regulated broker-dealer Electronic Transaction Clearing Inc.
-Coinbase Custody project lead, Sam McIngvale
The service is part of Coinbase’s strategy to diversify revenue, and to offer more products aimed at institutional clients, McIngvale said. The company is taking on clients with a minimum of $10 million, and charges a $100,000 setup fee and 10 basis points in monthly fees.
Coinbase Custody is part of a new launch of products aimed at institutional investors. Other products include Coinbase Markets, a new electronic market that will provide a centralized pool of liquidity for Coinbase products, and Coinbase Prime, a new platform designed to provide a suite of tools and services that institutional investors rely on when trading crypto.