Coinbase, the world’s largest crypto exchange with more than 20 million active users, has launched a custodian solution for large institutional investors that could bring billions of dollars worth of new capital to the crypto market.
Welcome traditional investors
Sam McIngvale, a product leader at Coinbase Custody, said in a company statement that Coinbase has officially launched its trusted custodian platform with partners such as Multicoin Capital, who are able to assist companies with the custody of a range of institutional crypto products.
In the coming months, Coinbase will serve a variety of institutional investors such as academic institutions, hedge funds and pensions and stressed that it will continue to attract new clients such as crypto-hedge funds, stock exchanges and ICOs.
Coinbase or Bitcoin Code?
“Coinbase Custody is a combination of Coinbase’s battle-proven cold storage for Bitcoin Code assets , an institutional broker-dealer and its reporting services, and a comprehensive client coverage program that bridges the gap between major investors and the crypto currency market.
Kyle Samani, partner at Multicoin Capital, a crypto hedge fund working with Coinbase to develop the company’s custodian solution, said last year large institutional investors tried to invest in digital assets but failed due to a lack of robust and trusted services.
“There are many investors where safekeeping is the last obstacle. In the course of next year, the market will see that the custody problem has been solved. This is going to create a big capital wave.”
This week, the Company announced that Coinbase Custody will use the systems of Electronic Transaction Clearing (ETC), a broker-dealer registered with the SEC and subject to intensive financial reporting and review. The partnership with ETC and the unique digital asset storage system will provide a safer and more efficient ecosystem for large investors looking to enter the market. Coinbase protects the funds of institutional investors by complying with the following four guidelines:
Digital asset transactions are signed and transferred on-chain
Offline private keys that require geographically distributed agents use cryptographic hardware to transfer transactions
Solutions for traditional Bitcoin Code investors
In May 2018, Coinbase Vice President and General Manager Adam White announced the formation of an institutional coverage group whose main task is to serve institutional investors in the crypto market. White revealed that the institutional coverage group consists of bankers and experienced investors from Bitcoin Code the world’s largest financial institutions such as the New York Stock Exchange, Morgan Stanley, the US Securities and Exchange Commission (SEC) and the Commodities and Futures Trading Commission (CFTC).
Based in our New York City office, this group brings years of diverse and relevant institutional experience from companies such as the New York Stock Exchange, Morgan Stanley, the SEC and the CFTC. By accompanying clients through the onboarding process and advising on execution strategies, this team will provide a world-class client experience.
Institutional investors until September
Ari Paul, a prominent analyst and founder of the crypto hedge fund BlockTower, said in late May that the crypto market will see the emergence of trusted custodian solutions by the end of September.
While Paul explained that custody is necessary for institutional investors to engage in the market, he also stressed that major investors in a market that has just created its first custody solution will probably need time for now.