On Tuesday, the New York Department of Financial Services and Coinbase announced that the exchange now qualifies as a custodial firm for cryptocurrency. Coinbase formed a subsidiary for custodies, the Coinbase Custody Trust Company LLC. They can now offer custody services for Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), and Ripple (XRP).
Coinbase COO and president Asiff Hirji lauded the NYDFS for their role in the “responsible growth of the cryptocurrency industry”
Indeed, the NYDFS are quite crypto friendly and is already granting licenses to many companies. These include custodies, as well as general support for many other wallets and apps in the state.
NYDFS superintendant Maria T. Vullo stated, “DFS continues to work in support of a vibrant and competitive virtual currency market that connects and empowers New Yorkers in a global marketplace while ensuring strong state-regulatory oversight is in place”.
CCTC is classified as a fiduciary under New York State’s banking laws, and will have to comply with specific regulations
In a time when many are seeking specific rules to help bolster the legitimacy of cryptos, this could well be a step in the right direction.
“Coinbase Custody is an institutional-grade service optimized for storing large amounts of cryptocurrency in a highly secure way. For our customers, operating under a New York State Trust Company is more than just a new license — it’s an important piece of regulatory clarity that will allow us to compliantly store more assets and add new features like staking,” says Coinbase product lead for custody services, Sam McIngvale.
The Coinbase Custody Site Outlines the Offer
To secure the custodies, Coinbase will be keeping the assets in their own cold storage. McIngvale explains that Coinbase Custody is its own self-contained service. But it will provide the same insurance protection as the exchange. Though it’s not yet available, this service will soon support multi-user accounts, and they’re seeking ERC-20 support as well.
This recent announcement is another example of crypto and blockchain’s horizontal spread, providing new services and applications. The company is hoping this will be a foot in the door for future offerings. Fidelity and others recently launched similar products, adding to the prevalence of crypto custodies. This could ultimately attract more investors.
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