Home / Crypto Currency / New York Gives Coinbase Green Light to Offer Regulated Crypto Custody

New York Gives Coinbase Green Light to Offer Regulated Crypto Custody

nydfs bitlicense


Coinbase has made yet another pioneering move in the regulatory morass that is cryptocurrency. The company today announced that its institutional wing, Coinbase Custody Trust Company, has received approval from New York State regulators to operate as an “independent Qualified Custodian.”

Coinbase May Operate as Qualified Custodian

A qualified custodian operates similarly to a bank, so much so that it is sometimes referred to as “custodian bank,” in that it is authorized to hold money for other people. In general, the purpose of a custodian is to minimize theft and/or loss of funds. Coinbase is among the first cryptocurrency firms to achieve this status, with BitGo having recently received approval from the South Dakota Division of Banking to operate as a qualified custodian as well.

Coinbase Custody Trust Company is legally a separate company from Coinbase. This means its funds and accounts will be organized separately from existing capital and funds held by Coinbase.

The move does not affect everyday users of Coinbase products, although larger holders may find they have new options and products available to them in the coming months. It remains to be seen if Coinbase will seek approval from other jurisdictions, such as the EU, for similar licensing. According to the New York Department of Financial Services announcement, the firm is also legally authorized to protect crypto assets.

Coinbase cryptocurrency exchange

According to Coinbase, this is an important addition for their clients, the vast majority of whom use the firm to be sure they are legally transacting in the cryptocurrency space. On their blog, the company wrote:

“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.”

The keyword here is compliance. While many in the Bitcoin community still take issue with the “Bitcoin bank” business model or the influx of traditional financial operators into the crypto space, plenty of newer converts and people interested in cryptocurrency have a much greater fear of government reprisal for the unregulated use of cryptocurrencies. The move also adds a degree of accountability to Coinbase in terms of holding a great deal of currency — with the new services they can offer larger clients they also now have a new range of penalties and investigative angles they are open to.

Cryptocurrency No Longer a Fringe Asset

Not so many years ago, to invest in Bitcoin was widely considered either foolhardy, overly idealistic, or downright outlandish. Today, however, there is no major financial firm nor entity which has not taken note of the plane-shifting asset class. The majority of them have active plans in place to deal with the new reality: blockchains are here to stay, and the tokens that power them are mighty valuable. Folks like veteran banker Jamie Dimon may continue to disparage cryptos while quietly strategizing to profit from them, but today’s smart money knows better than to believe his epithets.

Coinbase has, since its inception, understood what cypherpunks might prefer to minimize or ignore: Bitcoin and other cryptocurrencies have the best chance of survival when governments do not actively have them in their crosshairs. The establishment and licensure of Coinbase Custody is only the company’s latest move in line with this philosophical realism.

Images from Shutterstock

Follow us on Telegram or subscribe to our newsletter here.
Read more

Check Also

Bitcoin Cash Price Gets Skewed due to Exchange Trickery

A lot of confusing action is taking place where the Bitcoin Cash price is concerned. Although its actual decline in value is quite obvious for everyone to see, the real price of BCH is not necessarily what people can see on Coinmarketcap. This is primarily because numerous exchanges treat BCHABC as Bitcoin Cash already despite nothing being decided in terms of which chain will be the longest. Bitcoin Cash Value Fluctuates Heavily Depending on where traders look at, the price of Bitcoin Cash will be either close to the $400 level or down to $250-ish. That is quite a large gap between prices, yet one that is also very easy to explain. Bitcoin Cash, as people knew it before the fork, no longer exists. Most professional exchanges have also retired this price ticker, for the time being. As the hash war rages on, there are still a lot of unknown factors waiting to be addressed. Despite this ongoing kerfuffle, there is a net 5.76% decrease in the Bitcoin Cash price, and a 5.4% decline over Bitcoin. More specifically, that is what CoinMarketCap reports at this time, although this is not necessarily the case whatsoever. In fact, some exchanges are clearly jumping the gun by labeling BCHABC as BCH and thus dragging the Bitcoin Cash price down a bit more. Exchanges currently engaging in this activity include Bittrex and Coinex, neither of which plays a big role of importance when it comes to trading. However, based on the current value of BCH on Bitfinex and Gate.io, it seems a similar incident is taking place. One also has to keep in mind Bitcoin Cash was getting battered ahead of the network split as well. Most exchanges have halted trading of BCH indefinitely, primarily because the currency no longer exists. It is evident either BCHABC or BCHSV will take over that name in the future, but nothing has been decided at this point. As such, any trading referring to just “Bitcoin Cash” or “BCH” should be avoided, as most users can never be sure which currency is effectively being traded under this name. All of this skews the picture pertaining to Bitcoin Cash altogether. Coinmarketcap reports there is still $392m in trading volume for BCH, even though that is virtually impossible right now. With so many exchanges freezing deposits and withdrawals, it is evident actual BCH trading is no longer possible whatsoever. Virtually all platforms have deposits of BCHSV and BCHABC frozen as well, which only makes this market trend more confusing. It is safe to say the entire network split has been a bit of a mess first and foremost. In the case of Bitcoin Cash itself, that name will – under the current circumstances- not be used across exchanges for much longer. Instead, the two separate camps need to be treated as such first and foremost. Until things settle down – with might not necessarily happen anytime soon – the Bitcoin Cash price itself is pretty much irrelevant for most traders and speculators. Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency. The post Bitcoin Cash Price Gets Skewed due to Exchange Trickery appeared first on NullTX.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Disclaimer: Trading in bitcoins or other digital currencies carries a high level of risk and can result in the total loss of the invested capital. theonlinetech.org does not provide investment advice, but only reflects its own opinion. Please ensure that if you trade or invest in bitcoins or other digital currencies (for example, investing in cloud mining services) you fully understand the risks involved! Please also note that some external links are affiliate links.