On Thursday, November 16, Coinbase announced the launch of “Coinbase Custody” – an enterprise-grade security platform designed specifically to entice hedge funds to begin investing in cryptocurrencies through Coinbase.
Sign ups have already began, with the exchange limiting Custody users to institutions “with $10M or more in deposits.”
The security suite will offer a slew of advanced, custodial security services that will allow hedge funds to build up positions in bitcoin and ether without having to worry about many of the security issues that mainstream crypto users traditionally face.
For now, Custody users can:
- set withdrawal limits
- whitelist IP addresses
- segregate duties
- audit trails
- set up multiple signers
- apply for circumstantial insurance
- get support from account reps
Brian Armstrong, Coinbase’s chief executive officer, made no secret that the new Custody platform is part of the exchange’s larger maneuver to begin penetrating the institutional investment space:
“Over 100 hedge funds have been created in the past year exclusively to trade digital currency. By some estimates there is $10B of institutional money waiting on the sidelines to invest in digital currency today.”
Indeed, only big-time players will be allowed to use Custody. Investors will have to pay a $100,000 USD starter fee, as well as a monthly assets fee.
Many hedge funds have been increasingly interested at joining the cryptocurrency craze in recent months but have held out until now to avoid the security risks of the fledgling space. Custody could change that dynamic for good.
Will Ethereum and Bitcoin have another titanic year in 2018 on the backs of institutional investors? It’s possible, but the verdict is still out.
What is clear, though, is that Coinbase is looking to add new digital assets for both Custody and normal users. Specifically, they’re looking to add ERC-20 tokens.
That means both Bitcoin and altcoin markets may soon be facing a bona fide institutional investment surge.
TLDR: Coinbase is launching “Coinbase Custody,” a security platform to entice hedge fund crypto investors offering unparalleled, institutional security measures.