On Tuesday, October 23rd, New York regulator – New York State Department of Financial Services (NYDFS) – issued an official approval to Coinbase Custody Trust Company LLC, to operate as “a limited purpose trust company”.
The Coinbase Custody is a wholly owned subsidy of the Coinbase Global Inc. As a part of the recent approval, Coinbase Trust can provide custody services for Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), XRP (XRP), Ethereum Classic (ETC), and Bitcoin Cash (BCH).
It is surprising to see Coinbase providing custody services for XRP considering that it has yet not listed the token on its exchange. This has caused many to think whether Coinbase is preparing itself for a possible listing or not.
Now, Coinbase, being a qualified custodian, will function somewhat similar to a bank. A custodian service is authorized to hold money on behalf of people with an aim to minimize thefts and loss of funds. Coinbase officially launched its custody service ‘Coinbase Custody‘ back in July 2018, This service aims at targetting institutional players while providing them a conducive environment to participate in the crypto market. At the time of launch Coinbase said:
“Coinbase Custody is a combination of Coinbase’s battle-tested cold storage for crypto assets, an institutional-grade broker-dealer and its reporting services, and a comprehensive client coverage program.”
On receiving the latest regulatory approval, Coinbase president and COO Asiff Hirji praised the decision saying that NYDFS has been “a strong advocate” for the “responsible growth of the cryptocurrency industry.”
“Since 2014, the New York Department of Financial Services has proven itself to be a strong advocate in its support for the responsible growth of the cryptocurrency industry. The New York State Limited Purpose Trust charter, which now enables Coinbase Custody to act as a Qualified Custodian for crypto assets, builds on our unparalleled success as a crypto custodian while holding the company to the same exacting fiduciary standards and oversight of other, mature financial institutions operating in New York. We applaud the leadership Superintendent Vullo has shown to guide the responsible growth of the cryptocurrency ecosystem and look forward to working with their offices in the future,” the president said.
Financial Services Superintendent Maria T. Vullo stated:
“New York continues to be a leader in creating, fostering, and responsibly regulating a financial services marketplace that promotes innovation, safeguards the industry and protects consumers through strong supervision. Today’s approval further demonstrates that the state regulatory system is the best arena in which to responsibly supervise the growing fintech industry within a sound and compliant framework.”
As reports on the increase in institutional participation are getting further steam, a number of other cryptocurrency startups are gearing up to launch custodial solutions. Last month in September, BitGo received regulatory approval to launch its own custody services for crypto assets.