How Coinbase Custodial Account Works

A Coinbase custodial account is a type of account that allows institutions and organizations to store and manage their cryptocurrency assets securely.

These accounts are designed to provide an additional layer of security and compliance for institutions, who may need to store large amounts of cryptocurrency.

The account is managed by Coinbase, which is responsible for the security and integrity of the assets.

The account can be accessed by authorized individuals, who can view and manage the assets in real-time.

Coinbase Custody is a digital currency custodian designed specifically for institutional investors. It's a new product from Coinbase, a company that's already storing over $9 billion of digital currency on behalf of its customers.

Coinbase Custody addresses a major pain point for institutional investors: the lack of a trusted digital asset custodian. These investors, including hedge funds, family offices, and sovereign wealth funds, have been hesitant to enter the digital currency market due to concerns about security and trust.

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Here are the key features of Coinbase Custody:

With Coinbase Custody, institutional investors can finally find a secure and trustworthy solution for storing their digital assets.

Custody of crypto assets has become a pivotal issue due to the systematic de-banking of the industry amid an ongoing banking crisis.

The federal government's actions have led some to believe that there's a deliberate campaign to choke crypto off from its access to fiat dollars, known as Operation Chokepoint 2.0.

The failure of three crypto-friendly banks this year, including Silicon Valley Bank, which offered crypto custody to clients, has raised concerns about the stability of the industry.

The SEC has cracked down on crypto businesses, including custody, with SEC chair Gary Gensler making it clear that FTX and similar scandals were on his mind when the SEC published the QC proposal in February.

Critics of the SEC's proposal argue that it effectively financially punishes custodians of crypto assets, making providing these services unattractive, as seen with staff accounting bulletin 121 issued in May 2022.

The SEC's stance has led to a lawsuit by Custodia Bank, a Wyoming-based bank that was denied membership in the Federal Reserve system in January, highlighting the challenges faced by crypto-focused institutions.