Coinbase Cryptocurrency Exchange Ready To Operate As Qualified Custodian

The Coinbase cryptocurrency exchange announced on October 23 that its institutional wing, Coinbase Custody Trust Company has received approval from the New York Department of Financial Services (DFS) to operate as an independent “Qualified Custodian”. A qualified custodian functions so much like a bank that it is sometimes referred to as “custodian bank”. The purpose of a custodian is to minimize the loss of funds or theft.

Coinbase Inc. has held Money Transmitter and Virtual Currency licenses from the New York State regulators, DFS, since 2017. The state regulators had also approved Coinbase Trust to offer secure custody services for six of the largest cryptocurrencies: Bitcoin Cash, Ethereum, Bitcoin, XRP, Litecoin and Ether Classic.

Coinbase is among the first cryptocurrency exchanges to achieve the status of a qualified custodian. The BitGo exchange also recently received approval from the South Dakota Division of Banking to operate as a qualified custodian. Legally, the Coinbase Custody Trust Company is a separate company from Coinbase. Hence the funds and accounts of the former will be separately organized from the capital and funds held by the latter.

The DFS has proven itself to be a strong advocate since 2014 in its support for the responsible growth of the crypto industry. The New York State Limited Purpose Trust charter builds on the unparalleled success of DFS as a crypto custodian while holding the company to the same exacting fiduciary standards of other, old financial institutions operating in New York. Coinbase Custody has been enabled by the New York State Limited Purpose Trust charter to act as a qualified custodian for crypto assets, as stated in the DFS press release.

This move does not impact the everyday users of cryptocurrency exchange Coinbase’s products. However, large holders may find new products and options available to them in the coming months. Only time will tell if Coinbase will seek approval from other jurisdictions such as the EU for a similar licensing. The exchange is also legally authorized to protect crypto assets, as stated in the CCN report.

The post Coinbase Cryptocurrency Exchange Ready To Operate As Qualified Custodian appeared first on OWLT Market.

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