Coinbase Custody, the institutional arm of Coinbase, announced on Oct. 23 that it had obtained a license from the New York Department of Financial Services (NYDFS) to operate as an independent qualified custodian for digital currencies.
“More Than Just a License” for Coinbase Custody
Coinbase Custody Trust Company LLC will function as a stand-alone limited purpose trust company under the New York State Banking Law. Within a constantly evolving regulatory environment, this authorization represents additional regulatory clarity for institutions that seek to invest with legal certainty, which will also allow Coinbase Custody to compliantly store more assets and add new features like staking.
Coinbase Custody will be capitalized independently from its parent company, Coinbase Inc., and will fall under the same compliance, security, and capital requirements as traditional fiduciary custodial businesses. In other words, the license by the NYDFS verifies that Coinbase Custody has met all banking standards in terms of capitalization, antimoney laundering policies, confidentiality, security, and storage. Hence, it offers secure custody services to its customers for Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, and XRP.
In a press release announcing the matter, Financial Services Superintendent Maria T. Vullo said:
“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.”
Asiff Hirji, president and COO of Coinbase, on his part said:
“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.”
Coinbase Custody Added to a Short List of Licensed Crypto Custodians
As a strong proponent for digital currencies, the Department of Financial Services previously granted a virtual currency and money transmitter license to Coinbase Inc. in January 2017 to buy, sell, send, receive, and store cryptocurrencies. Coinbase Custody becomes the 11th company, including Gemini and BitGo, to obtain regulatory approval for offering crypto custodian services. With the influx of more institutional investors in the crypto industry, Coinbase Custody will have the opportunity to expand its customer base by providing products and services tailored to their needs.