Bitcoin’s value may have skyrocketed recently—it’s currently at $7643— but its association with illegal practices, fluctuating price, and security risks mean traditional institutional investors often shy away from it and other cryptocurrencies.
San Francisco-based cryptocurrency exchange Coinbase hopes to change this with its new platform for big money investors like hedge funds, family offices, and sovereign wealth funds. The service, called Coinbase Custody, offers extra security measures when buying and storing digital assets, which it hopes will help attract institutional investors.
Features available to Coinbase Custody users include the ability to have multiple signers, audit trials, withdraw limits, dedicated account representatives, multi-user accounts with separate permissions, and more.
While it’s only available in “some cases,” the most compelling element of Coinbase Custody might be the option for investors to insure their holdings.
“Over 100 hedge funds have been created in the past year exclusively to trade digital currency. An even greater number of traditional institutional investors are starting to look at trading digital assets,” Brain Armstrong, Coinbase Co-Founder and CEO, wrote in a Medium Post.
“When we speak with these institutions, they tell us that the number one thing preventing them from getting started is the existence of a digital asset custodian that they can trust to store client funds securely.”
Coinbase Custody isn’t available to retail customers, only institutional investors. As such, it comes with a minimum deposit requirement of $10 million. There’s also an initial setup charge of $100,000, and a monthly fee of 10 basis points (.10 percent) based on assets stored.
While Coinbase's retail service, where it stores more than $9 billion of digital currency on behalf of customers, only supports bitcoin, Ethereum, and Litecoin, Coinbase Custody will support “a wide range of digital assets and currencies.”
Coinbase Custody will be available early next year.