Coinbase Receives NYDFS Approval For Custody Service

Reports reaching CryptoBlockWire say that Coinbase, the biggest cryptocurrency exchange by daily trading volume, is the newest qualified custodian.

Undeniably, the exchange received the regulatory go-ahead from New York investment regulators, New York Department of Financial Services (NYDFS). Breaking the news Tuesday, NYDFS stated that it has given Coinbase a regulatory green-light to create Coinbase Custody Trust Company LLC. Similarly, the investment watchdog disclosed that with the license, Coinbase can now branch out into custody services for cryptocurrencies.

NYDFS listed the approved virtual currencies as Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), XRP, and Ethereum Classic (ETC). Altogether, Coinbase Custody Trust Company LLC will be Coinbase’s custody subsidiary.

Coinbase Mode of Operation

Currently, Coinbase offers customers the opportunity to buy, sell, and trade all the listed cryptocurrencies except XRP. However, it remains unclear why the exchange cataloged XRP,  given that some analysts asserted the exchange avoids XRP, citing legal concerns.

In appreciation, Coinbase’s Chief Operating Officer and President, Asiff Hirji, extolled the approval of their application. Hirji pointed out that the NYDFS has also championed the cause for the responsible growth and development of the digital asset industry. No doubt, there has been a growing interest among startups that are queuing up to offer custody services for cryptocurrencies. Some of these startups include Northern Trust, BitGo, Prime Trust, to mention but a few.

Official Statement

Speaking further, Hirji disclosed the role of the New York State Limited Purpose Charter. He stated that the charter enables Coinbase Custody to start acting as a qualified custodian for cryptocurrency.

The agency is building on their success as a crypto-asset custodian even as it mandates that the exchange maintains high fiduciary standards as other well-established New York-based investment firms.

Coinbase Not Settling for Custody Alone

In fact, custody service for cryptocurrency is just one area the exchange is looking to diversify its services. In June, Coinbase announced that it is working assiduously to secure a broker-dealer license from relevant regulatory agencies. Upon acquiring the license, which is an alternative trading system license, Coinbase will become a registered investment advisor in the United States.

Clarifying, the exchange disclosed that they had met all the regulatory requirements of the license issuers; Financial Industry Regulatory Authority (FINRA) and Securities and Exchange Commission (SEC). Hirji noted that upon securing the license, Coinbase will offer blockchain-based securities products.

Risk Disclosure

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