New York permits Coinbase to provide regulated custody for digital currency

New York permits Coinbase to provide regulated custody for digital currency
Oct 24, 2018 by Rico Wise

Coinbase has achieved one more goal in the regulatory chaos of digital currency. Today, the firm has made an announcement about obtaining the approval from the state policymakers of New York to operate the Coinbase Custody Trust Company as an “independent Qualified Custodian”.

The qualified custodian works like a banking institution, sometimes even being called a “custodian bank”, because it has the right to temporarily hold other people’s funds. Generally, a custodian is needed to decrease the amount of thievery and/or loss of money. Coinbase is one of the first crypto-related companies to reach such a status, with one of the other few companies being BitGo, which was recently approved by the South Dakota Division of Banking to take the same position.

In terms of legal matters, Coinbase Custody Trust Company and Coinbase itself operate separately, meaning that their funds and accounts will have individual organization, and the custodial service will have nothing to do with funds belonging to Coinbase.

This news does not in any way touch common clients of Coinbase, however, major holders have become enabled to explore new options and solutions at hand in the upcoming months. It is yet unknown if the company will look for approval in other jurisdictions, such as the European Union, to get similar license. Additionally, New York has authorized the company to protect digital assets, which is important for the clientele, as now the operations are regulated, which assures their lawfulness.