With Coinbase Custody, Institutional Investors Can Now Invest Billions in Crypto

Coinbase, the world's largest crypto exchange with more than 20 million active users, launched a custodian solution for large-scale institutional investors that could potentially attract billions of dollars worth of new capital into the crypto market.

Sam McIngvale, a product lead at Coinbase Custody, said in a company statement that after receiving its first deposit last week, Coinbase officially commenced its trusted custodian platform with partners like Multicoin Capital that are capable of assisting the company in maintaining a suite of institutional crypto products.

In the upcoming months, while serving a variety of institutional investors such as academic institutions, hedge funds, and pensions, Coinbase emphasized that it will continue to embrace new world-class clients including crypto hedge funds, exchanges, and ICOs.

"Coinbase Custody is a combination of Coinbase's battle-tested cold storage for crypto assets, an institutional-grade broker-dealer and its reporting services, and a comprehensive client coverage program," Filling the Gap Between Large Investors and Crypto Market".

Kyle Samani, a partner at Multicoin Capital, a cryptocurrency hedge fund collaborating with Coinbase in creating the company's custodian solution, said that throughout the past year, large-scale institutional investors tried to invest in digital assets but failed due to the lack of robust and trusted custodianship.

Samani said, noting that security has always been one of the major concerns of institutional investors regarding digital assets.

In May 2018, Coinbase vice president and general manager Adam White disclosed the formation of an institutional coverage group whose primary task is to serve institutional investors in the crypto market.

While Paul explained custodianship is necessary for institutional investors to commit to the market, he emphasized that the commitment of large-scale investors to a market that just created its first custodian solution will likely take time.

"Custody isn't binary. It's not like Coinbase Custody will launch and suddenly every pension will throw $100 million into BTC. It takes time for custody solutions to gain trustworthiness. But, I think we'll have solid third party custody by September of this year. That will allow institutional inflows to start accelerating. Once a couple big traditional money managers announce that they're including BTC as 'digital gold' in their portfolios, others will follow".

Like Paul, several billionaire investors like Mike Novogratz similarly believe that once one institutional investor commits to the market, a "Fear of Missing Out" will trigger amongst large-scale investors, leading the next mid-term rally of digital assets.