NY gives Coinbase the green light to offer crypto custody services

Cryptocurrency exchange giant Coinbase has received an approval for custody services for several crypto assets, according to recent news. A Coinbase application was approved for Coinbase Global, Inc. to act as a regulated trust company.

According to a report by Finance Magnates, Coinbase “had its application approved for its wholly-owned subsidiary, Coinbase Global, Inc., to operate as a limited purpose trust company”.

This approval officially allows Coinbase to hold cryptocurrencies for customers, in line with regulation, even in the state of New York. (Crypto custody means that a person or entity controls or keeps your crypto assets safe for you.)

The state of New York has been known to crack down on crypto regulation, possibly starting with its BitLicense requirement several years ago. BitLicense laws require persons or entities to obtain a license for the following, with certain exceptions (according to dfs.ny.gov):

  • Virtual currency transmission
  • Storing, holding, or maintaining custody or control of virtual currency on behalf of others
  • Buying and selling virtual currency as a customer business
  • Performing exchange services as a customer business
  • Controlling, administering, or issuing a virtual currency.

Regulators from New York also even went after the out-of-state exchange Kraken, which left New York years ago, finding a home on California.

According to the New York Department of Financial Services’ press release, Coinbase is an approved custodian for Bitcoin, Ethereum, Ethereum Classic, Bitcoin Cash, Litecoin, and surprisingly Ripple (XRP), even though XRP is not yet available for trade on Coinbase.

In the same press release as the crypto custody announcement, Superintendent Maria T. Vullo states – “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”.

“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”,  states Coinbase President and COO Asiff Hiriji in the government press release.

However, some people in the crypto space do not view New York’s involvement (as a whole) with the same positivity. “The BitLicense, in contrast, will hinder cryptocurrency innovation in New York for much time to come while problems of criminality go unaddressed” explained the Foundation for Economic Education, in response to the BitLicense back in 2015.

Though New York has given Coinbase the green light to offer crypto custody services, the state does have plans to ban its residents from using the decentralized exchange IDEX, according to a tweet by the Aurora IDEX exchange.

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