Coinbase, based out of San Francisco and one of the most popular and trusted crypto platforms in the world, has announced that it will expand its newly developed custodial services into the Asia market. The move is seen as two-fold – to attract major institutional players in the region and to provide custodial services for crypto exchanges in need of another layer of protection from professional hacking gangs.
Asia has always been a hotbed of crypto activity, sporting some of the largest and most active exchanges in the global market. Hacking compromises, however, have been ever-present and have represented a majority of the industry fraud losses.
In an interview, Kayvon Pirestani, head of institutional sales in Asia for the company, said:
Asia is super important to the crypto ecosystem. It’s home to some of the most active retail traders in the world as well as a lot of institutional investors.
Coinbase gained its well-deserved reputation by introducing the U.S. market to bitcoin. It has grown significantly, passing the 25 million mark in customers last October, more than double the number of clients that giants like Charles Schwab and Fidelity have in the stock trading world. The firm also noted that, even after the meltdown in crypto values in 2018, it continues to add 25,000 new accounts per day. At last count, they manage exchanges in 32 countries and service customers that reside in 190 countries.
In May of last year, Coinbase announced four new products aimed at opening the door to large institutional traders by relieving their worries related to account security. Custodial services was to be the primary product to address security concerns, while also addressing one of the major shortfalls that SEC authorities view as a deal stopper. At the time, Adam White, Vice President and General Manager of Coinbase, said:
We think this can unlock $10 billion of institutional investor money sitting on the sideline. We’re seeing a rapid increase in attention awareness and adoption in the cryptocurrency market.
In addition to custodial services, the new products also included enhanced trading features related to risk management and margin trading. Last October, the firm received permission from New York to create a custody trust company in the state and for the Coinbase Trust to offer custodial services for its group of supported crypto offerings, i.e., bitcoin, bitcoin cash, ethereum classic, litcoin and XRP. The license also applies to a majority of states, as well as New York.
Coinbase has already been testing these new services with a select group of its Asian clients. The intention now is to roll out these services across the entire region. Major clients would now be able to deposit large amounts of digital currencies with peace of mind, while exchanges might also become clients to alleviate fraud exposure risk.
I would argue that the Asia customer base is already moving the needle for the firm. One of our top five clients by revenue is in the Asian region.