Brian Armstrong, CEO at Coinbase, one of the largest cryptoasset trading platforms, has revealed that Coinbase Custody now has approximately $1 billion in assets under management (AUM).
All Assets Are Regulated, Insured, Subjected To Internal Evaluations
On May 6th, 2019, Coinbase’s management revealed that Coinbase Custody has added more than 20 different cryptocurrencies to its platform (so far this year). In addition to providing support for a wide range of cryptos, Coinbase’s team aims to “offer a safe, regulated and insured storage platform for all the assets [its] clients request and that pass [its] internal evaluations.”
Launched on May 15th, 2018, Coinbase Custody has been adding an average of around “$150 million AUM a month” and 70 institutional clients have registered (so far) to use the exchange operator’s digital asset custodial solution. This, according to Armstrong, whose comments came during an on-stage discussion at Coindesk’s Consensus 2019 event, held on May 15th, 2019.
Armstrong mentioned that institutional investors are also looking for cryptocurrency services such as “staking and voting, [and] doing governance on-chain.” Expressing views that are similar to many other blockchain industry participants, Armstrong believes proof-of-stake (PoS)-based cryptocurrencies will be widely used as their adoption rate is “growing rapidly.”
While most institutional clients are primarily interested in Bitcoin-related investments, Armstrong said that investors are now also more open to investing in other digital assets.
First Custodian To Provide OTC Trading “Directly From Cold Storage”
During the first of this year, Coinbase Custody has been integrating new features and support and it also became “the first institutional-grade, qualified custodian” to provide staking services for cryptoassets held in cold storage (offline). Coinbase Custody is also one of the first platforms to offer over-the-counter (OTC) trading “directly from cold storage.”
Only Around 200 Institutions Are “All In” On Crypto “So Far”
According to Fred Wilson, a partner at Union Square Ventures: “The token funds and venture funds will make up the first two big institutional funds. For them [traditional institutions] to take their chips and go all in, I don’t see that in the next year or two.”
He also mentioned:
When people read in the Wall Street Journal that institutions are coming to crypto, they think Goldman is coming, but in reality, maybe 100 token funds in the US and 100 in Asia are all in so far.
Notably, Armstrong revealed that 60% of Coinbase’s “trading volume” now comes from institutions.
I would love to be in a world where people could self-custody … and still participate in exchanges, we’re talking to people at StarkWare about that.
Interestingly, Armstrong has also acknowledged that Coinbase is becoming increasingly centralized and that the exchange is “a victim of [its own] success.”
“[@coinbase] is becoming more centralized. We’re almost a victim of our success...there’s a little too much power in one place. We need to make sure we don’t become too centralized.” —@brian_armstrong #consensus2019— Jen Wieczner (@jenwieczner) May 15, 2019