After operating for one year, the custodial arm of U.S. crypto exchange heavyweight Coinbase now has more than $1 billion USD worth of digital assets under management.

Coinbase Custody

Speaking during a panel at Consensus during New York Blockchain Week, Coinbase chief executive officer Brian Armstrong confirmed on May 15th that Coinbase Custody had reached that AUM milestone:

“We’ve just crossed $1 billion assets under management [and] 70 institutions have signed up, adding about $150 million assets under management a month. So to a large degree that has been a success.”

With its early growth looking promising, the custody platform now enters its second year as the cryptoeconomy appears to be ripping into its next bull cycle. Bitcoin (BTC) is up 62 percent on the month and ether (ETH) is similarly up 65 percent in the same span.

If bullish conditions are sustained in the crypto ecosystem in the upcoming months, then it’s safe to  say Coinbase Custody’s AUM will be higher — perhaps considerably so — one year from now after new institutional entrants have joined the fold.

Naturally, the platform is gunning to make that possibility a reality.

A Pivot Toward Crypto Staking and Voting

Back in March, Coinbase Custody launched a staking service that would allow its clientele to stake Tezos (XTZ) initially and with more coins to follow. In announcing that service, the exchange’s custody wing also confirmed it was moving to launch a governance service as well, for example to allow customers to use their MKR tokens in Maker ecosystem governance votes.

The activation of the staking service was the first of its kind among crypto custody enterprises, meaning Coinbase Custody is early and thus well positioned to swell its AUM even higher as more customers turn to the platform for staking and later for voting.

Regarding the latter, Coinbase recently partnered with the Maker Foundation in auditing the Maker Voting Contract, wherein a critical bug was discovered that could’ve led to voters losing their MKR tokens permanently. To be sure, the collaboration was a tell-tale sign Coinbase Custody is angling toward a governance service.

It’s worth mentioning here that the platform’s competition is increasing. Fidelity Digital Assets is set to be a gamechanger in the custody arena upon its forthcoming launch. Coinbase Custody will look to hold its ground leverage its first-mover staking and governance services as saturation in the industry continues to grow.

Busy May for Coinbase So Far

Zooming out on the wider Coinbase brand, the exchange hasn’t slowed down in its recent efforts to offer more choices to more traders.

On May 14th, the company declared it had expanded support of the USD Coin (USDC) stablecoin token to 85 further countries. “This [move] helps accelerate the global adoption of crypto trading, and with USDC, enables access to a stable store of value,” Coinbase said.

On the same day, the exchange announced that it had greenlighted XRP trading for residents of the state of New York. Like bitcoin and ether, buy pressure around XRP has recently been spiking, too, with the crypto being up 57 percent over the last week to its current price of $0.445.

It Hasn’t All Been Growth

Coinbase Custody’s AUM is up, but Coinbase has been retracting, or adapting, in other areas.

This month, it was announced CTO Balaji Srinivasan would be leaving the exchange. Last month, reports circulated that Coinbase had laid off 30 engineers at its Chicago office. The move came as the exchange was apparently shuttering its efforts to build a new matching system for trades.

Around the same time, the company saw four executives depart from its institutional business arm. Even still, Coinbase’s mission to brings crypto to mainstream finance continues undeterred.


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Posted by William M. Peaster

William M. Peaster is an editor and cryptocurrency writer. He is not a financial adviser. He enjoys covering both the promise and warts of the emerging cryptoeconomy. Follow him on Twitter: @WPeaster


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