Coinbase recently announced it has finally taken in its first Institutional deposits into its newly formed institutional division Coinbase Custody. Coinbase Custody “offers secure storage of crypto assets for institutions in the US and Europe.” Coinbase Custody will utilize the existing cold storage of Coinbase and feature segregated hot wallets for flexibility. In the future, Coinbase Custody will be looking to provide features like “proof of stake” and allow clients more control of their crypto assets. This announcement is a welcomed step to bringing in Institutions into the crypto market.
Xapo Institutional Wallet
There are other solutions for Institutions out there like Xapo. Xapo is a highly secure crypto storage platform that features the ability to permission users to control and move the crypto assets. Bloomberg reports that Xapo holds over USD 10 Billion worth of Bitcoin that is equivalent to over 6% of the total BTC supply.
By no means are these close to being a complete solution for cryptocurrency exchanges. They are steps in the right direction and make hacking far more difficult if not impossible. The wallet is not the only issue facing exchanges when it comes to security. Many of the past exchange hacks have included inside staff assisting the outside hackers. Cryptocurrency exchanges must review internal controls and asses risks with their operations staff. The problem is that many of the exchanges do not have the experience to know or understand where to find these risks until it is too late.
Intuitions waiting to enter
The exchange security issue is key to bringing in all of the institutional money that has been sitting on the sidelines. If Coinbase Custody can demonstrate its effectiveness, it could lead to a flood of liquidity coming into the crypto markets which could help secure its future.