Coinbase Custody has just fulfilled its first over-the-counter (OTC) trade directly out of offline or cold storage.
The San Francisco-based cryptocurrency exchange announced in a blog post published March 13 that the trade happened after its Custody service had been “directly integrated” with the Coinbase Pro’s OTC desk.
According to Coinbase, the news was “major unlock” for its customers as it made “immediate” liquidity available. Before, a trader would need to withdraw assets from cold storage—where the private keys are stored on a device without internet connectivity—to an online or “hot” wallet at a trading platform in order to perform a trade. Market conditions can shift immediately by the time the process is completed (around 24 to 48 hours for the withdrawal alone).
According to the post, linking the two departments means customers can take advantage of the OTC desk without having to withdraw funds from the cold storage. Customers “can buy OTC and settle assets directly into Custody,” Coinbase said. The integration was implemented because of customers’ demand.
The CEO of Coinbase Custody Trust, Sam McIngvale, said, “Being able to trade while their funds are held safely in cold storage is a feature that we’ve heard loud and clear that our customers want.”
“Coinbase offers the world’s largest regulated pool of crypto liquidity. Being able to access this market quickly and safely unlocks tremendous benefits for our customers,” McIngvale added.
Certainly, competitors of Coinbase in OTC trading and custody have recently linked the two functions, with the same intention—making the settlement of trades fast while keeping the assets safe in cold storage.
For instance, market maker Genesis Trading teamed up with custody specialist BitGo in January to allow their mutual clients to trade without having to move assets from offline storage.
OTCXN, another OTC shop, entered a similar partnership with custodians Kingdom Trust and Prime Trust.
Coinbase first unveiled its Custody service for institutional clients in May 2018 and went live in June.
Subsequently, the exchange was authorized as a crypto custodian in New York state in October of last year, following the New York Department of Financial Services’ approval to let Coinbase Custody Trust Company LLC offer custody services for bitcoin, ethereum, bitcoin cash, ethereum classic, XRP, and litecoin.