Coinbase, the cryptocurrency exchange, announced Tuesday that it secured the necessary qualification to operate as a qualified custodian.
In a blog post, Coinbase's Sam McIngvale said the New York Department of Financial Services approved the so-called Limited Purpose Trust Company designation. The firm has been operating its custody business since November, serving mostly small hedge funds. Now, the business will be a standalone entity, McIngvale said. The qualified custodian designation, which firms like Gemini and Paxos also boast, could help Coinbase lure more-established firms to its trading venue.
"Coinbase Custody Trust Company will operate as a standalone, independently-capitalized business to Coinbase Inc. and will be held to the same compliance, security and capital requirements as traditional fiduciary custodial businesses like the DTC," the blog post said, referring to the Depository Trust Company, which is a powerhouse on Wall Street.
Notably, Coinbase got permission to custody XRP, the token affiliated with Ripple, according to the announcement. XRP does not trade on Coinbase and some market participants have questioned whether it is a security or not.
Reporting by Frank Chaparro.