On Friday August 3rd, Coinbase announced it is planning to add more cryptocurrencies into its custody business, including XRP, which is currently the third largest in the market by capital. Currently, Coinbase provides its services for four types of cryptocurrencies – Bitcoin, Bitcoin Cash, Litecoin, and Ethereum. They charge 0.1% a month in addition to a $100,000 set-up fee.
Among Coinbase’s custody partners are the Autonomous Partners, Polychain Cap, and Multicoin Cap. Customers of the custodian company must store a minimum of $10 million. The company is now aiming to have at least 100 more institutional partners and store over $20 billion under their custody before the end of 2019.
With this latest announcement, Coinbase plans to add cryptocurrencies like Dash, Monero, Telegram, Ripple, Bytecoin, Steem, Bitcoin Gold and Tezos. Yet, the announcements aren’t official. A company spokesperson denied to provide a specific schedule around the implementation of these speculations for when exactly the new assets will be available. The company even said that the plans to add all of the 40 assets is indefinite.
As cryptocurrency is becoming increasingly popular, institutions are looking forward to adding it to their profiles. Therefore, businesses like Coinbase – which charge investors for the custody of their crypto-assets, have found new potential and opportunities in cryptocurrency. The institutional funds are required by law to store their crypto assets through a custodian. In return, the custodians charge a fee for providing the service.
It must be noted that Coinbase isn’t the only company in the custodian business. Plus, it does not sell all the assets it plans to store. In this state of affairs, it is still unclear how much the revenues might escalate with this move. Meanwhile, they also announced that the traders will be able to buy and sell Ethereum Classic on their platform, which is the follow-up of their announcement in June to add the current 14th biggest cryptocurrency in the market.
With these announcements, Coinbase is looking forward to increase their revenues from the custodian business. This does sound significant as many companies are now offering cryptocurrency on their platform. Although Coinbase has profited from the trading business in the past, yet the margins are likely to decrease in the future. Therefore, diversification of business strategy by strengthening their custodian business is hence, a very relevant step.