Coinbase Custody has just completed its first over-the-counter (OTC) trade directly out of cold, or offline, storage.
Announcing the news in a blog post on Wednesday, the San Francisco-based cryptocurrency exchange said the trade occurred after its Custody service had been “directly integrated” with the OTC desk at Coinbase Pro.
The news, it said, was a “major unlock” for its clients as it marked the availability of “immediate” liquidity. Previously, a trader would have to withdraw assets from cold storage – where the private keys are kept on a device not connected to the internet – to a “hot,” or online, wallet at a trading platform in order to execute a trade. Market conditions can change quickly in the time it takes to do all this (24 to 48 hours just for the withdrawal part).
Connecting the two departments means clients can leverage the OTC desk without needing to move funds out of cold storage, according to the post. Clients “can buy OTC and settle assets directly into Custody,” Coinbase added. The integration came about due to client demand.
“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,” said Sam McIngvale, CEO of Coinbase Custody Trust. “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.”
Indeed, several of Coinbase’s competitors in custody and OTC trading have integrated the two functions recently, with the same goal: speeding up the settlement of trades to the standard institutional investors expect while keeping coins safe in cold storage.
For example, in January, market maker Genesis Trading partnered with custody specialist BitGo so that their mutual clients can trade without needing to remove coins from offline storage (a process that, as noted above, can take hours or even days).
Another OTC shop, OTCXN, has similar arrangements with custodians Kingdom Trust and Prime Trust.
Coinbase first launched its Custody service for institutions in May of last year and went live in June.
The exchange was later approved as a crypto custodian in New York state in October 2018, after the New York Department of Financial Services granted its application to create the Coinbase Custody Trust Company LLC offering custody services for bitcoin, bitcoin cash, ethereum, ethereum classic, litecoin and XRP.