According to a press release published on Feb. 12, Coinbase Custody was granted a Service Organization Control (SOC) 1 Type 2 and a SOC 2 Type 2 report by major accounting firm Grant Thornton.
The crypto custody arm of major United States-based cryptocurrency exchange Coinbase, Coinbase Custody, obtained two new security evaluations.
In obtaining the reports, Coinbase Custody is able to prove to clients that they are compliant with a variety of security and reporting standards.
System Organization Control reports
According to Grant Thornton’s website, SOC reports are meant to provide information on “the existence and strength of financial, operational and information security controls in an organization.” An SOC 1 report provides information on the internal controls relevant to a user organization’s financial reporting. In other words, “SOC 1 reports are intended to be auditor to auditor communications.”
SOC 2 reports, on the other hand, provide information on “security, availability, processing integrity, confidentiality and privacy.” Both SOC 1 and SOC 2 reports are divided into Type 1 and Type 2. A Type 1 report describes the design of the controls, while a Type 2 report also covers their effectiveness after a minimum testing period of six months.
Coinbase Custody also states that it will renew the reports in the future. The announcement follows late January reports that Coinbase has established an entity in Ireland to expand its crypto custody services to European institutions.
Other cryptocurrency services have also sought out SOC certificates. As Cointelegraph reported in late January, U.S.-based crypto exchange and custodian Gemini has completed a SOC 2 Type 2 evaluation through global professional services firm Deloitte.
The purpose of cryptocurrency custody
While one of the biggest advantages of crypto assets is the ability to independently custody them, financial markets and institutional investors need a heightened security standard that can hardly be achieved with self-custody. Blockchain Zoo researcher Rohan Barde Hai explained in late September 2019 why custody solutions are important to institutional investors in a Cointelegraph opinion piece.
The maturing cryptocurrency market is also apparently bringing traditional institutions onboard. On the heels of new Anti-Money Laundering laws, 40 German banks requested the regulators’ go-ahead to offer digital asset custody services.
Bahamas Digital Dollar to Roll Out Across All Islands in H2 2020, Governor Says
While major industry actors argue that central bank digital currencies (CBDC) are years or decades ahead, the Bahamas plan to adopt a CBDC no later than 2020.
John Rolle, the governor of the Central Bank of the Bahamas (CBOB), has reportedly confirmed that the Bahamian digital dollar initiative will be introduced across all islands in the second half of 2020.
Bahamas has already launched a pilot in the Exuma region
According to a Feb. 13 report by local publication The Tribune, Rolle has presented the plan addressing a Bahamas Chamber of Commerce and Employers Confederation on the initiative, which is called Project Sand Dollar.
In fact, the Bahamas already rolled out the pilot project on the island of Exuma in December. As such, the CBOB governor declared that the pilot will be extended to the Abaco region, which originally was the first choice for the digital currency pilot. Rolle explained that the CBOB decided to start with Exuma:
“Abaco actually was the first choice for the digital currency pilot. … But we felt that what was missing from Abaco was that the financial inclusion, or financial access issue, wasn’t as stark in the sense of all of the banks being present. But in terms of ecosystem, it would have been just as rich.”
According to the report, the Bahaman central bank is still in the process of enrolling all of the 1,200 people who signed up for the pilot in Exuma. At least 2,000 people have also expressed interest in participating in the initiative in the region, the report notes.
Governor stresses that Sand Dollar is just a digital representation of fiat
In the report, the governor emphasized that the upcoming Bahamian dollar will be nothing more than just a digital representation of the country’s fiat currency, the Bahamian dollar (BSD). Rolle stressed:
“We’re looking at a digital representation of our currency. It’s not a different currency; it’s the same currency. In law, it will never be different. It can’t differ in value in any way or the other so Sand Dollars can never be priced different from Bahamian dollars.”
The governor noted that the Sand Dollar is originally targeting domestic use only. However, it’s also possible that it could be linked with a foreign currency, Rolle reportedly said. The official explained that this could be done only in case there’s an “explicit buying and selling of foreign exchange.”
The CBOB governor also noted that the Bahamas “might be a little bit ahead of some countries” in terms of the timeline. Rolle said:
“We’re not going to get to the rest of the Bahamas until the second half of the year, and that is predicated on certain things like during the pilot looking at a lot more issues around the technology infrastructure, making sure that the legal framework is more elaborated around regulations etc, and spending some time dealing with a lot of the cyber issues.”
Recently, the founder of major digital currency asset manager Grayscale Investments claimed that Bitcoin would benefit from global central banks issuing their own cryptocurrencies.