Coinbase Partners with US Marshal Service for Enhanced Crypto Custody Solutions

Smartphone with Coinbase logo on background of chart and coins blurred on computer screen Business and technology. Exchange of cryptocurrencies, USA, June 6, 2023.
Source:AdobeStock
  • Coinbase announced a collaboration with the US Marshal Service to manage and liquidate Class 1 digital assets, valued at US$32.5 million.
  • The partnership, showcasing institutional trust in cryptocurrencies, led to a 5% increase in Coinbase shares.
  • Amidst this positive development, Coinbase is also engaging in legal disputes with the SEC and FDIC over regulatory clarity.

News around a crypto exchange and US law enforcement isn’t usually bullish or positive, but recent news in relation to Coinbase is a little different. In a blog post from July 1, Coinbase officially announced a collab with the US Marshal Service (USMS) – a division of the US Department of Justice.

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According to the USMS they have chosen Coinbase to custody what’s called “Class 1” digital assets for the agency.

The U.S. Marshals Service (USMS) department of Justice (DOJ), on behalf of the Asset Forfeiture Division (AFD) has a requirement for managing and disposing of large quantities of popular cryptocurrency assets, known as Class 1 cryptocurrencies.

US Marshal Service

This includes storing and liquidating digital assets in a way that is “professional, lawful, and consistent with Department and USMS policy”.

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Coinbase-USMS Contract Worth US$32.5 million

After a “competitive due diligence process” the USMS chose Coinbase from a range of alternatives. Coinbase prides itself on its close ties with law enforcement agencies, saying it works with agencies across the US as well as globally.

Coinbase works with every major U.S. federal, state, and local law enforcement agency, as well as international agencies on every continent.

Coinbase

The contract is said to be valued at US$32.5 million (AU$48.9 million) and will focus on large-cap digital assets that have been seized by law enforcement.

The Coinbase share price gained 5% on the news during Monday’s trading session.

Coinbase Global, source: TradingView

While the development is good news and shows the ongoing integration of crypto into a broader range of financial and legal frameworks, it also underscores the increasing institutional trust in digital currencies.

Meanwhile, in late June, Coinbase launched Freedom of Information Lawsuits against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) seeking access to documentation.

Coinbase alleges the SEC hasn’t provided meaningful guidance to the crypto sector, never explaining its position on issues such as what constitutes a security – and has no clear mandate over the industry.

Related: Entertainment Giant Sony to Launch Crypto Exchange in Japan

This comes after the SEC has sued Coinbase over the “unregistered sale of securities” which could soon go to trial. All this is not without irony amid a growing interconnection between crypto and the real world on one side and continued regulatory ambiguity on the other side.

Aaron Feuerstein
Author

Aaron Feuerstein

Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.

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