Coinbase is currently looking into the processes involved in acquiring banking licenses. The Wall Street Journal reports that an undisclosed source revealed that the exchange engaged in conversations with members of the US Office of the Comptroller of the Currency in earlier this year:
“Coinbase Inc and another cryptocurrency firm talked to US regulators about the possibility of obtaining banking licenses, a move that would allow the startups to broaden the types of products they offer.”
Additional Coinbase services
Coinbase has been expanding its services this year to become more than just an exchange. Its commerce API or its “PayPal-like service”, was released in February. Merchants could quickly implement cryptocurrencies as a payment method supporting Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. The platform adds a “PayPal-like” button to e-commerce sites allowing streamlined payments straight to the vendor’s wallet.
Coinbase isn’t the only company to offer these types of services, with BitPay also letting customers pay in Bitcoin and Bitcoin Cash. With the volatility within the cryptocurrency market this year it may take more to encourage merchants to adopt this additional payment method.
Coinbase announced this month that it would be releasing its Coinbase Custody platform. The new product could entice institutional investors, it went on to explain: “The cryptocurrency market is maturing rapidly as more sophisticated institutional participants enter the space. In fact, in the past few months over 100 hedge funds were created that exclusively invest in and trade cryptocurrency. Some of the world’s largest financial institutions have also recently announced their plans to begin trading cryptocurrency.”
Coinbase Custody is a storage service for a minimum of USD 10 million in crypto. Financial institutions will be expected to pay USD 100,000 as a set-up fee and an additional monthly premium dependant on holdings. Coinbase claimed: “We have leveraged our experience safely storing more than $20 billion of cryptocurrency to create Coinbase Custody, the most secure crypto storage solution available.”
Coinbase believes its recent progress will accelerate the world’s adoption of cryptocurrency by bringing new capital and greater awareness to the industry.
The volatility of Bitcoin still stands to be an issue and has led to merchants withdrawing the payment option. This was one of the main reasons for Steam halting Bitcoin payments at the end of 2017. The rise of crypto-related crime is enough to deter investors in the interim.
As much as 30,000 people who have fallen victim to Ethereum-related theft, suffering an average loss of USD 7,500 each, according to Chainalysis. Exchanges have been targeted in large-scale hacks with Coincheck losing USD 550 million worth of NEM cryptocurrency (XEM) in January and Coinsecure losing USD 3.5 million in Bitcoin (BTC). With legislation and regulation becoming a hot topic among unions and governments, 2018 is set to be an interesting year for cryptocurrencies.
Coinbases profitability values the company at around USD 8 billion. The growth and reinvestment into new ventures such as the banking industry shows Coinbase’s faith in the future of cryptocurrencies.
However, not everyone believes that the company is heading in the right direction. Reddit user Bitcoin Yoda explains how Coinbase Commerce is moving in a different direction to Satoshi’s vision: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Any intermediary between your BTC payment and the merchant is violating the definition of Bitcoin and your privacy.”
Is Coinbase’s pursuit of becoming a bank turning its back on the ideologies behind crypto?
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