Digital Asset Manager Grayscale Moves $2.7 Billion to Custody with Coinbase

Grayscale Investments selected Coinbase Custody to serve as custodian for its digital asset holdings. As per their announcement, it will transfer $2.7 billion of assets to Coinbase.

We’re thrilled to welcome @GrayscaleInvest, the world’s largest digital currency asset manager, as the most recent firm to trust us with their clients’ assets https://t.co/TepusZtcbj

— Coinbase Custody (@CoinbaseCustody) August 2, 2019

Grayscale, which claims to be the world’s largest Bitcoin and digital currency asset manager, holds Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Stellar, XRP, and Zcash. Coinbase Custody also has plans to hold Grayscale’s Horizen (ZEN) token, currently awaiting regulatory approval to support the asset.

Sam McIngvale, Coinbase Custody CEO said that Grayscale and Coinbase have led the way in providing safe, secure, trustworthy, and regulated access to digital assets. He said that Grayscale is an established, trusted, and valuable partner to its clients and its service providers should be the same. He added that, as a New York state-chartered trust company, Coinbase Custody is held to the same fiduciary standards as national banks.

“We also offer some of the broadest and deepest insurance coverage in the crypto industry.”

This move came as expected as crypto investors are looking for signs of how global regulators will react to Facebook‘s plans to launch its own cryptocurrency sometime next year, Libra.

Expectations that some of Silicon Valley’s biggest companies, including iPhone-maker Apple and micro-blogging platform Twitter, are increasingly looking to Bitcoin and cryptocurrencies as a potential source of revenue has been largely responsible for the rise in the Bitcoin price so far this year.

Under this agreement, Coinbase Custody is expected to hold Grayscale’s asset for three years at the outset, with a charging fee based on the assets under custody. Both companies have agreed to escape clauses for the contract period. Once the initial term ends, each firm can opt to terminate the partnership with 90 days’ written notice.

Last month, Coinbase said that it had signed up 30 million users since launching in 2012, with eight million new users added over the last 12 months. Grayscale, on the other hand, announced that their Investments’ Bitcoin Trust was up almost 300% on the year as of July 9.

At the time, the trust was yielding a 296% year-to-date appreciation that represents a stratospheric increase as compared to mainstream investments reflected in the S&P 500 (18.7%) and Global Dow (12.9%) over the same time period.

In one of their reports, Grayscale found that more than a third (36%) of U.S. investors would consider buying Bitcoin, representing a potential market of more than 21 million investors. They wrote:

“Since its introduction in 2009, bitcoin has steadily grown in popularity and today has expanded its reach to a broad mainstream audience. Investors are constantly looking for new ways to diversify their portfolios as traditional assets and markets have begun to move more closely in sync with one another.”

This is hard to be a coincidence with the Bitcoin bulls back in charge and Grayscale in the spotlight on Wall Street and in the mainstream financial media. According to Grayscale CEO Barry Silbert, the company’s “Drop Gold” campaign is set to air on both CNBC and Bloomberg TV next week. As a result, Wall Street will be reminded about bitcoin as the asset continues its bullish trend trading above the key $11,500 level.

Oh man, next week is going to be a big one for @GrayscaleInvest. The #DropGold TV ad will also be debuting on @BloombergTV next week$GBTC https://t.co/2qctO2LOcx

— Barry Silbert (@barrysilbert) August 1, 2019

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