What is the significance of Crypto.com's Custody Trust Company?
Crypto.com has launched its institutional cryptocurrency custody service named the Crypto.com Custody Trust Company. This service aims to hold digital assets for U.S. institutions and high-net-worth individuals. The announcement was made just before the end of the year, indicating a strategic move to strengthen its foothold in one of the world's most dynamic crypto markets.
How does Crypto.com plan to penetrate the U.S. market?
The company is clearly attempting to position itself more favorably in the U.S. market. CEO Kris Marszalek stressed the necessity of this service for building their business in North America. Notably, he even met with U.S. President-elect Trump to talk crypto regulations. The company also decided to drop its lawsuit against the SEC, which was initiated to gain clearer regulatory guidelines.
Crypto.com did acquire Watchdog Capital in October, which is a key indicator of its ambitions in the U.S. Nevertheless, the company has had its fair share of challenges, including suspending exchange services earlier this year, but seems to be pivoting back toward securing institutional clients.
How does Crypto.com's custody service stack up against Coinbase Custody?
Regulatory Compliance
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Crypto.com Custody Trust Company: This new service is regulated under U.S. law, receiving a trust company charter, which permits it to hold funds for institutions and wealthy individuals.
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Coinbase Custody: As a qualified custodian under New York state banking law, Coinbase Custody is also subject to AML and KYC regulations, ensuring a high level of compliance.
Security Measures
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Crypto.com Custody Trust Company: Although specific security protocols aren't disclosed, the company adopts a "Zero Trust, Defence in Depth" approach and holds customer assets on a 1:1 basis in cold storage.
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Coinbase Custody: Coinbase Custody employs more transparent security measures, including cold storage, multisig technology, advanced encryption, and two-factor authentication, backed by a $320 million insurance policy.
In essence, while Crypto.com has established its custody service under regulatory oversight, Coinbase Custody appears to offer a more robust and transparent security framework.
What does Crypto.com's collaboration with regulators mean for the industry?
The decision to collaborate with regulators could be a double-edged sword. Initially, Crypto.com was at odds with the SEC, arguing that the commission had overstepped its authority. The withdrawal of the lawsuit indicates a shift toward cooperation, which may help in fostering a more stable regulatory environment.
This pivot suggests an intention to work alongside regulators, particularly the incoming administration, to help shape policies. It also hints at a broader industry's desire for clearer regulations, a move that could lead to more favorable conditions for crypto businesses.
How might this affect individual crypto users?
Crypto.com's focus on institutional clients may have ramifications for individual users. With regulatory approvals and strict security measures, the wallets offered by Crypto.com could be seen as more secure. This may entice individual users who prioritize security and compliance.
Furthermore, the company's extensive security measures and regulatory compliance can set a high bar for the crypto wallet market. This could inspire other providers to enhance their security features, ultimately benefiting individual users seeking secure crypto wallets.
