Coinbase Custody announced on Friday (August 2) that it had been chosen by Grayscale Investments, LLC (“Grayscale”) to be the custodian for the (roughly) $7.2 billion worth of digital assets managed by the latter.

New York-based cryptoasset investment firm Grayscale Investments is a subsidiary of Barry Silbert’s incubator and venture capital firm Digital Currency Group (DCG). According to Grayscale’s Digital Asset Investment Report for Q2 2019, it’s total assets under management (AUM) is $2.7 billion.

Coinbase Custody, which was launched in 2018, is “offers clients access to the secure, institutional-grade offline storage solution that has been used by Coinbase’s exchange business since 2012. ” It is “an independent, NYDFS-regulated entity built on Coinbase’s crypto-first DNA, offering the most sophisticated and reliable custody solution in the world.” It is “regulated by the New York Department of Financial Services (NYDFS), and operate as an independently capitalized entity, Coinbase Trust Company.”

Coinbase’s blog post says that it will be “serving as custodian for the underlying assets in Grayscale’s family of products, which include Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), Stellar Lumens (XLM), XRP and Zcash (ZEC).”

It also says that “Grayscale’s decision to trust its client’s assets to Coinbase Custody comes after a thorough and systematic review” that “focused on factors such as security, regulatory compliance, insurance coverage, and the overall ability of its custody partner to scale with their business.”

Other clients of Coinbase Custody include Polychain Capital, Autonomous Partners, and a16z crypto.

According to a report by Coindesk, Coinbase Custody has been holding Grayscale’s assets since July 29, and that Coinbase Custody CEO Sam McIngvale had this to say about today’s announcement:

Grayscale and Coinbase have led the way in providing safe, secure, trustworthy, and regulated access to digital assets. Grayscale is an established, trusted, and valuable partner to its clients and its service providers should be the same.

The Coindesk report also says that under terms of the agreement signed by Coinbase Custody and Grayscale, “Coinbase Custody will hold Grayscale’s assets for three years at the outset, charging a fee based on the assets under custody,” with both companies having “escape clauses for the three-year period.” After the initial term has ended, “each company can terminate the partnership with 90 days’ notice.”

Update (at 16:20 UTC on August 2):

Coinbase CEO Brian Armstrong made the following comment on Twitter:

 

Featured Image Courtesy of Coinbase Custody