Hassan Maishera
You should Under the agreement terms, the USMS will pay Coinbase a significant sum of $32.5 million. Coinbase Prime will be tasked with managing and disposing of large amounts of popular cryptocurrencies held by the USMS.
This deal reinforces Coinbase Prime's standing as a trusted custodian, with over $330 billion in assets under protection as of this year. Since its launch nearly three years ago, Coinbase Prime has become the go-to platform for institutions and major digital asset holders. It has also established itself as a key partner for numerous spot cryptocurrency exchange-traded funds (ETFs).
In the first quarter of 2024, Coinbase reported an institutional trading volume of $256 billion. The company highlighted its long-standing commitment to supporting law enforcement agencies, dating back to the creation of its law enforcement program in 2014.
"Coinbase collaborates with all major U.S. federal, state, and local law enforcement agencies, as well as international agencies across every continent. Fostering the growth of the crypto economy means promoting safe and efficient markets, and these partnerships are crucial to our mission," Coinbase stated in the blog post.
This selection of Coinbase for custody services comes as the US government recently sold 3,940 Bitcoin (valued at approximately $240 million) seized from a narcotics trafficker in 2014. The US government has become one of the largest Bitcoin holders, having acquired around 200,000 coins (worth about $5 billion) through seizures related to criminal activities.
Coinbase's Regulatory Challenges
Meanwhile, Coinbase has faced its share of regulatory issues. In April, Judge Katherine Polk Failla of the US District Court of the Southern District of New York ruled that the SEC's lawsuit against Coinbase could proceed. This decision followed Coinbase's motion to dismiss the SEC case, which alleges the exchange operates as an unregistered securities exchange, broker, and clearing agency.
More recently, Coinbase has accused the SEC and the Federal Deposit Insurance Corporation (FDIC) of improperly blocking its document requests. The exchange claims that the regulators are preventing access to documents that should be available under the Freedom of Information Act (FOIA).
On a positive note, Bank of America (BAC) has recently upgraded its rating on Coinbase shares from underperform to neutral, raising its price target for Coinbase to $217 from $110. Similarly, investment banking firm KBW has increased its Coinbase price target. In a research analysis, KBW raised its Coinbase price target from $160 to $230 while maintaining its market performance rating.
