Setting the record straight: Your funds are safe at Coinbase 

A couple of weeks ago, a newly required SEC disclosure they made in 10Q created some noise about how Coinbase holds crypto assets and what could happen in the highly unlikely event of the company’s insolvency. This led to some genuine concern among people who hold crypto assets on Coinbase.

Even though customer assets have always been protected, we know this was scary — especially in a down market. We want to share how we’re keeping your assets safe today and in the future:

  • Your funds are your funds, and your crypto is your crypto: Coinbase maintains internal systems, like a bank or a broker. The fully audited ledger identifies your account, and your fiat and crypto holdings, and tracks your account activity in real-time. There’s never a situation where customer funds could be confused with corporate assets.
  • We will never repurpose your funds: They do not lend or take any action with your assets unless you specifically instruct us to. Many banks and financial institutions use customer funds for commercial purposes including lending and trading, meaning that they often hold only a fraction of their customer assets at any given time. Coinbase always holds customer assets 1:1. This means that funds are available to our customers 24 hours a day, 7 days a week, 365 days of the year.
  • We have clarified our Retail User Agreement: They have always protected customer funds both legally and physically. They also recently updated our Retail User Agreement to expressly highlight the applicability of UCC Article 8 — the same legal protection that our institutional clients also rely on to protect their assets in the event of a custodian bankruptcy. This is not a change in how we do business. We believe that digital assets in our custody have always been Article 8 financial assets, but have clarified this so that there will not be any doubt.

They hope that the clarifications above provide the custormer  with confidence and clarity. They apologize for the confusion around the disclosure. Even though it was in response to guidelines applicable to any publicly traded crypto custodian from an important regulator, it caused unnecessary uncertainty and anxiety.

The crypto space is a dynamic one, and we will always seek to use the best structures to ensure that our client’s assets are managed in the safest way possible.

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