Gemini, the cryptocurrency exchange founded by the Winklevoss twins, is expanding its custodial services with the launch of a dedicated offshoot called Gemini Custody™. The qualified crypto custodian supports 18 cryptocurrencies including Bitcoin, Bitcoin Cash, Ether, Litecoin, Zcash, as well as 13 ERC-20 tokens.
While Gemini Custody service will be initially available for such major cryptocurrencies, the company plans to expand aggressively to support more coins. The step reflects the surge in demand for custody solutions for altcoins and other tokens and not just leading cryptocurrencies. Although this will have a profound impact on the crypto market, especially in the long-term, dealing with smaller cryptocurrencies is related to higher risks.
“The maturation of crypto as an asset class depends heavily on the safety and soundness of the custodians that hold individual and institutional funds,” said Tyler Winklevoss, CEO of Gemini.
The venture was built to overcome barriers that have blocked institutional investment in digital assets and minimize the risk of loss due to theft or operational errors. Other than being registered as a trust by the New York state regulator, one of the most stringent in the world, the operational and technical characters of Gemini’s offering could help improve underwriting appetite.
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“Institutional investors have demonstrated a clear and growing demand for crypto, but they’ve struggled to find a solution that fully meets their complex regulatory and security requirements,” noted Jeanine Hightower-Sellitto, director of operations at Gemini.
Gemini is going up against local players like Coinbase
More specifically, Gemini Custody offers operational and risk management advantages over other custodians including using “hardware security modules (HSMs), multisignature technology, and geographically distributed, access-controlled facilities.” Cybersecurity standards also allow users to secure their holdings with hardware security keys and restrict withdrawals from their account to addresses they whitelist. Alternatively, they can block all crypto withdrawals for their account.
The new service also combines Gemini’s expertise as a provider of crypto trading services with digital asset security, as users can instantly trade their crypto in custody without waiting for it to be transferred out of cold storage.
Gemini’s new offering is going up against local players like Coinbase custody service which has signed over 70 institutions to join the service it debuted last year to safeguard digital assets in a manner similar to traditional securities.
Coinbase custody service also partnered with several broker-dealers to provide its clients with access to its product, which is typically taking on clients with a minimum of $10 million and charges a $100,000 setup fee and ten basis points in monthly fees.