Gushiken Yona
The U.S. Marshals Service (USMS), a division of the U.S. Department of Justice tasked with asset forfeiture, has selected Coinbase Prime as its preferred custodian and trading partner for its “Class 1” (large cap) digital assets. This landmark decision marks a significant step in the growing acceptance and institutional adoption of cryptocurrencies.
The USMS initiated a competitive due diligence process earlier this year, evaluating various solutions for managing and disposing of substantial quantities of popular cryptocurrencies, as announced in March by the Asset Forfeiture Division (AFD). The goal was to streamline custody, management, and disposal processes while diversifying the types of cryptocurrencies handled under government forfeiture programs. Coinbase Prime’s robust infrastructure, proven track record, and ability to securely handle large-scale crypto operations ultimately led to its selection as the USMS’s trusted partner.
“The U.S. Marshals Service (USMS) department of Justice (DOJ), on behalf of the Asset Forfeiture Division (AFD) has a requirement for managing and disposing of large quantities of popular cryptocurrency assets, known as Class 1 cryptocurrencies. This will require the use of multiple, industry leading, storage and liquidation techniques employed in a manner that is professional, lawful, and consistent with Department and USMS policy. This contract will also streamline custody, management, and disposal processes for cryptocurrency assets while allowing for the diversification of the type of cryptocurrency assets that can be managed and disposed of under the Government’s forfeiture programs,” the agency said in March.
Coinbase’s relationship with law enforcement agencies dates back to 2014, when it established its law enforcement program. “Coinbase works with every major U.S. federal, state, and local law enforcement agency, as well as international agencies on every continent. Growing the cryptoeconomy means promoting safe and efficient markets, and these partnerships are critical to our mission,” the crypto company said in its latest blog.
Coinbase Prime, the institutional arm of the exchange, has become the platform of choice for many institutions and large holders of digital assets since its launch three years ago. Notably, it serves as the primary partner for a majority of spot crypto ETFs, further demonstrating its expertise in the institutional crypto market. As of March 31, 2024, Coinbase safeguarded $330 billion in assets and recorded $256 billion in institutional trading volume in Q1 2024, solidifying its position as a leader in the institutional crypto space.
The USMS contract represents a major milestone for Coinbase, demonstrating its growing influence and recognition in the institutional crypto market. However, the company also faces ongoing regulatory challenges, notably a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) in June 2023.
The SEC accused Coinbase of violating federal securities laws by offering trading and staking services to the general public and operating Coinbase Wallet as an unregistered brokerage. Despite this ongoing legal battle, Coinbase’s selection by the USMS highlights the increasing acceptance and adoption of cryptocurrencies by government agencies and institutional investors.
This partnership signals a growing recognition of the legitimacy and potential of cryptocurrency and could pave the way for further collaboration between the public and private sectors in navigating the evolving regulatory landscape of cryptocurrencies.
