Key Points:
1. Coinbase provides custody services for Digitalx’s Australian Bitcoin ETF.
2. Coinbase employs cold storage and MPC for asset security.
3. Partnership underscores Coinbase’s commitment to security and compliance.
Coinbase to Secure Australian Bitcoin ETF BTXX with Advanced Custody
Digitalx, a company registered on the Australian Securities Exchange (ASX), and Coinbase have teamed up for the recently approved Bitcoin exchange-traded fund (BTXX) in Australia. Through its Coinbase Prime platform, Coinbase will offer custody services and improved trading execution. Through this partnership, eligible Australian investors will be able to access Bitcoin and other digital assets through a traditional fund structure.
Because of its strong infrastructure and dedication to security, Coinbase is a top option for custody services. As evidence of its standing and dependability in the market, Coinbase is the custodian for eight of the eleven Bitcoin ETF issuers in the US.
Advanced Security Measures by Coinbase
To ensure the security of the Australian Bitcoin ETF’s assets, Coinbase employs two critical security measures:
1. Cold Storage: Coinbase uses cold storage to protect digital assets, including Bitcoin, by storing them offline. This method prevents unauthorized access by keeping the assets away from the internet and potential cyber threats.
2. Multiparty Computation (MPC): Coinbase’s MPC technology allows secure and auditable management of customer assets. This technology ensures that multiple parties, including the ETF issuer and Coinbase, can jointly control and verify the assets without compromising security or integrity.
Furthermore, Coinbase highlights the significance of personal accountability for safeguarding accounts. To prevent unwanted access, they advise enforcing two-factor authentication (2FA) for account access, writing down private keys and keeping them secure, and putting in place extra security measures. Coinbase offers a robust security architecture to protect the assets of the Australian Bitcoin ETF by combining these techniques.
Compliance with Australian Regulations
Coinbase’s role as the custodian for the Australian Bitcoin ETF involves adhering to various Australian financial regulations. These regulations include:
Anti-Money Laundering (AML) and Know-Your-Customer (KYC) Requirements: Coinbase is required to identify users on its platform, ensuring compliance with AML/KYC laws in jurisdictions where it operates, including Australia. This involves verifying customer identities and monitoring transactions for suspicious activity.
Australian Securities and Investments Commission (ASIC) Regulations: As a custodian, Coinbase must comply with ASIC’s requirements for holding and safeguarding assets, including Bitcoin, on behalf of Australian-based ETF issuers.
Australian Prudential Regulation Authority (APRA) Guidelines: Coinbase must adhere to APRA’s prudential standards for custodians, ensuring the safekeeping and management of assets, as well as maintaining adequate capital and liquidity.
Australian Taxation Office (ATO) Regulations: Coinbase must comply with ATO requirements for reporting and withholding taxes on behalf of Australian-based ETF issuers and their investors.
Coinbase has put in place a thorough compliance framework to guarantee that laws and industry best practices are followed. Among other things, this entails the hiring of a specific compliance officer to manage the business’s regulatory requirements. Tight policies and regulations aimed at stopping financial crimes including money laundering and financing of terrorism are also included in the framework. Coinbase regularly holds employee training sessions and monitoring processes in order to uphold high compliance standards. To maintain Coinbase’s leadership in regulatory compliance within the cryptocurrency industry, the business also examines and updates its compliance program on a regular basis to account for changes in laws and industry standards.
Looking Forward
Both Coinbase and Digitalx have expressed excitement about their relationship. Both Lisa Wade, CEO of Digitalx, and John O’Loghlen, head of Coinbase’s Australian operations, have underlined that their common objective is to give Australian investors consistent access to digital assets.
This collaboration for Coinbase goes beyond simple custody as Coinbase will be maintaining the integrity and dependability of the Australia Bitcoin ETF with cutting edge technology and secure custody services. This commitment will increase trust and will make sure all applicable regulations are followed strictly.
Coinbase’s designation as the preferred custody service provider for institutional investors and ETF issuers is further strengthened by this appointment to serve as the custodian for Digitalx’s BTXX ETF in Australia. Robust asset management and protection for the ETF is ensured by the company’s stringent adherence to regulatory standards and adoption of state-of-the-art security processes.
