U.S. Marshals tap Coinbase Prime for Crypto Custody

The U.S. Marshals Service (USMS), a Department of Justice division responsible for asset forfeiture, has partnered with Coinbase Prime, the leading crypto exchange Coinbase brokerage platform.

Coinbase stated in a blog post on Monday that the collaboration is intended to offer custody and trading services for the USMS’s large-cap cryptocurrency holdings.

Coinbase Prime was chosen by the USMS for its institutional-grade crypto services and demonstrated track record, as stated in the announcement.

Coinbase to Earn $32M From the Contract

The USMS is required to pay a substantial sum of $32.5 million by the contract terms.

Coinbase Prime will manage and dispose of substantial quantities of popular cryptocurrencies held by the USMS as a component of the agreement.

As of this year, Coinbase Prime has safeguarded over $330 billion in assets, which further solidifies its reputation as a trusted custodian.

Since its inception nearly three years ago, Coinbase Prime, a commercially available service, has become the preferred platform for institutions and significant digital asset holders.

It has become a primary associate for various spot cryptocurrency exchange-traded funds (ETFs).

Coinbase recorded an institutional trading volume of $256 billion in the first quarter of 2024.

Coinbase noted in the blog post that it has maintained a steadfast dedication to assisting law enforcement agencies since the inception of its law enforcement program in 2014.

“Today, 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.”

In the past week, the United States government has sold 3,940 Bitcoin (approximately $240 million) that it seized from a narcotics trafficker in 2014. Coinbase has been chosen to provide custodial services.

The United States government has acquired approximately 200,000 Bitcoin coins (equivalent to roughly $5 billion) through seizures associated with illicit activities, thereby becoming one of the largest cryptocurrency holders.

Regulatory Obstacles for Coinbase

In the interim, Coinbase has encountered its fair share of regulatory challenges.

Judge Katherine Polk Failla of the U.S. District Court of the Southern District of New York ruled in April that the SEC’s lawsuit against Coinbase could continue.

The Judge’s decision was made in response to Coinbase’s motion to dismiss the SEC case, which pertains to allegations that the exchange functions as an unregistered securities exchange, broker, and clearing agency.

Coinbase has recently accused the SEC and the Federal Deposit Insurance Corporation (FDIC) of unjustly blocking its document requests.

The exchange asserts that regulators obstruct access to documents that must be made available under the Freedom of Information Act (FOIA).

In the interim, Bank of America (BAC) has recently raised its price target for Coinbase from $110 to $217 and has upgraded its rating on Coinbase shares from underperforming to neutral.

Investment banking firm KBW has also raised its Coinbase and Bank of America price target.

In a research analysis, KBW maintained its market performance assessment while increasing its price target for Coinbase from $160 to $230.