WARNING! Your Bitcoin Is NOT SAFE w/ Coinbase!! - YouTube

Egggg yolk, what is going on with those who tune in daily, the Chico army, and of course

any newbie aka a viewer of the tube.

My name is Tyler, the host of the channel, that really loves the birth of a new video

meme on the internet…...No wayayayayay, he got

triple H shoes On, ON, ON ON.

It’s time for Chico Crypto!

So, I gotta cover this news that ripped through the crypto industry, late in the day on Wednesday….it

was announced that National banks in the US, could now offer custody services for crypto

assets.

As we can see from Coindek’s article on the news, it was the regulator, the office

of the comptroller of the currency, who gave this the greenlight.

Which, I knew something like this was coming...I have been covering Brian Brooks, Coinbase’s

former Chief Legal Officer, first joining the office in March of this year, officially

leaving the base and joining the government, and then by May in just a couple of months,

he became the acting comptroller of the currency, our nation's top banking regulator position.

So, a move like this makes sense, although I personally thought it would be the other

way around.

I thought crypto companies would become the banks, and get licenses to operate like one...as

Coinbase was already trying to get a national banking license in 2018.

Not banks would become the crypto companies….

So is this good, is the big question???

That national banks can custody our crypto assets for us...well, let’s get the actual

document from the OCC, and dissect it, to get a Chico interpretation of what was said.

It states “we conclude a national bank may provide these cryptocurrency custody services

on behalf of customers, including by holding the unique cryptographic keys associated with

cryptocurrency.

This letter also reaffirms the OCC’s position that national banks may provide permissible

banking services to any lawful business they choose, including cryptocurrency businesses,

so long as they effectively manage the risks and comply with applicable law.”

So right away, we get what this is about in the short term.

It was all about finalizing the red tape for getting crypto companies, like Coinbase, the

ability to be served by our national banks.

It means that when you have your assets on Coinbase, a federally charted bank in the

US may be the custodian of those funds.

These guys are allowed, the national banks that were active as of 6/30/2020 which includes

all the big banks, the household names...from every state.

JP Morgan chase providing banking services to coinbase?

Well that is what this new ruling by the OCC says, can & has actually already happened.

In May of this year, it was announced that JP Morgan was opening accounts for crypto

exchanges, and Coinbase and Gemini were the first two.

What were the services?

From the Coindesk article “The Wall St. Journal sources said JPMorgan is now providing

Coinbase and Gemini’s U.S. users with deposits and withdrawals via wire transfer and automated

Clearing House (ACH) transactions.

It’s also helping the exchanges with cash management services.

So they got OK’d for cash services for the base back in May, but now they are OK’d

to actually hold the crypto, for it’s customers...which in JP Morgan’s case, right now, is Coinbase.

So are you comfortable with JP Morgan, holding your private keys?

If you use Coinbase, that is a very likely possibility with this new ruling.

Which doesn’t make a whole lot of sense to me, I’m sure you know about Coinbase

Custody, it’s their custodian solution, which is the largest in the world, having

billions upon billions under its management, for more than 150 different clients in 14

different countries.

Then just in February of this year, they were the 1st custodian to pass 2 major security

evaluations, SOC1 and SOC2

But...Now, JP Morgan can compete with Coinbase at their own game??

Doesn’t make sense…Until, you realize that Coinbase custody was built for institutions

and not regular people... to become a customer, you either have to be a business or an accredited

investor.

So, this is how Coinbase has been providing custody of regular customer funds, like you

and me.

Coinbase, is a customer of Coinbase custody.

From the custody website...it says “Coinbase Custody operates as a standalone, independently-capitalized

business to Coinbase, Inc.

Coinbase Custody is a fiduciary under NY State Banking Law.

All digital assets are segregated and held in trust for the benefit of our clients.

Which they received in 2018...from a blog post “Coinbase Custody Receives Trust Charter

From The New York Department of Financial Services”....so why all this work from Coinbase,

to have one of it’s banking partners come in to swoop up their booming custodian business?

Insurance my friends.

It all comes down to insurance of those assets.

Now for the regular Conibase app, for retail investors...not Coinbase Custody, we get this

for our funds “Coinbase prioritizes the security of our customer's funds, all digital

currency that Coinbase holds online is insured.

If Coinbase were to suffer a breach of its online storage, the insurance policy would

pay out to cover any customer funds lost as a result.

Coinbase holds less than 2% of customer funds online.

The rest is held in offline storage.

So, online...those cold coins...of which most of their regular customer assets is 98 percent...is

actually uninsured as of right now.

Which they told us in April of last year.

Coindesk covered it, in an article titled “$255 Million: Coinbase Confirms Extent

of Crypto Insurance Coverage”...so 2 percent of their funds is worth 255 million, which

means the other 98 percent about 12.5 billion in cold storage is uninsured?

Ya, that is probably scary as fook, for Coinbase, because that is a ton of money, and they have

seen what happens to other exchanges, when they lose it….*cough *cough Bitfinex

Here is something else interesting, I found….with Coinbase Custody, if you store your assets

with them, you get a little perk….they insure cold storage too, which I’m sure the Trust

designation by New York allowed them to do that for custody...but there's still limitations

with even that insurance, from the section on what percent of your assets intend to be

covered by this policy it states “We carry an annually renewed commercial crime policy

that carries a $255m limit (per-incident and overall), with Coinbase Global as the named

insured...so again limited to 255 million, but with Custody they can do cold storage.

Well shoot guys, you got a ton of money filling up under your control...and things are getting

riskay, so they need the Big Boils to come to the rescue.

National Custodial banks they call them and from Wikipedia, the 5 largest are the Bank

of New York Mellon, State Street Bank & Trust Company, JP Morgan Chase, Citigroup, and BNP

Paribas Securities Services….

So why is this important?

These custodians can now hold crypto assets?

Well going to something like Vanguard, an American registered investment advisor based

in Malvern, Pennsylvania with over $6.2 trillion in assets under management, they state this

regarding the security of it’s assets, specifically mutual funds “Vanguard mutual fund assets

are protected on your behalf by the strict regulatory controls set forth in the Investment

Company Act of 1940.

This act requires each mutual fund to place its cash and securities with a qualified custodian,

typically a U.S. bank…

Then regarding the safety of assets they say “U.S. banking laws generally provide that

“segregated” mutual fund assets held by a bank custodian aren’t subject to the liens

or claims of the custodian’s creditors or of the Federal

Deposit Insurance Corporation (FDIC).

To further mitigate risk, Vanguard takes the precaution of using several different independent

custodian banks.

These banks include The Bank of New York Mellon, Brown Brothers Harriman & Co., JPMorgan Chase

Bank, and State Street Bank and Trust Company.

So, again the big names, those custodians on the wiki... but here is the thing I think

is happening.

By these guys providing custody, the assets won’t be subject to liens or claims of the

custodians creditors or of the FDIC.

Just like mutual funds...

Or it's the 1st step to getting them there.

Coibase has billions upon billions of dollars of assets that are insured.

The risk of that is beyond their control, and from what I see...they are bending the

knee to the banks, which means JP Morgan will eventually have control of your assets.

But it’s crypto, and we don’t necessarily need to store it with you Coinbase, so suck

a nut JP Morgan.

Cheers, I’ll see you next time!