Coinbase safeguards more of crypto than you might think

This is a segment from the Empire newsletter. To read full editions, subscribe.

Air traffic control is often pegged as the most stressful job in the world. 

Managing private key security at Coinbase might just take the cake. 

Coinbase is big. Influential. On the front lines of the war for hearts, minds and regulatory clarity.

There’s no greater way to prove Coinbase’s standing in the crypto space than by just how much of it is given to it for safekeeping.

We know now that Coinbase users held $272.7 billion in crypto at the end of September, plus an additional $4 billion in cash. 

That’s nearly $3.5 billion more crypto than at the end of June — probably in part boosted by rising asset prices — and $200 million less cash than the prior period.

Then, there’s all the crypto tied up in Grayscale’s suite of ETPs and ETFs: $22.62 billion at Q3’s close, per Arkham Intelligence data. Grayscale went all-in on Coinbase Custody back in 2019. 

Another $31.7 billion is custodied on behalf of other ETF issuers like BlackRock, Bitwise and Ark/21Shares. 

Coinbase’s final total for Q3: $331 billion, the equivalent of 15% of the total crypto market cap at the time.

And if you want to go even deeper: Chainalysis recently estimated that about 1.8 million BTC could be lost forever — or 9.1% of the circulating supply. 

Scrub that from crypto’s market cap, along with the 1.1 million lost Satoshi coins, and Coinbase would technically be sitting on closer to 17% of crypto’s remaining paper value.

No doubt, Coinbase recognizes the significance of it all. Still, the way things are going, Coinbase could go down as one of the most aptly named companies in fintech history: 

A base for literally all the coins.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.