Coinbase, the largest US cryptocurrency exchange, has added a new digital asset to its custodial service. Matic, the native token of Matic Network, can now be deposited and withdrawn by the institutional firms that utilize Coinbase Custody. Institutional interest in crypto assets has increased significantly over the last two years, with investment funds seeking exposure to the most traded cryptocurrencies such as BTC and ETH.
Mindful of this trend, Coinbase Custody is selective of the digital assets it adds to its insured and regulated custodial storage service. To date, it has added support for less than 40 of the 3,000+ crypto assets in circulation. The San Francisco-based company, led by CEO Brian Armstrong, has a vested interest in Matic Network, having previously provided seed funding to the fledgling startup via its VC arm.
Optimizing Crypto Networks For Enterprise Adoption
Matic Network is focused on scaling leading blockchains such as Ethereum (ETH) – that is, increasing their throughput and speed, enabling more transactions to be processed per second. This is particularly important for enterprises that are tentatively exploring blockchain solutions. Governments, banks, tech companies, and academic institutions are all investigating the potential of distributed ledger technology. Should the many pilot programs underway proceed to full-blown initiatives, it is critical that public blockchains can handle the commensurate increase in network usage.
To support businesses seeking exposure to blockchain technology, a number of leading tech companies have created enterprise-grade solutions. IBM (NYSE: IBM) is heavily invested in Hyperledger’s modular blockchain, while Amazon.com, Inc. (NASDAQ: AMZN) has released its own blockchain-as-a-service operating on AWS. Meanwhile, Facebook Inc’s (NASDAQ: FB) Libra project, which will operate on a native blockchain, is nearing completion, with regulatory – rather than technical – hurdles proving to be the main sticking point.
Institutional Exposure To Crypto Without The Complexity
As a young and wholly digital asset class, cryptocurrency entails a steep learning curve that requires technical sophistication to master. While anyone can custody their own digital assets, institutional investors are not comfortable with the responsibility this entails, and the lack of legal recourse should funds be stolen or lost through mismanagement. Third party services such as Coinbase Custody provide a turnkey solution, managing assets and even disbursing interest on tokens that incorporate staking rewards such as Tezos (XTZ) and Stellar (XLM).
Many of the assets that have been added to Coinbase Custody have subsequently been added to Coinbase exchange, where they can be bought and sold by retail investors. For Matic Network, whose token was issued less than a year ago on Binance via an initial exchange offering, making it into the vaults of Coinbase Custody is quite a coup.
The project will soon introduce staking, giving users an incentive to lock up Matic tokens. Should Coinbase Custody introduce passive Matic staking for its clients, it will be another ringing endorsement for the fledgling blockchain scaling project.