Coinbase to expand use of Vaults for secure crypto custody — Executive

Alex O’Donnell6 hours agoCoinbase to expand use of Vaults for secure crypto custody — ExecutiveCoinbase currently holds approximately $270 million in customer assets.936 Total views9 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTCOINTELEGRAPH IN YOUR SOCIAL FEEDFollow ourSubscribe onCoinbase plans to integrate its secure crypto custody accounts — known as Vaults — into more of its products, including those offered by its growing institutional custody business, according to Yehuda Lindell, Coinbase’s head of cryptography, speaking at the Science of Blockchain Conference on Aug. 8. 

Coinbase’s Vaults secure transactions using multiparty computation (MPC), whereby the private key used to sign transactions is split into multiple shares and distributed among several parties. No single party has full control of the key.

The Vaults “are used and will be used for more products at Coinbase, for custody, exchange, and more,” Lindell said.

Related:SEC pushes back against Coinbase"s "overly broad" discovery requests

The Vaults are designed to eliminate single points of failure where an attacker might be able to gain full control of crypto assets in a single stroke. To that end, each key share is held in a completely distinct environment.Coinbase Vaults offer advantages over traditional “hot” and “cold” wallets. Source: ElementalCrypto

“There is one share for the offline environment, one share for human approvers, and one share for each MPC server,” Lindell said.

The goal is for keys to be held in “different types of entities with strong separation between them,” she added. Ideally, the keyholders “never go together throughout the entire life-cycle” of a Vault.

The identity of keyholders varies across products. For non-custodial products, the customers themselves are often signers. With custodial products, “you would have MPC servers and human approvers all inside Coinbase,” Lindell said.

Coinbase has emerged as a key digital assets custodian for financial institutions. It holds crypto on behalf of virtually all of the issuers of spot crypto exchange-traded funds (ETFs). In 2024, spot Bitcoin (BTC) and Ether (ETH) ETFs launched in the United States. They now hold upward of $55 billion in assets, according to Yahoo Finance.

According to its Aug. 1 earnings call, Coinbase currently holds some $270 billion in customer assets. Assets under Coinbase’s custody grew by approximately $80 billion over the past year.

“No matter how much you protect a system, high-value targets like billions or hundreds of billions of dollars are very attractive, so we have to think about protection,” Lindell said.

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