Coinbase Custody Becomes First Custodian With SOC 1 and SOC 2 Security Evaluations
The crypto custody subsidiary of major US-based crypto exchange Coinbase has managed to obtain 2 new security evaluations.
As per a press release from February 12, Coinbase Custody got a SOC 1 Type 2 and a SOC 2 Type 2 report from Grant Thornton, a major US-based accounting firm. This means Coinbase Custody is now able to prove that it complies with many of the security and reporting regulatory standards.
What Information Do SOC Reports Provide?
The Grant Thornton official website says that SOC reports provide information on how strong and present the financial, information and operational controls are in an organization. SOC 1 gives information related to the financial reporting of any organization and are intended for auditor-auditor communications.
On the other hand, SOC 2 gives more information about availability, security, privacy, processing integrity and confidentiality. The Type 1 SOC 2 and SOC 2 reports describe the controls’ design, whereas Type 2 reports cover the effectiveness of controls for a testing time period of 6 months.
Coinbase Custody Will Renew Reports
Coinbase Custody has stated that it’s going to renew its reports. The news about the evaluations arrives soon after in January, Coinbase has a established an Ireland identity in order to make its cryptocurrency services available to European institutions. There are other crypto services providers that went to obtain SOC certificates. For example, at the end of January, US-based crypto custodian and exchange Gemini was granted the SOC 2 Type 2 evaluation by Deloitte.
What Does Cryptocurrency Custody Mean?
The greatest advantage of crypto assets is that they can be under independent custody. Institutional investors and financial markets need a higher level of security standards in order to achieve self-custody. Rohan Barde Hai, a researcher for Blockchain Zoo, explained in September last year how important custody solutions are for institutional investors. The more the crypto market is maturing, the more traditional institutions decide to join it.
For instance, after the new Anti-Money Laundering laws have been instated, 40 banks in Germany asked regulators to approve their digital asset custody services, which means the adoption of crypto is on the rise.