As of late, there has been much talk about whether or not Coinbase has custodial accounts. For those who don’t know, a custodial account is an account where the private keys are held by a third party.
In the case of Coinbase, this would be the company itself.
There are pros and cons to both custodial and non-custodial accounts. With a custodial account, you don’t have to worry about losing your private keys or forgetting them.
However, you are trusting a third party with your keys, which means they could theoretically be stolen or lost.
Non-custodial accounts are the opposite. You are responsible for your own keys, which means you need to be extra careful not to lose them.
However, if you do lose your keys, there is no one else who can access your account.
So, what’s the verdict? Does Coinbase have custodial accounts? It’s hard to say for sure. The company has been notoriously tight-lipped about its inner workings.
However, there is some evidence to suggest that it does indeed have custodial accounts.
For one, Coinbase has previously stated that it stores “the vast majority” of its customers’ funds in offline storage. This would not be necessary if the company did not have custody of its customers’ private keys.
Furthermore, Coinbase has also been known to freeze customer funds without explanation. This would not be possible if the company did not have control over its customers’ funds.
Ultimately, whether or not Coinbase has custodial accounts is still up in the air. However, the evidence does seem to suggest that it does indeed have such accounts.