Coinbase has launched its own cloud storage wallet software promoting its ability to be a standalone entity. Those who use the Coinbase wallet are the only holder of their private cloud store user controlled private keys. This will allow Coinbase users to have a greater degree of safety and security compared to having your money in a centralized exchange which are prone to hacks and other break-ins.
What are Private Keys?
Coinbase has added private keys to their wallet as the latest feature that is a new option to back up this information. The private key information can be stored in the cloud using either Google Drive or iCloud. This feature is expected to add an additional way to access portfolios that hold crypto currencies if for whatever reason an investor loses access to their wallet. Coinbase announced that these private keys will be encrypted and require a wallet password for access.
The additional backup that users will be able to enjoy with their Coinbase wallet, will create an additional space where they are subject to a hacking attack. The question is whether the convenience is worth the risk. No storage method is truly impenetrable, but each level of user requires a different level of security. Many of Coinbase’s users are willing to sacrifice for the greater convenience of having your private keys in an accessible cloud environment.
The SEC Continues to Ponder a Crypto ETF
Many on Wall Street believe that the introduction of a crypto currency ETF is a matter of when and not if. An exchange traded fund (ETF) is a product that trades like a stock on an exchange. A crypto currency ETF could hold a specific crypto currency as a trust like bitcoin, or several crypto currencies in a basket format. This would provide access to a large number of investors who are interested in gaining exposure to crypto currencies.
The launch of such an investment opportunity could be the impetus that takes this industry to the next level. While many investors have open wallets, to trade and invest in crypto currencies, a large portion of the retail investing community will only participate if there is an ETF. Additionally, institutional investors have specific rules about what they can invest in. An ETF would provide these funds with access to the crypto currency arena.
The SEC continues to evaluate the market environment to determine if there is enough interest in a crypto currency ETF. Safety and security is also a component and access to private keys such as the one introduced by Coinbase could go a long way toward answering many questions. Oversight will also be important. The Commodity Futures Trading Commission along with the Securities and Exchange Commission could have dual oversight, given there are futures on bitcoin which provide retail and institutional investors in the US access to crypto currencies.