The U.S. Marshals Service (USMS), a division of the Department of Justice responsible for asset forfeiture, has teamed up with Coinbase Prime, the brokerage platform of major crypto exchange Coinbase, for custody and trading services for the USMS’s large-cap cryptocurrency holdings, Coinbase said in a blog post on Monday.
According to the announcement, Coinbase Prime was chosen by the USMS based on its track record and ability to deliver institutional-grade crypto services. Under the terms of the contract, the USMS will pay $32.5 million, and Coinbase Prime will be responsible for managing and disposing of significant amounts of popular cryptocurrencies held by the USMS. This move cements Coinbase Prime’s position as a trusted custodian, with over $330 billion in assets safeguarded as of this year.
Coinbase Prime, which has been available for almost three years, has become the platform of choice for institutions and significant holders of digital assets. It has also become a primary partner for numerous spot cryptocurrency exchange-traded funds (ETFs). In the first quarter of 2024 alone, Coinbase recorded an institutional trading volume of $256 billion.
Coinbase has a longstanding commitment to supporting law enforcement agencies, and its selection for custody services comes as the US government moved to sell 3,940 Bitcoin (worth around $240 million) seized from a narcotics trafficker in 2014 in the last week alone. The US government has acquired approximately 200,000 coins (worth around $5 billion) through seizures related to criminal activities.
On the regulatory front, Coinbase has faced its fair share of trouble. Back in April, Judge Katherine Polk Failla of the US District Court of the Southern District of New York ruled that the SEC’s lawsuit against Coinbase could proceed. More recently, Coinbase accused the SEC and the Federal Deposit Insurance Corporation (FDIC) of improperly blocking its document requests, alleging that the regulators are blocking access to documents that should be available under the Freedom of Information Act (FOIA).
Meanwhile, Bank of America (BAC) has recently upgraded its rating on Coinbase shares from underperform to neutral, raising its price target for Coinbase to $217 from $110. Investment banking firm KBW has also increased its Coinbase price target from $160 to $230 while maintaining its market performance rating.