Coinbase, the biggest US-based cryptocurrency exchange and the world’s most regulatory-compliant one, has some significant changes for us this week. They’ve increased the purchase limits for all their US customers which have passed the necessary KYC and AML verifications, and also have added a new instant settlement procedure on bank transfers.
Individuals will no longer have to wait for five business days in order to purchase cryptocurrencies via Coinbase, even if the money comes through a bank transfer. The trick is that the customers won’t actually be able to withdraw their fund from the platform until their bank transfers actually settle in 5 business days. The point of this move from Coinbase is to provide some comfort and utility to both old and new customers that prefer doing bank transfers, without opening themselves up to any security or fraud risks.
For those of you wondering, this is not a blockchain-based implementation, as far as we are aware. Coinbase is not utilizing any of the instant-settlement (eg Ripple’s xRapid) solutions that could be available to them. In fact, this story would be much more interesting if they achieved it through blockchain engineering, instead of the way they went via a policy update.
But this is still a step in the right direction. Like it or not, the decision to use blockchain-based systems for instant settlements is not purely up to Coinbase, but rather includes all intermediaries between the customer’s money and Coinbase’s account with their own bank. If this was a blockchain-based solution (which we believe Coinbase would love it to be), then we would have solved a great problem with adoption on behalf of traditional financial structures. One day.
It is unclear if instant settlement for bank transfers is only available to US citizens, but Coinbase clearly communicated that the increase of purchase limits are not yet rolled out worldwide. They also say that the process for enabling the update has started, but don’t mention how long they expect it to take before the process can be completed.
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