After Fork, Coinbase Has Change of Heart on Bitcoin Cash
Now that Bitcoin Cash has forked off of Bitcoin, Coinbase is no longer taking a hard line stance against the alt currency. In a new email they sent to account holders, they cite security of the network, customer demand, trading volumes, and regulatory considerations as the reasons they have decided to support Bitcoin Cash by January 1, 2018. Not mentioned are the rumored threats of class action lawsuits for withholding Bitcoin Cash from their account holders.
On Twitter, Columbia University Professor Tim Wu had likened Coinbase’s original refusal to turn over Bitcoin Cash to account holders to a hijacked stock split. “Imagine a stock split where the broker declined to issue the new stock to its owners,” he wrote on July 31st. He also wrote that Coinbase was “courting serious, maybe ruinous legal trouble if it doesn’t give the users the full value of the Bitcoin fork.”
There is little doubt that Coinbase would’ve been exposed to lawsuits because they have access to Bitcoin Cash through their users’ Bitcoin deposits but were keeping the Bitcoin Cash for themselves. And Bitcoin Cash is not exactly valueless. As of the time I’m writing this, 1 Bitcoin is equal to $3,226, according to Coinmarketcap.com. 1 Bitcoin Cash is equal to $204. Bitcoin is hovering around its all-time high while Bitcoin Cash is already the 4th most valuable alt coin.
A letter from Coinbase on their change of heart is below:
Last modified: August 6, 2017
Dear Coinbase customer,
We wanted to give our customers an update on the recent Bitcoin hard fork. You can read more about what a digital currency fork is here:
Forks enable innovation and improvements to digital currency and we believe that we will see an increasing number of forks in the future. We expect this to be a vibrant and innovative community.
When a digital currency forks, it creates a new digital asset. Adding new digital assets to Coinbase must be approached with caution. Not every asset is immediately safe to add to Coinbase from a technical stability, security, or compliance point of view.
Our top priority is the safety of customer funds and we spend extensive time designing, building, testing and auditing our systems to ensure that the digital asset we support remains safe and secure. We may not always be first in adding an asset, but if we do, you can be sure that we’ve invested significant time and care into supporting it securely. We believe this is the best approach for us to maintain customer trust.
In the case of bitcoin cash, we made clear to our customers that we did not feel we could safely support it on the day it was launched. For customers who wanted immediate access to their bitcoin cash, we advised them to withdraw their bitcoin from the Coinbase platform. However, there are several points we want to make clear for our customers:
Both bitcoin and bitcoin cash remain safely stored on Coinbase.
Customers with balances of bitcoin at the time of the fork now have an equal quantity of bitcoin cash stored by Coinbase.
We operate by the general principle that our customers should benefit to the greatest extent possible from hard forks or other unexpected events.
Over the last several days, we’ve examined all of the relevant issues and have decided to work on adding support for bitcoin cash for Coinbase customers. We made this decision based on factors such as the security of the network, customer demand, trading volumes, and regulatory considerations.
We are planning to have support for bitcoin cash by January 1, 2018, assuming no additional risks emerge during that time.
Once supported, customers will be able to withdraw bitcoin cash. We’ll make a determination at a later date about adding trading support. In the meantime, customer bitcoin cash will remain safely stored on Coinbase.
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.