Gareth Johnson
Gareth Johnson
Updated on December 28, 2021

Coinbase is a popular US-based cryptocurrency exchange famous for its institutional character. It has been an industry leader among other crypto-related businesses since its launch, spearheading the mainstreaming of cryptocurrencies.

Coinbase is consistently rated as one of the best cryptocurrency exchanges in the world because it puts a lot into security. Coinbase customers have the advantage of not worrying about whether their coins will disappear overnight because of sloppy security practices or shady exit scams that hound the cryptosphere -that is why customers are willing to pay higher trading fees on Coinbase exchange.

While most reputable cryptocurrency exchanges use a mix of well-known security practices such as keeping more than 90% of all cryptocurrency assets in offline storage and requiring two-factor authentication for withdrawals, Coinbase takes cybersecurity a step further with cryptocurrency vaults.

In this guide, we’ll take a look at Coinbase vaults to explain how they work, and how you can take advantage of vaults to make sure your digital assets remain available and secure.

What Is a Coinbase Vault?

As you may already know, Coinbase has a crypto wallet service of its own. Coinbase wallet is an online crypto wallet where Coinbase customers can store their cryptocurrencies and trade them directly on the Coinbase exchange. 

Open vault with gold bars inside

However, keeping large amounts of cryptocurrency in an online wallet is not a recommended security practice, because most online wallets have custody over your private keys, which means you might lose assets in a hack. Therefore, customers are also advised to use cold wallets to store large amounts of cryptocurrencies. 

Using hardware wallets (like a Trezor or Ledger wallet) and paper wallets ensures that your digital assets can’t be stolen by hackers since cold wallets aren’t connected to the internet. But this method may be inconvenient for frequent traders, as they would have to constantly manage multiple wallets when they want to make cryptocurrency trades. Coinbase vaults offer a good compromise between cold storage and online wallets.

You can also think of Coinbase vault as a savings account. You can use your regular Coinbase crypto wallet to make daily withdrawals and trade cryptocurrencies as you like but the digital assets in your Coinbase vault require more effort to move, preventing you from making impulsive decisions.

How Do Coinbase Vaults Work?

Anyone with a Coinbase account can take advantage of Coinbase vaults. Coinbase vaults are free to use just like Coinbase wallets. A Coinbase vault receives cryptocurrency just like any other cryptocurrency wallet through a specific address. However, withdrawing from a vault requires completing more security steps than withdrawing from a regular crypto wallet.

Coinbase vaults allow you to integrate new security steps into the withdrawal process. You have to approve any withdrawal requests from two separate mail addresses within 24 hours and wait 48 hours for a withdrawal to come through. Coinbase users can also open group vaults and require multiple people to co-sign withdrawals. 

Beware that you won’t be able to skip the 48-hour waiting period on cryptocurrency withdrawals even in case of emergencies. But, you can earn rewards for keeping cryptocurrency in your vault! If you own digital assets eligible for APY or staking rewards, you can still earn them as you store your funds in the Coinbase vault.

Bitcoin and Other Cryptocurrencies You Can Store in Vaults

You can store more than a hundred cryptocurrencies supported by Coinbase in Coinbase vaults including Ethereum (ETH), Bitcoin (BTC), Litecoin (LTC),  Dogecoin (DOGE), Bitcoin Cash (BCH), Cardano (ADA), and Solana (SOL).

Coinbase portfolio page

How to Set Up a Coinbase Vault?

In order to set up a Coinbase vault, sign in to your Coinbase account on Coinbase.com from your browser. Select the cryptocurrency you wish to store in a vault from the Assets tab. Once you select the desired asset, you can click “create vault”.

Once you create a vault, you can select whether the vault is a group vault that requires approval from co-signers or an individual vault that will be managed by you alone. You will be asked for a second email address to verify your account.

Once you create your vault and verify your information through a second email address, you can send digital assets to your Coinbase vault. Do remember that each asset has a separate vault, so if you create a Bitcoin vault only send BTC to the vault address. 

You can only have one Coinbase account, you can only open a single vault for every cryptocurrency in your Coinbase portfolio. Each digital currency has its own vault, so as long as you make sure you are using the correct wallet address you are fine.

How Do Group Vaults Work?

If you are an individual who wants to put an extra bit of security on your crypto wallet, using a vault is easy enough. All you need is approval from a secondary email address. However, group vaults work a little bit differently.

In order to withdraw digital assets from a group vault, previously agreed upon members of the group have to approve the withdrawal process. Only the master account holder can initiate a withdrawal by sending a request, but the withdrawal won’t be approved until a set number of co-signers also approve. For a group vault with 3 co-signers, 2 co-signers have to approve in order to make a withdrawal. For a group of 5, at least 3 members should co-sign the withdrawal.

There is also a 48-hour waiting period before the withdrawal is complete. During the waiting period, the master account holder can cancel the withdrawal but co-signers can’t. It’s important to pick trusted people as co-signers when you are opening a group vault.

Slightly opened square vault with binary code flowing out on black background

Again, whether you use a group vault or an individual vault, necessary approvals should be given within 24 hours or the withdrawal order will be canceled. If your withdrawal is canceled, you can immediately initiate another withdrawal request.

How to Send Bitcoin and Other Cryptocurrencies to a Vault?

You can send your digital assets to a crypto vault from Coinbase or another crypto wallet of your choice. If you want to send cryptocurrency or Bitcoin to your vault from your Coinbase wallet, you should use the Coinbase website, instead of the Coinbase mobile app. 

In order to fund your vault, you need to know your vault address. Once you open a vault account, you can select “deposit” to see the specific vault address that belongs to that digital asset. You can copy and paste the vault address in QR code from the Coinbase vault section. You can also find your wallet address QR code on Coinbase mobile app. You can send the wallet address or the QR code to others in order to receive payments directly to your vault.

Just remember that each cryptocurrency has its own vault address, just like how each cryptocurrency has its own wallet address. You can’t send ETH to a BTC vault. Always double-check that your addresses are correct. Otherwise, your digital assets will be lost because you are trying to operate across different blockchains.

A Few Words Before You Go…

Coinbase vaults are a free way of storing your cryptocurrency on the Coinbase exchange. Coinbase vaults require two approvals from two separate email addresses for withdrawing cryptocurrency and there is a 48-hour waiting period before the transaction is completed. You can also open group vaults that require approval from co-signers in order to execute a transaction. Coinbase vaults can be a good option if you don’t want to make impulsive decisions with your digital assets or if you’re managing a cryptocurrency fund with other people.