This is not unusual. Often times the government will delegate something to a private company because it is more specialized in dealing with those things and is able to do so at a lower cost. However, in this case it would be more better to withdraw all of this from Coinbase. There is an overall benefit from that as Coinbase will have fewer coins, they already have too many stored with them.
The US government can deal with Coinbase, sign a contract with Coinbase and use Coinbase as their custodian but we individually should not try to do the same. Coinbase never intend to cheat the US. government in any national contract between the US government and Coinbase. They know what to do in order to keep their business and owners safe but with non-government customers, Coinbase can do differently.
I don't say Coinbase have already cheated or treated their individual customers bad but it's a principle for individual Bitcoin users and investors to keep in mind. This means you should not trust Coinbase and should not trust any other third party companies.