Deubiquitinating enzyme (DUB) that controls levels of cellular ubiquitin through processing of ubiquitin precursors and ubiquitinated proteins. Thiol protease that recognizes and hydrolyzes a peptide bond at the C-terminal glycine of either ubiquitin or NEDD8. Has a 10-fold preference for Arg and Lys at position P3''. Deubiquitinates ENAC in apical compartments, thereby regulating apical membrane recycling. Indirectly increases the phosphorylation of IGFIR, AKT and FOXO1 and promotes insulin-signaling and insulin-induced adipogenesis. Required for stress-response retinal, skeletal muscle and germ cell maintenance. May be involved in working memory. Can hydrolyze UBB(+1), a mutated form of ubiquitin which is not effectively degraded by the proteasome (By similarity). Thiol-dependent hydrolysis of ester, thioester, amide, peptide and isopeptide bonds formed by the C-terminal Gly of ubiquitin (a 76-residue protein attached to proteins as an intracellular targeting signal). Inhibited by monoubiquitin and diubiquitin. Preferentially binds diubiquitin; the interaction does not hydrolyze diubiquitin but, in vitro, inhibits the hydrolyzing activity on other substrates. Belongs to the peptidase C12 family.