On Wednesday, the world’s largest U.S-based cryptocurrency exchange Coinbase made an important announcement saying that the crypto exchange is all set to get itself registered with the US Securities and Exchange Commission (SEC) and function as a federally regulated broker-dealer.
In its official blog post, the company stated that it has completed all the formalities of getting some pre-requisite licenses. The blog post mentions:
“This step forward is being made possible by our acquisition of a broker-dealer license (B-D), an alternative trading system license (ATS), and a registered investment advisor (RIA) license. “
Coinbase is now awaiting the regulatory approval from the federal authorities and after receiving it, the company will be henceforth operating as a broker-dealer under the regulatory oversight of the SEC and Financial Industry Regulatory Authority (FINRA).
Recently, there has been an ongoing debate regarding the state of digital currencies and whether they are subjected to securities laws or not. In a recent interview to CNBC, SEC chairman Jay Clayton clarified the agency’s stand that Bitcoin won’t come under the securities laws. Moreover, there also has been a debate on whether digital currencies which were initially distributed through crowdsale, need to be classified as securities tokens.
In one of his previous statements, Coinbase President and COO Asif Hirji said that given the uncertainty in the regulatory climate in the U.S, the company is comfortable in supporting four digital currencies like bitcoin, ether, bitcoin cash, and litecoin. Harji said that once the company gets the license to operate as a broker-dealer, it would make a big difference allowing them to expand the list of assets that Coinbase can list.
“There are now many types of blockchain-based digital assets, from cryptocurrencies to security tokens to collectibles. In the United States, some of these assets will be subject to SEC oversight. With this in mind, securing these licenses will bring us a step closer to our goal, which is to be the most trusted way for our customers to buy, sell, and use many different types of crypto assets.”
In order to further strengthen its position to get the regulatory licenses, Coinbase has acquired three already registered companies – Keystone Capital Corp., Venovate Marketplace, Inc., and Digital Wealth LLC. Of these three, Keystone and Venovate are registered with the SEC and FINRA as broker-dealers and the Digital Wealth holds an RIA license from the SEC.
“We believe this is an important moment for the crypto ecosystem, and yet another indication of the maturation of the crypto economy. If approved, these licenses will set Coinbase on a path to offer future services that include crypto securities trading, margin and over-the-counter (OTC) trading, and new market data products.”
Hirji also mentioned that in addition to offering its own securitized tokens, the firm will also consider tokenizing existing securities products and “bringing to this space the benefits of cryptocurrency-based markets.” Some of the additional benefits to this will be real-time settlement, transparent chain-of-title and 24/7 trading.