If the US SEC classifies cryptocurrencies as securities, OTC Markes will be well-positioned in providing liquidity to these assets in the future.
During its earnings call earlier this week, OTC Markets announced that it has secured FINRA approval in order to provide services for digital assets as securities. This is a major development as it provides a regulated market for big investors to trade crypto securities.
In its quarterly report, OTC Markets mentioned that the update to its membership agreement to facilitate transactions in digital securities will allow OTC Link subscribers to quote and trade digital asset securities using the OTC Link ATS. But it’s too early to gauge whether such activity would have any material impact on OTC Link’s financial results.
Just like an exchange, an ATS works as a regulated trading platform. There are dozens of ATS platforms, however, most operate in the private securities market. OTC Market has a trading platform for many public securities including small banks, and global firms, as well as Grayscale funds that hold assets like Bitcoin and Ethereum. Speaking on the development, R. Cromwell Coulson, President and CEO of OTC Markets, stated:
“We also recently received FINRA approval to permit digital asset securities to be traded by broker-dealers on OTC Link ATS. This approval furthers our mission of operating regulated markets for broker-dealers and issuers of securities. While it will be some time until the regulatory framework and infrastructure develop, we believe our markets are well-positioned to be part of new trading, data, and disclosure solutions for these securities.”
Crypto and Regulation
OTC Markets prefer to adopt a regulatory-driven as it plans to offer to trade digital securities to its clients. Cass Sanford, OTC Markets Deputy General Counsel, stated that proper disclosure is essential for investor protection.
For a long, SEC chief Gary Gensler has been insisting that all cryptocurrencies are securities. Thus, if this turns out to be true, OTC Markets will be well-positioned in providing liquidity to these assets in the future. Sanford said that the SEC classifies digital assets as securities, they will function as OTC equity securities. She also added that a lot of instruments currently look like OTC securities. Sanford explained:
“The world’s largest digital asset investment vehicles trade on our markets. These securitized products help investors gain exposure to digital assets through broker-dealers and investment advisors operating within a robust framework of state and federal securities laws. We also recently received FINRA approval to permit digital asset securities to be traded by broker-dealers on our Alternative Trading System (ATS).”
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