Cryptocurrency industry giant Coinbase on Wednesday announced that it is “on track” to register with the US Securities and Exchange Commission (SEC) as a broker-dealer, a move which would allow it to list cryptoassets that the agency deems to be securities.
In a statement attributed to Coinbase President and COO Asiff Hirji, Coinbase revealed that it has acquired a broker-dealer license, an alternative trading system (ATS), and a registered investment advisor (RIA) license, and — pending regulatory approval — will begin operating as a broker-dealer under the oversight of the SEC and Financial Industry Regulatory Authority (FINRA).
SEC Chairman Jay Clayton has said that cryptocurrencies designed to replace sovereign fiat currencies — bitcoin, for instance — are not subject to securities laws, but there has been debate about whether other cryptocurrencies, such as those initially distributed through crowdsales, should be classified differently. Moreover, the agency has said that nearly every initial coin offering (ICO) token that it has encountered is a security under federal guidelines.
In previous statements, Hirji said that the four assets listed on the Coinbase platform — bitcoin, ether, bitcoin cash, and litecoin — were the only ones the company felt comfortable supporting, given the regulatory climate in the US. Operating as a broker-dealer would greatly expand the list of assets that the company could 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.”
As part of securing these licenses, Coinbase acquired three companies holding various federal licenses: Keystone Capital Corp., Venovate Marketplace, Inc., and Digital Wealth LLC. Keystone and Venovate are each registered with the SEC and FINRA as broker-dealers, while Digital Wealth has an RIA license from the SEC. Venovate also has a license to operate as an ATS.
Coinbase is not the only major cryptocurrency firm seeking federal registration in pursuit of greater regulatory compliance. As CCN reported, Circle Internet Financial — one of Coinbase’s most well-funded competitors — revealed this week that it plans to pursue SEC registration and hopes to eventually receive a banking license as well.
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