Coinbase Walks Back Claim That SEC Approved Trio of Acquisitions

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Cryptocurrency exchange and brokerage giant Coinbase has walked back a claim that it had received explicit approval from the U.S. Securities and Exchange Commission (SEC) to acquire three companies as part of its future plans to list cryptocurrencies that are deemed securities under federal regulations.

As CCN reported, the San Francisco-based company had announced earlier this week that it had received approval from both the SEC and the Financial Industry Regulatory Authority (FINRA) to buy Keystone Capital Corp., Venovate Marketplace Inc., and Digital Wealth LLC, firms which, between them, hold a range of federal licenses authorizing them to operate as broker-dealers, registered investment advisers, and alternative trading systems.

The claim that the SEC had approved these acquisitions was particularly notable, since it is the federal agency that oversees securities trading, and Coinbase has been clear that it sees these acquisitions as an important step toward ultimately listing blockchain-based securities, pending further discussions with regulators.

However, Coinbase retracted that claim on Tuesday, telling Bloomberg that while FINRA had indeed approved the acquisitions, the SEC had not been involved in that process in a formal capacity.

“It is not correct to say that the SEC and FINRA approved Coinbase’s purchase of Keystone because SEC was not involved in the approval process,” Coinbase spokeswoman Rachael Horwitz told the publication.

“The SEC’s approval is not required for the change of control application,” she added. “Coinbase has discussed aspects of its proposed operations, including the acquisition of the Keystone Entity, on an informal basis with several members of SEC staff.”

Separately, Maureen Shanahan, Coinbase’s head of corporate communications, told CCN that the acquisition of these three companies has placed the firm on the right track to obtaining the authorization to operate as a broker-dealer, but there is much work to be done before it can, under federal oversight, list security tokens.

“So the main update is that the acquisition has been approved. That means: we’re on the path to being able to operate as a regulated broker-dealer,” Shanahan said. “But there are many steps ahead before we will be able to offer blockchain-based securities under the oversight of regulators.”

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Josiah is an assistant editor at CCN. A former ancient and medieval literature teacher, he has been reporting on cryptocurrency since 2014. He lives in rural North Carolina with his wife and children. He holds investment positions in bitcoin and other large-cap cryptocurrencies. Follow him on Twitter @Y3llowb1ackbird or email him directly at josiah.wilmoth(at)ccn.com.