Coinbase & SEC Team Up to Clarify Which Crypto Assets are Security Tokens
The Security Exchange Commision (SEC) had some harsh criticism against many online trading cryptocurrency platforms. They had concerns that the trading platforms appear to be SEC registered and regulated marketplaces when they are not. The platforms which refer to them as exchanges give the impression that they meet the regulatory standards set by the SEC. After this public criticism by the regulatory authorities, Bitcoin took a sharp hit falling nearly 10%.
Now, Coinbase is helping SEC determine which tokens classify as securities. Currently, Crypto-exchanges must register at the state level to provide their services, which puts them outside the jurisdiction of the SEC. However, the federal regulators have investigative powers to check whether the exchanges are in any violation of securities laws.
In a series of meetings with SEC regulators, Coinbase discussed if they should become a licensed broker. By registering with the agency, Coinbase can support more coins while complying with securities laws. They hope that the dialogues with the SEC will likely boost the exchange’s reputation as the most legally compliant player in the crypto industry.
SEC’s focus is less on a particular cryptocurrency like bitcoin and more on new digital coins released through token sales on Initial Coin Offering (ICO). They have increasingly cracked down on fraudulent ICOs that tends to promote their potential returns to investors and attracts billions of dollars globally.
Coinbase is the leading US marketplace for a handful of major cryptocurrencies like Bitcoin and Ethereum. Earlier this year, the exchange added new tax tools to help investors prepare for a tax-filing season. These efforts might be Coinbase’s efforts to become the world’s largest cryptocurrency exchange.