SEC, Finra Approve Coinbase’s Acquisitions, Security Token Listing Offerings Soon
Coinbase Claims to Have Received “Green Light” to Start Trading Coins Labeled as Securities
Coinbase, one of the world’s largest cryptocurrency platforms, claims to have received the green light from US regulators to move forward with the acquisition of three companies. By acquiring those three companies, Coinbase will be able to list tokens labeled as securities.
The United States Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have approved Coinbase’s acquisition of Keystone Capital Corp., Venovate Marketplace Inc., and Digital Wealth, LLC, according to a report from Bloomberg.
By acquiring the three companies, Coinbase can offer so-called security tokens – which are digital tokens legally considered securities by regulators. The acquisition also means that Coinbase will be officially under federal oversight. Until now, Coinbase has been regulated by a patchwork of state authorities.
Back in June, Coinbase announced plans to begin operating as a broker dealer, an alternative trading system (ATS), and a registered investment advisor. By registering as an alternative trading system, the San Francisco-based company could operate outside traditional public stock exchanges.
The regulated cryptocurrency market is booming. Despite a crackdown by the United States, China, and other countries, companies have already raised $12 billion through ICOs in 2018 – more than triple the figure raised in all of 2017. The SEC claims that cryptocurrencies like bitcoin are unlikely to be labeled as securities, although they have also said that most coins sold through ICOs are securities.
That means anyone issuing coins through an ICO is required to register and comply with federal laws. Furthermore, anyone offering such coins for trading will be required to comply with federal law as well.
Coinbase is one of several major exchanges pursuing regulated security token trading. Circle Internet Financial Ltd. is one of Coinbase’s competitors. Last month, Circle announced plans to pursue registration as a brokerage and trading venue with the SEC, which would allow the firm to help investors buy and sell tokens deemed to be securities.
Circle also plans to seek a federal banking license, which would allow it to provide more services to customers.
The next step for Coinbase is to integrate its technology into the new subsidiaries it has acquired. That will take time, as Coinbase will need to make sure employees have the proper licenses and that all companies follow similar data reporting and customer onboarding procedures.
At the same time as this news broke, it was revealed that Coinbase was exploring letting its users trade five new digital currencies, including Cardano, Basic Attention Token, Stellar, Zcash, and 0x. However, Coinbase isn’t guaranteeing that it will list the tokens just like they said when announcing they would be listing Ethereum Classic (ETC).
It’s a big deal when Coinbase adds new tokens to the platform: to date, Coinbase only allows customers to trade bitcoin, Bitcoin Cash, Ether, and Litecoin. Despite being one of the world’s largest cryptocurrency exchanges, Coinbase is extremely selective about its crypto offerings.
Additionally, Coinbase revealed that some of the new cryptocurrencies will only be avaiablle in certain countries for legal reasons. That could mean American investors are excluded from trading the new coins using Coinbase and Coinbase Pro.
Stay tuned for more information as Coinbase continues to work with regulators to launch a regulated security token exchange.