Coinbase Seeks SEC Approval to Become Licensed Brokerage

coinbase

Coinbase has made moves to become registered with the US Security Exchange Commission as a licensed brokerage firm and electronic-trading venue according to the Wall Street Journal.

Coinbase Seeks SEC Approval

The San Francisco based company is one of the largest platforms in the world for trading Bitcoin and other cryptocurrencies. It is currently valued at $1.6 billion according to the Wall Street Journal. The company declined to officially comment on its application, however the report indicates that Coinbase representatives have met with SEC officials in recent weeks to begin the process of registering with the agency. This step would allow Coinbase to add digital tokens that the SEC has ruled as securities and could up the ante for other crypto exchanges to follow suit and register as well.

For the SEC’s part, it has yet to decide which cryptocurrencies are to be considered securities. The Commision has recommended platforms and investors follow the Howey test, created by the supreme court in 1946, to determine whether a digital token can be considered an unconventional financial vehicle requiring the same regulations as stocks and bonds.

Many in the cryptocurrency world have remained hostile towards regulation in part because of its muddy definitions but Coinbase has been the platform that brought trading to the masses from its inception and strives to be “the Google of cryptocurrencies” as VP Dan Romero told Business Insider.

Registering with the SEC would allow Coinbase to expand on the four coins it already lists – Bitcoin, Bitcoin Cash, Litecoin, and Ethereum.

Coinbase President Wants Clear Regulations

Coinbase President Asiff Hirji spoke to CNBC about the disparity in regulatory certainty saying that,

“As soon as there is more regulatory clarity than there currently is you would expect us to start listing more assets.”

Currently, the company’s policy is to only list tokens it judges stable as opposed to the bulk of alternative coins in the market that remain volatile and subject to intense price fluctuations.

Though Coinbase today is making the effort to conform to SEC regulatory requirements it has only recently run afoul of Federal authorities.

Just last year the company fought the IRS on its demand that they release information on customers who had profited from trading through their exchange. Ultimately Coinbase was forced to hand over that information on 14,000 customers who had made transactions amounting to over $20,000 between 2013 and 2015.

If and when Coinbase is registered as a broker it will only be allowed to offer tokens which have already been registered for sale with the SEC by their issuers. This would require token issuers providing investors with documents that give full financial disclosure, a move that can be avoided if sales are limited to institutions.

One other company has registered with the SEC as a brokerage firm. Templum LLC operates as a licensed brokerage firm and alternative trading system that has plans to offer a platform for selling and trading regulated tokens.

 

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