Coinbase Plans to Register with the US SEC
Cryptocurrency exchange and giant, Coinbase, announced that it is “on track” to register with Securities and Exchange Commission (SEC) of the US as a broker-dealer. This would allow it to list those crypto assets that the agency deemed as securities and expand the list of assets that it could list.
It is a $1.6 billion cryptocurrency giant which approached the United States SEC for registering as a licensed brokerage firm and also as an electronic trading venue. This move would pressurize the competitors to follow the suit.
There is no decision by SEC as to which digital tokens are to be considered securities. Since there’s no decision on this, Howey Test would be followed by the potential to-be investors, which was created by Supreme Court in 1946 to determine whether an unconventional financial instrument requires the same regulation as other conventional instruments like bonds and stocks.
According to SEC Chairman, Jay Clayton, Cryptocurrencies meant to replace several sovereign fiat currencies, like Bitcoin, are not subject to Securities Laws but the debate of a separate classification for other cryptocurrencies (like the ones offered through crowdsale) still continues. The agency stated that most of the ICO tokens are a security as per the Federal guidelines.
Asiff Hirji, Coinbase President and COO, revealed that the crypto exchange has acquired a broker-dealer license which is an alternative trading system (ATS) and a registered investment advisor (RIA) license apart from a pending regulatory approval. This will help it to operate under the oversight of Financial Industry Regulatory Authority (FINRA) and SEC.
Hirji also claimed that the four assets listed on the platform – Bitcoin, Bitcoin Cash, Litecoin, and Ethereum were the only assets the company comfortably supported considering the regulatory climate of US. Securing the licenses will bring the exchange closer to its goal of being the most trusted way for the users to sell, buy and use various crypto assets.
In order to secure the licenses, Coinbase acquired three companies. It acquired Keystone Capital Corporation and Venovate Marketplace Inc., each registered with FINRA and SEC as broker-dealers while Venovate also has a license to operate as an ATS. It also acquired Digital Wealth LLC which has an RIA license from the SEC.
Coinbase is regarded as a platform that made Bitcoin accessible to the non-technical users. Its policy is to list those coins that are stable over a long term of trade. It is not the only authority seeking federal registration. Circle Internet Financial also plans to get itself registered with SEC.
Meanwhile, the US SEC has been suppressing blockchain projects which generally create “tokens” to use on their platform and hold ICOs to raise funds by selling tokens to investors. The SEC is carefully scrutinizing on these tokens.
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