As a part of this approval, Coinbase will be able to list the ICOs on their platform and thus trade digital tokens that are deemed as securities.
According to the latest report from Bloomberg, the U.S regulatory bodies have given Coinbase Inc. the go-ahead with the acquisition of three companies, which will allow the exchange operator to list digital coins as securities under the observation of the federal regulatory authorities.
On Monday, July 16, a Coinbase spokesperson confirmed that the company had received a joint approval from the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) to purchase the security dealers Keystone Capital Corp., Venovate Marketplace Inc. and Digital Wealth LLC. As a part of this deal, Coinbase will now be allowed to expand its offerings while working as an alternative trading system, a broker-dealer, and a registered investment advisor.
Earlier this year, the SEC had directed exchanges trading digital assets as securities to get themselves registered with the agency. Once registered, the same rules would govern the exchange platforms like that of the traditional exchanges. The SEC had also mandated some regulatory requirements to operate as an alternative trading system (ATS), outside the ambit of the conventional public stock exchanges. The SEC at that time said:
“Registration as a broker-dealer subjects the ATS to a host of regulatory requirements, such as the requirement to have reasonable policies and procedures to prevent the misuse of material non-public information, books and records requirements, and financial responsibility rules, including, as applicable, requirements concerning the safeguarding and custody of customer funds and securities.”
Moreover, the SEC for long has been arguing that digital tokens sold through Initial Coin Offerings (ICOs) will be treated as securities. Hence any platform that is conducting an ICO needs to get registered with the SEC. Having got registered with the SEC, Coinbase will now be able to conduct the validated ICOs. This will also help to prevent frauds while creating a healthy environment in the ICO market.
In addition to Coinbase, Circle Internet Financial Ltd. also expressed their intentions to get registered with the SEC and obtain licenses to work as a brokerage and trading venue thereby allowing them to sell tokens deemed as securities. The company is also looking into getting a federal banking license to provide additional services to its customers.
Last weekend, Coinbase also announced its decision to add support for the trading of five more cryptocurrencies to its platform. This includes Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC), and 0x (ZRX). The company also said that it is recently working on regulatory rules and changes and that there could be some restrictions like not being able to send or receive using a local wallet. “Going forward, you should expect that we will make similar announcements about exploring the addition of multiple assets. Some of these assets may become available everywhere, while others may only be supported in specific jurisdictions,” Coinbase stated.