In the midst of emerging regulation, digital asset exchanges are rushing to comply with a shifting cryptocurrency landscape. Through three key acquisitions, Coinbase has gained regulatory approval to expand its asset offering and list tokens classified as securities.
Update: Coinbase has clarified its position and started it has not in fact received any approval to list security tokens.
In an email dated yesterday, Rachael Horwitz, spokesperson for Coinbase, said,
“It is not correct to say that the SEC and FINRA approved Coinbase’s purchase of Keystone because SEC was not involved in the approval process.”
Horwitz’s email further reads,
“The SEC’s approval is not required for the change of control application. Coinbase has discussed aspects of its proposed operations, including the acquisition of the Keystone Entity, on an informal basis with several members of SEC staff.”
The Future of the Digital Economy: Security Tokens
On July 16, 2018, the U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) approved Coinbase’s acquisition of Keystone Capital Corp., Digital Wealth LLC, and Venovate Marketplace Inc., according to a Bloomberg report.
Through the purchase, Coinbase secured an alternative trading system (ATS) license, broker-dealer license and registered investment advisor (RIA) license that will enable the firm to offer security tokens in compliance with regulatory authorities.
Although different from public stock exchanges, alternative trading systems offer many of the same services for emerging digital asset classes. With the green light from regulators, Coinbase will be able to operate as one of the first regulated trading platforms to offer security tokens listed in initial coin offerings (ICO).
In the initial announcement made June 6, 2018, Coinbase COO Asiff Hirji also noted that the licenses enable the launch of new features and services on its platform:
“If approved, these licenses will set Coinbase on a path to offer future services that include crypto securities trading, margin and over-the-counter (OTC) trading, and new market data products.”
Coinbase Expanding Asset Offering
Announced on July 13, 2018, Coinbase revealed the potential addition of Cardano, Basic Attention Token, Stellar Lumens, Zcash and 0x to its exclusive list of digital assets.
Today we are announcing that we’re exploring the addition of the following assets to Coinbase: Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC) and 0x (ZRX). https://t.co/qoECyR0V1f
— Coinbase (@coinbase) July 13, 2018
Although it is still unclear whether these tokens will be classified as securities, the move aligns with Coinbase’s recent acquisitions to meet regulatory compliance with an expansion of newly listed cryptocurrencies.
Under variable regulations in different jurisdictions across the globe, Coinbase also mentioned the continued expansion of further additional digital assets pending approval from authorities:
“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.”
Through a trio of acquisitions and plans to list security tokens, it’s becoming clear that Coinbase is preparing to maintain its first-mover advantage and remain at the forefront of cryptocurrency trading platforms.
Whether Cardano, Basic Attention Token, Stellar Lumens, Zcash and 0x will be made available for trading on Coinbase is yet to be confirmed.
Cover Photo by Tom coe on Unsplash