The largest US cryptocurrency exchange, Coinbase, announced yesterday that was in the process of becoming a regulated securities firm. The company is awaiting regulatory approval for three licences - a broker-dealer licence, an alternative trading system licence and a registered investment advisor licence. “If approved, Coinbase will soon be capable of offering blockchain-based securities, under the oversight of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA),” Coinbase’s chief operational officer Asiff Hirji wrote in a blog post.
“[T]hese 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,” he also said, adding that securing the licences would bring the company closer to achieving its goal of being “the most trusted way for our customers to buy, sell, and use many different types of crypto assets”.
Coinbase also envisions a scenario, where it may work with regulators to “tokenize” existing types of securities, bringing some of the benefits of cryptocurrency-based markets, such as 24/7 trading, real-time settlement and chain of title. According to Hirji, the company believes that such an approach would democratise access to capital markets for companies and investors alike, “lowering costs for all participants and bringing additional transparency and inclusion to the ecosystem”.
Coinbase has in recent weeks made a number of moves aimed at securing a stronger position in the cryptocurrency investment space. In May the company released a suite of products and services aimed at institutional investors, including a custody service, which it described as “the most secure crypto storage solution available”. Later that month it acquired Paradex, a relay platform that allows users to trade ERC-20 tokens from their crypto wallets, and changed the name of its trading platform GDAX to Coinbase Pro.