In an interesting announcement earlier this week, Coinbase announced that they have filed the paperwork to become a regulated broker-dealer. This paperwork is still pending federal authority’s acceptance, but it is interesting to note that Coinbase could soon be selling crypto based securities to their extremely large user base. Cryptocurrencies can come in various forms according to federal regulators such as the U.S. Securities and Exchange Commission (SEC) so the definition of a “blockchain based security” could be up for discussion amongst lawyers, but it’s safe to say that Coinbase will be expanding soon.
The most important thing to note is that Coinbase is opening doors to the ability to offer various types of coins aside from their current offering. This is a huge step for Coinbase as that has been a criticism of their users in the past. The small amount of coins that they offer on their platform (as of writing this only BTC, ETH, LTC, and BCH are available on the exchange) only account for approximately 63% of the total crypto market cap, and that has turned many users away in the past.
According to Coinbase’s own announcement this could possibly allow them to offer a ton of features from securities trading to margin, and over-the-counter trading. This comes after Coinbase recently announced their platform for institutional investors just under a month ago.
These announcements don’t come as a huge surprise to anyone that has been paying attention to Coinbase’s recent acquisitions. In April they acquired Earn.com, a popular service for Crypto enthusiasts to gain from answering questions on topics they already understand. As of June 6th, they have acquired Keystone Capital, a financial services firm based out of California that specializes in securities offerings. This shows that Coinbase isn’t waiting around for any regulatory body to approach them and is rather just acquiring already regulated firms to gain the connections necessary.
Coinbase’s communication with federal regulations here in the United States has always been a huge positive to their platform, as many exchanges are in a sort of gray area when it comes to legality in many cases. This is more of federal regulators coming to terms with the reality that is Cryptocurrencies than exchanges doing anything shady, however.
The benefits of this announcement are endless, as Coinbase even mentions in their announcement that they could possible bring some of the amazing aspects of Crypto trading such as 24/7 operation and real-time settlement to more traditional securities-based markets. Coinbase sees this as a step forward towards democratizing traditional markets by taking this huge regulatory leap.
Despite all the legal flip flopping the SEC has been undergoing in the Crypto space it is nice to see that the biggest player in the game has taken the necessary steps to gaining legal recognition for Crypto. This will undoubtedly allow Coinbase to think much larger in terms of scale and offerings on their platforms. I wouldn’t doubt it if Coinbase was offering securities and many more cryptocurrencies in the months to come.
It is an exciting time to be in Crypto.