Coinbase Corp. one of the most famous cryptocurrency platforms, said it got the green light to move forward with a trio of acquisitions that should allow it to become one of the first federally regulated venues for trading virtual coins deemed to be securities.
The Financial Industry Regulatory Authority approved Coinbase’s purchase of Venovate Marketplace Inc. Keystone Capital Corp., and Digital Wealth LLC, a company spokesman said this Monday. The acquisitions could help enable the firm to offer so-called security tokens, and also place the businesses under more federal oversight. Coinbase has to date primarily been regulated by a patchwork of state authorities.
The move provides Coinbase licenses to operate as a broker dealer, an alternative trading system as well as a registered investment adviser, the San Francisco-based company said last month. Alternative trading systems operate outside traditional public stock exchanges.
On Tuesday of last week, Coinbase provided an update on its ongoing talks with regulators, showing it still has some work to do before its customers may trade security tokens.
“Being approved to take ownership of these licensed entities is just one more step toward our ultimate goal of allowing our customers to trade securities tokens on our platform,” stated Elliott Suthers, a spokesman in an emailed statement. “There are plenty more steps and conversations needed with regulators before this journey’s complete.”
Regulated trading platforms may eventually handle billions of dollars in tokens sold by companies in initial coin offerings. Despite a crackdown by the U.S., China and other countries, companies have already raised more than $12 billion through ICOs this year more than triple what they did all of last year, according to market tracker CoinSchedule. The SEC has said most of the coins are securities, which means issuers must register and comply with federal laws — as do the platforms and exchanges that handle trading.
Coinbase isn’t the only runner in this race. One of its main competitors, Circle Internet Financial Ltd., said in June that it intends to pursue registration as a brokerage and trading venue with the Securities and Exchange Commision so it can help investors buy and sell tokens deemed to be securities.
The firm also plans to seek a federal banking license to provide more services to it’s customers.