According to The Wall Street Journal, Coinbase reached out to regulators about the getting licensed even as the Securities and Exchange Commission moves closer to writing some regulatory framework by which exchanges and other market players would operate.
Bitcoin exchanges have been feeling increased pressure from the Wall Street regulator of late, as evidenced by the Securities and Exchange Commission launching an investigation into ICOs and putting exchanges on notice that they were on the radar, too. While Securities and Exchange Commission Chairman Jay Clayton recently stated that not all ICOs are fraudulent, the regulatory agency has also made it clear that security tokens must be traded on licensed exchanges.
According to the Wall Street Journal story, Coinbase may look to become licensed by the Securities and Exchange Commission as an exchange but at the same time register as a broker-dealer(BD), the latter of which faces less strict rules. It would also mean the securities regulator would have unlimited access to the buy and sell transaction records.
Becoming licensed could potentially open the door to the exchange supporting more altcoins, including those that U.S regulators deem securities, the Wall Street Journal story suggests. It could also explain why Coinbase has been hesitant to add more coins, such as Ripple’s XRP, till now. As CBNN previously reported, Ripple was willing to pay for a listing on top cryptocurrency exchange Coinbase.
If Coinbase becomes licensed by the US SEC, it could set a precedent for other trading platforms to do the same. An attorney is quoted in the Wall Street Journal story as saying:
“It’s an early phase where the industry leaders understand they have to live within a highly regulated environment. They have to deal with the Securities and Exchange Commission.” – Richard Levin in the Wall Street Journal
USA-based Gemini is currently regulated by the New York State Department of Financial Services. In Japan, Monex Group, a regulated business, recently announced its plans to acquire the deft Coincheck in a $33.4 million transaction.
GDAX, which is run by Coinbase, is currently the number nine cryptocurrency trading platform based on volume over the past 48-hour period.
The Securities and Exchange Commission last month distinguished between cryptocurrency exchanges and trading platforms, saying a company that says it’s an exchange “could give misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”