Coinbase, the world’s most popular cryptocurrency exchange platform, announced today that it is on track to obtain the necessary licenses to become a fully-regulated securities firm, under the oversight of the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
If approved, Coinbase will 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 (@coinbase) June 6, 2018
According to the announcement, these advancements are made possible through the acquisitions of Keystone Capital Corp., Venovate Marketplace, Inc., and Digital Wealth LLC. If approved for the proper licenses, Coinbase would be able to offer a number of services, including crypto securities, margin and over-the-counter (OTC) trading, in addition to new market data products.
This news comes just weeks after a report indicated that Coinbase has been considering a possible move into regulated banking since engaging the U.S. Office of the Comptroller of the Currency in early 2018. Additionally, Coinbase recently launched a range of products and services designed for institutional clients.
While utility tokens, which make up the majority of tokens, are defined as something that gives access to the company’s services, they do not promise to bring profits. In contrast, security tokens are designed to be tradable assets and are issued to investors in the pursuit of future profits, and are thus included under securities regulations.
Other major financial institutions and companies are beginning to focus on digital securities. Recently, JPMorgan (JPM) announced that it has demonstrated a prototype of its blockchain-based platform for capital markets. Essentially, JPM is looking to streamline capital markets transactions by tokenizing assets, which will ultimately work to improve the flow of value between many different types of stakeholders.
Additionally, tZERO, a blockchain platform for capital markets and subsidiary of Overstock.com, announced in May that it has partnered with market maker BOX Digital Markets to launch the industry’s first regulated security token exchange.
Coinbase also detailed its vision for the future of crypto in the announcement, describing a world where tokenized assets are bridged with traditional cryptocurrencies, and are able to be traded 24/7.
Ultimately, we can envision a world where we may even work with regulators to tokenize existing types of securities, bringing to this space the benefits of cryptocurrency-based markets — like 24/7 trading, real-time settlement, and chain-of-title. We believe this will democratize access to capital markets for companies and investors alike, lowering costs for all participants and bringing additional transparency and inclusion to the ecosystem.