Coinbase approved by regulators to list tokens deemed securities


The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have given a thumbs-up to several recent acquisitions by the Coinbase cryptocurrency exchange.  The move could allow Coinbase to offer trading of several coins the regulators have defined as securities, expanding Coinbase’s offerings.  They could also allow Coinbase to expand into other investment vehicles beyond cryptocurrencies. 

At the beginning of June, Coinbase announced plans to acquire three financial companies – Digital Wealth LLC, Keystone Capital Corp. and Venovate Marketplace Inc.  All three hold a variety of licenses with the SEC and FINRA, and the approval by the two agencies could allow Coinbase to become a broker-dealer, a registered investment advisor and even an alternative trading system (ATS).  The company, which apart from operating an exchange offers a cryptocurrency wallet, is now reviewing the recently acquired companies to ensure their licenses and data reporting policies comply with federal regulations. 

In an announcement last week, San-Francisco-based Coinbase said that it was looking at adding five new tokens to its exchange, including Cardano, Zcash, 0x, the Basic Attention Token and Steller Lumens.  However, it emphasized that the decision to list the coins had not yet been finalized.  The addition of the coins would follow a move by the firm in June when it decided to support Ethereum Classic and ERC20 tokens.  According to the company, the inclusion of ERC20-based offerings "paves the way for supporting ERC20 assets across Coinbase products in the future."

The SEC said this past March that any digital asset trading platform that wants to trade assets determined by the agency to be a security is required to register as an exchange and that it would be required to comply with the same rules as traditional financial exchanges.  It added that an entity looking to operate as an ATS is also obligated to adhere to the same regulatory requirements, stating, “Registration as a broker-dealer subjects the ATS to a host of regulatory requirements, such as the requirement to have reasonable policies and procedures to prevent the misuse of material non-public information, books and records requirements, and financial responsibility rules, including, as applicable, requirements concerning the safeguarding and custody of customer funds and securities.” 

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