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Coinbase 'On Track' to Become a Regulated Securities Firm

Coinbase announced Wednesday that it was acquiring three financial services firms in a bid to receive a federal securities license.

Jun 6, 2018 at 11:20 p.m. UTC
Updated Sep 13, 2021 at 8:01 a.m. UTC

Cryptocurrency exchange Coinbase announced Wednesday that it was making strides toward its goal of operating a federally regulated broker-dealer.

Chief operating officer and president Asiff Hirji wrote in a company blog post that the firm is in the process of acquiring a broker-dealer license, an alternative trading system license and a registered investment advisor license. Once it has these licenses, the company intends to seek approval from the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) to offer blockchain-based securities.

Part of this effort includes Coinbase's acquisitions of Keystone Capital Corp., Venovate Marketplace and Digital Wealth LLC, he wrote.

Hirji expanded on Coinbase's plans, writing:

"We believe this is an important moment for the crypto ecosystem, and yet another indication of the maturation of the crypto economy. If approved, these licenses will set Coinbase on a path to offer future services that include crypto securities trading, margin and over-the-counter (OTC) trading, and new market data products."

Beyond merely offering its own securitized tokens, Hirji said Coinbase could tokenize existing securities products, "bringing to this space the benefits of cryptocurrency-based markets."

These benefits would include real-time settlement, transparent chain-of-title and 24/7 trading, he said.

The move comes just weeks after Coinbase announced it had acquired decentralized crypto relay platform Paradex and that it was planning to rebrand its GDAX service as Coinbase Pro, as previously reported.

Coinbase also formally launched Coinbase Custody, its crypto storage service aimed primarily at large financial institutions, last month. As previously reported, Coinbase Custody includes a suite of products aimed at institutional investors.

Hirji highlighted what he saw as the potential for combining cryptocurrencies with securities firms in Wednesday's post, writing "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."

image via Shutterstock

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