As titans of U.S. cryptocurrency industry are in a race to establish the first regulated exchange for tokens deemed to be securities, Coinbase on Tuesday said the nation’s regulators would approve its plans to buy a trio of firms including a broker-dealer registered with the Wall Street’s independent watchdog, the FINRA.
If confirmed, Coinbase will use licenses it obtains to offer customers blockchain-based securities. It will also be subject to more federal oversight.
The San Francisco-based $1.6 billion digital currency exchange has acquired Keystone Capital Corp in a bid to operate as a regulated broker-dealer. It has also acquired Venovate Marketplace Inc. and Digital Wealth LLC. The newly-acquired businesses will offer Coinbase a broker-dealer license (B-D), an alternative trading system license (ATS), and a registered investment advisor (RIA) license.
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The ATS entity will provide secondary market liquidity for ICO tokens that are offered and sold as securities. An alternative trading system is a trading venue that is not regulated as an exchange but operates for matching the buy and sell orders of its subscribers.
The move comes just as the US Securities and Exchange Commission is seeking legitimate platforms serving as trading venues for digital assets. This topic has received much attention since the SEC made clear that any digital token with an income stream is a security, and furthermore that any entity wants to become an ATS needs to register with the SEC as a broker-dealer and become a member of a self-regulating organization, such as the FINRA.
Circle, a blockchain startup backed by Goldman Sachs, has also announced plans to pursue registration as a brokerage and trading venue with the SEC. Circle also intends to seek a federal banking license to provide more services to customers.