Coinbase says it never needed SEC approval to list security tokens
Earlier this week, leading cryptocurrency exchange desk Coinbase announced it had gotten a stamp of approval from the US Securities and Exchange Commission (SEC) to close a trio of acquisitions that could allow the company to trade security tokens. But the exchange is now walking back its statements.
Coinbase spokeswoman Rachael Horowitz has come forward to clarify the company never got an approval from the regulatory agency to proceed with the buyout of Keystone Capital, Venovate Marketplace, and Digital Wealth.
It turns out it never needed one either – the blessing of the Financial Industry Regulatory Authority (FINRA) was purportedly more than enough.
“It is not correct to say that the SEC and FINRA approved Coinbase’s purchase of Keystone because SEC was not involved in the approval process,” Horowitz told Bloomberg.
While the exchange did indeed consult with SEC members informally, Horowitz added that the “SEC’s approval is not required for the change of control application.”
The clarification was seconded by Multicoin Capital managing partner Kyle Samani, who noted there are no legal roadblocks stopping Coinbase from listing security tokens. Still, Samani pointed out the exchange is unlikely to engage in the trade of unregistered securities.
For all the people still hoping Coinbase will list XLM or XRP
Yes, Coinbase can trade securities. Legally
But. They aren’t going to trade unregistered securities.
— Kyle Samani (@KyleSamani) July 18, 2018
In addition to increased federal oversight, the acquisitions also provide Coinbase with licenses to operate as a broker dealer, an alternative trading system, and a legitimate investment adviser.
“Being approved to take ownership of these licensed entities is one more step toward our ultimate goal of allowing our customers to trade securities tokens on our platform,” a spokesman for Coinbase told Bloomberg on Monday. “There are many more steps and conversations needed with regulators before this journey’s complete.”
The buyouts come at a particularly interesting time for Coinbase.
Last week, the exchange revealed it is considering expanding its list of supported cryptocurrencies – which currently includes Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, and Litecoin – with Cardano, Basic Attention Token, Stellar, Zcash, and 0x.
Paired with the now-denied SEC approval, many considered the announcement a harbinger of a new phase for Coinbase – one that would see the exchange add a number of less popular tokens to its platform. Indeed, blockchain market analyst Anthony Pompliano was quick to share his concern on Twitter:
US regulators have approved Coinbase’s purchase of three firms that will give the crypto company the legal ability to trade tokenized securities.
The virus is spreading. 🚀
— Pomp 🌪 (@APompliano) July 16, 2018
With today’s news, it seems the expansion into security token trading was always the route Coinbase intended to take – once regulators work out which cryptocurrencies fall under securities laws, that is.
Published July 19, 2018 — 08:16 UTC