The wallet and exchange giant Coinbase is reportedly in conversations with the Security Exchanges Commission to register as a full security brokerage exchange, according to an article written by The Wall Street Journal yesterday. This happens right after Coinbase has agreed to list Ethereum based ERC20 tokens. With this, Coinbase seeks to protect itself from possible regulatory changes that would stop cryptocurrency trading for a year, in the worst case scenario.
ERC20 tokens are used like utility tokens for almost every ICO out there. So this will open more markets for Coinbase. But it will also put a lot of responsibility on the exchange and the tokens that it will list due to the new security onslaught of the SEC against ICOs.
Coinbase relationship with government authorities has been thorny at best. Remember the long battle of the exchange provider with the Internal Revenue Service (IRS), the US tax watchdog, that finally ended with Coinbase delivering the private operational info of their top traders to them.
Cryptocurrency regulation in the US is in a state of disarray and uncertainty right now, due to reports that the SEC would consider some cryptocurrencies as securities this same year, changing the landscape of the trading business in the country and forcing exchanges to comply with a lengthy registry process. And even then after registering, they would have to wait a period of time to operate, according to present regulations. Some insiders state that the SEC master plan would be to declare all cryptocurrencies as securities. That’s why Coinbase is making this move, just in case that this hypothetical worst case comes to happen.
Clear regulation must be passed in order to exchanges to know what to really do for complying with the regulatory framework, and to create a climate of trust in the sector. This could well be the year of crypto regulation and massification, at least in the USA.