Coinbase, the leading US-based cryptocurrency exchange has announced today that they have applied to for a license to become the first exchange authorized by the Securities and Exchange Commision (SEC), the USA watchdog, to trade blockchain based securities. This was declared by Asiff Hirji, president and COO of Coinbase in a blog post on their webpage.
With this move, Coinbase aims to be ahead of possible incoming regulations imposed by the Securities and Exchanges Commission, that is currently evaluating which cryptocurrencies are securities and which aren’t. The concept of a security is a broad one, but in a nutshell, it is defined as a financial instrument that entitles the owner to some kind of profit coming from a third party management.
Of the four cryptocurrencies supported today by Coinbase, none has been declared a security still. But tokens that may be listed by Coinbase in the future, like tokens from Initial Coin Offerings, a crowdsourcing type of companies, are most likely to be declared securities in the future. This would hamper Coinbase’s reach in the market, and that is why they are taking this step.
This action is consistent with the latest push of Coinbase for upgrading its platform to include more institutional clients, and in the future, when the market matures more, massify the trade of security-based tokens, and even blockchain some types of securities, that is, to tokenize paper securities for convenience. About this, Asiff Hirji declared:
“…we can envision a world where we may even work with regulators to tokenize existing types of securities, bringing to this space the benefits of cryptocurrency-based markets — like 24/7 trading, real-time settlement, and chain-of-title. We believe this will democratize access to capital markets for companies and investors…”
Asiff Hirji states that this development has been possible their latest acquisitions: Keystone Capital Corp., Venovate Marketplace, Inc., and Digital Wealth LLC. Coinbase is not the only exchange seeking this kind of approval: Circle, the popular payment app now turned cryptocurrency exchange, has also applied for a banking license recently; the race for the institutional cryptocurrency market has started.