Coinbase - the biggest name when it comes to cryptocurrency trading in the US, has been moving forward towards becoming a registered broker-dealer firm. The Securities and Exchanges Commission (SEC) of the US issues this registration. Coinbase has taken another step forward towards this process after acquiring Keystone Capital for an undisclosed amount.
The acquisition of Keystone Capital is critical for Coinbase as this would allow them to diversify their services even more and move towards offering products in the non-crypto financial markets as well. As of this writing, the terms of the acquisition have not been disclosed.
Interestingly, the Keystone acquisition is one of many acquisitions made by Coinbase in order to move closer towards SEC Registration. In the past, Coinbase has acquired three companies holding various federal licenses, Keystone Capital Corp being the latest one.
The other two companies are Venovate Marketplace, Inc., and Digital Wealth LLC. All three companies are important as Keystone and Venovate are registered with the SEC and FINRA as broker-dealers, while Digital Wealth has an RIA license from the SEC. Moreover, Venovate Marketplace has obtained a license to operate as an Alternative Trading System (ATS).
Understanding the Impact of SEC Registration
There are a number of benefits that Coinbase gets if it becomes officially regulated by the SEC. Coinbase President and COO Asiff Hirji said in a statement that:
"If approved, Coinbase will soon be capable of offering blockchain-based securities, under the oversight of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). This step forward is being made possible by our acquisition of a broker-dealer license."
Becoming an SEC Registered broker-dealer would allow Coinbase to offer their users with a wide variety of blockchain-based securities under the supervision of the SEC. This is something that Coinbase has been trying for quite some time now.
Coinbase has been very selective in their offerings so far, providing the users with only four cryptocurrencies: Bitcoin, Ether, Bitcoin Cash and Litecoin. These four assets were the perfect choice for Coinbase so far to keep them out and away from all regulatory conflicts in the US. However, given that they may soon become regulated by the SEC, the list of digital assets listed on Coinbase are likely to increase. Coinbase COO Asiff Hirji further commented:
“There are now many types of blockchain-based digital assets, from cryptocurrencies to security tokens to collectibles. In the United States, some of these assets will be subject to SEC oversight. With this in mind, securing these licenses will bring us a step closer to our goal, which is to be the most trusted way for our customers to buy, sell, and use many different types of crypto assets.”
Interestingly, Coinbase competitor Circle has also been looking forward towards becoming an SEC-registered firm and is also looking forward towards obtaining a banking license.
Coinbase On an Expansion Spree
Coinbase is a global powerhouse when it comes to cryptocurrencies. The company has been working towards getting the best brains the crypto world on-board with them - and has been leaving no stones unturned, at times even acquiring companies to get access to talented individuals. Coinbase acquiring Earn.com is a recent such example.
Moreover, the company has also been diversifying their offerings and continues to expand the array of products that they have. In April, Coinbase launched ‘Coinbase Ventures’ - which is an incubator fund for startups operating in the blockchain and crypto space. Earlier this year, Coinbase launched an index fund - which was followed by an announcement of them launching special tools for institutional investors in May.
Coinbase is now evaluated at over $8 Billion - and is one of the biggest success stories in the crypto markets. It is rapidly becoming a giant which continues to expand at a rapid pace. If the company does get an SEC Registration, it would help provide another boost to their profits and help them expand the list of digital assets offered by them.