Coinbase Acquires Keystone Capital, Eyes Blockchain Securities Market

Phil Peters

Coinbase is seeking to become a fully licensed broker-dealer through its acquisition of three federally regulated firms.

Regulated trading platforms could eventually handle billions of dollars in tokens sold by companies in initial coin offerings.

While Coinbase is the largest US cryptocurrency exchange, it now offers only four types of virtual currency, including Bitcoin and Ethereum.

Details of Coinbase's licensure application process were laid out in a blog post entitled "Our path to listing SEC-regulated crypto securities", Coinbase explained that it's now waiting on approval from the US Securities and Exchange Commission (SEC) and FINRA for several forms of licensure: "a broker-dealer license, and alternative trading system license, and a registered investment advisor license".

In order to achieve this goal, Coinbase must first garner a broker-dealer license, an alternative trading system license, and a registered investment advisor license.

SEC Chairman Jay Clayton has said that cryptocurrencies created to replace sovereign fiat currencies - bitcoin, for instance - are not subject to securities laws, but there has been debate about whether other cryptocurrencies, such as those initially distributed through crowdsales, should be classified differently. Once it has these licenses, the company intends to seek approval from the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) to offer blockchain-based securities.

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With a presence in 32 countries, the San Francisco-based cryptocurrency company has traded $150 billion in assets and claims to have over 20 million customers.

In a blog post Wednesday, Coinbase president and chief operating officer Asiff Hirji announced the acquisition of Keystone Capital Corp., Venovate Marketplace, Inc., and Digital Wealth LLC.

"If approved, these licenses will set Coinbase on a path to offer future services that include crypto securities trading, margin and over-the-counter (OTC) trading, and new market data products", Hiriji said in the post.

He also said that Coinbase could tokenise the existing securities products apart from offering its own securitised token which could bring the benefits of Cryptocurrency-based markets to the regular securities markets.

In April the exchange took over Earn.com a company that lets users receive digital payments from mass market emails and by completing micro tasks.

The transaction would put Coinbase under the oversight of the SEC and Finra. Check our tools section.