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Why are crypto stocks getting SEC licenses?

Jun 9, 2018

June 6th Asiff Hirji, COO of the American trading crypto platform Coinbase, spoke of company's plans to acquire a broker-dealer license from the US Securities and Exchange Commission (SEC). Such license would allow the crypto exchange stocks to widen their array of trading instruments which in turn would affect the entire cryptocurrency ecosystem. It seems that this opinion is shared by many other popular trading platforms such as Circle, Kraken and Gemini, who are currently actively working with the country's financial industry regulatory authority (FINRA). What could this partnership lead to and is it worth it for users to wait for the new financial cryptocurrency-based instruments?

Coinbase & SEC

According to CNBC Coinbase currently has about 20 million users and its asset trading operations volume is that of about $150 billions. If the crypto stock will obtain the approval of FINRA it would allow it to add new assets to its listing, specifically securities issued based on blockchain foundation.

Partnership with SEC would allow Coinbase to create tokens based on preexisting types of securities which in turn would create a more democratic access to capital markets for investors and companies and lower the expenses for all market members with a higher transparency for the whole ecosystem.

According to Hirji Coinbase is also looking to obtain an alternative trading system license (ATS) and a registered investment advisor license (RIA). The company will acquire Keystone Capital Corp., Venovate Martplace, inc., and Digital Wealth LLC to reach said goal, which would allow them to offer non-cryptocurrency financial products.

As such Coinbase is joining a growing list of cryptocurrency platforms aiming to work with financial regulators in order to offer various blockchain based assets.

Circle &SEC

Additionally on June 6th it came to light that cryptocurrency startup and a single-rank payment platform Circle has submitted an application to acquire a broker-dealer SEC license and a banking license on a federal level from the Office of the Comptroller of the Currency (OCC). A broker-dealer license would allow Circle to trade security-tokens that SEC equated to regular securities in July of 2017.

In order to obtain the approval of Jeremy Alley, controller at Terra Echelon, Circle's CEO and co-founder reported that the platform has already begun the process of delisting tokens that do not meet the SEC requirements and that is their current primary goal.

"Currently we decide ourselves what is our legal position on this issue because you can't just call SEC and ask them if these tokens are securities or not. Therefore expect delisting to continue as it is the most appropriate course of action we may take right now".

Similar tokens came to Circle's listing after the acquisition of cryptocurrency platform Poloniex in February of this year. Firstly the company is planning to obtain a broker dealer license and only then banking permission from OCC. According to COO Circle Robert Bench banking license would significantly limit the number of controllers necessary for the platform to interact with. This in turn would increase the platform's effectiveness and lower its expenses. Additionally, this May OCC met with Coinbase representatives in order for them to acquire a federal level banking license, however the company refused to comment on this meeting.


Full article available at DeCenter.org (Russian) https://decenter.org/regulatio...

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