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Coinbase Retracts SEC Approval Claims

Coinbase has retracted reports of obtaining SEC approval for a trio of acquisitions in its quest to become a broker-dealer. The company also said it only discussed aspects of the deal with SEC officials and didn’t require the Commission’s go-ahead. This is the second time in as many days where a significant piece of news in the industry has been retracted or denied.

Coinbase Didn’t Receive SEC Endorsement

Reports emerged on Monday (July 16, 2018) that Coinbase had obtained approval from the United States Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) to acquire three companies. These companies were Keystone Capital, Venovate Marketplace Inc., and Digital Wealth LLC. The acquisitions enabled Coinbase to operate as a registered broker-dealer for the crypto securities market.

However, the company retracted those reports, yesterday, (July 17, 2018). In an email to Bloomberg, Coinbase spokesperson, Rachael Horowitz, said:

It is not correct to say that the SEC and FINRA approved Coinbase’s purchase of Keystone because [the] SEC was not involved in the approval process.

SEC Approval Was Not Required

Horowitz also went on to say that the Commission’s approval was not required for the deal. According to Horowitz:

The SEC’s approval is not required for the change of control application. Coinbase has discussed aspects of its proposed operations, including the acquisition of the Keystone Entity, on an informal basis with several members of SEC staff.

The retraction from the San Francisco-based cryptocurrency exchange platform is the second significant news to be retracted or denied in as many days. Reports also recently emerged that BlackRock was putting together a team to examine the merits of crypto-based investments. However, a few hours later, company CEO, Larry Fink dismissed those claims.

In the meantime, cryptocurrency investors will also be wondering what is to become of Coinbase’s bid to be a regulated broker-dealer. The main highlight of the plan is the listing of ICO tokens. The SEC has frequently classified ICO coins as security tokens. The following days and weeks will likely shed more light on the matter.

Are you concerned about the mixed reports that seem to be becoming a theme in the market? Keep the conversation going in the comment section below.

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Coinbase Obtains License to List Cryptocurrency Security Tokens

Coinbase announced yesterday (July 16, 2018) that it had obtained the go-ahead to become a government-licensed broker-dealer platform in the United States. Thus, the largest cryptocurrency exchange platform in the country can now list ICO tokens. Regulators in America have long maintained that tokens sold during ICO crowdsales were, in fact, securities.

Coinbase is Now a Federally Regulated Broker-Dealer

In June 2018, reports emerged that Coinbase was set to acquire Keystone Capital in a bid to become a regulated broker-dealer. At the time, the company was waiting for the approval of the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

According to a company spokesperson, the firm finally obtained regulatory approval for the purchase. Coinbase also purchased Venovate Marketplace Inc. and Digital Wealth LLC. The trio of acquisitions enables Coinbase to operate as a registered investment adviser, a broker-dealer, as well as an alternative trading system (ATS). As an ATS, the San Francisco-based firm can operate outside the mainstream public stock exchange market.

Listing Cryptocurrency Security Tokens

Based on the approval from the SEC and FINRA, Coinbase now has the license to list tokenized securities. The company’s regulatory status has also been given an upgrade from a collection of state licenses to being under federal oversight.

Now that Coinbase has obtained the necessary federal backing, the next step forward is to integrate the new platform with its existing technology. Trading securities in America require strict observance of laid down rules and regulations. Coinbase will have to ensure that its reporting protocols are up to standard. Employees will also need to have the necessary licenses to trade tokenized securities.

Regulated Trading of Tokenized Securities

ICOs are a multibillion-dollar market which continues to grow despite crackdowns in countries like China and the United States. In the first half of 2018, ICOs raised over $12 billion which represents a 300 percent increase from the whole of 2017.

There is the potential of facilitating billions of dollars in ICO token trade. Coinbase will be hoping to gain first mover advantage in the market. However, the platform faces competition from the likes of Circle which is also aiming to become an SEC-regulated broker-dealer. Circle even intends to go one further by applying for a federal banking license.

Coinbase recently announced that it was examining the possibility of adding five new tokens – Cardano, Basic Attention Token, Zcash, 0x, and Stellar. Presently, the platform only four cryptocurrencies for trading – Bitcoin, Ether, Bitcoin Cash, and Litecoin.

What do you think about Coinbase’s new broker-dealer license? Will this news cause another price spike in the market? Keep the conversation going in the comment section below.

Image courtesy of CoinSchedule.

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Crypto Startup Uphold Moves to Become Licensed U.S. Broker-Dealer

Digital money platform Uphold is looking to become a broker-dealer in the U.S. after acquiring a registered firm called JNK Securities, it was announced Wednesday.

The company has now filed with the Financial Industry Regulatory Authority (FINRA) for approval of the change of ownership to become a registered broker-dealer.

Ultimately, Uphold hopes to offer security tokens, fractional equities and other exchange services under the supervision of the U.S. Securities and Exchange Commission (SEC) and FINRA, as part of its new securities platform.

Uphold’s general counsel, Ben Sherwin, explained the move to CoinDesk, saying: “We’ve acquired a New York-based broker-dealer to expand our product base and offer more digital assets to our users.”

If approved, the acquisition would allow Uphold to begin offering regulated products to its customers.

Sherwin said:

“You file with FINRA to become a broker-dealer and that broker-dealer status allows us to engage in activities that we wouldn’t be able to without that license. It also aligns with our mission of transparency and trust because we’re submitting to the regulation that is appropriate and responsive to what the regulators are saying.”

Uphold later plans to file to become an alternative trading system (ATS) with the SEC, he added.

While JNK and Uphold will operate as two distinct companies until the merger is complete, Uphold intends to bring JNK’s employees in to help with Uphold’s expansion plans.

“JNK is an … organization with a 25-year history of being in the financial markets. They’re quality people and good operators … running a broker-dealer requires a certain amount of expertise and the quality of the people there gives us a leg up,” Sherwin said.

The flow of expertise will go the other way too, as Uphold intends to help JNK start offering cryptocurrency research products, on top of the reports it already offers looking at a variety of industries.

“From a process standpoint, they have license and we’re hoping to expand their license,” Sherwin said. “So we benefit from their institutional reach and they benefit from our consumer reach.”

“This reduces our regulatory overhand and shows how serious we are about regulatory oversight [because] Uphold is based upon transparency and trust,” he concluded.

Taxis image via Shutterstock

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