FINRA has approved iownit as a broker-dealer, clearing the firm to offer digital securities on a private Hyperledger blockchain.
The self-regulatory body for brokers and exchanges has quietly extended its deadline for member firms to report their crypto activity.
In a joint statement Monday, the SEC and FINRA laid out the issues they must examine before approving broker-dealer applications from crypto startups.
Wall Street watchdog FINRA has sat for as long as 12 months on roughly 40 broker-dealer applications by blockchain startups.
U.S. self-regulatory organization FINRA has fined and suspended an investment adviser over undeclared cryptocurrency mining activities.
FINRA has approved Grayscale Investments’ ethereum trust shares for sale to mom-and-pop investors.
SeedInvest, the equity crowdfunding platform owned by crypto startup Circle, just got a license to facilitate trading of traditional securities.
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 This is the second time in as many days where a significant piece of news in the industry has been retracted or denied.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.
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.
A U.S. self-regulatory body for broker-dealers is requesting member firms to submit a wide range of details relating to their cryptocurrency-focused activities.
In a regulatory notice issued on Friday, the Financial Industry Regulatory Authority (FINRA) said the requested information will supplement its existing efforts to “ascertain the extent of its member firms’ involvement” in the nascent space.
According to the notice, FINRA wants to know if a member firm has been or will be trading cryptocurrency, accepting it from customers, managing a pooled crypto fund, participating in a token sale, or offering advice on any crypto-related topic.
Also notably, cryptocurrency mining – earning rewards for participating as a node in a blockchain to record transactions – or “any other use of blockchain technology” are areas that FINRA has indicated interests in for its monitoring purpose.
The organization went on to say:
“Until July 31, 2019, each firm is encouraged to keep its Regulatory Coordinator updated if it, or its associated persons or affiliates, begins or intends to begin, engaging in a new type of activity relating to digital assets not previously disclosed.”
Authorized by the U.S. Congress in 2007, FINRA was incorporated as a self-regulatory organization with the remit to approve and supervise broker-dealers in the country.
Although the new regulatory notice is not mandatory, it follows FINRA’s existing efforts to scrutinize member firms amid rising concerns of “fraud and other securities law violations involving digital assets,” FINRA said in the notice.
Last year, the body issued a warning to retail investors to remain cautious after a number of public companies saw spiking stock prices following claimed blockchain and cryptocurrency pivots.
FINRA image via Shutterstock
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