Coinbase Granted Green Light For Three Acquisitions, Investment Licenses

As titans of U.S. cryptocurrency industry are in a race to establish the first regulated exchange for tokens deemed to be securities, Coinbase today said the nation’s regulators will approve its plans to buy a trio of firms including a broker-dealer registered with the Wall Street’s independent watchdog, the FINRA.

If confirmed, Coinbase will use licenses it obtains to offer customers blockchain-based securities. It will also be subject to more federal oversight.

Time to buy the dip?

The San Francisco-based $1.6 billion digital currency exchange has acquired Keystone Capital Corp in a bid to operate as a regulated broker-dealer. It has also acquired Venovate Marketplace Inc. and Digital Wealth LLC. The newly-acquired businesses will offer Coinbase a broker-dealer license (B-D), an alternative trading system license (ATS), and a registered investment advisor (RIA) license.

The ATS entity will provide a secondary market ‎liquidity for ICO tokens that are offered and sold as securities. An alternative trading system is a trading venue that is not regulated as ‎an exchange but operates for matching the buy and sell orders of its ‎subscribers.

The move comes just as the US Securities and Exchange ‎Commission is seeking legitimate platforms serving as trading venues ‎for digital assets. This topic has received much attention since the SEC ‎made clear that any digital token with an income stream is ‎a security, and furthermore that ‎any entity wants to ‎become an ATS needs to register with the SEC as a ‎broker-dealer and become a member of a self-regulating ‎organization, such as the ‎FINRA.‎

Circle, a blockchain startup backed by Goldman Sachs, has also announced plans to pursue registration as a brokerage and trading venue with the SEC. Circle also intends to seek a federal banking license to provide more services to customers.