Coinbase recently announced that they are in the process of of becoming a regulated securities broker dealer, pending approval by the SEC. This is just a brief overview of what a securities broker is, how this will affect Coinbase and the potential affect this could have on the cryptocurrency markets.
What does this actually mean?
If this is approved in short this will mean Coinbase will receive the go ahead to legally offer blockchain-based securities, “under the oversight of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA)”.
A brokerage firm is any financial institution that facilitates the buying and selling of financial securities. Generally brokerage firms will serve investors whom trade public stocks. The firm will then hold these stocks and initiate any trades on behalf of investors.
What does this mean for Coinbase
Should Coinbase acquire this license they will be able to begin to add blockchain backed security tokens. Effectively crypto-securities. This could be public stocks but purchased will stored on a blockchain (distributed ledger), rather than with brokerage firms.
Currently there are many types of blockchain-based digital assets, with regulation, especially in the United States, a number of these will be subject to SEC oversight and potential regulation. The acquisition of these licenses by Coinbase will put them in prime position to lead a market which is almost certain to be a huge one.
Ultimately, we can envision a world where we may even work with regulators to tokenize existing types of securities, bringing to this space the benefits of cryptocurrency-based markets — like 24/7 trading, real-time settlement, and chain-of-title.
Coinbase have just launched Coinbase Pro, and have announced that on 29th June, 2018 GDAX becomes Coinbase Pro. This is going to be there global professional trading platform and is already live here. If this license is granted we may well see crypto securities launched on the Coinbase Pro platform within the next few months.
What does this mean for cryptocurrencies?
There has been some confusion as to whether Coinbase needs to obtain this license to ensure they can continue to provide cryptocurrency trading. Right now, this is not the case. Bitcoin and other cryptocurrencies are not yet categorised as anything let alone securities.
What this will mean for now is that current stock markets can be drastically improved, should their request be approved. If crypto securities are listed on the Coinbase platform this could lead to an influx of new investors and could actually be very good exposure for cryptocurrencies.
Only time will tell, come check out how our cryptocurrency portfolio is doing via out Telegram channel.