Coinbase, one of the leading cryptocurrency exchanges in the US, received approval from the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) to list for trading digital currencies considered to be securities (security tokens). Coinbase has thus become the first US federally-regulated platform for trading security tokens.
The SEC and FINRA’s approval allows Coinbase to operate as a broker dealer, an alternative trading system, and a registered investment adviser. Moreover, this move sets a precedent for other ventures who wish to deal with security tokens to apply for a cryptocurrency exchange license from the SEC and FINRA, and thus to provide services in the US under proper and relevant regulation.
After the SEC chairman declared most digital coins to be securities – forcing US issuers to register and comply with federal securities law – a cryptocurrency exchange license became an essential requirement for acting in the US. Possessing such a license enables security tokens issuers (security tokens ICOs) to act in the US under relevant regulation with licensed exchanges.
This new supervision from US regulators – who have placed themselves at the forefront of regulators who view ICO as an issue of securities subject to regulatory oversight – offers a legal solution for listing and trading cryptocurrencies in the US. This opens the door to the development of the crypto industry in the US and will connect more investors to the blockchain market.
Until now, many ventures have banned US investors from purchasing and trading their tokens, due to concern that the SEC will see their action with US investors as a public offering of securities not in accordance with US securities law. With this latest progression, the SEC and FINRA have empowered ventures that issued or are planning to issue cryptocurrency to act in the US with US investors and to offer their tokens and list them for trading on a US regulated platform.