Coinbase, which is a leading cryptocurrency exchange, is reportedly in discussions with the Securities Exchange Commission (SEC), relating to it becoming an electronic trading venue and a licensed brokerage company. The news comes as regulators in the United States and across the world have ramped up efforts to regulate the nascent cryptocurrency industry.
The company, which is headquartered in San Francisco, is one of the biggest trading platforms for digital currencies in the world. In the past few weeks — according to insiders — it has been in talks with SEC officials over registering with the agency. If the company follows through with these talks, it would enable them to offer certain digital tokens that the SEC has previously called securities. It could also lead to other cryptocurrency exchanges submitting to U.S. regulatory oversight.
Richard Levin, who is a partner in the law firm Polsinelli PC and who has advised many businesses involved with cryptocurrencies, says that leaders in cryptocurrency industry now realize that they exist in an environment that is highly regulated. He further said that they also realize that they have to work with agencies like the SEC.
A spokesperson for Coinbase declined to issue a comment relating to the matter. Though Asiff Hirji — who is the president of Coinbase — said during an interview on Thursday that, when his company receives more clarity from regulatory agencies about their stances on digital currencies, his company will be more forthcoming in providing it information.
Currently, the trading of bitcoin and other digital currencies, such as Ether and Litecoin, is mostly unregulated in the United States. Though the rise of initial coin offerings (ICOs), in which companies offer digital tokens in exchange for an initial investment, makes it more difficult for agencies like the SEC to stay out of the fray. Jay Clayton, who is the chairman of the SEC, has stated that most of the digital tokens raised through ICOs are in fact securities. This means that legally they can only be traded at an official electronic trading venue or on a licensed exchange.
During the first three months of this year, companies have raised around $4 billion through ICOs. This number is more than half of what was raised through ICOs during 2017, for the entire year. The SEC has already issued subpoenas and other requests to dozens of businesses that have issued ICOs.