According to a Wall Street Journal report, U.S. cryptocurrency business Coinbase has approached regulators to get registered as a licensed brokerage. Such a move will allow the exchange to conduct its business in compliance with the Securities and Exchange Commission (SEC), which considers cryptocurrencies to be “securities.”
If executed right, the regulated exchange would be able to provide several other cryptocurrencies for trading purposes on its platform, including the coins/tokens that are considered as “securities” by the SEC.
As of yet, there is no clear definition by the SEC on which particular digital currencies are to be considered as “securities.” However, the regulatory body has advised investors and businesses in the space to refer to the “Howey Test” until clear regulations are made. Created in 1946, the Howey Test works toward determining whether an unconventional financial vehicle requires the same regulation as familiar investments like stocks and bonds.
Regulation A Must For Coinbase Expansion Plans
In a recent report, Coinbase said that “it wants to firmly establish itself as the Google of cryptocurrencies, and has its eye on expanding its exchange beyond the four coins currently listed – bitcoin, bitcoin cash, ethereum, and litecoin.”
Case in point, only stringent regulations, and required licenses would enable Coinbase to reach anywhere near Google’s dominance. There’s no realistic way in which an unregulated, unlicensed business becomes one of the top in the world.
The platform is widely known as the company which made bitcoin accessible to the non-technical masses. For its self-regulatory part, Coinbase policy requires only well-regulated, stable, and well-known coins to be listed on its platform, as to avoid any unstable, volatile price action from unknown altcoins causing the press to speak negatively about it. The company certainly has a “clean” image and one that would help while applying for a licensed brokerage.
Recently, the company announced ts plans to introduce ERC20-compliant Ethereum tokens across its trading, wallets, and asset management platforms. While the move would result in new coin listings on its platform, Coinbase added that they would wait until clear regulations arrive from the SEC.
Most Cryptocurrencies To Come Under Security
After regulatory remarks, the cryptocurrency population largely believes that digital asset shall come under the purview of securities. However, blockchain startups and token issuers are now working toward not creating their coins as a security, by introducing or cutting out a few technical aspects of the concerned token. They believe that regulation comes at a huge price, and it could potentially equate to increased issues for both buyers and sellers.
Meanwhile, governments and authorities around the world are scratching their heads and clamping down on cryptocurrency projects and blockchain startups who have their own tokens.
Recently,reports on the state of our current world government, and if they are conversant enough with blockchain technology to regulate it. Furthermore, with rampant frauds, ICO exit-scams and million dollar hacks – the world will prove itself why a decentralized system would always need regulations to work.