Coinbase Is Helping the SEC Determine Which Crypto Assets are Security Tokens
Coinbase is stepping up its effort to become the world’s largest cryptocurrency exchange. This includes expanding its universe of crypto assets and helping regulators determine which tokens classify as securities.
Coinbase to Support New Tokens
The San Francisco-based exchange has made a series of announcements in support of new business growth and regulatory compliance. This includes helping the U.S. Securities and Exchange Commission (SEC) determine whether certain tokens meet the agency’s definition of a security.
Coinbase has held a series of meetings with SEC regulators in recent weeks to discuss whether it should become a licensed brokerage, according to The Wall Street Journal. At the time of writing, crypto exchanges must register at the state level to provide their services, which puts them outside the purview of the SEC. However, the federal regulator has wide investigative powers, as demonstrated by its dealings with exchanges that violate securities laws.
By registering with the agency, Coinbase can theoretically support more coins while complying with securities laws.
Last month, the exchange rolled out new tax tools to help investors prepare for tax-filing season. A recent analysis from Fundstrat Global Advisors showed that U.S. crypto traders are on the hook for $25 billion in capital gains taxes.
Coinbase has also announced plans to support Ethereum’s ERC-20 protocol, which is the gold standard for initial coin offerings, and allow customers to withdraw offshoots of bitcoin.
Dialogue between Coinbase and the SEC will likely boost the exchange’s reputation as the most legally compliant player in the crypto industry. It will also enable the platform to offer more crypto assets, something traders have been longing for.
Coinbase users only have access to four digital currencies: bitcoin, Ethereum, Litecoin and, most recently, bitcoin cash. The exchange began offering BCH in December amid allegations of insider trading among some of its employees. As of March, the company was fighting a class action lawsuit over the allegation. The company made it known last August that it plans to support bitcoin cash, but didn’t do so until December.
Analysts generally agree that the exchange must expand its list of token offerings if it hopes to outlast its competitors. There has been much speculation about XRP being selected for both Coinbase and GDAX, but Ripple has reportedly tried to list on the exchange without success.
Coinbase’s GDAX exchange is the ninth-largest in the world based on total market cap, according to latest figures provided by CoinMarketCap. Nearly 43% of its $215 million in daily transactions were U.S. dollar purchases of bitcoin. Ether-USD trades accounted for roughly a quarter of the daily turnover.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.