Crypto Exchange Coinbase in Talks to Become SEC-Licensed Brokerage

  • Coinbase in talks with SEC to become a licensed brokerage firm
  • Valued at $1.6 billion, Coinbase seemingly has ambitions of becoming the 'Google of Cryptocurrencies'

Coinbase has reportedly approached the US Securities and Exchange Commission (SEC) and other US regulators in order to obtain registration as a brokerage firm. While the company has declined to comment at this time, being a broker is set to offer Coinbase a commanding position.

Currently valued at $1.6 billion, Coinbase is a giant in the cryptocurrency world. With its success, it's looking for new realms to expand into, with the recent controversies surrounding initial coin offerings (ICOs) being one of the areas.

The SEC has been acting against illicit activities of exchanges and ICOs operating within the country. It Is actively protecting investors by monitoring not so honest ICO operators.

Coinbase - Greater Security in Securities

The company is seemingly gearing up to become a Google-like titan when it comes to cryptocurrencies, with its establishment as a brokerage firm being a strong step in the right direction. While the talks have begun, the SEC's uncertainty over digital tokens means that they aren't entirely validated as securities.

The legislation that assesses companies, however, provides pause for concern for any crypto-based company. The Howey Test, set up in 1946, places stringent guidelines on companies to validate them as brokers

  • It is an investment of money
  • There is an expectation of profits from the investment
  • The investment of money is in a common enterprise
  • Any profit comes from the efforts of a promoter or third party

Coinbase provides its own form of vetting for coins made tradeable on its platform. meaning that only cryptos that have demonstrated a longer-term level of stability are listed. As a result, the likes of Bitcoin, Ethereum, Litecoin and Bitcoin Cash are the only listed. As stability improves for altcoins, Coinbase will undoubtedly expand into offering new tokens.

SEC Chairman Jay Clayton has in the past revealed that “most tokens” issued in ICOs are considered securities, which means they can only be legally traded on a licensed exchange. Being licensed would put Coinbase one step ahead of other cryptocurrency exchanges and wallet providers.

Coinbase is also seeking to drive forward innovation, as it considers creating funding for new startups within the field. Recently, the company announced it will allow its users to withdraw funds from bitcoin forks.

Wells Fargo Launches Its Own 'Digital Cash', Claims It's Not a Cryptocurrency

Financial services giant Wells Fargo has announced the launch of a settlement service called “Wells Fargo Digital Cash,” which will run on its distributed ledger technology platform.

According to the company’s announcement, Wells Fargo Digital Cash is a service that’ll bring in operational efficiencies as it’ll remove “barriers to real-time financial interactions” across its own network. The Digital Cash will “complete internal book transfer of cross-border payments” and its concept has already successfully been proven.

Lisa Frazier, head of the Innovation Group at Wells Fargo, was quoted as saying:

  • We believe DLT holds promise for a variety of use cases (…) Wells Fargo Digital Cash has the potential to enable Wells Fargo to remove barriers to real-time financial interactions across multiple accounts in multiple marketplaces around the world.

Speaking to The Block a Wells Fargo representative reportedly clartified that Wells Fargo Digital Cash is “not a cryptocurrency” before adding it is “1:1 against a tokenized USD/fiat currency that runs on a distributed ledger rail.”

When asked whether the Digital Cash could be considered a stablecoin, the representative reportedly stressed it’s an “internal settlement service” running on a “distributed ledger rail that supports tokenized fiat currency.”

Wells Fargo’s project is planned for next year and will initially completed transfers n U.S. dollars, although in the future it’s expected to add support for multiple currencies. The settlement service has been compared to JP Morgan Chase’s JPM Coin, a cryptocurrency developed for “instantaneous” transfer of payments between the financial giant’s institutional clients.

JPM Coin is a cryptocurrency pegged to the U.S. dollar at a 1:1 ratio, and is built on JPMorgan’s Quorum blockchain. Jamie Dimon, JP Morgan Chase’s CEO, has hinted the cryptocurrency could one day be used for retail payments.

 

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