The Winkelvoss twins’ cryptocurrency exchange Gemini will apply for a broker-dealer license from the Financial Industry Regulatory Authority (FINRA) in a bid to offer traders cryptocurrency securities.
Gemini Applies For Crypto Securities Trading
Just two months after popular cryptocurrency exchange Coinbase made its exit, Gemini has claimed that it will open an office in Chicago to meet “growing institutional demand.” The news was first announced by Tyler Winklevoss in a Medium post published on June 27.
Hey Chicago! 👋🏻 https://t.co/qIS6zS8hQS— Tyler Winklevoss (@tylerwinklevoss) June 27, 2019
On July 2, CoinDesk broke the news that Gemini was seeking a broker-dealer license. If approved, the move would be the first step towards the exchange becoming an Alternative Trading System--a designation necessary to offer clients the ability to trade securities according to US law.
Such approval would also consolidate Gemini’s current operation. The exchange had previously partnered with Harbor, a tokenized securities platform that allowed institutional investors to buy securities using Gemini’s native stablecoin, the Gemini Dollar (GUSD).
Thus far Harbor has focused its tokenized efforts in fractionalizing real estate and startup equity, but Gemini appears bent on expanding into full-blown securities. The increased regulatory hurdles imposed on securities trading, particularly in a tokenized format, has limited the growth of the industry.
However, an anonymous source knowledgeable of Gemini’s ongoing operation told CoinDesk the exchange intended to permit securities from external platforms, such as Harbor, to be traded on Gemini. The exchange is waiting upon approval to further expand its operation, which the source predicting would take quite some time.
Waiting On Approval
FINRA appears to be in no hurry to approve broker-dealer applications and has historically been reluctant to do so for cryptocurrency-related operations. The regulatory body is reportedly mulling over 40 applications for broker-dealer license approval, with the waiting time extending beyond 14 months for certain companies.
Tokenized securities trading has been a sought-after option for institutional investors and an expansion of the capability of digital assets. The problem has been in handling the regulatory hurdles, which involves far more oversight than that of traditional crypto-assets.
If Gemini intends to offer crypto securities trading, clients are likely going to have to wait until the end of 2019 or beyond.