Starting a business that is cryptocurrency related can be a gamble at this point considering the rules and regulations in every country. Up to this point, the crypto market is still relatively new. And because of this, there is always the potential that some businesses such as crypto exchanges could stop operations in a particular country. This is exactly what happened in China.
As for Coinbase, things are looking good for the company. They announced earlier this week that they are planning to enter Japan’s crypto market by hiring a new Japan executive who will be working hand in hand with regulators and authorities. It is during the time when the likes of Kraken decided to pull out from Japan. And also, Japan recently turned down FSHO to operate in the country implementing the new rules after the Coincheck hacking incident.
In addition to this, the company is also working hand in hand with the US Securities and Exchange Commission (SEC). The company announced on Wednesday that it is actually on track to register as a broker-dealer. By doing so, it allows the company to list crypto assets.
Acquiring a Broker-Dealer License
In a statement by Coinbase President and COO Asiff Hirji, Coinbase announced that it acquired a broker-dealer license, an alternative trading system (ATS), and a registered investment advisor (RIA) license that are all pending regulatory approval. And once approved, Coinbase will begin operating as a broker-dealer under the watchful eyes of the SEC and Financial Industry Regulatory Authority.
SEC Chairman Jay Clayton recently mentioned that ICOs are most likely securities and cryptocurrencies aren’t. The reason behind this is that digital currencies were designed to replace sovereign fiat currencies such as the dollar and the yen.
Hirji also mentioned in the past that Coinbase is confident in supporting four cryptocurrencies including Bitcoin Cash, Litecoin, Bitcoin, and Ether in the US considering the current regulations. However, as a broker-dealer, this can expand the assets that Coinbase could list.
Hirji said that “There are now many types of blockchain-based digital assets, from cryptocurrencies to security tokens to collectibles. In the United States, some of these assets will be subject to SEC oversight. With this in mind, securing these licenses will bring us a step closer to our goal, which is to be the most trusted way for our customers to buy, sell, and use many different types of crypto assets”.
Acquiring Three Companies
Coinbase is currently expanding. In fact, as part of securing the necessary licenses, Coinbase acquired three companies including Keystone Capital Corp, Venovate Marketplace Inc, and Digital Wealth LLC.
Keystone and Venovate are registered with the SEC and FINRA as broker-dealers. On the other hand, you have Digital Wealth that has an RIA license. And Venovate also has an ATS license.
One of the reasons for the bearish trend in the crypto market since 2018 is due to the lack of regulatory clarity in the niche. Investors are worried about the strict rules and regulations imposed by different countries. This is also true for institutional investors that are waiting to invest large capital.