RACE TO CREATE BROKERAGES FOR CRYPTO SECURITIES

Move by Coinbase, Circle Internet may appease regulators threatening to rein in market

TWO titans of the United States cryptocurrency trading are in a race to build the nation’s first regulated venues for tokens deemed to be securities, potentially appeasing watchdogs threatening to rein in the multibillion-dollar market.

Coinbase Inc, one of the largest cryptocurrency exchanges, said on Wednesday it was buying a trio of firms, including a broker-dealer registered with the Financial Industry Regulatory Authority.

If the US regulators approve, Coinbase will use licences it obtains to offer customers blockchain-based securities. It will also be subject to more federal oversight.

The announcement came hours after Bloomberg reported that Circle Internet Financial Ltd, one of the world’s most valuable cryptocurrency platforms, intends to pursue registration as a brokerage and trading venue with the US Securities and Exchange Commission (SEC) so it can help investors buy and sell tokens deemed to be securities.

Circle also plans to seek a federal banking licence to provide more services to customers.

Regulated trading platforms could eventually handle billions of dollars in tokens sold by companies in initial coin offerings (ICOs).

Despite a crackdown by the US, China and other countries, companies had already raised more than US$9 billion (RM35.77 billion) through ICOs this year, more than double what they did all of last year, according to market tracker CoinSchedule.

The SEC has said most of the coins are securities, which means issuers must register and comply with federal laws — as do platforms that handle trading.