Coinbase is talking to officials from the Securities and Exchange Commission (SEC) as the largest cryptocurrency exchange operator in the US paves the way for registering as a licensed brokerage and digital trading venue, an insider told CNBC.
The move will allow the San Francisco-based company to offer new cryptocurrency assets and to expand its business.
Canaccord Genuity research associate Scott Suh told CNBC:
"It seems like they're laying the groundwork for supporting tokens from [the technical] side and from a regulatory standpoint as well.”
The meeting with the SEC is the latest from a series of steps taken by Coinbase over the past few weeks. These include support for the Ethereum ERC-20 technical standard, withdrawal of Bitcoin ‘forks,' and the launch of the Coinbase Index Fund, which tracks all the digital currency assets listed on its trading platform GDAX.
If the SEC signs off on Coinbase's registration, it will set a precedent for some legal issues in trading certain crypto assets as securities. Several industry insiders said that a brokerage license would also allow the six-year-old cryptocurrency exchange to support more digital coins while complying with SEC regulations.
Jerry Brito, executive director at Washington, DC-based cryptocurrency advocacy group Coin Center, said:
"In order to trade securities, they need to be a broker-dealer/ I could imagine [Coinbase] could sell a number of other tokens [with the license].”
Last week, Coinbase announced plans to step up its technical ability to handle additional digital currencies, some of which regulators are expected to consider securities, and support the Ethereum ERC20 technical standard, which will allow its users to purchase directly to post-initial coin offering projects.
“We’re excited to announce our intention to support the Ethereum ERC20 technical standard for Coinbase in the coming months. This paves the way for supporting ERC20 assets across Coinbase products in the future, though we aren’t announcing support for any specific assets or features at this time. We are announcing this both internally and to the public as consistent with our process for adding new assets.”
Early last month, Coinbase COO Asiff Hirji told CNBC’s Fast Money that the company was launching its index fund and said this “big announcement would rock the crypto world forever.”