Leading U.S. cryptocurrency exchange Coinbase announced it would acquire securities dealer Keystone Capital in a bid to become a fully SEC-regulated broker dealer, the company said Wednesday.
“If approved, Coinbase will soon be capable of offering blockchain-based securities, under the oversight of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA),” Coinbase President and Chief Operating Officer Asiff Hirji said in a statement. “This step forward is being made possible by our acquisition of a broker-dealer license.”
Coinbase, which landed at the No. 10 spot on the 2018 CNBC Disruptor 50 list, will still need regulatory approval to operate under the Keystone licenses. The San Francisco-based firm is best known for its popular trading platform, which offers four cryptocurrencies. The Keystone acquisition could help Coinbase expand its offerings, and eventually allow them expand into other non-crypto financial products. The deal terms were not disclosed.
” Ultimately, we can envision a world where we may even work with regulators to tokenize existing types of securities, bringing to this space the benefits of cryptocurrency-based markets — like 24/7 trading, real-time settlement, and chain-of-title,” Hirji said.
Coinbase, which has traded $150 billion in assets across more than 20 million customers, has been plowing money back into areas other than its flagship exchange. In April, the company bought Earn.com for a reported $100 million, which lets users send and receive digital currency for replying to mass-market emails and completing micro tasks. As part of the acquisition, the crypto company will bring on Earn’s founder and CEO, a former Andreessen Horowitz venture capitalist, as its first-ever chief technology officer. Coinbase reportedly valued itself at about $8 billion when it set out to buy Earn.com, according to Recode, much higher than a valuation of $1.6 billion at its last round of venture capitalist financing in summer 2017. In May, the company announced a fleet of products to cater to the institutional investor class, which has been especially cautious to dive into what has been a volatile asset class.
Coinbase launched an index fund in March, and a month later launched Coinbase Ventures, an incubator fund for early-stage start-ups working in cryptocurrencies and blockchain. It has $15 million geared up for investments and recently announced its first deal with start-up Compound, which lets you lend or borrow cryptocurrency and earn an interest rate.