April 11, 2018
By: Steven Anderson
Considering how many people out there actually believe that cryptocurrency is nothing more than a facilitation platform for crime, it’s easy to see why cryptocurrency exchanges would be craving a little legitimacy to try and advance the market. With that in mind, it’s easy to see why Coinbase recently took a step in that direction by applying for registration with the Securities and Exchange Commission (SEC) as a licensed brokerage firm.
The good news here is that would allow Coinbase to start stocking an even larger quantity of cryptocurrencies, including those the SEC has previously declared securities. Since Coinbase—as expressed by its president Asiff Hirji—wants to only stock coins that have “…some amount of regulatory certainty”, the end result is a more stable, more reliable exchange.
Such a move would likely prompt other exchanges to do likewise—especially if the SEC actually approves Coinbase as a brokerage firm—if for no other reason than to get that fig leaf of credibility that comes from regulatory approval. However, such a move would also cost Coinbase and those who join in, as the SEC would then have the ability to examine records, policies and the like to protect against market manipulation and insider trading.
However, this is mitigated by the fact that Coinbase et al are already under government scrutiny to begin with; the IRS has taken an active interest in Coinbase’s activities as relates to tax evasion.
So there’s a lot of reason for Coinbase to go in for registration—the legitimacy, the ability to overcome one major objection to cryptocurrency and the ability to pull in some new investors—and not much reason to stay out. After all, there are over 100 million investors out there that could be getting into the field, and if even a tiny fraction of the amount of money that goes into the stock market goes into the cryptocurrency market instead, that’s likely to ramp up the market like nobody’s business.
That’s strictly conjectural, of course, but with even some of that outstanding investor pool stepping in—and that’s not even mentioning what could happen in other countries if suddenly the US has validated crypto by making it federally regulated like stocks—it could mean a serious upward trend. Only time will tell just where this goes.