One of the first crypto unicorns in the space, Coinbase, has enjoyed the same volatility native to the sector it represents just this past week. Most notably, the firm announced the potential addition of five new cryptocurrencies, an odd (and apparently unnecessary) declaration regarding confirmation from the SEC and FINRA, and a tacit response from the Ripple community for not being listed in that most recent batch of tokens. The latter inquiries may even spark an investigation from the Financial Industry Regulatory Authority for “price rigging.” In the context of Arianna Simpson’s recent proclamation that Coinbase could end up “being bigger than Facebook,” all of this sounds pretty normal.
New Potential Listings
Coinbase announced that it was in the process of considering five new tokens to be listed on July 13, 2018. In a statement on the company’s official blog, Coinbase revealed that it is working toward adding several new assets, including Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC), and 0x (ZRX).
The Coinbase statement reads in part:
“Today we are announcing that we’re exploring the addition of the following assets to Coinbase: Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC) [and] 0x (ZRX). We are making this announcement internally at Coinbase and to the public at the same time to remain transparent with our customers about support for future assets.”
Coinbase was quick to point out that this announcement is not in any way a guarantee that the tokens will be listed. A reason for this is that the exploratory work needed to integrate them is substantially more than what is necessary to incorporate a coin like Ethereum Classic (ETC), which closely resembles ether. The company also pointed out that the outcome of the listing process may not grant full functionality to all the assets.
For example, an endpoint may be that individual users can buy and sell the cryptocurrencies in question without having the ability to send or receive them using a local wallet. Another possible issue could be that the number of ways users can interact with these tokens on the Coinbase platform may be severely restricted. Users in some countries and jurisdictions could also possibly get access to the assets later or earlier than other users.
BTCManager earlier reported that Coinbase is making an effort to pivot into the market for institutional investors by offering listings and products that are useful to them such as its custody service.
No Need for Regulatory Greenlight
As mentioned in June 2018, Coinbase has been actively seeking broker-dealer licenses to acquire Keystone Capital Corp., Venovate Marketplace Inc., and Digital Wealth LLC. In purchasing these three companies, the crypto startup turned heavy-weight, would then be able to buy and sell assets labeled securities legally.
On July 16, 2018, a spokesperson for Coinbase even explained that “Being approved to take ownership of these licensed entities is one more step toward our ultimate goal of allowing our customers to trade securities tokens on our platform.”
As it turns out, however, none of this was really necessary according to the SEC. Another commentator from the financial authority said that “The SEC’s approval is not required for the change of control application. Coinbase has discussed aspects of its proposed operations, including the acquisition of the Keystone Entity, on an informal basis with several members of SEC staff.”
If not the SEC, it does mean that Coinbase still needs approval from FINRA. The misunderstanding is an odd one, but the press game being played may attract some unwanted attention. The latter watchdog has openly responded, albeit Twitter, to potential allegations that Coinbase may be engaged in some form of price rigging.
Sour Ripple Fans
Ripple fans were also upset with the exclusion of their beloved XRP token from Coinbase’s recent adoption announcement. While speculative, one commentator demanded an investigation on the part of FINRA to look into how the firm is justly (or unjustly) wielding its power in the space.
Thank you for bringing this to our attention.
— FINRA (@FINRA) July 15, 2018
Following the immediate price hikes from the other five tokens, it’s possible that an investigation may indeed be in order. Plus, in the wake of market manipulation following the addition of Bitcoin Cash (BCH) in 2017, suspicions are running high. Keeping at least a few tabs open on this development may be worthwhile, but in any case, Coinbase, much like Facebook, is not afraid of some extra press time.