Coinbase, the largest U.S. Bitcoin exchange, has initiated exploratory conversations with financial regulators regarding banking licenses.
Coinbase and Ivy Koin Meet with U.S. Regulators About Banking Licenses
Coinbase is now intent on learning how to obtain banking licenses. The Wall Street Journal reports that, according to undisclosed sources, the exchange held conversations with officials from the U.S Office of the Controller of the Currency in early 2018. According to the report:
Coinbase Inc. and another cryptocurrency firm talked to U.S. regulators about the possibility of obtaining banking licenses, a move that would allow the startups to broaden the types of products they offer.
Today we’re announcing the Coinbase suite of institutional products. As institutions continue to enter the cryptocurrency market, we are committed to building the products and services that uniquely meet their needs.https://t.co/o2EppgMpiI
— Coinbase (@coinbase) May 15, 2018
Coinbase is already licensed to process payments through banks under the state money-transmission licenses in the U.S. For example, to operate in New York, the company holds a “Virtual Currency License.” The Department of Financial Services issued this license on January 17, 2017.
The other company seeking information about obtaining banking licenses is Ivy Koin LLC. This company provides blockchain technology to facilitate fiat and cryptocurrency transactions, offering revocable access for KYC and KYT data to financial institutions and other clients.
Coinbase’s Business Expansion Strategy
Coinbase believes that the digital currency market is rapidly maturing as the number of financial institutions entering the market continues to increase. As a result, and to better serve these institutions, the company is determined to advance and expand its portfolio of cryptocurrency-based financial instruments.
In effect, the company is focusing on a strategy of business expansion by acquiring start-ups and hiring new talent. In April 2018, Coinbase bought Earn.com for about USD 100 million.
A few weeks ago, Business Insider confirmed that Coinbase is introducing over-the-counter (OTC) crypto trading services. In this connection, on May 15, 2018, the company opened a new engineering office in Chicago. The official announcement stated:
Coinbase already offers the deepest pool of liquidity to the largest number of participants in the cryptocurrency space. We intend to continue developing this electronic marketplace, known as Coinbase Markets, by opening a new engineering office in Chicago.
Moreover, Balaji Srinivasa, the co-founder and CEO of Earn.com, is joining Coinbase as its first Chief Technological Officer (CTO). Srinivasa was a general partner with Andreessen Horowitz, and as such, he brings significant crypto and Wall Street-related knowledge.
Coinbase is a profitable company. It values itself at about USD 8 billion. Additionally, its business expansion strategy, which now aims at participating in the banking industry, confirms its optimism about the future of the crypto industry.
What do you think will be the impact on the cryptocurrency market if crypto companies become part of the banking industry? Let us know in the comment section below.
Images courtesy of Coinbase, Glass Door, CNBC