Coinbase in talks to create a federally regulated crypto exchange
Amid the increased regulatory scrutiny of the cryptocurrency sector following the implosion of FTX and the resulting far-reaching market collapse, Coinbase and IEX are reportedly considering merging to address the underlying issue and create a regulated crypto trading platform.
In fact, management of the publicly traded crypto exchange and the exchange have begun talks to establish a federally authorized marketplace for digital assets, according to the sources with direct knowledge of the matter. Fox Business reported on February 21.
Specifically, IEX Chairman Brad Katsuyama met with former United States Securities and Exchange Commission (SEC) officials, including chief Gary Gensler, to discuss the foundations of the first crypto exchange that would have his unequivocal approval.
Concrete proposals must be finalised
According to the IEX spokeswoman:
“We continue to consider ways we can help provide a regulatory pathway for digital securities, including conversations with regulators and other market participants, but have not finalized any specific proposal that includes third parties.”
Interestingly, the original plan included working with FTX founder Sam Bankman-Fried (SBF), as both he and Katsuyama held proposal meetings with SEC officials almost until the time FTX filed for bankruptcy in November, according to Gensler’s public calendar.
However, IEX has been forced to find a new partner, as SBF is currently facing a federal indictment alleging widespread fraud, costing FTX customers and investors billions. He remains under house arrest until his trial in October, which could see him locked up for up to 115 years, as other FTX executives are expected to testify against him during their plea deals.
Coordinated Attacks Against Crypto?
As a reminder, the crypto industry has found itself between a rock and a hard place after crypto exchange Kraken agreed to shut down its betting services in the US and pay a $30 million fine to settle charges with the SEC, which accused it of violating securities laws.
Soon after, cryptocurrency firm Paxos was forced to stop issuing the dollar-pegged Binance token BUSD and now faces charges from the SEC for selling the stablecoin it considers a security, in what CoinMetrics co-founder Nic Carter described as “a well-coordinated effort to marginalize the industry and cut its connection to the banking system.”
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