The Securities and Exchange Commission just handed digital currency exchange provider Coinbase a great deal of authority. Coinbase has recently received approval by the SEC to offer its customers the option of trading both Litecoin and Ether, two digital currencies that have quickly been gaining prominence among cryptocurrency enthusiasts. This makes Coinbase the first New York-based exchange to offer Litecoin trades and the second to offer Ether trades. Particularly in light of the recent concerns over the long-term health of Bitcoin, this could provide Coinbase with an exceptionally powerful place in the growing digital currency trading industry.
Second to the Winklevoss Brothers
Coinbase is not the first exchange to offer trading of the Ethereum token in the state of New York. About a year ago, the Gemini Trust Company, a digital currency exchange run by Tyler and Cameron Winklevoss of Facebook fame, became the first exchange to receive clearance to trade Ether, according to a report by CoinDesk.
Coinbase's application for the new trading options was approved in an announcement by Maria Vullo, the superintendent of New York's Department of Financial Services. Vullo used the announcement as an opportunity to reiterate the DFS belief that state regulation of digital currency is essential, saying that "DFS has proven that the state regulatory system is the best way to supervise and cultivate a thriving fintech industry, like virtual currency. New York will remain steadfast in pushing back against federal encroachment efforts like the OCC's proposal to impose a one-size-fits-all national bank charter that increases risk and seeks to usurp state sovereignty."
Coinbase Pledges Security and Compliance
In response to the news, CEO and co-founder of Coinbase Brian Armstrong indicated that the exchange maintained a commitment to "ensure that we operate the most secure and compliant digital currency exchange in the world." He added that "New York is an important market and we look forward to expanding our services for New York customers as swiftly as possible." Coinbase has continued to gain traction among digital currency users even in spite of (or perhaps because of) its tense exchanges with the IRS in recent months. The IRS has filed requests for customer data and transaction histories on belief that some Coinbase users are dodging tax payments, and Coinbase has firmly refused to comply with those requests, indicating that such an exchange of information would constitute a broad violation of user privacy. With the addition of Ether and Litecoin to its lineup of digital currency trades, Coinbase is likely to continue to grow in importance within this burgeoning industry, although it is clear that digital currencies still have many growing pains to deal with within the broader financial and regulatory worlds.