Coinbase Going Public Could Let the SEC Run Token Listings

The Securities and Exchange Commission (SEC) might soon be able to dictate precisely which tokens a (specific) crypto exchange can list.

San Francisco-based Coinbase announced Thursday that it had filed a confidential S-1, an initial step to listing its shares on a national stock exchange, while Stockholm-based Safello announced its intent to file one on Friday. Going public would subject exchanges to closer regulatory scrutiny from the SEC.

Gabriel Shapiro, an attorney with Belcher, Smolen & Van Loo LLP, told CoinDesk that there are few federal laws around corporate governance. What shareholders approve and what a company’s board can approve are typically defined by state law. However, the SEC has been using its power to approve registration statements to try and enforce its will on public or soon-to-be-public entities, he said.

For example, the SEC could force a company to break down details of a potential merger into multiple votes instead of having shareholders and directors vote just on the overall merger proposal.

“They’ve been monkeying with governance rules like this at the federal level even though there’s no federal laws around this,” he said.

Something similar could happen to crypto companies trying to list on stock exchanges within the U.S.

Read more: Coinbase, With Bitcoin Soaring, Files in Preparation for Landmark Public Offering

For example, the SEC could say that crypto trading platforms need clearer procedures for how they list or delist different cryptocurrencies.

“’We don’t think you have a clear enough procedure for making sure the tokens that you list are not securities and we think you should adopt the same rules we use for determining whether a token is a security, and not list the ones that are securities,’” is something the SEC could hypothetically say, Shapiro told CoinDesk.

While it’s unlikely, the SEC could even require exchanges to delist certain tokens in this manner before deeming the S-1 forms effective.


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