Coinbase and IEX, two of the biggest players in the cryptocurrency sector, have reportedly been in talks to form a federally regulated crypto trading platform.
The news was initially reported by Fox Business on February 21st, citing sources with direct knowledge of the matter. It was revealed that IEX Chairman Brad Katsuyama recently met with officials from the United States Securities and Exchange Commission (SEC) to discuss the formation of the first crypto exchange that would have the SEC’s unambiguous approval.
The spokeswoman for IEX confirmed that they are
“considering ways that we can help provide a regulatory path for digital asset securities.”
She added that they are
“in conversations with regulators and other market participants, but have not finalized any specific proposal that includes any third parties.”
The plan initially included partnering with Sam Bankman-Fried, the founder of FTX, but that idea has been scrapped due to Bankman-Fried’s recent indictment alleging widespread fraud, which resulted in customers and investors losing billions of dollars.
The move is seen as a response to heightened regulatory scrutiny over the cryptocurrency sector following the implosion of FTX and the resulting wide-reaching market collapse. Other cryptocurrency firms such as Kraken and Paxos have also had to face accusations by the SEC over various alleged securities laws violations.
Nic Carter, CoinMetrics co-founder, has described the developments as “a well-coordinated effort to marginalize the industry and cut off its connectivity to the banking system.”
It remains to be seen if Coinbase and IEX will be able to establish a federally regulated crypto exchange, but it is clear that the cryptocurrency sector is facing an uncertain future as regulators continue to tighten their grip.