Stock Exchange IEX in Talks With Coinbase to Create Federally Approved Digital Asset Marketplace

Brad Katsuyama hopes the second time will be the charm

Katsuyama, Chairman of the Stock Exchange IEX, and his staff are currently in discussions with Coinbase, a publicly traded cryptocurrency exchange, to create a federally authorized digital asset marketplace. Fox Business has been informed by people who have direct knowledge of the matter.  

SEC CHAIRMAN GARY GENSLER MET WITH HEAD OF FTX MONTHS BEFORE COLLAPSE

Fox Business reports that Katsuyama is a veteran trader, who was the protagonist of the book. “Flash Boys,” Michael Lewis describes high-frequency trading in Wall Street. Lewis met previously with representatives from the Securities and Exchange Commission to discuss the possibility of a crypto currency exchange. Gary Gensler would be the first to give his explicit blessing.

WASHINGTON, DC, SEPTEMBER 14: Gary Gensler, Chairman of the U.S. Securities and Exchange Commission, testifies at a Senate Banking, Housing and Urban Affairs Committee oversight meeting on the SEC, September 14, 2021, in Washington, DC. (Photo: (Evelyn Hockstein-Pool/Getty Images / Getty Images)

Fox Business reported Sam Bankman Fried, who was later indicted as the founder of the now-defunct crypto-exchange FTX, was his partner. Gensler’s public schedule shows that Bankman-Fried as well as Katsuyama met with officials from the commission and the chairman.

These meetings occurred almost at the same time that FTX filed bankruptcy in November. It was a fraud regulators consider one of largest in crypto history.
Bankman-Fried and his associates are being accused by the government of stealing FTX customer funds to fund their lavish lifestyle and trading losses through an affiliated hedgefund, Alameda Research. Bankman-Fried, who pleaded guilty, is still under house arrest. He will be tried in October. He could face up to 115 year imprisonment. Other FTX executives have also reached plea bargains with US Attorney’s in Manhattan. They will be appearing in court as witnesses for the government.  

INSIDE CRYPTO EXCHANGE FOX: EVERYTHING YOU NEED to KNOW

Katsuyama is believed to have continued his negotiations for approval with the SEC for an exchange, even after the FTX failure. His potential partnership with Coinbase was not previously reported and he declined any comment.

Fox Business was informed by a spokeswoman from IEX “We continue to consider ways that we can help provide a regulatory path for digital asset securities, including conversations with regulators and other market participants, but have not finalized any specific proposal that includes any third parties.”

This illustration was taken Nov. 10, 20,22 and shows cryptocurrencies represented in front a displayed FTX Logo and decreasing stock chart.  (Reuters/Dado Ruvic/Illustration/File Photo / Reuters Photos)

Coinbase representatives did not respond to calls or emails seeking comment. The exchange reported higher-than expected fourth-quarter revenues at $605 million on Tuesday after trading closed. The company still lost $557 million for its fourth quarter ended December 31, compared with earnings of $840 millions in the same quarter 2021.

Coinbase, like many other crypto businesses, was affected by the “Security Crisis”. “crypto winter” Losing $2.625 billion in 2022 The global crypto industry lost nearly $2 trillion due to significant losses in digital assets and increased regulatory pressure. The $1 trillion dollar crypto market is further hampered by the FTX bankruptcy.

REPUBLICANS COMMAND SEC CHAIR GENSLER TO DISCUSS POTENTIAL VIOLATIONS OF FEDERAL TRANSPARENCY LAWS

Many market participants are looking for approval from the SEC to create a crypto marketplace that allows digital coins to be traded without worrying about regulatory backlash. Gensler is a former Goldman Sachs banker who was also a professor at MIT and taught a course about blockchain technology. He has stated publicly that the vast majority are illegally being traded as unregistered security tokens. Gensler has identified Bitcoin as the most likely digital asset being traded as a commodity.

POLAND – 2021/09/23. This photo illustration shows a Coinbase logo on a smartphone. (Photo Illustration by Mateusz Slobkowski/SOPA Images/LightRocket via Getty Images (Mateusz Slodkowski/SOPA Images/LightRocket/Getty Images

Gensler brought enforcement actions against several crypto businesses, including Kraken and Gemini, for alleged SEC rule violation violations in the last few weeks. Gensler also filed cases against entities that are accused of selling unregistered currency, while the SEC continues to pursue a case brought against Jay Clayton’s predecessor Gensler against Ripple cross-border payment company.

According to the SEC, Ripple executives were accused of violating securities laws by failing register the XRP token prior to various sales that were used to finance the building out of the platform.

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Ripple has mounted a vigorous defense. This high-profile case should conclude this year. This outcome will likely determine how much authority is given to the SEC over crypto regulation.