This is the first step toward becoming an approved Alternative Trading System, where customers can lawfully swap digital securities.
The Winklevoss-owned cryptocurrency exchange Gemini will apply for a broker-dealer license from the Financial Industry Regulatory Authority (FINRA), CoinDesk has learned.
Gemini previously partnered with the tokenized securities platform Harbor, which allows institutional investors to buy securities with Gemini’s GUSD stablecoin and to also receive dollar-denominated dividends via GUSD. It stands to reason that Gemini would also want to facilitate the trading of such securities on its own platform.
In February, Harbor CEO Joshua Stein told CoinDesk that brokers, family offices and investment banks are still “interested at a significant level” in tokens, even though the more stringent regulatory climate subdued 2017’s broader market frenzy. So far, the platform has focused on the potential for fractionalized real estate and startup equity, though it’s sole real-estate deal fell through in April.
“The Gemini team is very easy to work with and we are aligned in terms of taking a proactive regulatory approach and addressing the needs of the institutional players in the market”, Harbor’s marketing lead, Kevin Young, told CoinDesk.
A source with knowledge of Gemini’s operations told CoinDesk the plan is to permit securities from external platforms such as Harbor to eventually trade on Gemini. However, winning the necessary approvals may take time.
FINRA has so far appeared reticent to approve broker-dealer applications by companies interacting with cryptocurrencies, even as security tokens. The self-regulatory organization is reportedly sitting on roughly 40 applications for these approvals, with companies waiting as long as 14 months. Only time will tell if Gemini will also become a trading platform for tokenized securities.
Gemini is already a qualified on a state-level to custody digital assets, an approval the company received in 2018 through the New York Department of Financial Services (NYDFS).