Coinbase to seek SEC approval for tokenized stocks on blockchain

Key Points

• Coinbase is seeking SEC approval for tokenized stocks on blockchain, calling the initiative a “huge priority” for the company.
• Tokenized equities would let investors trade digital share representations to cut costs, speed settlement, and enable round-the-clock access.
• If approved, Coinbase could launch a new division targeting major brokers like Charles Schwab and Robinhood, marking its entry into U.S. equity markets.
• U.S. tokenized stock trading is currently banned, so Coinbase needs exemptive relief or a “no-action letter” to offer this service legally in the United States.

The U.S. Securities and Exchange Commission (SEC) is considering allowing Coinbase to offer tokenized stocks, a move that could revolutionize stock trading for individual investors. In an interview with Reuters, the company’s chief legal officer, Paul Grewal, announced the initiative. The concept is a “huge priority,” according to Grewal.

Investors trade tokenized equities as digital representations of company shares on the blockchain instead of using conventional stock exchanges. They hold tokens that represent ownership rather than the actual stock. This system aims to modernize trading by cutting expenses, speeding up settlement times, and enabling round-the-clock access.

Coinbase to seek SEC approval for tokenized stocks on blockchain

If the SEC approves, Coinbase may open a potentially profitable new division within its company and go up against big brokers like Charles Schwab and Robinhood.

Although international efforts are gaining traction, tokenized equity trading is currently prohibited in the United States. A rival to Coinbase, Kraken, revealed last month that it would introduce tokenized U.S. stocks, known as xStocks, for users residing outside of the nation.

Coinbase needs to obtain exemptive relief or a “no-action letter” in order to lawfully offer tokenized stocks in the United States. If Coinbase moves forward, these steps would guarantee the SEC won’t pursue enforcement. Although the business obtained a broker-dealer license in 2018, that division has not been active since.

Although the SEC did not comment, broader political changes could influence the agency’s shifting position.The SEC dropped a 2023 lawsuit against Coinbase under President Donald Trump, alleging that the company was acting as an unregistered broker. By assembling supportive regulators and establishing a crypto task force to create regulations for digital assets, Trump has indicated a pro-crypto stance.

Coinbase sees a chance to change how Americans engage with stocks—through the lens of blockchain—as Washington’s tone softens.

Featured Image Credit: Bastian Riccardi; Pexels: Thank You!

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