Coinbase Pushes for SEC Approval to Launch Tokenized Stocks, Aiming to Revolutionize Trading
Coinbase is looking to shake up how individual investors trade stocks, with the company’s Chief Legal Officer, Paul Grewal, revealing in a Reuters interview that securing U.S. Securities and Exchange Commission (SEC) approval for tokenized stocks is a “huge priority.”
Tokenized equities offer a modern alternative to traditional stock exchanges. Instead of trading actual company shares, investors would buy and sell digital representations of those shares on a blockchain. This means they’d hold tokens that signify ownership. The goal is to streamline trading by reducing costs, speeding up settlement times, and enabling 24/7 access.
A New Frontier for Coinbase and the Market
If the SEC gives its blessing, this move could open a significant new revenue stream for Coinbase, putting it in direct competition with established brokerage giants like Charles Schwab and Robinhood.
While tokenized equity trading is gaining traction internationally, it’s currently prohibited in the United States. Coinbase’s competitor, Kraken, for instance, announced last month it would launch tokenized U.S. stocks, dubbed “xStocks,” for its non-U.S. customers.
To legally offer tokenized stocks in the U.S., Coinbase will need to secure either “exemptive relief” or a “no-action letter” from the SEC. These steps would ensure the SEC won’t pursue enforcement actions against the company. It’s worth noting that while Coinbase obtained a broker-dealer license in 2018, that division has remained inactive.
Political Winds and Regulatory Shifts
The SEC has not commented on Coinbase’s initiative, but broader political shifts could influence the agency’s stance. The SEC notably dropped a 2023 lawsuit against Coinbase during President Donald Trump’s administration, which had alleged the company was acting as an unregistered broker. Trump has signaled a pro-crypto stance by assembling supportive regulators and establishing a crypto task force focused on digital asset regulations.
As the regulatory tone in Washington appears to soften, Coinbase sees a significant opportunity to fundamentally change how Americans engage with the stock market through the innovative lens of blockchain technology.
