Publicly traded crypto exchange Coinbase is pursuing approval from the U.S. Securities and Exchange Commission (SEC) to offer tokenized equities to its customers.
If approved, this move could enable the company to provide stock trading via blockchain technology, potentially competing with retail brokerages and opening up a new business sector for Coinbase.
Company representatives view this initiative as a significant priority. The SEC has not provided additional comments on the announcement, and it is unclear whether Coinbase has already submitted an official request or when such a proposal might be launched.
The concept of tokenized equity involves representing shares from a company with tokens rather than holding the securities directly. Proponents argue that this could reduce costs and enable faster settlement times while allowing for 24/7 trading. Critics, however, highlight gaps that need addressing; reports suggest sufficient secondary-market liquidity and clear global standards are needed for tokenized equities to gain widespread acceptance.
In the current U.S. market, tokenized equities are not a viable trading option despite several firms experimenting with them, including competitors like crypto exchange Kraken, which has partnered with Backed and the Solana Foundation to launch xStocks in specific markets outside of the U.S.
To offer this new service, Coinbase would need an exemption from the SEC, such as a no-action letter. Companies that trade securities typically have to be registered as broker-dealers. Although Coinbase is not currently registered as such, it faced legal scrutiny over operating as one without proper registration and was sued by the SEC in 2023.
The lawsuit was dropped under President Trump’s administration. The initiative comes at a time when Trump aims to reshape U.S. crypto policies after soliciting industry support during his campaign. His appointments of industry-friendly regulators and hosting prominent industry figures at the White House have positively impacted cryptocurrencies, with Bitcoin hitting new all-time highs this year.
