Coinbase Seeks SEC Approval to Launch Tokenized Stock Trading, Here’s All

Key Insights:

• Coinbase is seeking SEC approval to offer tokenized equities, aiming to enable blockchain-based stock trading in the U.S.
• Tokenized equities promise lower costs and 24/7 trading but face liquidity and regulatory challenges, says the WEF report.
• The SEC under Trump dropped its 2023 lawsuit against Coinbase and is now forming a crypto rules task force.

Coinbase has made a formal move towards the expansion of its services. The company is seeking approval from the U.S. Securities and Exchange Commission (SEC) to enable it to provide tokenized equities on its platform. The action would allow trading of stock backed by blockchain in the U.S. first time.

Coinbase Pursues Regulatory Approval for Tokenized Equities

Coinbase is currently exploring the necessary regulatory pathways to begin offering tokenized equities, according to the company’s Chief Legal Officer, Paul Grewal. In an interview with Reuters, Grewal confirmed that Coinbase is aiming to provide customers the ability to trade tokenized shares of publicly listed companies.

Consequently, this would require either a no-action letter or exemptive relief from the SEC, enabling the company to move forward without facing enforcement action.

Notably, tokenized equities are digital tokens that are a representation of equities of companies traded in the same way as cryptocurrencies. The tokens provide a right of ownership without investors having to hold, directly, the traditional securities. If approved, this would place Coinbase in direct competition with established retail brokerages such as Robinhood and Charles Schwab.

Tokenized Trading Could Reduce Costs

More so, the concept of tokenized equities is not new, but it has yet to be adopted in regulated U.S. markets. Proponents argue that the model can lower transaction costs, provide faster settlement times. It could also allow trading outside of traditional market hours.

Nevertheless, there are challenges. Two critical points were identified in a recent World Economic Forum report. The first is secondary-market liquidity, and the second is the lack of common standards worldwide. These challenges have lowered the rate of adoption and impeded the deployment of it on a larger scale.

Besides, several crypto firms are already experimenting with tokenized stock models in international markets. Kraken, a rival exchange, announced a tokenized equity product called xStocks, which will be available outside the United States. These products are designed to mimic the value of U.S. equities, However, they are offered in jurisdictions with more flexible digital asset regulations.

US SEC Position Under New Administration

On a positive note, the path toward regulatory acceptance may have become less restrictive under the current U.S. administration. Under President Donald Trump, the SEC has taken a different stance toward the crypto industry compared to its previous administration.

In earlier action this year, the agency dismissed a 2023 case that alleged that Coinbase was acting as an unregistered broker-dealer. This suit was brought during the Biden administration, and it was among a series of enforcement actions against crypto platforms.

The US SEC has since launched a brand-new crypto task force. It is expected to come up with some regulations specifically oriented toward digital asset regulation. This unit is exploring ways to integrate blockchain technologies within the current financial system. Coinbase’s request for a no-action letter could be one of the first tests of this emerging framework.

According to Grewal, a no-action letter would offer assurance that the tokenized equity offering at Coinbase is within the existing securities law. Though the company did not clarify whether it has formally applied, Grewal stated that regulatory clarity is a key factor that will instill institutional confidence.

Industry Trends Show Interest in Tokenization

Beyond Coinbase, interest in tokenized assets has been growing across the financial sector. Asset managers, fintech firms, and blockchain developers are increasingly exploring how tokenization can modernize trading infrastructure. Tokenized products have already appeared in pilot programs across Europe and Asia. Some regulators are supporting limited deployments under sandbox frameworks.

In case Coinbase is approved, it will become one of the first equity marketplaces based in the USA to connect traditional markets with blockchain environments. Nevertheless, such an offering would still have to maintain substantial compliance, brokerage registration, and custodial agreements necessary to comply with the U.S. securities laws.

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