Coinbase is pursuing approval from the U.S. Securities and Exchange Commission (SEC) to offer tokenized equities—digitally represented stocks traded on blockchain technology—to its customers, according to Paul Grewal, Coinbase’s chief legal officer.
If approved, Coinbase would enter direct competition with retail brokers like Robinhood and Charles Schwab by allowing users to trade stocks in token form. This new service could open a significant business segment for the crypto exchange.
What Are Tokenized Equities?
Tokenized equities convert traditional shares into digital tokens, enabling investors to hold and trade ownership rights on a blockchain network. Advocates argue that tokenization can:
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Reduce trading costs
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Enable faster settlement of trades
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Allow 24/7 trading outside conventional market hours
Challenges and Regulatory Context
Despite enthusiasm, the concept faces hurdles, including limited secondary-market liquidity and the absence of global regulatory standards, as highlighted by a recent World Economic Forum report.
Currently, U.S. law requires securities trading platforms to be registered as broker-dealers. Coinbase previously faced an SEC lawsuit for allegedly operating as an unregistered broker-dealer, but the case was dropped this year under the Biden administration.
To move forward, Coinbase needs a “no-action letter” or exemptive relief from the SEC—an assurance that the SEC would not take enforcement action if Coinbase offers tokenized stock trading.
Grewal emphasized that such regulatory clarity is vital for boosting institutional adoption of crypto and blockchain technologies.
Market Context
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Coinbase’s competitor Kraken recently launched tokenized U.S. equity tokens, called xStocks, but only outside the U.S.
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The SEC under President Trump has adopted a more industry-friendly approach, dropping several lawsuits against crypto firms and creating a task force for digital asset regulation.
No official submission date or launch timeline for Coinbase’s tokenized equities service has been disclosed.