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Coinbase Seeks SEC Approval to Offer Tokenized Stocks on Blockchain

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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:

  • Reduce trading costs

  • Enable faster settlement of trades

  • 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

  • Coinbase’s competitor Kraken recently launched tokenized U.S. equity tokens, called xStocks, but only outside the U.S.

  • 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.

Bitcoin Surges to Record High of $97,903 Amid Investor Optimism

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Key Highlights

  • Bitcoin achieved a new all-time high of $97,903, marking a significant milestone as it surged past the $95,000 threshold.
  • Market sentiment is buoyed by speculation that a potential second term for Donald Trump could create a favorable environment for cryptocurrencies.
  • The flagship cryptocurrency has gained over 127% in 2024, fueled by institutional adoption, regulatory shifts, and macroeconomic factors.

Market Performance

  • Current Price: Bitcoin was trading at $97,646.68, up more than 3% according to Coin Metrics.
  • Supporting Stocks: Shares of MicroStrategy, a notable Bitcoin proxy, climbed 3% in extended trading, while mining stocks such as Mara Holdings rose 4%.
  • Year-to-Date Gains: Bitcoin’s value has more than doubled since the start of the year, positioning it to potentially breach the $100,000 mark by year-end.

Drivers Behind the Surge

  1. Regulatory Optimism:
    • Speculation about supportive cryptocurrency regulations under another Trump presidency has energized the market.
    • Expectations include potential federal initiatives such as a national Bitcoin reserve, which would signal heightened adoption at the governmental level.
  2. Macroeconomic Conditions:
    • Analysts link Bitcoin’s rise to forecasts of larger U.S. budget deficits and inflation, alongside potential shifts in the international role of the U.S. dollar.
    • Such factors enhance Bitcoin’s appeal as a hedge against economic uncertainty and currency devaluation.
  3. Institutional and Retail Momentum:
    • Increased institutional participation, alongside growing retail adoption, has bolstered liquidity and confidence in the cryptocurrency market.
    • According to Sam Callahan of Swan Bitcoin, a combination of improved liquidity and reduced regulatory headwinds is driving the bullish sentiment.

Future Projections

  • Bitcoin is widely expected to cross the $100,000 milestone before the end of 2024, with some analysts predicting a potential doubling of its value by the close of 2025.
  • The cryptocurrency’s trajectory underscores its evolving role as a store of value and a key component in diversified portfolios.