Coinbase Seeks SEC Approval to Offer Tokenized Equities

Coinbase is aiming to expand its offerings by seeking approval from the U.S. Securities and Exchange Commission (SEC) to provide customers with access to tokenized equities, according to the exchange's Chief Legal Officer, Paul Grewal, in comments made to Reuters.

If approved, the move would enable Coinbase (COIN.O) to bring stock trading to the blockchain, putting it in direct competition with established retail brokerages like Robinhood (HOOD.O) and Charles Schwab (SCHW.N). This could potentially open a new business vertical for the crypto exchange.

Grewal emphasized the significance of the initiative, calling it a “huge priority.”

Tokenized equities involve converting traditional shares into digital tokens that represent ownership, allowing them to be traded similarly to cryptocurrencies. Supporters of the concept say it could lower trading costs, accelerate settlement times, and allow for 24/7 trading.

However, critics warn that several hurdles remain. A World Economic Forum report published last month cited two key barriers to broader adoption: the lack of secondary-market liquidity and the absence of unified global standards.

As of now, tokenized equities cannot be traded within the United States. While several companies are testing the waters, most offerings are limited to overseas markets. For example, Coinbase rival Kraken recently announced the launch of U.S. equity tokens, called xStocks, available in select international jurisdictions.

To offer tokenized stocks domestically, Coinbase would require either a "no-action letter" or exemptive relief from the SEC—effectively a promise from the regulator not to take enforcement action if Coinbase proceeds with the offering.