Coinbase Sets Sights on Tokenized Equities
Coinbase is expanding its ambition. The crypto exchange now wants to trade tokenized equities on its platform.
This major step requires approval from the U.S. Securities and Exchange Commission (SEC). If granted, it would reshape how equities are traded.
According to Paul Grewal, Coinbase‘s chief legal officer, the initiative is a “huge priority” for the company.
The move could position Coinbase to compete directly with retail brokers like Robinhood and Charles Schwab.
What Are Tokenized Equities?
Tokenized equities are traditional stocks converted into digital tokens. These tokens function similarly to cryptocurrencies.
Rather than owning the stock outright, investors hold digital representations of the shares via blockchain technology.
Coinbase believes tokenized equities could cut trading costs and speed up settlement.
They also allow round-the-clock trading, which traditional stock markets can’t support.
Coinbase Could Disrupt Traditional Brokerages
If Coinbase receives the SEC’s blessing, it could challenge existing brokers head-on.
With tokenized equities, Coinbase users could gain access to a seamless mix of crypto and equity trading.
This would appeal to younger investors seeking digital-native solutions.
Moreover, Coinbase could create new revenue streams, diversifying its business beyond crypto trading.
Regulatory Hurdles Still Exist
Despite the potential, offering tokenized equities in the U.S. remains legally complex.
Coinbase is not currently registered as a broker-dealer — a key requirement for trading securities.
To proceed, Coinbase would need either exemptive relief or a “no action letter” from the SEC.
This letter would assure Coinbase that it won’t face enforcement if it moves forward with the offering.
Industry and Regulatory Momentum Is Shifting
The regulatory tone toward Coinbase has softened recently.
In 2023, the SEC sued Coinbase for allegedly operating as an unregistered broker-dealer.
That case, filed under the Biden administration, has since been dropped under President Trump’s SEC.
This shift could signal a more crypto-friendly regulatory environment moving forward.
Tokenized Equities Still Face Challenges
While Coinbase pushes forward, experts warn of obstacles.
A recent World Economic Forum report highlighted liquidity and the lack of global standards as key concerns.
Without enough trading volume, tokenized equities might struggle to gain serious traction.
Nonetheless, several firms like Kraken are already experimenting in non-U.S. markets with tokenized stocks.
The Future of Coinbase and Equities Trading
If successful, Coinbase could redefine equity markets for a digital generation.
Its vision combines blockchain efficiency with mainstream stock investing — a potential industry game changer.
However, success hinges on regulatory approval and widespread adoption of tokenized assets.
For now, all eyes are on the SEC and how it responds to Coinbase‘s bold request.