Coinbase is actively seeking approval from the U.S. Securities and Exchange Commission (SEC) to offer tokenized equities to its users, the company’s Chief Legal Officer Paul Grewal revealed in a recent interview with Reuters.
If approved, this move would enable the crypto exchange to facilitate blockchain-based trading of traditional stock assets.
Such a shift would directly challenge incumbent retail brokerages including Robinhood and Charles Schwab and potentially open up a significant new line of business for Coinbase.
Tokenized equities involve the conversion of traditional company shares into blockchain-based digital tokens.
These tokens can be traded much like cryptocurrencies, allowing investors to hold digital representations of equity ownership instead of conventional shares.
According to Grewal, the project is a “huge priority” for the company.
Advantages and Hurdles of Tokenized Stocks
Proponents argue that tokenizing equities could streamline operations by lowering trading fees, enabling 24/7 trading, and speeding up the settlement process.
However, critics remain skeptical about the practicality of widespread adoption.
A recent report from the World Economic Forum highlighted two major hurdles: limited secondary market liquidity and the absence of consistent global regulatory standards.
Tokenized equities are not currently permitted for trading in the U.S., though several international companies are already experimenting with the model.
Kraken, another major crypto exchange, recently announced the launch of “xStocks” — tokenized versions of U.S. equities that will be accessible in select markets outside the United States.
Navigating Regulatory Channels
For Coinbase to introduce tokenized stock trading in the U.S., it would need to secure either a “no action letter” or some form of exemptive relief from the SEC.
This type of regulatory sign-off would indicate that the SEC does not plan to pursue enforcement action if Coinbase proceeds with the new product.
Such measures are typically necessary when companies want to offer securities trading without registering as a broker-dealer — a status Coinbase currently lacks.
The SEC previously sued Coinbase in 2023 during the Biden administration for allegedly operating as an unregistered broker-dealer.
That case was later dropped under the administration of President Donald Trump.
Grewal explained that a no action letter would allow platforms to move forward with some level of assurance.
“With a no action letter, an issuer of a tokenized equity or a platform that wishes to offer secondary trading in those equities can have some confidence, some comfort, that the SEC has adopted its view of why this product is compliant,” he said.
Grewal declined to confirm whether Coinbase has officially submitted a request to the SEC, nor did he provide a timeline for when the service might launch.
He emphasized that regulatory clarity is essential for broader industry adoption.
“It’s that confidence that has been lacking so far, and I think really held back a lot of the institutional adoption” of blockchain technology, Grewal noted.
As Coinbase continues to push for this regulatory breakthrough, its efforts could significantly reshape the intersection of traditional finance and blockchain infrastructure if approved.