Coinbase Seeks US Approval to Launch Tokenized Stocks, Details

Per a report from Reuters, crypto exchange Coinbase is currently seeking approval to offer tokenized stocks on its platform. The trading venue is in talks and awaiting the greenlight from the US Securities and Exchange Commission (SEC).

Coinbase to Expand its Products

According to the report, Coinbase’s Chief Legal Officer, Paul Grewal, stated that Coinbase will provide access to ‘tokenized equities’ by leveraging blockchain technology. Thus, the crypto exchange might expand into a new line of business and become a competitor to Robinhood, Revolut, and similar platforms.

Grewal told Reuters that ‘tokenized equities’ have become a ‘top priority’ for the crypto exchange. This product would allow its users to gain exposure to the US financial markets, but without directly purchasing or going through the requirements to buy the stock.

Instead, users would hold tokenized versions of these assets. Coinbase and other companies in the legacy and crypto industry are keen to offer these products to on-board new users, reduce costs, and provide faster transactions for its users.

The US SEC declined to comment on this potential expansion. However, Reuters noted that currently the US lacks a market for trading ‘tokenized equities.’ Thus, if Coinbase gets the approval it could become the first to offer this product in the country, opening the door for more exchanges to diversify their offerings.

Moreover, the report noted the change in the US SEC and in the Federal Government regarding cryptocurrencies and blockchain technology. In the previous administration, Coinbase, Kraken, Binance.US, and several DeFi protocols were targeted by the regulator for allegedly offering ‘unregistered securities’ in the country.

However, less than a year later and under the Trump administration, the country has changed its approach to a more favorable stance regarding the nascent sector. Coinbase’s CLO claims that the platform has already filed a request to the SEC, but they are still waiting for its approval.

Grewal stated:

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. It’s that confidence that has been lacking so far, and I think really held back a lot of the institutional adoption.

There has been a lot of buzz in the crypto market regarding equities. Earlier this week, Justin Sun, founder of the TRON blockchain, inked a deal to take its native token TRX to the US stock exchange.

The deal, supported by a company linked to Donald Trump, will take form via a merger with an already existing company trading in the US. This is just one of the many deals and potential partnerships looking to take crypto into the US financial markets.

As Nic Carter, General Partner at Castle Island Ventures, stated the narrative currently dominating crypto, and the one more likely to take control of the market in the next year, is simply stocks. Carter stated:

Most of my crypto trading GCs just talk about stocks now. the new meta is literally just stocks.

Cover image from ChatGPT, COINUSD chart from Tradingview