Coinbase Seeks SEC Approval to Offer Tokenized Stock Trading

WASHINGTON, DC — U.S. cryptocurrency exchange Coinbase is reported to be seeking regulatory authorization from the Securities and Exchange Commission (SEC) to offer users trading in tokenized equities.

According to a report published by Reuters on April 16, Coinbase Chief Legal Officer Paul Grewal stated that offering “tokenized equities” is a “huge priority” for the company and could position it to compete with established trading platforms like Robinhood in this emerging asset class.

Regulatory Landscape

While tokenized representations of traditional stocks are unavailable for trading directly on U.S. exchanges as of June 2024, U.S.-based crypto firms have successfully offered similar services tailored to non-resident clients through strategic partnerships.

This trend was exemplified in May 2024 when competitor Kraken announced its plan to launch tokenized U.S. stock trading services.

Recent Regulatory Shift

The push follows a reported shift in the political, legal, and regulatory climate since the Trump administration took office in January 2021. This is evidenced by the SEC’s decision in February 2024 to drop an enforcement action previously filed against Coinbase.

Approval from the SEC, should it be granted, would likely take the form of a “no-action letter,” signaling the Commission’s non-enforcement stance regarding Coinbase’s proposed offerings.

Related: W.idea-Fairmint calls for blockchain framework for private markets in SEC proposal (Reuters, April 16, 2024)

European Expansion

The announcement occurs alongside Coinbase’s ongoing efforts to secure licensure and operate throughout the European Union under its Markets in Crypto-Assets (MiCA) regulations.

Though the main focus here remains the pursuit of U.S. equities tokenization, the request highlights Coinbase’s strategic expansion into regulated traditional finance offerings.