Coinbase Seeks SEC Approval to Launch Tokenized Stock Trading
Coinbase is pursuing approval from the U.S. Securities and Exchange Commission (SEC) to offer “tokenized equities” to its customers, according to the crypto exchange’s Chief Legal Officer, Paul Grewal, who spoke to Reuters.
If approved, the initiative would allow Coinbase (NASDAQ: COIN) to provide blockchain-based stock trading, positioning it as a direct competitor to established retail brokerage platforms such as Robinhood (NASDAQ: HOOD) and Charles Schwab (NYSE: SCHW). The move could also open up a significant new revenue stream for Coinbase.
Grewal emphasized that launching tokenized stocks is a top strategic objective for the company.
Tokenized equities involve converting traditional company shares into digital tokens, enabling them to be traded much like cryptocurrencies. These tokens represent ownership in the underlying securities, though investors don’t hold the actual shares.
Supporters argue that tokenizing stocks could streamline trading by cutting costs, accelerating settlement times, and allowing 24/7 market access. However, critics point to major hurdles, including insufficient liquidity in secondary markets and the absence of global regulatory standards. A recent report from the World Economic Forum cited both issues as key obstacles to adoption.
The SEC has not publicly commented on Coinbase’s initiative.
While tokenized equities are not currently available in the U.S., other crypto firms are testing similar products overseas. Rival exchange Kraken, for instance, recently announced plans to roll out U.S. equity tokens called “xStocks” in select international markets.
To legally offer tokenized stocks in the U.S., Coinbase would need to receive either a “no-action letter” or exemptive relief from the SEC—both of which would indicate the agency will not pursue enforcement if the offering proceeds.
Typically, any firm offering securities trading must register as a broker-dealer. The SEC sued Coinbase in 2023 during the Biden administration for allegedly operating without proper registration. However, that case was dropped earlier this year under President Donald Trump.
Coinbase has held a broker-dealer license since acquiring a registered firm in 2018, although the affiliate has not been active.
A no-action letter is a written assurance from SEC staff indicating that the agency will not recommend enforcement against a proposed activity. Grewal didn’t confirm whether Coinbase had formally submitted a request or shared a timeline for a potential product rollout.
He noted, “A no-action letter gives platforms offering tokenized equities a level of certainty and assurance that the SEC agrees with their compliance view. That confidence is what’s been missing—and it has slowed institutional adoption of crypto and blockchain.”
Coinbase’s efforts come amid a broader shift in U.S. crypto policy under President Trump, who has positioned himself as an ally to the industry. His administration has eased enforcement, dismissed lawsuits against Coinbase, Binance, and Kraken, and established a new task force aimed at crafting updated regulations for digital assets.
Bitcoin has responded positively to these developments, hitting record highs this year.
