Coinbase seeks SEC green light for tokenized equities trading

Cryptocurrency exchange Coinbase is aiming to launch tokenized stock trading through blockchain, pending regulatory clearance from the SEC.

Coinbase tokenized equities approval could reshape U.S. stock trading

Coinbase is reportedly seeking Coinbase tokenized equities approval from the U.S. Securities and Exchange Commission (SEC) in a bid to launch stock trading via blockchain. According to Reuters, Coinbase’s Chief Legal Officer Paul Grewal called the plan a “huge priority.” He said the company is actively working with regulators to obtain a “no-action letter” that would allow the initiative to proceed without legal enforcement.

Tokenized equities represent shares of traditional companies in digital token form. These tokens offer many benefits, including reduced trading fees, faster settlements, and 24/7 trading availability. If approved, Coinbase would directly compete with platforms like Robinhood and Charles Schwab.

Regulatory background and political shift

Tokenized equities are currently not permitted for trading in the U.S., although they are being tested in international markets. Rival exchange Kraken recently announced a similar offering—called xStocks—for select non-U.S. markets. Unlike Coinbase, Kraken is rolling out its offering without needing SEC clearance for domestic trading.

The request for Coinbase’s tokenized equities approval comes amid shifting U.S. crypto regulations under President Trump’s administration. The SEC has dropped previous lawsuits, including one filed in 2023 against Coinbase for operating as an unregistered broker-dealer. This political change has led to renewed optimism in the digital asset space.

Paul Grewal emphasized that a no-action letter from the SEC would show the agency does not plan to file enforcement action. This would provide much-needed confidence for both institutional and retail participants.

Grewal said, “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.”

Technical details and compliance challenges

To move forward with Coinbase tokenized equities approval, the exchange would need to address complex regulatory and compliance requirements. Currently, only registered broker-dealers can legally trade securities in the U.S. Coinbase is not registered in that capacity, meaning SEC approval or exemptive relief is required to proceed.

Tokenizing equities involves converting stock shares into blockchain-based digital assets. While this approach has major advantages in efficiency and programmability, critics point to challenges such as limited secondary-market liquidity and a lack of global standards for these new financial instruments.

The World Economic Forum recently highlighted that overcoming these gaps will be crucial for mainstream adoption of tokenized equity markets.

Broader implications for the crypto and financial sector

If Coinbase’s tokenized equities approval is granted, it could open a new business vertical for the exchange and boost blockchain’s role in traditional finance. The company is already expanding globally, with pending approval under the EU’s MiCA regulations and a recent addition to the S&P 500 index.

This latest move would mark a major step toward integrating crypto infrastructure with mainstream stock trading. As U.S. policies become more favorable under the current administration, Coinbase and similar firms are likely to push aggressively into regulated equity markets.

The push for Coinbase tokenized equities approval could open the way for broader institutional adoption of blockchain. This shift offers greater efficiency and transparency across financial markets.