Coinbase Global Inc (NASDAQ:COIN) is seeking approval from the United States Securities and Exchange Commission (SEC) to offer tokenized stock trading to the crypto exchange's US users.
In an interview with Reuters, Coinbase’s chief legal officer Paul Grewal said that the company wishes to offer “tokenized equities,” equities represented by digital tokens.
Tokenized equities, such as stocks, are currently not available to be traded in the US. It is argued by proponents that tokenized equities can reduce trading costs, accelerate settlements, and support 24/7 trading.
If approved, Coinbase would be able to facilitate stock trading using blockchain technology, positioning itself to compete directly with retail brokerage firms like Robinhood and Charles Schwab.
Securing a “no action letter” from the SEC means Coinbase can move forward with its plan without the threat of enforcement.
"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,” Grewal told Reuters.
One potential hurdle is that Coinbase is not registered as a broker-dealer, a requirement for securities trading. The company was previously sued by the SEC in 2023 for allegedly operating as an unregistered broker-dealer, though the case was dropped earlier this year under the Trump administration.