Coinbase, one of the well-known crypto exchanges, is working to obtain approval from the U.S. Securities and Exchange Commission (SEC) to sell tokenized equities to their users.
What Are Tokenized Equities?
Tokenized equities are digital versions of regular company shares. Instead of holding ordinary stock, investors would hold virtual tokens representing company shares.
Coinbase's Position on Approval
Coinbase Chief Legal Officer Paul Grewal informed Reuters that obtaining SEC approval is the company's number one priority. If approved, it would allow Coinbase to move into stock trading, placing it side by side with companies such as Robinhood and Charles Schwab.
Legal Aspects and Future of Equity Trading
Currently, tokenized stocks cannot be traded in the U.S. Coinbase would need a special permission called a ‘no action letter’ from the SEC, meaning the agency won't take legal action if Coinbase proceeds. Coinbase is not currently registered as a broker-dealer, which is typically required for stock trading. In 2023, the SEC sued Coinbase over this issue, but the case was dropped following the new administration. It remains unclear when Coinbase will launch tokenized stock trading or if it has officially applied to the SEC.
Coinbase continues to work on obtaining SEC approval to expand its services in equity trading, which could facilitate broader adoption of blockchain technology in finance.
