Coinbase Seeks SEC Approval to Trade Stocks Based on Blockchain Technology: Reuters

Coinbase, a cryptocurrency exchange listed on Nasdaq, is seeking approval from the U.S. Securities and Exchange Commission (SEC) to offer blockchain-based stocks, referred to as “tokenized equities,” to its users, as reported by Reuters.

If the SEC grants this request, it would enable Coinbase to facilitate equity trading services utilizing blockchain and distributed ledger technology (DLT), positioning the platform as a direct rival to established retail brokerage firms such as Robinhood.

In a Reuters interview on June 17, Coinbase’s Chief Legal Officer Paul Grewal highlighted that tokenized equities are a “huge priority” for both the cryptocurrency exchange and the wider digital asset industry.

Understanding Blockchain-Based Stocks: The Shift to 24/7 Trading

Tokenized equities entail the transformation of traditional ownership interests in companies or assets into digital tokens that are recorded on blockchain networks.

Instead of directly owning conventional securities like corporate shares, real estate, or other valuable assets, investors hold digital tokens that represent ownership rights in these underlying securities.

Tokenized securities combine investment opportunities with blockchain efficiency.
The process of security tokenization allows for fractional ownership of stocks, bonds, and real estate on blockchain—lowering barriers to entry and enhancing settlement efficiency.
Discover how it operates and its… pic.twitter.com/3yXi4QMExJ

— ALLO (@allo_xyz) April 11, 2025

Proponents assert that tokenized equities provide numerous benefits, including lower trading costs due to minimal blockchain transaction fees and faster settlement processes, akin to the advantages associated with stablecoins.

Moreover, since blockchain networks operate continuously, this technology could facilitate round-the-clock trading, in contrast to traditional stock markets that function on set schedules.

Currently, around $25 trillion in securities are eligible for use as collateral from a potential $230 trillion market.

Tokenization has the potential to significantly improve liquidity and capital efficiency across financial markets.

Central banks, government entities, and financial institutions are increasingly observing how decentralized finance interacts with existing financial systems.

SEC Regulation: Challenges Facing Coinbase’s Stock Implementation

Critics have identified significant hurdles that must be addressed before tokenized equities can achieve widespread acceptance.

A report from the World Economic Forum on May 23 highlighted several challenges impeding progress, including outdated infrastructure, fragmented regulatory environments, lack of platform interoperability, and persistent liquidity issues.

From a regulatory standpoint, tokenized equity trading is not currently permitted in the United States, although various companies are experimenting with the concept.

@krakenfx plans to introduce tokenized versions of over 50 U.S. stocks and ETFs for non-U.S. users, enabling 24/7 trading via Solana.#kraken #solana #stockshttps://t.co/j2QJ7K0hLs

— Cryptonews.com (@cryptonews) May 22, 2025

Recently, cryptocurrency exchange Kraken announced its intention to launch U.S. equity tokens branded as xStocks. These tokens will be available in select international markets, excluding the United States.

Legal Pathway for Coinbase’s Stock Trading in the U.S.

For Coinbase to implement blockchain-based stock trading in the United States, the company would need to obtain either a “no-action letter” or exemptive relief from the SEC.

A no-action letter is an official response from SEC staff to corporate inquiries, indicating that the commission would not oppose a specific offering and would refrain from taking enforcement actions if the company proceeded with the proposed service.

Typically, firms engaged in securities trading are required to register as broker-dealers with regulatory bodies.

Currently, Coinbase does not have broker-dealer registration, which resulted in SEC litigation in 2023 under the previous Biden administration.

Breaking! The SEC reportedly informed Coinbase that EVERY crypto except Bitcoin is classified as a security.
This implies that Ethereum is included as well.
Coinbase responded, NO.
The SEC subsequently sued them.
Coinbase is on the right side of history, and they will prevail. pic.twitter.com/IXzwE9js4J

— Lark Davis (@TheCryptoLark) July 31, 2023

The agency claimed that Coinbase was operating as an unregistered broker-dealer. However, the SEC under the Trump administration dropped this case earlier this year.

Grewal did not confirm whether Coinbase has formally submitted a request to the SEC or provide timelines for potential product launches.

Trends in Industry Expansion

Companies focused on cryptocurrency are increasingly investigating opportunities to expand into traditional financial services.

Circle Internet Financial, the entity behind the USDC stablecoin, exemplified this trend with its notable debut on the New York Stock Exchange on June 5, where shares soared over 160% during initial trading.

Following Circle’s successful initial public offering, other cryptocurrency firms have sought opportunities on Wall Street.

$SOL rises 7.9% to $156.53 as @Bybit_Official announces the launch of Solana-based DEX ‘Byreal’ for Q3 2025, combining CEX-grade liquidity with DeFi transparency and MEV protection.#Dex #Bybit #Solhttps://t.co/2S6yvtjJkF

— Cryptonews.com (@cryptonews) June 16, 2025

On June 14, Bybit officially introduced traditional asset trading features, enabling users to trade gold, stocks, foreign exchange, and indices directly through its platform.

Bybit CEO Ben Zhou stated that this expansion allows the cryptocurrency exchange to offer trading in major U.S. stocks, including Apple and MicroStrategy, along with commodities such as gold and crude oil, marking a significant diversification beyond digital assets.

The post Coinbase Pushes SEC for Permission to Trade Blockchain-Based Stocks: Reuters appeared first on Cryptonews.