Coinbase Pursues SEC Approval for Tokenized Stock Trading: A Game-Changer for Retail Investors?

Coinbase, the largest U.S. crypto exchange, is seeking regulatory approval from the Securities and Exchange Commission (SEC) to offer tokenized equities, a move that could position it to compete with Robinhood and Charles Schwab. The concept of tokenized equities involves taking a traditional share of a company and converting it into digital tokens that are traded on the blockchain. According to Coinbase's Chief Legal Officer, Paul Grewal, in a Reuters interview, this is a "huge priority" for the company. Advocates argue that tokenized equities would reduce brokerage fees, speed up settlements, and enable individuals to trade 24/7. However, there are obstacles to overcome as tokenized equities cannot currently be traded in the United States. To proceed in a U.S. environment, Coinbase would require a "no-action letter" or "exemptive relief" from the SEC, essentially guaranteeing that the company would not be subject to enforcement action if it pursued these types of transactions. While Grewal would not confirm whether Coinbase had submitted a formal request, he noted that institutions have been hesitant due to the lack of guidance currently available. Coinbase currently holds a broker-dealer license from a company it acquired in 2018, but that entity is no longer active. The request comes against the backdrop of a broader shift in U.S. crypto policy under President Donald Trump, under whose tenure the SEC has abandoned its legal cases against key exchanges. If granted, this could create a new and massive source of revenue for Coinbase, entirely redefining retail investing. At press time, Coinbase's stock is trading at $250.02, down over 4.55% in the last 24 hours.