Coinbase Seeks SEC Approval for Tokenized Stocks Post Legal Victory

Coinbase, a leading cryptocurrency exchange, is seeking approval from the U.S. Securities and Exchange Commission (SEC) to offer tokenized stocks on the blockchain. These digital assets, known as security tokens, mirror traditional equities but offer faster settlements, enhanced transparency, and broader global access. This move signifies Coinbase's ambition to lead a new era in finance where securities are managed on-chain.

This initiative follows a significant legal victory for Coinbase in February 2025, when the SEC dropped its lawsuit against the company. The lawsuit had alleged that Coinbase operated illegally as an unregistered broker. With this legal obstacle removed, Coinbase has gained momentum and developed a “Blockchain Token Securities Law Framework” to achieve full regulatory compliance. This framework is part of Coinbase's strategy to engage with the SEC’s crypto task force and pave the way for security tokens and Security Token Offerings (STOs).

Coinbase's push for tokenized stocks is not isolated to the U.S. Across the Atlantic, the company is on the verge of securing its MiCA (Markets in Crypto-Assets) license, which could grant it a regulatory passport across the EU. This development is part of Coinbase's broader strategy to expand its services globally. The company has already established a presence in Luxembourg, highlighting the region's balance of innovation and regulatory clarity. Coinbase is also expanding its services with products like Coinbase Business, aimed at small and medium-sized enterprises (SMEs). This includes stablecoin APIs and integrations with platforms like Shopify, enabling dollar-denominated payments and consumer rewards. According to Coinbase CEO Brian Armstrong, stablecoins are among the fastest and most cost-efficient ways to transfer value worldwide.

In addition to its regulatory efforts, Coinbase is pushing the boundaries of innovation with new open-source protocols like X402. This protocol aims to revive the long-abandoned “402 Payment Required” HTTP status code for use in modern web interactions. With X402, users could send micro-payments to bypass paywalls or trigger services without registering. This open-source effort could transform online commerce and API monetization, further solidifying Coinbase's position as a leader in the crypto-fintech space.

If granted approval by the SEC, Coinbase would position itself as a direct competitor to traditional internet brokerages. The ability to offer 24/7 trading through blockchain technology is a significant advantage, allowing investors to trade stocks at any time, regardless of market hours. This feature is particularly appealing in an era where investors demand more flexibility and convenience in their trading activities. However, the tokenization of publicly listed company stocks is not without its challenges. Critics point to issues such as insufficient liquidity in the secondary market and the lack of clear global standards as significant hurdles. These concerns highlight the need for further regulatory clarity and market development before tokenized stocks can become a mainstream trading option.

Currently, tokenized stock services are not permitted in the United States. However, Coinbase's competitor, Kraken, has already begun offering tokenized stocks to non-U.S. customers. This move by Kraken underscores the growing interest in tokenized equities and the potential for this technology to disrupt traditional stock trading. Coinbase's pursuit of SEC approval for tokenized equities represents a bold step towards integrating blockchain technology with traditional stock trading. If successful, this initiative could reshape the financial landscape by offering investors a more flexible and efficient way to trade stocks. However, the path to widespread adoption is fraught with regulatory and market challenges that will need to be addressed.