If the move is granted, it could allow the company to offer stock trading via blockchain technology, competing with retail brokerages and opening a new business segment. Coinbase representatives categorise the initiative as a significant priority for the company. SEC did not give any additional comments on the announcement, and it is unknown if Coinbase had already submitted an official request, or when a proposal launch might happen.
The concept represents a process in which shares from a company are tokenised, similar to crypto trading. However, instead of holding the securities directly, investors hold tokens that represent ownership of the securities.
Advocates of the idea said that tokenised equities could reduce costs, enabling faster settlement times and facilitating 24/7 trading. Critics, on the other hand, say that the concept has gaps that need to be addressed. The World Economic Forum mentioned in a report that enough secondary-market liquidity and a clear global standard are needed for the adoption of tokenised equities.
At the moment, tokenised equities are not a viable trading option in the US, even though several firms are experimenting with the idea, including rival companies. For example, crypto exchange Kraken announced the launch of xStocks in partnership with Backed and the Solana Foundation. xStocks are tokens of US equities which will be available in specific markets outside the US.
To offer this new service, Coinbase would need to be granted a no-action letter, or exemptive relief from the SEC, which means that the regulator would pledge not to pursue an enforcement action if Coinbase moved forward with the plan. In the majority of cases, companies that deliver trading in securities have to be registered as broker-dealers. Coinbase is not registered as such, and the regulator sued the company in 2023 due to it allegedly operating as one without the proper registration. The SEC dropped that case this year, under President Donald Trump's administration.
The idea comes as Trump seeks to overhaul Us crypto policies after courting cash from the industry on the campaign trail. The US President appointed industry-friendly regulators and hosted industry players at the White House. Cryptocurrencies have reacted favourably, with bitcoin reaching new all-time highs this year.
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