Coinbase Seeks SEC Regulatory Clarity for Tokenized Stocks Service, Competing Head-to-Head with Robinhood

Coinbase's Chief Legal Officer, Paul Grewal, told Reuters on Tuesday that the company is pursuing regulatory clarity to offer tokenized stocks to U.S. customers. If approved, this could put the cryptocurrency exchange on a collision course with brokerages like Robinhood and Charles Schwab by potentially providing blockchain-based trading of traditional stocks. According to The Block on the 17th, Grewal described this initiative as a "huge priority," stating that Coinbase is seeking a no-action letter or exemptive relief from the U.S. Securities and Exchange Commission (SEC). Such a letter would signal that SEC staff would not take enforcement actions if Coinbase proceeds with offering tokenized stocks, which are digital representations of actual stocks. This effort represents Coinbase's latest attempt to expand beyond cryptocurrency assets, seeking new revenue streams and deeper institutional adoption. Last week, Coinbase unveiled an American Express-based credit card and announced partnerships with Shopify and Stripe to advance USDC stablecoin payments. Grewal noted that regulatory uncertainty has been a barrier to widespread adoption of blockchain-based securities trading. Tokenized stocks promise faster settlement, 24/7 trading, and lower costs compared to existing infrastructure, but are currently prohibited for U.S. investors. Coinbase's move comes weeks after competitor Kraken announced xStocks, featuring tokenized versions of over 50 stocks and ETFs, available in Europe, Latin America, Africa, and Asia. The SEC had sued Coinbase for operating without proper registration in 2023, but the lawsuit was withdrawn earlier this year. A company spokesperson told The Block that "Coinbase Global acquired a broker-dealer in 2018, but that affiliate has not engaged in customer activity since the acquisition." Grewal declined to comment on whether Coinbase has formally submitted a request to the SEC or provided a launch timeline. Coinbase attempted to issue a tokenized version of COIN during its 2021 S1 process but failed to reach an agreement with the SEC. A spokesperson stated in March to The Block, "As the first major crypto company to go public, we wanted to see a crypto-native version of our stock" and that they are "considering various options to bring tokenization innovation to traditional financial assets like securities to make them more efficient and accessible."