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Coinbase Seeks SEC Approval to Launch Tokenized Stock Trading

  • Coinbase is seeking SEC approval to offer tokenized equities, allowing stock trading through blockchain technology.
  • Tokenized equities are digital tokens representing shares in a company, traded similarly to cryptocurrencies.
  • Supporters believe tokenized equities could reduce trading costs and enable 24/7 trading, while critics cite concerns over liquidity and global standards.
  • In the U.S., tokenized equities are not currently traded, but some firms are testing the model internationally.
  • To offer tokenized equities in the U.S., Coinbase would need a 'no action letter' or exemptive relief from the SEC.
  • Coinbase is not registered as a broker-dealer and faced a previous lawsuit from the SEC in 2023 for acting as one without registration.
  • Regulatory uncertainty has slowed institutional interest in blockchain-based financial products, according to Coinbase's Chief Legal Officer.
  • The SEC has not publicly commented on Coinbase's request for offering tokenized equities.
  • If approved, Coinbase's entry into tokenized stock trading could lead to competition with platforms like Robinhood and Charles Schwab.
  • Grewal mentioned that the initiative is a 'huge priority' for Coinbase.
  • Coinbase's aim with tokenized equities is to provide more accessible and innovative trading options for investors.
  • Kraken, another exchange, plans to offer U.S. equity tokens, called xStocks, outside the U.S.
  • The lack of regulatory clarity poses a challenge for the launch timing of tokenized equities and institutional interest in blockchain-based financial products.
  • Coinbase's effort to offer tokenized equities showcases its strategic move towards expanding its business offerings.
  • The SEC's decision on Coinbase's request could impact the future landscape of stock trading and blockchain-based financial products.
  • Coinbase aims to leverage blockchain technology to revolutionize stock trading services if granted SEC approval.

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