Coinbase Seeks SEC Approval to Offer Blockchain-Based Stock Trading

In a bold expansion of its role as a regulated crypto exchange, Coinbase is seeking formal approval from the U.S. Securities and Exchange Commission (SEC) to launch a blockchain-based stock trading platform. If approved, this could redefine how equities are traded, settled, and owned—moving Wall Street’s traditional stock infrastructure into a decentralized, tokenized future.

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Coinbase’s move underscores a rapidly intensifying trend in financial markets: the convergence of blockchain technology and regulated financial securities. The implications are sweeping—from near-instant settlement and lower fees to global 24/7 market access and programmable financial instruments. But it also opens up legal and regulatory challenges that the SEC has only begun to grapple with.

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Why Blockchain-Based Stock Trading?

At its core, blockchain-based stock trading replaces centralized clearinghouses, intermediaries, and outdated T+2 settlement cycles with on-chain, real-time asset transfers. These tokenized assets—digital representations of real-world stocks—can be traded like cryptocurrencies but backed by real equity.

Coinbase’s strategy is rooted in building infrastructure that brings these tokenized equities to its crypto-native audience. The company is reportedly proposing a compliant trading environment where users can buy and sell U.S. equities that are represented as digital tokens on a blockchain ledger. These tokens would still represent ownership in real companies and comply with federal securities laws.

The Regulatory Hurdle

The proposal hinges on the SEC’s acceptance of tokenized stocks as securities, which are subject to existing frameworks like the Securities Act of 1933 and Exchange Act of 1934. Coinbase will likely seek registration as an Alternative Trading System (ATS), or even a national securities exchange (NSE), to offer these services legally.

This is a delicate dance. While Coinbase is already embroiled in a legal battle with the SEC over whether certain tokens on its platform constitute unregistered securities, this proposal marks an attempt to work with—not around—regulators.

A Coinbase spokesperson stated, “Tokenization is the next logical step in democratizing access to financial markets. We believe compliant blockchain-based trading can reduce friction and increase transparency for investors.”

Wall Street Meets Web3

If successful, Coinbase’s tokenized equities exchange could challenge incumbents like Nasdaq and the New York Stock Exchange. While traditional exchanges rely on centralized systems and third-party clearing, blockchain allows peer-to-peer settlement with embedded audit trails.

This isn’t just a theoretical advantage. Stock tokenization could:

• Eliminate settlement delays by finalizing trades instantly.
• Reduce counterparty risk by bypassing intermediaries.
• Enable fractional ownership of stocks, opening up investing to more people.
• Provide global, 24/7 trading without relying on country-specific hours or banking systems.
• Enhance transparency through immutable transaction records.

Legacy financial firms are watching closely. BlackRock, Fidelity, and JPMorgan have all launched blockchain initiatives or pilots involving tokenized assets. But Coinbase’s entry as a retail-first, crypto-native platform could shake up the sector with greater consumer penetration.

The Road to Tokenized Equity Markets

Coinbase’s vision aligns with broader movements in the “Real World Assets” (RWA) space, where everything from bonds to real estate and fine art are being tokenized. In particular, tokenized stocks have been explored before—by companies like Mirror Protocol and FTX, both of which ran into regulatory obstacles or collapsed before going mainstream.

However, Coinbase’s robust compliance history and existing licenses make it one of the most credible candidates to revive this vision in a regulated context.

According to Galaxy Research, the tokenized securities market could grow to over $10 trillion by 2030, encompassing equities, ETFs, private shares, and derivatives. Coinbase’s early entry into this market could position it as a leader in the next phase of blockchain-financed capital markets.

Legal, Technical, and UX Challenges

Coinbase will have to address several challenges before such a platform can go live:

1. Custody and Compliance: Stock tokens will need to be backed by real shares held in licensed custodial entities.
2. KYC/AML Enforcement: Blockchain doesn’t inherently track identities. Ensuring investor eligibility will require strict KYC/AML integrations.
3. Liquidity and Pricing: Ensuring price accuracy and trade execution across decentralized infrastructure is still a work in progress.
4. User Experience: Traditional investors may need simplified interfaces and onboarding to access tokenized equities without navigating crypto complexities.

Yet none of these hurdles appear insurmountable given Coinbase’s resources and track record.

The “Genesis Act” and Broader U.S. Policy Tailwinds

This development also dovetails with recent legislative momentum in Washington. The much-discussed “Genesis Act” (hypothetical legislation) proposes clearer legal pathways for tokenized securities, potentially accelerating innovation by offering firms like Coinbase a defined compliance framework.

Policy shifts are increasingly moving from enforcement to accommodation. Lawmakers on both sides of the aisle recognize the competitive risk of losing tokenization innovation to offshore jurisdictions like Singapore, Switzerland, or Dubai.

If Coinbase’s proposal is approved, it could signal a policy tipping point—legitimizing blockchain as not just a speculative tech but a foundational layer for global financial infrastructure.

Conclusion: Wall Street’s Future May Be On-Chain

Coinbase’s request to the SEC is more than a new product proposal—it’s a test of whether the U.S. is ready to lead the next era of financial market modernization.

A blockchain-based stock market, built on tokenized equities and open architecture, has the potential to reduce costs, improve access, and unlock new economic models globally.

Whether Coinbase gets the green light or not, one thing is clear: the future of equities trading won’t be built on paper or clearinghouses—it will be built on code.

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