Coinbase is looking for a green light from Securities and Exchange Commission to offer “tokenized actions” to its customers, said the legal director of Crypto Exchange in an interview with Reuters.
The concept is “a huge priority,” said Paul Grewal, the legal director of Coinbase.
Tokenizing Actions is a process in which the actions of a company are converted to a digital token, similar to the way in which cryptocurrencies are exchanged. Instead of directly holding the titles, investors have tokens that represent the property of the titles.
Supporters said tokenized actions could reduce negotiation costs, allow faster regulations and facilitate trade 24 hours a day.
Critics said there were many shortcomings that must be committed before token actions could generally be negotiated. The World Economic Forum in a report last month underlined a sufficient lack of liquidity in the secondary market as well as the lack of clear global standard as two major challenges for adoption.
A second representative did not immediately respond to a request for comments.
Currently, tokenized actions are not available for trade in the United States, but several companies are experiencing the concept. Rival Crypto Exchange Kraken said last month that it launched American actions, called XSTOCKS, which will be available in certain markets outside the United States
In order to offer tokenized actions in the United States, Coinbase should either benefit from a so-called “letter of action” or exempting repair of the SEC, in which the securities regulator undertakes not to continue an action in application if Coinbase progressed.
As a rule, companies that offer securities exchanges must be registered as brokers. Coinbase is not registered as a broker, and the SEC continued the company in 2023 during the Biden administration, alleging that it worked as one without registering with the agency. The dry under the administration of President Trump abandoned this case this year.
An action without action would be published by the SEC personnel in response to a request from a company like Coinbase, claiming that the SEC would not oppose a certain offer and would not recommend an application action if a company should go ahead with this offer.
Grewal did not say if Coinbase had already submitted an official request to the dry or when a potential product launch could occur.
“With a letter of action without action, a transmitter of a tokenized equity or a platform which wishes to offer a secondary exchange in these actions can have some confidence, a certain comfort, that the dry has adopted its vision of the reason why this product is in conformity,” said Grewal.
“It is this confidence that has been lacking so far, and I think that I have really retained a large part of the institutional adoption” of cryptographic and blockchain technology, added.
If granted, this decision would allow Coinbase to effectively offer trading of actions via blockchain technology, by placing it in direct competition with brokerage houses such as Robinhood and Charles Schwab and could open a new corporate segment for Coinbase.
Coinbase move comes as Trump sought to revise the American cryptocurrency policy after having courted the industry species on the campaign track. Trump has appointed regulators adapted to industry and welcomed industry leaders to the White House. Cryptocurrencies reacted favorably, Bitcoin reaching new heights of all time this year.
The dry under Trump abandoned the proceedings against a litany of cryptographic societies, notably Coinbase, Binance and Kraken, and instituted a cryptographic working group responsible for designing new rules for digital assets.
