Regulatory Tailwinds Push Coinbase to Revive Tokenized Securities Plan
The crypto exchange is taking advantage of an evolving regulatory landscape and recent legal victories to introduce tokenized securities in the U.S. stock market.
Coinbase Revives Tokenized Securities Plan
Coinbase is making another attempt to introduce tokenized securities in the U.S. stock market, revisiting a plan it first proposed in 2020 but was unable to execute due to regulatory hurdles. The renewed effort aligns with changing regulatory dynamics under the Trump administration, coupled with a new SEC crypto task force, which Coinbase sees as an opportunity to advance blockchain-integrated financial products.
Regulatory Roadblocks Halted Initial Plans
Alesia Haas, Coinbase’s Chief Financial Officer, disclosed during the Morgan Stanley TMT Conference that the company had initially aimed to go public using a security token representing its $COIN stock. However, the U.S. Securities and Exchange Commission (SEC) blocked the move, forcing Coinbase to pursue a conventional direct listing in April 2021.
The lack of U.S. exchanges licensed to trade security tokens and additional approval requirements were key obstacles that prevented the company from executing its vision. Haas acknowledged that Coinbase had encountered significant resistance from regulators, stating,
“We ran into brick walls.”
Changing Regulatory Landscape Fuels Renewed Effort
The Trump administration’s pro-crypto stance and recent shifts within the SEC have rekindled Coinbase’s interest in security tokens. The SEC’s formation of a crypto task force in January, under Acting Chair Mark Uyeda, signals a potential shift in regulatory attitudes that could open the door for blockchain-based financial instruments. Security tokens, which function similarly to traditional stocks and bonds but operate on blockchain networks, offer advantages such as enhanced transparency, faster transactions, and broader accessibility.
Expressing Coinbase’s optimism about renewed regulatory engagement, Haas claimed,
“I now believe that our U.S. regulators are looking for product innovation and looking to move forward.”
Legal Victory Clears the Path
Coinbase’s push for security tokens follows its recent legal victory against the SEC. The regulatory body had accused Coinbase of operating as an unregistered exchange, broker, and clearing agency. However, the SEC ultimately requested to dismiss the case with prejudice, meaning it cannot be refiled.
CEO Brian Armstrong emphasized the significance of the ruling, stating,
“We fully won that case. It was dismissed with prejudice. We did not pay a single dollar in settlement. We did not change a single aspect of our business.”
The company has developed a regulatory framework for blockchain-based securities to navigate legal complexities and encourage adoption. As Armstrong prepares to attend Trump’s upcoming White House crypto summit, Coinbase aims to advocate for a regulatory environment that accommodates tokenized securities and other on-chain financial assets.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
