Coinbase, the giant in the U.S. cryptocurrency industry, has just announced plans to relaunch its security tokenization project, an ambition that was blocked by the SEC four years ago. Amid the Donald Trump administration paving the way for crypto-friendly policies, this move not only marks Coinbase’s return but also promises to spark a wave of innovation in the U.S. financial market.
Ambition To Tokenize Securities Resurfaces After Four-Year Hiatus
Coinbase, a leading U.S. cryptocurrency exchange, is reigniting its ambitions to bring tokenized securities to the U.S. market—a plan previously thwarted by the U.S. Securities and Exchange Commission (SEC) in 2020. This move comes as the Donald Trump administration shows a more open stance towards cryptocurrencies, especially following a series of personnel changes at the SEC.
According to multiple sources, Coinbase has harbored this intention for a long time, even preparing to issue a tokenized version of COIN stock when the company went public 4 years ago. However, the SEC under former Chairman Gary Gensler rejected this plan, forcing Coinbase to follow traditional IPO procedures.
Building A Legal Framework For Blockchain Securities
Beyond just tokenizing its own stock, Coinbase is also working to build a comprehensive legal framework for blockchain securities. This framework aims to help developers and users comply with regulations related to digital securities.
Additionally, the exchange is implementing a digital asset monitoring program to comprehensively assess crypto projects before listing them for trading. This can be seen as a strategic move to build trust with regulators and investors regarding the transparency of the future tokenized securities market.
In a recent report, Coinbase highlighted the potential of tokenized securities to reduce costs, increase transparency, and expand access to the securities market for more investors.
Reversed Policy Landscape
One of the key factors driving Coinbase to revive this plan is the significant change in the regulatory environment. Under former Chairman Gary Gensler, the SEC accused Coinbase of operating as an unregistered exchange, broker, and clearing agency, while also launching numerous lawsuits against crypto companies.
However, the current landscape is completely different. The SEC has decided to drop a series of lawsuits targeting the cryptocurrency industry, including the legal dispute with Coinbase. Nevertheless, the exchange still demands that the SEC disclose the costs associated with previous crypto lawsuits to enhance transparency in the agency’s operations.
Mark Uyeda, the current Acting Chairman of the SEC, established a crypto task force in late January. This move is seen as a sign that the SEC is moving towards a more open regulatory environment for blockchain technology and cryptocurrencies.
Prospects For The Tokenized Securities Market in the U.S.
According to experts, if Coinbase succeeds in implementing tokenized securities, it could create a new wave in the U.S. financial market. Tokenized securities combine the characteristics of both traditional securities and digital assets, offering benefits such as 24/7 trading, fast settlement, and lower costs.
In Europe and many other regions around the world, tokenized securities have begun to be implemented. Major banks like UBS and Deutsche Bank have also entered this field with numerous pilot projects.
In fact, tokenizing securities is not just about converting traditional stocks into token form. It also opens up the possibility of fractionalizing assets, allowing more investors to access high-value stocks.
Remaining Challenges
Despite positive signals from the regulatory environment, Coinbase still faces many challenges. One of the biggest issues is ensuring that tokenized securities fully comply with existing traditional securities regulations while still leveraging the advantages of blockchain technology.
Additionally, issues related to security, privacy, and interoperability between different blockchain platforms need to be addressed before tokenized securities can be widely implemented.
Potential Impact on the Financial Market
If Coinbase succeeds in tokenizing securities, it could usher in a new era for the U.S. financial market. Blockchain technology has the potential to significantly reduce clearing and settlement times, which currently take up to T+2 (two business days after a trade).
Moreover, the adoption of blockchain technology in securities trading can reduce transaction costs, increase transparency, and expand market access.
In the context of a new administration showing a more friendly stance towards cryptocurrencies, Coinbase’s securities tokenization plan seems to have a great chance of success. However, all progress will still depend on the final regulatory framework that the SEC will apply to this asset class. To stay updated on the latest developments in this journey, follow MevXBot website that provides reliable news sources about the crypto market.