Coinbase Targets Tokenized Equities for U.S. Market

Leading crypto exchange Coinbase is seeking approval from the U.S. Securities and Exchange Commission (SEC) to offer tokenized equities, according to chief legal officer Paul Grewal. If approved, this would allow Coinbase to offer stock trading using blockchain, placing it in direct competition with firms like Robinhood and Charles Schwab.

Tokenized equities are digital representations of company shares. Instead of owning physical stock, investors hold blockchain-based tokens representing ownership, with the potential to reduce costs, enable faster settlement, and allow 24/7 trading.

Regulatory Hurdles and Legal Uncertainty

Currently, tokenized equities are not legal for trade within the U.S. For Coinbase to move forward, it would need a “no action letter” or regulatory exemption from the SEC—effectively a statement that the agency will not pursue enforcement if the company proceeds.

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Coinbase is not registered as a broker-dealer, a requirement for traditional securities trading. In 2023, the SEC sued Coinbase for operating without registration, but the lawsuit was dropped in 2025 under President Trump’s administration, which has taken a more crypto-friendly stance.

Market Interest Growing Amid Regulatory Shifts

Competitor Kraken has already introduced xStocks, a tokenized equity product available in non-U.S. markets. The race is on to establish dominance in this emerging segment.

Grewal emphasized:

“What’s been missing is confidence. A no action letter signals that the SEC has acknowledged compliance, giving institutional players the assurance they need to participate.”

With shifting U.S. crypto policy, including SEC lawsuits being dropped and new regulatory initiatives launched under Trump, the momentum for tokenized equities appears to be building rapidly.

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SEC to Dismiss Case Against Coinbase After Approval Process

The U.S. Securities and Exchange Commission (SEC) has decided to end its lawsuit against Coinbase after the approval process. The case, seen as a significant legal battle in the crypto industry, signals a potential reduction in regulatory pressure and marks a major turning point. Coinbase’s Chief Legal Officer, Paul Grewal, declared, “The war against crypto is over,” announcing the company’s legal victory.

Coinbase Global announced its plan to withdraw the lawsuit filed by the SEC, signaling the end of a prolonged legal battle that had posed a threat to the company and the broader sector. This decision marks the final retreat from former SEC Chairman Gary Gensler’s efforts to impose stricter regulations on the crypto industry.

Last week, the SEC requested a temporary pause in its lawsuit against Binance while it awaited the development of a regulatory framework for digital assets. In an interview, Grewal stated, “The war against crypto, at least for Coinbase, is over.”

In 2023, the SEC filed lawsuits against Coinbase, the largest crypto exchange in the U.S., and its competitor Binance.

SEC’s Defeat in the Crypto Market

Additionally, the SEC recently withdrew its appeal in the case challenging the dealer rule, delivering a significant victory for the Blockchain Association (BA) and the Texas Crypto Freedom Alliance (CFAT). This decision ended claims that the SEC had overstepped its regulatory authority, paving the way for a clearer and more supportive regulatory environment for the crypto sector.

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Grewal Challenges SEC’s Stance

Grewal pointed out the SEC’s assertion that it typically provides “detailed notice of the allegations” before suing a company. He contrasted this with Coinbase’s own experience, stating:

“We were not given ‘detailed notice’ of what was considered a security. We weren’t even told which assets were at issue. Why doesn’t the government follow its own ‘typical’ process in our case, and what does that say about [the SEC’s] claims?”

Background: The Debt Box Case and Coinbase’s Ongoing Legal Battle

The SEC filed a lawsuit against Coinbase in June 2023, alleging that the company had sold unregistered securities since 2019. The case is ongoing, and the SEC has recently requested that Coinbase’s appeal be denied.

Grewal’s criticism highlights the ongoing tensions between the SEC and the cryptocurrency industry. The SEC has been taking a stricter stance on crypto regulation, while the industry has called for clearer and more consistent guidelines.

The Debt Box case and Coinbase’s response raise questions about the SEC’s approach to enforcement and due process in the crypto space. The case could have broader implications for other cryptocurrency companies facing regulatory scrutiny.

The post Coinbase Slams SEC’s Methods: ‘No Wells Notice, No Clarity on Assets’ appeared first on Coin Engineer.

Coinbase has requested a mandamus (Mandamus is a legal recourse in the form of an order from a court to any government, lower court, corporation or public authority to perform a certain action that this body is legally required to perform and is of a public nature.) to be issued within 30 days to force the SEC to accept or reject the petition.

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The SEC presented a case update on October 12, giving an ambiguous response to Coinbase’ s petition. However, it did not share details. Coinbase’ s chief legal officer Paul Grewal criticized the SEC and called for a mandamus to force them to explain their intentions.

In his post on X, Grewal claimed “the SEC’s non-illuminating report is nothing more than a bureaucratic pantomime. It also is nothing other than a mandamus will compel the institution to take its obligations seriously”.

Coinbase had requested the SEC to establish clear rules for regulating the crypto market with the rule-making petition it submitted in July 2022. However, due to the SEC’s non-response, Coinbase had applied for a court order.

Also, SEC may respond at the end of October or the beginning of November. These developments increase the uncertainty about the regulation of the crypto market and the determination of rules.

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