Coinbase is pressuring the SEC to potentially change the balance in the Cryptocurrency world!

US-based cryptocurrency exchange Coinbase is attempting to obtain official approval from the US Securities and Exchange Commission to offer blockchain-based stock trading.

Speaking to Reuters, Coinbase's chief legal officer, Paul Grewal, confirmed that the company had applied to the SEC to offer "tokenized shares" to its customers.

This step could cause Coinbase to compete directly with retail investment platforms like Robinhood and Charles Schwab. It could also open the doors to a completely new line of business for the company.

Tokenized stocks are created by converting traditional company shares into digital tokens. Investors don't own the stock directly, but the tokens that represent those shares. Proponents suggest that this model can reduce transaction costs, allow transactions to be executed instantly, and enable 24/7 trading.

However, critics point out that there are significant issues that need to be resolved for the widespread adoption of such digital assets. The World Economic Forum highlighted obstacles such as the lack of sufficient liquidity in secondary markets and the absence of global standards in a report published last month.

In the US, tokenized stocks are currently not legally open for trade. However, some crypto companies have started experimenting in this area. The competing exchange Kraken announced last month the token versions of US stocks called "xStocks," which will be offered in certain countries.

In order for Coinbase to provide this service in the US, it either needs to obtain a "no-action letter" from the SEC or obtain certain exemptions. Such letters provide assurance that the SEC will not impose sanctions against a specific application.

Coinbase is currently not registered as a securities broker. The SEC filed a lawsuit against the company in 2023 on the grounds of unlicensed securities trading. However, under the Trump administration, this lawsuit was dropped this year.

*It is not an investment advice.

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