What to know:
- Coinbase plans tokenized stocks backed one-for-one by underlying U.S. equities.
- Brian Armstrong says Coinbase’s model aims to offer ownership, not synthetic exposure.
- Kraken, Robinhood, Gemini, and Bybit are also expanding tokenized equity products.
Coinbase plans to introduce tokenized stocks backed one-for-one by U.S. equities, adding its name to a growing race to move traditional shares onto blockchain networks. The exchange said users will be able to own, trade, hold, and redeem them onchain.
The company announced the plan on Tuesday in a post on X. It also stated that it would pass dividends on to users if applicable. The announcement came before a Coinbase product event scheduled for 3 p.m. ET.
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Coinbase Says Tokenized Stocks Will Differ From IOUs
The planned product will provide actual ownership for Coinbase’s users, according to CEO Brian Armstrong. He said that many of the current market offerings are set up as derivatives or IOUs. Coinbase presented its tokenized stocks as a different model that’s linked to shares.
The product will be a combination of blockchain access and shareholder benefits, said Armstrong. That includes dividend potential, he said. The company didn’t specify the settlement, custody, or redemption terms in detail.
The exchange stated that the offering will be offered initially in the United States. It did not specify the first markets. Coinbase also did not provide a launch date and said the product was coming soon.
Cryptocurrency exchanges and financial institutions have turned their attention to tokenized stocks. The model is a transfer of the traditional securities exposure to blockchain rails. According to supporters, it can decrease settlement delays and costs.
The trading structure can also allow trading outside the normal trading periods. This is one of the primary justifications for blockchain securities products. It could also simplify the path to U.S. equity exposure for some non-U.S. investors.
Crypto Exchanges Expand Tokenized Stocks Products
This year, competition has grown in the tokenized stocks. Kraken recently released tokenized shares of U.S. stocks to its customer base in over 180 countries via xStocks. Robinhood also announced that it will be providing tokenized equities in Europe.
Other crypto companies have followed suit. Similar products have been explored by some of the exchanges, including Gemini and Bybit. Their efforts show rising demand for blockchain access to listed shares.
Traditional finance companies are also scaling up tokenization initiatives. BlackRock, Franklin Templeton, and JPMorgan have introduced or expanded tokens on fund and asset products. Citi has estimated that tokenized securities could be a multitrillion-dollar market by the end of this decade.
Regulation and product are key concerns as Coinbase enters the space. Different markets may have different rules for tokenized stocks. The company’s eligible jurisdictions will dictate the pace of the offering expansion.
With the plan, another big platform has joined the tokenized stocks contest. Coinbase has not announced a start date for trading. Its ultimate launch will reveal how tightly the exchange can tie blockchain products to U.S. equities.
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