SEC Tokenized-Stock Experiment Seen Benefiting Coinbase, Robinhood and Circle
Summary
- A five-year SEC innovation exemption to allow AMM trading of tokenized stocks is moving forward, with Coinbase, Robinhood and Circle identified as potential beneficiaries.
- Goldman Sachs and Citizens said key tailwinds include Coinbase’s custody business, asset tokenization, Base (layer-2), as well as Robinhood’s overseas tokenized-stock business and Robinhood Chain.
- As on-chain securities trading expands, Circle could benefit indirectly from stronger demand for stablecoins such as USDC, while the impact on incumbent exchanges including Nasdaq, NYSE and ICE is likely to remain limited.
Forecast Trend Report by Period
The U.S. Securities and Exchange Commission’s regulatory experiment to allow tokenized stocks to trade on public blockchains has put Coinbase, Robinhood and Circle in the spotlight as potential beneficiaries.
CoinDesk reported on September 20 that the core of the SEC’s proposed five-year “innovation exemption” would allow U.S. stocks to be tokenized and traded through automated market makers, or AMMs. The tokens would need to preserve traditional shareholder rights, including dividends and voting rights. Trading platforms would also face limits on volume and on the number of securities offered.
Goldman Sachs said Coinbase could benefit across multiple business lines. The company’s existing tokenized-stock product already meets many of the SEC’s requirements, including dividend features similar to those of the underlying shares. Chief Executive Officer Brian Armstrong recently said voting functions would be added soon.
Coinbase’s institutional custody business and Coinbase Tokenize, which helps companies tokenize assets, were also cited as potential beneficiaries. Citizens also highlighted Coinbase’s business mix, spanning custody, tokenized assets, stablecoins and Base, its Ethereum-based layer-2 network.
Coinbase would still need additional infrastructure if it wants to operate a trading platform directly. Its exchange currently uses a central limit order book, or CLOB, while the SEC’s proposed framework is built around AMMs. Goldman Sachs said Coinbase could either build a new system or use a Base-based decentralized exchange.
Robinhood was also named as a potential beneficiary. Its tokenized-stock products currently offered overseas are derivatives that track the price of the underlying assets and do not provide the full shareholder rights required by the SEC. To launch the service in the U.S., the company would need to further develop the product structure.
Robinhood Chief Executive Officer Vlad Tenev recently said the company plans to add shareholder functions to tokenized stocks, including stock redemption and voting rights. Citizens said Robinhood could move quickly in the U.S. market, citing growth in its overseas tokenized-stock business and development of the Arbitrum-based Robinhood Chain.
Circle was identified as an indirect beneficiary through stablecoins. Goldman Sachs and Citizens said broader on-chain securities trading could increase demand for tokenized cash used in settlement and collateral, lifting use of USDC as well.
By contrast, the impact on incumbent exchanges such as Nasdaq and Intercontinental Exchange, the parent of the New York Stock Exchange, is likely to remain limited for now. Given trading-volume caps, issuers’ veto rights and the limits of AMMs in large transactions, new platforms are unlikely to take a significant share of volume from traditional exchanges.
