Coinbase Global Inc (NASDAQ: COIN) plans to launch tokenized versions of U.S. stocks backed by actual shares, marking the latest push to bring traditional equities onto blockchain networks.
In a brief social media post on Tuesday, Coinbase said it will introduce what it described as the first tokenized stocks backed on a one-to-one basis by underlying shares. Users will be able to buy, trade and hold the digital assets onchain while receiving dividend payments tied to the underlying securities.
The cryptocurrency exchange said investors will own tokenized shares of U.S. companies that can be traded, redeemed and held through blockchain-based infrastructure. Additionally, Coinbase stated the offering will not rely on derivatives or IOUs, which are commonly used in some existing tokenized equity products.
The company provided few details about the initiative and said it would release additional information later Tuesday.
Coinbase’s announcement arrives as regulators and lawmakers in the United States continue examining how tokenized stock trading should operate. Meanwhile, several cryptocurrency exchanges and trading platforms are racing to expand their presence in the emerging sector.
Earlier this year, Robinhood Markets Inc. (NASDAQ: HOOD) launched an initiative on the Arbitrum blockchain that offers access to hundreds of tokenized U.S. stocks and exchange-traded funds. Furthermore, cryptocurrency exchanges Kraken, Binance and OKX, along with decentralized trading platforms Hyperliquid and Lighter, are exploring similar products.
Many existing offerings provide exposure to stock price movements without guaranteeing that actual shares back the digital tokens. However, Coinbase’s proposed structure would tie each token directly to a corresponding share held in reserve.
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Blockchain is a digital ledger that records ownership and transactions
One of the sector’s main attractions is the possibility of around-the-clock trading. Consequently, investors could buy and sell stock-linked assets outside traditional market hours.
Earlier this month, Backpack Exchange launched Backpack Securities, a platform designed to combine conventional securities trading with tokenized stock investing.
Tokenization refers to the process of creating a digital version of a real-world asset on a blockchain. Those assets can include stocks, bonds, real estate, commodities or investment funds. The blockchain acts as a digital ledger that records ownership and transactions. Supporters argue tokenization can make financial markets more efficient by reducing paperwork, lowering costs and allowing assets to move between investors more quickly. Additionally, tokenized assets can be divided into smaller pieces, making expensive investments more accessible to a broader range of investors.
Larry Fink, the chief executive officer of BlackRock, has come out in favour of tokenization. He argues that tokenization should reshape financial markets, indicating that “the next generation for markets, the next generation for securities, will be tokenization of securities.”
For stock markets, tokenization creates a digital token that represents ownership of a share or interest in a company. Rather than trading solely through traditional brokerage systems, investors can buy, sell and hold blockchain-based versions of stocks. Consequently, tokenized shares could allow faster settlement and extended trading hours while maintaining exposure to the underlying company. Coinbase, Robinhood and several other firms are pursuing tokenized equity products as regulators consider how the market should operate.
