Coinbase INC is exploring the possibility of tokenizing its own stock, COIN, as part of a broader push to integrate traditional financial assets with blockchain technology. This initiative involves converting shares of COIN into digital tokens on a blockchain, specifically on Coinbase’s Ethereum layer-2 network, Base. The idea is to enable trading of these tokenized shares directly on the Base network, potentially increasing accessibility, enabling fractional ownership, and facilitating global trading.
As of early 2025, Coinbase has been in an exploratory phase, with Base developer Jesse Pollak indicating in January that the company is considering making tokenized COIN shares available to U.S. users on Base. Currently, tokenized versions of COIN are already accessible to non-U.S. users through platforms like Backed, a tokenized real-world assets (RWA) protocol. However, extending this to U.S. users hinges on regulatory clarity, as U.S. securities laws present significant hurdles. Pollak has emphasized the need for “regulatory clarity and improvements that embrace onchain as an open platform” to move forward safely and compliantly.
More recently, in March 2025, reports suggest Coinbase is renewing efforts initially considered in 2020 to tokenize COIN and bring security tokens to the U.S. market. This shift is partly driven by a perceived change in the regulatory environment, including the establishment of a new SEC crypto task force and a more crypto-friendly stance under the incoming Trump administration. Coinbase’s Chief Financial Officer, Alesia Haas, has expressed optimism about these developments, noting that the company originally intended to go public with a security token but faced regulatory barriers at the time.
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The potential benefits of tokenizing COIN include 24/7 trading, improved transaction efficiency, and broader investor access through fractional ownership. However, no concrete plans have been finalized, and the success of this initiative depends heavily on navigating the complex U.S. regulatory landscape. If realized, this could position Coinbase as a leader in merging traditional finance with decentralized systems, potentially influencing other companies to tokenize their assets as well.
The regulatory hurdles Coinbase faces in tokenizing its COIN stock stem primarily from the complex and evolving framework of U.S. securities laws, administered by the Securities and Exchange Commission (SEC), as well as other financial regulations. Tokenizing traditional stocks like COIN involves converting them into digital assets (security tokens) on a blockchain, which introduces unique challenges in ensuring compliance with existing rules designed for conventional financial instruments.
In the U.S., any asset that represents ownership in a company and an expectation of profit—like tokenized COIN—would likely be classified as a “security” under the Howey Test (a legal standard from a 1946 Supreme Court case). This test determines whether an investment involves (1) an investment of money, (2) in a common enterprise, (3) with an expectation of profits, (4) derived from the efforts of others. Tokenized COIN would meet these criteria, subjecting it to SEC oversight.
Security tokens must comply with registration requirements under the Securities Act of 1933 unless they qualify for an exemption (e.g., Regulation D for private offerings or Regulation A for smaller public offerings). Registering tokens is a costly and time-consuming process involving detailed disclosures about the company, its finances, and risks.
Platforms facilitating the trading of tokenized COIN would need to register as broker-dealers or alternative trading systems (ATS) with the SEC and the Financial Industry Regulatory Authority (FINRA). Coinbase already operates as a registered entity for its traditional exchange, but extending this to a blockchain-based system like Base might require additional approvals or modifications to its existing licenses.
U.S. securities laws impose strict custody requirements to protect investors, typically requiring qualified custodians (like banks or registered broker-dealers) to hold assets. Tokenized assets on a blockchain raise questions about how custody is handled—whether through smart contracts, multisignature wallets, or other mechanisms—and whether these meet SEC standards. Transfer agents, who manage the issuance and transfer of securities, also play a role in traditional markets. Tokenization could automate this via blockchain, but the SEC has not fully clarified how such automation aligns with existing rules.
