SEC Exemption Could Benefit Coinbase, Robinhood and Circle

Goldman Sachs and Citizens analysts have identified Coinbase, Robinhood and Circle as companies that could benefit from the U.S. Securities and Exchange Commission’s new five-year “innovation exemption” for trading tokenized U.S. stocks on public blockchains.

Wu Blockchain reported the assessment in a post on X, citing analysis from the two financial institutions. The SEC announced the temporary, conditional framework on Sept. 17, allowing qualifying Tokenized Securities Venues to facilitate trading of tokenized National Market System stocks through permissioned automated market makers and liquidity pools.

The framework is subject to several conditions. Tokenized stocks must provide holders with the same rights and privileges as the equivalent traditional securities, while venues face limits on the number of eligible stocks and trading volume. Companies whose shares are tokenized by unaffiliated third parties must also receive notice and an opportunity to object.

Coinbase Could Benefit Across Multiple Businesses

Goldman Sachs and Citizens pointed to several parts of Coinbase’s business that could potentially benefit from the framework, including custody, tokenization infrastructure, stablecoins and Base, Coinbase’s blockchain network.

Coinbase’s existing tokenized-equity products already contain several features required under the SEC framework, according to the analyst assessment. The company also operates institutional custody services and Coinbase Tokenize, which provides infrastructure for bringing assets onchain.

There is, however, an infrastructure consideration. Coinbase’s exchange uses a central limit order book, while the SEC exemption specifically covers trading venues using automated market makers and liquidity pools. That means Coinbase would need to develop compatible infrastructure or potentially route qualifying activity through AMM-based systems.

The SEC's exemption does not require a particular blockchain. Its conditions state that smart contracts used by a Tokenized Securities Venue must be auditable, public and deployed on a public, permissionless distributed ledger.

Robinhood Faces Shareholder-Rights Requirements

Robinhood could also benefit from the framework, although its existing offshore stock-token products do not currently satisfy all of the SEC’s requirements.

According to the analyst assessment cited by Wu Blockchain, Robinhood would need to add full shareholder rights to its stock-token products to offer a version compatible with the U.S. framework. The SEC requires qualifying tokenized stocks to preserve rights associated with the underlying securities, including voting and dividend rights.

The SEC also gives issuers an opportunity to object before a tokenized version of their stock issued by an unaffiliated third party can be made available for trading. That provision places an additional condition on platforms seeking to expand tokenized-equity offerings.

Circle Could Gain From USDC Settlement Demand

Circle was identified as another potential beneficiary through its USDC stablecoin. Goldman Sachs and Citizens analysts said greater activity in tokenized securities could create additional demand for USDC in settlement and collateral functions.

The potential impact on traditional stock exchanges may be more limited under the initial framework. Trading caps, restrictions on the number of eligible securities, issuer opt-out rights and the structure of AMM-based markets could constrain the amount of activity that moves away from established exchanges.

The SEC’s exemption is set to expire five years after publication. The agency is also seeking public comment on the framework and potential changes, making the five-year period an opportunity to gather information before considering longer-term rules for onchain securities trading.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.