SEC Framework Paves Way for Tokenized Shares on Public Blockchains
The U.S. Securities and Exchange Commission's (SEC) five-year innovation exemption has created a framework for tokenized shares to trade on public blockchains. Goldman Sachs analysts have identified Coinbase, Robinhood, and Circle as potential early leaders in this space.
Coinbase stands out with its existing infrastructure, including its institutional custody service and Coinbase Tokenize platform. The company's CEO, Brian Armstrong, has announced plans to add voting rights to its tokenized share product, which already offers dividend and shareholder rights tied to the underlying stock.
Rogerio Azevedo of Goldman Sachs noted that Coinbase's infrastructure is well-positioned to benefit from the SEC framework, but there is a technical compliance issue for the company regarding the operation of a direct trading platform. According to analysts at Citizens, Coinbase may need to build new infrastructure or route trades to AMM-based decentralized exchanges on its Base network.
Rogerio Azevedo also highlighted that Robinhood needs to develop a compliant product in the U.S. The company's existing stock tokens outside the U.S. do not grant all the ownership rights of the underlying stock, and it would need to perform additional development to offer a product that complies with the SEC framework.
Circle could benefit from the rise in tokenized security transactions due to increased demand for tokenized cash used in on-chain markets. Goldman Sachs analysts noted that Circle's USDC could be utilized in settlement, collateral, and other market transactions.