Coinbase Warns SEC Issuer Consent Could Block Tokenized Securities Growth

Highlights:

• Coinbase says issuer approval would restrict investor rights and block open trading of tokenized assets.
• SEC is planning an innovation exemption to test tokenization while firms push to bring stocks and bonds on-chain.
• Tokenized securities rules may shape how US regulators split oversight between the SEC and CFTC.

Coinbase has asked the US Securities and Exchange Commission, through a written input, to remove issuer approval requirements for third-party tokenization of public securities. The company stated in its 31 March statement that third-party tokenization keeps the same ownership rights because it does not create a new security. It explained that investors already hold legal rights to transfer securities without needing issuer permission.

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🚨SCOOP: Coinbase Opposes US SEC's Position on Issuer Consent for Third-Party Tokenized Securities🚨

▫️Requiring issuer consent for third‑party tokenization would contradict longstanding federal securities law principles, including Section 4(a)(1), Rule 17Ad‑20, and decades of…

— Rednirav (@CryptoRednirav) April 2, 2026

Coinbase argued that requiring issuer consent would give companies control over how investors trade assets in secondary markets. It said this approach would conflict with Section 4(a)(1), which allows investors to resell securities freely. It also pointed to Rule 17Ad-20, which prevents issuers from restricting how securities move through intermediaries. These laws protect investor ownership rights and support efficient market transfers.

The company added that recording securities on blockchain systems does not change their legal classification under federal law. It explained that regulators treat onchain and offchain records under the same securities framework. Therefore, Coinbase said regulators should not introduce new approval requirements for tokenized formats. It also noted that the Exchange Act authority does not allow regulators to impose new conditions without formal rulemaking.

Coinbase warned that issuer consent would affect market competition across trading platforms. It said large exchanges could use issuer relationships to block decentralized platforms from offering tokenized trading services. It explained that this would limit open access and reduce competition across market infrastructure. In addition, it described a coordination problem, where thousands of issuers would need to approve tokenization at the same time, which would delay adoption.

Coinbase cited Nasdaq’s approval for tokenized trading and the DTCC tokenization pilot as examples that do not require issuer consent. It also noted that unsponsored ADRs allow third parties to represent securities without issuer approval.

SEC Framework and Market Shift Bring Urgency to Digital Asset Trading

The SEC introduced a framework in January that classifies tokenized securities into issuer-sponsored and third-party models. The SEC uses this classification to evaluate compliance rules and risk exposure for each tokenization model. The agency now plans to launch an innovation exemption that allows firms to test tokenized trading without full registration.

Large financial institutions are in the process of building blockchain infrastructure to issue and trade tokenized stocks, bonds, and treasury securities. Nasdaq has developed systems to facilitate token trading in controlled settings. DTCC has launched a pilot program to test blockchain-based settlement processes. Meanwhile, these efforts show that tokenization is already moving into existing financial infrastructure.

Coinbase warned that companies may move tokenization operations to other regions if US rules become restrictive. Moving tokenization offshore would limit the SEC’s ability to monitor transactions and gather market data. It added that excluding third-party models would reduce the effectiveness of the innovation exemption.

Coinbase Highlights Role of Tokenized Securities in the Next Phase of US Crypto Rules

The debate around tokenized securities will shape how US regulators define future financial market structure. Regulators must decide how blockchain-based systems fit within existing securities laws. These decisions will determine how US markets handle trading, settlement, and ownership of tokenized assets. They will also influence how open and competitive these markets remain.

In a related development, Paul Grewal, Chief Legal Officer at Coinbase, recently said in an interview that discussions on stablecoin interest payments have advanced between crypto firms and traditional financial institutions. He stated that both sides are working to finalize terms within the current negotiation window. These talks aim to define how stablecoin products operate within regulated financial systems.

🚨 BULLISH: Coinbase CLO, Paul Grewal says CLARITY Act Progress in the next 48 hours

“I’m very confident we’re going to see progress.”

This is the unlock:

“Deciding which tokens… fall under the SEC… and which are better served by the CFTC.”

“We need to finish the job.”… pic.twitter.com/fT45vjw7ZI

— Mark (@markchadwickx) April 1, 2026

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