SEC plan for blockchain-based stocks pits Coinbase and Robinhood against Wall Street giants

Core Viewpoint - The SEC is reportedly advancing a plan to allow companies to offer stock trading on blockchain, which could benefit firms like Coinbase and Robinhood while raising concerns among major financial companies like Citadel Securities [1][2]. Group 1: SEC's Plan and Implications - The SEC's initiative aims to provide exemptive relief for blockchain-based stock trading, meaning some existing stock trading rules may not apply, although the specifics of the exemption remain unclear [2]. - This plan would enable investors to use platforms like Coinbase and Robinhood to purchase tokenized versions of popular stocks, integrating them with traditional cryptocurrencies [2]. Group 2: Current Market Landscape - Tokenized stocks are not entirely new, as Robinhood and Kraken have already been offering them in international markets, particularly in regions like South Africa where they provide access to U.S. equities with lower brokerage fees [3]. - The mechanics of tokenized stock ownership differ from traditional stocks, as they involve a brokerage creating a token on a blockchain that represents a claim on the underlying share [4]. Group 3: Advantages of Tokenization - Proponents argue that tokenizing stocks can lead to faster trade settlements, addressing issues that have caused market disruptions during high trading volumes, as highlighted by Robinhood's CEO during the COVID-era trading surge [5].