Coinbase unveiled tokenized U.S. stocks at its June 16 System Update event, targeting non-U.S. customers with promises of full shareholder rights, dividends, and 1:1 backing. One crucial piece went unsaid: the legal structure underpinning the product.
Unclear Ownership Path
Galaxy Head of Research Alex Thorn outlined two typical models for tokenized stocks: issuer-sponsored or third-party entities that hold assets and issue blockchain representations. Coinbase did not disclose which it uses. Thorn suspects the company may rely on a third-party wrapper structure similar to xStocks, where an intermediary holds shares and token holders get rights via contractual agreements.
That creates tension with Coinbase's claim of offering "true equity ownership." If a wrapper entity stands between investors and the underlying company, shareholder rights and dividends depend on deals with that intermediary. Thorn said the undisclosed legal structure determines ownership rights, compliance, and investor protections—all still unknown.
xStocks Failure Echoes
The debate comes shortly after xStocks' troubled SpaceX allocation. Binance Wallet, Bybit, and Bitget marketed reserved allocations linked to xStocks, but the transactions unraveled when shares never arrived. According to Thorn, Bybit told customers xStocks could not deliver underlying assets; Kraken and xStocks users reportedly received only partial allocations. These incidents highlight execution risks in the wrapper model.
Regulatory Limbo
Coinbase's move lands amid regulatory uncertainty. The SEC has not finalized its proposed innovation exemption for tokenized securities. Reports indicate officials debate whether relief should apply only to issuer-backed tokens or extend to third-party wrappers. Meanwhile, the CLARITY Act remains pending in the U.S. Senate. Thorn noted the legal framework gap makes compliance paths unclear.
Alongside stock tokens, Coinbase introduced the B20 token standard on Base, an AI-powered investment advisor (registered with SEC and NFA), crypto and stock options trading, RWA and pre-IPO perpetuals, a privacy platform for enterprises, and bitcoin-backed mortgages via Better—21 products and features in total. All share an unresolved anchor: the undisclosed legal structure.
Thorn's bottom line: the future of tokenized assets hinges on how regulators define "ownership." Until the SEC clarifies rules, the true nature of Coinbase's tokenized stocks—and the last line of investor protection—remains a question mark.