In a recent post on the X platform, Jesse Pollak, developer of Coinbase’s Ethereum layer-2 network, Base, hinted that the company is considering making tokenized shares of its stock available to United States users through the Base platform.
Tokenization of COIN Shares
As reported by Pollak in his January 3 post on X, tokenized COIN shares are already accessible to non-US users via protocols such as Backed, a leading tokenized real-world assets (RWA) platform. The availability of these tokenized shares is a significant development in the world of decentralized finance (DeFi), where tokenization has emerged as a key trend.
"COIN on Base is something we are looking into in the new year," Pollak said, adding that "every asset in the world will be on Base."
This statement highlights the potential of tokenization to transform the way assets are represented and traded on blockchain networks. By making COIN shares available on Base, Coinbase aims to provide users with a more efficient and secure way to trade its stock.
Regulatory Clarity Needed
However, before tokenized shares can be made available on Base, Coinbase needs regulatory clarity from US authorities. According to Pollak, the company is currently in an "exploratory phase" as it navigates the complex landscape of US regulations.
"We need regulatory clarity and improvements that embrace on-chain as an open platform to unlock this for everyone," Pollak emphasized.
The importance of regulatory clarity cannot be overstated. Analysts agree that clearer rules are essential for driving adoption of tokenized securities, such as COIN shares.
A $30 Trillion Market Opportunity
Collectively, tokenized RWAs — including tokenized securities — represent a massive market opportunity worth an estimated $30 trillion globally, according to Colin Butler, Polygon’s global head of institutional capital.
This enormous market potential is driving innovation in the DeFi space. As more assets are tokenized and made available on blockchain networks like Base, we can expect to see significant growth in the adoption of these platforms.
Impact of Trump’s Victory
The presidential election results in the United States have already had a significant impact on the crypto market. The victory of Donald Trump has led to increased optimism among investors, with many believing that his administration will be more favorable to the industry.
As reported by Cointelegraph Research, US crypto stocks such as COIN saw massive gains following Trump’s election win. In fact, COIN surged over 20% on November 11, pushing its stock price past $300 for the first time since 2021.
Regulatory Pressure on Coinbase
Coinbase has been facing significant regulatory pressure from the US Securities and Exchange Commission (SEC). The company has been actively fighting the agency in court, which may have contributed to its struggles with staking business regulation.
However, with the incoming Trump administration expected to be more favorable to the cryptocurrency industry, analysts believe that Coinbase’s staking business will face less regulatory pressure. As Michale Miller, an equities researcher at Morningstar, noted in a November research note:
"We see Coinbase as a beneficiary of the election results as the firm has been struggling with regulatory pressure from the SEC, with the firm actively fighting the agency in court."
Moving Away from Regulation by Enforcement
While the US has made significant strides in regulating the crypto industry under President Joe Biden, analysts agree that clearer rules are still needed. The SEC has brought over 100 enforcement actions against cryptocurrency companies for purported violations of securities laws.
As investment bank Citi noted in a December research note shared with Cointelegraph:
"The US has at least begun to try moving away from regulation by enforcement toward a broader framework passed by Congress."
However, legislation in the United States is "lagging other major jurisdictions," according to Citi. This highlights the need for regulatory clarity and more effective frameworks that support the growth of the DeFi industry.
Conclusion
The potential for tokenized shares on Base layer-2 network is a significant development in the world of DeFi. Coinbase’s consideration of making COIN shares available to US users through the Base platform has sparked optimism among investors.
However, regulatory clarity remains a key challenge for the company. As Pollak emphasized, "we need regulatory clarity and improvements that embrace on-chain as an open platform to unlock this for everyone."
The future of tokenization is bright, with analysts predicting significant growth in the adoption of these platforms. By providing users with more efficient and secure ways to trade assets, Base has the potential to transform the way we represent and trade assets on blockchain networks.
Recommendations
- Follow Regulatory Developments: Stay up-to-date with the latest regulatory developments in the US and other major jurisdictions.
- Explore Tokenization Opportunities: Consider tokenizing your own assets or exploring opportunities to invest in tokenized securities.
- Support Regulatory Clarity: Advocate for clearer rules and more effective frameworks that support the growth of the DeFi industry.
By embracing innovation and driving regulatory clarity, we can unlock the full potential of tokenization and create a brighter future for the crypto market.
