Coinbase, Circle recover as SEC opens tokenized stock path

Crypto-linked stocks have endured a volatile few days after the Senate failed to advance the CLARITY Act on Sept. 15 and the Federal Reserve raised interest rates by 25 basis points a day later.

Following the Senate vote, Coinbase fell 10.1%, Circle dropped 11.5%, Strategy declined 5.4% and Robinhood lost 3.4%. Bitcoin also slid below $76,000 as investors digested the regulatory setback and tighter monetary policy.

But sentiment improved Thursday as the Securities and Exchange Commission unveiled a new pathway that could bring a major feature of crypto markets to traditional finance: blockchain-based trading of U.S. stocks.

Related: LIVE: CLARITY Act fails Senate cloture vote

SEC opens pathway for tokenized U.S. stocks

The SEC on Sept. 17 issued two conditional, five-year exemptions allowing certain blockchain trading venues and liquidity providers to facilitate trading in tokenized representations of U.S. stocks.

Tokenization creates a blockchain-based representation of an asset. Under the SEC framework, eligible stock tokens must carry the same rights as the underlying shares, including dividends and voting rights.

Companies must also receive 30 days' notice and can object to their shares being tokenized.