Key Points

• The SEC’s plan to allow blockchain stock trading permits tokenized stocks on crypto exchanges for faster, 24/7 trading.
• It could lower costs but raises regulation concerns for investors.
• The plan creates opportunities for some trading firms while threatening others.
• It sounds nuts, but SoFi is giving new active invest users up to $1k in stock, see for yourself (Sponsor)

The Securities & Exchange Commission (SEC) is developing a plan to let blockchain-based versions of stocks trade on approved cryptocurrency exchanges. As part of the regulatory body’s crypto push, the plan would allow tokenized shares — digital representations of traditional stocks — to operate like cryptocurrencies, with near-instant settlements instead of the current T+1 day wait.

The proposal could enable 24/7 trading, cut costs because of the blockchain’s efficiency, and open markets to more retail investors through apps. There are risks, of course, including regulatory gaps and potential fragmentation. While it won’t impact most stocks as an investment, there could be some big winners from the scheme, and a couple of losers too. 

Below are two stocks that could gain most from the SEC allowing blockchain stock trading — and one to avoid.

Stock to Buy No. 1: Robinhood Markets (HOOD)

Robinhood Markets(NASDAQ:HOOD) stands to benefit significantly from the SEC’s blockchain plan. The company already offers tokenized U.S. stocks and ETFs to users in Europe through its Robinhood Chain on the Arbitrum network, including names likeNvidia(NASDAQ:NVDA) andApple(NASDAQ:AAPL). 

If approved, this could extend domestically, allowing seamless integration of stocks with crypto on its platform. Robinhood has lobbied aggressively for exemptions, positioning itself to attract more retail traders seeking 24/7 access and low fees. This shift would boost trading volumes, as tokenized assets reduce settlement times and appeal to younger users blending stocks and digital currencies. 

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Recent filings show Robinhood’s crypto revenue surging, and blockchain adoption could diversify its income beyond commissions, driving share value higher amid a pro-crypto regulatory environment. Analysts note its market cap of over $123 billion is larger than more established exchange operators, includingNasdaq(NASDAQ:NDAQ),Intercontinental Exchange(NYSE:ICE), andCME Group(NYSE:CME), reflecting investor confidence in diversified growth. 

However, competition from pure crypto players remains a watch point, but overall, HOOD looks like a strong buy for those betting on tokenized trading’s rise.

Stock to Buy No. 2: Coinbase Global (COIN)

Coinbase Global(NASDAQ:COIN) is another clear winner if the SEC greenlights blockchain stock trading. As the largest U.S. crypto exchange, Coinbase is pushing for quick approval to list tokenized versions of stocks likeNetflix(NASDAQ:NFLX) orTesla(NASDAQ:TSLA) alongsideBitcoin(CRYPTO:BTC). This would merge traditional and digital assets on one platform, drawing in retail and institutional investors with faster, cheaper trades. 

Coinbase has sought SEC exemptions to bypass some legacy rules, arguing tokenized stocks enhance efficiency without added risks. Its wallet and exchange infrastructure is ready for integration, potentially increasing fee revenue from higher volumes. 

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The SEC recently dropping its lawsuits against Coinbase signal a friendlier stance, and with Bitcoin’s rally boosting sentiment, COIN shares have climbed. The plan aligns with Coinbase’s lobbying efforts, pitting it against Wall Street but favoring its tech edge. 

While volatility in crypto markets persists, the blockchain push could solidify Coinbase as a hybrid finance leader, making COIN a buy for long-term growth in tokenized equities.

Stock to Sell: Virtu Financial (VIRT)

Virtu Financial(NASDAQ:VIRT) could face challenges from the SEC’s blockchain initiative. As a high-frequency trading firm and market maker, Virtu relies on traditional exchanges for tight spreads and high volumes, handling a chunk of U.S. retail trades similar toCitadel Securities. 

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Tokenized stocks trading on blockchain platforms might fragment liquidity, bypassing centralized systems like theNYSEand reducing the need for intermediaries. Virtu has historically opposed SEC overhauls that disrupt equities markets, with its CEO criticizing past proposals for potential instability. If blockchain enables direct peer-to-peer trades with instant settlement, Virtu’s execution services could see compressed margins and lower activity. 

While the firm has explored crypto, its core business is tied to legacy infrastructure, and opposition from market makers highlights risks of “regulatory arbitrage.” VIRT’s strong second-quarter results show its resilience, but long-term, this shift favors innovators over incumbents — making VIRT a stock to avoid for now.

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