Coinbase CEO Brian Armstrong said the company’s tokenized stocks are designed to be backed one-for-one by actual securities, arguing that onchain equity products should not rely on synthetic exposure or debt structures. He described Coinbase’s approach as a model built around real shares, redemption rights and economic benefits tied to the underlying stock.

The products are aimed at non-U.S. investors seeking exposure to U.S. equities. Coinbase said the tokens are issued through an offshore structure, are not registered under the U.S. Securities Act, and are not available to U.S. persons.

Armstrong outlines the structure

According to Armstrong, Coinbase’s stock tokens represent real securities rather than synthetic instruments. He said the model is based on fully backed shares, the ability for verified holders to request redemption, and treatment intended to connect token holders to the underlying equity.

He also said dividend proceeds are integrated into the product, while voting rights are expected to be added later. In his description, the tokens are meant to give global investors and institutions access to the U.S. stock market through an onchain format.

How the backing works

Coinbase said the tokens represent beneficial interests in shares. Under the structure described by the company, authorized participants first purchase the corresponding equities before those shares are placed into custody, and each token is presented as a direct claim on a real share.

The issuer is Coinbase Onchain SPV Ltd., an offshore special-purpose company. Alpaca Securities serves as broker and custodian, while the underlying shares are held in trust for eligible token holders. Redemption is available only if holders satisfy the applicable compliance requirements.

Dividends, fees and investor rights

Cash dividends are generally not distributed directly. Instead, Coinbase said those proceeds are typically reinvested after taxes and fees, meaning the amount put back into the position can be reduced by those deductions.

The company also said voting rights may eventually be available indirectly through the issuer. For now, Armstrong’s comments framed dividend participation and planned governance features as part of the broader case for using fully backed tokenized equities instead of synthetic alternatives.

Availability and next steps

Coinbase’s tokenized stocks are being offered offshore under Regulation S, which excludes U.S. persons. The securities are not registered under the U.S. Securities Act, leaving U.S. investors outside the product’s current scope.

American customers can still access conventional stocks and ETFs through Coinbase Capital Markets. Coinbase has also expanded the lineup of tokenized equities to include additional companies, while trading activity in these products has reportedly grown, including notable volume on decentralized exchanges.

Source: crypto.news