Key Takeaways:
- A total of twenty-two companies have declined to accept tokenization of their shares on the pending OKXICE.
- Among the most recent rejecters are Wells Fargo, Arm Holdings and Intuit.
- The SEC has established an innovation exemption that will effectively bar tokenization listings of stocks, which will impose an obstacle to tokenizing stocks.
One of crypto’s most ambitious initiatives to bring traditional stocks onto the blockchain is now under attack from a group of large companies.
In total, OKX and Intercontinental Exchange, the parent of the New York Stock Exchange, intended to have 63 stocks tokenized via their joint venture OKXICE. It has been met with resistance from nearly a third of the proposed issuers now, however.
22 Companies Push Back Against OKXICE Tokenized Stocks
Six additional companies, including Wells Fargo, Arm Holdings and Intuit, have objected to having tokenized versions of their shares listed on OKXICE, according to regulatory documents reviewed by Reuters.
The new complaints bring the total number of companies to 22. Other companies that have refused to join include Microsoft and Alphabet. Sixteen of the companies are listed on Nasdaq, and the other 6 on NYSE. The reasons behind the objections by the individual companies are not identified in the filings.
This is because under the SEC’s new rules, issuer approval essentially constitutes a gatekeeper. Platforms have the right to inform companies of their plan to offer tokenized stock, but they are not allowed to do so if the company objects within the designated time.
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Issuers Now Hold a Direct Veto
The SEC’s September “innovation exemption” was crafted to provide a regulated avenue for tokenization on the National Market System.
The temporary framework should maintain the same rights and privileges that attach to a security, such as dividends and voting rights. Even before 3rd party tokenized shares trade, Tokenized trading venues will afford issuers a formal opportunity to object.
What that protection offers distinguishes the U.S. version from many offshore tokenized-stock products, during which investors can only obtain synthetic exposure however no actual voter rights.
Crypto’s 24/7 Stock Trading Push Hits a Corporate Wall
The tokenization champion has been touted as a means of permitting immediate trading, quicker settlement, and programmable market construction.
The SEC has definitely given a license to experiment. OKXICE is already registered as one of the firms that announced they will be operating under the tokenized securities exemption. Only regulatory approval does not mean that the issuer will be willing to participate.
As far as OKXICE is concerned, 22 objections to a projected universe of 63 stocks are quite a commercial challenge. The platform could still open up for firms that aren’t opposed, though the platform’s sales momentum could be soured if major issuers continue to decline.
The move also underscores a larger conflict within tokenized finance: crypto companies would like to introduce traditional securities onto the blockchain, but issuers are worried about all of the implications behind fragmented liquidity, price discovery and onchain trading in securities markets.
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