coindesk.com
The SEC's new framework for tokenized stock trading looked, at first glance, roughly a month ago, like a fast track to putting U.S. equities on crypto rails.
The first real-world test hasn't looked particularly encouraging so far.
A growing group of public companies has objected to having their shares traded on the tokenized-securities venue being built by OKX and Intercontinental Exchange (ICE), the owner of the New York Stock Exchange.
This week’s of objections included some of the biggest names yet: Microsoft (MSFT), Alphabet (GOOG, GOOGL), Goldman Sachs (GS) McDonalds (MCD) and three others on Monday, then Wells Fargo (WFC) and Cisco (CSCO) and four more firms on Friday rejected having tokenized versions of their shares traded on OKXICE, bringing the disclosed total now to 22 objecting issuers.
Seeing some of the world's largest companies say no may not exactly be the start that tokenization advocates had hoped for.
But it also isn't necessarily a major blow to the SEC's experiment.
Read more: OKX-ICE co-chair Andrew Cuomo calls corporate objections a ‘natural response’ to tokenized stock plans
Why it matters
Before trading in a company's shares, a venue must notify the issuer and give the issuer 30 days to object. If the company stays silent, trading can begin.
That gives public companies a say in whether unaffiliated third parties tokenize and trade their shares, but it also tilts the decision toward caution.
Global law firm Latham & Watkins has warned issuers that silence effectively becomes an irrevocable decision: the SEC order provides no mechanism to object after the 30-day window or withdraw a prior non-objection once trading begins.
So when a legal or investor-relations team receives notice about a new market structure it may know little about, saying no while it figures things out can be the rational choice.
“Most of these companies had no idea a third party had tokenized their stock until the OKXICE notice went up,” Dave Hendricks, CEO and founder of tokenization firm Vertalo, told CoinDesk.
“Once they do, the questions come fast: who holds the shares behind the token, how do dividends and votes reach those holders, what does the transfer agent see?” he added.
If those questions can't be answered within 30 days, he said, objecting makes sense.
Olivia Vande Woude, head of tokenization at Ava Labs, also cautioned against reading the growing list as a verdict on OKXICE.
“It's the first venue to send notices under the SEC's Innovation Exemption, so it's the first to get the answers,” she said.
