Cryptocurrency exchange OKX and the Intercontinental Exchange (ICE) will launch the tokenized stock trading platform OKXICE on November 23, despite opposition from 67 listed companies and warnings from industry peers. The platform will operate under the U.S. Securities and Exchange Commission’s (SEC) newly established “Temporary Innovation Exemption” and offer 24/7 stock trading to eligible U.S. clients.
Blue-Chip Companies Oppose New Regulatory Mechanisms
Under SEC rules, trading platforms must give the original companies an opportunity to object before listing third-party tokenized stocks. Sixty-seven companies, including JPMorgan Chase, McDonald’s, SpaceX, and Coca-Cola, have already filed explicit objections. OKXICE’s first batch of listed assets exceeds 70, including 59 exchange-traded funds (ETFs) and stocks of crypto companies such as Coinbase, Circle, BitGo, Robinhood, and Strategy.
Liquidity Fragmentation Risk and Market Concerns
In January of this year, Nasdaq submitted comments to the SEC pointing out that trading tokenized stocks on blockchain platforms could divert liquidity from traditional exchanges, making it difficult for investors to obtain the best prices. In October, the International Monetary Fund released a study warning that the volatility of tokenized stocks is about 1.5 times that of comparable stocks in traditional markets, with decentralized exchanges exhibiting the weakest liquidity and the greatest price deviations from traditional markets. The organization also noted that when blockchain trading is integrated with settlement processes, it may remove the protective mechanisms that help markets absorb shocks.
The Size of the Tokenized Stock Market and the Industry’s Vision
As of November 11 (UTC), the total market capitalization of tokenized stocks and related funds reached $3.88 billion, representing a 13.4% increase over the past 30 days. Cuomo, former New York State Governor and Co-Chair of OKXICE, stated that investors will enjoy “the same rights, protections, and ownership as with the underlying shares” through the platform. He also criticized the existing market structure as “built for a different era,” arguing that the crypto market has proven the feasibility of 24/7 trading and that this move will “bring that standard to the traditional stock market without requiring investors to accept synthetic exposure or forfeit shareholder rights.”
Further Reading
Cover image: Corner of Warszawska and Szeroka Streets in Tomaszów Mazowiecki, in the province of / Wikimedia Commons (public domain)