TL;DR: Securitize argues that public companies rejecting OKXICE’s tokenization proposals are wary of unauthorized third-party share tokenization, not tokenization itself. Meanwhile, OKXICE, the NYSE, and new platforms are advancing competing tokenized securities venues. Securitize also reported strong Q3 revenue and tokenization growth while announcing its acquisition of River One to expand into stablecoin-powered asset-backed financing.
Key Takeaways:
- OKXICE confirms tokenization launch date, with more than 70 assets expected to be offered.
- NYSE taps Avalanche for tokenized equity clearing, settlement on its upcoming tokenized securities trading platform.
- Formation to launch first Solana-based tokenized security venue, with Securitize and Superstate expected to supply tokenized shares.
- Securitize turns heads with Q3 results, while announcing its acquisition of River One to expand into asset-backed financing.
Tokenization firm Securitize says the mass rejections by rival OKXICE’s public company targets is the result of share-issuer confusion, not a rejection of tokenization outright.
On November 11, OKXICE, the joint venture of digital asset exchange OKX and Intercontinental Exchange Holdings (NYSE: ICE), the parent company of the New York Stock Exchange (NYSE), announced that eligible U.S. customers will be able to start trading tokenized versions of select publicly traded stocks and exchange-traded funds (ETFs) on a 24/7 basis beginning November 23.
OKXICE is a tokenized security venue (TSV), the blockchain-based trading platform category announced in September by the U.S. Securities and Exchange Commission (SEC) as part of its ‘innovation exemption’ framework. But despite the SEC’s blessing, OKXICE’s initial 63 tokenization overtures were rejected by all but six public companies, and all six were crypto firms.
Those six—BitGo (NASDAQ: BTGO), Coinbase (NASDAQ: COIN), Circle (NASDAQ: CRCL), Robinhood Markets (NASDAQ: HOOD), Securitize (NYSE: SECZ) and Strategy (NASDAQ: MSTR)—will be among the “more than 70 assets” that OKXICE ‘expects’ to offer come November 23, although not all 70 might be available on Day One.
That number includes 59 ETFs from U.S. leveraged/inverse ETF issuer Direxion, whose CEO Douglas Yones said “as trading behavior evolves, so do we. Participating as a launch issuer on the OKXICE Tokenized Securities Venue is the latest example of Direxion meeting traders and investors where they are, and doing so within a framework built for transparency and compliance.”
The only other public company listed in OKXICE’s announcement is Better Home & Finance Holding Company, aka Better.com (NASDAQ: BETR), a mortgage-focused fintech that teamed up with Coinbase this summer to offer BTC-backed mortgages.
OKXICE’s announcement quoted Strategy CEO Phong Le saying Strategy’s “preferred stocks, such as STRC” help transform BTC into ‘digital credit’ and tokenization is “a natural next step toward making Digital Credit accessible to investors around the world, 24 hours a day, seven days a week.”
Le’s comment suggests that some (if not all) of the four undisclosed equities that OKXICE plans to offer will include Strategy’s preferred vehicles (STRC, STRD, STRE, STRF and STRK) in addition to its flagship MSTR shares.
Also quoted was Circle’s chief commercial officer Kash Razzaghi, who said OKXICE “reflects how we see markets evolving. Investors want access that is always on, and they want to know the rules behind it. We’re glad to see tokenized securities arrive through a compliant framework built on real shares and real shareholder rights.”
Circle is part of a working group on tokenization led by the Depository Trust & Clearing Corporation (DTCC), which recently launched its DTCC Tokenization Service (DTS) with ‘select’ Russell 1000 equities and other mainstream assets that are ‘available to tokenize.’ Working group members include BitGo and Robinhood, but not Coinbase, Securitize or Strategy.
On November 6, Coinbase CEO Brian Armstrong tweeted that he is “pro tokenization of our stock for a simple reason: I want more people to own it. Why would I alienate a potential new category of shareholders? It’s just bad business. Meet the customer where they are.”
Challenged as to why Coinbase has yet to offer tokenized versions of its own shares on Base, the company’s Ethereum
layer-2 network, Armstrong said Coinbase was “working on it.” Armstrong claimed that “it’s actually harder to tokenize your own stock vs. other companies” but insisted that “it’s on our roadmap.”
On November 9, CoinDesk quoted a Robinhood spokesperson calling tokenization “the future of financial markets. We would rather be part of building it than sit on the sidelines.” Robinhood has actively engaged in tokenizing public company shares for offering to customers outside the U.S.—with or without those companies’ permission—and while Robinhood execs have offered tepid praise for the SEC’s tokenization scheme, they’ve also criticized its restrictions.
OKXICE originally sought to tokenize dozens of blue-chip non-crypto firms, but these targets rejected OKXICE’s overtures using the SEC-mandated 30-day window for stating one’s objection. Several other major public companies that weren’t on OKXICE’s original wish list also stated their objections.
NYSE tap Avalanche for ATS clearing/settlement
While OKXICE struggles to find acceptance, the NYSE Group continues to firm up plans for its proposed digital alternative trading system (ATS).
Initially announced in January, NYSE signed a memorandum of understanding with digital asset platform Blockchain.com in September to give the latter firm’s users access to tokenized equities and exchange-traded funds (ETFs), once the necessary regulatory approvals for the ATS have been secured.
On Monday (9), Ava Labs announced that its Avalanche network will support the digital ATS with its clearing and atomic settlement needs, serving as the “core ledger technology” behind the ATS.
NYSE head of digital issuance Dennis Lee said the ATS “will support equities listed on a range of blockchains.” Lee said NYSE believes blockchain tech will help it expand tokenized equity options “and we’re picking the right technology for each job.”
New TSVs enter the arena
OKXICE was beaten to market by TSV LLC, which began trading a tokenized version of Canton Strategic Holdings (NASDAQ: CNTN) on the Canton Network on November 4. TSV LLC took a different approach to OKXICE by securing CNTN’s permission in advance, a strategy that got TSV LLC into the record books, if not necessarily pole position in any tokenized volume metrics.
On November 9, Formation Securities LLC announced that it had informed the SEC of its plans to launch its own tokenized securities venue on the Solana network. Formation is licensing its trading technology from Orca, the Solana-based decentralized exchange, and Securitize and Superstate “are expected to make tokenized shares available” on Formation’s TSV.
Unlike would-be tokenizer TSV.perpetuals, which didn’t cite any companies whose shares it wants/hopes to tokenize, Formation’s public notice cites three crypto firms—digital asset treasury Forward Industries (NASDAQ: FWDI), infrastructure firm Galaxy Digital (NASDAQ: GLXY) and fintech/wallet-maker Exodus Movement (NYSE: EXOD)—that will presumably be cool when trading of their tokenized shares begins sometime early next year.
Formation president Christopher Montagano said tokenized stocks “will succeed only if public companies see the value in them, and we intend to build this market together with issuers.”
Securitize hails near-record Q3, River One acquisition
This week saw Securitize issue its first quarterly earnings report since launching on the NYSE on July 2. Revenue in the three months ending September 30 came in at $18.6 million, 13% better than the same period last year, and the second-best showing in the company’s eight-year history.
However, the company booked a net loss of $66.3 million, although the bulk of this came courtesy of non-cash expenses and “accounting changes” associated with the company’s NYSE launch. Regardless, investors pushed the shares up from $7 to nearly $10 on Tuesday before closing at $8.53 (+22.4%). The shares rose again Wednesday, closing up 6.2% to $9.06.
Total tokenized assets on platform (encompassing both equities and funds, and formerly known as ‘tokenized assets under management’) rose 9% year-on-year to $4.8 billion as of September 30. The Q3 average of this figure was $5 billion, a new record. Aggregate transaction volume was up one-fifth to $4.3 billion.
The current quarter brought the launch on October 8 of Securitize Stocks (initially on Solana), which offered investors in the U.S., the European Union and other permitted jurisdictions access to “tokenized interests in U.S.-listed equities.” On November 2, Securitize added 13 more U.S. equities to the original dozen (including Securitize’s own shares) on offer.
While Securitize Stocks’ tokenized offerings provide the same dividends and voting rights as the real deal, they don’t operate under the SEC’s ‘innovation exemption’ that enshrined the TSV model. Instead, the offering is part of Securitize’s established regulatory framework, including its SEC-registered broker-dealer and transfer agent, as well as its SEC-regulated alternative trading system.
Securitize’s Q3 report was accompanied by news that it had inked a definitive agreement to acquire River Credit Labs Inc (aka River One), the “institutional asset-backed financing platform developing technology to connect stablecoin capital with traditional lending markets.” Terms of the deal weren’t disclosed, although Securitize CFO Francisco Flores told analysts said it was “attractive to us from both a strategic and financial point of view.”
On the earnings call, Securitize CEO Carlos Domingo said the strategic rationale behind the River One deal “is very straightforward. We’re building infrastructure to tokenize, service and distribute assets. River One will expand our business into credit origination itself.”
With River One, Domingo believes Securitize can “participate early in the life cycle of credit assets, from origination and structuring through financing with stablecoins and onchain distribution of the tokenized credit products. That creates opportunities for origination fees and participation in financing economics, with the potential for higher-value monetization as the business develops.”
Domingo was asked about the OKXICE mass opt-outs and whether this represented a wholesale rejection of tokenization itself or issuers just being wary of unaffiliated third parties doing the tokenization.
Domingo said issuers were under “a lot of confusion” trying to distinguish between SEC-approved products like those offered by Securitize and OKXICE versus “all these offshore synthetics,” aka tokenized shares that don’t offer the same rights as the real deal.
But Domingo said “we have obviously reached out to many of the issuers that have opted out” to explain the differences. And “overall, we don’t think that this is a problem long term … once you manage to explain those advantages … I think that’s when you start getting traction with [issuers].”
Securitize president Brett Redfearn added that “tokenization and TSVs are two different things” and opting out of a TSV “does not mean they are opting out of tokenization.” Domingo claimed that when the OKXICE official launch announcement is made, you’ll see “a lot of other issuers that have positively approved being tokenized and listed on the TSV.”
FAQs:
What is OKXICE?
It’s a joint venture between crypto exchange OKX and Intercontinental Exchange, the parent of the NYSE. It operates as a tokenized securities venue under the SEC’s innovation exemption.
Which public companies agreed to let OKXICE tokenize their shares?
Six, all crypto firms: BitGo, Coinbase, Circle, Robinhood, Securitize and Strategy. Better.com and Direxion’s ETFs are also in the launch lineup.
Why did so many companies opt out?
Securitize believes issuers are confusing SEC-sanctioned tokenized shares with offshore synthetic versions that lack real shareholder rights. It doesn’t see the opt-outs as a rejection of tokenization.
Who was first to launch a tokenized securities venue?
TSV LLC. It began trading tokenized Canton Strategic Holdings shares on November 4 after getting the company’s permission in advance.
How did Securitize perform in Q3?
Revenue rose 13% to $18.6 million, its second-best quarter ever. It also posted a $66.3 million net loss, driven mostly by non-cash costs tied to its NYSE listing.
Why is Securitize buying River One?
To expand into credit origination. River One connects stablecoin capital with traditional lending markets.
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Steven Stradbrooke
Steven Stradbrooke is a ‘self-taught’ writer who learned his craft from every book, newspaper, magazine, newsletter, snarky blog post and bathroom wall poem he ever read. Formerly the senior writer for 11 years at the CalvinAyre.com gambling industry news site, Steven wrote his first Bitcoin-focused article in 2011 and began contributing to CoinGeek in 2017. He joined CoinGeek full-time in 2021.
