SEC tokenized stock framework faces issuer pushback as Broadcom, Verizon object to OKX-ICE listing

The SEC’s caller model for trading tokenized stocks is encountering absorption from immoderate of the companies whose shares could trade, with Broadcom (AVGO), Verizon (VZ) and UnitedHealth (UNH) among the latest issuers to object.

Eight recently disclosed objections appeared successful an October 15 public notice from OKXICE, the associated task betwixt crypto speech OKX and New York Stock Exchange genitor Intercontinental Exchange (ICE) preparing to connection tokenized banal trading.

Alongside Broadcom, Verizon and UnitedHealth, the announcement names AppLovin (APP), Applied Digital (APLD), Rocket Lab (RKLB), CoreWeave (CRWV) and Applied Optoelectronics (AAOI).

It lists 9 objecting issuers successful total, including AI chipmaker Cerebras Systems (CBRS), which formally opted retired of being listed earlier. The update did not disclose wherefore the companies objected oregon erstwhile they submitted their notices.

Nasdaq (NDAQ) has separately said it would opt retired of having its ain shares tokenized nether the framework, according to an FAQ connected its website.

A Nasdaq spokesperson told the Wall Street Journal that the institution does not privation its shares trading connected a venue that does not show champion prices successful existent clip oregon study to the consolidated tape, which aggregates stock-market trading data. Nasdaq is not among the 9 issuers named successful OKXICE’s notice.

Path to onchain banal trading

OKXICE announced connected October 5 that it had notified the U.S. Securities and Exchange Commission of plans to motorboat the venue, initially targeting shares of 63 U.S.-listed companies. Former New York Gov. Andrew Cuomo, the venture’s co-chair, announced the determination connected X.

The venue would run nether the SEC’s five-year “Innovation Exemption,” issued September 17, which allows qualifying platforms to commercialized tokenized U.S. stocks utilizing automated marketplace makers and liquidity pools.

Tokenized stocks are blockchain-based representations of shares. OKXICE plans to run astir the timepiece utilizing Uniswap v4 liquidity pools connected OKX’s XLayer blockchain, with trades settled successful stablecoins.

Under the exemplary described successful its notice, underlying shares would beryllium held one-for-one against outstanding tokens done a registered broker-dealer. Token holders indispensable person equivalent rights, including dividends and voting rights.

Issuer doubts

The issuer pushback echoes findings from TD Securities analysts led by Reid Noch, vice president of U.S. equity marketplace structure.

Conversations with dozens of issuers showed “little involvement successful tokenizing their shares extracurricular a tiny radical of crypto-adjacent companies,” the analysts wrote successful a study shared with CoinDesk. Several issuers besides approached the steadfast with important concerns aft discovering the framework, having been unaware of it erstwhile it was announced, the study said.

TD Securities named the framework’s reliance connected impermanent exemptive relief, alternatively than imperishable rules, arsenic its largest hurdle. A aboriginal committee could reverse the approach, complicating the lawsuit for investing successful infrastructure and discouraging institutions from integrating with venues adjacent aft they launch, the analysts said.

That uncertainty is particularly challenging erstwhile overseas platforms tin proceed offering synthetic banal products without assuming the operational requirements of the U.S. relief, they added.