Key Points

• 22 companies oppose the proposed tokenized stock trading
• Microsoft, Alphabet, and Goldman Sachs join the growing opposition camp
• SEC Rules Allow Companies to Block Third-Party Listings

Microsoft, Google's parent company Alphabet, and Goldman Sachs are among the 22 major companies that oppose trading the blockchain versions of their stocks on a new platform supported by an encrypted exchange OKX and the parent company of the New York Stock Exchange.

According to Reuters, on October 23, another six companies raised objections, including Wells Fargo, Arm Holdings, and Intuit, further expanding the opposition camp.

This controversy raises a crucial question for the rapidly expanding tokenization industry: can financial platforms move traditional stocks onto blockchain when the companies issuing these stocks object to it?

Why 22 Large Companies Are Preventing Tokenized Stocks

OKXICE is a joint venture between the cryptocurrency exchange OKX and Intercontinental Exchange (Intercontinental Exchange), the latter being the parent company of the New York Stock Exchange.

The platform plans to provide a blockchain representation of U.S. stocks, which may enable investors to trade around the clock and use stablecoins to settle transactions.

The initial proposal listed 63 stock codes, representing 62 companies, including Microsoft, Tesla, NVIDIA, Amazon, and Goldman Sachs.

However, enterprises oppose a rapid increase.

As of October 15th, 9 companies had raised objections; by October 19th, that number increased to 16; and by October 23rd, it reached 22.

The latest companies to join include Wells Fargo, Arm, Intuit, Cisco Systems, Moderna, and Marvell Technology. Companies that raised objections earlier on include Qualcomm, Broadcom, Verizon, McDonald's, and CoreWeave.

These companies have not collectively disclosed their reasons for opposition, therefore it is not appropriate to describe these objections as opposition to blockchain technology itself.

This development has made the cooperation between OKX and ICE more complex. Previously, this collaboration had positioned tokenized stock trading as an important part of both parties' expansion plans.

SEC Rules grant companies the power to reject blockchain listings

These objections emerged following a regulatory change introduced by the U.S. Securities and Exchange Commission on September 17th.

According to the exemption framework of SEC, tokenized securities trading venues that meet the criteria must notify the relevant companies before listing stock token versions created by unrelated third parties.

The company has 30 calendar days to raise objections after receiving the notice. If an objection is raised within this period, the trading venue will not be able to provide the specified third-party tokenized stocks.

This restriction does not prohibit companies from advancing their own tokenization plans, nor will it automatically prevent other securities products.

This distinction is important because the tokenization of real-world assets can involve different ownership structures, including securities supported by issuers and third-party tokens.

The proposed model is to hold traditional stocks through regulated intermediaries, while simultaneously issuing corresponding blockchain tokens.

The platform also plans to conduct transactions through the v4 liquidity pool on the Uniswap of the XLayer network, and to support settlements with stablecoins.

Will corporate opposition slow down the tokenized stock market?

As large financial institutions continue to invest in blockchain securities, these objections also arise accordingly.

Morgan Stanley recently outlined plans to support tokenized stocks through its alternative trading system, while forecasts indicate that the broader tokenized assets market could ultimately reach trillions of dollars in size.

The report on Morgan Stanley by Coinpaper highlights market opportunities as well as the challenges of building the appropriate infrastructure.

Cryptography companies are already trying different approaches.

Ondo Finance has previously launched over 200 tokenized stocks, while Kraken offers stock-linked tokens to eligible customers outside of the United States.

At the same time, Binance has been advancing stock-linked derivatives. Such products provide price exposure, but they do not represent ownership of traditional stocks.

These structures differ in terms of legal rights, regulatory treatment, and investor protection.

Co-chairman Andrew Cuomo stated that the hesitation of companies is a reaction to an unfamiliar market structure, and he believes that companies may prefer to observe the early developments before deciding whether to participate.