Figure co-founder Mike Cagney has said 10 companies have opted out of stock tokenization on OKXICE, questioning the proposed venue’s appeal without leverage or stock lending.
Summary
- 10 companies have opted out, according to Cagney, but the examined venue notice identifies nine.
- SEC rules prohibit qualifying venues from extending credit to participants for tokenized stock purchases.
- Cagney questioned the product’s appeal while acknowledging a possible advantage through OKX’s distribution.
- Qualifying stock tokens must preserve shareholder rights, distinguishing them from products offering only price exposure.
Mike Cagney, in an Oct. 19 X post supplied for this report, put the tally at 10 “as of last week” and argued that U.S. investors would be better served by conventional national markets. His comments combine a claim about issuer objections with criticism of the product’s financing options.
The October 15 public notice examined for this report names nine objecting issuers. Cagney did not identify a tenth company in the supplied post, leaving his higher count unconfirmed by the dated venue document.
OKXICE tokenized stocks face nine documented objections
The venue’s notice lists Cerebras Systems, AppLovin, Applied Digital, Rocket Lab, CoreWeave, Verizon Communications, Applied Optoelectronics, Broadcom and UnitedHealth Group as companies that submitted objections.
As previously covered by crypto.news, the nine-company objection list followed earlier revisions of the venue’s disclosures. The Oct. 4 version recorded Cerebras, an Oct. 8 revision added three names, and the Oct. 15 document brought the published count to nine.
Earlier coverage found that eight objectors appeared among the original 63 prospective stocks, while Cerebras sat outside that lineup. The publication dates of those revisions establish when objections became public, without establishing exactly when each company submitted its response.
According to the SEC’s framework, an issuer can block the notifying venue from carrying an unaffiliated third party’s tokenized version of its stock. The objection does not impose a general ban on every possible tokenization arrangement involving that company.
SEC rules already restrict venue financing
While questioning the product, Cagney acknowledged a possible benefit for companies from an additional buyer of the underlying shares.
He then wrote that it was unclear whether the ecosystem offered a path to leverage or stock lending, arguing that the uncertainty hurt investors. His criticism addressed the ability to use the token financially beyond buying and selling it.
The SEC’s order contains a section titled “No Leverage.” It prohibits a qualifying venue from extending credit to participants to buy tokenized stock, borrowing securities or nonsecurity crypto assets on the venue, or permitting those assets to be pledged.
OKXICE’s notice independently states that the venue does not extend credit. Neither document examined establishes an announced future stock-lending or margin service.
The September 17 exemption grants conditional relief for five years to qualifying trading venues and certain liquidity providers. Earlier coverage of the five-year trading exemption detailed requirements for public, auditable contracts and coordinated trading halts.
Under those conditions, a venue must stop trading the tokenized security when trading in its conventional counterpart is halted on the primary listing exchange. The exemption covers permissioned automated market makers and liquidity pools, without giving those venues national exchange registration.
Shareholder rights distinguish the proposed U.S. route
Cagney argued that without financing functionality, the offering did not provide a compelling improvement over offshore stock tokens. He described U.S. investors as better served on national markets and said foreign investors could obtain price exposure elsewhere.
His post nevertheless left room for a commercial advantage through OKX’s customer reach.
The proposed platform initially sought to cover 63 stocks, according to October 5 coverage citing Bloomberg’s account of the venture’s paperwork. That report distinguished the planned U.S. venue from OKX’s existing offshore products.
The October 5 report said the venture was owned equally by OKX and ICE and co-chaired by Cuomo and ICE executive Trabue Bland. It described plans to seek U.S. broker-dealer and futures commission merchant status, with those activities still dependent on regulatory approval when the partners announced the venture.
According to the same coverage, OKX’s offshore Unified Tokenized Stocks offer price exposure without ownership in the underlying company or shareholder voting rights. Those products are unavailable to U.S. customers and operate separately from the proposed OKXICE venue.
The SEC framework requires equivalent shareholder rights for qualifying stock tokens, including dividends, votes, and liquidation claims. Price-tracking synthetic products do not qualify under that route.
In its own notice, OKXICE describes tokens backed one-for-one by shares held through a registered broker-dealer. Each token represents a security entitlement to a share, with blockchain transfers reconciled against the tokenizer’s records.
Issuer notice begins a separate 30-day clock
According to the SEC order, trading in an unaffiliated third party’s stock token cannot begin until at least 30 calendar days after the underlying issuer receives written notice. A timely objection prevents the notifying venue from offering that token under the exemption.
The venue must disclose a received objection within five business days. The clock runs from the issuer’s receipt, so publication of a prospective stock list does not establish a shared starting date for every company.
OKX and ICE announced their tokenization venture in June, with Andrew Cuomo appointed co-chair. Their announcement described proposed access to ICE futures and NYSE-linked tokenized equity markets as subject to regulatory approval.
The June announcement followed ICE’s March strategic investment in OKX. According to that earlier coverage, the investment amount was undisclosed, while the reported valuation of the exchange was $25 billion.
