Executives from Intercontinental Exchange (ICE), OKX and Securitize have warned that tokenized synthetic stocks create market and retail risks, as ICE moves forward with a regulated platform for tokenized U.S. stocks.
Michael Blaugrund, who works on strategic initiatives at ICE, the owner of the New York Stock Exchange (NYSE), said during a panel at Consensus Miami that the first version of the NYSE would begin with pre-funded tokenized stocks traded against stablecoins.
This model is “not the sexiest way” to build a market, Blaugrund said, but it gives issuers, investors and regulators a structure they can evaluate before more complex features such as leverage or self-custody.
Carlos Domingo, founder and CEO of Securitize, said tokenized offshore stock products take the opposite approach. Some use public company names without issuer approval and do not represent the underlying equity, he said.
“For some stocks, there are about five different tokenized versions,” Domingo said, citing Coinbase as an example. “None of them actually represent equity on Coinbase.”
The risk is most evident in corporate actions, Domingo said, because he has seen a token stock trade at prices that differ by five times across markets after a stock split.
Haider Rafique, global head of OKX managing partners, noted that the exchange has not launched tokenized synthetic securities and does not plan to make a move until the regulated offering is in place.
“We don’t sell promissory notes,” Rafique said. “We’re actually selling the underlying asset.”
The warning follows further scrutiny of equity tokens and private market exposure. OpenAI said last year that Robinhood’s OpenAI stock tokens did not represent OpenAI’s equity and were not endorsed by the company, while Robinhood later said the tokens were backed by a special purpose vehicle.
Domingo said the issue was a regulatory arbitrage. Offshore issuers can create wrappers in permissive jurisdictions and claim they are not targeting the United States or Europe, he said. Permissionless tokens can always return to these markets.
The SEC has also placed greater emphasis on the distinction between true tokenized ownership and synthetic exposure, asserting that issuer approval is required for true ownership of tokenized shares.
Blaugrund compared the move to tokenized securities to the move from floor trading to electronic markets.
“It’s now about ‘when’ and not ‘if’,” Blaugrund said.
The NYSE announced in January that it was developing a 24/7 trading and on-chain settlement platform for U.S.-listed tokenized stocks and ETFs, pending regulatory approval. The platform is expected to support split trades, immediate settlement, and dollar-denominated orders.
ICE subsequently entered into a strategic partnership with OKX, giving the crypto exchange’s customers access to ICE futures and tokenized NYSE stocks, also subject to approvals.
NYSE also tapped Securitize to help build the tokenized equity platform, with the company acting as a digital transfer agent for tokenized issuer-backed securities.
