A growing number of companies are pushing back against tokenized trading of their shares. Microsoft and Alphabet are the latest to complain about the practice, joining 14 other public companies that have formally objected to a plan by OKXICE, a new platform co-chaired by former New York Gov. Andrew Cuomo, to trade blockchain-based versions of their shares.
The two tech giants joined Goldman Sachs, Caterpillar, McDonald’s, Qualcomm and Western Digital in a new batch of objections disclosed Monday. They joined nine companies—Cerebras Systems, AppLovin, Applied Digital, Rocket Lab, CoreWeave, Verizon, Applied Optoelectronics, Broadcom and UnitedHealth Group—whose objections were disclosed last week.
Cuomo downplayed the wave of objections, framing the pushback as a predictable reaction to a major market shift.
“We always anticipated that, because this is such a dramatic and revolutionary change, many companies would want to wait and see how it goes rather than be the first to participate,” he said in a written statement to Fortune.
OKX did not respond to questions about when trading would begin or whether the objections had changed its launch plans.
The objections come two weeks after Cuomo announced plans to launch OKXICE’s tokenized stock-trading platform. The venture, a partnership between crypto exchange OKX and ICE, the parent company of the New York Stock Exchange, would offer round-the-clock trading in blockchain-based versions of 63 U.S.-listed stocks.
The venture is seeking to use a temporary exemption granted by the Securities and Exchange Commission last month that allows qualifying platforms to offer trading in tokenized stocks without registering as national securities exchanges, provided they meet certain conditions.
The veto’s limits
Under these rules, trading platforms do not need a company’s permission to offer tokenized versions of its shares. Instead, they must notify the company, which then has 30 days from receiving the notice to object before the platform can proceed.
“There’s not a proactive consent right. Rather, it is a reactive right to object,” said Erin Martin, a partner and co-lead of fintech and digital assets at law firm Morgan Lewis, who spent over a decade as a senior lawyer at the SEC. “If they don’t object within that 30-day notice period, the [venue] can go ahead and start to tokenize and list those securities.”
Applied Optoelectronics, a technology company that makes equipment for high-speed networks, said it objected because the framework is new and its potential effects on the pricing, liquidity and volatility of its stock remain uncertain.
“At this stage, we don’t see a clear benefit to AOI or our shareholders that justifies these uncertainties,” a spokesperson told Fortune. The company also said investors could mistakenly believe it backed the offering, which it neither sponsored nor endorsed.
The other 15 companies declined to comment or did not respond to requests for comment.
But a company’s objection only blocks trading on that platform under the SEC exemption. It does not stop other firms from offering tokenized versions of its shares overseas or through other legal arrangements.
The 30-day deadline can also create practical problems. Under the SEC’s rules, platforms must send notices to a company’s main executive office, where they could get buried in other mail before reaching its legal team, Martin noted. An unanswered notice lets the platform proceed after the deadline. “It has not been contemplated in the existing SEC order,” Martin said regarding whether a company can pull its stock after the 30-day window closes.
A new era of stock trading?
OKXICE’s push to tokenize stocks aims to tap into a $35 billion market, offering investors round-the-clock trading without some of the delays associated with traditional stock markets.
“The market never sleeps, so why should trading? Ownership shouldn’t have office hours,” Cuomo said when he first announced the venture.
But the benefits are less clear for the companies whose shares would be traded.
One concern is that the digital tokens could trade at different prices from the shares they represent on the NYSE or Nasdaq, especially when few people are buying and selling.
Martin, the digital assets specialist at Morgan Lewis, notes that companies have an additional concern when it comes to 24/7 trading. Namely, she points out that they would lose the pause they normally have to announce earnings or other important news while markets are closed, which allows investors time to digest the implications.
Protecting investors also presents hurdles if the software handling trades fails or the firms holding the underlying shares run into trouble, according to risk disclosures detailed in OKXICE’s public notice with the SEC.
Meanwhile, Apple, Nvidia, and Amazon are among the remaining 47 companies that have not yet publicly objected to plans to trade tokenized versions of their shares on OKXICE. As of Wednesday, that received notices in early October could have until early November to respond, depending on when they received them.
If all 60-plus companies in OKXICE’s planned lineup object within the 30-day window, the platform would have no stocks left from that list to offer under the exemption. Ignoring those objections would mean losing the exemption, Martin said.