Issuers Have ‘Little Reason’ to Allow 3rd Party Stock Tokenization
Some issuers have objected to their stock being tokenized on new platforms called Tokenized Securities Venues (TSVs), and this is likely to continue.
Graham Ferguson at tokenization platform Securtize, said on X:
Four Pillars, a research and blockchain enterprise, said in a newsletter said that this is the first case of the issuer objection process taking effect since the SEC announced an innovation exemption on 17 September 2026. The SEC allowed TSVs to trade tokenized NMS stock with certain limitations including market share thresholds.
In addition, if NMS stock is tokenized by a third party unaffiliated with the issuer, the TSV must provide a written notice to the issuer allowing them to object. A TSV must also verify that the tokenized NMS stock made available for trading provides holders the same rights and privileges as the traditional NMS stock of an equivalent class, including dividends and voting rights.
The main reason companies are objecting is that the interests of tokenizers and companies diverge, according to Four Pillars. Tokenizers attract users and earn fees by listing tokens, but companies do not receive any new capital, the token price is formed separately from the existing market and liquidity is fragmented.
“Risks such as price divergence may also be passed on to the company,” said Four Pillars. “It is a market where the revenue goes to the tokenizers and the risk goes to the companies, leaving companies with little reason to participate.”
Four Pillars argued that unless this conflict of interest is resolved, similar objections are likely to follow each time. Therefore, the firm believes that the global tokenized stock market is likely to remain a structure in which linked securities models circulate outside the U.S.
Olivia Vande Woude, business development, tokenization at Ava Labs, agreed on X that more issuers are likely to object. She said: “I think the objections are rational: an unaffiliated, always on market in your shares sits outside your investor relations & shareholder communication channels… & management gets little in return for allowing it.”
She believes tokenized stocks will continue to grow in volume but “what launches onchain will depend on which issuers stay silent, & that points toward issuer-sponsored models and the transfer agent as the stronger path for tokenized stocks.”
For example, tokenizaton platorms Securitize and Superstate believe in issuer-sponsored tokenization, where a company issue its shares onchain, with ownership recorded buy its regulates transfer agent. This allows the tokens to maintain the same shareholder rights as traditional equities.
Brian Glider, co-founder and chief executive of Glider, an onchain investment infrastructure platform, said on X that he expects zero traction on the OKX x ICE joint venture because there is no maker or taker demand:
Mike Cagney, co-founder and executive chairman of Figure Technology Solutions, said on X that it is unclear if there is a path to leverage and stock loan ability in the TSV ecosystem. Figure operates a blockchain-native equity market and is a founder of NAVRA, which intends to distribute onchain trading venues.
As of last week, 10 companies had opted out of having their stock listed as a token on the OKXICE TSV.
On a first order, companies should get the directional benefit of a marginal buyer, as there is an underlying DTC share backing the token. But second order is where things…
— Mike Cagney
(@mcagney) October 19, 2026
“This isn’t a product for US investors (they are better off on one of the national markets) and foreign investors can access price action through other mediums,” agreed Cagney. “It will be interesting to see if the OKX distribution can be a difference-maker here.”
Shadow SEC on the TSV “Order”
The Shadow SEC consists of professors John Coates at Harvard Law School, John C. Coffee, Jr. at Columbia Law School, James D. Cox at Duke University School of Law, Merritt B. Fox at Columbia Law School, and Joel Seligman at Washington University School of Law. They said on the Columbia Law School’s Blue Sky Blog that the innovation exemption was “highly question-begging and likely illegal” and it should have gone through notice and comment.
“It is labeled an exemptive “order,” but in substance it is a legislative rule,” they added. “Taken together, the “Order” attempts to create a new regulatory category for trading venues adjacent to but not part of the national market system, with potentially significant and sweeping consequences.”
For example, they highlighted that the order does not require connectivity between TSVs or aggregation of their quotation or last-sale information. Therefore, this will result in fragmented liquidity, reduced price discovery, and an undercutting of investor protections assured by the existing NMS rules.
They continued that the “Order” leaves too many basic questions open including shareholder communications and voting, liquidity-pool (LP) tokens, conflicts of interest and the means to detect them, fully decentralized protocols and weak enforcement.
“Many practitioner commentaries already raise other questions,” added the blog. “The Commission should revisit its action before it starts to do harm. It should publish a revised framework addressing these types of questions with full notice and comment, and in the meantime withdraw the current relief.”
