Who’s excited about stock tokenization? Not Apple and Nvidia, among others

The SEC in September opened up a temporary, conditional pathway that allows for the trading of digital stocks: tokens on a blockchain that represent ownership in real company shares. Now, a growing number of companies are trying to block the unwanted tokenization of their shares.

So far, three venues—Perpetuals.com, OKXICE, and TSV—have filed with the SEC to operate tokenized stock venues under the Innovation Exemption. Each venue is required to notify issuing companies, by posting a notice on its website, of its plans to trade tokenized versions of their stocks. The companies have 30 days to opt out.

At least 67 companies, including Apple, Nvidia, CoreWeave, and SpaceX, have objected to OKXICE’s plans, according to a Nov. 5 regulatory filing from OKXICE. A joint venture between crypto exchange OKX and Intercontinental Exchange, OKXICE responded to our email request for comment by referring to a recent press announcement.

Perpetuals, operated by Kephas Corporation, said it received written notice from Goldman Sachs that it objected to the tokenization of its stock. “Accordingly, the Company will not make Tokenized NMS Stock representing NMS stock issued by The Goldman Sachs Group, Inc. available for trading on the TSV pursuant to the TSV Exemption,” Perpetuals said in an Oct. 27 update.

Perpetuals didn’t reach out to Goldman but instead received a letter from the storied investment bank, Patrick Gruhn, Perpetuals CEO and founder, told CFO Brew. “If somebody says they don’t want [their stock tokenized], we will not list them. That’s for sure,” he said.

TSV posted a notice on its website informing users that operations and trading have started.

“We haven’t sent any notices to issuers, and so have received no responsive objections. We would, of course, adhere to objections as required by the SEC’s Order,” Ali Abrar, co-founder and CEO of TSV, said in an email to CFO Brew.

Citigroup expects the global tokenized asset market to reach $5.5 trillion by 2030 from its current $17 billion, driven by public market securities, specifically US equities and treasuries. Robinhood, for example, has tokenized 202 stocks, according to Nora Chan, a company spokesperson. This includes some well-known securities like Apple, Nvidia, and Alphabet, but these tokens are unavailable in the US. Apple, Nvidia, and Alphabet did not respond to our requests for comment by publication.

Under the Innovation Exemption, TSVs are expected to not list the tokenized stock after a company objects, according to Daniel Budofsky, a partner with law firm Pillsbury Winthrop Shaw Pittman. “If the TSV lists it anyway, it loses the benefit of the exemption and could become subject to an enforcement action by the SEC,” Budofsky told us in an email.

He cautioned that the “right to block trading” on a particular TSV isn’t a “universal right” that stops anyone else from digitizing a stock. The SEC order “doesn’t appear to create a centralized or blanket opt-out covering every TSV,” Budofsky said. Instead, issuers must object to each TSV.

“The Order gives an issuer an important—but limited—right to object,” Budofsky told CFO Brew.

If the issuer remains silent and does nothing during the 30-day period, “then that by default gives the tokenization service or exchange the okay to move forward and tokenize that stock,” Travis McGhee, global head of digital markets at Apex Fintech Solutions, told us.

Issuers could also reject one TSV but allow another to move forward, McGhee said.

McGhee, a former trader who spent four and a half years as CEO of Crypto.com Derivatives North America, agreed that the SEC order does give issuers rights, “which is something even in a traditional [finance] sense we don’t see,” he said. Apple, for example, went public on the Nasdaq in 1980, and its shares trade there. Investors can also trade Apple on the NYSE or another exchange through unlisted trading privileges. Apple can’t really do anything about this, McGhee said.

“So, [it’s] very interesting, and it’s honestly a first as it relates to issuers having some control over where their stock’s traded and how their stock’s traded,” McGhee said.