Executives from the Intercontinental Exchange (ICE), OKX and Securitize warned that synthetic tokenized stocks create market and retail risks as ICE moves forward with a regulated platform for tokenized US 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 NYSE’s first version will start with pre-funded tokenized shares traded against stablecoins.
That model is “not the sexiest way” to build a market, Blaugrund said, but 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 offshore tokenized equity 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 five different tokenized versions,” Domingo said, citing Coinbase as an example. “None of them represent actual equity on Coinbase.”
The risk is most evident during corporate actions, Domingo said, as he watched a tokenized stock wrap trade at prices that diverged fivefold across markets after a stock split.
Haider Rafique, OKX’s global managing partner officer, noted that the exchange has not launched synthetic tokenized securities and does not plan to move until regulated supply is in place.
“We are not selling a promissory note,” Rafique said. “We are actually selling the underlying asset.”
The warning follows a broader investigation into equity tokens and exposure in the private market. OpenAI said last year that Robinhood’s OpenAI stock tokens did not represent OpenAI equity and were not endorsed by the company, while Robinhood later said the tokens were backed by a special purpose.
Domingo said the problem is 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 still flow back into these markets.
The SEC has also sharpened its focus on the distinction between genuine tokenized ownership and synthetic exposure, saying issuer approval is required for genuine tokenized equity ownership.
Blaugrund compared the shift to tokenized securities to the transition from floor trading to electronic markets.
“It’s now ‘when,’ not ‘if,'” Blaugrund said.
The NYSE said in January it was developing a platform for 24/7 trading and onchain settlement of tokenized US-listed stocks and ETFs, pending regulatory approval. The platform is expected to support fractional trading, instant settlement and dollar-denominated orders.
ICE later entered into a strategic partnership with OKX, giving the crypto exchange’s clients access to ICE futures and NYSE tokenized stocks, also subject to approvals.
The NYSE also tapped Securitize to help build the tokenized equity platform, with the firm acting as a digital transfer agent for issuer-backed tokenized securities.
