Yesterday during a Consensus panel, the topic of synthetic tokenized stocks was discussed, with Securitize CEO Carlos Domingo pushing back hard against this type of token. Today there are relatively few tokenized US stocks with full ownership rights, which should change when the DTCC starts rolling out its tokenized entitlements in July. A wider variety of issuer-sponsored tokens should become available following recent tie-ups involving the world’s largest transfer agents, with Computershare collaborating with Securitize and Bullish acquiring Equiniti.
But for now the biggest offerings are synthetic tokenized stocks issued offshore, which are actually structured notes, led by Ondo Global Markets and Kraken’s xStocks, with a combined issuance of almost $1.3 billion. These notes do not provide ownership rights in the underlying stocks.
Domingo spoke about companies taking the “easy route” in offshore jurisdictions, adding that although people don’t like regulations, their purpose is to protect investors, provide transparency and ensure appropriate disclosures. While these synthetic stocks are not meant to be available in the US, he believes some circulate back because they are issued as permissionless tokens. Domingo described offshore synthetic stocks as “completely opaque” with “a lot of hidden counterparty risks. At some point they go wrong.” While he expressed gratitude that the current administration and regulators are providing regulatory clarity, he regretted that they are not “as aggressive enforcing things like the previous administration, which means that a lot of people are taking advantage in the wrong way.”
Article continues …
Want the full story? Pro subscribers get complete articles, exclusive industry analysis, and early access to legislative updates that keep you ahead of the competition. Join the professionals who are choosing deeper insights over surface level news.
