This is an opinion piece by Ray Tierney, CEO of 21X LLC, which recently applied for an ATS license. In his view, Issuers are not rejecting tokenization. They are asking reasonable questions – and it is the industry’s job to answer them.
In September, the SEC granted a five-year innovation exemption allowing new Tokenized Securities Venues (TSVs) to trade tokenized versions of US-listed stocks. On October 4, a first TSV notified the SEC of plans to offer 63 of them around the clock, and issuers were given 30 days to object. Since then, 16 have formally objected – first a wave of AI infrastructure names such as Broadcom and CoreWeave, then a second wave of blue chips including Microsoft, Alphabet, Goldman Sachs and McDonald’s.
They did not have to give a reason – and many did not do so. But it is easy to see why a company might hesitate.
Tokenization without being asked
Under the exemption, a third-party can tokenize a company’s stock and offer it for trading unless the issuer objects within 30 days. Objections apply venue by venue, so an issuer may have to repeat the exercise every time a new TSV appears.
Then come the open questions. Token holders must receive the same rights as traditional shareholders, but issuers have no clear guidance on what tokenized trading means for them. Do quarterly and annual reports need to address activity in a version of their stock they never chose to create? Will investor relations teams have to explain on the next earnings call why the tokenized stock was far more volatile than the listed one? Carrying that cost and reputational risk for something you did not opt into is a fair objection.
When the market is closed
The bigger concern is price. The first TSV prices trade through an automated market maker (AMM) liquidity pool. Prices follow a formula: Every purchase pushes the pool price up, every sale pushes it down, and in a shallow pool small orders can move it a long way.
Picture a weekend. During weekends, when underlying equity markets are closed, arbitrage becomes harder and liquidity may thin out. Token prices can therefore deviate more substantially from their last listed prices, potentially creating uncertainty about whether the move reflects new information or temporary liquidity imbalances.
How the industry earns issuer trust
Build in safeguards now. Price bands anchored to the National Best Bid and Offer (NBBO) during US market hours, volatility halts and circuit breakers, and transparent rules for off-hours price formation, liquidity and reopening after extreme moves. Where these protections already exist, the industry must explain them clearly. Issuers cannot trust what they cannot see.
Bring market infrastructure onchain, not the other way around. Tokenization alone does not create a functioning capital market. Rather than placing listed stocks into DeFi-style pools, the industry should bring established market structure onchain: A central limit order book with transparent bids and offers, exchange-style price discovery and institutional market makers – mechanics issuers already understand – combined with atomic onchain settlement. That is the approach 21X is taking.
Give issuers clarity. The SEC moved quickly, sought industry feedback from day one and describes the exemption as a bridge to future rulemaking. The next step is plain guidance for issuers on what tokenization of their stock means for disclosure, reporting and shareholder communications – a short FAQ answering the 20 questions every issuer is asking would be a strong start.
The prize is worth the effort
None of this weakens the case for tokenized stocks. Atomic settlement substantially reduces counterparty risk and frees capital tied up in settlement cycles. Cheaper issuance opens public markets to more companies. Programmable corporate actions cut cost and error, and always-on access creates a more democratic way to trade. BlackRock is already proving the model, moving tokenized model portfolios, a Treasury liquidity fund share class and $311 billion of money market funds onchain in the past two months.
Building consensus with corporate America
The question is not whether stocks move onchain, but how – and that must be decided with corporate America, not around it. That means discussion before deployment: Issuers, venues, investors and regulators agreeing on market structure, disclosure and safeguards together. It means issuer-led models, where companies choose to bring their stock onchain and help shape how it trades. Consensus takes longer than a 30-day notice period. It is also the only route to a market every listed company wants to be part of.
Regulators have opened the door. It is up to all of us building this market – venues, brokers, custodians, issuers and technology providers – to make tokenized trading safe, transparent and fast enough that companies choose it. Sixteen objections are not a verdict. They are a brief.
