There is a movement afoot to redesign the U.S. equities market by issuing shares in the form of digital tokens that can be traded around the clock, and where trades are cleared and settled instantly. The market for these tokenized shares is still nascent, but the technology got a boost on Wednesday when Wall Street giant Cantor Fitzgerald announced a partnership to help companies issue stock on the blockchain when they go public.
Cantor’s partnership is with Securitize, a New York firm that specializes in creating blockchain-native shares that, from a regulatory perspective, closely resemble traditional securities.
The tokenization model used by Securitize, as well as rival SuperState, is more technology intensive than the one used by Robinhood, Kraken and other firms that are rapidly adopting blockchain-based shares. The latter companies rely on a so-called wrapper model, which entails purchasing blocks of stock in order to hold them in a special purpose vehicle, and then issuing synthetic tokens that correspond to the value of the individual shares.
The wrapper model is controversial since it typically entails issuing blockchain versions of popular stocks like Tesla or Apple without the involvement of the companies. Under Securitize’s blockchain native model, by contrast, companies participate in the process and have direct control over the tokenized shares they issue.
