Key Takeaways
- A WSJ ad warned CEOs against stock tokenization, citing risks like market manipulation and hidden ownership.
- Industry leaders called the ad misleading, arguing that regulated U.S. tokenization mitigates these dangers.
- Fearing instability, major firms like Microsoft and Goldman Sachs already opted out of tokenized venues.
Anti-Tokenization Ad on WSJ Raises Criticism From Industry Figureheads
The issue of tokenizing real-world assets (RWA) and how the process will apply to stocks is back in the mainstream.
A full-page ad published in the Wall Street Journal (WSJ) on Sunday, the 24th, warning about the dangers of asset tokenization and calling on public company CEOs to opt out of tokenization processes, sparked a social media debate on whether these processes can affect the stability of capital markets.
Funded by the Common Sense Leadership Fund, a 501(c)(4) non-profit civic organization founded in 2021 and based in Arlington, Virginia, “dedicated to helping promote real, positive, impactful policies that promote individual freedom, lower taxes and less regulation,” it presents several risks that could affect companies tokenizing their shares.
In the ad, the Common Sense Leadership Fund exposes several risks associated with tokenization, including the appearance of price disparities in different token venues, the obfuscation of token owners, impaired ability to raise capital, cybersecurity risks, the possibility of market manipulation, AML/KYC loopholes, and the lack of investor protection for tokenized assets, stressing that CEO’s might be held liable for “anything that goes wrong.”
Carlos Domingo, CEO of Securitize, a public company that lends tokenization services to traditional companies, called the ad’s depiction of the tokenization process “misleading,” stressing that “it mixes tokenization with how it is done and where those tokens trade.”
“None of those concerns apply to proper tokenization done in the US under SEC regulations and traded on regulated venues,” he stressed, highlighting that offshore synthetics, derivatives designed to replicate the economic performance of a stock without ownership, were to blame for these fears.
“I see this as a tailwind for companies like ours doing it the right way, which was never easy, but it’s a durable long-term business model,” Domingo concluded.
MetaleX co-founder and CEO Gabriel Shapiro argued that increased ownership by intermediaries like Robinhood and Coinbase could become an issue, as these could hold real power on contested voting calls where a few percent can decide the outcome.
“Public companies will care about this more than crypto people expect,” he assessed.
Several companies, including Microsoft, Alphabet, Goldman Sachs, Qualcomm, Caterpillar, McDonald’s and Western Digital, have already objected to being listed by OKXICE, a joint venture that applied to act as a Tokenized Security Venue (TSV) under the Securities and Exchange Commission (SEC) Innovation Exemption.
