Cagney criticizes tokenized stock wrappers, favors native issuance

Mike Cagney criticized recent initiatives by OKEx and ICE to enable 24/7 trading of tokenized stocks, noting that 50 of the original 62 companies involved have opted out. He described tokenized stock wrappers as a distraction, arguing that their use of automated market makers provides worse execution than limit order books. Furthermore, Cagney stated that these wrappers lack margining capabilities and fail to control stock loan economics.

Instead, Cagney advocates for native on-chain stock issuance, which he says requires no regulatory approval and allows for self-settlement. This approach eliminates the need for the Depository Trust & Clearing Corporation and enables better margining and stock loan returns for investors. He suggested that buy-side pressure from firms such as BlackRock, Franklin, and Fidelity may be necessary to incentivize issuers to adopt this model. Cagney also expressed interest in the US Treasury issuing bonds on blockchain to enable real-time collateral mobility, contrasting this with the two-to-five-day release times typical of traditional custodians. He noted that blockchain securities differ from bearer assets like Bitcoin because transfer agents maintain definitive records, which allows for fraud recovery.