The New York Stock Exchange has chosen Avalanche as the core ledger technology for the clearing firm behind its planned tokenized securities platform. Ava Labs, the company behind the blockchain, announced the deal Monday. The platform is meant to support 24/7 trading, clearing and settlement, subject to regulatory approvals. AVAX traded at $8.47, up 4.78% in a day, according to CoinMarketCap data.

What Avalanche will do

NYSE's existing technology will match buy and sell orders, and Avalanche will settle each trade instantly. The NYSE says no other chain will do that job. The platform is targeting a fourth-quarter launch, pending approval.

Dennis Lee, the NYSE's head of digital issuance, said the exchange is "picking the right technology for each job." The platform will support equities listed on a range of blockchains. The ledger that records and settles trades, he said, has to be fast and reliable, let the exchange control who takes part, keep costs predictable and have a large developer community behind it.

Emin Gün Sirer, CEO and founder of Ava Labs, said the platform will run on dedicated infrastructure with predictable performance and costs. In his view, that gives it the control needed to meet regulatory and operational requirements.

Avalanche lets developers launch their own layer 1 networks, formerly called subnets, with custom rules and validator sets. A permissioned setup of that kind would fit the exchange's requirement to control who can participate. Neither company has said which design the platform will use.

Where the platform stands

The NYSE's parent, Intercontinental Exchange, outlined the design in January. It promised round-the-clock trading, instant settlement, orders sized in dollar amounts and stablecoin funding. Tokenized shares will be fungible with traditionally issued stock, and holders will get the same dividends and governance rights as other shareholders.

The venue now has six digital transfer agents. Securitize was named first in March, and tZERO also signed on. Earlier this month the NYSE added Broadridge Financial Solutions, Computershare, Equiniti and Superstate. ICE is also working with BNY and Citi on tokenized deposits for its clearinghouses, which would let clearing members move money outside traditional banking hours.

US securities have settled on a T+1 cycle, one business day after the trade, since May 2024. Atomic onchain settlement would remove that gap, which is the main efficiency argument behind the project.

A separate venue meets resistance

Tokenization is popular on Wall Street, but most efforts so far have wrapped individual funds or stocks in tokens. Putting a blockchain under the clearing and settlement layer is a different step. The NYSE has also tapped Blockchain.com to reach crypto investors with tokenized stocks and ETFs.

Not every issuer is on board with tokenization. On the separate OKX-ICE venue, which is planned under an SEC exemption, every Magnificent Seven stock, including Apple and Meta, has opted out of having its shares tokenized. In all, 67 companies have objected.

That venue is a different project from the NYSE platform Avalanche will support. The opt-out right comes from the SEC's Innovation Exemption, which gives companies 30 days to object to third-party tokenization of their shares. Nasdaq warned issuers in September that tokenized trading could fragment liquidity and hurt long-term shareholder value.

The NYSE says holders of tokenized shares on its own platform will have the same rights as other shareholders. It has not said whether issuers will need to consent.

A crowded race and a cautious data point

The Depository Trust & Clearing Corporation took its own tokenization service live on Oct. 28. Morgan Stanley then tokenized US stocks and Treasuries through it a few days later.

An IMF study found genuine demand for tokenized stocks, though the products remain volatile and illiquid. That suggests the infrastructure may be arriving faster than the markets that will use it.

AVAX is still far below its November 2021 peak of more than $140, so Monday's move recovers only a small part of its earlier losses. Ava Labs has not disclosed financial terms, and neither side has said when regulators might act on the platform.

Robinhood Launches Commission-Free IPO Access in the UK | HODL FM NEWS
Robinhood has launched IPO Access in the UK, letting retail customers request shares in eligible US IPOs at the offer price with no commission. See how it works.
hodl-post-imageHODL FM News: The Wildest Ride in the Crypto MarketRoman Zaika
hodl-post-image

Disclaimer: All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice. Cryptocurrency investments involve significant risk of loss. Please note that, despite the nature of much of the material created and hosted on this website, HODL FM operates as a media and informational platform, not a provider of financial advisory services. The opinions of authors and other contributors are their own and should not be taken as financial advice. If you require advice, HODL FM strongly recommends contacting a qualified industry professional.