Figure Technology has introduced a groundbreaking platform aimed at revolutionizing how companies issue stock by leveraging blockchain technology. This new initiative, known as the On-Chain Public Equity Network, or OPEN, enables firms to issue on-chain equity while facilitating direct lending of shares between investors. By bypassing traditional market infrastructures, such as clearinghouses and retail brokers, Figure aims to streamline the trading process significantly.
Operating on the Provenance blockchain, the OPEN platform allows companies to create genuine shares represented as blockchain tokens. Unlike typical digital assets that serve merely as placeholders, these tokens confer actual ownership rights to investors. Furthermore, OPEN empowers users to lend or borrow against their shares directly, which reduces the dependence on prime brokers typically involved in stock lending.
Co-founder and Executive Chairman Mike Cagney emphasized that the platform”s design seeks to eliminate unnecessary layers separating issuers from investors. “We”re really cutting everything out,” he stated, referring to the absence of central securities depositories and centralized exchanges. Cagney described this innovation as a fundamental reconstruction of equity capital markets, utilizing blockchain data to replace traditional systems.
Although the new model may still accommodate prime brokers, Cagney suggests they could play different roles, particularly in areas like cross-collateralization and new lending services tailored for an on-chain environment. Figure Technology, established in 2018, went public in September, raising $787.5 million through its initial public offering.
Interest in the OPEN platform is already apparent, with several firms eager to issue shares through this novel mechanism. Among them are digital-asset treasury firms, known as DATs, which focus on holding cryptocurrencies within their portfolios. A notable case is Strategy Inc., a company specializing in Bitcoin holdings. Many DATs have faced challenges, particularly as their stock prices have dipped below the value of the cryptocurrencies they maintain, following a significant market downturn in October.
Cagney believes that the OPEN platform can help bridge this valuation gap by allowing investors to directly purchase shares using cryptocurrencies. He illustrated this potential, noting that an investor could acquire stock in a Solana-based DAT using the Solana cryptocurrency itself. “When you”re on OPEN, the shareholder has a digital wallet that can take digital assets,” he explained. “That gives you a fast way to run a tender process and pull the price back to net asset value.”
This initiative by Figure Technology marks a significant shift in the financial landscape, promising to enhance efficiency and accessibility in the stock issuance and trading process.
