On-Chain Stock Trading Revolution: Figure’s OPEN Network Unlocks Transformative Public Market Access
In a landmark development for digital finance, Figure Technology Solutions has officially launched its OPEN network, a pioneering system designed to facilitate the on-chain trading of public stocks. This initiative, reported by industry source Wu Blockchain, represents a significant step toward merging traditional equity markets with blockchain technology’s efficiency and transparency. Consequently, the financial sector now faces a potential paradigm shift in how securities are issued, traded, and settled.
Understanding the OPEN Network for On-Chain Stock Trading
Figure Technology Solutions, a company founded by former SoFi CEO Mike Cagney, has built its reputation on blockchain-based lending and financial services. The newly launched OPEN network operates on the Provenance blockchain, an ecosystem also developed by Figure. Fundamentally, the network’s core function is to enable the creation and exchange of tokenized stocks. These digital tokens are directly backed by real-world shares of publicly traded companies.
This process, known as tokenization, converts the ownership rights of a physical stock into a digital asset on a blockchain. Therefore, companies can issue these digital securities, and investors can subsequently trade them peer-to-peer on the OPEN network. The system aims to streamline processes that are currently managed by a complex web of brokers, custodians, and clearinghouses.
The Mechanics and Technology Behind Tokenized Stocks
The OPEN network leverages the inherent features of the Provenance blockchain to reimagine stock trading. Provenance is a public, proof-of-stake blockchain specifically designed for financial applications, focusing on speed, security, and regulatory compliance. On this foundation, the OPEN network establishes a new framework for digital securities.
- Digital Issuance: A company or an authorized entity mints a digital token representing a share of stock.
- Real-World Backing: Each token is fully collateralized by a corresponding physical share held in custody.
- Direct Trading: Investors can buy and sell these tokens directly on the blockchain ledger.
- Instant Settlement: Transactions can settle almost instantly, unlike the traditional T+2 settlement cycle.
This model contrasts sharply with traditional systems. For instance, it could reduce counterparty risk and administrative overhead. Moreover, it introduces the possibility of 24/7 trading markets and fractional ownership of high-value stocks.
Regulatory Landscape and Market Context
The launch occurs within a rapidly evolving regulatory environment for digital assets. Agencies like the U.S. Securities and Exchange Commission (SEC) have increased scrutiny on crypto-related securities offerings. However, Figure has consistently emphasized its commitment to operating within existing regulatory frameworks. The company previously received a conditional bank charter approval and has engaged with regulators on its blockchain projects.
This move by Figure is not isolated. Other institutions, such as the Singapore Exchange (SGX) and various European banks, have experimented with tokenized bonds and funds. Nevertheless, the application to mainstream public equities in a dedicated network marks a more ambitious foray. The success of OPEN will likely depend on securing partnerships with established financial institutions and navigating the complex global securities laws.
Potential Impacts on Traditional Finance and Investors
The implications of functional on-chain stock trading are profound for multiple market participants. For companies, it could lower the cost of capital and simplify shareholder management through smart contracts. For institutional investors, blockchain-based trading promises enhanced transparency in ownership and faster, cheaper settlement.
| Aspect | Traditional System | OPEN Network Model |
|---|---|---|
| Settlement Time | T+2 (Trade date plus two days) | Near-instant (Potentially minutes) |
| Intermediaries | Multiple (Broker, Custodian, Clearinghouse) | Minimized (Direct peer-to-peer or via licensed nodes) |
| Market Hours | Exchange-specific (e.g., 9:30 AM – 4:00 PM ET) | Potential for 24/7/365 operation |
| Transparency | Opaque to most participants post-trade | Transparent, auditable public ledger |
For retail investors, the network could eventually democratize access to certain market activities and reduce fees. However, significant hurdles remain, including widespread adoption, liquidity provision, and integration with existing brokerage accounts and tax reporting systems.
Expert Analysis on the Future of Digital Securities
Financial technology analysts observe that the true test for networks like OPEN is network effects. A blockchain for trading requires both issuers and a critical mass of traders to provide liquidity. Figure may have an advantage due to its existing relationships in the lending and banking sectors. Furthermore, the use of a dedicated blockchain like Provenance, rather than a general-purpose chain, allows for optimizations specific to financial compliance and performance.
Industry experts often cite the potential for “programmable finance” as the ultimate goal. On a network like OPEN, dividends could be distributed automatically via smart contracts, and shareholder voting could be conducted transparently on-chain. This evolution would represent a move from digitizing existing processes to reinventing them with new capabilities.
Conclusion
The launch of the OPEN network by Figure Technology Solutions marks a pivotal moment in the convergence of blockchain and public markets. By enabling the on-chain trading of tokenized stocks, the initiative challenges long-standing market structures and proposes a more efficient, transparent future for securities. While regulatory adoption and market acceptance will determine its ultimate trajectory, the OPEN network undeniably accelerates the conversation around the tokenization of real-world assets. The financial world will be watching closely as this ambitious vision for on-chain stock trading begins its real-world test.
FAQs
Q1: What is the OPEN network?
The OPEN network is a blockchain-based system launched by Figure Technology Solutions. It is specifically designed to support the issuance and trading of tokenized versions of public company stocks on the Provenance blockchain.
Q2: How are tokenized stocks different from traditional stocks?
Tokenized stocks are digital representations of physical shares. They exist on a blockchain ledger, which can enable faster settlement, reduced intermediaries, and potential for 24/7 trading, unlike traditional stocks which rely on centralized clearinghouses and have set market hours.
Q3: Is trading stocks on the OPEN network legal?
Figure Technology Solutions states it is building the network within existing regulatory frameworks. However, the legality for any specific user depends on their jurisdiction and compliance with local securities laws. The network would need to operate with licensed entities to interface with traditional markets.
Q4: What blockchain does the OPEN network use?
The network is built on the Provenance blockchain, a financial services-focused blockchain also developed by Figure. It uses a proof-of-stake consensus mechanism and is designed for high throughput and regulatory compliance.
Q5: Can anyone trade stocks on the OPEN network?
While the technology permits peer-to-peer trading, access will likely be governed by know-your-customer (KYC) and anti-money laundering (AML) controls. Initially, participation may be limited to accredited investors or institutions as the regulatory model is established.
