Figure filed a proposed offering of its new Blockchain Stock on Monday, hoping to disrupt the vertical stock stack.
Blockchain Stock will be a class of blockchain-native equity securities, traded on Figure’s alternative trading system and will be convertible one-for-one into shares of Figure’s Class A common stock, the company said in a press release.
“This is a new moment in capital markets infrastructure for efficiency and risk management – a huge step forward from traditional securities markets infrastructure and the start of a world that no longer needs it,” Mike Cagney, executive chairman and co-founder of Figure, said in the release.
Traditionally, shares pass through a multitude of intermediaries, from custodians and clearing firms to prime brokers and introducing brokers. Figure’s blockchain structure aims to eliminate third parties, thereby improving efficiency, security and cost savings, representatives said.
“This is a direct, competitive attack on the current stock portfolio,” Cagney said in a conference call Tuesday.
The proposed offering, which Figure calls the first blockchain-native public securities offering, would allow investors to hold, transfer and collateralize Figure’s shares on the Provenance blockchain with four key benefits: faster settlement, 24/7 trading, cross-collateralization of the security with other assets and the ability to lend or borrow the shares seamlessly, the company said on the call.
While many of the benefits are investor-focused, the infrastructure also provides benefits to issuers who want to engage more with individual investors because they can use a listing to further promote their business, CEO Micahel Tannenbaum said on the call. The blockchain nature of the security also allows broader access to investors who have difficulty with a traditional brokerage account.
“The ability of buyers to move this forward should not be overlooked,” Cagney said. “You look at Larry Fink (CEO of BlackRock), for example, he repeatedly talks about the tokenization of everything… We expect the buy side to play a significant role in this process here because of the utility it provides to the investor.”
Figure is currently selling issuers on the idea of blockchain, but doesn’t expect to see that
The number of Blockchain Stock shares to be offered and the price range have not yet been determined. Figure also doesn’t expect it to go live until next year.
The offering will not be dilutive to current Figure shareholders because existing investors will sell Class A shares to the underwriters and then Figure will repurchase and hold those shares for cash.
“This is a very ambitious undertaking,” Tannenbaum said on the call. “It’s hard to do new things, but there are courage and economic aspects to it.”
