Figure has filed for a proposed offering of its Blockchain Stock, aiming to disrupt the vertical equity stack. The Blockchain Stock will be a blockchain-native class of equity securities that would trade on Figure’s alternative trading system and would 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 capital markets infrastructure moment for efficiency and risk management — a huge leap forward from the legacy securities market infrastructure, and the start of a world that no longer needs it, said Mike Cagney, executive chairman and co-founder of Figure. Traditionally, equities move through a stack of intermediaries, from custodians and clearing firms to prime brokers and introducing brokers. Figure’s blockchain structure aims to cut out third parties, improving efficiency, security and cost savings.
This is a direct, competitive attack to the current equity stack, Cagney said in a conference call. The proposed offering, which Figure calls the first blockchain-native public equity security issuance, would allow investors to hold, transfer and collateralize Figure stock on the Provenance Blockchain with four key advantages: faster settlement, 24/7 trading, cross collateralization of the security to other assets and the ability to lend or borrow the stock transparently. The infrastructure also provides benefits for issuers who want to engage more with individual investors, as they can use a listing to further market their company, Michael Tannenbaum said on the call. The blockchain nature of the security also allows for broader access to investors who struggle with a traditional brokerage account. “You don’t want to discount the buy side’s ability to push this,” Cagney said, “You look at BlackRock CEO Larry Fink, for example, he talks repeatedly about the tokenization of everything … We expect the buy side is going to play an important role here in driving this because of how much utility it accrues back to the investor.” Figure is currently selling issuers on the idea of the blockchain, but does not expect material results this quarter. The number of shares and the price range have not been determined yet, and Figure does not expect to go live until next year. Figure went public in September, opening at $36 per share and reaching a high of $49.17 in October before dropping to $39.19. The offering would be non-dilutive to current shareholders, as existing investors would sell Class A shares to underwriters and Figure would repurchase and hold those shares in treasury. “It is a very ambitious undertaking,” Tannenbaum said on the call. “It’s hard to do new things, but there’s valor and economics in doing so.”
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