Blockchain-Native Equity Markets: Figure's OPEN Network and the Future of Capital Formation

The emergence of blockchain-native equity markets represents a paradigm shift in capital formation, challenging the entrenched intermediaries of traditional finance. At the forefront of this transformation is Figure's On-Chain Public Equity Network (OPEN), a platform designed to enable companies to issue and trade equities directly on a blockchain. By eliminating intermediaries such as custodial brokers and clearinghouses, OPEN promises to reduce costs, democratize access, and integrate decentralized finance (DeFi) into equity markets. This analysis explores the disruptive potential of decentralized, self-custodied equity trading for institutional and retail investors, drawing on recent developments and regulatory dynamics.

The OPEN Network: A New Infrastructure for Equity Markets

Figure's OPEN Network, launched on the Provenance Blockchain in early 2026, allows companies to list equities natively on the blockchain, bypassing traditional tokenization methods that rely on depositary receipts or derivatives. Unlike tokenized versions of DTCC securities, OPEN equities are blockchain-registered, offering real ownership and enabling continuous trading via a limit order book. This innovation aligns with broader trends in DeFi, where the trading stack has converged into a continuous system, improving liquidity rotation and execution quality.

A key differentiator is the platform's integration of Democratized Prime, a DeFi protocol that allows shareholders to lend or borrow against their stock without relying on prime brokers. This disintermediation redirects economic benefits back to shareholders while enabling real-time settlement and transparency in stock lending. For institutional investors, this reduces dependency on traditional prime brokers and lowers operational costs, as evidenced by the 145 institutional investors who increased their positions in Figure's stock in Q3 2025, including major additions by RIBBIT Management Company and Vanguard Group.

Cost Savings and Liquidity Improvements for Institutional Investors

Institutional investors are increasingly adopting tools like ETFs to address liquidity and cost management challenges, with 67% of surveyed institutions using ETFs frequently or extensively. The OPEN Network's features-such as self-custody, on-chain settlement, and decentralized lending-align with these trends by further reducing intermediary costs. For example, the platform's ability to facilitate continuous trading and seamless exchangeability between OPEN shares and Nasdaq-listed shares ensures liquidity across both marketplaces.

Quantitative data from 2025 highlights the growing appeal of decentralized systems. The DeFi market is projected to grow at a CAGR of 81% between 2024 and 2029, driven by blockchain's ability to enable peer-to-peer transactions and smart contracts. This growth is supported by stablecoins, which function as a settlement layer for DeFi, with settlement volumes rivaling those of traditional value-transfer networks. For institutions, these developments offer a scalable alternative to legacy systems, where settlement times and operational costs are significantly reduced.

Retail Investor Access and Regulatory Challenges

While OPEN initially targets institutional and accredited investors, its long-term vision includes broader adoption by retail investors. The platform's self-custody model democratizes access, allowing individuals to trade equities without relying on custodial brokers. However, regulatory compliance remains a hurdle. The network must navigate complex frameworks under the SEC and FINRA, with initial adoption likely limited to accredited investors until regulatory clarity improves.

Retail investors are also influenced by macroeconomic trends, such as interest rate expectations and geopolitical risks, which shape their preference for stable assets. The OPEN Network's potential to offer transparent, low-cost equity trading could attract retail investors seeking alternatives to traditional markets, particularly as AI and open banking technologies reshape investment behavior.

Regulatory Developments and Systemic Implications

The regulatory landscape for blockchain-native equity markets is evolving rapidly. In 2025, the Federal Reserve finalized revisions to its supervisory rating framework for large banks, aiming to align supervisory ratings with actual financial strength. These changes reduce compliance costs for banks but raise concerns about systemic risk, as critics argue they may weaken corrective actions for institutions with significant deficiencies.

Globally, over 70% of jurisdictions advanced new stablecoin regulatory frameworks in 2025, with 80% of reviewed jurisdictions witnessing financial institutions announce digital asset initiatives. These developments signal growing institutional adoption of blockchain-based solutions, including equity trading platforms like OPEN. However, the displacement of traditional bank deposits by stablecoins could increase liquidity risk and funding costs for banks, particularly those reliant on concentrated, uninsured deposits.

Future Outlook: A Disruptive Force in Capital Formation

Figure's OPEN Network is poised to redefine capital formation by enabling companies to access blockchain-native capital markets. The platform's first issuer-Figure itself- filed a public registration statement in November 2025 for a non-dilutive, secondary equity offering. This move underscores the platform's potential to attract blockchain-native companies and digital asset treasury (DAT) firms, which can align equity values with digital assets and streamline tender processes.

For institutional and retail investors, the disruptive potential of decentralized equity trading lies in its ability to reduce costs, enhance liquidity, and democratize access. As regulatory frameworks mature and DeFi infrastructure scales, blockchain-native equity markets could challenge traditional intermediaries, reshaping the future of capital formation.