Private company shares could be tokenized in the ‘next 4 years’: Blockworks Research

This is a segment from the Empire newsletter. To read full editions, subscribe.

Today, we covered the new blockchain Converge, intended for products and apps that would give institutional investors ways of engaging with tokenized assets. Speaking of tokenization, Blockworks Research analyst Carlos Gonzalez Campo has penned a new report on the subject. 

“We anticipate the rapid development of purpose-built infrastructure,” Gonzalez Campo wrote. 

And wouldn’t you know it — we’re already seeing this kind of development in ONDO Chain and Converge. Both are “designed to align with regulatory requirements while leveraging the efficiencies and transparency of open blockchain networks.”

“In the coming months, we see the greatest opportunities in the tokenization of illiquid markets, particularly private equity. However, the successful integration of offchain assets into blockchain ecosystems relies heavily on clear and consistent regulatory frameworks,” he continued.

Gonzalez Campo makes the case that tokenizing private equity makes more sense than public stocks due to the high entry barriers and illiquidity that plagues private markets. 

“Unlike public stocks, which are already easily traded on traditional brokerage platforms and apps like Robinhood, tokenized private equity allows investors to access fractional ownership in high-growth private companies while adding efficiency to valuation dislocations,” he wrote.

Tokenized stocks, however, do have a bit of interest, as seen in the chart below. 

Right now, tokenized versions of Coinbase, Nvidia, and the iShares CORE S&P 500 UCITS ETF dominate the available tokenized public stocks. 

But, “with the right regulatory guidance in the US, we expect that shares of private companies like SpaceX and Open AI will be tokenized over the course of the next four years,” the note said. 

Throughout my career, the idea of making these highly exclusive private markets more available to the public has been teased but not really truly acted on — not, at least, in a way where folks really can get a piece of whatever private pie they want. 

It’s certainly taken longer than I thought it would after Robinhood changed the game for stock trading years ago. But it’s exciting to see a potential timeline laid out.

• Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
• Empire: Start your morning with the top news and analysis to inform your day in crypto.
• Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
• 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
• Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
• The Drop: For crypto collectors and traders, covering apps, games, memes and more.