The Real Tokenization Revolution Is In Private Markets, Not Public Stocks

Opinion by: Alex Svanevik, CEO of Nansen

Since tokenization first gained mainstream attention during the 2017 initial coin offering boom and early blockchain projects aimed at digitizing assets such as equities and commodities, it has been crypto’s go-to pitch for modernizing finance. 

For many, however, the conversation stops at tokenizing public equities, putting existing stocks onchain for fractional ownership and 24/7 trading. While these steps are nice to have, they’re a far cry from a revolution. The truth is that equities are already very efficient markets, meaning the marginal gains from deploying blockchain technology are notably small.

This means the fundamental transformation lies in markets and asset classes where inefficiencies are still deeply embedded. Private markets remain less transparent, more expensive to access and off-limits primarily to over 80% of investors. To have an actual influence on finance, we need to rearchitect access to capital itself. Tokenizing private equity has the potential to remake capital formation, not just digitize it, unlocking a massive new level of financial inclusion.

Where are the customers’ yachts? 

In today’s system, access to high-growth private companies is limited to accredited investors and institutions, leaving retail investors locked out of early-stage growth opportunities. When a company goes public, venture capitalists and hedge funds have swallowed most of the pie. 

The public markets weren’t always the late-game arena they are today. Companies IPOd earlier a generation ago, letting retail investors ride decades of growth. Amazon went public at a $438-million valuation, while today’s giants stay private until they’re worth $50 billion. Over the past 20 years, capital formation has shifted upstream, and companies remain private longer; Stripe, SpaceX and OpenAI are now worth tens of billions without ever listing. Meanwhile, accreditation rules limit participation in private markets to those with a $1-million net worth or high incomes.

Related: Private companies line up to join Robinhood’s tokenized equity platform: CEO

This trend isn’t limited to Silicon Valley. Companies increasingly raise capital across Europe, Asia and the Gulf through private placements, sovereign funds and family offices, not initial public offerings (IPOs). 

The result is a global freeze-out of ordinary investors from the most dynamic parts of the economy.

Tokenization has the potential to break this cycle,…