Empire Newsletter Segment

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Today, we covered the new blockchain Converge, designed for products and applications that enable institutional investors to engage with tokenized assets. Notably, Blockworks Research analyst Carlos Gonzalez Campo has authored a new report on tokenization.

Gonzalez Campo anticipates “the rapid development of purpose-built infrastructure.” Currently, we’re witnessing such development in Ondo Chain and Converge. Both platforms aim to align with regulatory requirements while leveraging the efficiencies and transparency of open blockchain networks.

He sees significant opportunities in the tokenization of illiquid markets, especially private equity. However, the integration of off-chain assets into blockchain ecosystems is heavily dependent on clear and consistent regulatory frameworks.

According to Gonzalez Campo, tokenizing private equity is more logical than trading public stocks due to high entry barriers and illiquidity in private markets. “Unlike public stocks, which are easily traded on platforms like Robinhood, tokenized private equity allows investors to access fractional ownership in high-growth private companies while enhancing efficiency in valuation dislocations,” he noted.

Tokenized stocks are gaining interest, as shown in the chart below.

Source: Blockworks Research

Currently, tokenized versions of Coinbase, Nvidia, and the iShares Core S&P 500 UCITS ETF lead the market. However, with appropriate regulatory guidance in the US, we can expect shares of private companies such as SpaceX and OpenAI to be tokenized in the next four years.

Throughout my career, the goal of making exclusive private markets accessible to the public has been discussed but rarely acted upon, particularly in a way that allows individuals to invest in private opportunities meaningful to them.

The evolution has taken longer than anticipated since Robinhood transformed stock trading, but it’s thrilling to see a potential timeline emerging for broader access.