Onchain is the next online 🚀
For years, there has been talk of the tokenization of securities — the process of converting traditional securities like stocks, bonds, and other assets into digital tokens that can be traded on blockchain networks. 💰→🌐
However, despite the hype and excitement surrounding the concept, we have yet to see a widespread adoption of tokenized securities. Why is that?
On the tech side, significant advancements in the infrastructure and ecosystem surrounding tokenized securities have been made. The rise of blockchain technology (and particularly L2) has made it easier than ever to create and manage digital assets, and platforms like Ethereum have enabled the creation of smart contracts that can automate many aspects of the issuance and trading process.
The regulatory landscape remains murky, with many jurisdictions still struggling to classify and regulate digital assets. 🏦 Europe and Asia seem to be the most advanced on the regulations, but much debate is happening in the US to bring more clarity.
On the market side, there are also challenges to overcome. The traditional securities market is heavily regulated, with strict requirements for listing and trading securities on public exchanges. ️️⚖️ This has created a barrier to entry for smaller companies that are looking to raise capital through public offerings. The JOBS Act and Reg CF didn’t fix things and after 11 years, the results are unfortunately far from what was expected.
With the rise of decentralized finance (DeFi) and the growth of blockchain networks, there are now more opportunities for companies to raise capital through alternative means.
For example, private companies can now offer onchain securities, digital tokens representing ownership in the company. ⛓ These tokens allow companies to raise capital from a global audience without going through the traditional IPO process, which is key for the entire industry.
More successful founders are considering the path to direct listing and there is no doubt that in the next few years, those direct listings will be onchain, on Coinbase, or on Robinhood, accessible to a community of investors directly without the “investment bankers” intermediaries.
Terms are critical in the current market as it brings clarity. The term “token” is often associated to cryptocurrency, and all the “sulfureux” market that goes with it. 🙈 Lately, the 2023 buzzphrase has been “onchain is the next online,” signifying the start of more mainstream marketing that embraces securities built on blockchains. This is a chance for the market to be more open, to focus on “onchain securities” rather than “tokenized securities.”
While we have yet to see widespread adoption, the future looks bright for onchain securities. 🌎
As more companies explore alternative fundraising methods, and as regulatory bodies continue to recognize the potential of blockchain technology, we can expect to see more opportunities for investors to participate in the ownership of private companies.
Additionally, the rise of social investing and community-driven investment platforms like Fairmint are changing the game. 💫 Private companies can now offer access to series traditionally reserved for insiders, giving their communities skin in the game and more opportunities to participate in the company’s growth.
As blockchain technology continues to mature and regulatory bodies recognize the potential of decentralized finance, we can expect to see more and more companies offering onchain securities as a means of raising capital and wealth distribution.
