Can Tokenization Disrupt Wall Street?

As the Bitcoin rally pushed the price to a fresh all-time high above $64,000, Wall Street banking giants, including JPMorgan, Goldman Sachs, and Morgan Stanley, are finally embracing  cryptocurrencies.

However, Bitcoin is not the only potential point of interaction between Wall Street and the blockchain world. The technology can transform the venture capital space thanks to equities’ tokenization, enabling Wall Street investors to purchase a stake in startups and small-cap firms conveniently and securely. 

Eventually, blockchain will be used to tokenize public companies’ shares via security tokens, which could help both institutional and retail investors get exposure to companies through a much safer and more transparent process. However, the regulatory hurdle makes the tokenization of public companies a more distant scenario.

Nevertheless, tokenization of startups and private equity is already a big trend, and this might transform the way venture capital (VC) firms invest in companies seeking fundraising.

One of the best platforms that enable the tokenization of company stakes is Republic, which recently partnered with AIKON to to use the Algorand blockchain. The Note was their first tokenized equity offering – and launched to huge demand.  

Republic connects startups and small companies with accredited and non-accredited investors. It has a well-established ecosystem that provides various forms of securities to meet the demand from investors. On the other end, startups can easily raise funds by directly connecting with a pool of well-versed investors.

Wall Street VC firms have been heavily investing in blockchain startups in the last few years, as they prefer this kind of exposure to the crypto industry rather than building digital asset portfolios. Nevertheless, some of them implement a mixed approach.

Republic has been used by many startups that have already gained notoriety. For example, popular trading Robinhood raised over $11 million through Republic. Other startups and companies that used the platform are Elon Musk’s SpaceX, AMPLE, and Carta.

On the other side, Republic has been used by the world’s largest VC firms and institutional investors seeking to get exposure to tech-oriented companies. Some of the VC giants invested in Republic companies are Sequoia, Andreessen Horowitz, Y Combinator, Union Square Ventures, Goldman Sachs, Pantera, and Mark Cuban Companies.

Soon, tokenization will likely be used by more and more startups and private companies to move their stakes on blockchain and simplify the fundraising process. This will give new opportunities for a lot of developers and startups with innovative ideas. On the other end, investors will enjoy more transparent and smooth investment channels to target companies with growth potential.

At the moment, Republic enables investors to get exposure to different companies through a wide range of investment instruments, such as Simple Agreement for Future Equity (SAFE), Crowd SAFE, Crowd SDA (a debt instrument), Token Debt Payable by Assets (DPA), and Crowd Token Purchase Agreement (TPA).


Source: https://republic.co/startups/fundraising-instruments 

Token DPA and Crowd TPA are leveraging blockchain to tokenize equity and debt. SAFEs can also be used to tokenize equity and attract VC firms.

Republic is poised to lead the tokenization revolution that will change the rigid Wall Street culture.

AIKON is proud to help Republic users better manage their identity and authentication options through ORE ID — an authorization and authentication platform built for blockchain dApps.

Learn more about AIKON’s solutions and read our blog to see how AIKON and Republic are helping Wall Street investors.

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About AIKON

AIKON, a San Francisco-based VC-backed firm, was founded in 2017 to enable the digital asset economy and empower users from all over the globe by securing their personal information via blockchain. 

AIKON has developed the Open Rights Exchange (ORE) protocols to manage access to digital rights and access and has been enabling mainstream blockchain adoption with its ORE ID secure identity service and ORE Vault — shared wallet for teams. With its solutions, AIKON aims to foster a new era of secure identities that protects users and their data, powered by the blockchain. 

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