Tokenization: A New Trend Reshaping the Financial Market

The development of the U.S. public stock market can be described as magnificent and tumultuous. From the early days of free issuance to the frenzied speculation of the 1920s, and then to the strict regulations after the Great Depression, the public market has undergone tremendous changes. The enactment of the Securities Act of 1933 and the Securities Exchange Act of 1934 established a strict information disclosure system for listed companies, aimed at protecting investors' rights.

However, with the passage of time, the private placement market has gradually risen to become the new main battleground for fundraising. Many star tech companies such as SpaceX and OpenAI choose to raise funds in the private placement market, which allows them to obtain ample financing while avoiding the cumbersome procedures and public scrutiny associated with going public. Although this trend facilitates businesses, it has also sparked debates over fairness—ordinary investors are unable to participate in the investment opportunities of these high-growth companies.

To resolve this predicament, the industry has proposed various solutions: simplifying the listing process, strengthening supervision of private enterprises, restructuring the economic structure, etc. However, the most radical proposal is to completely abolish the existing rules for listed companies, allowing any company to freely raise funds from the public without mandatory information disclosure.

In this context, the cryptocurrency industry has pioneered a new path – issuing "tokens" to circumvent securities laws. Although this practice has been controversial, it has gained momentum in recent years. Some financial institutions have begun exploring the "tokenization" of private company stocks, attempting to bypass U.S. disclosure rules to sell shares of private enterprises to the public.

A certain trading platform recently announced the launch of tokenized stock services and gave away tokens from private companies like OpenAI and SpaceX. The platform's executives stated that this move aims to address investment inequality, allowing ordinary people to invest in these star companies. However, this practice essentially challenges the existing securities regulatory system.

Some financial leaders have also publicly supported tokenization, believing it can eliminate investment barriers and allow more people to access high returns. However, it is important to recognize that the notion of "allowing the public to invest in private companies" is inherently contradictory. The core characteristic of private companies is that they are not open to the public and are not bound by the disclosure requirements of publicly listed companies. Therefore, promoting tokenization is essentially advocating for allowing companies to sell shares to the public without disclosing information.

Although the direct sale of private company "tokens" to the public is not yet legalized in the United States, some major players in the financial sector are actively promoting this trend. They believe that the existing disclosure rules hinder public participation in private investment opportunities. Compared to directly calling for the abolition of disclosure rules, the term "tokenization" sounds more modern and appealing.

Looking back at history, around 2020, crypto projects raised funds through false promises, leading to a bubble burst and the "crypto winter". In the face of this situation, people initially thought there would be strict regulation or an industry recession. However, the current development trend is surprising: the financial industry seems to be seeking a way to blur the boundaries of information disclosure and trading rules in the stock market through tokenization, making it closer to the operational model of the cryptocurrency market.

This trend will undoubtedly have a profound impact on the future of the financial markets, requiring the attention and discussion of regulators, investors, and market participants.