<\/p>\n
Joris Delanoue, CEO and co-founder of Fairmint, explains why private equity needs a tech upgrade. <\/p>\n
<\/p>\n
As asset tokenization picks up momentum across real estate, debt, and treasuries, one segment remains largely untapped: equity. Still, despite its complexity, this market has significant potential, especially in the private equity space. <\/p>\n
To discuss tokenization in private equity, crypto.news spoke to Joris Delanoue, CEO and co-founder of Fairmint. He explained the transformative potential of this technology, as well as outlined proposals for making markets work better. <\/p>\n
crypto.news: Everyone\u2019s racing to tokenize real-world assets \u2014 real estate, debt, treasuries. Why did Fairmint choose to focus specifically on equity?<\/strong><\/p>\n Joris Delanoue: Tokenization is really just about upgrading from an old system to better technology \u2014 replacing traditional databases with distributed ledgers. But the word \u201ctokenization\u201d is very generic. It\u2019s broad. So for us, the real question was: what problem are we solving?<\/p>\n And the answer was clear \u2014 illiquidity, especially in private equity markets.<\/p>\n In capital markets, you have two main categories: debt and equity. Within equity, you have public markets \u2014 where everything is highly structured \u2014 and private markets, where things are still a mess.<\/p>\n The public markets, especially in the U.S., have been evolving since the 1970s. After the paper crisis, the DTCC was created to clean up the system and take it digital. It worked \u2014 today, public markets process trillions every day.<\/p>\n But in private markets? Nothing was standardized. Investors can\u2019t really custody their assets. There\u2019s no unified infrastructure. It\u2019s fragmented, manual, and hard to move anything.<\/p>\n That\u2019s where the real friction was \u2014 and that\u2019s what we wanted to solve.<\/p>\n Originally, I started working on a solution using SPVs to create liquidity for startups. The cap table of the startup stayed the same, but within the SPV, you could move shares. It offered a workaround to simulate liquidity without touching the issuer\u2019s structure.<\/p>\n Then in 2018, my co-founder Thibault \u2014 who\u2019s been deep into blockchain since 2014 \u2014 introduced me to the tech side of things. At the time, everyone was talking about ICOs and deregulation. But what I saw was different: blockchain as a superior database \u2014 a way to remove intermediaries and rebuild the system on better rails.<\/p>\n We didn\u2019t chase the STO or deregulation trends. For us, it was always about asking: How do we bring these assets \u2014 equity \u2014 on-chain in a way that\u2019s compliant and functional, even if the laws don\u2019t change?<\/p>\n That\u2019s been our approach from day one. Seven years later, it turns out we were just early \u2014 but right.<\/p>\n CN: Let\u2019s talk about regulation. Private equity is subject to a completely different set of rules than public markets. Access is limited, and compliance is strict. How do you approach compliance in this market?<\/strong><\/p>\n JD: That\u2019s a really good question. And I\u2019ll say this: after seven years in this space, regulation is not just something we react to \u2014 it\u2019s something we design around.<\/p>\n When we started Fairmint, one of our first hires was a securities lawyer: Collins Belton. He\u2019s been instrumental. He helped us really understand U.S. securities law, and what we realized early on was that the rules we needed already existed. The U.S. legal framework is actually pretty robust \u2014 the key is building within its boundaries.<\/p>\n A lot of companies in crypto tried to change the law or wait for a new legal framework to appear. That\u2019s risky. Instead, we decided to fully embrace the law as it is \u2014 and build everything in strict compliance. Sometimes that meant walking away from deals where founders or VCs wanted to cut corners. But long-term, it positioned us to be credible, scalable, and regulatory-first.<\/p>\n Today, I believe we\u2019re one of the best teams in the world at operating at the intersection of traditional finance and blockchain \u2014 especially on the private market side.<\/p>\n And this is how I like to frame it: we\u2019re helping shift the system from compliance by intermediation to compliance by automation. That means instead of relying on lawyers and middlemen to enforce the rules, we translate regulations directly into smart contracts \u2014 with attributes that govern exactly how assets move.<\/p>\n CN: What kind of rules are you embedding into the smart contracts? Can you give some examples of what \u201ccompliance by automation\u201d actually looks like?<\/strong><\/p>\n JD: Sure. Let\u2019s start with the basics. In private equity, the company is required to know who its shareholders are. So KYC and AML \u2014 Know Your Customer and Anti-Money Laundering \u2014 are mandatory.<\/p>\n Then, depending on how shares are issued, different exemptions apply under U.S. securities law. For example, if a company raises from accredited investors under Reg D, there are strict requirements \u2014 like verifying accreditation status, applying lockup periods (180 days or one year), and so on.<\/p>\n Or if the deal is done under Reg S \u2014 an offshore exemption \u2014 then the rules change. It applies only to non-U.S. persons, meaning they didn\u2019t invest through a U.S. IP, weren\u2019t physically in the U.S., and have no U.S. tax ties.<\/p>\n Now here\u2019s where it gets interesting: all those exemptions can coexist in the same cap table \u2014 but that used to be a nightmare for lawyers. One mistake \u2014 sending the wrong document to the wrong investor \u2014 could invalidate the entire exemption.<\/p>\n With smart contracts, we can embed all these rules as logic. The contract checks: Are you accredited? Are you in the right jurisdiction? Are you within the lockup period? And only if everything checks green, the transfer happens.<\/p>\n It\u2019s binary. It\u2019s precise. And it\u2019s a huge upgrade from the manual, error-prone world of legacy compliance.<\/p>\n <\/p>\n CN: Let\u2019s talk about programmable equity. It\u2019s a buzzword \u2014 but what does it actually do? What becomes possible once equity runs on code?<\/strong><\/p>\n JD: The biggest shift is that ownership becomes native to the internet. Not in a metaphorical way, but in how it\u2019s issued, held, and used.<\/p>\n Historically, owning shares meant having a paper certificate. Then it became a database entry. Now? Most people don\u2019t really \u201chold\u201d anything \u2014 you rely on a cap table software or an admin. And that\u2019s fragile. If the platform shuts down or the company stops paying, you can be left with nothing more than a screenshot.<\/p>\n When equity is programmable and on-chain, it\u2019s yours \u2014 in your wallet, under your control, and recognized legally. But more than that, it becomes active. It\u2019s no longer just a static record in a spreadsheet.<\/p>\n You can move it, use it, and respond to events. It can \u201ctalk\u201d to other systems, connect to financial infrastructure, and eventually flow into new environments \u2014 whether that\u2019s a lending platform, a trading interface, or something we haven\u2019t seen yet.<\/p>\n For the first time, equity isn\u2019t just a claim. It\u2019s an object that behaves. That changes what it means to be a shareholder \u2014 you don\u2019t just hold value; you participate in it. And over time, this creates new market behaviors.<\/p>\n Most people still see equity as a dead document. But when it becomes code, it can evolve. Programmable equity isn\u2019t just more efficient. It\u2019s more capable. And that\u2019s what people miss when they reduce tokenization to \u201cdigitizing shares.\u201d<\/p>\n This isn\u2019t about faster PDFs. It\u2019s about equity being composable, verifiable, and responsive to the world around it. That changes what companies can do \u2014 and what investors can expect.<\/p>\n CN: You\u2019ve made the case that smart contracts are actually more precise than traditional legal workflows \u2014 but smart contracts aren\u2019t immune to bugs or hacks. How do you approach smart contract risk, especially given you\u2019re dealing with real securities?<\/strong><\/p>\n JD: That\u2019s a key point. First, let me say: we\u2019re not doing cryptocurrencies. We\u2019re doing crypto-securities. That\u2019s a fundamentally different framework.<\/p>\n The moment you deal with securities, you\u2019re required to work with regulated agents. That could be a broker-dealer, a transfer agent, or another licensed intermediary \u2014 someone who\u2019s liable and accountable. If something goes wrong, the SEC can fine them.<\/p>\n Here\u2019s a concrete example. Let\u2019s say you invest in a private company through our platform. You pass KYC, your money goes in, and you receive your shares in a digital portfolio. But two weeks later, your wallet is compromised. Let\u2019s say a group like Lazarus steals your keys and takes control of your portfolio.<\/p>\n Now, in the crypto world \u2014 that\u2019s it. Game over. But in our world, you\u2019re still the legal owner of those shares.<\/p>\n Why? Because one of the primary attributes in the smart contract is your identity. You can go to the regulated transfer agent, prove who you are, re-do your KYC, and they\u2019ll cancel and reissue the shares to a new wallet. Problem solved.<\/p>\n That\u2019s what makes these tokens securities. They\u2019re built for investor protection. The legal claim sits with the person \u2014 not the private key alone. It\u2019s a totally different risk model than DeFi or tradable crypto tokens. In our system, the identity is decoupled from the device. That\u2019s part of the compliance layer we built into the contracts.<\/p>\n And because we\u2019re not dealing with pooled liquidity or locked funds in the same way as DeFi, the risks of exploits like flash loan attacks or protocol-level vulnerabilities are much lower. We\u2019re not locking hundreds of millions in a contract. We\u2019re managing ownership, identity, and permissions.<\/p>\n <\/p>\n CN: You\u2019ve said from the start that Fairmint builds within the rules \u2014 but you also submitted a 7-point proposal to the SEC about modernizing equity markets. What exactly should change in the way the system works?<\/strong><\/p>\n JD: Yes \u2014 this is something I care a lot about. Let me break it down. The proposal is a 7-point framework, but a few points really stand out as critical.<\/p>\n The first one is standardization. The private market is messy. Every deal, every lawyer, every cap table looks different. That chaos creates risk, especially as more assets move on-chain. Standardization is the only way to scale safely.<\/p>\n Funny enough, I was just at a private event in New York with people from the DTCC, and even they\u2019re thinking about this. They\u2019ve modernized the public markets \u2014 but the private side is still too fragmented. Everyone knows it.<\/p>\n So the first part of the plan is: let\u2019s create clear, interoperable standards for digital equity \u2014 so tech platforms, investors, and regulators are speaking the same language.<\/p>\n Second, there\u2019s this false tradeoff that \u201cgoing on-chain\u201d means giving up privacy. That\u2019s not true \u2014 and it shouldn\u2019t be the default.<\/p>\n Private companies want to keep certain things private. Not because they\u2019re hiding something, but because they\u2019re early-stage, they\u2019re innovating, or they\u2019re simply not ready to disclose everything like a public company would.<\/p>\n At the same time, we don\u2019t want to create opacity \u2014 especially for regulators or trusted analytics providers.<\/p>\n So one of our core proposals is the concept of observer nodes \u2014 trusted actors who can see what\u2019s happening on-chain, even in encrypted or permissioned networks. These could be regulators, analysts, or data firms \u2014 giving them read-access without compromising privacy.<\/p>\n This is especially important because we\u2019re seeing a rise in privacy-preserving blockchains \u2014 Canton, R3, Aleo, Provenance, zkEVMs, FHE chains. They all introduce a new kind of visibility risk. If no one can see what\u2019s going on, violations can slip through.<\/p>\n But if observer nodes are built in, we can give regulators near real-time transparency, not quarterly reports filed months late.<\/p>\n Today, as a registered transfer agent, I send my TA-2 report to the SEC every March \u2014 reporting on activity that may have happened as far back as January of the previous year. That\u2019s 14 months of lag.<\/p>\n With on-chain systems and observer nodes, you could flag compliance violations live. That changes everything.<\/p>\n CN: Final question \u2014 what\u2019s something you\u2019ve been thinking about lately that isn\u2019t getting enough attention in this space?<\/strong><\/p>\n JD: The exit. Everyone\u2019s focused on how to raise capital on-chain, or how to tokenize ownership, or make equity programmable \u2014 all of which is important. But no one\u2019s really asking: What does a true on-chain IPO look like?<\/p>\n It\u2019s still a missing piece. People have tried to imagine it, but mostly in siloed, walled-garden ways. What we actually need is a co-designed blueprint, created by multiple players in the ecosystem \u2014 platforms, exchanges, regulators \u2014 working together to define what it means to go public natively on blockchain rails.<\/p>\n Because right now, even the most advanced tokenized companies still end up exiting through traditional channels. That\u2019s a dead end. What we need is a way for companies to offer access to their growth \u2014 fully on-chain \u2014 without relying on legacy exchanges or middlemen.<\/p>\n And we\u2019re close. On-chain capital formation is now a real market. Coinbase\u2019s acquisition of Eco was a major signal that this category matters. We\u2019re seeing the same metrics \u2014 and often 10x more \u2014 across the ecosystem.<\/p>\n But the vision is still scattered. There\u2019s no shared roadmap for what happens after the raise.<\/p>\n A true on-chain IPO would mean any investor \u2014 from Coinbase, Binance, Robinhood, Fidelity \u2014 could access an equity offering directly, legally, and transparently. No unnecessary intermediaries. No fake digital wrappers. Just programmable equity at scale.<\/p>\n And the only way to get there is if programmable equity becomes the backbone. Without it, the infrastructure won\u2019t hold.<\/p>\n We talk a lot about \u201ctokenizing everything,\u201d but unless we figure out the exit \u2014 the last mile \u2014 it doesn\u2019t change the system. That\u2019s where I think the conversation needs to go next.<\/p>\n <\/p><\/div>\n","protected":false},"excerpt":{"rendered":" Joris Delanoue, CEO and co-founder of Fairmint, explains why private equity needs a tech upgrade. 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