{"id":7986,"date":"2025-08-16T18:53:06","date_gmt":"2025-08-16T18:53:06","guid":{"rendered":"https:\/\/bitunikey.com\/news\/tokenized-private-stocks-have-a-fundamental-problem-opinion\/"},"modified":"2025-08-16T18:53:26","modified_gmt":"2025-08-16T18:53:26","slug":"tokenized-private-stocks-have-a-fundamental-problem-opinion","status":"publish","type":"post","link":"https:\/\/bitunikey.com\/news\/tokenized-private-stocks-have-a-fundamental-problem-opinion\/","title":{"rendered":"Tokenized private stocks have a fundamental problem | Opinion"},"content":{"rendered":"<div class=\"post-detail__content blocks\">\n<div class=\"cn-block-disclaimer\">\n<div class=\"cn-block-disclaimer__icon\">\n            <svg class=\"icon icon-info\" aria-hidden=\"true\"><use xlink:href=\"#icon-info\"><\/use> <\/svg>        <\/div>\n<p class=\"cn-block-disclaimer__content\">\n            Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news\u2019 editorial.        <\/p>\n<\/p><\/div>\n<p><!-- .cn-block-disclaimer --><\/p>\n<p>Tokenization is one of blockchain\u2019s applications, proving truly disruptive in its utility and scale. Real-world assets such as bonds, art, and even real estate are fractionalized and digitalized as tokens recorded on blockchain\u2019s private ledgers, becoming tokenized investments and part of a transparent system of ownership. This increases accessibility to typically ring-fenced assets and pulls in greater liquidity by making it easier for investors to access and invest in these tokenized assets \u2014 at any time.\u00a0<\/p>\n<div id=\"cn-block-summary-block_0881aaffb12b8a4c51c670da6d623d18\" class=\"cn-block-summary\">\n<div class=\"cn-block-summary__nav tabs\">\n        <span class=\"tabs__item is-selected\">Summary<\/span>\n    <\/div>\n<div class=\"cn-block-summary__content\">\n<ul class=\"wp-block-list\">\n<li>Tokenizing private company shares promises 24\/7 trading and broader access to high\u2011value assets, but today\u2019s offerings mostly wrap illiquid, opaque markets in a digital shell.<\/li>\n<li>Current tokenized private stocks often lack clear ownership rights, investor protections, and exit options, making them more complex and risky than their traditional counterparts.<\/li>\n<li>True democratization requires enforceable equity rights, transparent ownership records on\u2011chain, and explicit support from the companies themselves.<\/li>\n<li>Tokenization has succeeded elsewhere \u2014 from $3.2B in tokenized real estate today to a projected $19.4B by 2034 \u2014 proving its potential when built on traceability and access.<\/li>\n<li>With legal clarity, unified markets, and genuine company backing, tokenized private stocks could evolve into a powerful bridge between private and public markets.<\/li>\n<\/ul><\/div>\n<\/div>\n<p><!-- .cn-block-summary --><\/p>\n<p>Considering the above, it is not surprising that tokenization is now being applied to private company shares. At first glance, it makes sense; private companies can yield large returns and unique investment opportunities, so simply adding them to a blockchain should, in theory, unlock capital in previously untouchable markets. The hypothesis is that tokenized private stocks will enable 24\/7 trading, allowing public access to a greater share of the world\u2019s return-generating assets.\u00a0<\/p>\n<p>Unfortunately, the reality is less appealing. Instead of tokenization making private stocks more accessible and transparent, investors are presented with digital wrappers on top of an opaque, fragmented, and illiquid trading system.\u00a0\u00a0<\/p>\n<p>This is a major step back from the original purpose of tokenization. However, there is still time to course correct \u2014 the RWA community must rally around its fundamental principles to ensure that future adoption achieves the democratising aims of tokenization.\u00a0<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<h2 class=\"wp-block-heading\">Tokenized private stocks lack real equity<\/h2>\n<p>The driving force behind the tokenization of private stocks is the democratization of access to high-value assets and the elimination of gatekeepers. The hope is that retail investors, buoyed by opportunities to invest in Silicon Valley unicorns or pre-IPO tech firms, would be quick to support the tokenization of private stocks.\u00a0<\/p>\n<p>But the truth is that retail investors who purchase tokenized private stocks would only be buying into locked-up instruments with no guaranteed exit, few investor protections, and unclear rights to underlying assets. In their current form, tokenized private stocks are over-engineered, introducing complexities around regulation and uncertainty around the custody of the underlying stock.\u00a0<\/p>\n<h2 class=\"wp-block-heading\">Properly tokenizing private companies<\/h2>\n<p>Given the aforementioned problems with tokenized stocks, it would not be unreasonable to expect the RWA community to abandon them altogether and for financial regulators to prohibit them completely. However, such actions might be too heavy-handed and drastic. Rather, we need to revisit the infrastructure underpinning tokenized private stocks.\u00a0<\/p>\n<p>If platforms want to uphold basic principles of investment while tokenizing currently private companies, they must treat their platforms as a middle ground between complete privacy and a public listing. Three base improvements are necessary for any platform attempting to properly tokenize private stocks:<\/p>\n<ol class=\"wp-block-list\">\n<li><strong>Equity ownership rights<\/strong> \u2014 legally enforceable ownership that provides, at a minimum, economic rights (the ability to transfer ownership and receive dividends).<\/li>\n<li><strong>Traceability<\/strong> \u2014 clear records of previous ownership, market participants, and token holder rights listed on the blockchain.<\/li>\n<li><strong>Support from private companies<\/strong> \u2014 clear endorsement from the listed private companies, ensuring that investors are not put off by competing public statements.<\/li>\n<\/ol>\n<h2 class=\"wp-block-heading\">Tokenization is gaining traction<\/h2>\n<p>Outside of private stocks, tokenization has proven its credibility as a mechanism of accessing high-value, yield-generating assets that were previously inaccessible to many. Take the tokenized real estate market; worth $3.2 billion in 2024, current <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.custommarketinsights.com\/report\/real-estate-tokenization-market\/\" target=\"_blank\" rel=\"nofollow\">estimates<\/a> predict that the market will grow 21% year-on-year and reach $19.4 billion in 2034. Real estate investment is traditionally opaque, paper-based, and inefficient \u2014 characteristics that in fact lend themselves perfectly to market transformation through tokenization, with fractional investments and digitalisation democratising access to the property market on a traceable blockchain.\u00a0<\/p>\n<p>Without the underlying principles of democratization and traceability, tokenized private stocks will eventually be exposed for what they truly are: a digital wrapper on an inaccessible asset. Their current form is not decentralization; it\u2019s window dressing.<\/p>\n<h2 class=\"wp-block-heading\">But tokenized stocks don\u2019t have to remain this way.<\/h2>\n<p>If we can create clear ownership structures that link tokens to legitimate legal rights for investors, establish unified secondary markets with tangible liquidity, implement investor protections, and, most importantly, gain the consent of the companies involved, tokenized private stocks can be a marquee success for the crypto industry.\u00a0<\/p>\n<p>Tokenized private stocks can become a uniquely powerful tool for investors, unparalleled by traditional instruments. But only if we stop pretending the current model works. By reimagining these assets as stepping stones to public markets, we can bring trust, access, and efficiency to a corner of finance that desperately needs it. Anything less risks undermining the very credibility of tokenization itself.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<div class=\"cn-block-author author-card\">\n<div class=\"author-card__photo\"><\/div>\n<p><!-- .author-card__photo --><\/p>\n<div class=\"author-card__content\">\n<div class=\"author-card__name\">\n                Amr Adawi            <\/div>\n<p><!-- .author-card__name --><\/p>\n<div class=\"author-card__bio\">\n<p><b>Amr Adawi <\/b><span style=\"font-weight: 400;\">is the co-founder and CEO of MetaWealth, a leading platform for tokenized real estate investments. With a background in real estate, fintech, and product development, Amr has helped MetaWealth become one of the fastest-growing RWA platforms \u2014 successfully distributing over $1 million in yield to token holders. Prior to MetaWealth, he held roles at Wealthsimple, Meta, and the Chan Zuckerberg Initiative, and co-founded the AR startup 1lens. Passionate about financial inclusion through Web3, Amr is focused on making real estate more accessible, transparent, and rewarding for global investors through blockchain-powered infrastructure.<\/span><\/p>\n<\/p><\/div>\n<p><!-- .author-card__bio --><\/p>\n<div class=\"author-card__social\">\n<p><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.linkedin.com\/in\/amr-adawi-0b328165\/\" class=\"community-link\" target=\"_blank\" rel=\"nofollow\" aria-label=\"LinkedIn\"><\/p>\n<p>    <svg class=\"community-link__icon\" aria-hidden=\"true\">\n        <use xlink:href=\"#icon-social-linkedin\"><\/use>\n    <\/svg><\/p>\n<p><\/a><\/p><\/div>\n<p><!-- .author-card__social --><\/p><\/div>\n<p><!-- .author-card__content --><\/p><\/div>\n<p><!-- author-card --><\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news\u2019 editorial. Tokenization is one of blockchain\u2019s applications, proving&hellip;<\/p>\n","protected":false},"author":1,"featured_media":7987,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-7986","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/7986","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=7986"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/7986\/revisions"}],"predecessor-version":[{"id":7988,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/7986\/revisions\/7988"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/7987"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=7986"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=7986"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=7986"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}