Social Capital CEO: How Equity Tokenization is Reshaping Capital Markets from US Stocks to SpaceX?

Original link: https://x.com/chamath/status/2029650649819009211

Original author: Chamath Palihapitiya

Compiled by: Ken, Chaincathcer

The modern stock market is built on infrastructure that existed long before the advent of digital networks.

The global stock market has a market capitalization of over $150 trillion, yet trading hours remain limited, settlements still rely on multiple layers of intermediaries, and many investment opportunities in high-growth companies are still restricted to a select few investors.

These structural limitations constrain the flow of capital, the participants involved, and the speed of ownership changes.

Market infrastructure providers are exploring how to modernize systems through tokenization. Institutions, including the New York Stock Exchange, Nasdaq, and DTCC, have begun developing tokenized equity and settlement infrastructure.

As the adoption of equity tokenization increases, these barriers are gradually being removed.

Since the beginning of 2025, the market capitalization of equity tokens has grown nearly 3.5 times, reflecting a broader shift towards the tokenization of real-world assets.

This expansion coincides with the rise of stablecoins. These tokens, pegged to fiat currencies, have grown more than tenfold in less than five years and have now become a primary settlement layer for on-chain financial activities:

While the functions of stablecoins differ from those of equity tokens, their rapid adoption indicates that when tokenized financial instruments can provide significant infrastructure advantages, they can achieve considerable scale.

Equity tokens represent the next test: Can tokenization expand from payments to ownership of financial assets?

What are Equity Tokens?

Equity tokens are not just traditional stocks placed on a blockchain.

Traditional stocks represent ownership in a company.

Equity tokens are blockchain-based assets that represent shares in a company or structured rights associated with those shares, with ownership tracked and transferred through distributed ledger technology (DLT).

Tokenized Equity Can Address Three Major Market Gaps 24/7

1. 24/7 Trading: The market is shifting from a trading model of five days a week (or shorter) to continuous 24-hour trading.

Even today, about 11% of U.S. stock trades occur outside regular trading hours.

A 24/7 market structure can more quickly incorporate new information into prices during after-hours periods and better accommodate a global shareholder base, with foreign investors currently holding about 15% of U.S. stocks.

2. Ownership: In traditional finance, records of equity ownership are maintained across multiple intermediaries, including brokers, clearinghouses, and central securities depositories.

Tokenization reduces reliance on these layers and allows ownership to be tracked directly on a shared ledger.

This transforms equity from static records into programmable financial assets.

Owners can use the asset as collateral to obtain on-chain loans. They can use it to secure credit. They can also place it into automated liquidity pools to generate yield.

In traditional markets, similar operations typically require multiple intermediaries and additional settlement steps. Each intermediary interaction incurs brokerage fees and commissions, which ultimately get passed on to equity asset holders.

Even a slight reduction in post-trade friction is estimated to save the stock industry between $5 billion and $10 billion annually.

3. Access Restrictions: While the first two advantages primarily apply to publicly traded stocks, tokenization also addresses access restrictions in private markets.

Under current securities regulations, many private placements are limited to accredited investors. This often requires investors to have a net worth of $1 million (excluding their primary residence), an annual income of $200,000, or a combined annual income of $300,000 with a spouse.

Private companies must also control the number of shareholders to remain unlisted. U.S. regulations require that once a company registers more than 2,000 shareholders or more than 500 non-accredited investors, it must report to the U.S. Securities and Exchange Commission.

Additionally, institutional venture capital funds often require limited partners to commit millions of dollars.

As a result, most investors have little opportunity to access these high-growth private companies before they enter the public market.

Equity tokenization is expected to bridge this access gap.

Equity tokens can be issued through various structural models, but the most common method currently relies on special purpose vehicles (SPVs).

In this structure, the SPV holds the underlying shares, while the tokens represent economic claims on that entity. This allows issuers to provide investors with exposure to private company investments that were previously limited to venture capital firms and institutional investors.

For example, Robinhood recently announced the promotion of tokens for OpenAI and SpaceX to eligible users in the EU.

These tokens provide investors with exposure to two of the hottest private companies globally. However, they do not represent direct ownership of shares in OpenAI or SpaceX. Instead, these tokens represent financial rights linked to intermediary institutions.

This highlights a core challenge of equity tokenization: the rights represented by the tokens are not always standardized.

Different issuers can design tokens with materially different economic rights. For instance, it is currently unclear whether the SpaceX token offered by Robinhood provides preferred stock rights or whether it can be converted into common stock if SpaceX eventually goes public.

Preferred and common stocks differ in terms of liquidation priority, voting rights, and return characteristics. Without clear disclosures on these terms, investors find it difficult to price or compare tokens linked to the same company.

As a result, many tokenized private equity products offer economic exposure rather than direct ownership. Because tokens exist at a different legal tier than the underlying stocks, investors must understand their structure before assuming what they own.

Despite these structural ambiguities, the demand from investors for access to private markets continues to grow. In this context, companies are also remaining private (unlisted) for longer periods.

Surveys show that about 90% of Americans are willing to allocate a portion of their retirement savings to private assets, with particularly strong interest from Gen Z and millennial investors.

Equity tokenization is expected to bring more opportunities to access private markets, ongoing liquidity, and new ways to build financial ownership.