By Igor Lipovetsky, Co-Founder & CEO of PIPO.VC
Tokenization is once again being sold as the great equalizer, this time between Web2 and Web3 markets. Wrap a private company’s shares in a token, put them on the blockchain, and a retail investor in Lagos or Manila will supposedly gain the same access to SpaceX or OpenAI as a Silicon Valley hedge fund.
There’s some truth to this story: tokenization can reduce operational barriers, speed up settlements, expand the geography of demand, and make access to private assets technically easier. But over the past year of observing this market unfold in real time, I’ve come to a less comfortable conclusion: tokenization itself doesn’t democratize private markets.
It merely migrates the old system to a faster settlement layer, with a more user-friendly interface, 24/7 availability, and a new set of marketing promises. But the key questions remain the same: what exactly is the investor buying, what legal rights come with it, who holds the underlying asset, and how are disclosure and liquidity structured?
The settlement layer is the part that genuinely works: stablecoin rails have shown that value can move continuously and finality can be achieved. What they cannot do is manufacture a claim on the other side of the trade.
The gap tokenization claims to close
Companies are staying private much longer than before. Jay Ritter’s IPO data shows the median venture-backed tech company that went public in 2025 was 12 years old, and the 2024 cohort was 14, against a median of six to nine years through the 1980s and eight to ten through the 1990s. Andreessen Horowitz puts it more sharply: companies that went public between 2014 and 2019 gained over 80% of their market capitalization after their IPOs. Companies in the later cohort have already gained over 50% of their future market capitalization while remaining private.
Run the numbers, and you’ll discover a real structural problem. According to a16z, the combined value of private tech companies worth over $1 billion is about $4.7 trillion, representing about 15% of the entire Nasdaq market and about 40% if the Magnificent Seven are excluded. There are approximately six times as many private unicorns globally as public companies of comparable size. Virtually the entire value creation process for companies like OpenAI or Anthropic has already occurred before a retail investor has the opportunity to invest on a public exchange.
For decades, access to this process was limited to investors who met the accredited-investor test: $200,000 in annual income, or $300,000 jointly, or $1 million in net worth excluding a primary residence, or who could clear the far higher minimums of a venture fund. Meanwhile, the fastest-growing pool of global capital retail and institutional investors outside the US was excluded entirely. This gap is real, and addressing it legally is a legitimate issue.
Three tokens, three very different claims
By mid-2026, pre-IPO tokenized share trading volume had grown to approximately $544 million in the first half of the year, almost entirely concentrated in a few well-known companies: SpaceX, OpenAI, Anthropic, Stripe, and Anduril. But “pre-IPO tokenized shares” isn’t a single product. It’s at least three, and the differences matter.
Firstly, spot tokens backed by a special-purpose vehicle (SPV) are the largest category by volume. A platform buys shares in a private company through the SPV, then issues tokens that represent an economic stake in what the SPV owns. It’s simple, quick to launch, and easy to market.
“Completing the actual acquisition transaction by a special purpose vehicle (SPV) is the easy 10% of the job; the other 90% is ensuring the structure passes the issuing company’s own shareholder structure review, and that’s the part almost no one spends time on,” says my co-founder Sergei Goriachev, COO of PIPO.VC.
However, structurally, this is the weakest of the three options: to receive each token, the platform must purchase the underlying share, and the legal claim the token holder ends up with is defined by the SPV documents, and it is usually much thinner than the marketing suggests.
Next, synthetic perpetual futures built on platforms like Hyperliquid’s HIP-3 let traders take leveraged long or short positions based on a private company’s implied valuation without any share transfers. They have survived tighter rules on unauthorized share transfers precisely because they never touch the underlying shares.
As one chief investment officer put it, these are “sentiment markets, not fundamental valuation markets.” They carry oracle and liquidation risks that have already done real damage. Ventuals, the largest builder-deployed pre-IPO perp venue, saw its SpaceX market fall roughly 45% in a single session on faulty oracle data and compensated traders afterward. In June 2026, it froze its pre-IPO markets altogether and settled open positions at a trailing 24-hour time-weighted average price, after roughly $650 million of lifetime volume. A sentiment market can close its book and settle at an average. A legal claim cannot.
And then there are warrant-based structures. This is the third model, and it is the one PIPO.VC is built on. I have an obvious interest here, so weigh what follows accordingly. Because settlement is in shares rather than cash, the instrument can be treated as equity rather than a liability under US accounting rules, which matters to an issuer preparing to list. The holder receives physical share settlement, an exercise path defined in the warrant documents rather than left to platform discretion, and backing evidenced by the underlying warrant agreement held at the issuing vehicle and confirmed independently, not by a number on a dashboard.
I set out these three models because an investor looking at a trading app usually cannot tell them apart, and priced side by side on one screen, they are not the same product.
What “investor rights” actually has to mean
It’s worth clarifying what exactly is missing, as the term “rights” is used rather loosely in this market. For a tokenized instrument issued pre-IPO to be meaningful, an investor needs to know the answers to a short list of uncomfortable questions before making a purchase:
- Does this token represent a legal claim recognized by the issuing company, or is it a liability to an SPV the company never approved?
- Is there a defined contractual path from the token to the shares, or is the token the final state?
- Is the backing verified independently, or is it a number on a dashboard the platform controls?
- What happens to my position if the company at any point decides it doesn’t recognize the structure on which the token was built?
Tokenization can certainly improve the infrastructure around these issues. Fractional ownership, instant settlements, programmable compliance, and continuous record-keeping linked to a shareholder table are all real and useful engineering improvements over faxed subscription agreements and quarterly NAV (Net Asset Value) updates.
But infrastructure is not the same as investor rights. Even the most technologically advanced settlement system doesn’t create value on its own: it must convey a legally enforceable claim to a real asset.
The regulatory ground is shifting, but slowly
This is partly because the rules are still being developed in real time. Nearly all pre-IPO platforms in this category, PIPO‘s included, are structured under SEC Regulation S, which permits offerings made entirely outside the United States and therefore excludes US persons.
The SEC’s January 2026 staff statement drew an important distinction between securities tokenized by, or on behalf of, the issuer and instruments created by an unaffiliated third party. The distinction does not determine whether a product is good or bad. It determines what the holder can actually claim, from whom, and under which documents. A warrant, an SPV interest, and a third-party token linked to a private-company valuation may all create economic exposure, but they should not be presented as equivalent forms of ownership.
Under Chairman Paul Atkins, the SEC’s “Project Crypto” includes a proposed innovation exemption that would let tokenized securities trade on-chain under lighter conditions, issued and traded for a defined testing period without full registration, subject to participation caps and KYC/AML requirements. As of mid-August 2026, the exemption has not been released. Reporting suggests it is being held back while Congress negotiates the tokenized-securities provisions of the CLARITY Act, and no timeline has been given.
In the EU, MiCA explicitly identifies tokenized shares that qualify as financial instruments under MiFID II, leaving them under securities law rather than the cryptoasset regime. MiCA’s transitional period ended on 1 July 2026. Smaller, tailored regimes, such as El Salvador’s Digital Asset Issuance Act, are also emerging as venues for structuring these instruments transparently.
Regulators are not the only ones pursuing this standard; market infrastructure is moving in the same direction. The SEC approved Nasdaq’s rule change permitting tokenized-securities trading in March 2026, NYSE is building on-chain settlement rails, and DTCC has a tokenized-securities platform in pilot from July 2026 with a launch targeted for October. This is an existing clearing and settlement system that already ensures shareholder rights, and it is moving toward tokenization on its own terms, rather than leaving this category entirely to platforms built on SPVs that the issuer never approved. None of this has been fully resolved yet.
What a rights-first standard actually requires
If the goal is to provide real access, rather than a repackaged version of the same opacity retail investors have always faced, then several points should be non-negotiable, regardless of platform or jurisdiction:
- Proof of reserve must be continuous and verified by the depository, not a number published by the platform itself. The claim must be structured so the issuer’s share register and transfer restrictions cannot void it later, which means building with the issuer’s cap table, not around it.
- There must be a defined, contractual path to conversion into real shares, not an implicit promise that liquidity will eventually become available. And the instrument must be clearly classified for the buyer at the time of sale: is it an enforceable right, economic exposure to a special-purpose vehicle, or a synthetic bet on sentiment? These are three different products with three different risk profiles, and collapsing them into a single interface harms retail investors.
- Investor rights in the event of corporate events must be pre-defined, disclosed, and legally enforceable.
What happens to the instrument if the company raises a new round at a lower valuation, changes its capital structure, is sold, goes public, postpones its IPO indefinitely, conducts a reverse split, or fails to achieve a liquidity event? Who decides whether to exercise, convert, or sell the underlying asset?
The platform must disclose these scenarios before the purchase, rather than determine them ex post through discretionary decisions by the SPV, changes to terms, or interface updates. If an investor doesn’t understand what will happen to their position in the event of an IPO, acquisition, down round, or no exit, they are not buying a structured financial instrument, but an uncertain promise.
I should say plainly what the warrant model does not solve. A warrant is only as good as the issuer’s willingness to honor it: if a company declines to recognize the structure, the holder has a contract and a dispute, not shares. It does not create liquidity by itself; it requires a venue, and venues require licenses that take time to obtain. And it is slower and more expensive to launch than an SPV wrapper, which is exactly why fewer platforms build it. Those are real costs. Anyone choosing between these three models should price them.
Where this goes from here
I expect the next 12-18 months for this market to be driven by three factors.
First, convergence: as large private companies conduct actual IPOs, instruments that convert cleanly into equity will keep their users, while instruments built on liabilities the issuer never acknowledged will keep losing them.
Second, gradual re-entry: if the SEC’s innovation exemption is adopted with acceptable volume limits and KYC requirements, market access for retail investors in the US could open up for the first time, which would be the most significant catalyst for this sector.
Third, and most importantly for those who actually own these instruments, is the pursuit of structural quality: as more market participants begin to understand that the implied valuation on a dashboard and a legal claim against a company are not the same thing, capital will migrate to platforms that can demonstrate depository-verified reserves and a real legal claim, and away from platforms that can only show a chart.
The pre-IPO market for tokenized securities reached real milestones in the first half of 2026: the distributed value approached $1.4 billion across 2,246 tokenized assets, and the holder base reached roughly 265,000. These figures will keep growing regardless of any single platform’s actions.
And only investor rights, built into the instrument from day one, can correct the market.
Igor Lipovetsky is Co-Founder and CEO of PIPO.VC. This article reflects his own views. It does not constitute investment, legal, tax, or financial advice, nor an offer or solicitation to buy or sell any asset.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are advised to conduct thorough research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.
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