This week, in a Washington Post up-ET, Robinhood called on CEO Vlad Tenev for a new approach to capital markets in the United States. He suggested that a number of policies – modernization of accredited investor standards are an old favorite among financial winners – but one stood out. “[T]Here, there must be a security token registration regime so that companies can create token offers that are open to US investors. “Here Tenev seizes the skelet key to unlock Cryptocurrency’s full potential.

This is how securities markets work in the United States. By default, companies are not allowed to sell equity at all. Securities ACT from 1933 defines securities and prescribes conditions – and sanctions – to sell them. If a company wants to raise money, it hires a lawyer like me and either records or finds an exception -like regulation D (reg d).

Most people choose an exemption and go privately. And as Tenev points out, many of you Choose to remain that way – Openai, SpaceX or Stripe. But exempt securities do not act easily. They are generally obsessed with contractual and legislative restrictions that make them illique. For the richest few companies, this can be fine – or even the point. But not for most. Without liquid secondary markets, investors can only realize profits through dividends. And where investors cannot realize gains, primary markets run correspondingly dry.

Registered securities, on the other hand, are very fluid in the secondary market. This means that investors typically jump to participate in an initial public offer. But this process is also Limited to the richest companies of its massive price tag. PwC estimates that even relatively small original public offers cost millions of dollars along with millions more in annual legal fees and compliance. This is still before considering the heavy transparency and forfeiture of control that comes with registration. For these reasons, even “top companies are avoiding” to publish, “says Tenev.

It’s no secret this is a problem. Washington DC recently tried to tackle it by creating regulation of crowdfunding (reg cf) in the 2012 Job Act. The idea was to make exempt securities more accessible to small and medium -sized businesses (SMBs), but they just couldn’t help themselves. Known limitations for secondary liquidity hamstring program. Combined with still significant compliance costs, the result will never be a meaningful segment of US capital markets.

Instead, the solution came from the outside. Ethereum developers introduced the ERC-20 standard in 2015 so that someone can create any number of tokens and sell them for immediate liquidity. Project pins could limit resale as they chose. But in practice, the best projects quickly developed deep, effective markets quickly. These fungal tokens took different names and features, but practically they were in the capital market in the internet.

On top of safe, confidence -free blockchain technology was the crucial breakthrough just To let people buy and sell tokens freely. It turns out that this is a product people really want and the initial coin offerings grew 100x between Q1 and Q4 from 2017.

This Halcyon moment could not last -completely unregulated markets was a sink for fraud, and the subsequent SEC campaign to end cryptocurrency -fundraising is well documented. These days it is extremely difficult to make a legally primarily token sale in the US projects are left to Give tokens away for free. Even then, a single successful Hyperliquid AirDrop created more value in a day than all reg CF offers from 2021 to 2023 combined.

Instead of gesture to the past, however, Tenev emphasizes the future:

“Tokenization of private-business shares would enable retail investors to invest in leading companies early in their life cycles … enabling them to withdraw additional capital by utilizing a global crypto-retail market … [It] Would [ ] Give an alternative path to the traditional stock exchange listing[.]”

He calls this “tokenized assets in the real world.” I call it a legislative third way. SEC, which sits between exempt securities and public offers, should promote rules that allow projects to sell securities in the form of cryptocurrency with limited compliance and revelations – by combining the relative simplicity of a private location with the secondary liquidity in a public offer.

We already know the first -order effects of such a system. In 2017 and 2018, more than 2,000 projects sold tokens to raise over $ 13 billion. As Tenev points out, “the risk is highest, where the possibility of the upside is greatest” and many of these early cryptic companies failed. However, many survived and still build today. Early investors became rich and their leaders remain faces of the industry.

The second -order effects are where the real value incurred. Compared to any traditional outer vocabulary, cryptocurrency -token launches are trivially cheap. After some estimates, there is as much as a trillion dollars with potential SMB capital demand in the United States. This suggests great potential for fundraising on-chain. No one knows what access to this capital would mean would not be questionable-but there is a real potential that underestimated markets are experiencing asymmetric growth.

Of course, there are also risks in addition to lost investment. A liberalized cryptocurrency -regime may displace one or the entire current public securities regime. In fact, this would radically reduce the requirements for compliance with public companies, possibly undermine the efficiency of the market and increase deception.

But why anchor himself to the status quo? A third -way regime may require information without being as cumbersome as public registration. Consumer protection does not need to arise from laws that were written before Running water Were ubiquitous – much less cryptographically safe blockchain networks.

It is not obvious that public securities are disappearing anyway. The relative costs of compliance are reduced by scale. For mature companies, investors are likely to require traditional information and be willing to pay a similar premium in exchange. If they don’t, these laws might have come.

It’s hard to imagine someone who arrives in the modern regime from the first principles. The president may start a memecoin but tokens tied to business foundation is Prima Facie illegal. So here second, what Tenev says, “It’s time to update our conversation about crypto from Bitcoin and Memecoins to what blockchain really enables.” Let’s put securities on-chain.