IPO Activity Declines 80% As Tokenized Equity Emerges

In recent years, the landscape of initial public offerings (IPOs) has undergone significant changes. With over $5.3 trillion in private capital waiting on the sidelines and artificial intelligence rapidly altering market dynamics, many companies are choosing to remain private. Public markets have become slower, more rigid, and increasingly misaligned with the operations of modern businesses. Since its peak in 2021, IPO activity has declined by more than 80%, indicating that founders and investors are exploring alternative avenues for liquidity and legitimacy.

Since 2015, private markets have expanded by 162%, while the number of publicly listed companies in the U.S. has decreased by nearly half from its 1996 peak. This trend suggests that companies are staying private longer, raising capital on their own terms, and avoiding the quarterly pressures of Wall Street. The next phase of this evolution may involve bypassing traditional equity structures entirely and transitioning to a more programmable, flexible, and continuous model.

Early indications of this shift are already visible. For instance, Coinbase has explored the idea of tokenizing shares of its COIN stock on Base, its Ethereum Layer-2 network. Although still in the conceptual stage, this move hints at a new kind of financial infrastructure. In a tokenized equity model, shareholders could access liquidity 24/7, borrow against their holdings, and interact with their equity in ways previously reserved for institutional investors. This isn't just a change in format; it's a change in function that reimagines ownership itself.

Major financial institutions are also moving in this direction. BlackRock recently filed to offer a $150 billion Treasury Trust fund as a tokenized product. Franklin Templeton launched the first U.S.-registered mutual fund to record shares on a public blockchain. Platforms like Securitize, INX, and Republic are building the infrastructure for tokenized equity that can be issued, transferred, and traded globally without needing an exchange listing. These developments are not isolated experiments but early infrastructure for a parallel financial system.

For retail investors, the implications of tokenized equity could be transformative. Historically, access to high-growth startups has been limited to elite capital such as venture firms, family offices, and hedge funds. By the time companies reach public markets, most of the upside has already been captured. However, with tokenized equity, ownership can be distributed much earlier. Platforms like Republic and CartaX are already testing models that allow broader participation in equity fundraising. In this future, wallets may replace brokerage accounts as the primary gateway to wealth creation.

For younger generations, this shift could be even more significant. Millennials and Gen Z missed out on early access to many of the tech giants that defined the past two decades. Most didn’t have the capital or access to participate in early venture rounds or IPO allocations. Tokenized equity presents an opportunity to change that. By making ownership programmable and open, it gives the next generation a chance to participate in value creation earlier and without needing a seat at a VC fund or a private placement deal.

At the same time, AI is accelerating the need for more adaptable markets. The pace of disruption today makes quarterly reporting feel outdated. Business models are shifting in real time, and valuations are increasingly volatile. Even central banks are concerned. The Bank of England recently warned that widespread use of similar AI models by institutional traders could amplify systemic risks. In this climate, tokenized assets, which offer programmable logic and constant market access, may be better suited for the volatility ahead.

However, the path forward is not without challenges. Regulatory clarity remains a major hurdle. The SEC has issued limited guidance, suggesting that tokenized shares may fall under existing securities laws, but many questions remain unanswered. How will custody work? Who provides investor protections? Can tokenized equity comply with disclosure requirements in real time? These issues are still being worked out. Yet as jurisdictions like Singapore and the UAE roll out frameworks for tokenized capital markets, global leadership is already shifting.

The IPO isn't dying; it's being redefined by tokenized equity. What's emerging in its place is a model that favors flexibility, global access, and direct ownership. The most valuable companies of tomorrow may never ring the opening bell. They may mint tokens instead. The revolution isn't coming. It's already here.