Investment Platform Plans to Tokenize Private Equity on Solana

Onchain private equity: On Wednesday, U.S. investment platform Republic introduced “Mirror Tokens”, a new type of asset that tracks the value of private company shares and allows retail investors to trade them globally.

• SpaceX first: The first token, issued on Solana, will offer exposure to Elon Musk’s SpaceX, with plans to expand the offering to other high-profile companies like OpenAI and Stripe.

Democratization: Since 2016, Republic has been using licenses and crowdfunding exemptions under U.S. securities law to enable retail investors to access private markets and alternative assets typically reserved for accredited investors.

• Track record: To date, more than $2.6 billion has been deployed through platforms, funds, and affiliates within Republic’s ecosystem by over 3 million investors across 150+ countries.

Mirror Tokens: For the new offering, Republic is making use of the JOBS Act, which lets private U.S. companies issue securities and raise up to $5 million a year from retail investors. Here’s how it works:

• No approval required: Republic issues the tokenized securities itself, with the tokens tracking shares of private companies like SpaceX. Through this structure, it doesn’t need permission from the underlying firms.
• Valuation basis: Token pricing is based on how company shares are trading in secondary markets.
• Minimum investment: Individuals need to join a waitlist and can invest as little as $50, up to a cap of $5,000.
• Payout logic: If the company is acquired or goes public, Republic is obliged to pay out the increase in valuation to token holders.
• Liquidity: Tokens are subject to a one-year lockup before becoming tradable on Republic’s secondary market.

Regulatory gray zone: While Republic CEO Kendrick Nguyen said he’s confident in the tokens’ legality, there are plenty of questions. First, investors won’t receive financial disclosures or equity ownership. Second, legal experts question whether companies like SpaceX might challenge the structure. And third, it seems like the tokens could still attract scrutiny from regulators.

Obviously, Republic’s structure isn’t exactly investor-friendly. Besides the trust assumptions involved, the whole user experience suffers from all the regulatory hoops Republic has to overcome.

But maybe making private equity tradable on blockchains isn’t the best approach anyway. There’s a lot potential in using crypto rails to make going public cheaper, easier, and therefore more attractive for companies.

And that’s exactly where we’re seeing real momentum right now. Alongside infrastructure efforts from players like Superstate and its Opening Bell platform, which aims to bring IPOs onchain, regulators are also sending positive signals. Just yesterday, trading platform Dinari became the first to receive a U.S. broker-dealer license to offer tokenized stocks, allowing U.S. investors to access equities onchain legally.