DeFi partnership aims to tokenize shares of pre-IPO companies

Published at: April 25, 2022

Decentralized finance (DeFi) protocol Portal has partnered with the asset marketplace HighCircleX (HCX) to tokenize stocks of pre-initial public offering (IPO) companies, according to an announcement shared with Cointelegraph on Monday. 

The collaboration aims to make investing in private equity easier by building on top of the Bitcoin (BTC) blockchain. Through this, HighCircleX is looking to solve problems such as the lack of liquidity and value uncertainty for traditional assets.

According to the announcement, HCX will create and manage a limited liability company (LLC) for the investments. While the investors will not own the shares of the LLC, they will own tokens that "represent ownership" of the LLC. Such tokens can be traded on the HCX marketplace.

Furthermore, the funds gained by the LLC will be used to purchase a pre-IPO investment. The pre-IPO companies that can be tokenized and traded include SpaceX, Epic Games, Klarna, Automation Anywhere and Cross River Bank.

Chandra Duggirala, Portal’s executive chairman, explained that the partnership aims to bring more utility to BTC. He said that:

“Portal is bringing real-world use cases to Bitcoin. Eventually, we will see the tokenization of many more financial assets onto the Bitcoin blockchain.”

Additionally, Duggirala explained that while the assets are different from BTC, simplifying the interface for traditional assets starts the "beginning of merging the Bitcoin ecosystem with mainstream finance."

Related: Texas-based Bitcoin mining operator files for $60M IPO

Last year, crypto platform Coinbase became the first company to go public in the United States. However, based on market trends, owning BTC is currently better than owning Coinbase stock (COIN) by 20%.

Meanwhile, crypto block explorer and exchange Blockchain.com is exploring how the company can conduct an IPO in 2022. If the firm succeeds in conducting an IPO, the firm will be the second exchange in the United States to do this, following Coinbase.

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