Blockchain-driven platform to mimic stock trading, allowing users to buy shares of SpaceX, other hot private companies

CNBC

6 hours ago

Republic, a New York-based investment startup, is offering users exposure to SpaceX by issuing a "tokenized" representation of its shares.
The company will begin selling the digital tokens this week and eventually plans to expand the offering to other private companies like artificial intelligence darlings OpenAI and Anthropic, as well as Stripe, X, Waymo, Epic Games and more. The Wall Street Journal first reported the story Wednesday.
"We're talking about delivering products to retail investors that they've have been held out of previously," Republic co-CEO Andrew Durgee told CNBC. "The fact that retail investors couldn't own pre-IPO SpaceX has always been crazy to us. Now that's going to be attached to the upside of these pre-IPO businesses. The businesses that we target out of the gate we want to have a retail focus, or at least significant retail following."
In the crypto world, tokenization is the process of issuing digital representations on a blockchain network of publicly traded securities, real world assets or any other form of value. Holders of tokenized assets don't have outright ownership of the assets themselves.
The move comes as the U.S. crypto industry is testing new regulatory boundaries under President Donald Trump's pro-crypto administration. Since he took office, the Securities and Exchange Commission has moved swiftly to loosen the restraints left on the crypto industry by the previous administration, ending an enforcement case against Coinbase; closing investigations into Robinhood Crypto, Uniswap, Gemini and Consensys without enforcement action; scaling back its crypto enforcement unit; declaring meme coins are not securities and launching a Crypto Task Force that's been holding a series of roundtables on crypto asset regulation.
"If you take a step back and look at what the last four to eight years looked like in the space, innovation was very stifled," Durgee said. "The reality is the space was just difficult for most to understand and consume. Now we've gotten to a point where it's certainly become more mainstay."
"We've moved from what was ultimately ... nothing but headwinds," he added. "And now we're finally in a place industrywide, where we actually have tailwinds and we have some room to really innovate."
Republic will allow investors to invest between $50 and $5,000 in the tokens. Typically, those wanting to invest in private companies are required to meet a minimum closer to $10,000 and need to meet specific income or net-worth requirements. Shares of private company can be exchanged by accredited investors in secondary markets; Republic will initially price SpaceX tokens based on how the company's shares are performing there.
Tokenized private equity is new territory for regulators and the underlying companies being digitally represented. There are outstanding questions about the legality of the tokens, how Republic will give financial information to investors as required, and how selling private investments to retail investors could provoke stress in the financial markets.
"We don't need a company's approval to be able to do these types of offerings, and I do think there will be some companies that will want more control over something like that," Durgee said. "The reality is the structure that we're using, which was built on securities law from the 1930s, in a lot of instances allows us the leeway to give these types of offerings. People are going to really have to start to question how they're going to approach some of these innovations, and how far they will want to push that risk envelope."
Financial institutions are becoming increasingly interested in tokenizing traditional assets because of the often-touted benefits of blockchain technology: lower costs, faster settlement times, greater transparency about ownership and performance and programmable terms, as well as increased accessibility for retail investors and global reach.
The announcement comes about a week after Coinbase said it's pushing for SEC approval to offer trading of tokenized public stocks, which would give the crypto services provider an additional revenue stream and put it in closer competition with brokerages like Robinhood and eToro.
Competing crypto exchange Kraken recently said it'll offer tokens of U.S. stocks for 24/7 trading in unspecified markets abroad.
BlackRock CEO Larry Fink has said he sees the "tokenization of every financial asset" as an important step in "the technological revolution in the financial markets."