The Evolution of the US Stock Market and Tokenization Trends

The history of the U.S. public stock market dates back to the early 20th century. At that time, anyone could raise funds for a project by selling shares to the public, a practice often accompanied by false promises. This phenomenon peaked in the 1920s, with investors rushing to buy stocks and borrowing to leverage. However, the subsequent stock market crash and the Great Depression prompted Congress to pass a series of laws, particularly the Securities Act of 1933 and the Securities Exchange Act of 1934, to regulate the public stock market. These regulations require companies to disclose detailed business information, publish audited financial statements, and promptly announce significant events when issuing stocks to the public.

However, these regulations mainly apply to publicly listed companies, with exceptions for private enterprises that do not raise funds from the public. Over time, these exceptions have become increasingly significant. Today, large tech companies can easily raise billions of dollars through private markets without going public. This has led to the phenomenon that "the private market has become the new public market."

For some star tech companies, remaining private has many advantages: there is no need to disclose financial reports, update business progress, and they do not have to face potentially unwanted shareholders, while also avoiding the pressure of public stock price fluctuations. However, this trend may not be good for ordinary investors, as they are unable to invest directly in these highly promising private companies.

To address this issue, several possible solutions have been proposed: simplifying the listing process, increasing regulatory requirements for private companies, restructuring the economy and wealth distribution, etc. However, a more radical approach has recently emerged: bypassing existing securities regulations through tokenization.

Tokenized stocks provide a new idea: converting private company shares into tokens and then selling them to the public. This approach may not only bypass U.S. disclosure rules but also offer other benefits such as self-custody, high leverage loans, and 24-hour trading.

Recently, some financial institutions have started to attempt to launch tokenization of stocks services. For example, a trading platform announced that it will provide 24/5 trading services for tokenized US stocks to users in 30 countries. Even more notably, the platform also offered private company tokens as promotions, including tokens from some well-known technology companies.

This practice has sparked a discussion about equal investment opportunities. Supporters argue that it is unreasonable to prohibit retail investors from investing in private companies, especially considering that people are already able to invest in other high-risk areas. However, critics point out that allowing the public to invest in private companies is inherently a paradox, as the core characteristic of private companies is that they are not open to the public and are not subject to the disclosure requirements of publicly listed companies.

Currently, it is still not allowed to directly sell "tokens" of private company shares to the public in the United States without disclosure. However, many financial industry giants are advocating for this practice, and the regulatory environment seems to be gradually easing.

This trend has sparked thoughts on the future direction of financial market development. Some believe that the financial industry is seeking a way to reform the information disclosure and trading rules of the stock market, making it closer to the model of the cryptocurrency market, rather than normalizing the cryptocurrency market to the model of the traditional stock market.

This development trend will undoubtedly have a profound impact on investors, regulators, and the entire financial ecosystem. As tokenization technology continues to evolve and be applied, we may see the boundaries between traditional financial markets and emerging digital asset markets becoming increasingly blurred. In the future, finding a balance between innovation and investor protection will be an important challenge that regulators and market participants will face together.