Earlier this week, co-founder and former CEO of prominent cryptocurrency exchange Binance, Changpeng Zhao (CZ) released a bold statement on Twitter that took the cryptocurrency industry by storm: “IPOs will move onchain”.
An initial public offering (IPO) is the process by which private companies go public on the stock market for the first time, typically through a stock exchange. Moving that process on-chain would mean companies issue and settle their shares on a blockchain.
However, this is not an entirely new phenomenon. French aerospace and defence supplier ST Group completed a tokenized IPO through Paris-based Lightning Stock Exchange in April, and Hyperliquid experimented with the launch of a pre-IPO for SpaceX in May.
“What CZ is probably pointing towards is the idea that, eventually, the IPO process itself becomes on-chain rather than taking place through the traditional infrastructure and being tokenized afterwards. And that is the big change,” Albert Castellana, co-founder and CEO of GenLayer Labs, told DeFi Rate.
Wrapper vs native
According to experts, what the industry has seen so far in the on-chain IPO space were wrappers around companies that already listed through a stock exchange. Moving the process completely on-chain, as per CZ’s remarks, would also bring the listing of shares and records on-chain.
France did that in April, the DTCC ran live production tests in July, and the New York Stock Exchange filed for a rule change to trade tokenized shares inside the existing system. Coinbase also launched tokenized stocks through its Ethereum Layer2 network, Base, in August, held one-for-one in custody rather than issued natively on-chain.
Vivek Raman, the co-founder and CEO of Etherealize, a company that connects the traditional finance industry with the Ethereum ecosystem, highlighted that synthetic and wrapped products will not carry the industry forward.
“The version worth building issues the asset on-chain at the point of creation, and that requires a network with real liquidity and credible neutrality underneath it.”
Making public markets more accessible
One of the biggest perks of moving any aspect of traditional finance (TradFi) on-chain is accessibility.
“You could potentially get 24/7 trading, fractional ownership, faster settlement and easier global participation,” Joshua Kim, the CEO and founder of DonaFi, said.
He added, however, that more notably, moving IPOs on-chain could also lead to higher interoperability – a big pain point in Web3, especially tokenization.
“… Shares could eventually interact with stablecoins, lending markets and other decentralized financial infrastructure instead of remaining stuck inside traditional brokerage systems.”
The accessibility argument is not limited to who can trade, as it extends to who can list their shares in the first place. In order to go public, companies must spend a lot of money on legal fees, accounting, and underwriting, which smaller companies often cannot afford to pay.
“A tokenized venue can afford to list a business that the traditional process prices out, and the French listing is the template,” Ryan Day, the CMO of Solstice Finance, said.
The SpaceX pre-IPO crash
Ahead of its official Nasdaq listing, Hyperliquid launched synthetic pre-IPO perpetual futures for SpaceX, which allowed users to speculate on the company’s valuation before its public market debut.
The contract suffered a 45% flash crash on May 28, 2026, plunging from $2,277 to $1,254 and liquidating over $1.5 million in positions.
According to Etherealize’s Raman, the instance was related more to the instrument itself than to on-chain markets since the contract was a synthetic referencing a private company with no public price.
“Its mark depended on an off-chain data feed, and the feed mishandled a share split. Thin liquidity and leverage did the rest.”
SpaceX had run a five-for-one stock split to lower its per-share price and expand investor access, a routine event. However, the outside data provider feeding prices into the market got the per-share math wrong, which caused the quoted price to collapse.
GenLayer Labs’ Castellana framed this as a stress test.
“A blockchain can work perfectly and still produce the wrong outcome if the information coming into it is wrong,” he said, pointing to private companies, mergers, and stock splits as cases where “the answer has to be interpreted from real-world information” rather than read off a live price feed.
However, if IPOs were to move on-chain, how can we ensure the same problem does not arise?
“The answer is issuing the asset on-chain with a real registry behind it, so the ownership record itself is the source of truth. That requires a settlement layer with deep liquidity and credible neutrality that every counterparty is willing to hold positions on it,” Raman said, noting Ethereum could be a good solution for this.
The regulatory hurdle
The CLARITY Act still faces a procedural vote in the Senate, expected on September 15, and the US Securities and Exchange Commission (SEC) has announced its plans to modernize the rules and forms governing registered transfer agents.
According to Etherealize’s Raman, who previously testified in Congress on matters of crypto regulation in the US, the SEC’s own rulemaking on tokenization and market structure is the more immediate signal, alongside institutional adoption already moving forward under the GENIUS Act’s framework.
“What the market needs, as I told Congress in June 2025, is clear delineation of when an issuance triggers securities law, and registered ATSs and broker-dealers that can operate on blockchain rails.”
As the SEC moves towards clearer messaging, some players in the industry are already taking charge. ARK Investment Management applied to the SEC to record shares of its venture fund on a digital ledger, and BlackRock filed for tokenized share classes of its money market funds.
According to Solstice Finance’s Day, if these clear, “the first wave [will be] institutional, with verified investors trading through registered venues”. He added that retail will also enter this playing field once it is better established.
“Coinbase’s Brian Armstrong has argued the industry gets a workable rulebook either way, from the bill or from agency rulemaking. Either outcome beats the gray zone we have now.”
Yet, according to GenLayer Labs’ Castellana, noted that issues may arise once regulated assets start to sit on decentralized infrastructure.
“Regulators will obviously still care about disclosure, custody, investor protection, and who can own or trade particular securities. But once those assets live on open infrastructure, it becomes much harder to control everything people build around them.”
