Decentralized financial protocol Portal will tokenize companies’ stock by partnering up with one of the asset exchanges, HighCircleX (HCX); this process will proceed right before the initial public offering (IPO) of one’s company.
The tokenization of existing assets, according to Chandra Duggirala, Portal’s executive chairman, accelerates the combining of the Bitcoin ecosystem with mainstream finance.
The collaboration expects to make private equity investing easier by leveraging the Bitcoin (BTC) blockchain. HighCircleX hopes to use this to tackle issues such as a lack of liquidity and value uncertainty in traditional assets.
Solving Limitations From A New Approach
Investing in the private market is appealing, but it comes with significant drawbacks. Long periods of uncertainty about how long funds must be locked up, limited liquidity, and uncertainty about the true worth of holdings are all severe impediments. By securing private equity, Portal and HighCircleX remove these limitations. Users with access to the Accredited Portal can also look into unsecured digital assets and tokenized securities.
As mentioned in the release, HCX will build and run a limited liability company (LLC) for the investments. The investor will own tokens,which can be traded in the HCX marketplace, that represent the ownership of the LLC, instead of owning shares.
Additionally, the LLC’s profits will be used to purchase a pre-IPO investment. SpaceX, Epic Games, Klarna, Automation Anywhere, and Cross River Bank are among the pre-IPO companies that can be tokenized and traded.
According to Duggirala, the partnership intends to increase BTC’s utility. He stated the following:
“Portal is bringing real-world use cases to Bitcoin. Eventually, we will see the tokenization of many more financial assets onto the Bitcoin blockchain.”
Furthermore, while the assets are distinct from BTC, Duggirala explained that simplifying the interface for traditional assets marks the “beginning of combining the Bitcoin ecosystem with mainstream finance.”
In financial markets, liquidity is important. The cooperation between Portal and HighCircleX helps increase the basic need of liquidity. Tokenization allows more and more investors to join the game with less interface, which can speed up transactions. Moreover, trading firm stocks under the form of tokens will definitely add a large amount of private equity investors to the crypto pool.