Capital markets roundup: Tokenization and strategic acquisitions

Tokenization and strategic acquisitions have continued to accelerate across the capital market sector. Firms are accelerating their investments in blockchain technology infrastructure and blockchain-based investment management tools—a strategic response to the demand from retail and institutional investors for transparent, efficient and flexible investment platforms.

As competition in the capital markets space intensifies, capital markets firms must continue to evolve to deliver seamless, comprehensive solutions for wealth management, trading and capital formation, all within a unified platform.

The pace of innovation is likely to continue into next year, as financial services organizations pursue strategic partnerships and acquisitions and deliver innovative product offerings to become one-stop shops for the evolving, modern-day investor.

Tokenization accelerates

In early October, a capital markets alternative trading system leading the 24-hour trading trend announced plans to integrate with the National Market System, a tokenized equities framework.

This move will position the capital markets organization as the first alternative trading system to support tokenized U.S. equities, a significant step toward blockchain-native capital markets.

Once that alternative trading system supports tokenized equities on its platforms, users will experience faster settlement and the ability to make transactions around the clock with the immutable transparency provided by blockchain technology. This strategic support of tokenized equities further establishes the organization’s mission to expand trading to all hours through the integration of innovative technologies.

In addition, a major investment bank announced it will significantly add to its digital assets by offering a tokenized private equity fund. This move is aimed at simplifying and expanding access to a traditionally opaque asset class. Through the use of blockchain technology, the bank will offer digital representations, or digital tokens, that represent ownership in the fund or in other alternative assets.

Currently, access to this tokenized private equity fund is limited to private customers. However, the investment bank plans to scale this offering through a platform that aggregates data from various fund managers, distributors and administrators. The platform will then create smart contracts to reflect ownership and enable the near-real-time exchange of assets and cash flows on the blockchain.

The bank also plans to tokenize other asset classes such as private credit, real estate and hedge funds, and potentially allow clients to use funds as collateral for borrowing. This development reflects a broader shift toward tokenization in the capital markets space to drive operational efficiencies and customer-centric innovation.

Strategic acquisitions

In mid-October, Coinbase announced a notable strategic acquisition of a blockchain-based crowdfunding platform that enables startups to procure capital from accredited investors via private token sales. As a result, Coinbase users will have access to an expanded suite of tools to help streamline on-chain fundraising.

The Coinbase acquisition reflects a broader trend in capital markets toward innovative, blockchain-native products. Outside of that deal, Coinbase has pursued a series of acquisitions aimed at equipping users with tools to launch new tokens and streamline the updating of capitalization tables when new tokens are issued.

Another deal in October signals continued traction in the event contracts space: A major sports-betting platform announced its acquisition of a Commodity Futures Trading Commission exchange. This will allow the betting platform to enter the regulated prediction market space, which has captured the attention of retail investors looking to purchase event contracts. The deal further legitimizes and integrates prediction markets into mainstream finance.