Subject: "Tokenized" private companies
Oh, boy. Jargon! What does it mean?
Tokenized.
Blockchain.
Depository receipts.
Does this make a new concept more transparent and safer from inaccurate valuations than SPACs? (A SPAC is a “special purpose acquisition vehicle” that people or institutions with too much money pump money into so someone else can decide to invest in companies that can’t meet the SEC’s rules of transparency for IPOs. Only an idiot would do such a thing but billions were poured into SPACs a few years ago.)

https://www.wsj.com/finance/ba...


Citigroup Is Rolling Out Tokenized Shares of Private Companies
Bank hopes other financial institutions will become involved

By Gina Heeb, The Wall Street Journal, June 11, 2026

Citigroup established a blockchain-based venture for its wealthy and institutional clients to trade private-company shares.
The venture uses authorized, tokenized depositary receipts issued by Citi, initially for foreign investors, with U.S. access planned.
The infrastructure, operated by Switzerland-based SIX, aims to broaden access to private firms and can be adopted by other banks.

…
It is initially open to only foreign investors, with a transaction- and maintenance-based fee, but Citi plans to make it available to U.S. investors later. The infrastructure can be used by other banks, Citi said.

The venture works through depositary receipts—or securities that allow investors to buy stakes in foreign companies—that are authorized and tokenized. Citi will issue those securities and act as a custodian for them.

Banks have been racing to adopt the blockchain technology best known for powering cryptocurrencies. Citi, JPMorgan Chase and other banks plan to launch a tokenized deposit system next year, The Wall Street Journal reported. Tokenized money-market funds have also emerged, as well as plans for tokenized securities platforms.

Citi said the tokenized depositary receipts offer a more straightforward and trusted alternative to other ways that investors access private companies, such as through special-purpose vehicles that have been under scrutiny… [end quote]

https://www.wsj.com/finance/ba...
JPMorgan, Citi and Big Banks Plan New Tokenized Deposit System to Answer Crypto
The new network could help banks contend with a wave of new competition from stablecoins and crypto firms

By Gina Heeb and Vicky Ge Huang, The Wall Street Journal, June 4, 2026

The largest U.S. banks plan to launch a tokenized deposit network in the first half of 2027 to counter crypto company threats.
The Clearing House, co-owned by major commercial banks, will operate the network, connecting traditional payments with digital asset infrastructure.
Tokenized deposits retain existing credit risk, regulatory expectations and accounting treatments, keeping funds within the banking system. [end quote]

To a girl who grew up in Brooklyn riding the subway, a “token” was a 5/8" diameter brass coin with a “Y” cut out of the center. It cost 15 cents. My mother used to say, “That and a token will get you on the subway,” if we showed her something insignificant. In 1970, fares went up and a larger token was issued.

Now “tokens” are appearing in novel places. AI uses tokens to represent units of computing use.

Banks are planning to issue tokens to represent bank deposits on the blockchain. This appears to be a way to use the benefits of the blockchain, such as international money transfer, and compete with stablecoins. As a customer, I can understand the appeal of a bank vs. a crypto company as long as the bank tokens remain regulated and FDIC-insured. (Which crypto companies don’t have.)

As for “tokenized” private companies - this is clearly a way to circumvent securities laws for publicly traded companies. The token is only as safe as the information that backs it. Like SPACs, the tokens will be opaque to investors unless the company provides accurate, complete, marked-to-market balance sheets and income statements. OOPS, marked-to-market? Well, that’s a problem with many private equity and private credit companies now (the ones that are limited to Accredited Investors).

Notice that the tokenized private companies are being offered to foreign investors to begin with. I guess this is because a token on a blockchain doesn’t have the currency conversion issues. The investor would take care of that on their end by buying tokens in their own currency.

Owners will be able to trade tokens much more easily than opaque private loans. This means that adverse publicity could cause rapid panic selling that doesn’t happen in the current private credit world.

As far as investment safety is concerned it’s totally based on the integrity of the information. If the information is inaccurate, the token wouldn’t even be worth a subway ride.

Wendy