Cathie Wood's ARK, in partnership with Securitize, will hold OpenAI and Anthropic shares of the venture capital fund.

ARK Investment Management is collaborating with the tokenization platform Securitize to move its actively managed mutual fund ARKVX onto a blockchain, where investors will hold shares of funds in an on-chain form. This marks another attempt by a large financial institution after Blade and Franklin Templeton to port traditional financial products onto the blockchain trajectory, as well as extending tokenism from government bonds and money market instruments to equity and private capital markets.

From government bonds to private equity: the next stage of tokenization

Previous Wall Street attempts at tokenization have largely focused on the security asset space. Blade's BUIDL Fund and Franklin Templeton's BENJI Fund were pioneers of this wave, with underlying assets dominated by US Treasury and money market products. Now financial institutions are reaching deeper into areas where stocks and private equity markets are new main battlegrounds.

Citigroup analysts predict that the market size for tokenized securities could reach $5.5 trillion by 2030 under a baseline scenario. This expectation is one of several agencies' core drivers to accelerate their layout.

Lax regulation provides an institutional gateway

Just last week, the US Securities and Exchange Commission (SEC) unveiled a five-year blockchain innovation exemption framework that allows certain tokenized U.S. stocks to circulate on specially designed chain exchanges. The mechanism opens up new compliance pathways for financial institutions to test blockchain securities and also reflects regulators' desire to drive more market activity onto chains.

What the ARKVX Tokenization Means

To clarify, ARKVX is an inter-private venture fund with active management of listed companies. Tokenization does not mean that the company owned by the fund will be transferred to a chain, nor does it imply that the underlying shares in the fund can be freely traded.

As Domingo explains: "The underlying assets will remain private, but the investments of end-users will be liquid. In other words, improvements in liquidity occur at a fund share level rather than an underlying holding level".

Securitize also plans to provide daily net asset value (NAV) and promote the fund's shares on a blockchain-based marketplace. The observation for ordinary readers is that this longstanding pain point may be partially alleviated if there are secondary transactions in terms of shares on the chain, and the tokenization narrative will move from chains on sovereign bonds to new stages on private equity products.