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Fairmint’s innovative seven-step proposal aims to modernize private securities administration by integrating blockchain technology and real-time regulatory oversight.
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The framework emphasizes interoperability among transfer agents and advocates for updated investor accreditation standards that reflect knowledge rather than income thresholds.
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According to COINOTAG, Fairmint CEO Joris Delanoue highlighted the inefficiencies in current private equity management, stating, “Private companies are managing billion-dollar cap tables in Excel while public companies have regulated infrastructure.”
Fairmint proposes a blockchain-based framework to modernize private securities, improve regulatory oversight, and update investor accreditation standards in the evolving crypto landscape.
Fairmint’s Framework Targets Private Securities Modernization and Regulatory Efficiency
In a move poised to reshape private securities administration, Fairmint submitted a comprehensive seven-step proposal to the SEC’s Crypto Task Force. This framework targets the modernization of an industry traditionally reliant on outdated, manual processes, such as spreadsheet management, which lack real-time settlement capabilities. By leveraging blockchain technology, Fairmint aims to introduce real-time regulatory observability and seamless interoperability across transfer agents, which are critical for enhancing compliance and operational efficiency.
The proposal also advocates for enabling investor self-custody while maintaining robust compliance safeguards, a balance that could empower investors without compromising regulatory standards. This approach reflects a broader industry trend toward digitization and decentralization, aligning private equity administration with the technological advancements seen in public markets.
Updating Investor Accreditation: From Income to Knowledge-Based Standards
One of the most significant aspects of Fairmint’s proposal is the call to reform investor accreditation criteria. Traditionally, accreditation has hinged on income and net worth thresholds, which many argue are outdated and exclusionary. Fairmint suggests shifting toward a knowledge-based accreditation model, emphasizing investor understanding and competency over financial metrics.
This paradigm shift could democratize access to private securities, fostering greater participation while maintaining investor protection. The proposal also includes the creation of a regulated decentralized finance (DeFi) sandbox, which would provide a controlled environment for innovation and experimentation within the regulatory framework.
Tokenization: Bridging Traditional Finance and Digital Assets
The SEC Crypto Task Force’s recent roundtables underscore the agency’s growing focus on tokenization as a means to integrate traditional and digital asset markets. Tokenization enables fractional ownership and improved liquidity for assets that were previously illiquid or difficult to trade, such as private equity stakes.
Financial institutions are increasingly exploring tokenization strategies. For example, Robinhood’s plan to launch a blockchain network for trading US-listed stocks in Europe highlights the expanding role of tokenized assets in mainstream finance. CEO Vladimir Tenev’s emphasis on private equity tokenization signals a potential shift toward broader adoption of blockchain-enabled securities.
Industry Implications and Market Growth Potential
The global private equity market, valued at $5.3 trillion in 2023 and projected to reach $6 trillion by 2024, stands to benefit significantly from these technological advancements. By replacing costly and inefficient spreadsheet-based systems with blockchain-enabled infrastructure, the industry can reduce friction, enhance transparency, and accelerate capital formation.
Fairmint’s clients, including wallet infrastructure provider Privy and social media platform Bloom Network, exemplify the growing ecosystem supporting this transformation. As tokenization gains traction, regulatory clarity and infrastructure standardization will be essential to unlocking the full potential of digital securities.
Conclusion
Fairmint’s proposal represents a pivotal step toward modernizing private securities administration through blockchain integration and updated regulatory frameworks. By advocating for real-time oversight, interoperability, and knowledge-based investor accreditation, the framework addresses critical inefficiencies and compliance gaps. As tokenization continues to bridge traditional finance and digital assets, these innovations could significantly enhance market liquidity and investor access, shaping the future of private equity and digital securities.
