Bringing Equity Onchain to Make It Move Easier, Faster, Safer

Equity is static and that’s a problem.

Imagine a world where capital flows seamlessly, where founders can raise funds as instantly as investors can allocate their capital, and where ownership is transparent and accessible to all.

Yet, despite advances in financial technology, equity remains stuck in the past, bogged down by outdated processes. Equity is the backbone of entrepreneurship, but its movement is restricted by a system that hasn’t evolved at the same pace as the companies it supports. This system is supposed to fuel startups, align incentives, and enable wealth creation. Yet, despite its critical role, the way equity is managed today remains antiquated, slow, and frustratingly inefficient.

In an era where money moves at the speed of light and global transactions settle in seconds, private company ownership is still stuck in a maze of legal paperwork, outdated cap tables, and restricted access. Founders endure weeks or months of bureaucracy just to close a funding round, while investors are trapped in illiquid positions for years. Employees, meant to be rewarded through stock options, often face complex, opaque processes just to understand what they own.

The reality is stark: equity doesn’t move the way it should.

This isn’t just an inconvenience: it’s a massive structural flaw that holds back innovation and growth. And it’s not a new problem.

To understand why equity remains frozen, we need to look at how we got here.

A System Built for the 20th Century

The Paperwork Crisis and the DTCC Solution

In the late 1960s, Wall Street faced an unprecedented challenge. The sheer volume of stock trades outpaced the financial system’s ability to process transactions. Back then, ownership was tracked with physical stock certificates, requiring brokers to manually exchange documents. It was a logistical nightmare — trades took weeks to settle, errors were rampant, and paperwork was drowning the system.

To solve this, the Depository Trust Company (DTC) was created in 1973, later evolving into the Depository Trust & Clearing Corporation (DTCC) in 1999. By digitizing stock ownership and settlement, the DTCC brought efficiency to public equities, enabling the modern trading ecosystem that now processes over $2 quadrillion annually.

But while public markets evolved, private markets remained largely untouched.

The reason? Private equity markets were never built for speed.

The Private Market Bottleneck

Unlike public companies, which rely on centralized clearinghouses like the DTCC, private companies depend on fragmented, outdated processes. Ownership changes require lawyers, transfer agents, and extensive paperwork. Even with modern cap table software (think about the Carta moment in the 2010s), equity remains siloed across disconnected databases.

Here’s what that means in practice:

• Founders spend months finalizing a funding round, navigating term sheets, legal agreements, and compliance hurdles.
• Cap tables become messy, riddled with errors and manual reconciliations.
• Early investors and employees are stuck holding illiquid shares for years, waiting for an IPO or acquisition to cash out.
• Secondary transactions are costly, slow, and restricted to a small pool of qualified investors in pr, often predatory to the companies.

The Hidden Cost of a Frozen System

Every inefficiency in private equity markets carries a real cost.

• Time lost: The traditional fundraising process can take six months or more — time founders could and should be using to build their company.
• Liquidity risk: Investors back early-stage companies knowing their capital will be locked up for a decade.
• Limited participation: The current system restricts access to a select few, leaving millions of potential investors out of the equation.

Clearly, something needs to change.

The Solution: Bringing Equity Onchain

Digitization has improved record-keeping and administration, but it hasn’t solved the fundamental inefficiencies of private equity markets — ownership remains siloed, transactions are slow, and access is restricted. So, the answer isn’t just digitization — it’s about laying down a new set of rails for equity movement, a new foundation that transforms private ownership from the ground up.
A new set of rails for equity.

It is the onchain moment, the moment to bring equity onchain.

Onchain equity isn’t about tokenizing stocks for the sake of blockchain hype. It’s about creating a fundamentally better, more efficient, and more inclusive system for private ownership.

What changes when equity goes onchain?

✓ Real-time transactions — Ownership transfers settle in seconds, not weeks.
✓ Automated compliance — Smart contracts enforce securities rules instantly.
✓ Transparent ownership — A single source of truth from seed stage to IPO.
✓ Built-in liquidity — Investors can have an opportunity to sell in regulated secondary markets with a very optimized and automated mechanism, controlled by the board.

This isn’t just theory. Companies are already proving this model works.

Proof that it works: open standards and Fairmint’s $1b+ in transactions

• The Open Cap Table Coalition (opencaptablecoalition.com) is setting the groundwork for industry-wide interoperability. In November 2024, Gunderson, Orrick and a bunch of other top US Securities law firms decided to support the new format for 100% of their customers’ cap tables. A massive milestone.
• Fairmint has processed over $1B of cap tables, showing that founders and investors are ready for a new model, turning their cap tables into smart contracts. That’s just the beginning, considering how AI agents will be able to operate smart contracts.
• Regulatory discussions are evolving, with policymakers recognizing the potential of blockchain-driven equity management.

But who benefits most from this shift?

Who wins? The Impact on Founders, Investors, and Employees

For Founders: Fundraising Without Friction

🚀 Instant capital deployment — Raise funds in minutes, not months (with stablecoins, onchain issuance)
🚀 Automated cap table updates — No more fragmented spreadsheets (with OCF, OCX)
🚀 Borderless access to investors — Attract capital from anywhere in the world.

For Investors: True Ownership & Perspective of Liquidity

💰 Onchain equity = verifiable, programmable ownership.
💰 Early liquidity opportunities — No more waiting years for exits.
💰 Less reliance on intermediaries — Reduce fees, simplify transactions.

For Employees: Frictionless Stock Options

🎯 Vesting schedules are automated.
🎯 Exercising stock options is seamless.
🎯 Clear visibility into ownership at all times.

This is how equity should work.

A Real Blocker: Archaic Regulation

The biggest barrier isn’t technology or mindset. It’s a 90-year-old rule: the Accredited Investor Rule from the Securities Act of 1933.

🚧 Based on wealth, not knowledge.
The SEC’s accredited investor definition relies on arbitrary financial thresholds — such as a net worth of $1 million or an annual income of $200,000 — rather than actual financial literacy or investment expertise. This outdated standard excludes millions of highly knowledgeable individuals, while allowing those with inherited wealth to participate without any vetting of their financial acumen. Regulatory experts, including former SEC Commissioner Hester Peirce, have called for a revision of these criteria to better reflect the realities of today’s investment landscape.
🚧 Excludes millions of potential investors.
This restriction disproportionately impacts younger, tech-savvy investors who understand financial markets but lack the arbitrary wealth thresholds set decades ago. Many of these individuals actively invest in public markets, crypto assets, and startups through alternative means, yet they are barred from participating directly in private equity opportunities.
🚧 Prevents broad market participation.
By keeping private equity within an exclusive circle of already wealthy investors, this rule stifles broader economic growth and limits wealth-building opportunities for a more diverse investor base. Countries like the UK and Singapore have already implemented more flexible investment standards, proving that broader participation can be both safe and beneficial.

For onchain equity to reach its full potential, regulators must modernize outdated accreditation rules to reflect today’s digital-first, financially savvy investor base.

Crossing The Chasm: The Future is Already Here

We’re not waiting for permission.

At Fairmint, we keep building the infrastructure to make equity move easier, faster, and safer. Here are the

✓ Founders → Rethink how you fundraise and manage your cap table.
✓ Lawyers → Support innovation embracing standardization.
✓ Investors → Demand real ownership and get prepared for less illiquid assets.
✓ Employees → Experience equity that actually makes sense for you.

The future of equity isn’t coming. It’s already here and it is time to cross the chasm.

Are you ready to move with it?