The number of public companies in the U.S. has fallen by half in 30 years, redirecting investment returns to insiders like private equity and venture capital firms. Paul Atkins, former Chairman of the U.S. Securities and Exchange Commission (SEC), notes that Initial Public Offerings (IPOs) have transitioned from crucial fundraising events to primarily liquidity vehicles for company insiders.
Significant regulatory costs and the threat of litigation, particularly class action lawsuits, deter private companies from going public. Atkins calls for a comprehensive review and modernization of the regulatory framework to align with current market realities and emerging technologies like blockchain and artificial intelligence.
The Commodity Futures Trading Commission (CFTC) is preparing to regulate spot markets for digital assets, underscoring the need for updated regulations that specifically address the unique risks of autonomous capital deployment. While tokenized securities are still subject to existing securities laws, the financial services industry is on the cusp of achieving immediate delivery versus payment through digital assets, driven by distributed ledger technology.