The Great Liquidation: How Wall Street Created a Trillion-Dollar Problem & Why That’s Your Opportunity
There’s $13 trillion sitting in private markets that you probably can’t access. Not because the assets are bad, quite the opposite. Some of the world’s best-performing investments are locked behind minimum investments of $250,000, decade-long lockup periods, and accreditation requirements that exclude 98% of investors.
This wasn’t an accident. It was the predictable result of two seismic shifts in American finance over the past 25 years. Understanding how this massive opportunity was created is the key to capitalizing on the solution that’s emerging right now: tokenization.
Act I: The Consolidation (1999)
Remember when your bank couldn’t also be your investment bank? That ended in 1999 with the repeal of Glass-Steagall.
Suddenly, commercial banks, investment banks, and insurance companies could merge into financial supermarkets. Citigroup and Travelers merged. JPMorgan Chase assembled. Bank of America swallowed Merrill Lynch.
The result: Wall Street went from dozens of major players to a handful of giants.
Competition declined. Centralization intensified. The public markets became the domain of mega-institutions.
Act II: The Regulatory Squeeze (2010s)
Then came 2008. The financial crisis triggered a regulatory tidal wave—Dodd-Frank, Basel III, and layers of compliance requirements designed to prevent another meltdown.
These regulations were necessary. But they came with a cost: being a public company became exponentially more expensive and complex.
The unintended consequence: Companies started avoiding public markets entirely. Why endure quarterly earnings pressure, disclosure requirements, and compliance costs when you could raise capital privately?
The Perfect Storm: Capital Moves Private
These two forces, consolidation reducing public market appeal and regulation increasing its burden which created a structural shift:
IPOs delayed: The average company now waits 11+ years to go public, up from approximately 4 years in the 1990s
Private capital explodes: Private equity assets under management have grown from roughly $1 trillion in 2000 to over $13 trillion today
Best opportunities locked away: High-growth companies now mature entirely in private hands, with retail investors shut out until growth has already occurred
The wealthiest investors have access. Most people don’t.
Enter Tokenization: The Digital Solution to an Analog Problem
Here’s the crucial insight: The problem isn’t the assets. It’s the infrastructure.
Private markets suffer from antiquated plumbing—manual processes, paper-based transfers, intermediary layers that add cost and time. The illiquidity premium exists largely because the administrative systems can’t handle efficient secondary trading.
Tokenization changes everything by representing ownership as compliant digital securities on distributed ledgers (blockchains). This isn’t cryptocurrency speculation—it’s the digitization of real-world assets with the same (or better) regulatory protections.
What Tokenization Delivers:
1. Real Liquidity
Lock-up periods could shrink from 10 years to months or weeks through compliant secondary markets that operate continuously, not just quarterly.
2. Radical Efficiency
Smart contracts automate compliance checks, investor onboarding, distribution payments, and reporting—slashing the costs that currently make small investments uneconomical.
3. Democratized Access
Fractional ownership drops minimum investments from $250,000 to potentially $1,000 or less, opening institutional-quality investments to qualified investors who were previously excluded.
Why This Time Is Different
You’ve heard about blockchain before. What makes this moment unique is that the very institutions that created the private market explosion are now building the tokenization infrastructure.
BlackRock launched a tokenized money market fund
JPMorgan processes billions in tokenized repo transactions daily
Franklin Templeton put a mutual fund on-chain
Fidelity is building digital asset custody for institutions
This isn’t fringe anymore. It’s Wall Street.
The Multi-Trillion-Dollar Transformation
Private credit and private equity represent the two largest asset classes ripe for tokenization:
Private Credit: Approximately $1.6 trillion in high-yield debt seeking efficient servicing and distribution
Private Equity: Approximately $11.7 trillion in growth capital desperate for liquidity solutions
When these assets move on-chain, we’re not talking about a new product category. We’re talking about rebuilding the plumbing of global finance.
What This Means for You
The tokenization of private markets isn’t happening tomorrow. The infrastructure is being built right now. And that creates a rare investment opportunity: the chance to position yourself ahead of a structural shift.
But here’s where it gets interesting. The best opportunities aren’t in tokenized assets themselves yet. They’re in the companies building the rails.
Think picks and shovels, not gold claims.
Let’s Talk About Your Portfolio
If you’re wondering how to position for this shift, read on.
There are accessible, compliant ways to get exposure to this infrastructure build-out through:
Companies building the blockchain technology that institutions must use
Financial platforms positioned to distribute tokenized products
Funds that provide exposure to the underlying digital asset ecosystem
But which combination makes sense depends entirely on your situation—your risk tolerance, time horizon, tax circumstances, and overall portfolio.
The gold rush is happening. Let’s figure out if the picks-and-shovels approach makes sense for you. Contact us today. Please share this with your friends.
Sources:
1. Jay Ritter, University of Florida, “Initial Public Offerings: Updated Statistics,” 2024
2. Preqin Global Private Equity Report, 2024; McKinsey Private Markets Annual Review
3. Boston Consulting Group, “Tokenization: A Trillion-Dollar Opportunity,” June 2024;
various company press releases and SEC filings
4. Preqin Global Private Debt Report, 2024
5. Bain & Company Global Private Equity Report, 2024; Preqin data