By: Michael Nadeau, Director of Ecosystem Strategy
As we’ve been saying for some time now, private markets are poised to lead the adoption of digital assets in the coming years
With interest rates remaining at historically low levels since the Great Recession of 2008, investors have increasingly allocated to private market assets over the last decade (4x increase over public equities). As such, Blackrock has been advising a 50/30/20 portfolio allocation with the 20% representing alternative private market investments.
With this increase of capital moving into private assets, the natural outcome has been private companies opting to stay private longer, and in some cases forgoing opportunities to list publicly altogether.
And now the innovation around blockchain technology is set to pour gasoline on this trend.
We can now record all of the relevant data to price an asset using blockchain technology in an immutable record. Permissioned access to the valuation data can be granted to market participants seeking to evaluate the true state and value of an asset. This verified data allows market participants to converge on price discovery and trade these assets on distributed ledger technology.
Inveniam sits at the data layer of this emerging tech stack for private market assets.
As a testament and validation to this ongoing trend in private assets, the SEC recently proposed new rules requiring Private Equity Advisors to report material information *within one day.* This would include events pertaining to the execution of advisor-led secondary transactions, implementation of GP or LP clawbacks, removal of a funds GP, termination of a funds investment period, etc.
The proposal is designed to allow the SEC and FSOC to receive more timely information about certain events that could signal distress or systemic risk in the markets.
The writing is on the wall. It won’t be long before private markets start to resemble public markets. With the new proposed reporting rules, access to verified and immutable data recorded using blockchain technology becomes that much more important.
Interested in learning more? We’re hosting an event in March covering everything you need to know about the future of private market assets. You can register through the link in the comments.