Tokenised startup equity could give family offices earlier exits
The FCA published final rules for PISCES, the Private Intermittent Securities and Capital Exchange System, on 10 June 2025, creating a regulated route for private company shares to trade in defined windows. Paired with tokenised startup equity, meaning digital tokens that represent legally recognised shares and carry transfer rules, that could give family offices a way to sell part of a startup stake years before the company is sold or listed.
How family offices are held back by illiquid startup equity
Startup equity is illiquid. Investors can wait five, seven or ten years for a liquidity event, and in the meantime capital stays committed, rebalancing a portfolio is hard, and existing shareholders have few ways to sell part of a position.
New investors face the mirror problem. Strong private companies are hard to reach once the original round has closed, and secondary sales are slow, manual and costly to arrange.
Continuous trading is not the answer, because early-stage companies need patient capital and heavy short-term trading puts pressure on founders. The workable model is controlled liquidity: defined holding periods, selected investors, periodic trading windows, proper information and permissioned transfers.
How PISCES and tokenised shares could fit together
What does PISCES allow?
The Government's November 2024 consultation response describes PISCES as a secondary market for existing shares, with intermittent trading windows that can be ad hoc, quarterly, biannual or yearly. It does not allow companies to raise capital by issuing new shares on the platform. Buyers can include institutional, professional and sophisticated investors, high net worth individuals and employees of participating companies, and companies control admission and set price parameters, with their reasoning disclosed in advance.
The FCA opened a PISCES sandbox on 10 June 2025, running to June 2030, and platform operators need a PISCES Approval Notice from the regulator.
What does tokenisation add?
A token does not replace legal ownership, investor protection or regulation. It improves the records and rules attached to a share: a digital register of holders, automated eligibility checks, transfer restrictions and lock-in periods built into the system, and quicker investor onboarding. For a family office the gain shows up in the process from due diligence to settlement, not in the blockchain underneath.
What happens to SEIS shares?
HMRC's Venture Capital Schemes Manual says SEIS shares must be held for at least three years from issue for relief to be kept, and a disposal inside that period leads to relief being withdrawn or reduced. Tokenisation therefore cannot make SEIS shares freely tradeable from day one. A token could be technically transferable while staying legally restricted until the conditions are met, so the infrastructure has to encode the restriction rather than rely on manual checks.
Take an illustrative case. A family office invests £200,000 in a qualifying company, the annual SEIS investor allowance. It holds through the three-year period, and once the restrictions lapse the company opens a permitted secondary window. The investor offers 60,000 pounds of its holding, keeps 140,000 pounds of exposure, and has cash back before any exit. The window might draw no bids, or bids below the original price, so this is a route to liquidity and not a promise of it.
What has to be solved before investors can rely on tokenised equity
The token has to map to a legally enforceable share or interest, and investors need to know exactly which rights attach to it. Platforms that arrange or operate trades need authorisation from the FCA. SEIS and EIS carry detailed conditions, so the holding period and tax status of each investment must be visible and controlled, and a secondary sale can affect relief.
Pricing is harder still. Startup shares have no continuously observable price, and an auction with thin participation can produce a volatile or unreliable result. Transfers may need founder or investor approval, so the articles of association, shareholder agreements and platform rules must agree, and the model has to be built for eligible, informed investors with clear disclosure that total loss remains possible.
Taken together, the pieces point towards primary funding through conventional rounds, tokenised ownership and administration, and periodic secondary windows for professional investors. For founders that offers shareholder liquidity without a full exit, and for the UK a closer link between private company finance and public market infrastructure. This is general information, not legal, tax or investment advice.
Key takeaways
The FCA published final rules for PISCES on 10 June 2025, with a sandbox running to June 2030.
PISCES is a secondary market for existing shares in intermittent windows and does not allow new share issuance on the platform.
HMRC requires SEIS shares to be held for at least three years from issue to keep relief, so tokenised SEIS shares cannot be freely tradeable from day one.
Tokenisation improves records, eligibility checks and transfer rules but does not replace legal ownership or regulatory compliance.
Comments