L2 Capital, a Hong Kong technology investment firm, has signed on as founding partner of a tokenization platform Newton Labs is developing for private and public-market holdings. The firm is targeting $500 million of tokenized holdings in late-stage, pre-IPO technology and AI companies within 24 months of the platform’s launch, according to a release shared exclusively with The Defiant.
Most tokenized assets enforce compliance once, at issuance, or by whitelisting wallets. The issuer’s rules stop applying when the token moves into a lending market or another application. Newton’s platform would write investor eligibility, lock-ups, holding limits, transfer restrictions and permitted chains and apps into each tokenized holding, then check every transfer, loan or other supported action against them before settlement. That enforcement is the condition fund managers set before private-market positions can be used as collateral onchain.
The holdings would come from L2 Capital’s own portfolio and from deals it originates with other firms. Eligible investors would be able to hold the positions onchain and borrow against them in permitted DeFi lending markets. Participation is restricted to institutional and professional investors in licensed jurisdictions.
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“We want eligible investors to access investments that have historically been out of reach, and to borrow against those holdings without having to sell,” said Dennis Won, co-founder and CTO of Newton Labs.
Still In Development
The platform is still being built. “This is an announcement of the platform, which is still in development,” Won told The Defiant. “The next milestone is bringing the first tokenized offering live, and we’ll share timing as we get closer.”
The companies in the pipeline are not named. Won said it covers late-stage AI and technology companies across Asia and the US, with specifics to come at launch.
Newton Protocol, the authorization layer the platform would run on, is further along. Newton Labs — formerly Magic Labs — sold its embedded wallet business to Kraken parent Payward in July and renamed itself around the protocol, which went into mainnet beta the same month. Its first product, VaultKit, enforces policy on DeFi vaults with RedStone, Webacy and vaults.fyi.
Rules Inside The Token
Newton’s documentation describes the protocol as a decentralized policy engine built as an EigenLayer AVS. Developers write rules in Rego against onchain and offchain signals such as sanctions screening, KYC status and spending limits. An operator network evaluates each transaction and the result is enforced at the smart contract level, with each decision backed by a BLS attestation and only hashes and commitments stored onchain. Newton works with most EVM networks, including Ethereum, Base and Arbitrum, and lists non-EVM support on its roadmap.
Asked how that works with protocols that were never approved, Won said transfers to venues that do not meet the requirements will not go through. “This is similar to how a bank can stop card transactions happening in suspicious or unauthorized locations,” he said.
The platform is also designed to hold policies confidentially, so an institution can apply a requirement without publishing it, with access for regulators and auditors. An unmerged Ethereum draft is working on the same problem from the token-standard side.
The Vehicle Holds The Shares
Each token would represent an interest in a separate investment vehicle that holds the position, kept off the sponsor’s balance sheet. The vehicle is the registered shareholder in the underlying company.
“Neither Newton Labs nor the platform holds investor assets,” Won said. The sponsor or an independent administrator keeps the register of holders and periodically confirms that the vehicle still holds the shares, with those confirmations recorded onchain.
If a sponsor wound down, Won said holders’ interests in the vehicle would be unaffected, and each offering’s documents would typically provide for a replacement manager.
That structure differs from the tokenized private-market products already trading. Ondo Finance’s OpenAI-linked note, which opened to secondary trading on Oct. 8, is a debt obligation of the issuer that carries no ownership or shareholder rights.
Collateral Hasn’t Followed
Tokenized equity has not reached the lending markets Newton is building for. Tokenized stocks grew 395% in the year to Sept. 28, to $3.17 billion, and roughly $81 million of that — about 2.6% — sits in lending markets as collateral, according to a RedStone report published this month. Tokenized private equity grew faster than any other category, at 935%.
Lending protocols cite redemption timelines and off-hours pricing as the reasons they will not take most real-world assets at a meaningful loan-to-value ratio. Pre-IPO shares carry both problems in sharper form, with no public-market reference price.
NEWT, Newton’s token, traded at $0.0458 on Tuesday, up 1.3% on the day and down 4.4% on the week, for a market value of $9.8 million, according to CoinGecko. It is 94% below its June 2025 peak.
L2 Capital invests across venture, pre-IPO growth, tactical and public-equity strategies, and manages capital for institutions and family offices through a licensed affiliate. Its venture arm, L2 Iterative Ventures, backs early-stage blockchain infrastructure.
“Investors in our holdings want to know the rules are being followed, not take our word for it,” said Kevin Lee, co-founder and partner at L2 Capital. “That is why we chose Newton.”