Why would valuations change and be more realistic if you tax illiquid stock people can’t afford to pay taxes on the gains of?

Valuations would be artificially low if that were the case.

Not artificially low; the idea is to increase liquidity by tying said currencies to semi-liquid ETC/BTC (or whatever).

Right now, most post-money valuations are artificially high, which has its own set of problems. These companies are being valued as if they had already accomplished their objectives, and it’s solely because the lack of liquidity allows (and after several rounds of funding, requires) VCs to obfuscate reality and get big valuations that drive big headlines which become self-reinforcing.

In any case, it’s all speculative now, but in 2 years I bet we have this all figured out; and the regulators will probably catch up a few years after Trump is gone. Cryptocurrency has hit the critical inflection point where big banks are building platforms around blockchain. It’s not like this stuff isn’t already core business for Goldman et al.

I fail to see how cryptocurrencies help here at all. The only thing they do is take stuff that could be done by trusted accountants and lawyers and move it to computers. This is useful in the case where you're in a lawless wild west jurisdictionless hacker internet, or if you can't pay lawyer or accountant fees. But these startups can afford accountants and lawyers to set up contracts, and they are in the US jurisdiction so they can sue if the contracts aren't followed.

So what real change do cryptocurrencies bring here?

I'm with you. The post you're replying to seems like hype word salad to me. E.g., the big-bank experimentation with blockchains I've seen has nothing to do with cryptocurrency; they're just looking at reliable distributed recordkeeping.

Making stocks more liquid early on is the last things startups want; if they effectively become publicly traded, the SEC is going to push for a great deal of transparency that will be at least expensive and possibly harmful.