Unchained - Should Tokenized Stock Only Come From Issuers? Yes, Says Carlos Domingo

Episode Date: August 4, 2026

Wall Street's transfer agents want issuers, not outside platforms, to control tokenized stock. Securitize's CEO says the alternative invites insider trading. ======================================================== Thank you to our sponsor! ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Cape⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠: Your biggest crypto vulnerability isn't your wallet, it's your phone number. Cape is America's privacy-first mobile carrier that rotates your SIM identity daily and blocks SIM swaps before they happen. Get 33% off your first six months at cape.co/unchained (use code: UNCHAINED). ======================================================== Securitize took itself public twice this year: once through a direct listing, and once by tokenizing more than $265 million of its own stock via a SPAC with Cantor Equity Partners, testing whether Wall Street lets equities trade onchain. Carlos Domingo, founder and CEO of Securitize, joins Laura Shin to argue that much of crypto's tokenized stock boom is unauthorized, offshore paper exposing investors and issuers to real legal risk, and to make the case that transfer agents, not outside platforms, should control what gets tokenized. They cover Rule 611, the SEC rule locking onchain and offchain share prices together, the Securities Transfer Association's push for issuer authorization, and a Netflix stock split that left an unauthorized derivative trading five times off. Domingo also lays out Securitize's NYSE partnership, launching tokenized trading in the fourth quarter. The SEC is now weighing whether to unwind the rule that keeps those prices identical, with real stakes for how equities trade next. Host: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Laura Shin⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, Host / Unchained Guests: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Carlos Domingo - Founder and CEO of Securitize Timestamps 🏛️ 01:09 Why Domingo took Securitize public after Circle's IPO opened the door 💹 04:12 Securitize's SPAC: tokenizing over $265M in stock with Cantor Equity Partners 📣 10:10 Cape: Get 33% off your first six months with code unchained at https://cape.co/unchained 🔗 10:24 Why Securitize tokenized SECZ on Solana for trading, Avalanche for lockup 📜 14:51 DTCC entitlement vs onchain shares: what you actually own on Robinhood ⚠️ 16:46 Why owning tokenized versus traditional shares carries real risk ⚖️ 20:53 Why Rule 611 keeps onchain and offchain share prices identical 🧩 28:37 The three models of tokenized equity, and who should authorize them 🚨 34:47 Tom Farley's insider trading warning about unauthorized stock derivatives 🏦 40:10 Why institutions still fear crypto after Celsius, BlockFi, and FTX 🗽 44:02 Inside Securitize's tokenized trading partnership with the NYSE 🪙 50:01 Why Domingo calls Robinhood a partner, not a competitor Learn more about your ad choices. Visit megaphone.fm/adchoices

I think Tom Farley, the CEO of Bullish, posted the other day something very interesting. He said, look, I'm the CEO of Bullish. And then there's somebody that has created a derivative of bullish equity that trades offshore without KIC in a permissionless environment. So as a CEO, I can actually, my CFO, let's say, can go there and buy or sell those derivatives completely anonymously the day before the earning announcements. And this is obviously breaks a million different rules, as you can imagine, because you're an insider and you're not allowed to trade before earning announcements because you know what's

going to happen or you can know whether the results are good or bad and how the stock is going to move. Hi, everyone. Welcome to Unchained. You're no hype resource for all things crypto. I'm your host, Laura Shin. Thanks for joining this live stream, but just so you know, this was pre-recorded a few weeks before.

This episode is brought to you by Cape, America's Privacy First Mobile Carrier. Same premium service you'd expect from any other carrier, but designed so your number your location and your data actually stay yours. Get 33% off six months at cape.co slash unchained. Today's guest is Carlos Domingo, founder and CEO of Securitize. Welcome, Carlos. Thanks for having me again, Laura. Yeah, nice to see you, and congratulations on your IPO.

Thank you. For a long while, there's been a trend where startups stay private for longer, which obviously we're seeing with, you know, a lot of these AI companies and things everybody's excited about. But securitized went in a different direction. So why did securitized decide to go public earlier than is typical nowadays? Well, first, from a age perspective, we are more than eight years old. So I think we've been around for a while. From a size perspective, we're a lot smaller than some of the companies that stay private longer. But I don't know. Like when I started in tech, it was the opposite. Like companies used to IPO as soon as possible because, you know,

get access to public markets. You then have the credibility of being publicly traded. Your equity becomes liquid. I remember companies like Amazon, et cetera, the IPO when there were like few hundred million dollars in market cap, wrap. And somehow in the middle, you know, I think it was Google and Facebook and these companies that started like delaying, delaying, delaying, they go in public and everything became private markets. But I think so why was this the right time for you? For us, it was the right time because first the IPO market. was open for crypto companies after many years since you know that you know since the coinbase IPO i guess that there was no other you know crypto ipos except for for miners uh so so we IPO after

or we started the process when we saw that uh you know circle uh was going public and you know other companies like you know jemini or i total uh later bitgo etc they were also planning to go public so so talking to bankers they tell us yes definitely the market it's open the second thing is As I mentioned, we were already eight years old. We've been growing a lot the last couple of years. tokenization was a huge narrative in the industry. And I think that the Circle IPA was very inspiring because, you know, Circle tokenizes dollars.

We tokenize everything else. And the amount of, you know, attention and interest they got from public markets, you know, was an eye-opening for us in terms of the interest that could be in our company. And the final thing is, you know, a couple more things. One is obviously most of our counterpart. These are very large traditional financial services companies. So I think going public and make sure that they don't have any concerns about the long-term viability of the company because now they can see our balance sheet.

They can see, you know, how much, I mean, hundreds of millions of dollars we have there and that we're not going to go out of business anytime soon. It kind of give us also credibility with our customers. And the final thing is that I think crypto is going to consolidate. I mean, you've been in this industry for a very long time. And it's been, there's a lot of M&A happening now, but it hasn't really, I think for many, many years. And I guess part of the reason is precisely because there's no public literary companies, right? And when you're private, it's a lot more difficult to acquire another company.

When you're public, the price of your company is set by the market. Your stock is liquid. So somebody is not taking the same risk as taking private shares in another company, etc. And we thought that this was a good opportunity to reinforce the balance sheet, you know, provide visibility and credibility to the company, and then being able to tap into the M&A market. Great. So you also did a SPAC with Cantor Equity Partners, too, and you tokenize more than $265 million worth of your own stock. So why did you go both routes? So I don't think that today the tokenized equity market is ready for just only be traded your own chain. I don't think there is enough liquidity if you look at the size of the market. It's very small between, I think us and figure and super state, which are the only ones that are doing like real tokenization where the token does represent equity is around.

I don't know, $600 million or something like that, and the rest, which is more or less double that. These are all these derivatives that are not real equity and that are only offer offshore. So this is not a market where you can think of only IPO in there, or only trade on chain. There is no enough liquidity. So we thought, let's do a traditional listing. Let's list on the New York Stock Exchange in our case. But then at the same time, put our shares on chain for people that want to trade them.

And more in particular, we wanted to do it in the U.S. So people understand that, you know, all this narrative in the crypto saying, oh, we do these derivatives offshore because it's impossible to do in the U.S. This is actually not true. These are people playing regulatory arbitrage that they just don't want to do it following the existing regulations in the U.S. It is doable to do it with native equity tokenization. It's doable to do it in the U.S.

It's doable to trade on chain following all the regulations, etc. So we wanted to showcase, you know, our technology and our licenses at the same time that they were doing the traditional listing. Well, I just had Johan Kerbara on the show. So it sounds like you're talking about Robin Hood Crypto because they rolled out in Not just Robin Hood, but a lot of people are doing things offshore and for different reasons. And it might be fine if you want to do things offshore, that's your problem. But it shouldn't be because you kind of do it in the US.

You don't do it in the US because you don't want to do it in the US because you don't want to follow US regulations. And you don't want to go through the process of getting licenses here, which of course, you know, you've been in crypto for a long time. You know that's how crypto companies sometimes operate. right, regulatory arbitrage, the things offshore, don't get licenses, and wait to see, you know, what happens. I do remember in 2021,

you might remember this as well, when there were all these shadow banks that they were saying, oh, you know, we provide yield for your crypto and for your stable coins, and that's what banks do. We don't need a bank license because we're crypto, blah, blah, blah, blah. And then all of them went bankrupt.

In some cases, CEOs went to jail. So I don't think that this is a long-term sustainable business. eventually regulators catch up to you when you do something that is illegal. And that has never been our approach. Our approach has always been to comply with regulations, to do it out of the US, which is the largest capital market, and then build something that is sustainable and that lives across whatever administration it's in charge at the moment. Yeah, and I think eventually Robin Hood will bring that onshore here,

but they're starting in the EU. And welcome to the Robin Hood equity natively. in the US and I'm graded here in tokenized form is something that I think eventually they will do as well. So I'm so curious because obviously this is the world that you live and breathe, you know, tokenizing real world assets. But since you underwent the experience of going public via both methods, the traditional method and then going the tokenized route, I'd love to hear how the experience of both of these methods differed. And, you know, if you're making this pitch that this future tokenized world is better. I wonder how you felt about it as a customer. Like what parts of

it felt like a better experience to you and what parts felt like it needed to be improved? So first, I don't think that is either or or. I think both markets are going to coexist. And the tokenized equity markets is a very nascent market. So I don't think that it's ready, as I mentioned, to replace the other markets in terms of market participants, liquidity, access, users, etc. The way I see it is similar to talking about Robin Hood, Robin Hood actually pioneered something, which was the retail access to IPOs, right? I remember five or six years ago, IPOs were basically only for institutions, right?

And you can only participate in an IPO if you were an institution, and Robin Hood Pioneer giving access to Robert Hood users. I'm a Robin Hood user for my traditional equities, and then they give you access to, you know, an IPO as a retail person, right? And that started being very small, started being only companies that nobody needed. about it. But over time, it became a thing. And now you've had examples like, you know, SpaceX IPO, which had a huge retail portion and participation, you know, their crypto companies,

like bullies had a huge portion of their IPO also on the retail hand. So I think that the tokenized equity IPOs are going to kind of follow the same process. We're going to start with something. It's going to be small at the beginning. And then, you know, over time, it's just going to become something that every single company does and that grows over time until it becomes a percentage of the rest of the market. Now, in terms of the experience, tokenizing our shares, we did it ourselves. It was very smooth,

even though we had to actually build a lot of tech, especially for the trading side of things, because trading on chain today, it's complicated because of the existing regulations that are designed for traditional markets that you still have to comply with. The other IPO process, what I would say is that, you know,

it's a huge regulatory burden. I didn't expect that it was going to be such a long process, and I know Chair Atkins is saying that we need to simplify disclosures and the IPO process to stimulate more companies going public. And I really, having done the process, I really hope that they do it and that more people go public earlier because they make it cheaper and easier. It's a complicated process.

You have to do a lot of disclosures. There's a lot of it's expensive because of the legal cause, the bankers you need to use, et cetera. But hopefully this is all for the good and for the company. and so far, you know, we're pretty happy with the outcome. All right. So in a moment, we will talk a little bit more about the tokenized security, securitized stock, but first we're going to take a quick word from the sponsors who make this show possible. If you hold crypto on your phone, your biggest vulnerability

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Back to my conversation with Carlos. As mentioned earlier, you tokenized SECZ, and you did so on Solana and Avalanche, and I was curious why you chose those chains. So first, we wanted to be in more than one chain to also prove that you don't have to be in a single chain. We can actually track the cap table and the ownership. of the securities across multiple chains simultaneously. We also wanted to kind of pick two different ecosystems.

So Avalanche is obviously an EVM chain that is very focused on RWA. Solana is more focused on the trading side of things. So actually the shares that are on Solana, the ones that are currently trading, like if you go and buy the sexy shares on chain, you do it through the Solana implementation. We do need together with Jam, Crypto, who is our market maker. They have a prop AIM technology that they've been using for these DAL assets that we together adapted for tokenized equities. And then we tokenize some of the restricted shares. We offer all the shareholders if they wanted to have their shares on chain, which are not tradable yet.

We have a lockup period for six months. We will then enable trading them on Avalanche as well down the road. And you, you know, talks a little bit about the process about tokenizing. SECZ. But I wondered, like, you know, what are all the things that any other issuer who wants to do the same would have to either build in the background or what processes would they have to follow in order to be able to offer the same? So the key entity there that helps you get this happen is the transfer agent, right? So when you go public, it's mandatory that you engage with a transfer agent. A transfer agent is an SEC regulated entity that basically,

manages the cap table. And then the transfer agent then manages shares that are in two different locations. Some shares are the ones that, you know, you'll be able to trade through Robin Hood, let's say, and those sit on DTCC, which is the central securities depository. But then they also manage shares that are under the actual investor name. So those shares are, you know, like in our case, they're under my name or under the name of other investors, et cetera. And those shares are on the books and records of the transfer agent, which is basically a ledger, right? It's not a blockchain, but it's a ledger. Now, if you want to move them into tokenized form, you have to work with the transfer agent.

So our transfer agent for the company for the SPAC that we merged with was Continental. So we, you know, strike a partnership with them. So we became their tokenization agent. So on that case, then Continental facilitated two things. One, it facilitated that we actually, you know, inform all the shareholders when they were going to receive their SEC shares that they could get them on tokenized forms. So we have to ask them to register a wallet and then, you know, we send the, we listed the wallet and then send the shares there.

And we also use a broker dealer to basically purchase shares from the own market and move them outside of DTCC. So we can then put them on chain and trade them separately from traditional markets. So everything that is on DTCC trades through the existing market structure, right? There's changes, the broker dealers, etc. So once you move them on chain, they're kind of outside of that scope. So you can actually trade them any way you want as far as you follow, obviously, with regulations. So as I mentioned, we then, you know, created this version of the Jam Crypto ProPAMM that follows, you know, regulations for trading public securities, right?

Securities are, you know, national market securities, our shares. And then those are trading there. They have, you know, they have more availability in terms of trading hours. they settle instantly. You can trade them against USDC. So they actually behave more like crypto. If you look at the experiences like going to Uniswap, where you go there, you connect your wallet, then you see USDC and sexy shares, and you can decide which one you want.

And then either you submit shares if you have them and then you get stable coins, USDC in this case, or you submit USDC and you get shares. And that's an instant process. You get the shares onto your wallet. There's no settlement period. Once you're there there, you know, you could potentially do all the things. that we're now enabled like borrow against them, et cetera. So it's a very kind of like a cryptocentric experience

as opposed to, you know, go into a traditional broker dealer and trade them there. So for investors who are interested in owning securitized stock, how should they think about which form or which wrapper to buy? Like what are the tradeoffs on either side? So first, this is not a wrapper. These are the same shares, whether you get a token or you get, you get them on DTCC.

There's no... Yeah, rapper, I guess it's the wrong word. Format. Format, yeah. Format is more appropriate. So first, when you can go to Robin Hood and buy shares, and you will see, you know, our ticker there on your account,

and those shares are actually, you know, on the cup table. Like, people don't realize that when you're buying something on Robin Hood, you're actually not getting the shares. What you're getting is an entitlement towards shares that sit on DTCC. So if you want to do something with them, If you want to transfer them quickly, somewhere else, another proper dealer to another investor,

if you want to place them as collateral to borrow against it, then it becomes a process, right? It's like a very manual and convoluted process of doing all these processes. Now, if you want to buy them in tokenized form, it's much simpler to just go there. You have stable coins. You submit, let's say, $100 of USDC. You get your shares instantly on your wallet.

You are actually at that point in time on the cap table, so we know who you are. We can conduct corporate actions like, you know, dividends and proxy votes directly with you. you instantly, because there's no intermediaries, we actually know who is on the cap table. When somebody has shares on Robin Hood, we don't even know they exist because they're not on the on the cap table. And then let's say in the near future, when we enable lending against it, then you'll be able to post them, let's say, on Camino, for instance, and then borrow

against them in a kind of like a defy manner. And those are things. Or if you want to transfer to another, while listed wallet of another investor, you can just send them on chain and they arrive instantly in. And then that's it. The shares aren't been transferred. So it's kind of a completely different experience from that perspective. And I guess they're going to be different audiences and different people that want to do different things with the shares. And for, you know, thinking about kind of these two different versions of the stock, what are the risks of having the two versions? You know, one of them trades 24-7, the other only trades during weekday market hours. like how do you think about that both as an issuer but also even just from the perspective of the investor?

So first, as an investor, when you're taking native tokenized shares, you don't have any risk against any counterparty. Because there's no intermediary that has created a derivative version. Like let's say when you buy these derivatives offshore, in some cases you're getting a debt instrument against a company that has purchased the shares that have them on SPV. So there's intermediaries there, and typically crypto companies, that you're taking a counterparty risk against. In our case, it's the same. If you have them on Robin Hood, the risk is wrong with going out of business, which is obviously unlikely.

But broker dealers, when you have them at a broker-dealer, because they're not under your name, you have that problem. When you have them under yourself, under your own name on the cap table and wallet, then it's actually, I would argue, it's less risky. Because you are at that point in time on the cap table. These are permission assets and securities. Therefore, if you were to lose the keys of your wallet, we'll be able to verify that you were an investor

and reissue the old shares and reissue the new tokenized shares. Now, in terms of trading, they actually trade at the same price because there's something called National Best Bit Offer, MBBO, which is a regulation that when you trade registered shares during market hours, you have to always offer investors the best price and the best execution. So whether you trade them on Robin Hood or you trade them on our, you know, prop AIM technology with jump, you're going to get the same price. So there's also not, you know, let's say, risk of, oh, I'm buying the ones on chain and I get

a worse price, et cetera. Then outside of market hours, that's a different story. Outside of market hours, things trade at whatever price it trade. We actually trade extended hours, not 24-7 yet, but we're working on enable them. But during the extended hours, you might actually get different prices in different venues. But that's what happens to the national markets as well. Like if you buy, you know, things outside of market hours, there's no guarantee of what price or what spread you're going to get. But during market hours, this is completely consistent and we trade exactly at the same price that you will get if you buy them on Robin Hood.

Okay. I'm confused, though, because if one format stops trading, even just, even if you're doing extended hours, there's some period where it's not. And then the other version is continuously trading, then how was it that? the price that's never diverge? Because the market maker has a regulatory obligation to offer you the same price that you will get if you buy them from the same. Oh. So there is something that these prices are published, right?

So any broker-dealer that is selling shares has to always look at this tape that has the updated pricing. So what we do is we actually inject the real-time pricing on-chain for, you know, Jam, to be able to, really didn't offer you that price. So it's literally all done through the market maker or is there even, I guess because it's centralized. So like immediately my head went to an Oracle. I guess that's in type of because this is centralized.

That's a good way to think about it. It's an Oracle that takes the price from, you know, the national markets where things are trading continuously. and it's constantly fitting that price into the on-chain training mechanism. So when you trade on-chain, you actually get the same price. And then the market maker is guaranteeing you that you get that price. Okay. It's their job to, you know, how they hedge the price and how you do that.

So that's what market makers do for a living. But the price that we are getting on-chain, it's the same price that you're getting off-chain. It's actually a regulatory obligation, by the way. Okay, okay. And I guess like typically, um, most people when they talk about that, they would say that the one that is continuously trading while the other is not trading would, you know, see changes in the price that then might be, you know, not reflected in the one that isn't trading. But you're just talking because like so much more of the liquidity is on the, on the stock side that the, the price essentially is being set there. Is that kind of? That's correct.

So this is something that is very controversial, by the way. This was something that was set up in 2005 by the SEC. And I like to talk also about how the SEC is trying to change that, which is a good thing for crypto. But at that time, they created something called Rule 611. I don't know if you ever heard of Rule 611. All right. So Rule 611 is called the Order Protection Rule. And that is a rule that says that quotes are protected to make sure that, you know,

When you trade on one venue, you know, you can't get a worse price than what's this place on another venue. Because most people don't realize that equities don't trade on the same place. Like, equities trade on tons of different places. Even if you're listed on the New York Stock Exchange, you have ATSS and you have broker dealers. So equities are all the time trading in a variety of venues. In fact, what happens with this rule 611 is actually created more venues because every venue could just know at what price they were trained. But anyway, that was created in 2005. It's called Order and Protection Rule 611.

and that basically the way they guarantee that this is the best price is because there's something called the securities information processors, the SIPs, that actually publish data feeds that aggregate from all the venues. So those SIPs aggregate data from all the venues, and then anybody that trades has to look at the SIP. It's called the tape as well. And then you see, oh, it trades at 11.5. And then at that point in time, you have to offer 11.5 to somebody trying to buy,

that security. So whether it's on chain or it's off chain, it doesn't matter. Everybody actually does that. And that's how markets actually work today. Now, this introduces complexity because then you have to follow a price that has been set somewhere else, et cetera. So if you think about how crypto works, crypto doesn't work that way, right? So in crypto, you have Coinbase trade in Bitcoin and Binance trade in Bitcoin and they

don't talk to each other. And then when you buy the price of the Bitcoin in Binance, you're getting whatever. price, Binance is offering you. When you're buying Coinbase, you're getting whatever price in Coinbase is offering. Now, in spite of that, it actually trades at the same price, right? Why? Because market makers eliminate the spread. So if it's any time Bitcoin trades higher on NASDAQ, then people are going to buy it on Coinbase and sell it on Binance and it's going to adjust the price. So that's how crypto works, but that's not how, you know, traditional markets for equities work. Okay. So because of this rule 611. Now.

this is something that, as I mentioned, introduces a lot of complexity and doesn't necessarily solve any problem because I mentioned crypto doesn't have those rules and it doesn't have the problem of things trading at different prices. So the SEC recently has published a document trying to repel Rule 611.

So they're trying to eliminate Rule 611. And this is something largely that the crypto markets have not paid a lot of attention because I don't think most people understand how it works. But it's actually pretty relevant for crypto because it means we'll be able to trade on chain at whatever price it trades on chain and not have to like do this convoluted process what we're doing fetching from with an oracle the CIP data send it on chain forcored market maker to trade a particular

price etc and then then at that point in time they can trade at different prices but if they trade at different prices market makers will come and eliminate the discrepancy and that will increase liquidity because the market makers will be making money which is exactly how crypto works so so i think that um we're in a kind of an interesting uh point in the industry because the SEC is trying to eliminate a rule for traditional markets that can actually have a very important implication for crypto markets when equities start trading there. Okay, okay. Yeah, it's funny because I realized that initially when I asked when I asked my questions, it didn't even occur to me that the price on chain would be set by anything other than the market.

So during that period where the equities markets are closed, I assume that. the price would keep changing on chain. But you're saying that whatever it closes at will be whatever the price will be on chain somehow? No, no. So once market close, when the market's close, then this rule, Reagan-Mess rules do not apply. Then you trade at whatever price market trades, that your market, let's say, the on-chain market. Okay, but that's when I was asking earlier. So then when the equities market opens, if the price is have to purged.

You have to trade market at whatever price it opens on equity market. Wait, I'm sorry, say that again? You have to then start trading at the price that everybody else is trading. Oh, okay, right. So that's what I meant. Like if you own the stock, you can kind of get screwed, right? Well, no, no. So, but that happens as well. Let's say if you're in Japan and then you trade equities in Japan, when the US markets are closed, you're also getting a different price because you're getting whatever that market is a offering you because U.S. markets are close. So that's how equity is trade, actually. Equity is trade, you know, not 24-7, but 24-5. And then outside of market hours, they don't have to follow Reagan-M-S. So they might actually trade at a different price than what the actual, let's see,

opening price is going to be when markets open or what the closing price was. That's exactly how. I guess, no, but I guess what I'm trying to say is so like, let's say that something happens where on-chain, and suddenly the price drops considerably. But you own the stock and you cannot sell it because the market is closed. And so what happens is when the market opens, you will just have to absorb that loss. You cannot, like, let's say, okay, let's say the market closes at, you know, so let's say there's, I'm just going to make it up,

like between midnight and 8 a.m. suddenly, like, you cannot sell. And something happens at 4 a.m. and you would like to act on it, but you can't. Do you see what I'm saying? Yeah, so you're trying to trade and there's no liquidity you can't trade. And then... Yeah. So, first, you know, if you wait to trade until the market opens,

then you're going to get whatever market prices. So, and then... Right, with the people who own the tokenized stock, they can act because it's open. That's what I'm talking about. Correct. But the same happens with traditional stocks as well, that they trade outside of market.

hours in some restricted manner. So that's actually how markets work. When you're trading outside of market hours, you might get a different, a worse price. And that's why markets are inefficient for 24-7, because outside of market hours are very liquid. And then the same experience you're going to have on-chain. That when you trade in the end of market hours,

there's less liquidity in general, both on-chain and off-chain. And there's also no price protection because they can trade at any price. And then if you trade at those outside of market hours, you actually might get a worse price. Right. Okay. I see. You're saying it's tradeoffs either way and you can either be a beneficiary or be at a disadvantage no matter what. Okay.

Got it. That means a lot of sense. Well, let's kind of go back to something that you alluded to earlier. Obviously, there's been a lot of discussion about what it is exactly that investors own when they buy a trade. tokenized stock. So go ahead and explain kind of like the different variations on, you know, what the rights are that different investors have and sort of like what the spectrum is that is available now. Yeah. So largely there's kind of like three models if you want. The one we use, the one that figure is using, the one that bullish is using super state, etc., which is basically

you go through the transfer agent and then you're basically getting an entry on the transfer agent cap table and the transfer agent happens to use a blockchain as their underlying ledger and therefore you get a token as the entry on that ledger which is what a blockchain is a ledger where the entry of what you own on that ledger is represented by a token that you can hold on a wallet right so so in that case you're buying the same instrument is the same Q-sip the same rights you get access to dividends you get access to voting rights splits are done etc so you're basically buying essentially the same security okay And that's what most people refer at ISTs or issuer, sponsored, you know, tokenization,

where the issuer basically works alongside their transfer agent to make sure that, you know, there's some shares that are tokenized properly. So the transfer agents are computer shared, you know, equinity, computer share has partnered with us. Equinity is in the process of being acquired by bullies, as you know. Continental is also partnered with us, which is the one we use for our own equity. And there's a lot of other small ones. out there, but those three represent like the large majority for public trade equities in the US. And then you have to go through the transfer agent to make this happen. Now, the second model is kind of like the DTC model, which is you tokenize the entitlement.

What does that mean? So, as I mentioned, when you have shares on Robin Hood, you actually don't have the shares under your name. What Robin Hood has is a claim under your name towards shares that sit on DTCC, which is the central security depository. So DTC helps trillions of dollars in shares. And those shares are under DTCC, so the transfer agent only sees, it's called CDNCO, which is a

company that DTC owns, as they kind of like the beneficiary owner, but those shares in reality belong to the actual investor that has bought them through a broker dealer. So what you have there, it's an entitlement, it's called, and those shares are, you know, you have the same rights. You don't have the shares, but you have

the same rights. So that's the DTCC model, where they are tokenizing their entitlements, et cetera. Now the disadvantage of that model is not, you're not getting the same rights. You are getting the same rights. Is that you're still sitting within the DTCC infrastructure, right? So you kind of take the shares on your self-custody wallet.

I kind of move them outside to trade them somewhere else. I kind of go and pose them as collateral for defy, etc. So the shares have, the tokenized shares have, or tokenized entitlements have less utility. It's more like an efficiency for the existing market participatory. doesn't allow to create a new ecosystem as we're trying to create that is fully on chain. Okay, and then the other model are these derivatives that are offshore where you're not getting the shares, right? You're getting, and it's kind of funny because a lot of people claim, oh, it's one-to-one back or it's regulated, blah, blah, blah,

but the first, if you wanted to do one-to-one, then there's a way to do it natively in the US and regulate it. So those are, I think most of the structures are structures as a debt. So where, you know, you are somebody's, you know, buying shares on the open market is holding them somewhere at an SPV or a broker-dealer and you get like a debt instrument against that, you know, SPV. And that's how most of this offshore derivatives work where you're not getting the shares. You're not on the cap table. In some cases, you don't have access to the same rights because they also offer them permissionless. So, for instance, if there's a dividend payout and you're on your. wallet you've never done KOSI, you're never going to receive your dividends.

They're misled because they are showing this as tokenized equities, but it's not. Tokenized equity, you're getting a debt instrument, right? So you're getting a different instrument that has, you know, a price tracker against the shares that sit somewhere else. So those models, obviously, in some cases, the way they are structured, they are not legal in the US. That's why they block the US. They also issue them as permissionless tokens, which has all sort of regulatory issues and

off-fack issues because they can go into sanction wallets. They're being distributed by unlicensed exchanges that do you have no protection as an investor when you're buying because you're not buying from a regulated broker dealer. I remember one of the issuers without mentioning

anybody, but they actually issued this tokenized equity for, I believe it was for Netflix, and then Netflix did an split, and then the on-chain version did not do the split, and they were trading at five times different price because the token does not really represent the shares, right?

So there's nobody that actually took care of doing the split. So these are the kind of problems you're going to be facing when you buy these these derivatives that you might run into issues. A dividend is paid and you don't receive it or you're not part of a proxy vote or this is split and you're not affected or one of these companies might actually go out of business and then you lose your shares because they're held under their SPVs and some cases not banked receipt remote. etc. So, yeah, this touches on a wider debate that's happening right now where the Securities Transfer

Association, which is an industry group for transfer agents, is, you know, saying to the SEC that they think that tokenized securities should be authorized by the underlying issuer. And it sounds like you're on that side. You're on the board of this on that association. We are very well aligned with that view. Can you just give a sense of why the other side wants to not have them be issued by the underlying, or yeah, not be authorized by the underlying issuer? Well, it's very simple because it's easier if you don't have to ask permission, but forgiveness, right?

And this is why you end up having, you know, Coinbase has not tokenized their equity. right or robin hood but there is five different versions of derivatives of robin hood equity or or coin based equity that had been issued completely without coin base permission completely without robin hood permission then those things are actually different because they're taking they're not the same instrument they're all different derivatives issued by different companies they're they are using the name of the company without their permission in some cases they lose the qsip like if this was like a real security because it's this legal number that every security has they are offering them as tokenized stocks,

even though they're not stocks and they're tokenized something else. So if I was an issuer, I wouldn't want that to happen. Also, it's a kind of worms, right? So I think Tom Farley, the CEO of Bullish, posted the other day something very interesting.

He said, look, I'm the CEO of Bullish. And then there's somebody that has created a derivative of bullish equity that trades offshore in, you know, without KYC in a permissionless environment. So as a CEO, So I can actually, my CFO, let's say, can go there and buy or sell those derivatives

completely anonymously the day before the earning announcements. And this obviously breaks a million different rules, as you can imagine, because you're an insider and you're not allowed to trade before earning announcements because you know what's going to happen or you can know whether the results are good or bad and how the stock is going to move. So as an issuer, you're just opening up for a lot of issues internally. your own employees can get in trouble, like some affiliates, etc. Not to mention that also your securities might actually be held, or derivatives of your securities might be held by sanctioned people in sanctioned countries

and opening to OFAC rules, etc. So I think that the reason they do need is obviously because it's easier to do that. They can create 100 different derivatives of 100 different names without talking to anybody. So obviously, you know, there's a lot of, there's less friction to do that than you have to go to have every issuer and convince them to do it and work with the transfer agent, etc. But the transfer agent association, rightly so, is saying this is not the model because issuers need to be able to control what happens with their securities, with their company name, with their QShips, and they need to authorize what you do.

The same way that I authorize our shares trade on New York Stock Exchange. And it's not that NASA can go and pick my shares and trade them there, right? It has to be done with my authorization. So it's the same situation here. But by the way, it just feels to me like a very normal, fair ask, right? Because they're your securities and it's your company name and your company reputation that is going to be exposed to all these potential problems happening there. Okay. Yeah. I mean, I think, you know, it seems like I understand,

and that makes a lot of sense. And yet at the same time, there's something about it, like just coming from the crypto perspective where there's, you know, this notion of permissionlessness and censorship resistance. But I agree maybe. By the way, this notion of permissionless and censorship resistant, these things are issued through centralized offshore exchanges. There's nothing decentralized there. So they want to mention the names, but everybody knows who they are.

And they're also allowing Chinese people through VPNs. to connect there, to trade use derivatives or U.S. stocks, etc. So I don't think it's because of the ethos of the industry is to be permissionless and decentralized. I think it's because, you know, plain regulatory arbitrage simplifies your business model. There's less friction. There's less cost. There's, you know, wider distribution because, of course, you can use and license venues

to distribute, et cetera. So I don't think that this is a, you know, crypto has moved. I think I don't think a lot of people that are doing these things are because they are, you know, really believing on a permissionless decentralized world, just because they can make more money easier without less problems. Yeah, yeah. No, I see what you're saying, and it makes a lot of sense. I guess just one question. So if people were still to try to pursue the derivatives in other jurisdictions,

you know, so let's say that happened to securitize, like, could you go after them and some other jurisdiction? Or like, how would that work? That's a good question. So since we preempted the problem because we issue our own equity, we don't have that problem as other companies have it. So I don't know what kind of recourse I have if that happens, to be honest with you,

because this is done in offshore jurisdiction, sometimes in places like Jersey or places like that that are hard to reach. I guess you can always ask them not to use your company name without your permission, I guess. So, but that's. Okay. So let's now just talk generally about tokenization because, you know, you're sort of at

the center of this world. I'm sure that every single financial institution is coming to you and, you know, wants to at the very least talk. But I would imagine that you're also hearing a lot of questions or concerns from them. And so, you know, what are those conversations like? What are the issues that you think need to be addressed before we see a much larger wave of tokenization? I think that, you know, large, let's say, asset managers that are tokenizing assets and put them on chain, they are obviously concerned about two different things.

One, they are concerned about not following regulations because they don't want to get in trouble with the regulator. That can affect their brother business, which is obviously much bigger than whatever the tokenized portion of their business is, which is today is very nascent, right? So obviously their concern is make sure it's all legal, that there's regulated entities that are involved, that those entities comply with the law, that people are not doing kind of like weird things, etc., because that can get them in trouble.

And the other thing is reputational concerns, right? Like, you know, where are these things going to trade? Are they going to trade in places where maybe, I don't know, people from sanctioned countries are being involved, because these are permissionless protocols, etc. That while it will not imply the asset manager doing anything wrong, it has a reputational impact in their brand. If somebody is out there and says that, oh, this, you know,

somebody in North Korea is buying, you know, some particular asset or is lending against it, etc. So I think it's a combination of regulatory and reputational in terms of getting into crypto. And unfortunately, because crypto has had this, this unfortunate history of problems, you know, over the years, then people are concerned, rightly so, because it seems that we don't actually learn from the past, right? We continue doing these things in spite of these things in the past, ended up wrongly. I do remember in 2021 when we raised our series B, we actually had a deal with a very large US bank,

one of the top three, just without saying which one. And then, you know, then FDX and Celsius and BlockFi and all these, you know, things happen, right? And then they came to us and they said, like, we just, we don't want to continue with the project because we don't want to be on a, you know, on the Wall Street Journal article saying, oh, we've tokenized this with securitized and, you know, these guys are going to jail and the other guys are going to jail. And this company went bankrupt and people lost a lot of money. We just don't want to be associated with that. So I think crypto needs to try to mature and self-regulated themselves a little bit by, by, you know, understanding that unless, you know, people are comfortable about the space, you know, the large institutions are not going to come on. All this thing about institutional adoption,

et cetera, it's all predicated and them feeling comfortable that they're not going to get in trouble, but they're also not going to have any reputational impact to their brands. And by the way, it's much better now than it used to be, but still, we have ways to go. And in a tokenization front, one of the things worries me is that one of these things blows up, right?

Because these things are completely unregulated. They're done offshore, without any controls, distributed by people without licenses, etc. So something can actually go wrong. the same thing that Celsius went wrong or blockfired went wrong and people were saying, oh, they're just giving you a yield for your deposits like a bank does. Well, they're not banks, right? Banks are regulated and it's much harder for a bank to go out of business than for one of those

companies because, you know, those companies were not transparent on what they were doing. So this is the same situation today where there's this lack of transparency about what they're doing that can actually lead to a problem and that can actually impact the whole space because then all the large institutions will get concerned about it and we'll plow. So you were in the thick of building this new collaboration with the New York Stock Exchange to help create tokenized versions of traditional financial securities. And I wondered if you could just talk a little bit about what that's like. Just I would imagine that right now there are so many different problems that need to be solved.

And you've probably alluded to different ones of them right now. But, you know, how do you see the road? to, you know, just having announced this a few months ago, to getting to the point where you can launch something. So this project is very interesting because the entity that is going to operate the trading, the on-chain trading venue is the New York Stock Exchange, which is the largest exchange in the world. So the fact that they actually do see a future of on-chain trading where you have, you know,

24-7, where you have instant settlement, et cetera, it's very interesting because you somehow validates the thesis that there is value there. otherwise they would not be doing it. Of course, it's a complex project because they need to stand up an ATS in their case. They call it a digital ATS, which is an ATS that trades this tokenized native issue tokenized securities, but they're also going to trade tokenized entitlements, which, as I mentioned, they're kind of regulatory equivalent, even though they're not done by the issuer, but they're done by an intermediary, but they're kind of a different story.

And then we have been working with them for a few months, as you saw in the announcement we did, they chose us as the design partner to help them, you know, figure out how this works. We're also the first transfer agent has been approved to basically send tokenized equities and ETFs there for trading. Let's say the same thing that we did with Continental for Sexy. We'll be doing there for other securities. But we're also a broker-dealer. So the New York Stock Exchange won't take subscriptions. directly from retail people.

They will only allow broker-dealers to subscribe to their ATS to see what the price is and what the trades are. And then retail investors will have to come through broker-dealers. So, Securitized Markets, which is the broker-dealer that Securitize has, has been also approved as a broker-dealer. And we're now doing all the integration of a broker-dealer, the transfer agent, they're standing up their ATS. So it's a complex project.

They've announced that they're launching in Q4. We're working towards that deadline. But it's a very exciting project because I think that will kind of prove really that first there is a way to do it in the right way in the US with the largest exchange, etc. And I think that's going to that's going to be an step change in terms of adoption of, you know, tokenized equities. And do you have a sense of how many you'll launch with? Well, we've been talking to tons of people, as you can imagine. I will hope that we launch. So first, they're they're also going to, you know, do entitlements, right? Which as I mentioned,

these are kind of like a DTCC type approach, not the offshore derivatives. And, and, and, And those they can actually have more at lunch because those are not issue or sponsor. They're also going to have issue as sponsor. So probably they'll have, you know, you know, tens of different instruments that you can trade there. Well, let's also talk about the elephant in the room DTCC because they are also entering this space. But from what I understand, they're taking a different approach. So explain what their approach is compared to securitizes. Yeah, as I mentioned, the DTC approach is the tokenized entitlement where the actual share.

So the token does not represent the share. The token represents a claim, a legal claim towards the share that sits on the custodian, which in this case is DTCC. And then that token can only go to wallets that have been created by the clearing market participants. These are like the broker dealers that are connected to DTCC. So today, let's say, if you're Robin Hood, you have a database, let's say, that the DCC gives you, that says, you know, you have one million shares of Apple and the Robin Hood and then Robin Hood has another database that says, of these million shares, you know, Carlos has 100, Laura has 200, and John has 300. So that's how these are a layer thing, right? So then Romycourt in this case, instead of getting an entry on a database,

it's going to get a token that represents how many entitlements these broker-dealer controls. But that is not going to flow back to the end user. That's at least the way this structure for time being. I don't know whether they are going to evolve this in the future or not. So it just keeps things within the DTC confines and the approved market participants. And then the cleaning still goes to DTCC. so it's going to clear a plus one. So it's not going to do like instant clearing, instant settlement or 24-7.

So it's just more of a, if you're an efficiency thing of, you know, broker-dealers, they are able to move shares across themselves in a much more efficient way than they do today. I think it solves for a different problem. I think it's great that the DTC is doing this because it's putting the word tokenization out there is forcing a lot of these market participants to start thinking about, I need to get a wallet and maybe to open an account with BitGo, I think, which is one of the custodians, to get a wallet, to get these tokenized entitlements, and that can lead to them doing more things on chain. Besides that.

But I think that the most interesting thing is when you actually move things completely outside and you are able to kind of create new stuff, right, and do new things, which in this case is going to be much more limited. But, you know, kudos for somebody like the DTCC for getting into the space. I think it's helping get the word tokenization out there. And as I mentioned, getting people to start thinking about wallets and tokens, et cetera. But it's a completely different, you know, model than the one that we're doing. So one other competitor that we've mentioned a few times in this episode is Robin Hood. And I'm sure you were watching what happened with Robin Hood chain.

And it seems like, you know, originally they were thinking about this for RWAs, at if we're judging by CEO Vlad Tenev's initial remarks about it. But, you know, very quickly, we saw that actually meme coins really started taking off there. And I wondered if you had thoughts on why that happened. And if that phenomenon changed your outlook on, you know, how big the tokenized real world asset sector could grow. So first, I don't see driving creditors as a competitor.

We talk to them all the time. I think that they're more focused on distribution. They have a great distribution because they have a ton of retail users and that I think this is why the Robin Hood chain has been a very successful loans, right? Because they have a lot of users they can bring quickly on chain. What they're doing of bringing people on chain is great and benefits everybody. So I think that we're more focused on the kind of one step behind the scenes infrastructure of like tokenization, working with asset managers or with issuers to issue tokens, etc.

And that those could actually be very well issued on the Rogan chain. as well as we issue is actually based on the Arbitron technology which we support and they can be distributed by Robin Hood. So from that perspective, I don't see that ourselves kind of operating exactly on the same space, even though we might overlap a little bit here and there. And in terms of memes, you know, meme coins taking off versus RWAs, well, why can I say this is crypto, right? So people, crypto, people are drawn towards those things.

I think this is a, I don't think this is like a long-term sustainable thing. and that's what they're intending. I think RWA's have more complexity in terms of adoption because in some cases are regulated as instruments. You might need K.YC. You need to understand what you buy and when you buy a Minko. You're just purely speculating without even thinking about what you're buying or not. But I think that their intention of making Robin Hood chain kind of like the preferred chain for RWA

is I think is great because they bring distribution there, which is something that's required in this space for this space to grow. So I was particularly very excited about. the success of their launch and look forward to, you know, do things with them there as well. And to go back, you know, once more to why it is that you launched Salana, sorry, why you launched your tokenized stock on Salana and Avalanche, I just wanted to ask, you know, because Robin Hood, you may remember, had, there was a little bit of discussion about their choice of launching an L2 on Ethereum

rather than launching on Solana. And there even had been some talk that they had initially chosen Solana. And you, obviously, you work with Ethereum, but for your own stock, you chose Salon and Al-Lanche. And I wondered, like, if there was a reason you didn't choose to issue the stock on Ethereum or another L-2. So Solana always prefers we've worked with many chains, as you know. We've issued some assets first on Ethereum like Biddle, and we obviously liked Ethereum, and we started there.

That's how our company started when there was nothing else. So we were originally like a pure 100% Ethereum shop, and over the years, we've kind of diversify and support other chains. I think every chain has its own kind of peculiarities in terms of infrastructure. They have different ecosystems, et cetera. the reason we chose, you know, those two. Obviously, we have a longstanding relationship with Avalanche. We launched our first tokenized, you know, fund with KKR on Avalance long time ago.

Now the team very well have a lot of respect for them, but the BILTA thing is pretty good. We also use them for getting our license in Europe. They have deterministic settlement, which is actually an interesting characteristic that, you know, the L2s don't have, that from a regulatory perspective could create problems because once you settle a trade, you have to report it.

And then if something happens after that, you have to unwind the trade, then that creates a problem. And you're not going to have those on Avalanche or on Solana. And then the Solana portion was, besides I was also working very actively with Solana and the Solana Foundation that, you know, the propium and technology from JAM that we wanted to use, together with Jam as a market maker, was actually developed originally in Solana. So the tech was already there. As I mentioned, we started with those two.

but we don't want to necessarily only support those two. We're now looking at with the Avalanche team and how can we enable trading on Avalanche as well, the same way that we're doing it on Solana and we will continue supporting a variety of ecosystems. All right. Well, last quick question you have said before, that securitized plans to go shopping

and make some acquisitions. And I wondered if you had any thoughts on how to add to your current operations. So, yes, so I think, you know, when you go public, you need to explain to investors, what are you going to do with the money? Because otherwise they're not giving you money for no reason. We don't need a lot of, you know, we have like $400 million or something like that on the balance sheet now plus liquid stock. We actually don't need that money to operate the business day to day as opposed to.

So we're going to have, you know, excess cash as well as liquid stock that should be able to do things. So the things we're looking at are things that are complementary to the business that we way we do. So what else our customers need or what else our ecosystem needs to kind of make it grow and make tokenization more useful or make it for us less frictionless to serve customers? You might remember we acquired MG Stover a couple of years ago or a year and a half ago. That was an acquisition precisely to make the life of our customers easier because fund admin is very, you know, adjacent to tokenize funds. And then now by having the two assets, then we can

actually serve customers much better because they only have to deal with one entity. So we're kind of looking at those type of things. But what else is complementary to what we do in the tokenization of funds as well as tokenization of equities, what are the building blocks that is worth for us owning to simplify the life of our customers at the end of the day? And then the second portion is like international expansion. So what jurisdictions we don't have licenses or presence that we think are worth exploring options there. As I mentioned in interviews, I don't think buying like a direct

competitor is really what we're looking at after because, you know, I think we have what we need to have from that perspective, from a tokenization perspective, we're already the market leader. So I think it's more interesting for us to figure out how to expand the product offering and the capabilities and doing it through inorganic, which is faster. And if you buy a company that has established company and that has already revenues and tech, etc, you risk the process versus building it yourself and take a few years to do it. The other area we arranged is DFI. We haven't touched about this a lot, but I think that there is a, there's going to be a convergence

of RWA's and DFI. Today, DFI uses digital assets as collateral. As you know, they've had a lot of problems precisely because of the bad quality of collateral that gets hacked and stuff like that. And I think that there is a convergence that is happening on, you know, RWI, and DFI, that is particularly interesting. And we work with a lot of Dify companies, with Ave, Camino, and others. But there's kind of like stuff there that is closer to, let's say, the RW origination

that we've been looking at as well. All right. Well, Carlos, it has been great catching up with you. Thanks so much for coming on Unchained. Well, thanks for having me again. It's my pleasure. And thanks to everyone for joining us, and we will catch you next time. Nothing you hear on Unchained is Investment Advice.

This show is for informational and entertainment purposes only, and my guest and I may hold assets discussed on the show. For more disclosures, visit Unchangedcrypto.com.