Crypto Is 'Waking Up' to Real World Assets: Securitize CEO | First Mover Clips

the last couple of years I think we've seen a two things happening on one side the crypto people have kind of waking up at the the concept of real wall assets which is a bit of a terrible name but it somehow signifies that these are real stuff that you put on chain as opposed to more imaginary things that we were doing before Black Rock and secuti recently announced a fund called The Black Rock USD institutional digital liquidity fund or bidle this is black Rock's first tokenized investment fund and it's a $160 million in inflows in the first week bidle is a tokenized money market fund that invests in US treasury bills repurchase agreements and cash and it uses the ethereum blockchain for issuing tokens which are designed to offer a stable value of $1 per token and pay dividends to qualified investors while this is a totally different product than the spot Bitcoin ETF this news is yet another example of how trafi might interact with blockchain projects moving forward secuti CEO Carlos Domingo has been working on tokenization of real world assets for years he says that the last few years have been moving really really slow and that crypto was previously moving in a completely different direction now he tells me crypto people are waking up to the concept of real world assets we have to pause here because you're probably wondering what are real world Assets Now You Are Not Alone real world assets can be defined as any asset physical or digital that's value is derived from their existence outside of the blockchain from The Real World Now by tokenizing these assets they are easily tradable on digital exchanges and at a global scale Carlos joined me to unpack what securitizes relationship with black rock means for the future of trafi and real world assets and even wait in on how Regulators view these kinds of products let's take a listen Carlos Domingo welcome to First mover hi Jen thanks for inviting me of course thanks for being here now let's get right into this because all anyone can talk about is real world assets and this is a big story when it comes to the advancement of real world assets I'd say so Black Rock and securitize have now partnered to launch the Black Rock USD institutional digital liquidity fund let's start right at the beginning explain to me uh what it is and what Gap it fills well this is the first uh tokenized fund that blackr as the largest asset manager uh in the world is launching uh it's on a public ethereum blockchain um it's basically a a like a money market fund a cash equivalent fund that contains overnet repos and and three-month uh treasuries and we are securitized we're very proud that we've been chosen to be the the transfer agent for the fund um the tokenization platform as well as the main uh distributor with our broker dealer securitized markets talk to me about this first step right what what future are we working towards when it comes to the tokenization of real world assets and uh how do you think we'll get there so as you know we've been on this for for a long time probably longer than anybody else um the last few years it was very slow moving I think crypto was moving in a completely different direction and I think the last couple of years I think we've seen a two things happening on one side the crypto people have kind of waking up at the the conceptt of real assets which is a bit of a terrible name but it somehow signifies that these are real stuff that you put on chain as opposed to more imaginary things that we were doing before um and then at the same time I think that you know companies like ours and others have evolved from a technology stack perspective as well as from a regulatory coverage in terms of having the necessary licenses to now being able to bring the largest asset managers in the world like we've been working with KKR Hamilton Lane now Black Rock to really bring their assets on chain to make them more productive make them easier to interact with crypto easier to trade easier to redeem Etc so I think that this is just the tip of the iceberg is actually still a very very small industry as opposed to to other things but I think now we're seeing an inflection point in terms of the growth of this part of the industry you started uh unpacking it there but tell me a little bit more why do we need the tokenization of real world assets why do we need them on chain uh they Wen onchain before and they seem like they were doing all right well so if you think about what blockchain is at the end of the day blockchain is a very very good Ledger uh that is public Ledger that is cryptographically secure where you can represent things that represent certain value and and move them very efficiently across the different Market participants and and a ledger where you can represent both Securities like this fun is a security as well as cash like you know tokenized cash like stable coins and this is a very unique situation like in traditional Finance in capital markets not having a very good Ledger is actually problematic in terms of how you represent ownership how you move the ownership around how you trade and settle a trade because you have to move the Securities and the C Etc so I think the bringing bringing those things on chain provides tremendous not just efficiencies but also kind of like functionality that you can unlock in these Securities that as you said they were doing well but they can do better than they were doing before now tell me a little bit about the institutional interest you had before this news broke what kind of questions were institutions asking I think that you know when we started on this in 2018 we approach institutions back then and you know the reality is that it was very early days for blockchain the word token had a bit of a negative connotation because of all the Ico craziness that happened there and all the enforcement actions Etc I think over the years what we've seen is that you know first the blockchain infrastructure has improved significantly I think that people feel more comfortable with it there been you know more resilient on networks uh more easier Key Management wallet management Etc and at the same time we've built the regulatory coverage to be able to bring these institutions on chain with comfort and peace of mind that that this is probably you know legal and that is there's a regulatory framework of how to do this uh in a legal way so so what we're looking now is that you know the last few years uh you know there's been a huge interest towards the space but you know a lot of Institutions like you know as I mentioned KKR Hamilton Lane they've been like you know very forward thinking and now black rug in terms of being the first ones but I think now that we have some of the largest asset managers in the world is a no-brainer for anybody in the space uh to really start you know looking at how they can leverage this technology to improve their operations and and how they manage their and distribute their assets do you think this approval of the spot Bitcoin ETF was the Catalyst was the thing that you needed to really get people to start understanding real world assets and how they might unlock things in the traditional Financial system that we didn't previously have I see those things are completely different right so the the Bitcoin ETF is a web three asset like Bitcoin that is wrapped in a if you own web two asset which is an ETF to take a web3 asset and put it in the traditional Financial system this is actually the opposite this is about taking some traditional Financial products and move them on chain so it's a web to asset that you rra it around a web three to make it more productive so obviously the the Bitcoin ETF has bring legitimacy to the space and and blackr as you know has been the the most successful one there uh but I I see this as as completely the opposite move right so it's how you bring trfi into crypto as opposed to Bringing crypto into trfi what assets will the fund hold so the fund it's uh is what is referring the industry as a money market fund so it's a cash equivalent type of product that provides a yield based on on on the FED rates so it holds uh overnight repos and and three month dated treasuries so so it's very liquid uh we we offering daily liquidity through our Rion wallet um so that's uh essentially what the product is and who can participate in the product the current product is for qualified purchases for institutions uh so it's aim as basically a number of use cases obviously treasury management is the most obvious one that's what a lot of people do with their cash and today you know they have to go and and open accounts with a traditional bank or financial service institution so now they can do that directly on chain with more easier interaction uh with the rest of the products they they have uh the other use cases is building derivative products we've seen already some companies announcing how they can actually build their products on top of something that is on chain um and then the third one is actually collateral for trading right so we've seen also one firm already falconx that announced that they will be taking this as collateral uh for the trading facility uh which will improve the the performance of of the trading because the collateral is providing a yield so outside of this specific news Black Rock has made a Strategic investment in securitize talk to us about what that partnership might look like moving forward have you gotten that for in discussions first we're very pleased that blackr has not only selected us as their partner for tokenization but that also have made a Mr jig investment and and they've taken aboard seting the company so for us this is a hugely important relationship is the largest asset management manager in the world but it's also you know shows their their commitment towards the the space and and our company um of course we expecting this to be the first of many different projects we're not allowed to talk about the RMA we're focusing on what we're doing now but yes at the is not uh as you can imagine from an investment happening alongside with the project is is not one of relationship are you working with any other institutions that you can tell us about other than the ones you've already mentioned well the ones that are not announced we're not allowed to talk about it but as you can imagine we've been talking to many institutions uh over the last years and as we have been adding large asset managers to our portfolio of of customers you know we bring them one step closer to be able to to do something and after the announcement of this project obviously we got a massive amount of attention and and you know companies that either were were talking to us already or new companies that have reached out to us to to see what they can do so I think that we're going to see the next 12 to 18 months a a significantly increase in the tokenization of reable asset space you know when we talk about the intersection between uh crypto and trafi regulation always comes up have you engaged with Regulators on the tokenization of real world assets have there been any challenges there in bringing a product like this with black rock to Market so obviously we are regulated uh companies so we are registered transfer agent with the SEC and we also have a broker dealer with a member of finra uh so obviously we do talk to Regulators all the time uh for a variety of reasons because we want to upgrade our licenses because we want to explain them what we're doing or or because they come with questions uh when they see projects um what we do are securities so a lot of the controversy in crypto about which of Securities or not doesn't really apply to us uh I think there's still room for improvement in in certain areas of regulation for what we do but for the most part I think that you know we have the necessary licenses to be able to operate in in a regulated manner with Securities which is what we're doing with black I guess what I ask that I mean you know what kind of questions are Regulators asking often when we hear about the intersection of products like this there's a lot of Education that needs to happen um between the company and The Regulators is this just something that was understood from the get-go because you're licensed because you're already dealing with Securities well we started approaching the the SEC in particular which is our regulator uh in 2019 before we we file uh to register as a transfer agent uh what I have to say is that the the level of understanding they have about the space is you know increased exponentially over the years because obviously 2019 tonight is five years so they've been seeing many projects they've been talking to many firms like us and and others and I think that they've got uh you know a lot more up to speed about what we do there's still a lot of like you know questions about you know how do you what Ledger is the right one like which blockchains can can be used or not uh for this if they're at the end of the day you know solid you know Financial servic infrastructure where you can represent Securities in an efficient way what's going to happen if there's a fork if there's a 51% attack like all these things that can happen on on blockchain what happens if somebody loses the private keys of the wallet Etc so I think that they're asking those questions that are related to this new infrastructure uh that we're using for doing if you want traditional stuff uh with new infrastructure and on that topic and know that you're regulated by the SEC the fund is Incorporated in the British Virgin Islands how does that work when it comes to working with an American regulator and having it Incorporated over in the BVI we sell to us investors so obviously we're still regulated by the SEC and we use a sec register transfer agent and and a and a finra member broker dealer so we'll still regulate under the SEC even though the fund is not Incorporated here and Carlos just to wrap it up I know we started the interview like this look into your crystal ball take a look into the future talk to me about what this unlocks for folks 10 20 years from now um where are we headed uh when it comes to the tokenization of real world assets and you're right real world assets we need another name for that so I think that look this this last week with the with the new uh fund coming on chain we exceeded the 1 billion mark on tokenized treasuries there is also several hundred millions in in credit that we have H one of the funds with Hamilton Lane there is other tokenization efforts in different parts of the space with real estate Etc I think that the the main in my opinion breakthrough will be when the overall space becomes one trillion uh as crypto became few years ago that became one trillion uh Market capup the overall crypto space the because at that point in time this becomes too large and too important for anybody to to ignore it right so so my hope is that you know we start with 1 billion then we'll go to 10 then 100 then one trillion and that's when really the space uh is taking uh taking off and become part of the capital markets infrastructure well Carlos congratulations on the launch of the new product and we'll be watching closely to see what you announce next thank you very much

Channel: CoinDesk

Views: 1,403

Keywords: Blackrock, Carlos Domingo, FM Clip, Securitize, cdtv, ethereum, coin desk, coindesk, coindesk tv, first mover, real world assets, crypto, cryptocurrency, blockchain, tech, tokenization, digital assets, digital currency

Id: 80q80eG8uoA

Length: 14min 26sec (866 seconds)

Published: Thu Apr 04 2024