How Securitize Is Building 24/7 Tokenized Assets - CEO Carlos Domingo

Transcript

But the problem is that collateral which is very high quality it moves very slowly because when I want to post it as collateral or move it or when I want to lend against it those options are not available. Regulated yieldbearing assets move with stable coin like speed and flexibility. My understanding was that maybe there was there was some rhyme or reason as to why we had a break in settlement. Welcome back to the room. This is your home to learn from the biggest guests, the brightest minds at the tip of innovation. Our goal is to help spread the collective knowledge of everyone in our community. We are breaking crypto out of its echo chamber and taking it to the real world. All right, guys. We got Carlos Domingo in the back. We're going Money Moves Fast episode number two powered by Polygon.

We're talking Securize. We're talking build. We're talking RLUSD. And let's set the stage a little bit as as as we get Carlos up. So, Rob, as I was telling you, I'll shoot you this announcement as well. Um, basically Securitize is partnering with Ripple to enable RLUSD transfers for Black Rockck's build and van X bill, which are two of the largest tokenized funds uh in the world. Uh, Securitize being number one. Um, they gain 247 instant exchange via RLUSD powered by Securitize. Um, you know, Rob, this is the money moves fast show talking payments, talking RWAs. Um, you

know, Ripple has really tried to grow their ecosystem outside of just the uh kind of core chain that they've had bringing DeFi and more. Um, you know, this is this is a a a moment for securityize where basically they they have this RLUSD backed one to1 by USD deposits and short-term treasuries issued under an NYDFS trust charter uh with 7 with $740 million in circulation. RLUSD is purpose-built for institutional use and now DeFi composability. So, um, let's get Carlos up on stage now and let's get him up and let's get firing.

All right, Carlos, welcome to Money Moves Fast episode number two. Thank you for your patience and it's good to have you on, man. >> Good. Good seeing you again, guys. How is everything? Congratulations for the Calcy partnership, by the way. >> Thank you. Thank you. Oh, thank you. It >> was very timely. We talked about prediction markets last week. So, >> yeah, we did. >> Yes, we did. That was a good question. And we talked about the whole price dis price discovery that's happening in this new asset class and it really feels like it could be an RWA. Some of the the the lines in over which you draw some of these things you know we can re we can reclassify and I really do think that if we're looking at the outcomes of certain events you could maybe not real world future world you can you can make an

argument for it. >> Good. All right let's talk uh our USD then. Yeah, Carlos, so maybe you can break down this announcement today for us. You guys have rolled this out with VANC kind of what's the story behind this and why is this important for securityize? >> Good. So obviously for RWAs to one of the advantages that they have is that being on chain uh you have within the same ledger you represent securities which are the RWAs that we issue that represent a security an LP interest on a fund or or tokenized treasury fund or whatever it is. But then you have tokenized dollars as well, right? And then one of the issues with capital markets is that the dollar the rails for the dollars and the rails for the

securities are disconnected. So one of the huge advantages of tokenization is that you bring within the same ledger technology tokenized securities and tokenized dollars that can interact with each other in a in a native way and in an atomic way, right? And that is a huge thing because it reduces, you know, settlement time, friction, counterparty risk, etc. Like people don't realize that when you go on Robin Hood and you buy shares, you're actually not getting the shares, right? There is a whole process behind the scenes of settling to move the shares, move the cash, etc. That takes two days. Actually takes two days, believe it or not. Um, but on chain those things can be done atomically, right? Because you have a token representing a security, a token representing a dollar, which is a stable coin. So for us being uh you know the

largest issuer of tokenized securities, we need to partner with the largest issuers of tokenized dollars because that's how we bring the two worlds together and provide liquidity for our assets which is hugely important to make them you know more useful for people on chain uh you know being able to then compose them better with defy that needs liquidation use them as collateral for trading uh in case the collateral needs to get liquidated you need to exit into stable coins etc. So um as you know Ripple uh one of the largest companies in the space launched its own stable coin I believe it was like 6 months ago or something like that like pretty recently.

>> Yeah. >> But it's been pretty remarkable how quick how big it has become so quickly. >> So obviously Ripple is a company very familiar to us. They I don't know if people are aware of it but they invested in our company in 2018 and we've always been uh you know talking to them. Um but more recently I think Ripple has started like kind of doing some movements to get closer to our space. They as you know launched a costly product now they bought a prime broker and now they launch a stable coin. So, so that led to the discussions of why don't we use RUSD as one of the liquidity layers for RWAS and then the announcement today that we're going to start that with the two tokenized uh treasury funds that we have uh Bidd from Black Rockck and Vivville from from Van where they will have

instant onchain liquidity options into RLUSD. So, that's uh that's the the announcement that we've made today. >> Yeah, Carlos, this is money moves fast episode two. This is a perfect announcement for this because in the copy for the announcement you guys wrote regulated yieldbearing assets move with stablecoin like speed and flexibility. And one of the big concepts that we're trying to get across here is that there are a lot of advantages to using blockchain rails to tokenize assets and and provide that 247 kind of instant experience that anybody who uses crypto is now very familiar with and frankly used to. Maybe you can talk to the to the impact of having regulated yield

bearing assets moving with the flexibility and speed that we're used to in the crypto space, what that unlocks and kind of what are the second and third order effects potentially of having these regulated yield assets at, you know, at breakneck speed uh globally. >> So, look, I I was talking the other day to the the founder of CEO of a very very large trading firm. I'm not going to mention the name just for a personal conversation, but he was telling me something very interesting because this firm does both trading traditional and and crypto. And he said, "Look, in traditional markets, I have very high quality collateral because I get money market funds uh from like Black Rockck or JP Morgan, whatever that are high quality because they're regulated. They have a a predictable yield because

obviously being a regulated asset, you have to fully disclose what are the fees, you know, what the yield is going to be. you can't just change it discretionary. Um and then but the problem is that collateral which is very high quality it moves very slowly because when I want to post it as collateral or move it or when I want to lend against it during the weekend etc those options are not available because markets move at the speed they move and sometimes they are closed etc. I said in crypto people tend to use you know either crypto assets or stable coins to post as collateral which move very fast right because you basically just send it and it's there and they liquidate it and it disappears. uh uh etc. But but then you have you know you don't have like high quality regulatory yielding assets

where you have a a clear expectation of the of the return. Of course, stable coin providers do all sort of like uh reward sharing and stuff like that, but it's kind of all no official behind it's all behind the scenes because stable coins by by definition they're not yield bearing, right? So, so I think that you know tokenized treasuries like like be or vivville they kind of merge the best of both worlds, right? They give you the same high quality you know assets that you have on trify as collateral but they move at the speed of stable coins. But now of course if they get liquidated they need to be moved back into like digital dollars right tokenized dollars.

This is why integrating u you know tokenized treasury funds like bill and vill with stable coins like RUSD is very critical for the whole you know uh thing to work uh properly. So >> yeah introducing extended exclusively on stark a nextg per trading platform live today with 50 plus trading pairs from crypto to tradi you get the best experience on chain today. Deposit in the community vault for attractive returns EMV compatible and engage in unified margin spot trading lending and per trading. Carlos, when you're thinking about the actual market segment of users and institutional adoption for these types of products that are tokenized onchain, and you're speaking to the uh clientele, you know, how how

valuable are they ascribing these properties of what blockchain can bring to their current needs, right? We understand what it can do holistically but when it comes to an institution's direct needs you know are they uh ascribing certain value to the settlement to the fast settlement to the transfer speeds to the uh verifiability that blockchain brings like which of the core properties are they ascribing the most value to and then thus demanding the most out of kind of the the core that we just talked about? I would say is a bit of all of the above, right?

So obviously they like that the assets are high quality. They like that they are on chain so they're verifiable. Like if you're using, you know, Bill as the backing of your stable coin, you can actually verify the the the reserves on chain, right? Because it's visible on chain, people can actually trust your stable coin or any other asset that you're creating using uh you know an RWA because you can actually see it uh on chain. So the the the verifi verifiability of the holdings is important. The fact that it's very fast transferable peer-to-peer etc is very important as well. And then the fact that you know they have liquidity right like if they need to you know liquidate a collateral or liquidate a reserve because you know a stable coin gets uh you know redemptions etc. the fact that

you can move it out uh from the RWA into stable coins that obviously are more liquid uh on chain uh is a huge um advantage. So I don't know I don't think that obviously everybody has their own use cases and some people value more one feature than the other one but I think that the combination of all these features is what makes RWS so powerful right? >> Yeah. Yeah. Carlos I'm curious about the the settlement time that you that you mentioned. My understanding was that maybe there was there was some rhyme or reason as to why we had a break in settlement. You know why these things took a day or you know why the market is only open you know 9 to 4. Is it to mark to market to rebalance the index funds?

Is there any rhyme or reason or was it just an antiquated system just didn't have the technology to to sell? >> So in some cases the the fact that people in traditional markets don't use instant settlement is because they want to do net settlement, right? So so there is a component of you know do net settlement. So it doesn't require cash moving in and out all the time because you only settle at the end of the day. But you know you could you can have that with like a t plus one if you want or t plus 2 hours or t plus 5 hours. the fact that it's T plus two and by the way it was T plus three before T plus whatever before right so so the markets are becoming more efficient but but the fact that they don't settle faster uh and

faster doesn't necessarily mean instant because you want to have net settlement and you don't want instant settlement but the fact that they don't sell faster is a pure uh technology issue because markets are antiquated and then market hours is also a uh you know it's a construct right like there's no necessarily any regulation in fact there's some uh you know securities today in Robin Hood and other platforms that they trade 24/7. Of course, they have less liquidity, but this they still could trade 24/7, right? There's no regulation that prohibit you to, you know, trade a stock at, you know, 3:00 a.m. in the morning.

>> It's a market construct, how markets were created back in the days. I think these things will evolve ultimately, especially with blockchain coming into the picture. You will see 247 markets like crypto becoming the norm for every asset class uh tokenized or not tokenized. Yeah, Carlos, I'm curious what the word on the street is about the upcoming rise of these payment chains. Uh, RLUSD with Ripple is obviously growing almost to a billion dollars of supply for their stable coin. Ripple has been the one of the largest payments networks, you know, in general, uh, you know, for the last 10 years. You've got, you know, chains like, uh, Polygon, you've got chains like Salana, and then now you've got the rise of Plasma, Tempo, Arc, Stable, and these types. what is the word on the

street about the rise of these payments chains um and kind of how are you viewing this landscape of the of the payments chains competition holistically from securitize >> that's a good question I think that is I don't know how this is going to end um I mean for for a pure payment chain you could argue that some of the existing chains are actually already good enough for payments because they maybe Athereum is not the best payment chain because of you know it it prioritizes security above anything else and therefore you know the settlement times are not adequate for payments where you want as instant as possible. So I can see why you need a payment chain but the fact that every stable coin holder or is launching its own chain is just because

they're trying to corner the market there uh for their own benefit right so and so which one will prevail I don't know but what is very clear becoming in this industry is that this is not going to be uh a single blockchain industry this will be a collection of multiple blockchains that will have to try the specific features for particular use cases and then the question to me is how do you make interoperability across chains uh more seamless and with a better experience, right? Because today, yes, you can bridge things from one chain or another, but if you guys have tried ever, it's a pretty clunky experience. So, so for consumers ultimately, you don't want to deal with that there is a blockchain out there, right? It's like the same with internet, right? Like in the past, you had to download TCP IP software and you know, a modern

software and connect and today use internet and you don't even know that you're connected to a network of networks, right? Because internet is also not a monolithic network, right? So networks are interconnected and it makes it completely seamless for the end user. So I think that we need to get to the point where if we end up in a situation where we have 100 different blockchains for different use cases that work well for some assets or some other asset classes etc that this becomes completely transparent for the end user because we're going to be creating >> big problems from a user experience perspective. One one quick followup there for you and then I know we're coming up on time is you know we had Jeremy Aair on last week and he spoke about how USC is trying to be everywhere right in the same lens that Netflix is

now on your TV on your iPad on your you know even on on your smart fridge or on your bathroom mirror they want to get USC everywhere and he used the the analogy of you know you can use Google Chrome on your MacBook on your Apple device you can use Apple TV on Samsung TVs, on LG TVs, on Sony TVs. He really kind of explained how when he's thinking about this kind of payments landscape, he's thinking about it in this lens of growing the pie versus kind of like seeing a singular kind of square into a circular hole type of of format. From securitiz perspective, it would seem to me that you guys benefit from a wider more uh you know more uh kind of

holistic environment of different chains with more breadth uh you know each of them having their own depth kind of from the securitized perspective. Do you do you agree with this analogy for where you see some of these stable coins and payments heading as far as their interoperability and how does that impact the secure size business kind of vision and and broader direction? >> Yeah, I don't I don't know about you know what's the the the vision of circle versus other of the people building their chains. It's very clear to me though that you know uh in some of these cases and not want to mention any specificity they're just trying to create their own payment network right so the same way that Vis and Mastercard has its own payment network I do definitely think from our perspective that we want to be everywhere as well

right like I don't want to have a you know token uh tokenized money market fund that only works on this chain like if there's another chain that takes off and has enough liquidity users uh stable coins etc we want to be there and we integrate currently I think with like 15 different uh blockchains combination of L ones and and L2s. So, so yes for for us uh you know working with as many chains as possible is definitely the the goal and what we've been doing uh so far and yes to some the more if these new blockchains just increase the pie as uh you said Jeremy was saying the other day so more people consume uh stable coins I believe more people will consume tokenized assets right because it's kind of kind of the

natural next step after you start trying stable coins to to try to do other things with the infrastructure so >> well I hope your uh pers versus prediction markets panel went well. Carlos, one final thing for us. >> It was a lot of fun. I can tell you. >> What is the work that you're doing with Polygon on the RWA and tokenization side? They've been growing significantly. Maybe you can talk talk to us a bit about securityize relationship there and what you guys have been building. >> Well, we've been friends of the Polygon team for a very very long time. Uh obviously, you know, Mark very well and Sandep and and many of the of the people there. I do believe they were like the the second like the the second time we did like a major project with an asset manager was with Polygon and and

Hamilton Lane. Uh so we're fully integrated with them. We've deployed many assets. Uh we you know talk a lot uh uh with the teams really like the the technology and and as I mentioned it was our second kind of third if if you take Ethereum outside but um uh of where we deploy assets and and we continue being very excited about all the progress that we're making. Carlos be one last question from my side. You you mentioned uh >> relate. >> I guess the la last thing just real quick is that you know you guys have your own chain and converge. You work with a lot of chains and several asset managers. Well, how do you think about your own chain relative to this broader landscape of chains that you work with?

>> Yeah. I don't want you to think of converge of our own chain, right? This is something we've uh spareheaded uh and in collaboration with with Athena. It's it's purposely has a separate name and because we as I mentioned we don't want to have our own chain where our assets live. We want to work with all the chains and we partner with all the uh chains and and foundations. We just think that you know there's a space for innovation um that you know uh where in particular in the in the topic of how you you know bring RWS integrated with DeFi um that that you know there's room for innovation there but uh but I kind of agree with what uh Andy said that Jeremy was saying that the purpose is to increase the pipe not just to you know

create an a close ecosystem for for our assets. Our assets I want them to be in as many places as possible. Carlos Domingo, CEO of Security. Thank you for your time. Great work in the space all the technical problems we had today. >> Thank you, Carlos coming on. >> Thank you. Bye-bye.