Securitize President: This Is How We See Tokenization in 2025

Transcript

And I think it's the next natural evolution um of of capital markets. >> Did you think that it was going to play out this way? Like were we all wrong? >> RWAS now are over 25 billion um at the moment, which is just wild. >> Welcome back to the Rowup. We are your hosts. I'm Andy. >> I'm Robbie. And this is your home to learn from the biggest guest, 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. Sit back, relax, and enjoy a quick word from some of our awesome partners who make this show possible.

CryptoUx broken AI can't trust it. Let Magic Newton set you free. It puts your onchain transactions on autopilot. Does all the work for you 24/7 so you can go do what you want. The vision of Magic Labs. The creators of embedded wallets used and backed by the best. See for yourself. Simpler crypto UX, verifiable AI agents. Newton.xyz. [Music] Introducing Summerfi, one of Defi's oldest and most battle tested platforms.

Summerfi automates your exposure to DeFi's highest quality yield so you can sit back and enjoy this summer. Deposit stable coins at USDC or USDT and let Summerfy route your funds into optimized low-risk lending strategies. With over a 100 million in instant liquidity and support for over 34 protocols across Ethereum, Arbitum, and more, you always stay in control. Choose from a wide range of curated strategies reviewed by independent risk experts, all in just a few clicks. So why work hard for your yield when you can be lazy? Start earning now at summer. the home of the Lazy Summer Protocol.

>> Welcome to the show, man. >> Thanks for having me. Good to be here. >> Good to see you, man. I'm digging that that that art in the background. What is that? A uh is that an NFT by chance? >> It is not an NFT, but you know, the fact that we're calling it potentially an NFT. Someone will probably like screenshot this conversation and turn it into an NFT, right? Uh no, it's actually aerial photography. It's a beach. Those are beach umbrella. >> Oh, wow. That's super cool, man. Nice. Yeah. Well, welcome to the show. Um, it's 8:30 here in Sweden. You're calling in. You're live. Uh, nothing that you say will be used against you, unless you uh have some really spicy takes, but um >> but yeah, man, welcome on. Wanted to to

talk mostly about this tokenization mania that's happening today. I mean it just it it it seems like day after day the news wire rings with different announcements, different collaborations um and a lot of these partnerships really just bridging the gap between uh kind of the traditional finance world and DeFi crypto native world. Um so why don't we just get started with a brief in introduction of securitize really I think that uh getting to understand what it is that you guys do at the core level would be great and I got a ton of fun questions for you.

>> Yeah. Awesome. Well, it's great to be here. Appreciate the time. So, um I'm Michael Sunenshine. I'm the chief operating officer here at Secure Tides. I've actually only been with Securit Tides for the past seven months. Um I've been in the crypto space over the last 12 years. Um so, I've been at this at this game for a while, seen a lot of different cycles and a lot of different um you know, themes and breakthroughs within crypto. But I do think this time it feels a little bit different, which hopefully we can talk about today. >> Um Don't say that, Michael. Don't say that. Um, at, you know, at Securitize, um, you know, I really give credit to the team, our co-founder and CEO, Carlos Domingo, who've been really pushing the

company over the last seven years, um, for a long time was pushing this concept of tokenization. Candedly, no one really cared about it until the last probably 12 or 18 months. And so really at its core, securitized the technology platform. Um it has built the infrastructure to be able to mint real world assets. In our case, we really just focus on tokenization of securities um onto public blockchains. So today we're integrated with a dozen public blockchains. Everything from arbitrage to Salana to Ethereum to Avalanche to Abtos Inc. you name it. Um, and we really work as a service provider for some of the largest asset issuers in the world. Uh, folks like Apollo and BlackRock and Vanek and

Hamilton Lane, KKR, really helping them to bring traditional investment offerings from their traditional formats onto public blockchains. And so we're able to do that both with the combination of our tech infrastructure that allows us to to mint these assets on public chains as well as the fact that we have the right lensure and that we're doing this in a compliant manner. So we have a regulated broker dealer that allows us to sell authorizes us to sell tokenized securities. We have an SEC registered transfer agent that we're always keeping a set of shadow books and records on who owns what. Um and also a fund administration business. So as these investments make their way onto public blockchains, we have the right infrastructure to surround how those

funds are serviced day-to-day. Um so in totality um it is uh really a vertically integrated offering for top tier issuers looking to um bring investments on chain. >> Beautiful. I think I think it's going to be super helpful to understand a bit of like the you know why now question before getting into some of the nitty-gritty. And so you guys have just been uh recognized for being the first to tokenize five different uh RWAS with over $100 million in AUM each. So congratulations. Um you know I'm curious from your perspective what these what the top factors that are driving traditional finance titans to embrace tokenization now and you know kind of

what what are these new capabilities? what are these new reasons that have recently emerged um that you know aren't possible in with legacy assets or weren't possible in the past um you know just like why now? >> Yeah. So I would start by saying it's not really hype. Um I think where we are today is really history in the making. There is always this impatience around crypto like why not faster? Like why aren't things you know happening faster? why am I still not buying a cup of coffee with Bitcoin? You know, all those kinds of things. Um, but I think really what's different about where we are now is just the numbers speak for themselves

and I think who's involved um only gives that greater tailwinds um and validity to the staying power not of just the asset class but this subset of the asset class. So when you look at the RWA market, even just the last six months, it's it's like doubled in size almost, right? Like we've gone, you know, RWA's now are over 25 billion um at the moment, which is just wild. Um and when you look at previous cycles or previous breakthroughs within the crypto space, there was a lot more I think embedded in this idea of speculation, adopting technology early, things like that. and eventually more of those institutional investors um and institutional capital

came in. Now when we look at who's getting involved in the RWA space, it's the largest asset issuers in the world. It's Black Rockck, it's Apollo, it's it's folks like that. And so I think that lends a certain credibility and validity to what we're seeing. And it's also not just kind of experimentation, right? we're actually seeing real infrastructure being built um and and the real deployment of assets on chain in a way that is far outstripping far outshining their traditional counterparts and that's really why I think it's so different.

>> Yeah. Yeah. I mean between and you know on like I think there's actually a a deeper driver with regard specifically on the economic side um which is is is actually ironically the the higher interest rates has led to so much more demand for uh T bills and and US treasuries and then stable coins obviously have kind of grown into this into this mega behemoth idea that is so easy to understand for you know the non-crypto folk that is you could act, you know, you can really just democratize access to not only just US dollars but uh US dollar denominated yields globally, right? And so I think the you know while I think the the the

rest of the crypto markets are are screaming for rate cuts and even I think Trump is himself I think that uh a a larger part of this entire sector and frankly a reason why I think a lot of people like wrote off the their interest in it because it was just oh it's just tea bills oh yeah they're tokenizing tea bills great but that that kind of allowed the foundation to really be built uh you know around okay we can actually bring this real financial product on chain that has a real use case, real yield. Um, and that I think, you know, maybe you see it differently, but I feel like that had a large that was the foundation in my mind of this entire like concept of RWA's tokenization. Obviously, now it's quite,

you know, quite a bit bigger. Um but I think that you know that part also played a big role and like without the kind of broader macroeconomic reality of higher rates you know maybe this space would have started in a completely different way. Um >> it that's that's certainly possible and you know I think to your exact point you know stable coins have um had have seen explosive growth. They're continuing to you know expand rapidly just even as we're speaking here today. Um they're certainly reshaping and re recasting the way that people think about value, moving value on chain and there's no question that they have become the common denominator across the crypto ecosystem, right? Whether it's for trading, for um you know, moving value

uh for uh derivatives, you know, whatever it is that you're doing, stable coins are kind of showing up everywhere. Um what's interesting about where the RWA cycle is in general though is that things like tokenized treasuries are starting to challenge u the stable coin model right and I think the onchain investor is starting to rethink what they should be using to collateralize their onchain activities given the yields and the high quality assets that are available to them and things like tokenized treasuries and even some of the other yield bearing assets that we're starting to see coming out of the tokenization space. So it is definitely a pivotal time for for all of this.

>> Yeah. One one other uh kind of thought with regards to how this has played out is and I think a misconception of a lot of Ethereum believers early on was that all the RWA are just going to be living on on Ethereum. It's the most secure censorship resistant network. It's where everyone's going to want to be. What we've actually seen is one it's it appears to be more of a a a lack of a preference for for uh you know general purpose chains let's call it Avalanche, Salana, Ethereum, Aptos, etc. Um and then also actually a desire for more of specialized and like custom you know chain developments converge with Athena

Plasma and stable those kind of like Tether chain Robin Hood chain. How like did you think that it was going to play out this way? Like were we all wrong thinking that it was just going to be on on Ethereum? Like looking back like how like you know is this is is this what you thought would happen? And maybe we we can then make a more kind of forward-looking thought as to where these things will live in the future. >> Yeah. Well, it's a great point. I mean, at Securitize, we're certainly, you know, chain agnostic. Were integrated with a dozen public blockchains. So, everything from, like I shared, Ethereum to Arbitum to Avalanche to Salana, you name it. There has definitely been, I'd say, probably the

predominant amount of RWAs minted on EVM chains, but you are starting to see more movement into um you know things like Salana and you know some other parts of the crypto ecosystem. Um, and I think that's a function of the fact that each of these chains, each of these chains and their associated um, entities and ecosystems and enthusiasts, they all have these installed bases um, of participants and investors and people that are looking to engage on those protocols in new ways, right? So if you're someone who's a Salana enthusiast, yeah, sure, maybe you are uh speculating on the price of Salana, maybe you're actively staking Salana,

you know, maybe you're doing all these other things, but now the fact that there are these onchain investment opportunities for you to participate in on Salana creates yet another use case, another utility that maybe wasn't there before. Um and so when you think it we think about each of these as sub ecosystems um you can see why you know we at Securitize are minting assets across so many different blockchains and then also working with great partners like wormhole to facilitate interoperability um across um you know each of these each of these ecosystems. Um and I think one of the other things that we're also doing which is exciting is also working on building another blockchain. Um we're working with the team at Athena to launch

Converge which will be a a new blockchain um that's really we hope going to be a you know like a a settlement layer a sub you know kind of common denominator as we think about these really high quality RWAs and how they live and interact with the world of DeFi which for a lot of the onchain investors is really where they want to take their RWA to get that much more value out of them that much more utility out of them so I I think it's too early to make a call. Um, and I think that we will continue to see rapid RWA development across a lot of different chains, a lot of different ecosystems.

>> Yeah. Yeah. I mean I think converge is a perfect example of a thesis that we've held at the rollup for a while which is around um you know originally was kind of application specific chains but I really kind of view it as like okay you you you have these purpose-built environments specific for specific reasons and and for a specific use case and then also for a niche market segment. So it's it's kind of like these niche purpose-built chains are what where I think a lot of the space is going to head and it just happens so happens to be that Converge you know accurately fits in into this. So, let's go a bit a bit deeper on Converge. As you guys as you mentioned, Securize is one of the largest, if not the largest

RWA uh issuer on Ethereum, right? If if you don't count stable coins, um now partnering with Athena's USD uh which is the like, you know, top three stable coin, top four stable coin in in the world. How do you view this kind of uh partnership, joint venture, this launch of this chain to you know further cement Ethereum and converge as the go-to platform for institutional and traditional finance? How do you really plan to make that a reality? >> Yeah, so I think it really comes down to the partnerships and the ecosystem that you know we and the Athena team are building around converge. Um so for one you know on the security high side we're

certainly um hoping to bring many of the top tier asset issuers that we already work with to the converge ecosystem so that they can bring their products you know to new users and new use cases and new utility. Certainly with Athena a lot of their partners across the DeFi ecosystem I think really can help enhance what that looks like. And so as we want to um you know move towards launching converge hopefully you know in Q3 it's not just about the infrastructure or the issuers but it's a lot of the application partners. So we've already you know announced folks like Maple and Morpho and Pendle and Terminal and Strata. And so from the

get-go for us, it's really about having these types of partnerships, these types of, you know, functionality in place as the RWAS make their way into the Converge ecosystem and then also making sure that we have the appropriate developer tools so that Converge can really serve as that layer for where a lot of these applications come together or converge. >> Well, well, Michael, it's crypto week in America man. >> It is. It is. Yeah, I I don't know if you saw that Trump tweet, but uh he's he's he's pretty uh hard pressed on getting this Genius Act, bill, this Genius Act through and then also this uh Clarity Act as well. Um very bullish Ethereum on my side as a result of this.

Extremely bullish on these uh kind of uh legally, you know, legal tender stable coinesque uh products as well. Um I mean let's say you know end of week we get genius act passed we get clarity act through you know what does this do for the tokenization RWA sector what what kind of confidence does this in instill and you know what does this do for for crypto in America as a whole from your perspective? Yeah, I mean you're talking to someone that has spent many years, you know, lobbying on Capitol Hill. Um, you know, multiple very deep engagements with the SEC, CFTC, Treasury, you name it. So, the environment that we find

ourselves in today here in the US really with this desire to cement the US as the crypto capital of the world to have, you know, bipartisan supported um legislation passing through Congress. um the types of um you know task forces and requests for in information and things like that coming out of our regulators and legislators. I mean this is the types of stuff that an industry which arguably is still a cottage industry just tiny compared to all the other industries that our regulators and legislators are responsible for. I mean these are the types of things that we can only dream of right um and I think the stakes are probably higher than ever. Um and I say that because you know

also having somewhat of a global view um of crypto just being in the space over the last decade. It is always and and at the moment remains the US that so many other jurisdictions look to for guidance. Um and so how policies get set up, how um you know different pieces of legislation are enacted here in the US definitely are going to have a ripple effect, no pun. to other jurisdictions all around the world. So I think this time it does feel different. Um and the stakes have probably never been higher as to the implications for crypto in general.

Innovating finance global institutional and onchain deep liquidity to drive capital efficiency. Now maximize yields on institutionalgrade liquid staking with me. unlock trillion dollars of capital via F Bitcoin. All of this secured by Mantle's treasury of billions in stables and ETH capital pools. This entire ecosystem is coordinated by a vast network of seasoned VCs that are aiming to create the next generation of banking and financial technology. This is Mantle.

>> Introducing asset runes, the future of decentralized finance. Stable coins natively on Bitcoin. Hedge against volatility. Diversify your portfolio. All directly from your Bitcoin wallet. Secured by ZK Technology. This is asset runes available now exclusively on Starknet. >> Yes. So it's very important that we get this right-w which I think why there's a lot of DeFi leaders you know going to the White House going to these meetings doing their as much as they can to properly lobby in the last even just six to eight months uh specifically with

with this Genius Act because you know I think originally there was quite a bit of of nuance missing from the actual act and I think that over time it got to a point where I think a lot of the stable coin issuers and um you know people that were quite in the know of of of the matter felt very very comfortable and strong about about this. And so I think the second order effect is going to be we're about to see a lot more stable coins launched like >> we are very quickly. >> Yeah. And listen, I think there's a lot of, you know, there are some pole position stable coins like USDC and tether and things of that nature. And so with this new framework in place and you know it's very easy to understand you

going to run a stable coin you here in the US and offer it to us investors things like that you need to put it in transparent reserves that are registered funds, direct treasuries, shortdated repo, things of that nature. And um all the new issuers that are up and coming probably just kind of feel like they had everything to gain and and nothing to lose right? >> Um and you know, not only do we kind of see this new framework having emerged that I think can spur a lot more activity and a lot more issuers coming, but I also think it says a lot for kind of businesses like Securitize, right?

like today um you know the fund that we worked on and continue to service for Black Rockck the Biddle fund that serves as a reserve asset for a lot of stable coins right um and so I think those that are looking at tokenization in general they're going to see increasingly not just with stable coins but tokenized treasuries there's just so much more functionality on chain that just traditional rails don't allow for um and in the everinccreasingly scrutinized world of atomic subscriptions and access to capital 24/7. Um it just further necessitates or almost like a shining advertisement or endorsement that this concept of tokenization of securities

and the utility and features that it offers. Um these are just irrefutable and this is the direction that banks are going to go in as they launch their own stable coins. Other payment businesses are going to go in and probably other cryptonative stable coin issuers as well. So Michael with that kind of uh lens of thought and you know kind of uh you know thought process here what is the what is the the part of this entire sector per se that as a result of new stable coin issuers new stable coins and just this this continuous growth like is there a is is there a a a a part of the sector which you can point to specifically as to like this is something that people

should be watching in the next year more than other parts or that hey like you know stable coins are very exciting and there's going to be a lot more of them and you know uh tokenized treasuries are great but like really you know there's a lot happening here that I don't think is getting enough love is there anything that comes to mind specifically in this sector >> yeah I mean stable coins and and tokenized treasuries genius act these are all very important topics um a topic that arguably is actually getting more airtime and I think it deserves our airtime as well now um is to talk about the tokenization of equities um right um and that's you know seemingly this next big foray into expanding the RWA market and the assets that you know we believe

are going to be going onchain next you know you've seen a variety of announcements from companies believing that they've kind of cracked the the model um to be able to bring equities on chain and uh you have this overall convergence between wealth that's been accumulated in wallets and wealth that's been accumulated in brokerage accounts and you're starting to see user behavior want those two pools of wealth to converge um so that you know they have one one user interface one pile of assets that they can um really leverage for their investment strategies and so I think the next natural extension of where we are is the tokenization of equities

I'd say broadly two major schools of thought have emerged and I I believe and happy to talk about what security tag is doing here but those two schools of thought are really one wrapping securities. Um, and so you have a lot of folks that are working to create special purpose vehicles or rappers where the tokenized interest is in that wrapper itself before the user um has actually any recourse or legal rights or obligations to the underlying equity that it owns. Um, we think that that's a problematic uh strategy. Um, it doesn't really demonstrate for the users a real ownership. Um, instead it's really more like synthetic representation. And I

think the SEC has even recently commented, Hester Pur last week put out some commentary on exactly this that these kind of receipts for securities um you know don't really allow issuers or investors to enjoy the protections that you know US securities have. Um we at Securitize on the other hand have taken a much more digitally native approach. So because we have the infrastructure surrounding our broker dealer, our transfer agent um and DTC connectivity, we're actually able to facilitate the movement of shares of of a security that someone owns regular way back through the DTC system and thus able to mint the asset back to the user um in their

wallet so that they enjoy the exact same rights and ownership and governance and distributions and everything that they would normally be experiience. in a traditional environment. And so at the moment these two schools of thought are out there. Um I think regulators are watching this closely. I think that a lot of this activity certainly around synthetic and kind of rappers of equity are happening more offshore. Uh but certainly as soon as some of that activity comes back into the US market and into the wallets of US known investors um it is I think it is going to be problematic and I do think this is something everyone should be

paying attention to and everything everyone should be watching. >> Yeah. I mean it sounds quite similar to you know owning Bitcoin in your on the Bitcoin blockchain in a in a ledger versus owning rap Bitcoin on Ethereum for example, right? I mean it's different but uh from a very cryptonative lens the there there are there are going to be investors who are okay with that and there's going to be investors who seemingly like are are not going to want that. Um, you know, I think that's right, but I think it extends beyond that. Like that's certainly a cryptonated analogy that we can sink our teeth into, but you know, if you really are thinking about this happening in size and institutions coming to, you know, want to trade equities 24/7, 365,

they're going to care quite a bit about the tax treatment, the governance rights, the ability to have voting rights on the equities that they own. And a lot of that stuff won't be able to be extrapolated or um make its way into the way that that's done for these synthetic or wrap securities. And I think certainly from a regulator perspective, I don't see how it would be possible to instill the protections around insider trading and order protection and all the kinds of things and disclosure um that certainly our regulators want to ensure that investors have when they are making these types of investments.

>> Yep. Yep. Totally totally get it. Um, so I'm I mean I'm I am it is going to be fun to watch these these two kind of uh schools of thought play out. It's good it's good to hear that securityize is very much thinking about this from a uh again it's not necessarily like the crypto ethos per se but it's just this ownership um that is valuable and then all of these different uh kind of aspects that institutions will want um that you just you know kind of put out there I think will will also fall into line there. Um so I I I I agree broadly as well tokenized equities. I also think like extrapolating that to the next extreme is like um let's let's put you know instead of uh you know I don't

think Stripe's ever going to go public but like instead of um you know instead of your favorite app on your phone that's kind of small but kind of big um you know that could do an IPO potentially no no why don't we why don't we think about a way to do some sort of like onchain IPO or some sort of like tokenized version of of these ownerships and I think that could also happen But very, you know, obviously we're still in, you know, step one here of just getting tokenized equities onchain. Um, but that's something that I'm excited about too. >> Yeah. Listen, and I think what you just said is is coming, right? Um, onchain IPOs, onchain secondaries. I mean, >> there's no reason that issuers should not be able to tap directly into this,

you know, installed base of investors who are looking for these types of opportunities. And I think it's the next natural evolution um of of capital markets. In fact, you know, we and some others actually think that over time as the tokenization of stocks, you know, continues to pervade, um this actually might be the next evolution of ETFs. Right? Today, we've seen and continue to see day after day more and more mutual funds shutting down and swapping into ETF format. um you know that's been a decade decade plus you know kind of process um and perhaps over the next you know however many years we see a similar you know kind of movement and user

behavior away from ETFs into you know tokenized securities that can serve with those same types of exposures. >> Yep. Yep. Yep. Very very interesting. Last thing for you Michael that I have is so you worked at Grace for quite a while. Uh I just have a couple questions about that. First of all, um, where were you when Barry Silbert tweeted, "It's going to be a big week." And then that became one of the biggest memes in crypto. >> I don't know if I remember where I physically was. Um, but um, you know, that's um, you know, my time at Gayscale, 10 and a half years was is the time period I look back on really fondly. Yeah. a lot of wins, a lot of

successes, a lot of lessons learned, a lot of great people along the way. Um, and probably a lot of big weeks if I really think back. >> Um, what so you guys grew this to I mean a multi-billion dollar uh kind of entity um with you know everything from the ETF products to the kind of like uh tokenized uh or basically funds for different tokens etc. you know, what are some of the lessons that you carried over in in particular or at least just what are some of the things that you personally uh you know overcame want you know and have since kind of grown grown skills as a result of your time there that you're carrying over to securitize

you know if you could pinpoint a couple things that >> yeah a bunch yeah >> bunch of things come to mind so I think first and foremost um you know when I joined gayscale essentially as employee number one. I remember when we were two people, five people, 10 people, 100 people, right? And so over time, as the business grew and scaled, it was so important for me and everyone around me to learn delegation. Um, as the company became more complex, our processes became more complex. Um, the ability to delegate and lean on team members, um, was just something I and everyone had to learn. Um, and certainly something that I'm taking with me as I, you know, now am in this role at Security Tides,

overseeing a whole bunch of different parts of the organization. Um, I think too culture is is so so key. Um, you know, at Grayscale and certainly at Securitize, we want people to, you know, show up as their authentic selves, do their best work. Um and because we are not a bank, because we are not an institution that has you know the rigidity of so many different um you know levels of approval and committees and we want to you know move fast and sometimes break things. Um >> when you create an environment for people to just be who they are um and do their best work, not be afraid to take risks, ask questions, question the status quo. I always felt and

seem to continue to feel that that you actually get the best output out of employees. Um, and I think the third thing, and this is not just a grayscale thing I learned and certainly not just something I'm carrying with me at Securitize, but is just generally knowledge that I take with me. Um, the best companies, um, they hire people, they don't hire resumes. Um and um you know I think when you are building a team building an organization um sometimes the zero to one people are not necessarily the one to two people and it's not just what's right for the company but also what's right for the individual themselves as they think about their career path. So um I always encourage people to you know always look at things with with a fresh perspective

and and make sure that they're not kind of stifling their own growth or the growth of the the business they're a part of as well. Well said. $25 billion market cap for RWAS today. About 243 or 245 million in stable coin supply. I'm expecting good 8x on stable coins by the end of next year. You'll you can tell me where RWAS are going. I appreciate you coming on, Michael. Thanks for joining, man. >> Thank you. It's great to be here. >> Cheers, man. Speak to you soon.