Tokenization is about to get much bigger: Securitize's Carlos Domingo

Transcript

We're kind of at the end of the beginning of tokenization. So now tokenization is here to stay and now everybody understands it. Everybody has heard of it. Everybody knows it. But it's really now the beginning of making this a very large multi- trillion dollar industry. >> Tokenized assets are taking off in a big way. But how does all of this work? Why does it matter? And what do investors need to know about all of this in the new era of global finance? Hello and welcome to Milk Road Crypto, the podcast that knows that if you tokenize a Pokemon card, Gary Ginsler will suddenly appear and refuse to tell you whether or not it's a security. I'm your host, John Gillan. Today is Tuesday, September 8th, and today we are joined by Carlos Domingo. Carlos is the co-founder and CEO of Securitize, a leading platform for issuing and managing tokenized

securities and real world assets on blockchain infrastructure, which he co-founded in 2017. Tokenization is one of the hottest topics in crypto these days. Carlos knows all about it and he's going to tell all of us. So, if that sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going to enjoy it. And as a reminder, our podcast today is free and that would not be possible without our wonderful partners at Saber. Money, the stable coin payments platform built for Asia. So, keep an ear out for more information on them later in the episode. But for now, welcome to the Milk Road Show. Carlos, how are you, sir? >> Hi, John. Thanks for having me. >> I'm really excited to talk to you.

Carlos, took a huge topic. I think the reason it's gotten a lot of attention these days has to do with what's happening on Robin Hood chain. Uh traders are pairing meme coins with equities, forcing market makers to mint more of these equities. Uh and this is getting into quite a frenzy here. What's your reaction to all of this and and what's your take on on this this whole situation we're seeing play out right now? >> First, those tokens that they're pairing with memecoins are not equities. They are debt securities that are issue offshore. And I think that's where the controversy comes from. I'm not sure if people understand what they're buying or what they're not buying or the kind of risk that that they're taking. And this uh last few days, you probably saw as I did the the the interesting debate between the AMC CEO and what they were

doing with their stock and uh and the CEO of Robin Hood and and other people chamming in about uh you know the legality or or in some cases maybe it's not because it's necessarily legal, but what's the the right that a company has in terms of claiming tokenization of somebody else equity without their permission. Right. Yeah. So, for our audience who's listening who may not be familiar, Robin Hood CEO Vlad Tennv and AMC CEO Adam Aaron got into a spat on X, which is what Carlos is talking about. And I believe this ended up with someone from Robin Hood saying, "Send your lawyers and we'll educate them." Um, Carlos, this is a uh a space where the regulation is evolving. You know, the Clarity Act is still in Congress and the SEC is trying to make this like regulatory clear for businesses

operating in the space. Like, how does this get resolved? Do you think that Robin Hood is in the in the right here? Do you think AMC has a point? Like what what's your perspective on all this? >> So So first, one of the things the AMCCO complain about it that this was not being done uh following US uh securities regulations and he's absolutely right because Robin Hood actually is not issuing this in the US. They're issuing this offshore uh from Jersey if uh if I'm correct. So so clearly you know they can send as many lawyers as they want. There is a fact that Robin Hood is doing this offshore without following US regulations. They are issuing a debt security not a stock even though they call it stock tokens and then they are uh basically doing it as a permissionless token which under Jesse

law might actually be you know legal but I'm not sure it's legal in the US and this is what the AMCCCO was complaining right that they're issuing a derivative of their security uh without their permission and without following US regulations and I think he has a point. >> Okay. Well, I want to talk more about US regulations. First, I want to talk about Securitize because you are in the US and following US regulations. Uh, Securitize went public this summer. Many people may not know this, but you all started trading on the New York Stock Exchange under the ticker uh SECZ, uh, which I thought was well chosen. Uh, but this started on July 2nd. Yes, exactly. Um, but talk to me about the significance of this and and launching a tokenization platform on the New York

Stock Exchange at a time when the legality of all this stuff is is being so hotly debated. >> So, so first we as you said, we operate in the US and and what we do is legally in the US and we issue assets in in the US and actually the day that we went public in the New York Stock Exchange, we did tokenize our equity issuing a token that is actually a representation of the of the equity, not a dead security or a derivative. And um and we did it in uh in the US. It's available at stocks.security.com. You can trade them. We follow all the regs securities laws which are these laws that about the pricing that you need to provide people which these debt securities don't do.

This morning actually somebody shared with me in a screenshot where one of these derivatives that is being issued short was trading Apple stock at $50 difference. I think it was $317 Apple and 356 or 66 this derivatives. So, so that's that doesn't comply with US uh securities laws. Uh not to mention the permissionless nature of the some of these these tokens. So, so for us was a very important milestone in the company. We started at the end of 2017, so we're close to be 9 years old and and being able to go public, you know, raise a big amount of money. We raised $250 million and as part of the process and and then have enough strength in the balance sheet to take it from here because the market is now exploding, but it's still

in its infancy. So I'm very excited about it. >> Yeah. So I want to understand a little bit better about what Securitize does and how all of this works, how you guys work with your partners. Could you just describe to us a little bit of what a tokenization platform is um and and how your business works, who you're partnering with and and how you're doing your business? >> So the a tokenization platform is just the beginning of a you know journey of of the stuff that you need to do, right? So, so tokenization is basically the the process of you know representing any type of securities whether they're equities, stocks, debt securities as they do in Europe or or fund units etc.

using a a superior ledger technology which is a a public blockchain where a lot of the things you want to do with securities in terms of trading them in terms of moving them across investors settling trades borrow against them etc. they become a lot easier to do and a lot more streamlined and you eliminate uh some of the required intermediaries to make all the plumbing work, right? So, you can think of this as upgrading uh capital markets. We're not just a tokenization platform. We are an SEC registered transfer agent. So, we have a license to be able to issue and manage securities on behalf of of an issuer. We just happen to use a blockchain, but we're also a broker dealer. We're registered investor advisor. We have a large fund admin business, etc. So we we have a number of licenses in in the US

and and in Europe that allow us to basically you know provide all all the management and functionality of securities that are being issued on a blockchain. >> Hi everyone, this is John. Listen, our Milk Road Pro analysts nailed this AI bull market. They we had dozens of calls pay off in a big way for our community. If you want to see how our entire team of analysts are positioning for the crypto bull market that's going to come after this bare market finally ends, you can join us now at Milkroad Pro. It's just a dollar. Link is in the description. You'll get access to all of our analyst trades there. watch list and see how they're navigating this in their portfolios and get access to ask us questions in Discord anytime, day or night. It's just a dollar. Links in the description. Milk Road Pro. Join now.

I'll see you there. Okay. So, let's take as a case study um a couple of uh products that Black Rockck launched back in August, which was um BSTBL and BRSV um which are two new tokenized products. >> Yeah. Uh yeah. So, these are two new tokenized products Black Rockck launched on Ethereum and other blockchains. talk to me about what Securitize's involvement was with these products just as an example of of of how you guys work in this industry and what you guys are doing. >> So, if we're going to go back in time a little bit in in 20124, um the the overall size of uh the what they're calling crypto the RWA market, the real world assets market or the tokenized uh asset market was very very small. And

then in March 2024, we we partnered with Black Rockck and we issued the first Black Rockck uh tokenized fund Bidd um that became it's a it's a tokenized treasury fund. So it's a fund that basically try tracks the Fed rate by you know buying and selling shortdated treasuries and that became very very quickly the fastest growing and the largest asset uh ever tokenized. um it's it's currently at close to $3 billion in in aum but the whole industry kind of exploded on the back of that and we went from you know treasuries were like under a billion dollars to now I think it's 18 or something like that out of which black rock is three billion but there's many other players that that have subsequently come along or or they were there that are now uh you know

continuing pushing the space and and the whole RWA space grew to 40 billion or so I mean depends which which metrics or what you count in but anyway in the tens of billions of dollars from as I mentioned uh low single digit billions. So it's been the fastest growing part of the of the industry and then I think that most recently what happened was the change in in the US uh government and in more particular in at the helm of the of the SEC with the appointment of uh you know chairman Paul Atkins and the creation of the crypto task force that they've been very vocal supporting tokenization and pushing for you know regulatory clarity and changes uh to make tokenization uh more viable in in the US. And then in terms of the role that we do, so Black Dog is an asset manager. So they create funds, they buy

and sell the underlying of the fund. And what we do is we act as a transfer agent. So so we are basically the the SEC registered transfer agent that manages the securities of their fund. And we just happen to put them on chain. As I mentioned, we started with Bidd and we're doing now B reserve as well. And then the idea is that these securities because they're tokenized, they can actually have properties that are hard to do without tokenization. So, our securities have onchain liquidity 24/7. They have they they're transferable peer-to-peer. They can be used as collateral uh 24/7. Um they pay they pay daily dividends by just basically running a new blockchain transaction once a day, etc. So, the tokenized version has more properties and more

features that makes it better than the than the non-tokenized uh version. So the difference between bidd and b reserve is b reserve is basically a registered fund that has been designed to be genius compliant. So it can be used as a reserve for for stable coins which as you know that the genius act came recently and stated that tokenized funds could be the the reserve uh for for stable coins. So but we are also the distributor. We are also a broker dealer. So we distribute the black products among many other products from other asset managers that we work with. So we're not just tokenizing but we're also distributing and then integrating these products with you know derivative exchanges to use as collateral with D5 protocols to be able to leverage them and borrow against them etc to provide more utility to the tokenized

securities. >> Okay. So you guys act as a broker dealer and a transfer agent and that's why these institutions and asset managers choose to work with you because you increase their ability to access tokenized rails and and distribute their products in in ways that other transfer agents or broker dealers might not be able to do. Is that kind of the the situation? >> Correct. You can think of us as as kind of the bridge between Taty assets uh into crypto rails to just make them better, but somebody needs to sit in between and being able to kind of manage those securities and move them and then make them useful when they are in a crypto rail. So that's exactly the role of security.

>> Okay, cool. This is very helpful. Thank you. Um, another question I had, you know, we talked about the partnership with Black Rockck, but you've also partnered with a lot of cryptonnative companies as well. On May 5th of 2026, Securitize Jump Trading Group and Jupiter launched a three-way partnership to enable onchain and regulator regulatory compliant uh sec secondary trading of tokenized equities on the Salana blockchain. And I would love for you to walk me through a little bit of this partnership and uh you know maybe differentiate this from maybe the way some other people might be uh offering tokenized products on on blockchains.

>> Good. So so Jam Trading um it's a very large propm firm uh in in the Tati space but it's also the largest uh crypto market maker. They had developed what they call a propm technology in in Solana that allows you to basically create some sort of an RFQ when people want to sell a digital asset. they sit on the other side and they provide you know the best price they can find and they can just make make markets that way. So we worked with JAM to adapt this propm technology so it was uh compliant with securities regulation so we could actually trade tokenized equities uh on chain and then we actually uh as I mentioned when we listed on the New York Stock Exchange we tokenize our own equity and then make them make it available to trade on Solana. So you can

go to stocks.security.io And then you can just basically connect your wallet and it's a very kind of crypton native experience you you have to pass KYC before you but once you've done it like like when you log in in Robin Hood or in Coinbase you also have to do KYC. So so once you do that the we wallet and then you can just basically swap tokenized uh uh equity in in securize against a stable coins or or if you already hold the tokeniz equity you can just swap it against the stable coins and we guarantee the best pricing uh available in the market through uh JAM. So J is the market maker that provides that and then Jupiter is the largest front end in in in Solana. So the partnership with Jupiter is about being able to expose, you know, those tokenized equities to all the Salana traders so they can

actually get access to them to to trade. >> Okay. So there's a three-way partnership coming together to build this sort of like unique offering in the Salana ecosystem. Um why Salana? Is there like a specific reason why this blockchain is like maybe technically or from a liquidity perspective best suited for this product? just walk me through how you evaluate which blockchains you're going to be building these uh things on or launching these tokenized assets on. >> So we've been partnering with with Solana for for several years but we also support other blockchains uh like Ethereum Avalanche Arbitum, Polygon etc. So so typically what we look is like what is the partnership structure and and where every every blockchain has like a different ecosystems and different

characteristics. So in this case um and the propm technology that Jam had was already developing in Solana and Jupiter is a Solana front end for the most part. Um I'm not sure they support other blockchains but they're definitely big in in Solana. So obviously that was very clear that the kind the ecosystem that we wanted to use was a Solana based ecosystem. So that was the natural uh place to develop. We also tokenize a portion of our equity on on on avalanche as well which is another you know blockchain that is more from the EVM side like more Ethereum compatible that is also look you know pushing towards adoption of uh institutions and RWAs. So so we are blockchain agnostic we tend to work with all the large ones and then kind of select each one depending on the on the ecosystem we're going after.

Okay. So, we talked about some of the um the Wall Street asset managers that you guys are a partner to. Talked a little bit about some of these things you're doing more on the cryptonative side. I want to get your thoughts on something that I just I want to hear what you think about this. The DTCC made headlines this summer with plans to do some pilot programs around tokenization. The DTCC is this huge multi- trillion dollar um clearing house. Um but securityize is very conspicuously not involved in this partnership and in this project. And I'm curious like differentiate for me like the work that Securitize is doing in tokenization versus this pilot program. Why aren't you guys involved? And just like you know walk me through that.

>> So the first kudos to the TCC because it's a very large strata incumbent as you mentioned. Uh so the fact that they're getting into tokenization and that they're kind of forcing all their ecosystem participants to think about tokens and wallets etc. I think it's a positive thing overall for the ecosystem. But their approach is a bit of a more of a post trade improvement. So, so the the securities itself, they still sit in a central securities depository. They still settle T+1, etc. Um, and then they're just issuing a token that represents the entitlement. Like most people don't realize when you buy securities on a broker dealer like let's say Robin Hood, you're not getting actual shares. You're just getting an entitlement towards some shares that the broker dealer has an entitlement towards some shares that sit on DTCC. So,

there's like, you know, three layers of abstraction and intermediaries until your shares uh are there, right? So entitlements are fully legal in the US. So from that perspective, I don't think that you can compare to all these uh you know things happening offshore. The entitlements have full securities entitlements. So they get all the rights etc. I think that the the the main kind of if you want downside of what they're doing is that it's more of a like a close ecosystem to try to provide post trade improvements for the existing market participants. Right? So the market structure who has access to the tokens is they the clearing market participants. they're doing it on on closed ecosystems, nonpublic chains, etc. So, I think it's it's great, but it's just only, you know, solves a part

of a problem within that existing ecosystem. We we do think that when you take securities and you move them natively or through an entitlement, which is also is a valid way of doing it into a public blockchain, then other kind of innovation like more permissionless open innovation can happen that it's not going to happen there, right? So I always tell people to to think of this as when when the internet started and you're you're a lot younger than me so you might not remember but at the beginning there was uh you know American online and MSN and those were great initiatives that they were tapping into this new technology called the internet that came up to create this this ecosystems that you know were perceived as safer for uh you know some type of participants because they were close and controlled. But

ultimately I think that in in every industry open innovation is what prevails and where innovation really happens when it's permissionless innovation anybody can go and build something on top of uh because that's where innovation happens and you you can actually see with what's happening on the Robin Hood chain right like I don't think that Robin Hood thought that by issuing these debt securities people were going to start pairing them with memecoins and do like that that happens because it's done on a on a public chain and it's uh you know permissionless innovation and that's not going to happen on the DTC pilot So I think we kind of sit somewhere in between like we want to be on the public chains. We want to have you know permissionless open innovation but at the same time we want you know be fully uh compliant with US

regulations. >> Thank you Carlos. That's really helpful. I think that's an important point that I didn't want to get lost in this conversation which is that there's meaningful differences between how you tokenize what and sometimes it's just stapling extra steps onto the legacy system and sometimes it's completely redoing things from the ground up. And anyway, I just I think that's really important to to highlight that for the audience. Could you tie this back for me to the blockchain ecosystems and their native digital assets, right? Like you said, it's important to build on this public blockchain infrastructure. How does this drive value adoption back to these crypto ecosystems and to their assets? And what's the connection between tokenization and and those blockchain ecosystems?

>> I mean, look, when you issue assets on a public blockchain, you need to consume, you know, block space and then you need to pay for it. uh and and that value should be occurring in the native token of the of the blockchain. I know there's a lot of controversy about whether this this layer three chains like Rome is a layer three because it's a on top of a layer two which is arbitrum where they ultimately acrew value or not on Ethereum but you know certainly like what we do on Solano or Avalanche it acrews value on on Solana and Avalanche because you know we consume their native token we create we also hopefully get other people to build other things that also consume the the native token and make the blockchain more useful and the more useful a blockchain is the more people will consume the native native

token and the native token should go up in value, right? So, so that's kind of like the the thesis of uh of of how those the digital assets acrew value versus how we acrew value which is basically as a service provider, right? Like charging fees for you know issuing securities or charging fees for for trading etc. more like on the application layer if you want. So >> why does this matter so much to the end user of these products? if people just want a low friction way to trade meme coins, why should they care so much about how these tokenized products are getting to market and like what's sort of like at stake in the long term here and give me a framing on that?

>> I mean, if you want to trade meme coins, then you shouldn't care about anything because you're not trading anything of intrinsic value. You're just, you know, playing around, which is great. Some people like that. But but if you if you're buying uh an Apple share, you know, you should understand what you're buying and should be communicated to you what you're actually buying or not, right? And I think that there is a bit of a a a marketing issue here where I'm I'm not sure how people are aware they are that what they're buying is not a stock even though they're called stock tokens or they're called tokenized uh stocks or tokenized equities. It's a derivative. In many cases, it's a debt derivative. But there's like I don't know five different models. it's it it doesn't actually necessarily carry the same rights. So if if there is a a split

or which has actually has happened that there was a split in the market and one of these derivatives didn't split and it was trading at five times different price uh that the price you're getting might not be the same price that you will be getting buying the real thing that if there's a dividend distribution you might actually not be entitled to get it because you haven't been KYC and maybe you don't you know pass KYC for some reason if you wanted to etc. So I think it's it's a bit of a marketing issue. And then the other thing is you're taking counterparty risk, right? Because when you're buying a debt security, you know, you're basically taking counterparty risk towards the company issuing the debt security. So it's not the same as buying a a native share through a transfer agent where, you know, there's no counterparty risk.

Even if the trans goes bankrupt, you're still the owner of the share. or if you buying a full securities entitlement where you're taking counterpart risk towards DTCC but you know I don't think that anybody thinks that DTCC is a risky you know organization because the entire you know US public markets sit on top of it so so I think that uh you know I think people need to know what they're buying and needs to be communicated properly and I think that is a bit of that miscommunication issue in the industry today >> I think you're great at communicating about this so I appreciate you sharing these details with the audience uh Carlos I got to get your thoughts on this. The uh SEC last week, I believe, for the first time in nearly 40 years since like 1983, I think, uh issued a proposal for a major rewrite to the

transfer agent rules, transfer agent rules, uh which has come up several times in this conversation, uh before we get into like asking too much about all this stuff, like tell us a little bit more about what a transfer agent is, what they do, and why this is such a significant move from the SEC to propose a rule change after 40 years to this. So transfer agency is this thing that now has become very popular and sexy to own and to talk about. But in in 2018, in October 2018, I raised RCA. And then uh and then I went back to my board and I told them, look, um I'm going to register a transfer agent because I think that's the kind of the right regulator intermediary. And they thought like I've gone completely crazy. They were like transfer agents are this outdated business that nobody likes them

because it's such a manual process, such a bad experience. I was like precisely that's why you want to get there right because this an opportunity to actually make this experience that and this friction that most people have because of transfer agents uh a better experience and I think blockchain enables you to to do a lot of the transfer agent functionality uh in a better way so so now obviously has become a very popular thing every single company in the tokenization space is registering transfer agents you have bullies spending $4.2 billion dollars buying a transfer agent, the second largest one. Uh which is crazy if you think about that, you know, a crypto company will be buy the buying the second largest transfer agent. Um but a transfer agent is just basically the regulator intermediary that is responsible for keeping track of who

owns what, right? Like you know when there are shares out there, somebody needs to keep track of of what happens. Somebody's responsible for uh just you know doing corporate actions. So like I don't know if you want to move your shares from from your own name into a trust or you get divorced and you need to split them or there's a dividend that needs to be distributed or there's a proxy board that needs to be conducted. So so transfer agents kind of sitting in the middle of all this and and therefore they are a very critical piece of uh you know capital market infrastructure to to manage securities better. Now transfer agents as you said the the rule the ruling for transfer agents was done 40 years ago and it has actually things that are as absurd as like we have to keep track of the physical address of a

person when we don't actually issue physical securities and everything is digital. I remember and and this is an anecdote that is very funny but when we register our transfer agent in 2019 the SEC told us oh you need to you need to fingerprint every employee that touches share certificates and we were like we're issuing shares on a blockchain is no share certificates because this piece of paper they are like well then fingerprint the employees of the like the developers so we actually did that believe it or not so so this the the transfer agents operate under like extremely updated rules now now it's great that the SEC now is uh is finally pushing to modernize these rules. I have to give credit though to the person that

actually started that which is actually somebody that works for me now Brett Red uh who is you know a few months ago joined as the the president of uh of security and Brett Redund was the director of trading and markets when J with Jay Clayton before Gens I've been through three years already so a lot of history here so at that time bread actually wrote uh you know the first kind of draft for the transgend modernization but that was towards the the tail end of their uh you know their time at the SEC. So when Gloler came I actually went to see I posted on X the other day I actually went to see him with a list of things and and you know transfer agent modernization was one of them and and he was it just didn't feel that it was a

priority for them. They had a lot longer list of all the things that they wanted to do. Uh so it's great to see that that the SEC is doing this because you know it can actually simplify the life of especially the digital transfer agents and at the end of the day this is going to make it better and cheaper for investors right which ultimately are the ones that you want to uh to benefit. So, so if you know this is still in in in draft stage for people to comment, but there's certain things there could be very interesting like you know I don't need to have a physical address of a person. I just need to have a wallet if I track their things on the blockchain because the wallet is the is the way for me to communicate with them. If I want to I can actually ask them to vote

through connecting their wallet into a website. I can send them a dividend on stable coins to the wallet etc. So there's a number of things and by the way this this is a very very long you know document they put out there that we're still sorting through but but it is very promising. I think modernizing transfer agents is going to benefit the digital ones and and everybody else will have to to adapt to it and it's going to make us you know to streamline operations which ultimately as I mentioned the the number one beneficiary is the investor right that gets a better experience a more digital experience we just went public as you mentioned and we did it through an SPA and then we had to do a proxy vote and it takes like 20 days and we don't even know like who who needs to vote so because we don't know

who holds the shares it's like insane so I think that there is a lot of things on on capital markets that that could be modernized and it's great to see the SEC, you know, doing that. >> You know, one thing we've talked about a lot on this show is that crypto is quickly becoming a huge part of the global payments infrastructure. And nowhere is that more obvious than in Asia. But if you're actually running a remittance company or a payment business, you know that the hard part isn't moving the stable coins. It's dealing with local banking partners, compliance, liquidity, and all of the operational headaches that come with sending money into places like India and Southeast Asia. That's why today's partner is Saber. They give payment companies stable coinpowered infrastructure to collect and make payouts across Asia without having to build all of that complexity themselves.

They've already processed more than $3 billion in transactions across 40 different countries. So, this isn't just a concept. These guys are actually doing this for real. If you're building payment infrastructure or expanding into Asia, make sure you check out saber.money. Carlos, fingerprint the developers sounds like exactly the kind of government bureaucracy that we've all had to deal with. So, thank you for handling these headaches for all of us. Yeah, I actually fingerprinted my job as well because we're okay. So my bits everybody we don't have anything to hide. But >> I promise you I haven't touched since I've been running this company for almost nine years. I haven't touched a share certificate ever in my life. So >> well I'm glad the SEC is still on top of things. Um I do want to hear more about how you think this might change the industry though because as you said this

has been discussed for a long time. It's been something people have been pushing for a while but this SEC seems to be finally willing to move forward with it. What does this unlock in terms of things that like crypto projects can now do that they maybe couldn't have done in the past? Does this change things for DeFi? Just what do you see on the horizon if if this modernization for transfer agents does go through? >> So I think it it basically you know makes it tokenization better uh and eliminates friction in how you tokenize things because as I mentioned one of the way to do it not everybody's following the same rules as we discussed at the beginning but if you want to do it in the US you know the the kind of the natural intermediary is the is the transfer agent. So the more the transfer

agent can operate native digitally on a blockchain with wallets etc that you know the more then those tokens can actually integrate with rest of the ecosystem right and ultimately eliminate a lot of the friction of of intermediaries like we do things most people don't don't understand but you know if if you want to transfer shares on a private company through a traditional transfer agent they sometimes uh ask you for uh for a certificate so so you have to actually go to a bank and get something call a medallion guarantee which you've probably never heard of but probably people in the audience have heard of that when you have to have a medallion guarantee to guarantee that you actually own the shares because they don't have a simple way to prove that you own the shares before they transfer them somewhere else. So there's so much

friction, cost, etc. time involved in doing certain operations that should be very very simple in in in a with a digital transfer agent like us. We issue this these tokens on chain. You know the smart contracts will control the transfers. You can peer-to-peer transfer them to any other wireless listed investor. You don't need to talk to me. You don't need to pay any any money to do it. It's all free. It's all instant etc. So, so the amount of benefits of you know improving you know the capital markets infrastructure with blockchain it's it's an endless uh conversation and and the transfer agent kind of sits at the the middle of it right so so making sure the transfer agents are fully digital they operate on a blockchain they use wallets etc it's a it's the beginning of unlocking a lot of other

value >> how do you see securityize positioned in that world in other words like will this regulatory clarity and these uh changes advancements in in um you know the technology here will that give you guys more of an advantage in the market and sort of push out some of these less let's say less regulatory compliant al alternatives that are on the market or do you think this just brings a huge wave of additional competition? What do you foresee for securityize in that that world? >> No, I think that simplifying by by the way as I mentioned we push for transfer agent regulations because we we suffer the friction of doing that right like we was we do it because we want to be compliant but it doesn't matter it doesn't mean that it's not a pain in the ass to do it. So, so if they can

actually simplify our life, of course it's not going to be just for us. It's going to be for everybody else. But so, so be it, right? Like this industry, look, I'm not worried that much about competition is about growth, right? This is about, you know, the 40 or 50 billion, whatever number you pick of of tokenized securities, how that gets to a trillion dollars and then everybody will find their space. There will always be some people offshore catering to the more, you know, DJM people, etc. That's fine. But there will also be the more institutional focused compliant people that will want to do things in the US which is the largest capital markets in the world and there will be people in between. So I don't think that this is a a one takes all um uh industry at all.

So there'll be multiple models coexisting. You'll have the DTCC doing their own postrate thing there etc. So so this is not an area where where I think that security is going to have you know 90% market share. We've never had it and and we don't have it today. and and eliminating friction will bring more benefits for us and for everybody else and so so be it right this will help the industry advance which ultimately is what everybody I think should should be as aspiring to great answer appreciate that I want to talk about that comment about growing the pie growing the number of tokenized assets on chain uh as you mentioned we're now between like 40 and 50 billion of assets on chain but there are trillions of assets in the world how do you as securityize think about prioritizing where to start and where to

focus in terms of trying to bring some of that you know many hundreds of trillions on chain and what's what's the strategy there and and the outlook from your perspective? So yes, there's trillions of assets there, but there's also tr, you know, many, many different asset classes, right? And what people don't realize is that tokenizing a dollar, which are stable coins, is is a business that we don't do, but Circle, for instance, does. And tokenizing treasuries is a different problem with different, you know, counterparties, advantages, different, you know, skills you need to have. Tokenizing equities is a different problem, etc. So you need to pick kind of asset classes um and and try to to focus on on those because you know the what the advantages you bring what licenses you need what you want to

do with them etc it's not the same right so so we focus primarily like in two distinct segments one is um you know funds and and yield bearing assets so there we have a a pretty good you know position where we have a leadership position on tokenized treasuries we also have a very large AAAL which has like a higher yield treasuries is is like 3.6% today. You know, the CLOS are like, you know, close to 5%. Then we just released another product with New Burger Band that has like above 7% yield. And then we have also private trade that has like eight or nine% yield. So we're trying to cover the yield curve. And of course, the higher you go on yield, the longer duration, the higher risk. So it's a trade-off between, you know, getting

more yield and and either having less liquidity or or taking more risk, right? But that's fine. there's investors in all the spectrum and and we're trying to kind of like provide as many products as as possible on that uh you know yield curve and then also make sure all our products are as fully integrated as possible with you know as many D5 protocols to be used as collateral to borrow against them to leverage the products etc. So that's one aspect of our business. The other one is the tokenization of equities which is a completely different business, right? You're talking to different counterparties because you're talking to issuers as you know the transfer agents there play a big role. So we have partnered with computer shared and continental which are the first and the third largest transfer agent to be able to do tokenization of equities. We have

a big project with the New York Stock Exchange about you know 247 trading of of tokenized equities uh on a digital venue that they launch in separated from the traditional venue. So that's like for us it's completely different business in terms of you know this that's where we work with Jump as we mentioned on on the propon chain on Solana etc. So so the the two ecosystems are are very distinct. they have a little bit of overlap but for the most part there are two different uh problems with two different kind of like uh actors that you need to partner with and that you need to you know um work with to to make things happen. So, >> and then of course there's tons of other things. There is real estate, there is private assets, there's private equity, there is like this and that. So,

>> right. Exactly. So, there's there's tons of these asset classes and I I appreciate you giving some insight into how you're thinking about the focuses there. Where are you seeing the most traction, the most adoption? Is it in the equity space? Is it somewhere else? What what's what's getting the most attention right now? >> No, equities is uh is is growing very rapidly equities, right? because most of what's growing are debt securities that are not equities but people refer to them as equities but nevertheless within that category of indirect price exposure to equities if you want uh that's going very rapidly but it's still I don't know like $2.5 billion or something like that so it's is pretty small most of it is not native tokenization uh you know the liquidity as we discussed is pretty bad like what I was telling you this morning

I saw in Jupiter that I'm not going to mention the name of the competitor because there's no need to trash anybody in publicly but they were trading at $50 different price than Apple during the market hours by the way this is not of market hours because of market hours you can argue that because traditional markets are closed that these things dep right um so so I think that market is very nent it's very fragmented it's very messy if you want etc so there's still a a lot of like growth and and room to do more things because that's a huge market that is like 100 trillion dollars that just you know a very small percentage moves the needle massively in terms of size right the the fund space I think is is more mature. It has started earlier.

You know, we we've been doing fun to organizations since we started with KKR and Hamilton Lane and then in 2024 Black Rock and there's a ton of space there. I think that's more mature. Uh it's more, you know, diverse in the sense that there's not just one asset class that you're tokenizing. You're tokenizing treasuries or or bonds or CLS or uh credit, private credit, etc. So, but that that is more mature and the majority of the market is there today. The other market is nent and it's kind of more crazy today, but it's growing rapidly and it's it's probably going to become the largest one at some point. >> Okay, this is helpful. I I Carlos, I want to go back to something you mentioned earlier in the conversation.

When Securitize went public this summer, you guys also got a liquidity unlock of around $350, $400 million somewhere in that neighborhood. I'm really curious your strategy with how to apply that capital to continue to grow, securitize, and just talk to me about the strategy going forward from here. >> So, yes. So, we raised $250 million we don't need the money to operate the company. We have like I don't know 14 15 years runway at at the current you know burn rate which obviously we're planning on improving over time. So so that's not where we raise money from even though it's good to have that money in case for any reason things happen like this industry as you know is very cyclical and volatile but but we've been you know very public saying that we've been looking at acquisitions. I think

this industry is about to consolidate. I don't think that you win by just being a tokenization platform and not doing anything else. I think the the market structure is more complex than that. And I think that because the the immaturity of the industry to be able to offer a more like uh you know comprehensive whole solution of building blocks that are together and and we've been actively doing that. We started with a transfer agent then broker dealer then you know fund admin then IRA etc. So there's still all the stuff that we're looking there for, you know, the existing asset classes plus plus others. And then we've been looking also you know internationally what can we do to expand our you know licenses in other geographies where there might be interesting opportunities.

>> Well Carlos I'm going to be paying very close attention to see where all this goes because as you said there's a lot changing the rules are changing consolidation >> changes very very quickly. Crypto has always been and it's always been very interesting industry precisely because of that. >> It also makes it hard to understand for people and to distinguish you know thing reality from just uh announcements but uh but it's a very exciting industry. I think that you know we're kind of at the end of the beginning of tokenization. So now tokenization is here to stay and now everybody understands it, everybody has heard of it, everybody knows it but it's really now the beginning of making this a very large uh you know multi-trillion dollar industry. Carlos Domingo, Securitize founder and CEO. Thank you so much for being on the Milkro show. Where

can we send people to find more of you and your work online? >> Pretty much online all the time at Carlos Domingo on X. I'm very uh probably, you know, spend more time than I should there. So, so you can find me there on X. You can go to securityize.io to see what our company does. You can actually create uh, you know, your own securityize ID, which is is very simple to do if you're a retail person. Uh, you can go to stocks.securize.io And you can actually look at how our onchain trading of our own stock in Solana works and it's a obviously a registered security so anybody can can purchase it. So uh yeah those are like the places where you can find us.

>> Carlos thank you so much for doing this. I think this is a very important but somewhat confusing topic and you're an excellent communicator about these things. So thank you so much for being on the Milk Show. I hope you can catch for having me. >> Thank you all for joining us. I hope you all learned something today. I know I did. So until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of the Milkro Show. Thanks for being here, everyone. Bye. >> Thanks for listening to Milk Road. If you enjoyed the show, make sure you like and subscribe. And if you're struggling to find winners in the market, that's exactly what Milkroad Pro is built for. Our analysts have called some of the biggest winners early, and Pro lets you see what they're buying next, every

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