SEC Unlocked Tokenized Stocks

Simone Maini (0:03)

Speed is going to be everything here because things are moving much faster than they ever have done. And the kind of compliance frameworks, the risk frameworks that exist today for securing things, protecting things, we can see already they're not fit for purpose.

Simon Taylor (0:17)

Imagine a golden source record of every transaction, an auditor in the sky, and you can make change, and it's a golden source, so it updates every single time. But there isn't a single point of failure.

If I was to describe that technology to you and say it was a blue, blue bar, you would tell me that you want it. But because I say it's a blockchain, you go, oh, I'm not so sure about that thing.

Nikhil Chandhok (0:40)

Money is just the beginning of what is trust. So you have other trust primitives that can be built, that can be proved, and crypto have all the primitives to do that. So I am very excited to move away from this doomer AI sort of narrative to a world in which we harden our systems and we utilize what is the best of crypto to do that.

Cuy Sheffield (1:00)

When I think about DeFi and just how wild west it has been for so long, where there's some smart contract bug, oops, all the money's gone. That doesn't work in traditional capital markets. That's not an acceptable outcome. Some engineer made a mistake, all the money's gone.

And so, it's like you have to kind of rebuild this trust stack.

Simon Taylor (1:20)

Welcome to Tokenized, the show focused on stable coins and the institutional adoption of Tokenized real world assets. I'm Simon Taylor, your host, head of market there at Tempo and author of Fintech BrainFood. And joining me again is Cuy Sheffield, head of crypto at Visa. And also, congratulations, man, father of two. How are you doing, my friend?

Cuy Sheffield (1:39)

Thank you. I am in the trenches, in the baby trenches, just trying to get by, but having a great time. Good to be back on the show after a few weeks. There's so much happening. We've got some awesome guests, some announcements to cover. Let's get into it.

Simon Taylor (1:54)

Yeah, well, let's do that, but we've got to welcome our guests first. Returning to the show is Nikhil Chandhok, who's chief product and technology officer at Circle. How are you doing, Nikhil? Good.

Nikhil Chandhok (2:03)

How are you?

Simon Taylor (2:04)

Really good, man. You've got some news this week that we'll get to, but I've also got to welcome long overdue debut for Simone Maini, who is CEO at Elliptic. Simone, how are you doing?

Simone Maini (2:16)

I'm great, Siren. Yeah, it's great to be here finally, so thanks for having me.

Simon Taylor (2:20)

Long, long, long overdue. Really happy to have you. Before we jump into the news, I've got to remind viewers and listeners that views and opinions of our contributors today are their own and might not reflect those of companies they represent. Please don't take anything we say as tax legal or financial advice and of course, this podcast is sponsored by Modern Treasury.

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First story this week, the SEC has granted a five-year exemption for tokenized US stock trading, two days after the Clarity Act failed to advance in the Senate. This is a temporary conditional relief allowing certain on-chain venues to offer trading and tokenized US listed stocks using automated market makers and liquidity pools, aka DeFi Anyone. There are two exemptions, one from the legal definition of an exchange and another for the definition of dealer. Both last for five years. This is going to be really interesting. Tokenized shares must give holders the same rights as the equivalent conventional shares. Hello, Robinhood. And trading access must be permissioned even though the smart contracts run on a public permissionless blockchain. So I'm actually going to start with Cuy on this one. And since you're coming back into it and you've not had much sleep, I'm just going to ruin your week. But we've been talking about this theme on recent shows quite a bit about tokenized stocks. There's obviously some disappointment around clarity, but this is the next best thing for tokenized US stocks?