Should Stock Tokens Be Limited to KYC'd Users? Or Be Tradeable by Anyone?

Brett Redfearn (0:00)

Tomorrow is 9-11, and I live in New York.

I worked in the World Trade Center in 1993 when it was bombed, and I worked a block away at 9-11. So I was a runner in the street when the Tower One came down. And it's funny because every time I get involved in conversations about permissionlessness, I'm always talking to people about, you know, like, I really care about terrorist financing, right?

Laura Shin (0:26)

I care.

Brett Redfearn (0:26)

And so, you know, we have to make sure that as we get really excited about permissionlessness and what that unlocks, that there's some really other important things and policy issues that have to be kept in mind. And we don't want to unlock things that make it easier for bad things to happen. And I think it's just a really poignant point, especially today and tomorrow.

Laura Shin (0:48)

Hi, everyone. Welcome to Unchained, your no-hay presource for all things crypto. I'm your host, Laura Shin. Thanks for joining this livestream. First, we'll take a quick word from the sponsors who make this show possible.

This episode is brought to you by OneInch Aqua, the shared liquidity layer from OneInch. Back multiple liquidity positions with one wallet balance and keep your tokens in your wallet until a swap fills. See how it works at oneinch.com/aqua.

Today's guest is Brett Redfearn, president of Securitize. Welcome, Brett.

Brett Redfearn (1:21)

Thank you very much for having me, Laura. It's great to be here.

Laura Shin (1:24)

Yeah. Good to be here on the show. Oh, thanks. I'm excited to chat about what is a super juicy and controversial topic. Who knew that securities law could be so entertaining as I tweeted during this spat that we've seen this last week.

To set the context last week, Adam Aron, the CEO of AMC, tweeted about what he called Robinhood's, contemptible, outrageous, disgusting, detestable, inexcusable, vile AMC tokens, which are actually backed by real shares of AMC, but they're not actually shares. Robinhood CEO, Vlad Tenev tweeted back, what's the concern? Later on, Robinhood CLO, Dan Gallagher, who by the way is also a former SEC Commissioner, he tweeted back, quote, we know a little something about the US securities laws and will not desist and misspelled it because it was misspelled when Adam Aron told them to cease and desist. Then Dan Gallagher finished, send your lawyers and we'll educate them.

I know you have a dog in this fight, but I want you to take a step back and try to explain the debate here from a more impartial perspective. Explain why AMC's Aron was so upset and explain what leg Robinhood is standing on or thinks it's standing on legally.

Brett Redfearn (2:51)

Again, thanks for having me.

It's a very important topic because we all have been watching tokenization and blockchain technology coming into traditional financial market services. As you know, Securitize has been very involved in that in terms of tokenizing funds and private equity and treasuries and the like. The stocks really are the next big thing in terms of bringing the stock market on chain. As you know, this SEC under Paul Atkins and Jamie Selway and others has really been trying to create what are the rules of the road and how do we get into that particular spot. But in the meantime, a lot of things have been happening offshore. The offshore regulatory environment is very different than the onshore regulatory environment. Robinhood, first of all, they weren't the first to do this. There's a lot of other stock tokens, as you know, that have been issued in offshore markets that are essentially synthetics or wrappers.

And so Robinhood did come in. And of course, if it's Robinhood, they're going to come in big. They're going to come in hard. And they're going to do it in a very meaningful way. So look, I think to a certain extent, kudos to Robinhood for getting this out there and helping to find the market and looking at what is one of the real use cases of the tokenization of securities. But in so doing, it really is opening up a lot of important questions that we have to answer as investors, as issuers, as participants in the financial market. So what Robinhood has done is they have issued this sort of debt security, as you mentioned, in offshore markets where people can trade them. And I think it's right. They are doing things within the law.

But that's different than like, what is the issue for the issuers of the company? We have to ask fundamental questions like, what are our capital markets for? Why are we raising money? Is it for issuers? Is it for investors? Or to what extent is this just really to tokenize and do things where they're not involved in this? And so I think the fundamental point here is, as we get into tokenization, there's a very important question about how do we involve issuers? How do we involve companies? The companies are out there raising money in this discussion, in this process. And to what extent should they have a say in what's happening?