“We’re at the End of the Beginning” - Tokenization Is About to Get Much Bigger

Carlos Domingo (0:00)

We're kind of at the end of the beginning of tokenization, so now tokenization is here to stay. 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.

John Gilland (0:11)

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 Gilland. 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 gonna tell all of us. So if that sounds good to you, make sure you like and subscribe, share this episode with somebody who's gonna enjoy it. As a reminder, our podcast today is free, and that would not be possible without our wonderful partners at Sabre.Money, the stablecoin 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?

Carlos Domingo (1:09)

Hi, John. Thanks for having me.

John Gilland (1:11)

I'm really excited to talk to you. Carlos, tokenization is a huge topic. I think the reason it's gotten a lot of attention these days has to do with what's happening on Robinhood chain. Traders are pairing meme coins with equities, forcing market makers to mint more of these equities.

This is getting into quite a frenzy here. What's your reaction to all of this and what's your take on this whole situation we're seeing play out right now?

Carlos Domingo (1:33)

First, those tokens that they're pairing with meme coins are not equities. They're securities that are issue offshore. 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 risk that they're taking.

These last few days, you probably saw as I did, the interesting debate between the AMC CEO and what they were doing with their stock and the CEO of Robinhood and other people charming about the legality, or in some cases, maybe it's not because it's necessarily legal, but what's the right that a company has in terms of claiming tokenization of somebody else's equity without their permission.

John Gilland (2:12)

For our audience who's listening who may not be familiar, Robinhood CEO Vlad Tenev 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 Robinhood saying, send your lawyers and we'll educate them.

Carlos, this is a space where the regulation is evolving. The Clarity Act is still in Congress and the SEC is trying to make this regulatory clear for businesses operating in the space. How does this get resolved? Do you think that Robinhood is in the right here? Do you think AMC has a point? What's your perspective on all this?

Carlos Domingo (2:47)

So first, one of the things the AMC CEO complained about it, this was not being done following US Securitize regulations. And he's absolutely right, because Robinhood actually is not issuing this in the US, they're issuing this offshore from Jersey, if I'm correct.

So clearly, they can send as many lawyers as they want, but there is a fact that Robinhood is doing this offshore without following US regulations. They're issuing a debt security, not a stock, even though they call it stock tokens. Then they're basically doing it as a permissionless token, which under Jersey law might actually be legal, but I'm not sure it's legal in the US. This is what the AMCCO was complaining, that they're issuing a derivative of their security without their permission and without following US regulations. I think he has a point.

John Gilland (3:36)

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. 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 SECZ, which I thought was well chosen. But this started on July 2nd. Yes, exactly.