WEBVTT - Securitize's Sonnenshein Talks Crypto Market, Tokenization

0:00:00.280 --> 0:00:08.760
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. One product, though not

0:00:08.800 --> 0:00:12.880
<v Speaker 1>seeing outflows lately, is black Rocks Tokenized Funded Biddle. The VON,

0:00:12.960 --> 0:00:15.680
<v Speaker 1>which is exclusively on Securitize, is more than one point

0:00:15.720 --> 0:00:19.079
<v Speaker 1>seven billion dollars in assets under management. Joining us for

0:00:19.079 --> 0:00:23.560
<v Speaker 1>an exclusive conversation is Securitize CLO Michael Son and Shein. Michael,

0:00:23.640 --> 0:00:25.920
<v Speaker 1>good to see you. Welcome back to Bloomberg Crypto. How

0:00:25.960 --> 0:00:26.200
<v Speaker 1>are you.

0:00:26.360 --> 0:00:27.520
<v Speaker 2>I'm great, Thanks for having me.

0:00:27.640 --> 0:00:29.200
<v Speaker 1>Yeah, thanks for joining us. Hey, we're going to talk

0:00:29.200 --> 0:00:31.520
<v Speaker 1>about securities in just a minute. First, I do want

0:00:31.520 --> 0:00:33.839
<v Speaker 1>to talk about this moment in crypto because it has

0:00:33.880 --> 0:00:36.400
<v Speaker 1>been a while since we spoke. When you were at Grayscale,

0:00:36.440 --> 0:00:39.320
<v Speaker 1>you led the battle to create a spot at bitcoin ETF.

0:00:39.360 --> 0:00:42.320
<v Speaker 1>Fast forward to today, you've got those spot bitcoin ets,

0:00:42.360 --> 0:00:46.159
<v Speaker 1>You've got this new crypto friendly administration, potentially more crypto

0:00:46.200 --> 0:00:49.239
<v Speaker 1>friendly sec We'll see what happens later this week. What

0:00:49.400 --> 0:00:51.520
<v Speaker 1>is the opportunity that you see at this moment?

0:00:51.720 --> 0:00:54.000
<v Speaker 2>I mean, it really is night and day. Right. When

0:00:54.000 --> 0:00:56.200
<v Speaker 2>I was last here a couple months ago speaking to you,

0:00:56.520 --> 0:00:58.960
<v Speaker 2>I would say that as an industry, crypto was still

0:00:59.000 --> 0:01:02.560
<v Speaker 2>operating here in the US under a regime of regulation

0:01:02.640 --> 0:01:05.759
<v Speaker 2>by enforcement. By and large, I think the crypto ecosystem

0:01:05.840 --> 0:01:08.920
<v Speaker 2>is breathing some sigh of relief that perhaps that.

0:01:08.920 --> 0:01:09.640
<v Speaker 1>Has ended right.

0:01:09.720 --> 0:01:12.760
<v Speaker 2>We've seen a lot of lawsuits be dropped against crypto businesses.

0:01:13.400 --> 0:01:15.720
<v Speaker 2>We've seen more businesses come to the US wanting to

0:01:15.800 --> 0:01:18.760
<v Speaker 2>offer crypto products and services. We have a Head of

0:01:18.760 --> 0:01:21.759
<v Speaker 2>Crypto at the White House, we have a Crypto task

0:01:21.800 --> 0:01:25.920
<v Speaker 2>Force at the SEC that's meeting collaboratively with crypto businesses.

0:01:25.959 --> 0:01:29.720
<v Speaker 2>And so to me, that combined with the executive branch

0:01:29.720 --> 0:01:32.920
<v Speaker 2>of government that continues to come out publicly and say

0:01:33.160 --> 0:01:35.160
<v Speaker 2>we want to make the US a crypto hub, a

0:01:35.160 --> 0:01:38.640
<v Speaker 2>bitcoin hub of innovation, means that the opportunity around this

0:01:38.720 --> 0:01:40.560
<v Speaker 2>assa class is going to be here in the US.

0:01:40.640 --> 0:01:42.800
<v Speaker 3>I think there's a pretty direct connection to be made

0:01:42.800 --> 0:01:45.120
<v Speaker 3>here in what might be possible in terms of tokenization.

0:01:45.800 --> 0:01:49.400
<v Speaker 3>Executive after executive that we speak to speak to the

0:01:49.480 --> 0:01:52.520
<v Speaker 3>idea of accredited investors and even a broader set to

0:01:52.520 --> 0:01:55.520
<v Speaker 3>be able to have more access to companies or projects

0:01:55.560 --> 0:01:58.920
<v Speaker 3>that are raising money in a tokenized manner. Private equity funds,

0:01:58.960 --> 0:02:03.880
<v Speaker 3>venture capital funds. How big is that opportunity? How fast

0:02:03.960 --> 0:02:04.440
<v Speaker 3>does it come?

0:02:05.040 --> 0:02:08.200
<v Speaker 2>It's coming very quickly. So at securit Ties we sit

0:02:08.280 --> 0:02:11.799
<v Speaker 2>in a really interesting place. We are the largest tokenization

0:02:11.919 --> 0:02:14.799
<v Speaker 2>platform out there. To date, we've brought almost two and

0:02:14.840 --> 0:02:18.160
<v Speaker 2>a half billion dollars worth of assets, real world assets

0:02:18.200 --> 0:02:21.520
<v Speaker 2>onto public blockchains. So we sit between asset issuers like

0:02:21.560 --> 0:02:27.200
<v Speaker 2>black Rock and Apollo, KKR, Hamilton Lane in public blockchains, Polygon, Ethereum, Avalanche,

0:02:27.200 --> 0:02:30.360
<v Speaker 2>et cetera. And so for those that want to bring

0:02:30.400 --> 0:02:33.680
<v Speaker 2>their investment offerings on chain in a compliance secure way,

0:02:34.040 --> 0:02:37.440
<v Speaker 2>they're often coming to Securititize. Now the real question is

0:02:37.480 --> 0:02:39.680
<v Speaker 2>why right. For a lot of folks, it could be

0:02:39.720 --> 0:02:43.400
<v Speaker 2>democratizing access to the investments, Like you mentioned private credits,

0:02:43.400 --> 0:02:46.560
<v Speaker 2>something that historically has only been available to a small

0:02:46.600 --> 0:02:49.760
<v Speaker 2>subset of investors. But I think we share a burden

0:02:50.560 --> 0:02:52.800
<v Speaker 2>in the tokenization space that we want to make the

0:02:52.880 --> 0:02:57.799
<v Speaker 2>investor experience objectively better. So that could be daily dividends,

0:02:57.919 --> 0:03:00.400
<v Speaker 2>it could be instant liquidity. It could be things that

0:03:00.440 --> 0:03:03.440
<v Speaker 2>investors aren't getting in their traditional counterparts that only this

0:03:03.520 --> 0:03:04.760
<v Speaker 2>technology allows it.

0:03:04.600 --> 0:03:07.600
<v Speaker 3>To be on your partner Really over here, black Rock,

0:03:07.680 --> 0:03:12.000
<v Speaker 3>when it comes to this tokenized treasury fund, Blackrock CEO

0:03:12.040 --> 0:03:14.160
<v Speaker 3>Larry Fink at Davos said this, it caught a lot

0:03:14.160 --> 0:03:17.720
<v Speaker 3>of attention. My god, if we can tokenize bonds and

0:03:17.760 --> 0:03:21.400
<v Speaker 3>stocks tomorrow, it would democratize investing in all ways we

0:03:21.440 --> 0:03:24.840
<v Speaker 3>can't imagine. And I think that just shows you part

0:03:24.880 --> 0:03:27.920
<v Speaker 3>of what he's seeing down the road. Sure, but let's

0:03:27.919 --> 0:03:29.600
<v Speaker 3>just start what you have right now. I mean the

0:03:29.639 --> 0:03:33.280
<v Speaker 3>idea of tokenized treasuries. Why why buy into this fund

0:03:33.400 --> 0:03:36.240
<v Speaker 3>relative to a money market fund or even a stable coin.

0:03:36.440 --> 0:03:38.440
<v Speaker 3>There's a spectrum of investments to choose from.

0:03:38.480 --> 0:03:40.560
<v Speaker 2>Sure, So there's a couple of dimensions to look at this.

0:03:40.680 --> 0:03:43.360
<v Speaker 2>So if you take a money market fund today, for instance,

0:03:43.400 --> 0:03:47.120
<v Speaker 2>investors maybe only getting their dividends monthly. Investors have to

0:03:47.160 --> 0:03:49.480
<v Speaker 2>submit in order to buy or sell the money market

0:03:49.480 --> 0:03:52.360
<v Speaker 2>fund or treasury fund by a certain cutoff time each day.

0:03:52.680 --> 0:03:55.280
<v Speaker 2>The fund may not be open obviously, usually on weekends,

0:03:55.280 --> 0:03:57.920
<v Speaker 2>et cetera. By contrast, you look at the product that

0:03:57.960 --> 0:04:01.040
<v Speaker 2>we have with Blackrock Fiddle, there's twenty four to seven

0:04:01.080 --> 0:04:06.080
<v Speaker 2>three sixty five liquidity, daily dividend accrules, instant subscriptions and redemptions.

0:04:06.400 --> 0:04:10.320
<v Speaker 2>You know, this is objectively a better investor experience, and

0:04:10.520 --> 0:04:13.920
<v Speaker 2>we're starting to see people really think about money market

0:04:13.920 --> 0:04:16.520
<v Speaker 2>funds in a different way, using it as collateral things

0:04:16.520 --> 0:04:18.520
<v Speaker 2>that they just don't typically think about when they think

0:04:18.520 --> 0:04:19.760
<v Speaker 2>about the traditional counterpart.

0:04:19.839 --> 0:04:21.240
<v Speaker 1>But how does that open it up to more people?

0:04:21.240 --> 0:04:23.680
<v Speaker 1>How does it democratize this because it's pretty easy to

0:04:23.800 --> 0:04:27.120
<v Speaker 1>use any sort of app be it robin Hood, Schwab,

0:04:27.160 --> 0:04:30.080
<v Speaker 1>Fidelity and more, and go and buy any of these

0:04:30.120 --> 0:04:32.760
<v Speaker 1>assets that you're talking about, Sayer Venture Capital.

0:04:33.279 --> 0:04:35.840
<v Speaker 2>So I think in the terms of a tokenized treasury

0:04:35.880 --> 0:04:39.320
<v Speaker 2>or money market fund, it's actually about connecting that collateral

0:04:39.400 --> 0:04:41.720
<v Speaker 2>in a way that people aren't typically used to using it.

0:04:42.000 --> 0:04:44.520
<v Speaker 2>So today I think a lot of investors' mindsets may

0:04:44.560 --> 0:04:46.680
<v Speaker 2>be I have some spare cash, I'm going to make

0:04:46.720 --> 0:04:48.719
<v Speaker 2>it interest bearing by putting it into a money market

0:04:48.720 --> 0:04:52.200
<v Speaker 2>fund or put it into treasuries. But today those assets

0:04:52.200 --> 0:04:55.320
<v Speaker 2>in those products aren't connected or utilized in the world

0:04:55.360 --> 0:04:58.760
<v Speaker 2>of DEFIVE, for example, Whereas if you're doing this on chain,

0:04:59.000 --> 0:05:01.159
<v Speaker 2>it allows you to use that collateral to post on

0:05:01.200 --> 0:05:03.720
<v Speaker 2>an exchange, to post as collateral with an OTC desk,

0:05:03.960 --> 0:05:05.440
<v Speaker 2>or even link it to the world of DeFi.

0:05:05.760 --> 0:05:08.839
<v Speaker 1>So how far does this go in your view? What

0:05:09.000 --> 0:05:12.600
<v Speaker 1>ultimately gets tokenized? What do you want to get tokenized.

0:05:12.240 --> 0:05:15.520
<v Speaker 2>Well, it's a small but growing market. Right. The world

0:05:15.600 --> 0:05:18.000
<v Speaker 2>of RWA's has more than doubled in the last year,

0:05:18.040 --> 0:05:21.480
<v Speaker 2>and within that tokenized treasuries have actually expanded over five

0:05:21.600 --> 0:05:26.040
<v Speaker 2>hundred percent. We've recently tokenized public equity on New York

0:05:26.080 --> 0:05:30.839
<v Speaker 2>stock listed company Exodus. So we're starting to see movement

0:05:30.960 --> 0:05:34.720
<v Speaker 2>beyond tokenized treasuries, movement beyond tokenized money market funds into

0:05:34.760 --> 0:05:38.920
<v Speaker 2>things like public equities. But again, it's small, and you know,

0:05:39.000 --> 0:05:40.839
<v Speaker 2>a lot of that momentum I think we'll continue to

0:05:40.839 --> 0:05:41.719
<v Speaker 2>carry throughout this year.

0:05:41.960 --> 0:05:43.720
<v Speaker 3>You know, I also want to just take another big

0:05:43.760 --> 0:05:45.359
<v Speaker 3>picture of you for a moment, because you have the

0:05:45.400 --> 0:05:49.600
<v Speaker 3>confirmation hearing for the incoming SEC chair Paul Atkins this week.

0:05:49.720 --> 0:05:51.640
<v Speaker 3>From the seat that you're in, what are you looking

0:05:51.720 --> 0:05:54.440
<v Speaker 3>for in terms of how he might lead the SEC?

0:05:54.880 --> 0:05:57.760
<v Speaker 2>So again, it seems like gone are the days of

0:05:57.839 --> 0:06:00.520
<v Speaker 2>regulation by enforcement, and so I think as long as

0:06:00.520 --> 0:06:03.720
<v Speaker 2>we are continuing to proactively work as an industry with

0:06:03.800 --> 0:06:07.480
<v Speaker 2>our regulators, we are unlocking new use cases around crypto

0:06:07.560 --> 0:06:10.400
<v Speaker 2>every single day, and so it's really a burden that

0:06:10.440 --> 0:06:12.520
<v Speaker 2>we have to share as an industry to continue to

0:06:12.640 --> 0:06:14.640
<v Speaker 2>educate them. Right, if we're going to continue to expand

0:06:14.720 --> 0:06:17.400
<v Speaker 2>access to our WA's, if we're going to revisit things

0:06:17.480 --> 0:06:20.599
<v Speaker 2>like the accredited investor definition. All of these are the

0:06:20.600 --> 0:06:22.640
<v Speaker 2>types of engagements that we certainly want to have with

0:06:22.640 --> 0:06:23.160
<v Speaker 2>our regulator.

0:06:23.240 --> 0:06:25.040
<v Speaker 1>Do you ever get a little concern that this administration

0:06:25.120 --> 0:06:27.800
<v Speaker 1>is too close to crypto? Given World Liberty Financial their

0:06:27.920 --> 0:06:30.080
<v Speaker 1>entry into stable coins announced today, and then of course

0:06:30.120 --> 0:06:31.000
<v Speaker 1>meme coins as well.

0:06:31.360 --> 0:06:33.719
<v Speaker 2>I wouldn't say that's a concern. I think it's certainly

0:06:33.920 --> 0:06:37.640
<v Speaker 2>an area that has been nice and welcomed by both myself,

0:06:37.720 --> 0:06:40.880
<v Speaker 2>my peers and peer businesses to see that level of collaboration.

0:06:41.760 --> 0:06:44.840
<v Speaker 1>All right, Michael Sunshine of Securitized, good to see you,

0:06:44.880 --> 0:06:45.359
<v Speaker 1>Good to see you.

0:06:45.480 --> 0:06:46.240
<v Speaker 2>Thanks for having me.