WEBVTT 1 00:00:00.280 --> 00:00:03.919 And so you can take that token to posit it 2 00:00:04.000 --> 00:00:08.439 into our smart contract, and our smart contract basically locks it. 3 00:00:08.839 --> 00:00:11.759 So and it mints an S token, and that s 4 00:00:11.839 --> 00:00:14.960 biddle doesn't it's not a wrapper of the security. It 5 00:00:15.000 --> 00:00:19.160 doesn't provide the holder of the S token any rights 6 00:00:19.559 --> 00:00:20.760 or recourse. 7 00:00:20.359 --> 00:00:21.600 To the actual security. 8 00:00:21.879 --> 00:00:24.120 But what it does is it's sort of a technical 9 00:00:24.199 --> 00:00:28.160 guarantee that this security is unincomable. 10 00:00:33.479 --> 00:00:35.799 This content is brought to you by bitco, which is 11 00:00:35.840 --> 00:00:39.119 one of the top crypto custodians in the crypto industry. 12 00:00:39.399 --> 00:00:42.719 Bitco works with many big companies and brands such as 13 00:00:42.759 --> 00:00:47.920 Pantera Capital, Bitstamp, and bitcoin Ira. Nike also selected Bitgo 14 00:00:48.079 --> 00:00:51.960 to power its wallets for its NFTs and bitco has 15 00:00:52.039 --> 00:00:55.679 many great services such as hot wallets, custodial wallets, self 16 00:00:55.719 --> 00:01:00.840 managed cold wallets, and NFT wallets. Many institutions bitgo with 17 00:01:00.920 --> 00:01:05.000 its top level security and incredible services such as being 18 00:01:05.000 --> 00:01:08.000 able to deploy your capital while it's in custody, which 19 00:01:08.040 --> 00:01:12.040 includes lending, borrowing, tradings, taking DeFi access and more. If 20 00:01:12.079 --> 00:01:14.840 you'd like to learn more about bitco, please visit bitgo 21 00:01:14.920 --> 00:01:17.879 dot com link in the description Welcome into the Thinking 22 00:01:17.879 --> 00:01:20.680 Crypto podcast. I'm your host, Tony Edward, and my guest 23 00:01:20.719 --> 00:01:23.480 today is Read Simon, who's the head of DeFi and 24 00:01:23.599 --> 00:01:27.719 Credit Solutions at Securities Read. Great to have you on MI. 25 00:01:27.760 --> 00:01:30.000 Likewise, thanks for having me Tony Read. 26 00:01:30.319 --> 00:01:33.640 As we were discussing before the recording, I follow securities 27 00:01:33.680 --> 00:01:37.480 for many years. I've interviewed Carlos Domingo, Jamie Finn, and 28 00:01:37.519 --> 00:01:39.959 I'm excited to be speaking with you today because there's 29 00:01:40.000 --> 00:01:43.359 been some new updates and some very big news around 30 00:01:43.439 --> 00:01:45.840 securities and we're going to get into all the details. 31 00:01:45.840 --> 00:01:48.200 But tell us a bit about yourself, where you're from 32 00:01:48.200 --> 00:01:49.599 and what's your professional background. 33 00:01:50.200 --> 00:01:53.079 Sure, so originally from New York. 34 00:01:54.319 --> 00:01:59.719 My background has been a weird amalgam of kind of finance, 35 00:02:00.079 --> 00:02:04.439 heck and crypto. I spent the last six years at 36 00:02:04.439 --> 00:02:07.760 Botching dot com building their credit business, build credit products 37 00:02:07.760 --> 00:02:12.080 at uber was a banker and a former life But 38 00:02:12.719 --> 00:02:15.039 now I kind of get to sit in between all 39 00:02:15.080 --> 00:02:18.719 of these exciting elements and bring in some of the 40 00:02:18.879 --> 00:02:22.240 tradify background and help try to figure out ways for 41 00:02:22.960 --> 00:02:26.039 securities that we issue, had securities to be able to 42 00:02:26.080 --> 00:02:29.759 interact with DeFi the way it operates today. 43 00:02:31.039 --> 00:02:33.840 And what was your first encounter with bitcoorn or crypto, 44 00:02:34.000 --> 00:02:35.199 what was your aha moment? 45 00:02:37.039 --> 00:02:40.280 Well, so they were different. So my first experience with 46 00:02:40.319 --> 00:02:44.159 bitcoin was in twenty eleven. I needed access to where 47 00:02:44.199 --> 00:02:47.960 I wanted access to a newsgroup and that kind of 48 00:02:48.199 --> 00:02:51.439 was what opened opened my eyes. And then I kind 49 00:02:51.439 --> 00:02:54.400 of forgot about it for about a year and was 50 00:02:54.439 --> 00:02:59.319 actually in Argentina and I guess this was during the 51 00:02:59.400 --> 00:03:05.400 last the last term of Kirchner, and you know, dollars 52 00:03:05.479 --> 00:03:08.840 were just you would change them, and I was curious, 53 00:03:09.800 --> 00:03:14.560 you know, why different notes were getting different rates and 54 00:03:14.639 --> 00:03:16.759 found out, you know, the five hundred euro note was 55 00:03:17.039 --> 00:03:20.919 the one that got the best exchange rate and was 56 00:03:20.919 --> 00:03:23.159 talking with people and they were like, oh, but you know, 57 00:03:23.240 --> 00:03:26.400 bitcoin actually gets an even higher rate. And then it 58 00:03:26.479 --> 00:03:29.400 was like everything clicked. And being on the ground I 59 00:03:29.439 --> 00:03:32.479 was living there doing a study abroad and just seeing 60 00:03:33.560 --> 00:03:37.000 you know, two forced evaluations and kind of just the 61 00:03:39.520 --> 00:03:44.319 everyone was changing, was changing paces for dollars. That like, 62 00:03:44.439 --> 00:03:47.719 that was really my AHA moment where I was like, 63 00:03:47.840 --> 00:03:50.599 oh my god, this actually exists in the real world 64 00:03:50.599 --> 00:03:53.560 and its solving like a real critical problem. 65 00:03:54.280 --> 00:03:58.319 M HM. And your background you mentioned in banking your 66 00:03:58.439 --> 00:04:01.520 d creditsueeze, and then you were Uber and now you're 67 00:04:01.560 --> 00:04:08.199 in crypto. Do you see crypto being that evolution of 68 00:04:08.319 --> 00:04:12.439 the banking finance industry? But in addition Uber, maybe it 69 00:04:12.520 --> 00:04:15.080 can be considered Web two and it eventually has to 70 00:04:15.120 --> 00:04:17.360 merge over to Web three. 71 00:04:17.720 --> 00:04:18.279 Absolutely. 72 00:04:18.360 --> 00:04:20.720 I mean, you know, I think back on a lot 73 00:04:20.720 --> 00:04:25.639 of the frustrations of kind of how you know, banking operates, 74 00:04:26.680 --> 00:04:30.000 even if it's just these legacy systems built on top 75 00:04:30.040 --> 00:04:33.240 of other legacy systems that don't communicate with each other, 76 00:04:33.319 --> 00:04:38.439 and the walled gardens and inefficiency and absolutely, you know, 77 00:04:38.480 --> 00:04:44.040 if you think about industry that haven't been revolutionized by technology, 78 00:04:44.240 --> 00:04:47.439 even sort of in a Web two, you know, function 79 00:04:48.800 --> 00:04:53.480 finances is certainly one of those. And yeah, I would say, 80 00:04:53.839 --> 00:04:57.519 you know, part of the reason I joined securitized is 81 00:04:57.560 --> 00:05:02.360 because you have so much excite mint and innovation and 82 00:05:02.519 --> 00:05:04.519 kind of the crypto world, but you still have the 83 00:05:04.560 --> 00:05:10.399 realities of like the deepest capital markets and the investor 84 00:05:10.439 --> 00:05:14.879 protection of kind of securities regulations. And we see these 85 00:05:14.920 --> 00:05:18.920 two worlds kind of merging together, and I see securitizing 86 00:05:19.199 --> 00:05:21.839 at exactly kind of the nexus of those two. 87 00:05:22.639 --> 00:05:25.319 Do you think we might see Uber and this is 88 00:05:25.319 --> 00:05:28.759 a hard question, you know, integrate blockchain. And it's funny 89 00:05:28.879 --> 00:05:33.399 that I remember years ago SEC chair Gary Genser, who's 90 00:05:33.399 --> 00:05:35.839 on his way out, he said, you could build Uber 91 00:05:35.879 --> 00:05:39.839 on top of algorand the Algoran blockchain, which is you know, fascinating, 92 00:05:39.959 --> 00:05:43.800 is out of security. Yeah, but it's funny because I 93 00:05:43.839 --> 00:05:45.519 think he has a point though, right, that you can 94 00:05:45.560 --> 00:05:50.040 have blockchain integrated into these Web two companies, helping him 95 00:05:50.040 --> 00:05:52.680 to move to Web three and then maybe better digital 96 00:05:52.720 --> 00:05:56.040 identity and verification and faster transaction speeds with stable coins 97 00:05:56.079 --> 00:05:56.800 and things like that. 98 00:05:57.920 --> 00:05:58.160 Yeah. 99 00:05:58.199 --> 00:06:01.519 So I mean, actually, while it was Uber, there was 100 00:06:01.560 --> 00:06:05.199 a crypto project that was being explored, but it was 101 00:06:05.240 --> 00:06:07.680 more so on on the payment side. And I think 102 00:06:07.720 --> 00:06:10.199 you kind of see some similar corollaries for like what 103 00:06:10.279 --> 00:06:12.759 PayPal is doing with p y u s D and 104 00:06:12.879 --> 00:06:15.480 kind of using that stable coins as a means for 105 00:06:15.560 --> 00:06:20.519 internal treasury efficiency, and so for at Uber, it was 106 00:06:20.560 --> 00:06:24.639 more so around like payment processing fees and being able 107 00:06:24.680 --> 00:06:27.399 to move money more quickly to drivers in kind of 108 00:06:27.439 --> 00:06:32.560 an internal system. So for sure, but I mean I guess, 109 00:06:32.680 --> 00:06:37.519 you know, could could Uber be run on a blockchain? 110 00:06:38.240 --> 00:06:43.720 I mean, I don't know about this scale and kind 111 00:06:43.759 --> 00:06:48.399 of the transaction speed element of Trips and all of 112 00:06:48.480 --> 00:06:50.680 the kind of other data that would need to be 113 00:06:50.720 --> 00:06:53.720 processed but os sensibly Yeah, but I guess it comes 114 00:06:53.759 --> 00:06:56.519 to that big question, which is like did everything need 115 00:06:56.560 --> 00:06:59.839 to be run on a blockchain or should everything be 116 00:07:00.079 --> 00:07:03.839 organize And I guess, you know, I would probably say no, 117 00:07:05.160 --> 00:07:09.480 but I think cases like identity and trips a lot 118 00:07:09.519 --> 00:07:12.199 of I think there's kind of sub elements of their 119 00:07:12.240 --> 00:07:18.560 business model that are certainly beneficial to have some type 120 00:07:18.560 --> 00:07:21.399 of distributed ledger support it. 121 00:07:22.519 --> 00:07:22.759 Yeah. 122 00:07:22.800 --> 00:07:25.120 Absolutely, And maybe it's a hybrid model that we might 123 00:07:25.160 --> 00:07:27.959 see some of these companies do where not everything in 124 00:07:28.000 --> 00:07:30.680 their business is running on the blockchain, but certain aspects 125 00:07:30.680 --> 00:07:34.279 like you mentioned, and maybe it's just simply using stable 126 00:07:34.319 --> 00:07:38.639 coins for faster transaction than settlement and on the back 127 00:07:38.759 --> 00:07:39.639 end or whatever it may be. 128 00:07:39.680 --> 00:07:40.879 But we'll have to. 129 00:07:40.839 --> 00:07:46.079 See how these things evolve. Absolutely, But for those who 130 00:07:46.079 --> 00:07:48.079 may not have heard of securities, can you give a 131 00:07:48.120 --> 00:07:49.439 quick overview what you guys do? 132 00:07:50.240 --> 00:07:50.600 Sure? 133 00:07:50.959 --> 00:07:57.040 So, securitizing is sort of one of the og tokenization platforms. Historically, 134 00:07:57.120 --> 00:08:00.759 we've had a very regulated footprint and we really haven't 135 00:08:00.759 --> 00:08:04.680 been a crypto company so we have a transfer agent, 136 00:08:05.120 --> 00:08:08.600 we have a broker dealer license, we have an ATS license, 137 00:08:09.399 --> 00:08:11.480 and we have an investment advisor. So kind of all 138 00:08:11.519 --> 00:08:18.639 of the core regulatory structures to enable the issueance, sale, 139 00:08:18.680 --> 00:08:23.279 and trading of digital securities, and that's really kind of 140 00:08:23.279 --> 00:08:27.600 formed the basis of the company. So our goal was 141 00:08:27.639 --> 00:08:31.360 to go out to top tier asset managers UH token 142 00:08:31.439 --> 00:08:35.240 IDEs their their private assets and then be able to 143 00:08:35.240 --> 00:08:39.360 distribute them on chain UH to investors in you know, 144 00:08:39.440 --> 00:08:42.879 smaller ticket sizes, and then be able to provide users, 145 00:08:43.039 --> 00:08:46.679 UH the opportunity to not just hold an asset in 146 00:08:47.200 --> 00:08:51.279 you know, their Morgan Stanley Bank account or you know 147 00:08:51.320 --> 00:08:55.120 another you know kind of internal ledger, but be able 148 00:08:55.159 --> 00:08:57.759 to bring those assets on chain and find ways to 149 00:08:57.879 --> 00:09:01.440 unlock all of the great composed billy and utility that 150 00:09:02.480 --> 00:09:05.559 you know, crypto and lawn chain activity entails. 151 00:09:06.639 --> 00:09:08.919 And of course the biggest news that I think most 152 00:09:08.960 --> 00:09:12.279 people are familiar with is you guys working with black 153 00:09:12.360 --> 00:09:16.919 Rock to launch Biddle, your tokenized fund, and that is 154 00:09:17.200 --> 00:09:20.519 growing significantly. I think early this year I read it 155 00:09:20.960 --> 00:09:23.919 went over five hundred million dollars. It might be higher now. 156 00:09:24.919 --> 00:09:25.159 Yeah. 157 00:09:25.440 --> 00:09:28.279 Yeah, So I mean, if if you would have said 158 00:09:28.360 --> 00:09:32.240 that I would have, you know, left a proper crypto 159 00:09:32.360 --> 00:09:35.759 crypto company to move to work on a money market fund. 160 00:09:36.679 --> 00:09:39.440 I would have told you that you were crazy, Like 161 00:09:40.480 --> 00:09:42.360 who would have who would have thought at that time 162 00:09:42.440 --> 00:09:46.200 that you know, these products would have such great upload uptake. 163 00:09:46.600 --> 00:09:49.519 But if you think about, like you know, people have 164 00:09:49.559 --> 00:09:52.679 repeated this, but like the best product market fit in 165 00:09:52.720 --> 00:09:56.519 crypto is stable coins, right, And if you think about, 166 00:09:57.039 --> 00:10:00.440 you know, the proportion of dollars in the US financial 167 00:10:00.440 --> 00:10:04.600 system versus kind of the treasuries that ultimately back those 168 00:10:05.480 --> 00:10:06.919 those dollars, it's. 169 00:10:06.759 --> 00:10:10.720 Like ten to tend to want treasuries to dollars. 170 00:10:11.000 --> 00:10:14.120 And then you look at our universe of on chain 171 00:10:14.200 --> 00:10:16.679 dynamics and it's a total opposite. I mean, I think 172 00:10:16.679 --> 00:10:22.320 we have maybe two billion of treasury products on chain 173 00:10:22.759 --> 00:10:25.440 and then something like one hundred and seventy billion of 174 00:10:26.000 --> 00:10:29.360 stable coins. So there really has been this great, great 175 00:10:29.480 --> 00:10:34.679 up uptake not only just amongst institutional investors, but also 176 00:10:34.759 --> 00:10:38.960 retail for a whole host of products where they are 177 00:10:39.000 --> 00:10:44.039 actually getting yield from from the treasuries instead of kind 178 00:10:44.039 --> 00:10:48.200 of the traditional stable coin providers keeping it for themselves. 179 00:10:49.600 --> 00:10:52.600 Now, let's talk about s tokens tell us what this 180 00:10:53.000 --> 00:10:55.519 is and what are the benefits and functionality of it. 181 00:10:56.399 --> 00:11:00.000 Yeah, so, you know, if you think about real world assets, 182 00:11:00.320 --> 00:11:02.879 you've kind of got two different categories of that, Right, 183 00:11:03.080 --> 00:11:06.320 You've got real world assets that are securities and are 184 00:11:06.320 --> 00:11:12.200 regulated and have kind of a regulatory obligation to fulfill, 185 00:11:13.159 --> 00:11:15.320 and then you've got kind of a whole host of 186 00:11:17.080 --> 00:11:21.399 some might be securities, some are definitely not securities. And 187 00:11:21.559 --> 00:11:25.000 so for us, all the assets that we issue, our 188 00:11:25.120 --> 00:11:30.960 securities and s tokens are really kind of the technical 189 00:11:31.000 --> 00:11:37.120 implementation to help break down some of the friction points 190 00:11:37.279 --> 00:11:40.679 that really make it difficult for securities to interact with 191 00:11:40.919 --> 00:11:46.320 DeFi the way DeFi operates today. So the securities that 192 00:11:46.320 --> 00:11:49.279 we issued their permission so they can only go to 193 00:11:49.600 --> 00:11:51.879 certain addresses that have been ky seed. 194 00:11:52.200 --> 00:11:54.600 But it's not just KYC it's they have. 195 00:11:54.639 --> 00:11:59.039 To maintain certain ownership records for how many holders exist 196 00:11:59.080 --> 00:12:03.480 in certain j stictions. But even more than that, you know, 197 00:12:04.200 --> 00:12:08.279 can of security sit in a smart contract? Can someone 198 00:12:08.399 --> 00:12:12.279 earn LP fees off of a security is at a 199 00:12:12.279 --> 00:12:16.240 broken dealer fee? So there's just really a whole host 200 00:12:16.279 --> 00:12:21.159 of kind of regulatory and legal friction points for security 201 00:12:21.279 --> 00:12:25.279 is on chain, and so our S tokens are a 202 00:12:25.399 --> 00:12:30.360 means to kind of responsibly and and compliantly be able 203 00:12:30.440 --> 00:12:34.360 to allow securities to interact with DeFi the way that 204 00:12:34.559 --> 00:12:37.960 you know, you or I would go onto whatever platform 205 00:12:38.039 --> 00:12:39.440 and do whatever we like. 206 00:12:40.919 --> 00:12:43.000 So just why I break it down for the audience. 207 00:12:43.039 --> 00:12:49.679 So let's say we tokenize or let's use the Biddle example. Right, 208 00:12:50.159 --> 00:12:54.279 how does are the token ized shares a Biddle S 209 00:12:54.360 --> 00:12:58.559 tokens or S tokens exist outside of the Biddle shares? 210 00:12:58.840 --> 00:12:59.559 How does that work? 211 00:12:59.720 --> 00:13:03.279 So, so think about it this way, Like, aside from 212 00:13:03.279 --> 00:13:07.840 some of the kyic elements like a security, the defining 213 00:13:07.919 --> 00:13:10.960 feature of a security is really that it has some 214 00:13:11.000 --> 00:13:15.240 stable value component, a variable return, and then maybe some 215 00:13:15.320 --> 00:13:19.000 forward stream of distributions. Right, But it's really kind of 216 00:13:19.000 --> 00:13:22.960 that variable return or the forward distributions that make that 217 00:13:23.639 --> 00:13:26.919 asset actually become a security. Right, So if you kind 218 00:13:26.919 --> 00:13:29.320 of think about the parts that make up a security, 219 00:13:29.679 --> 00:13:34.559 our S token vaults allow you to extract the stable 220 00:13:34.679 --> 00:13:39.080 value component and use that in a permissionless fashion to 221 00:13:39.159 --> 00:13:43.440 be able to be a collateral asset. So that's kind 222 00:13:43.480 --> 00:13:46.240 of like if you think about it from a high 223 00:13:46.320 --> 00:13:49.039 level view, but I think more kind of tactically as 224 00:13:49.039 --> 00:13:56.039 it relates to Biddle. Biddle itself is a stable nav fund, 225 00:13:56.440 --> 00:13:59.039 so the token always priced at one, and you receive 226 00:13:59.159 --> 00:14:03.679 your interest as distributions, right, And so you can take 227 00:14:03.720 --> 00:14:08.639 that token, deposit it into our smart contract, and our 228 00:14:08.639 --> 00:14:12.200 smart contract basically locks it so and it mints an 229 00:14:12.240 --> 00:14:16.080 S token, and that S Biddle doesn't it's not a 230 00:14:16.120 --> 00:14:19.480 wrapper of the security. It doesn't provide the holder of 231 00:14:19.679 --> 00:14:24.200 the S token any rights or recourse to the actual security. 232 00:14:24.519 --> 00:14:26.279 But what it does is it's sort of a. 233 00:14:26.320 --> 00:14:31.559 Technical guarantee that this security is unincomorable, so you can't 234 00:14:31.600 --> 00:14:34.559 borrow against it, someone else can't use it. And that 235 00:14:34.600 --> 00:14:41.480 token then provides the holder sort of like comfort that 236 00:14:41.480 --> 00:14:45.200 that dollar actually exists. And if I do liquidate the 237 00:14:45.240 --> 00:14:48.639 S token, I'm going to be able to receive I'm 238 00:14:48.679 --> 00:14:51.559 going to be made money good. And what's interesting about 239 00:14:51.559 --> 00:14:55.120 this is, again because Biddle is permissioned, not anyone can 240 00:14:55.240 --> 00:14:58.879 just buy it, right, not anyone can hold it even 241 00:14:58.919 --> 00:15:03.679 if even if someone or to default on it, because 242 00:15:03.720 --> 00:15:07.159 it's permissioned. But what we're able to do with our 243 00:15:07.720 --> 00:15:13.159 vault is essentially keep the securities flows between whitelisted users 244 00:15:13.679 --> 00:15:17.679 and then have stable coins or S tokens flow between 245 00:15:17.879 --> 00:15:23.120 kind of the non ky seed or non permissioned addresses, 246 00:15:23.879 --> 00:15:28.360 and part of that is is enabled through circles atomic 247 00:15:28.399 --> 00:15:32.240 liquidity contract where when the S token comes back to 248 00:15:32.279 --> 00:15:37.000 our contract, there's four internal transactions. It burns the S token, 249 00:15:37.360 --> 00:15:42.159 it unlocks the security, it redeems the security with a circle, 250 00:15:43.080 --> 00:15:46.960 and then we forward the USDC to the redepositing address. 251 00:15:47.320 --> 00:15:49.960 So it's really one of these kind of like technical 252 00:15:49.960 --> 00:15:55.519 and legal implementations that unlocks a lot of utility for 253 00:15:56.200 --> 00:15:56.840 holders a bit. 254 00:15:58.600 --> 00:16:02.000 And I know you guys are working with Elixir on this. 255 00:16:02.159 --> 00:16:04.360 I remember speaking to to I think it was sometime 256 00:16:04.440 --> 00:16:09.279 this year. Is it in regards to their setup? Which 257 00:16:09.679 --> 00:16:13.600 protocols can this be used on as far as defire protocols. 258 00:16:14.559 --> 00:16:18.440 So our focus at Securitize, like I said, our regulated 259 00:16:18.480 --> 00:16:23.519 footprint is really focus on issuing assets from the highest 260 00:16:23.639 --> 00:16:27.080 quality asset managers. And then if you think about our 261 00:16:27.200 --> 00:16:31.360 credit entities which issue as tokens, were kind of one 262 00:16:31.399 --> 00:16:35.480 step over right, So we kind of unlock that intermediate 263 00:16:35.720 --> 00:16:39.320 utility and then we look to partner with other providers 264 00:16:39.360 --> 00:16:42.440 who can deliver kind of the last mile of utility 265 00:16:42.519 --> 00:16:48.840 in DeFi. So with respect to Elixer, they read the code, 266 00:16:49.120 --> 00:16:51.240 they get comfortable with the code, and they look at 267 00:16:51.240 --> 00:16:53.559 black Rock or Hamilton Lane or some of the other 268 00:16:54.120 --> 00:16:57.440 products that will issue, and they say, okay, we think 269 00:16:57.480 --> 00:17:00.440 that this is money good to to be. 270 00:17:00.440 --> 00:17:02.080 Able to lend against. 271 00:17:03.000 --> 00:17:06.359 And that's really kind of the core unlock here is 272 00:17:06.440 --> 00:17:09.519 then users who have Biddle can mint s bittle, they 273 00:17:09.519 --> 00:17:12.359 can mint the us D and then d USD is 274 00:17:12.720 --> 00:17:17.200 a stable coin net Elixir issues and it's permissionless and 275 00:17:18.119 --> 00:17:21.759 all over. So it really allows users the ability to 276 00:17:22.039 --> 00:17:26.519 retain their interests on their security. But then you know, 277 00:17:27.799 --> 00:17:30.680 undertake activity that kind of fit in their risk spectrum. 278 00:17:30.799 --> 00:17:33.400 So some people may want to go quite out on 279 00:17:33.440 --> 00:17:37.680 the edge and do some some really esoteric things, or 280 00:17:37.720 --> 00:17:41.279 some of them they just you know, want to you know, 281 00:17:41.480 --> 00:17:46.039 lp into a stable coin pool that has no impermanent loss. 282 00:17:45.839 --> 00:17:52.519 It really is about allowing users to use base assets 283 00:17:52.720 --> 00:17:55.240 that are high quality and then kind of choose how 284 00:17:55.279 --> 00:17:58.599 they want to interact with with crypto to to fit 285 00:17:58.680 --> 00:18:00.759 their risk profile. 286 00:18:01.680 --> 00:18:05.079 Interesting. So and you mentioned this is only for accredited investors. 287 00:18:05.960 --> 00:18:09.000 Are you seeing like hedge funds, family offices and so 288 00:18:09.079 --> 00:18:11.279 forth using this type of service. 289 00:18:12.440 --> 00:18:17.240 Yeah, so it's interesting, right, like when when Biddle was launched, 290 00:18:18.400 --> 00:18:20.319 guilds were about five percent. 291 00:18:21.440 --> 00:18:23.680 We hadn't really seen this uplift in. 292 00:18:25.599 --> 00:18:29.160 Bitcoin prices, and so you know, interest rates on chain were, 293 00:18:29.759 --> 00:18:34.079 I don't know, around four or five six percent, and 294 00:18:34.119 --> 00:18:38.079 so it was a comparable a comparable yield, but still 295 00:18:38.119 --> 00:18:41.039 not super attractive given kind of all of the permissioning 296 00:18:41.119 --> 00:18:44.920 and kind of reduced utility of the security. And now 297 00:18:44.960 --> 00:18:48.359 you see yields you know, north of twenty six percent 298 00:18:48.480 --> 00:18:51.680 twenty seven percent on just just the basis trade, right, 299 00:18:51.720 --> 00:18:57.000 which is a delta neutral strategy that other than the 300 00:18:57.440 --> 00:19:03.240 platform or counterparty risk doesn't have have a price impact. 301 00:19:04.279 --> 00:19:06.480 And so now if you look at you know, being 302 00:19:06.480 --> 00:19:11.039 able to use Biddle as as kind of that base 303 00:19:11.119 --> 00:19:15.079 asset through through s BITTLE and d U s D, 304 00:19:15.759 --> 00:19:19.079 you're now able to access those yields while still doing 305 00:19:19.119 --> 00:19:21.920 so with your with your Biddle. So in some cases 306 00:19:22.200 --> 00:19:25.480 you could argue that it's actually because you can't really 307 00:19:25.519 --> 00:19:29.319 do the basis trade with a yield bearing asset at 308 00:19:29.319 --> 00:19:33.319 that scale. It's kind of a it really is kind 309 00:19:33.359 --> 00:19:37.240 of one of the best use cases for being able 310 00:19:37.279 --> 00:19:38.599 to capture basis right now. 311 00:19:39.279 --> 00:19:42.720 Mm hmm. And you know we're using BIDDLE as an example. 312 00:19:42.839 --> 00:19:48.000 Are there other uh tokenization of real assets examples that 313 00:19:48.039 --> 00:19:48.519 you can share? 314 00:19:50.039 --> 00:19:52.119 I is so in terms of like scope for. 315 00:19:52.079 --> 00:19:55.279 Instance, yeah, or if there are any other existing ones, 316 00:19:55.440 --> 00:19:58.519 or if there's others on the roadmap that you're planning 317 00:19:58.559 --> 00:19:59.440 to enable this war. 318 00:20:00.240 --> 00:20:00.480 Yeah. 319 00:20:01.000 --> 00:20:03.920 So our view is like, and I've said this a 320 00:20:03.920 --> 00:20:06.279 couple of times, it's like, we kind of deal in boring, 321 00:20:07.279 --> 00:20:10.839 boring products, but we want those boring products and we 322 00:20:10.920 --> 00:20:14.920 think they're interesting because they're super high quality, and we 323 00:20:15.039 --> 00:20:17.720 make them base assets so people can in crypto can 324 00:20:17.759 --> 00:20:19.839 then kind of build build on top of them and 325 00:20:19.880 --> 00:20:23.559 do more interesting things. So our focus has been on 326 00:20:23.680 --> 00:20:26.799 kind of private assets. You could take BIDDLE as an example, 327 00:20:27.599 --> 00:20:32.200 which is treasuries. There's basically no risk in the US 328 00:20:32.279 --> 00:20:35.279 government defaulting on these, and then you can kind of 329 00:20:35.279 --> 00:20:40.440 move down the risk spectrum. So we have Hamilton Lane 330 00:20:40.920 --> 00:20:44.400 their Senior Credit Fund, which is a credit fund that 331 00:20:44.480 --> 00:20:51.599 only invests in senior secured loans to corporations. There's there'll 332 00:20:51.599 --> 00:20:56.279 be another credit fund that's coming out from another top 333 00:20:56.319 --> 00:20:58.480 tier investment manager. 334 00:20:59.000 --> 00:21:01.440 We've got a KKR. 335 00:21:01.160 --> 00:21:07.119 Healthcare Fund, but really private assets by high quality issuers 336 00:21:08.480 --> 00:21:12.960 that you know, have been in the business for one 337 00:21:13.039 --> 00:21:20.440 hundred literally hundreds of years, manage trillions of dollars and 338 00:21:20.480 --> 00:21:25.640 have really kind of, you know, really have a focus 339 00:21:25.759 --> 00:21:33.279 on the expertise that Wall Street has in making investments 340 00:21:33.400 --> 00:21:37.240 and managing those investments and really being able to take 341 00:21:37.799 --> 00:21:40.440 the best elements of that world and kind of merge 342 00:21:40.440 --> 00:21:43.559 them with the best elements of being able to the 343 00:21:43.640 --> 00:21:47.039 user experience and the opportunities for transacting on chain. 344 00:21:47.799 --> 00:21:50.039 So on that note, what do you think might be 345 00:21:50.079 --> 00:21:54.519 the phase two of RBA tokenisation? Given at we got 346 00:21:54.599 --> 00:21:56.839 money market funds and things like that, what do you 347 00:21:56.880 --> 00:22:02.759 think might be the next uh of a phrasing this right, 348 00:22:02.920 --> 00:22:05.920 the next product that that is tokenized so to speak. 349 00:22:07.400 --> 00:22:09.279 So I don't know, I don't know what the next 350 00:22:09.559 --> 00:22:14.240 product to be tokenized will be, but I think kind 351 00:22:14.279 --> 00:22:18.519 of the phase two that I'm excited for is more 352 00:22:18.599 --> 00:22:24.119 so around the way that. 353 00:22:22.200 --> 00:22:23.480 That DeFi. 354 00:22:24.720 --> 00:22:28.319 Looks at real world assets and so so what I 355 00:22:28.359 --> 00:22:31.720 mean by this is all you know, all of DeFi, 356 00:22:32.000 --> 00:22:34.119 you know, whether it's AVE or you know, pick your 357 00:22:34.200 --> 00:22:37.960 your CDP platform. Everyone has been focused on kind of 358 00:22:37.960 --> 00:22:41.519 point in time liquidity and liquidity is something that you know, 359 00:22:42.240 --> 00:22:46.440 Bitcoin adds arguably some of the best liquidity across you know, 360 00:22:46.680 --> 00:22:49.559 really any asset, maybe aside from from treasuries, but at 361 00:22:49.599 --> 00:22:53.039 least that trades. And so it's been this point in time. 362 00:22:53.119 --> 00:22:56.799 So like the moment bitcoin drops below X, you know, 363 00:22:57.079 --> 00:23:00.480 there's a four starbatrage, someone comes in and liquidates. But 364 00:23:00.480 --> 00:23:02.559 if you look at some of these private assets that 365 00:23:02.599 --> 00:23:05.839 we've mentioned, you know, these the volatility of their underlying 366 00:23:05.880 --> 00:23:11.319 investments is really quite low, and even so in the 367 00:23:11.359 --> 00:23:13.319 case that most of them only get marked once a 368 00:23:13.359 --> 00:23:19.240 month because there's not that much fluctuation in between in 369 00:23:19.279 --> 00:23:22.119 between the month. So I think as we get some 370 00:23:22.279 --> 00:23:26.400 more of these assets that have you know, composibility and 371 00:23:26.440 --> 00:23:29.519 interoperability with DeFi, I think we're going to start to 372 00:23:29.559 --> 00:23:33.440 see DeFi protocols that take a different view on liquidity, 373 00:23:33.960 --> 00:23:39.000 which is okay, if this fund has you know, it's 374 00:23:39.079 --> 00:23:42.599 issued by a manager who the firm has been around 375 00:23:42.599 --> 00:23:45.599 for one hundred years. They manage about a trillion dollars. 376 00:23:45.960 --> 00:23:50.160 The thing returns maybe ten percent a year. These type 377 00:23:50.200 --> 00:23:55.599 of funds don't fall fifty percent overnight. And so thinking 378 00:23:55.640 --> 00:23:58.480 about what's the liquidity of a fund like that? And 379 00:23:58.559 --> 00:24:01.559 maybe it's only fifty cents, but looking at it kind 380 00:24:01.559 --> 00:24:05.359 of a more expanded view of an asset for its 381 00:24:05.400 --> 00:24:08.680 quality rather than just kind of the point in time. Okay, 382 00:24:08.680 --> 00:24:10.359 you're done, let's let's move on. 383 00:24:11.279 --> 00:24:14.759 Mm hmm. Do you think it makes sense that eventually 384 00:24:16.039 --> 00:24:19.799 ETFs might be tokenized like uh, bigcoin ETFs or a 385 00:24:19.839 --> 00:24:24.440 basket ETF with crypto ascids? If you know, Big One 386 00:24:24.519 --> 00:24:27.240 is going to become this strategic reserve asset and so 387 00:24:27.279 --> 00:24:29.119 forth used by different governments. 388 00:24:29.920 --> 00:24:35.000 I mean, so, so will ETFs be will ETFs be tokenized? 389 00:24:35.160 --> 00:24:37.400 Is that? Is that what you're saying? Yeah? 390 00:24:37.480 --> 00:24:43.000 And and maybe you know Big One obviously already on chain, 391 00:24:43.200 --> 00:24:47.079 easily accessible and so forth. But do you think some 392 00:24:47.240 --> 00:24:50.200 of the institutional investors or credit investors may want to 393 00:24:51.200 --> 00:24:54.160 get access to not bitcoin directly, but through an ETF 394 00:24:54.160 --> 00:24:59.359 maybe black Rock Blackrocks version I bit? Does that make 395 00:24:59.400 --> 00:25:01.480 sense that I don't? I'm asking as like a. 396 00:25:01.799 --> 00:25:05.799 Yeah, yeah, yeah, so I think it's interesting. I mean, 397 00:25:05.960 --> 00:25:12.359 I I hold I a bit, I hold some you know, eth. 398 00:25:14.480 --> 00:25:17.000 I think it really depends on like the investor, right, 399 00:25:18.119 --> 00:25:20.160 I think part of the reason that crypto has had 400 00:25:20.240 --> 00:25:24.559 such great success is because the user experience is a 401 00:25:24.640 --> 00:25:28.480