Carlos is an entrepreneur, investor and co-founder/CEO of Securitize Inc. Prior to Securitize, Carlos co-founded SPiCE VC, the first liquid, inclusive and transparent tokenized VC fund on the blockchain. Previously, he was the President and CEO of Telefonica R&D and CEO of New Business and Innovation at Telefonica Digital. He also co-founded and sits on the board of Wayra, one of the world’s largest corporate accelerators.
A self-described crypto-capitalist, he is the founder of Sling Ventures, an angel-investment fund co-invested by the European Invested Bank; a founder of Dubai Angel Investors; and a venture partner in THCAP VC. Carlos has also been a CTO, CEO and board member for multiple tech startups.
Securitize An end-to-end platform for issuers that are seeking to tokenize assets
Hey everybody, it’s me again, Adam Chapnick, your very favorite host. I’m with the Security Token Academy and we are here at Crypto Invest Summit in Los Angeles, California. And joined by friend of the show, CEO and founder of Securitize, the one and only, Carlos Domingo. Thank you for being with us.
Thank you Adam.
Alright, so we’ve talked to you guys a lot. We are fans obviously of Securitize.
You guys are one of the sort of the main stays of the entire security token industry. But you’ve got a lot going on, so we always like to check in with you every now and again to hear what’s the latest. What sort of things have been happening since last we spoke? How is it going over at Securitize.
So I think a lot of things have been happening but perhaps one of the most interesting things is that we recently move one of the early security tokens that would ... It was issued outside our platform before we existed actually, which was the BCap token from Blockchain Capital. This is a project that I know very well because it was a source of inspiration for me to create SPiCE VC and subsequently Securitize. So I always look up at them as the pioneers of the industry. So, the fact that eventually we kind of convinced them to move their token from their original platform into our platform to make sure they can provide compliance and all the token management services, is a great achievement.
That’s a huge bragging right. So for those of the viewers who don’t know sort of the history of this, there have only been a handful of funds that tokenize or that actually started themselves, they were on tokens. The Blockchain Capital, you had SPiCE and then you also had Science, I think was another one.
Yes, Science was ... They came after Blockchain Capital. So, all, there was Blockchain Capital and Science and Protos and then SPiCE. So, today actually was kind of leaked in one of the panels that Science is also moving to our platform.
Our dear friend, Lou Gardner, kind of leaked it out in the middle of a panel. But anyway-
The crypto oracle himself, also a friend of the show.
... The crypto oracle himself.
So, this is for us something that we’re very proud of because it actually validates our platform. Our technology is kind of what people need. And then direct from Science was in the states this morning saying very nice words about why they chose Securitize to basically reach their new tokens. So, that’s the thing.
How terrific? So, that says a lot if what’s now, if three of the OG, four, are all migrating on your platform.
Hopefully a fourth one will come as well.
It’s inevitable now, probably.
It’s inevitable, yeah.
So, giving you free rein to brag, why do you think those guys decided to shift into the Securitize platform?
I think one of the main reasons we actually have a working product, which is very important.
Well, that is important.
So I think that the fact that we started before other people and we actually managed to build technology because we were trying to solve our own problem, which was initially tokenize SPiCE VC and issue our own token, allowed us to basically come early into the market and this is a virtuous cycle. So, the more tokens come to our platform the more of the partners like exchanges, custodian services want to integrate with digital securities protocol. And the more integrated we are in the ecosystem the more tokens we can bring on board.
Amazing. So, now that you guys are sort of into, your round first base, so to speak, what do you seeing as the most promising signs in terms of adoption from either side if it’s, you know, the issuers, if it’s platforms that you’re partnering with? Where are you seeing some signal that things are positive and that are growing?
I think what we’ve seen is that we started getting the first batch of institutional investors and institutional projects that are moving into security tokens. And that’s the important thing because, I actually don’t like the concept of security tokens are a way to fix ICOs or to make ICO legal, that’s a very short sighted thing. Security tokens are a bigger thing, is about digitizing securities on the blockchain, to provide a lot of the efficiencies that come with real time settlement, traceability, eligibility and automation of digitized securities.
And I think that the sign that we’re moving towards that direction, and away from like, “Oh, we’re going to make ICO legal is a very good sign.
Right. And having the institutions give that in perimeter it’s a big step. So what about ... On the other hand, are you seeing some sort of friction points or challenging elements that are making it harder for people to kind of come on mass?
I think there are still friction points, obviously. The number one friction point, I will say, is the liquidity because that’s a big promise around security tokens and this changes having launched. We work very closely with OpenFinance, which is going to launch very soon, we hope. And then, other companies like SharesPost, AirSwap, tZERO is launching, which is great. So I think that that’s kind of one of the ... is not really a friction point but is a unfulfilled promise that ... it’s holding people from moving towards security tokens.
And then the other area which will be getting fixed but still there’s friction is custodian services obviously.
Right. So, what about that? What are we seeing happening there?
I think that the fact that companies like Kingdom Trust or Coinbase they’re moving into the space, is great. We have some announcements coming soon on that respect, because for us, it’s very important that the investors in the projects that our issuers do get proper custody. So, at the moment, what we tend to do in many projects is really the investors. The option to just take the security without the token or take the security with a token to avoid the problem of what do I with private keys and if I lose them Blah! Blah! Blah! But I think when that gets fixed, then you will also see a lot more influx of investors.
It’s funny because the word custodian or custody didn’t even come up in our conversations for maybe the first nine months that we did this.
I’m sure now it comes all the time.
And now it’s all anybody is talking about. It’s custodianship, it’s like the big thing.
So it’s, I think, a natural evolution that, that is, people are realizing, “Oh, yeah, wait a minute, we need someone to hold on to these things.”
Definitely. I heard about a very funny story.
We love them.
So, when we were doing a fundraising for SPiCE VC, we sold to one family office, but I’m not going to say which one obviously, but a big family office that they bought into the story about what SPiCe was doing and security tokens et cetera, and they actually never registered the wallet with us. So we never send them tokens, and we gave them what we call a treasury. And then when they contacted us and they say, like, “We need the tokens? Where are the tokens? And we told them, “Oh, we need your address,” and I meant the wallet address, and they send me the email address of the people is like, “Okay, now we have a problem here.”
There is a little gap.
The guys haven’t realized that they actually need to have to create a wallet. We work with them on how to do it. They feel comfortable, they did it themselves without any custody. But this is kind of a reflection of the problems that the industry has.
And they’re like the earliest movers, they still didn’t know. That’s really funny. That says it all, actually, does it?
So, what do we expect in the next ... I would usually say a year, but with you guys, you pack a year into about three months. So, let’s give you six months, what’s coming?
It’s actually the opposite. One year feels like six years for me.
Yeah, right, for you, exactly. So, where are we now? It’s October. So by April, what are we going to see from Securitize?
I think we’re going to see these changes launching on many of the tokens that we are issuing already, or we’re migrating in the platform like SPiCE, BlockChain Capital, 22X, Science, etc., that are going to start being traded. And I think that’s going to be a landmark moment for the industry because we’re going to see how liquidity comes. My expectation is that liquidity is not going to be great at the beginning, but it’s going to be the first signal towards that direction.
And then the second thing that we’re going to start seeing from the kind of project I’m getting now is a more complex tokenization. So, not just simple equity or a dividend or tokenizing a fund, that we know how to do very well. But you know, derivative products, debt products and more interesting types of securities been tokenized.
They’re already starting to build those with you? Are you seeing with some?
We’re getting customers approaching us to do those things. Those are actually much more complex, especially debt, debt is complex but debt is ... people love that. And then we started working with real estate, we have some rates coming up, which are also an interesting tokenization class. So, I think that initial is going to become a more mature, more complex than it was before.
Yeah. Exciting. I mean, I’m looking forward to the ... when we start talking about the non-fungible stuff, and talking about fractionalizing, Picasso’s, as in some guys house and things like that, keep us posted.
That’s will happen.
I know. We love talking about this stuff. Great. So in terms of your prediction for ... we always love predictions as you know, I will force you to make predictions.
Bitcoin, 2000, name the date. No, ignore, we don’t care about that here. We are the Security Token Academy. So we care about where you think the security token ecosystem will be, let’s say the end of 2019. Are we going to have major institutions really involved? Not yet? Are we going to have major adoption across new classes of issuers? Are they going to still be cold feet with the investors?
I think, end up of 2019 we’ll still be kind of like the second stage. I think that today, where we are is that there is very few security tokens actually issued on the blockchain. You hear a lot about people, Oh, I’m doing the security token project.” But people have actually raised the money and issued the token for investors, that has really not happened. There’s very few out there like the ones we just mentioned. I think by end of 2019 I’m expecting that the number will be above, over 100. I’m expecting a lot of them come from us but also obviously from our competitors that are also working very hard on making thing happen. So I think that’s my number one prediction. A 100 security tokens-
A hundred by two, the end of 2019. We love it.
... A hundred security tokens by the end of 2019.
And then my second prediction-
Oh, number two, here it comes.
... Here it is. Now, we’re going to have more than ten exchanges trading security tokens.
Which is another important thing because you need that part of the ecosystem, the liquidity. So, I think that we have like three or four exchanges that will launch by the end of the year and the number will double or more in 2019.
Very excited. Well, you heard it here from oracle number two himself.
I’m never going to be number one. Lou has taken that, period.
Lou is the man, you can’t overtake him. But Carlos, thank you.
You know, I kind of look like Lou a little bit.
Same hair do, that’s right, same hair do. Alright, well, Carlos, thank you again as always for joining us.
Thank you Adam.
Oh, wait, before you go, before you go, do you want to give a little shout out about an event that’s coming up?
That’s good thinking.
So, I encourage everyone to do the same thing. We’re going to run what we call the Security Monster event that we did you Kansas first, we do our second edition in Las Vegas next week. So, I’ll expect everyone to be there.
Fantastic, yeah, don’t miss it. Alright, well, thanks again.
Carlos and Securitize.
Thank you, bye.
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