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Expert Interview


 
Carlos Domingo - Founder & CEO of Securitize

Carlos Domingo

Founder & CEO, Securitize

Carlos Domingo is a senior executive, entrepreneur, investor, and currently the CEO and Co-Founder of Securitize, Inc. Before becoming the CEO of Securitize, Carlos co-founded and launched SPiCE VC, a fully tokenized VC fund. In order to ensure global compliance for SPiCE VC, Carlos and his team created the security token issuance and lifecycle management platform that would later become Securitize, Inc. Prior to SPiCE and Securitize, Carlos was the President and CEO of Telefonica R&D, and CEO of New Business and Innovation at Telefonica Digital, as well as co-founder and board member of Wayra, one of the world’s largest corporate accelerators. He has been CTO and CEO or board member of multiple tech startups. On the investment side, he is the founder of Sling Ventures, an angel investment fund co-invested by the European Invested Bank, one of the founders of Dubai Angel Investors, and a Venture partner in THCAP VC. Carlos was also one of the leaders of open source project Firefox OS.

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Securitize An end-to-end platform for issuers that are seeking to tokenize assets

Transcript


 

Carlos Domingo:

So, we felt that if you want to have a legitimacy in the space and really be able to go after real business, good issuers, broker-dealers, etcetera. You have to have all those investors that come from that space. So early on after we did our CSA back in November, we started approaching banks and talk to them about trying to evangelize about the importance of digital securities and how they can actually improve their processes by these types of securities on the blockchain. And that conversation led to some of them, you know, starting doing some projects with us and then saying, okay, we’re going to do a project with you so I might as well invest in you as well. So I can then benefit from the upside is going to give to your company and really make sure there’s an internal alignment between what we do. So we were very fortunate. We got Banco Santander, which is the largest bank in Europe because Mitsubishi UFJ, which is the largest bank in Japan and fifth largest bank in the world after all Chinese banks. We’ve got a number of securities, which is one of the largest securities firms in the world. So I cannot be more pleased about the news. And I hope that people take it as a step forward for the entire industry, not just for Securitize because this brings, you know, they take the validation of this page that everyone needs, not just us, so.

Carlos Domingo:

Actually, they’re all super interested and the, you’d be surprised, they’re super knowledgeable. And they all have very good, you know, DLT, blockchain, digital asset teams, whatever they want to call it, depending on the bank. And they all have the, you know, capital markets experience as well as technology experience. And they all understand that blockchain is the solution for basically digitizing the entire process of issuing and managing securities. Because today is very broken so, so it’s very dysfunctional. This, you know, these low rent seekers, they love like disconnects in systems that are there. You know, it’s like I’ll be in some markets, etcetera. So I think these banks are, they all have a very good understanding about how this technology can actually help them improve. That said, it’s going to take a long time. It’s is not going to happen tomorrow because obviously these are very, very, very large corporations. So, so bankers and then there is, you know, the largest publicly traded company in Spain and it’s the largest bank in Europe. So you’re not going to change how they do things tomorrow. But you know, the good thing is that they support us with funding so we can stay here for the long term and then we can work with them and help them improve their internal systems, digitize the process of managing securities using blockchain technology.

Carlos Domingo:

So, as you know in the US, you don’t have to have a transfer agent to deal with certain types of security. So, so far we were operating without being a transfer agent and it was not a problem from a regulatory perspective, but we always felt that being regulated gives confidence to people that what we will be doing is legit. Because in this industry, as you know, there is a lot of like people that used to do ICO that not do STO and like that’s, you know, something we have to hopefully eliminate at some point. And some of the STO platforms that come from the ICO space eventually will not be there because it actually gives, it scares people off about doing this industry.

We felt like by having an SEC regulated license is going to allow us to do two things. One is going to allow us to basically deal with all the type of securities that you have to have a license to deal with like Reg A+ plus, public securities, being able to conduct corporate actions like paying dividends and things like that that some people are doing in the blockchain industry. But it’s completely illegal but then, and any ways we want to do it the legal way. And the second thing is even for the people that we actually don’t need to have a license to give them the comfort that we’re so confident that what we do is compliant, that we don’t have a problem with reporting to the SEC about what we do with the securities because it’s going to give them comfort that what we do is legal, so.

Carlos Domingo:

I think we just did a big update but I’m in Japan next week we, we got out of the funding round besides Mitsubishi UFJ and Nomura securities. We also got Mitsui Fodosan, which is the largest real estate business in Japan. And we’ve got KDDI, which is second largest telco that has the biggest FinTech business in Japan. So, we are very excited about the country and probably you don’t know, but I actually live for 15 years in Japan and speak Japanese and studied there, taught myself. Technology for me is like my second home, so I’m very excited about having had these investors coming from a country that feels very close to me and being able to develop their business there and at the end of the day is the third largest economy in the world and is highly digitized. So we think there’s a lot of opportunities there.

Carlos Domingo:

I think for issuers is basically, you know, a number of things. Obviously some of the issuers are looking for capital formation and today that’s tough because it’s not really there. I think many of the issues that work with us, they’re just basically looking at automation of, of the process of issuing the security and managing the security once it’s been issued because a lot of issuers, you know once they issue the security, have a lot of problems or like paying a dividend and they have to use transfer agent and pay three percent to pay a dividend and things like that that we can actually basically simplify. For investors is basically reducing the cost of holding the security. Like most people don’t understand that if you’re an investor and you invest in a security that pays a dividend, for instance, as I mentioned, you’re not going 100 percent of your dividend because the issuer has to use a transfer agent that is going to actually take a cut of that dividend that comes to you and typically it’s like could be up to three percent, which is ridiculous because it’s basically a check that they send you in the mail.

So for investors, even though maybe they don’t perceive it as an advantage to them is basically makes their investment better. A also, you could think of like that investment having a higher, you know, rating because it’s more transparent because all the documents of let’s say… on the blockchain and therefore the business high rating and therefore the investors more protected. So I think there’s a lot of improvements for investors that might not be as obvious as for let’s say issuers or broker dealers, but that over time we hoped that they would realize about it.

Carlos Domingo:

Well, we’re doing it right. So, so in this industry, there’s going to be two things, it’s going to happen, these entities that are regulated that you can replace because regulation tells you have to use transfer agent. So we have to have a transfer agent, but we’re going to actually make it cheaper, better, faster, and, and more efficient. And then some other, let’s say rent seekers that actually not necessarily because of regulation.

Carlos Domingo:

All right so, so what I was telling you is that the, in the, in the financial services industry, there’s two types of intermediaries, ones that are required by the regulator, the ones that are just there to fix a problem because they can’t do any better than that and then therefore they, they do it. So I think that our approach is that for the intermediaries that are regulated, because you can’t really fight the regulator and tell them like remove these. So we’re going to get the license, but we’re trying to be better, cheaper, faster and more efficient. So provide a better service. And for the ones that are not necessarily because of the regulation, we can go to try to replace them. And that’s kind of the approach we’ve be following. So, so there’s certain intermediaries like let’s say a transfusion that actually the SCC says you have to have a transfer agent.

So we become a transfer agent. But we’re going to be a much more efficient, cheaper, faster, a transfer agent than a traditional one. But there’s other, let’s say like…agent that you actually don’t require by regulation, but it actually, they play a role because today there’s no other way to be maybe pay, you know, a commercial paper note when it matures. Do they invest it because you know who they are. But we can do that on the blockchain and we actually don’t need that intermediary. So, we’re going to try to replace those guys and these dis-intermedate them.

Amy Wan:

Very interesting. Thank you so much for-

Carlos Domingo:

Thank you to you guys for the help either for the industry too.

Amy Wan:

Of course.

Carlos Domingo:

Promote the you know… and evangelize what’s happening in the industry.

Amy Wan:

Of course. Thanks.

Carlos Domingo:

Thank you.