This discussion explores the burgeoning landscape of on-chain capital markets, focusing on the tokenization of publicly traded securities, its underlying motivations, practical implementation, and implications for market structure and liquidity.
Mind Map
คลิกเพื่อขยาย
คลิกเพื่อสำรวจ Mind Map แบบอินเตอร์แอคทีฟฉบับเต็ม
Well, hello everyone and uh thanks again
for joining us today and hearing from
all of our distinguished speakers and
panelists. Um it's really been an honor
to have all of you here with us. Um so
our session today is focused on onchain
capital markets. So we're going to talk
a little bit about um the why, the how,
the where, and the what of tokenized
publicly traded securities. Um, and
maybe we'll even get to the win, so you
all can place your Cali and Poly Market
bets. Um, but I'm excited to dive in
with our panelists today. Uh, Nadine
Shakar, the managing director and global
head of DTCC Digital Assets, and Yoshi
Yokawa, co-founder and CEO of Alpaka.
Thank you very much for for joining us.
>> Thank you for having us.
>> Uh, maybe you could both start just by
briefly introducing yourselves and what
you do. Nine.
>> So, as Mark said, I'm Nadine Shakar. I
run digital for DTCC. Uh been part of
the organization for a couple of years
now. Came through an acquisition of a
fintech firm. So we're marrying fintech
and digital market infrastructure at
DTCC. And um I think everybody knows uh
by now because I did get asked about
this quite a bit today. uh in December,
we got a no action letter from the SEC
that allows us now to proceed uh to
start tokenizing um our our our
inventory and start really to push
forward on digital market
infrastructure. So that's that's what we
do at DTCC.
>> Ter Yoshi.
>> Hi, I'm Yoshi. I'm the co-founder CEO of
uh Alpaka. Uh Alpaka is a FIMRA SEC and
DTCC member uh self-claring broker
dealer uh in uh in the US and multiple
other uh jurisdictions. And we are also
the clearing and custody infrastructure
API uh companies supporting a lot of
tokenizations uh supporting uh modern
fintech applications in the in the world.
world.
>> Excellent. Well, thank you both very
much. Um so I mentioned we'd start with
the why here. Um so at we often talk
about tokenization is unlocking access.
So access to more financial instruments,
to more ways to hold them, to more ways
to use them. Um I'm really interested in
understanding how this aligns with other
mark market participants views um of
kind of the purpose of tokenization. So
Yoshi maybe we'll start with you. Alpaka
has a wide range of customers from other
broker dealers, robo advisors,
>> hedge funds, uh crypto exchanges, token
issuers, retail investors and beyond. >> Um
>> Um
>> how does the value of tokenization to
those customers vary across that
customer base? I think like you know I
think about like kind of two uh
directions and two time durations when I
think about tokenization. One is that
like where the world actually moving and
the how the financial system is moving
towards because like you know everyone
wants less risk less systemic risk and
the better experience with the faster
money movement. So in order to achieve
that bringing hold the system on chain
which is like tokenization is a part of
that is necess necessity. So like that's
the one thing that we always think about
like you know we have to go there but at
the same time like you know there's a
immediate steps that we have to take
that's about product market fit more of
like immediate short-term what we should
be doing and that's coming from like
actual people demands and like how I see
is definitely like you know
accessibility because there are a lot of
countries that have uh you know their
assets on chain instead of uh uh having
their money in their local currencies or
like you know because of the some of the
credibility of the local banks have
their assets on chain so like they have
to be able to access those financial
assets that's already liquid in the
world which is like US stocks uh uh to
be able to be accessed by the uh you
know onchain system I think that's the
demands that what we are seeing in the
tokenized stocks
>> terrific so in addition to access kind
of the efficiency play as well
>> yeah I think like when I think about it
like more of the macro lens like if you
step back a little bit like we have to
kind of understand why this is happening
anyway of course there's a technology
innovation but like we have to think
about why that innovation happens
because this is for the better world and
better things for the people. It's like
you know safer uh you know investments
like you know safer system so that we
don't see any more leman shock right
because it's a lot of capital crunch in
the immediate uh uh you know credit
crunch that that's going to be that's
going to be reduced if the uh like you
know settlement happens atomically
instead of like you know money sits
there because of the funding problem. So
I think like you know I think about that
lens first as well in addition to what's
happening right now in terms of the
product market fit of the what the
market needs.
>> Terrific. So, speaking of innovation,
Nadine, you mentioned the the no action
letter that DTC received. Um, can you
talk a little bit more about, you know,
what you're hoping to learn from that? I
don't know if you call it a tokenization
pilot. It's kind of time a little bit
time limited. What you're hoping to
learn from that and how that factors
into to what DTC is trying to achieve
globally. Um,
>> sure. Just to build on Yoshi's comments
like innovation is also driven not just
by client demand but also the ability of
looking at risk management looking at
efficiencies and you get all that with
the digital infrastructure that we're
looking forward to working with all our
participants and their clients to to to
get us there. The no action letter um is
is only time bound and for in terms of
we did not ask for any exemption to any
securities law. That's really important
to note what we've asked for is a little
bit of leeway because as a highly
regulated entity we have to govern our
businesses with rule books um and other
risk management. So we've asked for a
little bit of room to grow into it. Um
so that is what we're um what we're
starting to if you will build the u
infrastructure to do so. We have u we've
have about u hundred trillion dollars in
assets 1.4 4 million QIPS within our
custody and that is where we're hoping
over a period of time to get there. Uh
with the no action letter in order to
better risk manage we've committed to
tokenizing the Russell 1000 um ETFs uh
that are tied to major indices uh
treasuries and other fixed income
instruments. What we're looking to do is
you could the tokenization process by
itself is super easy right we can do
that all now all right now um but
there's an ecosystem that you build
around it that takes a little bit of
time and thought um and you also need to
add you know you need to give these
tokens a level of value right and what
is that for us we have been working with
a lot of people in this room and and
elsewhere to build um an interconnected
eventually interoperable L1 L2 two
layers so we can move uh and our
participants can move these tokens with
ease and security. So that is one
element of what we're doing. We are also
trying to build u use cases around
collateral. So we're looking to uh roll
out hopefully by the second half of this
year a collidal um infrastructure which
we call our collateral app chain. So an
app chain just dedicated to collateral.
To be clear, we are not doing collateral
management, but we're allowing our
participants and their clients to have
an in in the ability of leveraging
tokenized assets uh as collateral and
you can move that collateral literally
at the speed of the network. So, if you
think about it, if you're you're from
Kyoto, right? So, if you're uh trying to
finance uh security during Japanese
training hours, we're asleep here in the
US and you want to use a US security to
do so. If it's in your wallet, you can
move it, you can use it. Um and this is
just the beginning of what we believe
over a period of time that we will
rebuild the infrastructure and the rails
of the US capital markets. Excellent.
Thank you. Um as turning a little bit
from the the why to the what. Um so I
spoke a little bit earlier about you
know various tokenization models that
have kind of been in the public debate.
You've heard a lot of tokenizers
um issuers market participants discuss
the relative merits of those models. The
SEC came out with their statement
recently giving their own taxonomy
regarding what these models are. Um
Nine, how would you describe the various
models and and kind of just in in brief
the pros and cons of each?
>> The SEC did a phenomenal job um
explaining it and it's I would urge all
of you to read it. It's a couple of
pages uh so it's not very ownorous and
you know I think about it in three
buckets. uh you have what uh what's
called the direct uh methodology to
tokenization. So you're pretty much
tokenizing at the issuer level and
you're direct owner of that security.
You've got the indirect method that DTCC
uses where uh we're tokenizing the
entitlement and you've got a third level
that other fintexs are using which is
really synthetic version of that and
they did a nice job between the pros and
the cons. Um but then the it's amazing
when our letter of uh no action came out
this debate over what BTCC is doing or
not doing has emerged but the SEC really
clarified that at least from a DTCC
perspective you preserve the same
ownerships that you have today to
tomorrow and we're very very conscious
to ensure that everything that we're
doing protects there there's a
protection of investor rights in in that
process right so both models are just
fine they've always existed Ed, they've
coexisted. They will continue to coexist
in the future. Uh, but sometimes this
world of like having an intermediary,
you know, some people it rubs them the
wrong way, but the fact of the matter
whether it's direct or indirect, you
still need somebody in the chain to be
able to process and preserve uh this
investor protection, right? So, as a if
I own a share of Apple directly from
Apple, who's going to do my corporate
actions? who's going to make sure that
uh this is uh this you know the asset is
safe. So there's a lot of things uh so
intermediation in itself is not a bad
term. Uh but this new digital technology
is collapsing it and we're very
cognizant of that and we're doing our
part if you will to ensure that we
continue to proceed with fair amount of
efficiency and protection in the marketplace.
marketplace.
>> Absolutely. And I'm sure I you know I
could nerd out for a long time about
sort of the legal aspects of these
models. Um,
>> yeah, I'm not getting with the legal
[laughter] debate. So, no,
>> I was going to ask Yoshi to talk about
that. No. Um, Yoshi, could you could you
just describe a little bit about what
characteristics of tokenized securities
are important for you and your customers
from a business perspective? >> Mhm.
>> Mhm.
>> Yeah. So I think like you know the how
we are playing uh in the tokenization
world right now uh is more of the like
you know the kind of synthetic version
right like you know we have the uh custo
we are the custodian of the underlying
assets and then tokenization players use
that to tokenize assets and then I think
there's you know of course pros and cons
in every like different methodologies uh
and I think I know there's an idea what
how it should be at the same time I
think about like you know what is
accepted by the users in the market and
that's what I also like focus very much
on like of course like ono has been uh
getting like amazing traction in terms
of the you know amount and like you know
trading volume and that really proves
like you know it's adapted to the market
and that I think like you know that's
something that we should be focusing a
lot in addition to uh like logical what
is pros and cons as well. So like I
think like you know I'm neutral of like
I think like every single methodology of
the tokenization should be happening
because it's a huge market that we have
to do every single thing to push things
to the digital layer or like onchain
layer. Um um but at the same time like
you know we have to be uh like very
neutral like everything should work.
>> Absolutely. Um [clears throat] so okay
so we've covered the what a little bit
of the why. Um maybe we'll talk a bit
about the where. Um so as in you know
what types of blockchains um you know
these assets might be made available on
or some of the use cases might be
available on. So Nadine you mentioned
nap chain for collateral. Um obviously
there's a variety of different kinds of
chains private permission public
permissionless hybrid chains things in between.
between.
Nine can you talk a little bit about how
you view the trade-offs between private
permission chains and public
permissionless chains? I mean, it's it's
really going to be trade-off between
transparency and scalability versus
privacy um and um privacy and
compliance. That that's at its
fundamental core. Uh but the reality is
we're going to need a mix of all of it
to to make it work. So, at DTCC, a lot
of our infrastructure is built on
Hyperledger BU today. Um but we also
support other L1s that are out there.
Um, we have been very public with our
relationship with Canton, for example.
Um, and we're also working with other
L1's and L2 providers out there. The
idea for DTCC is to have a a curated u
network of L1's L2s where we were
overlay an orchestration layer on top.
Um and when I say which is really driven
by client demand. What took us to Canton
was our clients told us we want we want
to work on Canton and we will select
layer layer the next one and next one
again based on liquidity in where our
clients want to go. Uh but the I but
what we're trying to do we're trying
really hard and we will not pick winners
or losers right it's going to be really
um up to the clients to direct us uh
which networks they want to do. What we
want to be able to do is facilitate that
movement. Um, now I I purposely am not
using the word interoperable because I
just don't believe that exists yet, but
it's truly interconnected and as an
industry we do need to work into uh ease
our way into interoperability which is
more than technology. It's around
standards. It's around data. There's a
lot of other non-technical
um requirements that need to go in to
get us in a true world of
interoperability. But we leverage
private, we leverage public. Uh we will
continue to do so. Um I don't personally
believe there'll be a one uh chain that
will win it all. It'll be an aggregate
an ambination of chains and we're the
way we manage all this is ensuring that
at the core we can track movement and a
real-time basis. Um ensuring the
scalability and the security of that
network as we move forward. And that's
why I think a DTCC curated um
environment will will help uh expedite
um adoption um and uh fluidity in the marketplace.
