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On the third and final day of the inaugural TokenizeThis Summit, the first guest was none other than Carlos Domingo, CEO of Securitize. What followed was a discussion on not only what the company has to offer but where Domingo sees the digital securities sector going in the coming years, highlighting a few of the hurdles expected along the way.
Securitize and the Role It Plays
Before diving into some of the insights shared during this discussion, it is important to understand what Securitize is and the role it plays in the digital securities sector.
Spearheaded by CEO Carlos Domingo, Securitize has managed to stand out as a pioneering platform enabling the secure issuance and management of digital securities on the blockchain, fostering compliant trading across secondary markets. The firm aims to revolutionize private securities by facilitating its digitization and ensuring streamlined, compliance-friendly operations.
Interestingly, Securitize was born out of the 2017 ICO boom when Domingo recognized the ability for them to raise capital efficiently. Domingo stated that along with taking inspiration from companies like Polymath, he wanted to recreate the ICO process but in a proper and regulated manner that would also entice traditional investors.
So, while the digital securities sector began spinning its wheel by 2018 due to the proliferation of unlicensed companies and a widespread underestimating of the complexities surrounding tokenization, there were positives to arise from this period – like Securitize and Security Token Market.
As it stands, Domingo states that Securitize boasts the ability to operate as a transfer agent, has tax reporting capabilities, as a broker/dealer, and even as an ATS for secondary market trading. These abilities have already resulted in various promising partnerships with companies like the following,
- Hamilton Lane
Domingo has attributed Securitize's ability to stay at the forefront of the sector to a few simple approaches.
- Good execution
- Focused approach
- Financial cognizance
It was noted that timing and the ability to endure are the space's biggest uncertainty. Domingo believes that not only will digital securities become commonplace but that by sticking to this approach, Securitize has the ability to stay as long as it takes. In the meantime, it plans to continue building out its ecosystem through a focus on investor participation and liquidity mechanisms such as lending.
Little Love for DeFi
With Decentralized Finance (DeFi) protocols and platforms essentially being the antithesis of a regulated, KYC/AML-compliant entity like Securitize, it was interesting to hear Domingo's thoughts on the former when the topic arose.
Unsurprisingly, the prevalence of hacks, anonymity, and lack of compliance with regulations have each made it hard for Domingo to see real adoption of DeFi. Simply put, most people and companies see too many risks and wish to operate in a regulated environment.
While the above may currently be true, Domingo did not go without acknowledging his love for the great technology and ingenuity on offer within DeFi. More specifically, it was noted that certain approaches towards lending and automated market makers could be adopted by Securitize in time.
A Look Forward
So, what does the CEO of Securitize see when taking a broader look at the digital securities in the coming years?
First addressed was a series of needs that require fulfilling. Describing the sector as a two-sided marketplace comprised of assets and investors, Domingo noted that the asset side of the equation has already been solved. Where the issue lay is in a lack of investor adoption – something that can be addressed by bringing more utility to tokenized assets and working collectively to ensure non-compliance among industry participants does not rear its head.
Furthermore, Domingo echoed a similar sentiment shared on day two of the TokenizeThis Summit by Graham Rodford, CEO of Archax, who stated that bringing bad assets on chain does not make them good. Rather, a concerted effort needs to be made to only tokenize assets that are already good, and solid.
It isn't all uphill from here, though. Over the next year, Domingo predicts big things, which will see the first $1,000,000,000+ tokenized fund created. When this happens, he believes that investors will finally begin realizing the benefits on offer through tokenization (i.e., flexibility and efficiency) and that the sector is here to stay.
Once this occurs, the sector will reach an inflection point.