Projects
![]()
No projects found
Investors
New
DAO Treasuries
DATs
Lend / Borrow APRs
Chains
Categories
Spaces
Real World Assets, Global Liquidity, Tokenizing the World, Stablecoins
Recorded: April 22, 2025 Duration: 1:02:01Space Recording
Short Summary
The conversation delves into the evolving landscape of tokenization, highlighting key trends such as the convergence of traditional finance with decentralized finance, the importance of strategic partnerships, and the ongoing debate around centralization versus decentralization in regulatory compliance. Participants emphasize the need for innovative solutions that balance privacy, security, and regulatory requirements as the industry matures.
Full Transcription
Thank you. Music
Music so
all right what's going on everybody welcome to wolf welcome to another rwa space just fresh
off the dock from last week's tokenizes conference got to meet up with dave in person which was epic
and even got to sit down with him for a little bit and talk RWA's. Actually, I want to find that interview we did.
Ray actually did that with Dave, but got to chat with him.
Dave, it was great to meet you out there, man.
Actually, give me a couple of your thoughts.
I'm still waiting on Ray to connect here.
It says just connecting right now.
You got me while I just bit into a sandwich.
I've been jammed up on calls all day.
I was like, I got eight minutes to make a sandwich, but apparently not enough time to
eat it.
It was interesting.
First of all, thanks for having me on your show.
And I really enjoyed the interview.
I mean, if the people on this call have 40 minutes of their life that they want to,
they want to just throw away, you know, go, go check out the interview.
It was a lot of fun. Talked about, you know, kind of the journey.
The conference I thought was really great. It was a,
it was a lot of people who are actually doing things um and um you know less
less performance and and and and like what's going to happen in the future a lot more about
what people are doing and there were a lot of real things um uh there were a lot of real people doing real things, real projects, et cetera.
It felt, it felt less, it felt less fluffy.
More people should have been there.
Uh, I would say, but the people that I spent time with there were, were fantastic.
So great event.
I think the next STM, um, tokenized this, it should, it, it, it, it deserves to draw
It should, it, it, it, it deserves to draw more people.
more people.
And, um, and, uh, and it was definitely worth, uh, getting on a plane and, uh, and, and,
and getting into a room and getting away from the computer.
That's my, those are my thoughts right there.
Love that.
Love that.
Yeah.
I had a great time as well.
And I think we got Ray up here on stage now.
Ray, how's it going, brother?
Yo, yo, yo. Testing one, two. Am I coming through okay? Had a little bit of a pick up.
Sweet. Fantastic. Yeah, I want to kind of rebut what Dave said a little bit. You would definitely not be throwing away your 40 minutes.
You'd be investing your 40 minutes if you check out that episode. There were so many insights about the history of tokenization, how this whole thing is unfolding in terms of tokenization. I love what you said,
David, during the interview of being the exhaust to a DLT system. We just really dove deep and
got into the nitty gritty of what this all means. So phenomenal interview. Definitely,
if you have a chance to check it out, highly recommend. And it was a great conference. So
like David was saying, I could definitely echo the sentiment that people are building,
things are happening.
There's never been a better time to be in the industry.
That is for sure.
Seeing the convergence of TradFi and DeFi coming together all under one roof is exciting,
to say the least.
And I don't have to learn to program COBOL.
That's the big silver lining of this entire thing, right?
So super stoked to be here with everybody today.
Definitely want to kick the tires on something I think was a theme that really stuck out to me in the tokenize this conference.
And that's that I've been just playing around in this industry for going on a decade now.
I'm Web3 native through and through.
My profile picture is a red pudgy with an inner tube and a pirate hat, for goodness sake.
So with that said, that begs the question.
A lot of us got in this industry during a time when the ideological lean of decentralized
everything was in a fever pitch for good reason as well.
I mean, so Toshi inscribed in the Genesis block of Bitcoin to,
that's the Chancellor's bailed out the central bank. So I really want to kind of just kick the
tires today on the necessary level of centralization that it takes to undergo tokenization
efficiently. I think it's a strong question because ultimately at the end of the day,
we're all centralized to some degree. We're a central system. It's all a great joke that,
you know, oh, my microbiome's upset. Well, the macrobiome wants a pizza and the macrobiome gets what it
wants. And that's central authority. You get to override that sort of thing. And so where does
that convergence occur in a way that is elegant and allows for the best of both worlds? Centralized
management, centralized legal rights and warrants to ensure that no one's kind of getting the short end of the stick and scam, yet decentralized processes that
allow for a level of trustlessness and transparency where it counts for most. So I just kind of want
to open that up. I know everyone's worked on some amazing things. Want to get this around to the
panel and just get everyone's thoughts on the idea of balancing centralization and decentralization
in an era where tokenized assets are kind of becoming the
main thing. And of course, I got to give it to Dave first, since we had such a good time hanging
out in New York. Awesome time. Dave, want to get your thoughts on this, since I know you have
many fresh ones to share with us. Yeah, the centralization versus decentralization
argument, I think, and I hate this cliche, is a little bit of a false dichotomy.
When it comes to doing things like providing liquidity, specifically for securities,
you want bid density and you want to be able to go to a venue that is very, very clear,
where you're going to be able to find either this kind of asset or this specific asset.
Because when it comes to securities,
like getting listing agreements with trading platforms, et cetera,
is different than getting and putting out just a generic token
where you can have liquidity pooling.
So when it's about security tokens
or some of these real-world assets, when it's about security tokens or, you know, some of
these like real world assets, which are under some form of regulation, there's always some
centrality there in order to create a venue where people know they can buy and sell.
And the other issue with, with, um, with, you know, specifically in the securities context,
in the securities context, you have this concept called best execution. And three or so years ago,
you have this concept called best execution.
Exodus, before they went public, they attempted to list on both T0, just decentralized and
securitized markets. And it was very difficult because there was a best execution problem.
there was a best execution problem now that's just in this case decentralization though um
when it comes to assist like when you're talking about nodes you know if you're using a public
chain and you're writing your asset ownership to a public blockchain it is going to be decentralized by necessity.
It's just the way that blockchains work.
They're sharing a copy.
They're just CCing all over the place, and that creates resilience.
And the third thing is if you're talking about a technology as an issuer
and you're trying to issue something,
you're probably going to go to a website where you're going to issue something, you're probably going to go to a website
where you're going to manage this.
And you can't really decentralize a website
where your investors might see their holdings
because it's not just going to be in a wallet
or an issuer is managing its offering.
So I don't think that you can look at this as a binary thing.
I think that if you use public blockchains,
you are decentralizing.
It just comes down to management of the asset and the trading of the asset.
And that's a tricky thing there.
So I'm just going to leave that one there.
If people disagree, oh my, I'd love to hear about it.
I think a person here who's on the call who probably has a lot to say on this is Colin.
think a person here who's on the call who probably has a lot to say on this is Colin,
Colin Sellers, who I, who was really instrumental in the early days, early founding team member
of Vertalo and, and currently working at Prov Labs and doing really interesting things. I think he
has something to say here. Thanks, Dave. Yeah, no, I mean, largely I agree with, you know, with your,
with your point, right? It's, it's, I think, I almost go maybe upstream, even just a little bit further in terms of looking at the asset itself. And I've made comments like this before, right? If we're talking about decentralized money, well, we have that it's called Bitcoin, right? And it is entirely trustless, you can go look at the network and all the nodes there.
It is entirely trustless.
You can go look at the network and all the nodes there.
The minute we're talking about something that has been issued by an issuer, trust has entered the equation, right?
And you can play this out in many different scenarios.
You go to Fidelity, you're brokered by Apple shares.
Okay, well, that process is governed by a QSIP and an ISIN number, which is issued by the DTCC.
There's your trust.
We're trusting that Fidelity has pulled
the right ISIN number. And on my screen, I'm looking at AAPL and I'm going to buy it. But
at some point with securities, trust enters the equation. And so the analysis, I think,
that really is critical is, okay, what does that look like? Who are we placing our trust in
based on the asset and its behavior. And what Dave said is absolutely
correct. Once you get into trading, that's a regulatory problem. Trading assets on the
internet is quite simple. You can get marketplaces for every asset under the sun.
But the trading of securities, well, that harkens all the way back to the Securities
Exchange Act of 1934. We got 91 years of history and case law and precedent
that we can rely on.
And so, yeah, this is really, really exciting.
I know we're going to,
I think we're going to talk about
the Securitize acquisition of MG Stover,
which I think is awesome.
And yeah, happy to be here, guys.
Thanks for having me.
Absolutely.
Always good to have you, Colin.
And fantastic takes from both Dave and Colin here.
And Colin, boom, you're calling my,
the cards that I hold in my hand. Absolutely. Of course, Securitize's Acquisition is a big piece of this, 100%.
We're kind of seeing a trending towards some levels of consolidation, fantastic strategic
acquisition on their part, but definitely we'll dig into that here shortly. I want to kind of
paint the landscape a little bit with some broad brushstrokes, since I know so many people on the
panel are building so many just phenomenal things in terms of bringing asset tokenization forward. And so with that said,
I do want to say, you know, if you can hear my voice, whether live or on the recording,
definitely give everyone on stage a follow. And they're doing some amazing stuff and retweet the
space as well. We want to get this out to as many people as possible. And should you or anyone you
know happen to have a deficiency in Web3 knowledge, nine out of 10 doctors recommend wolf crypto uh they're fantastic the other one doctor that didn't recommend he was
crying because his portfolio was down but now he doesn't have to cry anymore because bitcoin is
back point being definitely follow wolf crypto they got amazing stuff going on there i want to
get this over to our friends at infineo i believe it may be dr murphy behind the account um if not
either way infineo is doing some amazing stuff. We'd love to get your thoughts on the relative level of centralization and decentralization we have in tokenization
today. Yeah, of course. Thanks for having us, Ray. This is actually Jackson, VP of Education
here at Infineo. I just want to thank you guys all for having us, Wolf, Dave, and just the rest
of the speakers. It's great to be up here with you guys. And I really kind of echo the sentiment
that Dave and Colin were bringing that a certain level of centralization is needed. And for those of you not familiar with Infineo, we work in an industry right now that is highly centralized, which is life insurance. We are tokenizing life insurance and that comes with a lot of trust, like you're saying. And so ultimately, by getting that data out of the carriers, filing cabinets and on chain,
it's going to come with a lot of efficiencies from originating the policies to moving them into secondary markets
and ultimately accessing more liquidity through the policies, whether it be lending against them or by selling them.
through the policies, whether it be lending against them or by selling them.
And so there is a level of centralization that is needed, at least for our use case,
and that's why we've chosen to work with such a great permissioned use case like ProvLabs.
And yeah, we're just super excited to be here. So thank you for having us.
Absolutely. Always a pleasure to have you and have Infineo on the stage with us.
You guys are doing some amazing stuff in the tokenization of life insurance. I definitely
want to have my sinuses alleviated from having to dig through those dusty old filing cabinets and
bring things firmly into the 21st century. So phenomenal to have you with us today.
Additionally, we'd love to get our friends over at Onino's thoughts here because I
know you guys are working in Germany. They have a different kind of framework under the Mica
legislation. And naturally, there's a in tokenization, as we've discussed thus far,
there's a need for some level of centralization. But curious how you guys are kind of viewing that
in these early days of tokenized assets. Yes, welcome, everyone everyone happy to be here again um yeah i'm i don't even
want to touch too much upon the aspects regards of trading and why is certain degree of centralization
is necessary there um what we see at onino especially as we are putting securities on
chain in the form of for example corporate bonds and such um there's
always a need for central centralization when you kind of get to the point where you actually have
to enforce certain rights or obligations whether for obligations for the fraudy issuer or rights
in terms of the people who invested in something in a tokenized form and this is something that's really really
hard to put into a fully decentralized manner because we've seen that point and in times and
often um like how do you regulate decentralized systems like is there even anyone that you can
kind of um oblige to do something because it's it's just hard to get
to someone and that's where centralization is still necessary a lot we see it for example when
we put a loan on chain and there has to be securities um if the loan defaults or something
and someone has to be the point of contact there and someone has to manage this and that's where
a degree of centralization is still
needed at least how it is done today and it could change in the future but right now that's the
simplest way by keeping a centralized entity managing things like that yeah so i want to
i want to talk a little bit about that putting securities on chain um issue okay um
on chain issue. Okay. Everything sounds great about putting securities on chain. And this is
something that we've been doing for almost eight years. So it's something that we're, we're, we're
pretty comfortable with it for Talo. We, we were always, you know, when, when this whole, uh, revolution started, uh, we
were initially in the camp of everything on chain.
We were, we were on chain, uh, maximalists, which made us decentralization maximalists
for securities on chain.
But what we found, and this is prior to some of this d pan and all these kind of other
things which are out there we what we found was that the cost of putting things on chain was uh
was expensive okay um first of all the chain's a horrible place to store unnecessary data.
You can't put binary large objects on there,
at least simply.
And especially at the time when we were first doing this, the cost of doing this on Ethereum was prohibitive.
And so we split out our architecture
to put what was necessary on chain and to put what was unnecessary
not like couldn't really fit on chain and off chain and that was not only for the practical
considerations of of cost and what a blockchain in 2017-18 could handle um but um, but also for the purposes of what we thought was going to be the way to manage
the issuer-investor relationship and everything that went into restrictions, etc.
Fast forward to two weeks ago. Two weeks ago, I spent a better part of an afternoon with the crypto task force, crypto at sec.gov, asking them one simple question.
consider securities which have been placed on chain to be treated as equals with securities
which are ledgered in central databases and on spreadsheets and index cards because for a long
time the what was on chain wouldn't be recognized as the actual shares they They said, yes, you can do that.
But the PII, meaning the compliance information,
any personally identifiable information,
we want that to be off-chain.
And the issue with this, that this causes,
the problem this causes for decentralization is that what that means is that not only are you kind of bifurcating or
duplicating some records between off-chain and on-chain, but you're actually creating one
centralized repository, which is the off-chain data, which is in a traditional database structure,
and you're decentralizing the ownership such as the ownership record, the smallest, the least bit of data,
that can be on-chain and that can be immutable.
But they did not want anyone in our industry to be storing the entirety of the record,
meaning the name of who owns it and the KYC and all that stuff.
They didn't want any of that to be on chain.
They wanted to be off chain.
So we're entering into a hybrid universe right now that I see,
which is going to frustrate the decentralization maximists,
because if they want to do securities on chain in the United States, they're going to have,
from what I see, and they haven't made the staff statement yet, it's going to need to be
in a hybrid on chain, off chain model. And that does not advance full decentralization.
Go ahead, Anino.
So you're on mute.
Yeah, I just wanted to touch upon that
because those were great points.
Like we had the exact same conversation
with the German BaFin just a little earlier.
Like to give a bit of background,
we started out and trying to build a fully decentralized compliance system and decentralized identities
but our efforts on that front immediately stopped when we basically came to the point that any
security that we put on train would have to basically um be built on what you say is a hybrid system.
Essentially, the Buffett being able to access all the records of all the investors
and us proving that everything is adhering to regulatory compliance
in a way that it's not on chain.
So it just did not make sense to put everything on chain.
Unfortunately, it will remain that way for quite a long time at least
that's my personal belief but on the other hand that actually allows us to build a better user
experience too um which is good for the average user that is not a power user um like most of us
are i believe um but brings again all the trust issues um that we would like to minimize in our trust with this.
But I love seeing that we all face the same problems, no matter where we sit on the globe.
100%. And even if I am defined as a power user, the amount of times I've had to click
forgot my password on centralized systems just across the web. Just goes to show that there's something to be said
about a balance between a user accessibility experience
versus, oh no, I think I wrote an L instead of an I.
Somewhere in this seed phrase,
something bad has happened sort of situation.
So I want to ask a question if I could here.
For the folks who are building,
if there are layer one teams on here,
maybe Colin, you, you, you, you probably put some thought into this,
but I'm sure there are other people as well.
What do you see as the, as the like,
what's the solution that makes the regulators happy,
but also makes the maxis happy here?
Are there singular chain, singular products out there
which anyone here thinks can achieve cost-effectively?
Just let's just stick with that.
Putting all of this on chain,
and how do those systems plan on satisfying the regulators who want to work with us and provide them comfort that customer records, PIRs, is protected?
I don't want to –
We'll go ahead to Infineo, and then let's get this over to John for sure.
I know John's got some thoughts on this, but I'm saying go ahead. And I definitely don't want to steal Colin Slender here, but Dave, when you were talking about
your recent conversations with US regulators and how they would like to have PII stored,
it immediately made me think of a product that is built by ProvLabs, known as BlockVault,
that is perfect for that use case, storing PII off-chain, and it is a product that us at Infineo have leveraged.
As you can imagine, with life insurance policies being on-chain,
there is data that needs to be available at different times to different stakeholders in the policy,
whether it's the owner of the policy, a potential buyer, or just someone that is researching the on-chain data.
And that is all different levels of data and permissions. And by being able to leverage
Provenance, ProvLabs, and furthermore, BlockVault, we've been able to do that. And so when you were
speaking about that recent conversation, it immediately made me think of Colin and BlockVault.
So I can let Colin explain more
elegantly what it is. No, you're good, man. Side note, Jackson's being modest. What Infineo is
doing is extremely cool. And as far as I can tell, they've actually made life insurance on chain,
the fastest growing asset class in the world. I haven't checked it, Jackson, what's the number
at? 562 million now? I haven't looked at them. 552. Very close. There it is. Yeah. So,
you know, $552 million in policies on chain since August. Really pretty, pretty cool. And so,
yeah. So, I mean, to respond to the question, right, I think it's important to zoom out and
think about this holistically, right? Blockchains are great for historicity and immutability,
but the problem, you know, raised here that Dave and Ray and Jackson are talking about is, okay, there are some data you don't want to be historically immutable and publicly available, like your social security number or your tax ID.
We have to keep that private.
And so there comes this problem that we're talking about in balancing the historicity and immutability of a blockchain against the privacy needed in financial services.
And so the way that we have architected around this is we have a metadata module
that allows us to park PII and other sensitive information
into a traditional cloud storage database.
We maintain the infrastructure and the rail, so there's your trust. You're trusting us, you're trusting Google as the cloud storage database. We maintain the infrastructure and the rail. So there's your trust.
You're trusting us, you're trusting Google
as the cloud storage provider,
but we maintain those rails.
And then only those that are permissioned accordingly
have access to that data.
We can also run really cool,
like zero knowledge computation in the aggregate
on data parked inside a block ball,
which is the data implications
are like actually really interesting.
Anthony Morrow, who's ProvLab CEO, he likes to say that, you know, I don't know that we could have
prevented 2008, but if we had ledgered data for all the loans for all the mortgages that led to
the global financial crisis, at least it wouldn't have been a surprise to anyone, right? Because
that information would have been much more readily available and immutable and then accessible for,
you know, layering the insights and
trying to predict where the market might go. And so, yeah, so we think that with BlockVault,
we've found a really elegant solution to balance the tension between the PII and the historicity
and immutability. We want transactions. We want ownership records, those sorts of things.
That should be public. That should be immutable.
Transferring assets and who owns what for how long.
That's exactly what blockchains were
designed to solve for. It's awesome.
And so when PII enters the conversation,
then all of a sudden, okay, well, now we need to
think more holistically about
how we maintain privacy, but still reap the
benefits of that historicity,
that immutability.
Fantastic points.
Definitely want to make sure everyone gets a chance to take a crack at this,
but I love the synergies that are happening on this stage.
And, you know, like our friends over at Onina said,
a lot of us are facing, you know,
the exact same kind of challenges and reconciliation
between these concepts of centralization and decentralization.
John, I know you're working on some phenomenal stuff.
I'd love to hear your thoughts on this,
and then we'll send it over to Aroka.
Yeah, thanks for having me.
Great to be up here with you guys.
This is a phenomenally technical and intelligent conversation, so I'm happy to be a part of it.
I'm working on hashfires to bring legal agreements onto the blockchain, making sure that they're secure, encrypted, immutable.
making sure that they're secure, encrypted, immutable. And of course, legal agreements have
PII. So that manages quite a bit of personal data. And that PII is incredibly sensitive.
And ultimately, Dave is right again. You can't really do this without some modicum of centralization,
right? Back to Colin's point of they maintain those records.
And once they're maintained, you're trusting them to keep them and encrypt them, whether that be through FHE or accessed through ZK.
You're still hoping and trusting that that data is there and it's secure.
is there and it's secure. And I don't know of any other way. I don't think that there's a solution
And I don't know of any other way.
that exists right now that gets you around that. And if we look at what came before us,
the most sensitive data I know of that we all use is our tax data with the Internal Revenue Service.
And those guys still want you to fax stuff, right? They don't even want you shooting
stuff around on email because of how sensitive that data is. And they're maintaining those
records and they still got hacked in their database, right? So it's a real problem. There's
not a great solution that exists today, but I think we're getting closer to it by leveraging
fully homomorphic encryption and ZK proofs and figuring out ways to lock this data
into smart contracts that are owned by the individuals who are disclosing PII. And I think
that through time, these federal agencies are going to, they're going to come around to it,
and they're going to want that in lieu of people trusting them with their data because they've,
they've proven untrustworthy or the Internal data because they've proven untrustworthy,
or the Internal Revenue Service has proven untrustworthy to safeguard that data.
But the other point that Dave made was about the cost of doing this. And I do run an L1
on the Avalanche ecosystem, and that allows me to manage those compute costs from making those
transactions on-chain. And it's quite inexpensive. And that was explicitly the first reason, the first principles move
to going on an L1 is you get to decide what is the cost of this transaction? How are you going
to manage it? And that greatly reduces what I call the tax on data, which is what we were seeing in
the early days of Ethereum and even not very long
ago when it was two tenths of a penny to transact on our return on more avalanche.
That's too much for this type of data.
And with an L1, you can regulate that and manage it.
And so that was the solution that I found for it.
Oh, fantastic insights.
So the balancing of those two aspects are crucial.
I want to get it over to Aroka as well.
Aroka, I know we haven't heard from you yet, my friend, and curious to your thoughts.
I know you're doing some great work.
What are your thoughts on that centralization versus decentralization balance we're trying to strike here?
Thanks for having me again.
Hey, everybody.
Good to see everybody.
Good to see all your faces again.
Hey, Dave.
So I have a few things to say.
First of all, we've all been working with centralized entities all our lives.
The decentralized entities are the new thing, and most of them are not decentralized.
We all know that most of the blockchains are not fully decentralized.
And we all have USDT and USDC, which is completely centralized. And that's why I can't go and shout
maximalists, everything must be decentralized. But as I work with banks and buy RWAs from these banks,
and if they break down, I may have a problem. There's some
laws in some countries that protect that and some others that give less protection, et cetera.
But my way to decentralize is to just work with more banks. And we can't deny the centralization
aspect of our business at this stage. I mean, not when I'm buying stocks, bonds, and ETFs,
which are completely centralized.
I can't save everything.
I can work on more decentralized networks, more nodes,
more decentralization as a statement, as a wish,
and as an act, work with many, many agents and spread my eggs in many
baskets. But to shout out maximalism, it would be hypocritical. The second thing which I want
to talk about, and sorry, I'm going to take a bit more time, is all of this talk about PII,
which I hate. I mean, what we're bringing is a bit different. I is all of this talk about PII, which I hate.
I mean, what we're bringing is a bit different,
and I'm not trying to advertise ourselves,
but I'm saying our first layer, obviously, is AML KYC.
We're a licensed issuer, so we have to do the whole thing.
Obviously, it's Web2Data, et cetera.
I don't want to go into that. People have summarized that very well.
And I'm not against that. What I am for is being on DEXs because that's the way to democratize
these things. And literally once it's there, we lose this PII. And I don't know where this
RWA is going to. So just as much as any USDT, USDC could be gone and, you know, I'll say it in a
bad way, okay? It could be in terrorist hands, okay? Which is what we all don't want to know,
don't want to think, don't, you know, don't want the situation to happen. But obviously,
it happens with cash. It happens with guns. It happens with everything. So will PII data save
that, solve that? It hasn't until now and it won't from now. So I'm sorry to be the party pooper for,
you know, yeah, the SEC as if they're listening to me, but I think they're doing it the wrong way.
So think about maybe a system where you screen wallets when
money is coming back into the financial system and you screen KYTs, wallets, transactions,
you may stop things at that level. But controlling the system from the underwriting position,
I don't see it as effective. I think, I don't know,
I'd love to hear your opinion. Well, we have that though, right? I mean,
chain analysis and all of their competitors, you know, Q3 or whatever, there's a million of them.
They do this. We're using these vendors in Wyoming for the Wyoming stable token
for the on and the off ramps. I don't disagree with the
notion that, you know, I've said it a lot before. I think the United States government is deeply
unserious about preventing money laundering and terrorism. But I don't know that that necessarily
means that some modicum of KYC isn't useful either. But at the end of the day, it's, you know,
either, but at the end of the day, it's, you know, I'm, I'm, I'm serving the market, not
reshaping it with, with legislation. And so, you know, my goal is to just kind of like adhere to
that and just make things as safe, secure, efficient, inexpensive, and interoperable as,
as possible, I think is, is my particular kind of take on that.
Yeah. The biggest, the biggest experts in KYC AML are criminals. I'm
sorry to say it like that. You understand what I'm saying? That's my problem.
Dude, I agree with you. And I also think it's an absolute sin that any customer, any citizen
can't ask the federal government to just provide them with that, with that list, like give them
the intel to satisfy their own requirements. But instead it's sort of like, you know, good luck guys.
I'll let you know if I'm going to seize your assets and jail you, um, which is kind of a
way to do business. Yeah. So there's a, there's kind of like a, either like a reverse Machiavelli,
uh, kind of philosophy here, perhaps.
Can you make, you know, there's a lot of people
who don't want to compromise their values
or their principles, et cetera,
and those are kind of just maximalists
and they've got a belief system.
But how effective, or is it more effective to throw bombs from outside
against the walls or is it easier to get in and work from the inside like get the trust of the
regulators and then explain to them why this is safe, why this is workable,
and help move them towards a more, say, a better understanding of what is possible, etc.
Because, you know, SEC, etc., their mission is investor protection.
Okay, that's it.
That was why they were set up. It mission is investor protection. Okay. That's it. That was why they were set up.
It was for investor protection. Okay. So if they've got an investor protection mandate,
is it more effective to fight from the outside or do you work with them, try to gain their trust
and then go incremental? And I'm interested to see.
I think we have some incrementalists on the call.
I think we have some absolutists on the call.
And I'm interested to hear from both sides about what the most effective strategy is to get them to move towards decentralization where we are definitely not there right now.
They're not down for that.
100%.
And I definitely want to get Vinay's thoughts on this. Vinay, you know, it's always
a pleasure to have you on the call. You're doing some astounding work over at Materium. I know
you've been in this space for far longer than most. I definitely want to hear your thoughts
and opinions on this centralization versus decentralization kind of push that we're
having here.
Hey, yeah, I've been listening to this very intently
because it's it's not a simple question you know if we think about decentralized uh plc stock right
ibm stock ibm is not a decentralized thing it's a corporation it's registered in a specific
jurisdiction it's got a board of directors,
shareholders, there's a whole machine there. So the thing, the underlying asset is singular,
there is just one IBM. Contrast that to, for example, a gold token, which might in principle
be redeemable against 500 different vaults in 170 different countries and you can just turn up at any one of those vaults hand over your
token and receive a bar so you know some of these assets are inherently very centralized some of
these assets are potentially decentralized some of these assets are somewhere in the middle but
i think what it all boils down to when all is said and done is is a single legal entity responsible for the asset? The IBM board are responsible for
the IBM shares, kind of full stop, and there's nothing past that. So I think it'd be helpful
to think about this in terms of that are decentralized and centralized assets. And then
once those assets are kind of in the ecosystem, you've got centralized or decentralized claims
on those assets. And decentralized claims on those assets and you
know decentralized claims on a centralized asset is a very different thing from decentralized
claims on a decentralized asset and the KYC, AML, CTF, Malarkey you know in the long run
really this is all zero knowledge proof territory, right? I verify my identity. Okay,
great. You verified your identity. Now I can go and do transactions, you know, masked by snarks and
all the rest of the stuff. And at the end of the process, if somebody decides I'm a terrorist and
wants to go get those files, there is some mechanism for unpicking that data. And, you know,
those kinds of operations are highly tractable now that we have these kinds of
technologies. But I sort of feel like a fundamental solution here has to come from trying to figure
out what it is that we're attempting to achieve and what it is we're attempting to protect.
And I think that the money laundering question is ill- ill behaved because of things like the mixers
you know the same technologies that maybe give you transactional privacy but with still the
possibility of regulatory oversight are also very tightly coupled to the technologies that could
just scramble money and there's absolutely no way to ever trace it ever again and this in a context
where north korea just walked off with a billion and a half dollars,
which is, you know, that's a geopolitically significant amount of money when you're dealing with a regime that is trying to buy the necessary materials for a nuclear bomb.
So, you know, all of this stuff, it doesn't really matter until it does,
but when it does, you're really going to feel it.
Sorry if that was all of them.
Excellent takes.
I mean, the ZK definitely has a huge place in the future.
And I think that's definitely an aspect that isn't as heavily focused on, perhaps, in the privacy and compliance aspect.
But I believe it will make its way slowly but surely into the mindshare.
We also haven't heard from T-Rise.
T-Rise, I want to get your thoughts on this conversation of centralized versus decentralized.
I know you guys are doing some amazing work with properties. I don't want my
properties decentralized because that means the bricks aren't put together. And that's kind of a
hard circle to square, but would love to get your take on the topic.
Yeah, it's hard to jump into the conversation that is going on, but I can easily share what
we are doing and are taking it so like you said yes we
have a property that is tokenized right now the TVL is tracked on DeFi Lama it's 23 million dollars
for a construction project that is financed through our platform and the tokens from this deal, they are ERC20 tokens that represent the equity of the investors in the asset, and they are wrapped by ERC3643 tokens.
So we are part of this, the association for the ERC3643 that develops this standard, and it implements compliance on chain so you can have compliance on chain
everything's can be in there in when it comes to compliance nice but it only uh sets who can buy
the tokens and who can trade the tokens who can sell the tokens it also has some special features that you don't want to have in completely decentralized tokens so
pure ERC20 tokens for example and I'm talking about here forced transfers and freeze tokens
as two examples you don't want somebody to be able to forcefully transfer the tokens that you have that are your utility tokens.
So I don't know, your Ethereum or what other token we can mention here.
I don't know, even USDT, USDC, you don't want somebody to be able to forcefully transfer
these tokens that you have.
But when it comes to tokenized securities, things
are different.
There's a
special role that is played in the smart
contracts of ERC3643.
That's called the agent.
And the agent who plays
this role can enforce
legal action into the blockchain.
So stuff like the ByteBit
hack would not really happen if they were
stealing tokenized securities that are using this standard instead of Ethereum. Because, well,
the hack could have been undone if it was deemed by the legal system that indeed there was a hack
and somebody stole the tokens. Or another example, maybe the tokens were transferred to a sanctioned entity.
Well, then this agent can step in and force the transfer of these tokens and undo such
a hack or such crime.
So yeah, compliance is on chain, but it's also not everything.
Just like Dave said, storing documents, documents for example on chain can be very
expensive if you're doing it on ethereum but storing hashes is relatively cheap so you can
store the hashes from documents on chain and the documents can be stored off chain or even on another
chain that is made for storage like arweave or filecoin so i I think it's when it comes to me, I'm an engineer, I'm the tech
visionary for T-Rise. I'm always thinking about the tech. And to me, engineering is usually about
trade-offs. So we could put everything on chain. Everything could be decentralized technically, but you
would have to make trade-offs on it, like paying too much for the storage versus computation,
right? Storage is a lot more expensive on Ethereum than computation. And then when it comes to
the legal side of it, the compliance and regulation, to me it's pretty
simple. We just need to follow what the
regulations say and
also be ready for changes
in regulations. And again,
ERC 3643
that we were using in this first tokenized asset,
it supports that.
And lastly,
I think we could only...
All of this makes sense for tokenized securities.
If you tokenize something else that's not really a security,
well, there you can go fully decentralized,
but not really in the case of securities.
There's always a centralized element in securities as of now.
And to me, it's good.
If there's a reason for it to exist, right?
And if the regulations change,
we can also reflect that on what's implemented on the blockchain.
Fantastic takes and awesome stuff.
You guys are,
are doing over at TRIs.
Definitely encourage people to check that out for real estate tokenization.
I just want to,
again,
kind of like underline the fact that everyone here has been so generous with
their time and their expertise.
This is a very high level conversation,
but it's a very necessary one since we are at an inflection point for tokenization. With all these assets coming on chain, this kind of conversation
needs to be had to really set expectations between all parties, both traditional asset
issuers who maybe want to know what they're getting into, but additionally, folks who are
Web3 natives and want to understand what makes a properWA and why are some levels of centralization necessary to some degree.
And Dave, I saw you actually wanted to pass it back to you and then kind of get your thoughts both on the ZK angle in terms of what that could do for privacy and ultimately just what this kind of balance between centralization and decentralization may mean for privacy writ large as assets come on chain.
Okay.
Well, so one of the things when you talk about decentralization,
you're also probably talking about, while I am a big fan of borders
from a nation-state perspective, borders are relatively impractical
when you're talking about things like blockchains okay
distributed ledgers so we've got a bunch of people here on the call from the u.s and of course you
know we're all you know make america tokenized again on this call and it's awesome but we've
also got some people that are in other jurisdictions and and it sounds like we have some Europeans on this call.
How do you think about this when you've got GDPR that you have to think about?
Where does GDPR come into play, and what is the contagion or the bleed over?
If you want to create a fully decentralized trading of shares or trading of assets and you want to be fully
decentralized where is it how to how does how do europeans deal with the gdpr issue when you've
got immutable chains and how should americans or non-europeans think about when they create
something like an on-chain asset, and making it fully centralized?
Where does GDPR come into your thinking?
I don't have an answer to this.
This is a curiosity question right here.
That's a fantastic question.
I think definitely, Onino, if you're willing, I'd love to pass the mic to you
and kind of get your thoughts.
I know being based in Europe, complying with GDPR is obviously a requirement.
So how does that kind of factor into your thoughts
regarding tokenization?
Since as far as I'm aware, the US doesn't have
kind of a similar equivalent as of yet.
Yeah, I'm in a love-hate relationship with GDPR,
to be honest, and it tends to go towards I hate it sometimes.
But it's an interesting discussion,
especially when it goes to the point of storing personal data on chain.
And I had that conversation a few weeks back when I was in Berlin and talked with a few people about exactly that topic.
And we quickly thought to France in the whole discussion and one front of them was quite firm on their standpoint of it's impossible
to implement GDPR and in terms of putting personal data on chain because a key component of GDPR is
me myself as a user if a company holds personal data a i have the right of the to the data to get deleted first
i have the right to see what data is there and then i have the right to it to be deleted fully
and of course you could say um you can just delete the access to the data points on chain or
whatever necessary technological construct you put around it um but there is this camp of
people saying that why if there's still any trace left on the ledger even if it's not accessible and
readable um the data is still on chain and thus not fully deleted which makes it not gdpr compliant
so it is quite a let's say heated discussions if you go into that front
and there are just two fronts that so far as i know is even there might be uh any developments
that kind of brought this forward um there is kind of no um solution to that conflict right now
which tends to keeping these kind of data points off chain for now at
least. That does make it a tricky situation. It's a bit like when I tell my wife, no, I'm not going
to get a hamburger while I'm out. And then she finds some crumbs. And there's not necessarily
evidence. It's definitely enough to implicate me, at least in this household.
That's some serious red flag stuff there, right i mean i yeah i mean if she's getting into your hamburgers
hamburger habit man you know we we have to have a chat here this is not a good situation it is my
sovereign right as an american that's for sure but i mostly just she actually just uh does that
whenever um you know she's cooking delicious food like she just made prime rib so i can't be too
upset whatsoever.
Just, you know, as an American, you crave a good burger every so often.
It's just how it goes in my blood.
But this is really rich territory.
I mean, especially as we talk about different jurisdictions
and their privacy expectations from a legislative perspective,
it kind of begs the question kind of how these different jurisdictions
will ultimately tackle different identifying information that makes its way on-chain. To your eyes, I see your
hand up as well. I know you're based in the European jurisdiction as well, correct?
Love to get your thoughts on this.
No, we're actually in Canada. We're based in Montreal, the French part of Canada. But
I did look into a problem recently, very similar.
I mean, it had the European regulations in there.
And I'm just in fully agreement with Onino.
The user data cannot be stored on-chain.
It has to be off-chain.
But you can store on-chain either the hashes of the data
that can prove that the data that is off-chain is legit,
or encrypted data. Because at the end of the day, if you want to comply with those regulations, you need a centralized system that can authenticate users and implement access control.
So I just wanted to add this to his take.
Awesome. Fantastic take there. And I know in terms of the relative access controls,
there's a lot of rich territory and a lot to unpack there. Just saw Vinay's hand go up, Vinay, we'd love to get your thoughts. I know you kind of broached the subject on ZK, but we'd love to get your thoughts on kind of the jurisdictionality and just privacy writ large as we move things on, Shane.
I think GDPR specifically is just kind of poorly worded legislation.
You know, being in a situation where the hash of a transaction is considered to be PII doesn't really make a lot of sense.
You know, it's just one of these things where I think the legislation is a wee bit buggy. is that they're going to have to patch that because building technical systems
to completely erase those kinds of data traces
is like a thousand times more costly
than building technical systems
that just delete the underlying data
and the hash is left floating in space.
So, you know, I don't think
we're going to be stuck with that forever.
We might have to live with it for a little while.
While the EU is wringing its hands about that kind of stuff
that America has forged forward in a much less regulated space,
and then the EU will have to change its regulations
and tighten it a little here and loosen it a little there to make it work.
But I think overall that is just what happens
when lawyers try to write law about technology, not really understanding things like one way functions.
on it. So very insightful takes on technology from regulators. Of course, I think that underlines
Dave's point very presciently that it's incumbent upon us as individuals who understand this
technology and understand the juncture in which we find ourselves, where we're seeing assets
in the traditional sense being interpolated into these distributed systems to educate the
regulators in such a way as to where they make prescient decisions on how to regulate the underlying asset. And that gradation of control,
that gradation of access is something that I think is very prescient. And our friends over
at Infineo, I know you guys are doing amazing work, something you mentioned previously in terms
of that gradation of controls, that gradation of access is fascinating to me. So we'd love to get
your thoughts on kind of how privacy plays into tokenization, maybe specifically in the
tokenization of insurance. Yeah, it's funny that you bring that up. With insurance, it's
life insurance in particular, it can be very important. So there are lots of reasons to tokenize a policy, but the one that makes it the most clear as to why you need to retain privacy on chain is in the instance of a life settlement.
For those unfamiliar with a life settlement, that is a transaction where the owner of a life insurance policy sells that policy to someone else.
sells that policy to someone else. And you can imagine for a lot of reasons here,
retaining the privacy of the original owner of the policy that is still the insured on the policy
is very key because if there is not, there is going to be moral hazard there on the side of
the buyer to do some not good things if they know exactly who that is. So we need to keep the
insured insurance information private
while giving the buyer enough information
to make a decision in the due diligence process on the asset.
And so by working with a public permission blockchain
like Provenance,
we're able to build in these controls
that are necessary to allow access
to only necessary data, only at needed times.
Absolutely. Definitely, I don't want to have that kind of moral,
that kind of moral hazard. I know I have a,
if I have exposure to someone who is a logger and they, you know,
I have exposure to their insurance policy. Well, let's just,
let's just say that I definitely want to go help them cut down some trees and
I'm not the best at knowing where they fall. Right. But then I see your hand up,
my friend, definitely get your thoughts on this.
Is your hand up?
You're being rugged out of hand.
Ah, darn.
Well, I'm sorry about your hands.
I definitely still have two.
And Elon thinks you have one as well.
So we got something going on here.
That tends to happen to me.
But either way, you know, this has been a phenomenal space.
We got a couple minutes left. And so, Colin, you know, this has been a phenomenal space. We got a couple minutes left.
And so, Colin, you know, we've heard from pretty much everyone here.
And Colin, I know over at ProvLabs, you guys are doing some phenomenal stuff.
The Providence blockchains, nothing to shake a stick at.
You got some high praise from our friends over at Infineo.
I had no idea you worked with Dave previously as well.
with Dave previously as well. I'm learning more and more about the lore of the early days of some
I'm learning more and more about the lore of the early days of some of these tokenization systems.
of these tokenization systems. Colin, let me get your take on privacy and how that factors into
assets as we bring them on chain. Yeah, absolutely. Our space was, our industry was quite small back
in 2019. It's been fun to grow up with it. But yeah, I really appreciate a lot of the points
that have been made. And I think it's really critical for us to be pragmatic, you know, on a personal level,
you won't find someone that's more free market oriented than me, but the rubber meets the
road somewhere.
And I do not expect that we will have a fully global, fully permissionless ERC20 based equities
equities market anytime soon. That would be really cool. But I'm not holding my breath. And, you know,
market anytime soon.
That would be really cool.
and so we'll, we'll, we'll do what we need to, right. And so it Yeah, at labs, like this is,
this is really, really critical, because, you know, figure is the largest consumer of the
provenance chain. And they write about $700 million worth of private loans, almost entirely
in the form of HELOC's home equity line of credit to the provenance chain every month. And they use the same process that we have, which is to say
it's a metadata module that we can hash documentation and the evidence of that onto chain.
And what's been really exciting is that while we're still, I think, waiting for regulators to
come around, although we've seen a ton of action in that, and I'm really excited for the ensuing regulation and clarity.
DBRS Morningstar is the rating agency for these loans, because what Figure will do is, you know, they originate the loans, package them, and then they've done nine securitizations to date, all of them in the range of $200 million to $300 million.
And then now what they're doing
is they just package the loans and sell them directly to Apollo and KKR. And so traditionally,
a rating agency would come in and rate every single loan in any given tranche before
a large institutional player such as an Apollo would be willing to buy it. Well,
they looked at our process. They looked at the rails. They looked at the encryption. They looked
at who holds decryption keys. They at the cloud storage piece and they are actually so
so confident and so comfortable in how we ledger and store the data who has access
that they only have to rate 10 of any given loan in a pool in in a pool and the other nine they're
able to look at it and say okay well we well, we can see the rails, we can see the communication here. Nothing's happened with this, which is to say it has not changed. And so we don't need to look at it.
these tools that, you know, I think it's important for us to remember, right, that, yeah, the rubber
meets the road somewhere, and we absolutely have to be, you know, cognizant of that, and
so, yeah, I'm rambling now, so I'll shut up, but Ray, thanks for the space, man, this was a great,
it was a great discussion. Absolutely, man, and your ramblings are more prescient than I think,
you know, 95% of the Web3 industry writ large, so no stress there, man. Always a pleasure to have you on.
You're too kind.
Hey, man, when an
asset called Fartcoin is in the top
100, I mean, these kind of conversations are worth
their weight in gold to help to educate the wider
industry, regulators, and everyone
in between. Definitely kind of
show the world that this is serious technology
backed by serious people with serious
implications for asset management. So I just want to echo the sentiment, give everyone on stage a follow.
These are the folks who are making tokenization possible, who are the trailblazers, who are doing
things right, who are doing things properly. And ultimately, that is what's going to move the
needle. Meme coins are fun. They're interesting. But yeah, you might get an ETF of one or two of
them. But when it comes to serious companies with hundreds of millions, sometimes trillions, like BlackRock, for example, coming in and saying, hey, we want to use this technology.
These are the folks who they call. So wonderful space.
Join us again on Thursday, 2 p.m. Eastern time.
We're going to be running it back. We're going to be doing another space on tokenization on RWAs.
And we're going to be kicking the tires on everything that makes this industry tick. Definitely follow Wolf Crypto, your one-stop shop for everything happening in Web3.
I've been your host, Ray Buckton. Check us out at rwa.world. I highly suggest you subscribe to
the newsletter. You can join some of the names you've seen here, plus more. And yeah, we will
see you beautiful people on Thursday. Talk soon.
