What Wall Street Really Thinks About Tokenization

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Talking Tokens: Crypto, Onchain Finance, Investing 49 min 1 speaker 8 chapters transcribed 1 month ago
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What is tokenization and how is it being adopted by institutions today?

Rebecca Rettig 0:00
I think crypto has a terrible reputation. It's scams, it's hacks, it's rug pulls, it's all of those kinds of things. And we are doing a terrible job shaking it.
Jacquelyn Melinek 0:13
Why are crypto products so complicated still? Like it's been around for over a decade. Why are people not getting the point that they should make it as easy as you know getting in a way mode?
John D'Agostino 0:21
Nobody sits in a Waymo and like tries to figure out LIDAR, right? But it just works. You you tap a button, you get in, and everything works. We have to get better at selling trust, uh, and we have to get better at selling simplicity. Stable coins, I think, are gonna be the unlock. When you can send someone money at two AM on a Friday and have it settle at two AM in five seconds and see that tangibly in your wallet, that's a massive, massive unlock.
Rebecca Rettig 0:45
Build useful things. That's the most important thing to push us all forward.
Jacquelyn Melinek 0:56
Today's talking to organization guests are John D'Agostino, Coinbase Institutional Head of Strategy, and Rebecca Redig, the Chief Operating Officer and Chief Legal Officer at JETO Labs. John, Rebecca, thanks for coming on. Thanks for having us. Great to be here. Yeah, I'm excited to have you guys. I think I've had both of you on the show before or some capacity. We all know each other, so this will be fun. With this series, we always like to start off by asking people, how would you define tokenization and the state of adoption today? 'Cause we always, you know, toss around this word, but I think people have similar but different definitions of it. John, do you want to start?
John D'Agostino 1:28
No, please, Rebecca. I I insist. Ladies first. Ladies first.
Rebecca Rettig 1:31
Yeah. Okay, okay. So I would define tokenization as Using technology to make digital representations of traditional financial assets that live on chain. I think other people, to your point, may definitely have different definitions of that. We've seen a lot of different varieties of it, which I think we'll talk about today in terms of institutional adoption and how people are thinking about it. But as far as the you know, actual adoption today, I think there is a lot of interest in it. I think people are looking at a lot of different types of models, including the large exchanges and some of the newer exchanges as well. But people are still not quite sure what to do with this in a more traditional sense, is my it's that outside of sort of crypto and more digital and innovation forward companies.
Rebecca Rettig 2:18
John, what's your take?
John D'Agostino 2:20
See that's why I go second, because it's polite and also I get to piggyback off of one of the smartest people I know. Or
Rebecca Rettig 2:25
tell me or tell me why I'm wrong.
John D'Agostino 2:27
Yeah. No, no, I I maybe we'll disagree on something, Rebecca. I doubt it. I've never heard anything you said I I don't agree with. Yeah, I mean, look, I'll just I'll just take it a a little step further, Rebecca. So so my my my history is I've been exchanges my whole life. And uh one of the first lessons I learned about uh f about exchanges where everybody thinks exchanges are places where uh meeting places where people transfer value. They're actually meeting places where people transfer risk, which I think is a better framework to think about it. So I think of tokenization As just the next evolution and a better way to transfer risk. So to transfer risk appropriately or effectively, you need an efficient mechanism to ensure that the risk transfer is real and actually occurred.
John D'Agostino 3:03
But you also need to be able to create the exact type of risk you want. So we went from like, you know, people swapping stock certificates around a tree to centralized exchanges that allow people to build more liquidity and swap risk. Then we move to things like complex instruments like swaps and options and swaptions and all this kind of crazy stuff, which is all just a ways of just making sure that the risk I want to give to you is the risk you want to accept. And now we have this fantastic technology that kind of almost combines everything. Where we can take all of those nuanced, complex, bespoke ways of of of types of risk you want to transfer, and we can encode them into a smart contract that can

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