How do tokenized stocks work? Dialogue BlackRock Digital Asset Manager

Tokenized 76th, Speaker: Pet Berisha (Co-founder of Tokenized)
Guests: Rob Hadick (Dragonfly GP), Robert Mitchick (Head of BlackRock Digital Assets), Noah Levine (Andressen Horowitz Partner)

Time axis:

00:00 Introduction

02:17 monetization is essentially a “access” story that allows more investors to access asset classes that were hard to reach in the past。

05:51 Currencyization equity can be broadly divided into three structural types。

08:41 There are limitations on the transferability of monetized assets under the White List mechanism。

11:21 New York Stock Exchange works with Securitize to explore 7x24 hour trading patterns。

The stabilization currency is evolving into a new generation of financial infrastructure。

18:58 U.S. regional banks are building a token deposit network。

24:21 The stable currency and token deposit services are different user groups。

25:42 The demand for privacy in the chain capital markets is growing significantly。

31:06 The future market structure will reduce the number of intermediaries and become more flat。

Takeaways:

1. The stabilization currency is evolving from “payment instruments” to “account level infrastructure”. Users no longer simply use it for transfers but hold the balance directly, which means that the next step naturally extends to investment, revenue management and asset allocation. For financial products, stabilization wallets gradually replace traditional accounts as entry points。

2. The greatest value of tokenization is not efficiency gains, but increased access to investment. It exposes users who were only involved in the encryption market to a wider range of traditional assets, while also allowing more investors globally to enter the unified market, essentially on the demand side rather than on the supply side。

3. Most of the “currencyized stocks” in the current market are still in a transitional form, which is essentially a derivative packaging rather than a chain of real assets. Problems such as inconsistent trading times, inability to redeem in real time and unclear ownership of assets suggest that the real chain capital market infrastructure is not yet mature。

4. A truly valuable model for the future is “issues on the primary chain” rather than mapping down the chain. Only when assets are generated, traded and liquidated directly in the chain will new capabilities such as collateral, portfolio, governance and so on be the starting point for structural change。

5. White lists and compliance restrictions are the core bottlenecks to the current liquidity of monetized assets. As long as assets must be transferred between restricted addresses, real liquidity and deFi portfolioability cannot be achieved. Industry is seeking solutions that satisfy regulation without sacrificing mobility。

6. 7x24-hour transactions are not the core demand and the real demand comes from “assets efficiency”. When users hold stable currencies, they want not just to trade at any time, but to have these funds seamlessly involved in the scenes of investment, borrowing, returns, etc., which is the key to driving the growth of dollarization。

7. Stabilized currency and monetized deposits do not replace each other, but serve different scenarios. Stable currencies tend to favour cross-border, encrypted markets and dollarized demand; tokenized deposits favour capital flows and efficiency optimization within the banking system. In the future, there will be a combination of funding patterns。

8. THE CENTRAL OBSTACLE FOR BANKS TO PROMOTE TOKENIZATION IS NOT TECHNOLOGY, BUT REGULATORY UNCERTAINTY. THE LACK OF CLARITY, INCLUDING ON AML, COMPLIANCE FRAMEWORK, CAPITAL REQUIREMENTS, ETC., HAS LED BANKS TO MOVE FORWARD WITH CAUTION, EVEN IF THEY ARE AWARE THAT THIS IS A CHANGE THAT MUST INVOLVE THEMSELVES。

9. PRIVACY IS BECOMING A KEY INFRASTRUCTURE REQUIREMENT IN THE CAPITAL MARKET CHAIN. IN PAYMENT SCENARIOS, WHICH CAN BE CIRCUMVENTED BY NETTING, BUT CANNOT BE REPLACED BY MORTGAGES, CLEARINGS, TRANSACTIONS, ETC., SO THAT TECHNOLOGIES SUCH AS ZK WILL BE PRIORITIZED IN THE CAPITAL MARKET RATHER THAN IN THE AREA OF PAYMENTS。

10. In the long run, the financial market structure will be significantly flattened. Current transactions involve a large number of intermediaries (e.g., coupons, exchanges, clearing houses, trustees, etc.), which can be reduced by monetization. As a result, investor costs have declined, asset management agencies have expanded their reach and encryption infrastructure has access to the mainstream financial system。

Pet Berisha:
Welcome to Tokenized, a programme focusing on the stabilization of coins and the institution ' s use of tokenization of real world assets. We're recording this live at the Digital Asset Summit in New York. That was good. Hello, I'm Pet Berisha, this week's shift, Simon, but at least I have a similar accent. I'm surrounded by guests who've been wonderful and may have been following the show's record

Rob Hadick:
I'm fine, and obviously I'm not as skilled as you, because I didn't say the whole thing last time。

Pet Berisha:
Well, that's practice。

Rob Hadick:
Yeah, just practice. Well, I'll come a few more times。

Pet Berisha:
A first-time guest, Robert Mitchick, Digital Asset Manager of BlackRock, welcomed to the show。

Robert Mitchnick:
Thanks for the invitation。

Pet Berisha:
Wow, there's applause. Look, Rob just didn't. I don't know why. And the last, and equally important, partner of Noah Levine, Andressen Horowitz, who wore a coat and tried to mimic Cuy Sheffield, was also a member of the so-called "Visa Encrypted Gang." How are you

Noah Levine:
Good, very excited to be here。

Pet Berisha:
Second time on the show. I'm going to do something that everyone will skip, and I need to remind you: The views expressed by all the guests today are personal and do not necessarily represent the positions of their companies. Nothing we say should be considered tax, financial, investment or legal advice, and you are invited to study it yourself. And thank you very much today, Visa and Mesh, and Mentox Global, for helping us organize this event. The program is sponsored by Visa, the leader in digital payment. Visa's monetized asset platform VTAP uses smart contracts and passwords to help banks bring French currency to the chain. Whether it be the issuing of stable coins, deposit tokens or other forms, VTAP allows financial institutions to issue coins supported by French currency, improve financial efficiency and achieve programmable finance。

Pet Berisha:
The programme is also sponsored by Stripe. Stabilizing currencies are becoming the basic building block of borderless financial services, allowing funds to flow globally as data do. Through Stripe, you can use stable currency and encryption technology to reach new user groups, reduce cross-border costs and reduce settlement time from a few days to a few minutes. Most importantly, it's being used in the same way as other Stripe products, directly through the API in the Stripe console, which means you don't have to care about which block chain or what wallet is actually used. From Shopify to other global enterprises, the complete encryption solution of Stripe is used to expand markets and reach more users。

Pet Berisha:
THE PROGRAMME IS ALSO SPONSORED BY M0. THE CURRENCY OF STABILITY IS BECOMING A GLOBAL FINANCIAL INFRASTRUCTURE THAT ALSO NEEDS TO MATURE. IF YOU'RE A BRAND, YOU SHOULD HAVE YOUR OWN STABLE CURRENCY, AND IT SHOULD MATCH THE WAY YOU SPEND MONEY IN YOUR PRODUCT. IF YOU'RE THE ISSUER, YOU WANT TO BE THE MOST VALUABLE PRICED PARTNER. M0 IS CURRENTLY THE ONLY PLATFORM FOR DISTRIBUTORS AND BRANDS TO BUILD DIGITAL CURRENCY PRODUCTS TOGETHER。

Pet Berisha:
Enter the first topic. One news from around the world, Larry Fink, says that monetization can make investment as simple as paying for it with a mobile phone. In his annual letter, he said that half of the world's population was using digital wallets on mobile phones, and imagine that if that number of wallets could invest in a basket of companies as easily as they could send payments. This future can be accelerated by upgrading the bottom-up structure of the financial system, making investment easier to issue, trade and access. Robert, let me ask you first. Your reaction to this is interesting. Can you start

Robert Mitchnick:
Yes. I think it's really in line with some of his views over the past months or years, and it's similar to his article on Ecomist last November. The central idea is that we have always seen monetization as a story of efficiency, but in many ways it may be a story of “access”. Now there's a class of investors, who are originally encrypted, or who are more accustomed to interacting with digital wallets, digital assets and DeFi ecology, but they are severely inadequate, even zero percent, in traditional investments today. The question then is how to reach them with broader investment opportunities than they are now, rather than being confined to the current market of approximately $3 trillion in encrypted assets, it is the entire $400-$500 trillion global asset pool. I believe that this is a great opportunity for financial inclusion to help build a more complete and diversified portfolio。

Pet Berisha:
Rob, would you like to expand a little bit from the point of view of access? Why does monetization not only allow encrypted primary users to expand their portfolio, but also enhance the access of ordinary investors and institutions

Rob Hadick:
Okay. I might have a different perspective than Robbie, and he might say I was wrong. From our point of view, what we're seeing now is the rapid spread of the stable currency around the globe, often because people want to get the dollar, for example, they have 30% or 40% of inflation in the country every year, and they just want to run away from the currency and enter the dollar system. But the stabilization currency has actually become a “digital oil” used for liquidity between monetized assets. When these assets exist in a form similar to a stable currency, it becomes much easier for you to trade between different assets。

The problem now is that if I want some kind of stock opening in an emerging market, the regulatory licences, infrastructure, structure behind me are complex and costly. So we see a lot of people using some kind of “alternative” approach, like Robinhod, which is essentially a derivative: an American voucher buys shares at normal trading times and then issues a corresponding token, which cannot be forged or redeemed at some point in time. So many of the programmes are now only transitional, some kind of regulatory arbitrage, not real “form” assets. Once these assets have become uniform, they can break the technical boundaries, access borders, and all that remains is a regulatory issue — and as a matter of business, I usually tell my company that this issue can be considered later。

Pet Berisha:
Noah, I'd like to ask you again on the next topic, but since Rob mentioned these derivative structures, would you mind combing out some of the structures that are now in the market for tokenized shares

Noah Levine:
Yes. I may not be as good as Rob and Robbie, but I try. There are three broad categories. The first is the SPV structure. You will see someone set up a SPV to buy an equity asset and then monetize it and distribute it to a group of investors. It's worth it, if you just want to get a price opening, it's a good tool. But the problem is, for example, Rob has mentioned before that if this thing is traded for seven days, and the bottom market is open only at a given time, there's a problem with price mismatches. And as an investor, you buy SPV, not the bottom asset itself, which is risky。

The second is the "right-type token," like DTCC or Securitize is doing. The assets themselves are issued under the chain and are then monetized so that wallet users can hold and gain access. The advantage is that 7x24 transactions can be achieved and a certain degree of deFi portfolioability can improve the efficiency of asset flows. Of course, there is still room for improvement。

The third category is stock issues on the complete chain, like Superstate, Figure, doing things. In this case, new securities are issued on the chain, and you actually hold the asset in the bottom stock. Advantages include cross-collateralization, participation in governance voting, etc. So it is not just moving existing assets on the chain, but going straight on the chain, which is a very exciting direction。

Noah Levine:
I want to turn to Robbie for a question. You've done many monetization attempts, such as monetization of money market funds, and Securitize. So what do you think of the future, like freer transferable assets, even from the original chain like Superstate, that would be part of you

Robert Mitchnick:
First, it is clear that our product is not SPV or feeder fund, but a new, original fund whose share is issued directly in token form. However, transfers remain limited, for example, by the need to transfer between white lists, which is limited to private fund-raising rules and anti-money-laundering requirements. This is a big problem: as long as there is a white list, there will be considerable friction, which will affect mobility and the availability of DeFi. So the whole industry is thinking about how to solve this problem, without simply making regulatory arbitrage and then asking for forgiveness afterwards。

Pet Berisha:
I want to keep asking that question. Noah, how do you think we got to that more open, near-missionless state

Noah Levine:
That's a good question. I think there are two aspects. The first is regulatory clarity, which is critical, and we are just beginning, as in the case of securities regulation in the United States in the last month. Second, infrastructure, such as Superstate and Figure, now also needs to provide liquidity and trading through ATS, which is feasible in the short term, but needs to be further developed if we are to move to a more institutionalized scale. So the core is continued clarity of regulation + upgrading of liquidity infrastructure。

Pet Berisha:
We're entering the second topic. An exclusive story from The Wall Street Journal: New York Stock Exchange is working with Securitize to develop a 7x24-hour monetization security platform. Securitize will be the first digital transfer agent for a business or an ETF-issue block-chained security. Rob, you're gonna help us get this over with。

Rob Hadick:
Let me start with this, and then with a larger trend. Now we all believe in monetization for several reasons, one of which is very important: we want weekend and night trade. It is true that there are municipal chambers of commerce in the market that try to hedge at night, but this is not accurate. Especially on weekends, the risk of hedge is almost impossible. If you want to manage collateral and leverage on weekends, you have to have a chain infrastructure. So now we're all trying different options。

For example, the New York Stock Exchange may use an independent order book, similar to a new one; while NASDAQ may be more inclined to trade tokenized assets and traditional assets in the same market; and there are attempts to introduce tokenized assets in a dark pool. In short, we're all exploring different paths. This is good for the whole industry, because it brings more innovation. My personal opinion is that eventually all assets will be monetized。

Pet Berisha:
Robbie, do you agree

Robert Mitchnick:
I think it's a fairly probable event, but not necessarily. Even if the probability isn't 100 percent, if it's high enough, it's enough to put a lot of resources into the layout. Because once it occurs, it has enormous implications for the entire financial system, value chains and market structures, including changes in the role of intermediaries。

Pet Berisha:
Noah, a lot of people are saying that 2025 is the year of stability, 2026 will be the year of capital markets

Noah Levine:
I basically agree. I remember last year when Cuy said, “Every bank needs a currency stabilization strategy”. The stabilization currency has now changed from a question of whether to do it or not to “must do it”. And the real question is, if the money is in a stable purse, they don't just want to see the balance or pay, they want to do more, like invest. I think that's the real growth drive for monetized assets, not just the 7x24 deal itself。

Robert Mitchnick:
And I think the application of the stabilization coin has just begun. It already has some penetration in the encryption exchange and DeFi, but there is still a long space for development in situations such as cross-border remittances, corporate capital management, capital markets, etc。

Pet Berisha:
We're entering the third topic. As we also mentioned on last week's show, U.S. regional banks are building a network of monetized deposits through ZK Sync, called Kari Network, involving Huntington, First Horizon, M& T Bank, KeyCorp and Old National Bank, scheduled to go online in 2026 and operate on the ZK Sync licensing chain. Rob, what do you think of this

Rob Hadick:
I think the discussion of “stabilized or tokenized deposits” is a little off the point. In essence, we have cash equivalents and non-cash equivalents. Discussions have begun at the regulatory level, such as the possible redefinition of the Basel rules and capital requirements, and the recent statement by the United States Government that a stable currency could be considered a similar cash equivalent, which would be useful for capital management. So I think these different types of assets will eventually serve different purposes。

For example, the so-called payment-type stabilization currency may be a money-flowing instrument; tokenized deposits may be another instrument; and monetized money-market funds may be another instrument. They will look more and more like today's financial products, but they will be more digital, easier to trade with each other and more liquid, while the complexity of back-office reconciliations will be reduced. So from my point of view, the question of who replaces who is not so important。

Pet Berisha:
What about the banking union model? Especially for medium-sized banks. What do you think

Rob Hadick:
There are many successful banking unions in history, such as Visa, Mastercard, and Early Warning, even such as Synchrony. So I do think that some of the core infrastructure is more appropriate to be built through alliances, because it would be very difficult for a start-up company to meet the needs of so many banks simultaneously. You have to do a lot at the same time, not just one. So I think the banking union will play an important role, even have to exist, in future capital market innovations。

Robert Mitchnick:
I think that's a little too broad for success stories. Because in the area of block chains and digital assets, the historical performance of the Alliance is actually worse — that is to say, kind of generous. This is not to say that the Alliance must not, but we need to realize that it is very difficult for it to do something that is truly economic in this area。

Pet Berisha:
So what's your advice

Robert Mitchnick:
Let's leave this to others. I'm in the banking system now。

Pet Berisha:
Noah, you should've talked to a lot of banks in Visa before. Why would they choose to make token deposits

Noah Levine:
THAT'S A GOOD QUESTION. I THINK IT IS A COMMON MISCONCEPTION THAT BANKS ARE PERCEIVED AS BEING CONSERVATIVE AND NOT INTERESTED IN INNOVATION, BUT THEY ARE NOT. THEY ARE ALL AWARE THAT THERE ARE GREAT OPPORTUNITIES TO USE THESE INFRASTRUCTURE TO PRODUCE MORE COMPETITIVE PRODUCTS. THE MAIN PROBLEM IS LACK OF CLARITY IN REGULATION. AS WE HAVE JUST SAID, ALTHOUGH THERE HAVE BEEN SOME POLICY ADVANCES, MANY KEY ISSUES REMAIN UNCLEAR, SUCH AS HOW COMPLIANCE IS DONE AND HOW AML IS DONE. SO BANKS WILL BE VERY CAREFUL。

There are, of course, some more radical ones, like JP Morgan Chase, who made JPM Coin very early, who is now doing new experiments; and Citi, and so on. Indeed, there are a number of coalition projects, and banks are willing to participate, despite the low probability of success, because they do not want to miss the opportunity。

Robert Mitchnick:
I think it is also important to know very well what kind of problems have been solved by monetized deposits or what unique value is given to stable coins. This question is not well answered。

Rob Hadick:
From a bank perspective, they would argue that tokenized deposits would allow them to remain in control of the deposit base while continuing to operate part of the reserve banking operations. On the other hand, such as asset management agencies, they would like to continue to manage money market funds. So this is a game between different stakeholders。

Pet Berisha:
Noah, if it's a medium-sized banking union, what do you think is the probability of future success

Noah Levine:
I find it difficult to succeed in any particular project. But by the nature of the product, stable currency and tokenized deposits are completely different things, and the services are different users. The current product market convergence points for the stabilization currency are mainly in encrypted capital markets, such as money flows between exchanges, DeFi, and as a United States dollar storage tool outside the United States. These banks serve mainly local customers, such as M& T Bank does not serve Argentine users. Their use is therefore more at the wholesale level, such as liquidity, back-office settlements and internal efficiency optimization. In this scenario, such projects are likely to succeed, but they will not become a product for the general public。

Pet Berisha:
Robert, I'd like to ask one last question, and now there's a growing discussion about privacy in the encryption industry, like ZK technology. Why is this issue so important now

Rob Hadick:
In fact, everyone has been doing this, except that in the past the demand was less strong, or that the only demand came mainly from less legitimate uses. For example, when we say stable currency payments, if you're going to pay, pay, etc., you certainly don't want everyone to see how much they pay. But how do we solve this in reality? We use “netting”, for example, to aggregate a day of transactions and then make only one settlement transaction on the chain, which in itself provides some privacy。

BUT IN CAPITAL MARKET SETTINGS, SUCH AS WEEKEND TRADING, COLLATERAL MANAGEMENT, IT'S COMPLETELY DIFFERENT. YOU CAN NO LONGER DEAL WITH NETTING BECAUSE OF THE NEED TO DEAL WITH RISKS IN REAL TIME. SO PRIVACY BECOMES MORE CRITICAL. ZK TECHNOLOGY CAN SOLVE SOME, BUT NOT ALL, PROBLEMS. IF YOU'RE DOING THESE THINGS ON THE PUBLIC CHAIN, IT'S ACTUALLY VERY TECHNICAL。

Pet Berisha:
We're going into the audience question session。

Audience:
We're all talking about dollar stability. Is there a need for non-dollar stability

Rob Hadick:
There is no apparent need at this time, but there must be a future. If all capital markets are chained, then there must be stable currencies, or you face exchange rate risk. In the United Kingdom, for example, hedge funds, if their assets were to be valued in pounds sterling, they would not wish to take the United States dollar risk every time. So, in the long run, there's bound to be several stable currencies. At the same time, from a more macro point of view, we may be entering an era of “currency cold war”, and the need for so many different currencies in the future is also an issue of our own。

Audience:
Stable currencies are already useful in the financial system, but ordinary consumers are still biased against “encrypted”, and how long can this issue be resolved

Noah Levine:
In fact, many users are already using stable coins, but they don't know. Some new banking products, for example, are based on stable currencies, but users see only one ordinary account. So the key is to hide the encryption behind the product, not let the user feel it。

Robert Mitchnick:
Another point is that the stabilization currency is not attractive in the United States-based payment scenario, but is of great value in the cross-border scenario, where more friction and United States dollar acquisition is difficult。

Audience:
If, after 5-7 years, all assets were chained, what would become of the market structure? Who would benefit and who would suffer

Robert Mitchnick:
It's a hard question. Overall, however, value chains will become shorter and intermediaries will decrease. A stock transaction now involves many players: investors, primary brokers, exchanges, clearing houses, trustees, transfer agents, fund managers, etc. Many of these intermediaries can be compressed and automated。

This is good for investors because of increased efficiency; for asset management agencies, because they can reach more users; and for encrypted exchanges, because they currently cover only a fraction of global assets and can expand significantly in the future。

Pet Berisha:
Okay, that's it for today. Thank you all for listening and listening. Thank you, guests。