“We’re at the End of the Beginning” - Tokenization Is About to Get Much Bigger

Overview

This Milk Road Crypto episode focuses on the accelerating rollout of tokenization in global finance. It explores what “tokenized” actually means (including how it can differ legally and economically) and the regulatory/market-structure issues that arise as tokenized products move onto public blockchains.

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Main points and arguments

1) Tokenization is “just beginning” to scale

• Guest Carlos Domingo (Securitize co-founder/CEO) argues the industry is beyond its early “formation stage.”
• He claims tokenized assets are building momentum and could grow to a long-term market on the order of “trillions” as adoption expands.

2) Public blockchain tokenization is different from offshore/permissioned approaches—and that drives controversy

• The episode references news tied to Robinhood and meme coins that appear to be paired with tokenized equity exposures.
• Domingo’s core reaction: many products marketed as “equity tokens” may not be true stocks.
  • They can instead resemble offshore-issued securities or derivative instruments.
• The controversy, in his view, centers on consumer confusion about what they are actually buying and the rights/risks they assume.

3) AMC’s complaints are framed as regulatory and structural (not merely marketing)

• When AMC CEO Adam Aron criticized Robinhood/tokenization practices, Domingo endorses the underlying concern:
  • The “tokenized equity” products may be issued offshore (e.g., Jersey) and may be permissionless under local law.
  • But Domingo argues the structure is likely problematic under U.S. securities rules, depending on how it functions (e.g., derivative-like behavior) and whether U.S. regulatory expectations are met.
• He characterizes Robinhood’s approach as issuing debt/derivative-like instruments marketed as “equity tokens,” creating legal and investor-protection friction.

4) Securitize’s strategy: comply in the U.S. and build end-to-end governance

• Domingo emphasizes Securitize is not “just a tokenization platform.”
• He describes it as a regulated intermediary with multiple U.S. roles:
  • SEC-registered transfer agent
  • Broker-dealer
  • Registered investment adviser
  • Provides fund administration services
• He argues this regulatory architecture is necessary to bring tokenization into mainstream finance—especially in the U.S.

5) NYSE listing as validation of regulatory-compliant tokenization

• Domingo discusses Securitize going public on the NYSE (ticker SECZ).
• He describes tokenizing its own capital via a token intended as a representation of capital rather than a direct security/derivative exposure.
• He contrasts this with examples he references where tokenized instruments trade with pricing deviations, arguing some tokenized derivatives may not meet U.S. pricing rules and related regulatory expectations.

6) Securitize’s role in BlackRock’s tokenized products (transfer agent + blockchain functionality)

• The episode mentions BlackRock’s tokenized fund products (BSTBL and BRSRV) and Securitize’s involvement.
• Domingo frames Securitize’s role as acting as a transfer agent:
  • managing fund/security structures
  • placing them on blockchain rails while complying with U.S. law
• He argues tokenization enables practical features such as:
  • 24/7 on-chain liquidity
  • peer-to-peer transferability
  • more continuous use of tokens as collateral
  • dividend mechanics via blockchain transactions
• He also links B Reserve to stablecoin-reserve utility via the referenced Genius law, implying tokenized funds can support stablecoin reserves.

7) A “three-way” Solana partnership for regulated on-chain secondary trading

• Domingo discusses a partnership involving Securitize, Jump Trading Group, and Jupiter to enable compliant secondary trading of tokenized shares on Solana.
• He describes:
  • Jump as a market maker using Solana AMM technology designed around RFQ-style best execution pricing
  • Jupiter as the Solana frontend to access liquidity/markets
  • Securitize adapting trading mechanics to securities regulations, including investor onboarding (KYC/whitelisting) prior to wallet trading

8) DTCC tokenization pilots contrasted with Securitize’s approach

• Domingo says he respects the DTCC and views it as positive for awareness.
• However, he argues DTCC’s approach mainly focuses on post-trade improvements while maintaining underlying ownership in a central depository model (e.g., T+1 settlement and centralized custody).
• He critiques closed ecosystems (permissioned access, less open innovation) and argues:
  • public blockchains (or open rails) enable innovation that closed pilots can’t.
• He frames the “right” direction as public-network, permissionless innovation—while still maintaining U.S. regulatory compliance.

9) Tokenization value depends on proper communication (many “tokenized stocks” aren’t stock)

• Domingo stresses investor education:
  • “tokenized stock/equity” may actually be a derivative or debt-like exposure
• He cites consequences such as:
  • different corporate action handling (e.g., stock splits not mirroring the underlying)
  • dividend eligibility and entitlement issues depending on KYC
  • different price behavior versus the real underlying asset
• He also highlights counterparty risk:
  • tokenized derivatives/debt instruments can carry issuer counterparty risk
  • true stock ownership via a transfer-agent custody model would be structurally different

10) SEC transfer agent modernization as a key enabler

• Domingo explains the function of a transfer agent and why the SEC’s proposed overhaul matters.
• Transfer agents are presented as critical infrastructure for:
  • tracking ownership
  • executing corporate actions
  • enabling dividends, proxy voting, transfers, etc.
• He argues transfer agent rules are outdated (e.g., procedures tied to physical addresses and paper-era processes).
• He supports modernization to reduce friction and cost—particularly for digital transfer agents using wallet/blockchain-based settlement.
• He also references his own experience with onerous compliance requirements, including a humorous anecdote about “fingerprinting developers” under an older compliance interpretation.

11) Native token thesis: how tokenization value could accrue to blockchain ecosystems

• Domingo argues that tokenization on public blockchains consumes blockchain resources and pays transaction costs.
• Those costs, he claims, ultimately support value accumulation in the chain’s native token (e.g., Solana/Avalanche), because tokenized applications increase network usage.
• He contrasts:
  • “value for apps”
  • vs. “value accrual for native tokens,” arguing adoption should benefit both.

12) Securitize’s focus: two different tokenization business lines

Domingo distinguishes tokenization segments:

1. Income-generating tokenized fixed income/funds

   • Claims Securitize is strong in tokenized treasuries
   • Mentions CLOs and private credit
   • Notes yield curve coverage via different risk/liquidity trade-offs
   • Emphasizes DeFi integration so tokens can be used as collateral, borrowed against, etc.

2. Tokenization of shares (equities)

   • Framed as a separate challenge involving issuers, transfer agents, and market infrastructure
   • Mentions partnerships with transfer agents (e.g., Computershare and Continental)
   • Mentions NYSE-related initiatives toward 24/7 trading
   • Describes Solana AMM-based approaches for secondary trading

13) Outlook: consolidation and growth, not a winner-take-all market

• Domingo expects consolidation to begin soon in tokenization.
• He notes Securitize raised funds at IPO but doesn’t need them for operations and is considering acquisitions.
• He argues competition won’t be purely zero-sum:
  • models may coexist (offshore vs U.S.-compliant vs hybrid approaches)
  • roles like DTCC-style post-trade and Securitize-style rails/transfer agent functions may overlap, but are not identical

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Presenters / contributors

• John Gillan — host, Milk Road Crypto
• Carlos Domingo — Founder & CEO, Securitize