The Fintech OG's from TWIF
00:37:30 路 Leif Abraham
[00:37:30] S2: The TLDR is, I think this version of tokenization is being discussed right now is regulatory arbitrage. It's not actually innovation. And it's easy to say, hey, if you tokenize a private company or a public stock and you put it into other countries and jurisdictions through, for example, crypto regulation, but not through the actual regular securities regulation and so on, that that is democratization and giving people more access. But if you're really honest, that is just regulatory arbitrage. And that creates risks in terms of investor protection. That creates and at the end of the day, it's also just piggybacking on the back of actually traditional finance and regulation. Like if you have a tokenized stock, for example, that stock, the act, there's still a real stock behind it, right? Behind that token. And that is still custodied by the broker or by the custodian in that moment. That and that lives off the regulation and the security that, you know, in whatever jurisdiction that lives in, called in the US, that the SEC and FINRWA have created, and that security they've created, because it's still living there, and you don't actually own that stock. You are essentially just owning a derivative of that stock, and that for example. And the same thing for private assets. You are not owning the stock, you are owning a derivative of that piece. And you could be like, that doesn't matter, I can still trade it, etc. etc. And it'll be like, yeah, sure, that's true, but what is your benefit? Like you as an end user now, like what is your benefit? And the sense of tokenized public stocks, I would say the benefit is non-existent, to be honest. I do not see the real benefit for you as a user. I only see downsides right now because there's all protection that's missing and uh a bunch of other things. And then in terms of private companies, there's the issue of float, proper market pricing, and so on. And to give you an example, we as public used to offer private assets through a regulatory framework in the US called Reggae Plus.
00:39:29 路 Leif Abraham, Julie VerHage-Greenberg
And you can think of it as like you can take a private asset, take a piece of art, or we had like music royalties, or it could be also shares of private companies, and you would run it through this regulatory framework called Reggae Plus, it turns it into a tradable security, and now you have shares of that security that in the end of the day is like a shell around this private asset that exists somewhere in real life. And what happened was that because these assets have so little float, and so there's so little amounts of market cap that's actually tradable, off the market's actually tradable, that if the demand in any way exceeds that, you're just pumping the price up. And so it becomes speculative assets super damn quickly because it detaches itself of the real lives value, like of the real market valuation. [00:40:17] S0: It's like a beef stock right away.
00:40:19 路 Leif Abraham
[00:40:19] S2: Yeah, exactly. So like if you tokenize 0.01% of open AI and you put that on the chain, every crypto bro will celebrate it because there's another because there's another point that you can celebrate the amazingness of crypto. But in true reality, what is happening right now is that you're creating a super low float float asset without any without any true ownership of that actual stock. And if the demand in any way exceeds the amount of float that's out there, you're just gonna pump that price up, and suddenly the paper valuation of OpenAI is not a hundred billion anymore, whatever it is right now, it's suddenly gonna be like five trillion or something because the low float just pumped that stock up. And then it's literally the cliche thing of what happened to like a GameStop or whatever. When the float is very low, a little bit of trading volume can pump the price up very easily, and those and and those things can just happen super damn easily. So it turns these assets into these speculative assets really, really quickly, and the market valuation of the shares that someone owns might be completely detached of the real valuation of that asset. And and I'll be like, again, like I don't call that innovation. That is not something that is like brand new or something. Like tokenized private assets have existed in many forms in different stages from different companies for a long time. There have been companies doing it with treasuries, there are companies doing it with art and whatnot, or royalties or whatever. That is not necessarily new, but also it has not really found its footing yet because it doesn't actually work well. And so and so it's a great PR thing. We did it ourselves as well. It was great for PR, great music, like great. If you Google it right now, you'll find amazing press stories for public launching music royalties. We shut it down on the end because at the end of the day, it's not actually a healthy market. It's not actually something that other than speculating on something, someone can really like see as a serious piece of their portfolio. And I think therefore it's still very early. And I think the current iteration at least of that tokenization is just not really what it is.
00:42:19 路 Julie VerHage-Greenberg, Leif Abraham
[00:42:19] S0: So over the next six to twelve months, not stable coins, not tokenization, those two things aren't exciting to you. What does excite you over the next year? [00:42:28] S2: If you share the sounds, AI. [00:42:30] S0: I think high level any any certain aspect of AI.
00:42:34 路 Leif Abraham
[00:42:34] S2: Let's get a little bit more in the two pieces in our camp. One piece is high level. I think what is happening is that there's now the chance to reinvent essentially how people engage with any product in this world. And so any type of interface that's out there, any product that's out there, any service that's out there, the way people actually use the service, use this product, I think there's a chance now to reinvent all of these. And so that's why it's such a free field for founders right now to go into any industry, any product, and just start first principles thinking of what the technologies that are out today, what are the efficiencies, what are the new ways of doing things that suddenly are being created. And I think there's a gold rush on that. Now, the second piece for us specifically is we're very excited on just like what AI can do in terms of personalization of portfolios. And so we launched this one thing called generated assets. If you go to generatedassets.com, it's essentially your ability to create, to turn any idea you have into an investable asset. And so you can literally turn any prompt, call it CEO, said go on podcasts, and it will literally go find the companies of public companies, and that's on that moment, obviously, of companies that always own podcasts, create an asset out of that, create a little index out of it, give it a name, give it a little logo, a little description. It weights the index, it tells you why it added certain companies to the to that index, and then after. Actually, it makes that investable. And that is always a little bit of a wacky example I'm making right now. But what it really does is it takes these like cookie-cutter, one-size-fits-all type of investing, which you've seen with ETFs and sometimes even financial advisors in their products, and turns it into a world where everyone's portfolio can be completely customized. And we often talk about the sense of that in the old world you had either your financial advisor who does everything for you, or you had your self-directed investing platform where you go in and it's just charts and tables and just do everything yourself. And I think AI turns that more into a spectrum where it's not just binary, you kind of like pull it out and it becomes a spectrum.
00:44:41 路 Leif Abraham, Julie VerHage-Greenberg, Jack Zhang
And those two worlds merge a little more, and you have the sparring partner of how you invest, how you do research, how assets are being created, and so on. And generate assets, for example, is one of those executions of how we execute on that kind of vision. [00:44:56] S0: Jack, what about you? Close this out. [00:44:58] S1: I mean, for for us, it's really the kind of building that overall business operating system. If you think about some of our customers that are operating globally, they used to use a dozen banks. And to using AI to automate the financial operation, you need to do integration with all these a dozen banks, and every bank has different data points, different standards, and just make it extremely hard for the agent to perform autonomous finance options, autonomous finance operations. Where using AirWallets, they able to standardize the data layer, able to consolidate all the money in apps and money out apps and all the treasury in the middle to a single platform. And then we have all the business operating system and working together with AI to automating these workflows for you. I would say that's the biggest innovation we we we have this year, and we're really working really hard to launch this product before the end of the year. [00:45:53] S0: Amazing. All right. Well, thank you so much for joining me guys, especially both of you have crazy busy schedules. Life, you are on holiday right now. And Jack, I'm gonna have you back in 10 years or less to talk about what it feels like to be bigger than City. You heard it here first. [00:46:08] S1: Yeah, there.