Tokenization: The Next Wave of Mass Adoption?

Transcript

so once again i mean welcome uh everyone to the crypto valley association virtual series uh titled tokenization the next wave of mass adoption so i'll be your host uh this evening and we'll be moderating our extraordinary panel of industry leaders so we have stefan mayer co-founder of fqx patrick stetler head of sales ema of stx and cloud scanning ceo of digi shares and of course none of this could be done without the support of our very own co-executive director uh nikki zizani who's in the back end here helping us uh coordinate uh everything as well um so we have just under an hour so i propose we just dive uh straight in i'm sure everyone is joining uh slowly but

surely um so let's kind of get get started maybe uh stefan if you'd like to kick us uh off today and you can provide a short introduction about yourself what got you involved in the digital space and maybe a little bit about fqx as well super thanks happy to do so so i'm uh stefan i'm sitting at the moment on the mount triggy i hope that the connection is nonetheless fine i'm based usually in zurich i'm an attorney at law in switzerland i've been working a couple of years in the insurance industry and then i moved back to academia for a phd on a blockchain and securities law so how can you optimally tokenize assets from a legal perspective and i completed this 2019 and i've been working now in the

meanwhile five years with mme's dlt team also mostly on tokenization projects from blockchain based equity to derivatives to kind of real estate in dubai so quite a broad range and as of 2019 i co-founded together with three colleagues fqx so we are a swiss based but now in the meanwhile a global company with around 25 employees and we are focusing on one of the most traditional and standardized debt instruments so the promissory note and we have built an integrable so-called e-node transaction engine allowing uh to create those instruments and this enode transaction engine can be

integrated into any financing platform so we have now the meanwhile for example a leading european money market platform having integrated e-notes a new crypto uh stable coin landing platform and then it in very short it usually always works usually works in a similar manner you have negotiation on a financing platform as soon as the parties agree to a transaction and it's very similar to a paypal check out uh so with the only difference that the result is you issue a tokenized so-called e-note and the c-note can then be stored either on a dlt or if for example within csds and here we are working closely together with uh

specifically sdx and we have a very nice and promising model how you can then bring those e notes into sdx uh maybe as a last remark and but then i've already talked a lot i'm also leading uh i'm lecturing at two swiss universities on the intersection of blockchain in law i'm meeting at the university of lucerne the master course on blockchain and smart contracts for the law students and then also from time to time met tawi and of it said with this happy to hand over to my colleagues stephan thank you so much uh for all of that and really looking forward to discovering more about the e-note and also your collaboration with sdx maybe that's good uh transition uh patrick if

you'd like to tell our audience a little bit about your yourself and of course the company yes uh thank you cheers um patrick simpler my name i'm uh with sgx now for three years i have a background in capital markets for 25 years so you'll see and i've got some gray hair that means i've been here for a while um so i'm actually one of the traditionalists i would like as i would call myself but uh at the same time i'm a very curious person and i believe in actively shaping the future so i always believe that what brought us here won't bring us there i was in trading market making uh for many years originally and i i in my time in capital capital

markets i was also in sales and structuring for for quite a quite some years and during that time i was also involved and actually called building and co-architecting several platforms around um investment structuring and automation and i was always a strong believer in doing things better faster cheaper or actually and more efficient to get better qualities um out of on for clients then um at some point in time i just realized that the technology part of thing was going to change substantially with the advent of the dlt blockchains so i i strongly believe that these new

technologies will over time no not very easy to predict how quickly and in what sequence but these technologies will change the way banking the capital markets work and therefore i was um you know joining sdx three years ago because i thought that's that's really a key project and a key endeavor and therefore at sdx i'm very happy to be there i'm heading the sales and relationship management team and i have the pleasure and honor to work with capable people like stefan and his team and his group and we see a lot of things and i'm very happy to let's say represent one fragment of the

entire market which is so big and so colorful and and and uh no dizzying so um happy to be here thank you of course well thank you and hopefully we get a chance in this in this hour to explore some of those uh colors uh as well but before we do a klaus please uh if you would like to introduce yourself as well yeah great great place to be here today and looking forward to the discussion my name is klaus i'm the ceo of ddcs i also have a background similar to stefan i was a re researcher to begin with i have a phd in computer science but i went into business quite soon after that i wasn't so happy in academia so i i actually i joined julie packard

hp for some years as a kind of technical lead on a project and took that to become a spin out of of hp and was the ceo for that for more than 10 years and that sort of became my first company on my first exit and then since then i've started another three or four companies and ending with this company ddgs founded that around four years ago and taking it now to around 30 employees and quite good business traction so i i bought my first bitcoin in 2014 and that was sort of my entry into this space here i i think i paid 200

dollars for it or something like that and i didn't tell my wife because i was afraid she still think i was a complete fool but i i told her later when it increased in value but unfortunately i bought only one but it it it allowed me to start interest start an interest in the blockchain space and to slowly learn more and more until i i stood basically without a job around five years ago and looking for new career opportunities so i i basically selected the blockchain space as a kind of career path for me and started together with some good friends to look for business opportunities and places where we could make a difference and add value so we actually started different projects but eventually found

out that providing infrastructure for tokenization might be a really good niche to focus on when we started four years ago there weren't really any good providers in the space the solutions were really really simple and we thought that we could potentially do it better um so um so we we we founded digices and basically as a kind of infrastructure technology provider to organization space we we have a focus on real estate most of the tokenization products we do are with real estate developers but we also work with our other assets today but but the the basic value proposition that we approach that we try to resolve is to assist the real estate developers

to modernize and digitize and automate their internal business processes in relation to financing new projects uh and the corporate management of the standard group over time and then we also help them to make their assets much more liquid in in different ways one is through our own internal marketplace for trading internally within each project another angle is to collaborate with exchanges such as such as sdx right so tokenize on our platform and then list it on on an exchange like sdx so that's that's what we are working on we have around 60 clients now and we see huge demand so even though tokenization had has taken some time to to take off now

it it really is taking off we see a very strong demand and and it's been growing i think steadily for the last two years or something like that yeah i'll stop there so i guess like well yeah no thank you and yeah really looking forward to hearing more about where that demand is coming from um as well so um as the audience have been able to see i mean we have some incredibly bright minds speaking today so uh feel free uh to start picking their brains at any moment if you want to write any of your questions uh in the chat box below and i'm sure we'll be able to tackle uh them in in due course um so maybe because you can kick us off here and to my belief i mean a good one would be to

shed some light on some of the differences in terminology here i mean we talk about tokenization digitalization and the likes i mean are those two synonymous so they have different meanings maybe you can you can help with this a little sorry tokenization and what was the other term uh digitalization yeah yeah good good question um so so digitization is is everything you do to to to digitize a working process right our workflow so just you could say the electronic signing of of a document or a contract is a digitization of a work workflow or work process tokenization goes much further than that

right so we are basically building on top of securitization which i think was was very popular some some years ago where you you you have an asset an underlying asset like a real estate property a hotel a hospital or some villas then you you basically create a legal unit that owns these properties so you can actually issue shares corresponding to the ownership of those assets and that's securitization right the next step then is to to digitize the cs you can do that using yeah many different properties like in exchange or in a bank and so on you can digitize the shares and you can work with them in in in a digital manner but now we're tokenizing them that means we are

actually representing the shares with tokens so you can have the token in your own wallet you can keep it in custody you can have it traded on exchange you can use it as collateral for default lending but but essentially the share at the end of the day is represented by a token which gives you a lot of benefits because you can then you can self-custodian and you can transact on it with it yourself in a peer-to-peer fashion with other counterparties right the blockchain technology allows you to do that extremely efficiently and in trade without counterparty risk and and so on so there's a lot of benefits fantastic um stefan i feel like you want to jump in there to highlight what klaus said i think one main character characteristic of

tokenization is to create unique riverless electronic records so that's a difference to just digitize it you create a unique electronic record which is able to exclusive control so you can i as a holder of this electronic can exclusively control the instrument and i can also easily transfer the instruments by transferring the control and i think this is this makes it a very elegant technology and basis in order to transfer any type of asset from securities to other financial instruments to real estate as we heard or to art or or uh or other use cases thank you thank you stefan um and and

maybe uh steven on that note and uh through f2x that you just recently uh mentioned before the release of enote which is based on blockchain technology you can tell us more about that innovation and the importance of it as well yes absolutely so what we are leveraging is one of the the oldest most standardized legal instruments in the world the promissory note which is an unconditional promise to pay in german for the german maybe one or the other german person here it's the so-called eigenvector so the instrument almost died out because you had the legal requirement needing a paper based certificate and a handwritten signature nonetheless you have from a legal and accounting perspective you have a lot of

advantages coming out of this instrument and what has now obviously changed in the meanwhile is that the legal base is allowing now to issue those instruments purely electronically and we at devkex we're doing this based on either delaware law or singapore law we're also now leveraging the new swiss legislation with the scope is a bit narrower in this regard and then in in essence our main end users are businesses and we have for example publicly listed companies issuing the instrument on the investor side we have institutional investors and buying the instruments we also have for example credit suisse doing transactions by

using e-notes and the charm of the instrument is it's so generic you can use it in loan scenarios you can use it in a more commercial paper like program scenario you can use it as a buyer in order to pay your supplier so then it's a pure payment instrument another credit instrument and that this is what makes the instrument very very appealing and then also it's a globally standardized legal basis so you can use the same instrument in europe in asia in the us and therefore it makes the whole case also very scalable and having done quite a lot of tokenization projects for example if you're focusing on equity

then you always end up with one jurisdiction you have certain uh specific regarding this jurisdiction specific requirements and now focusing on a global instrument uh you can really leverage also the the global access of the of the technology and we started with basing or building up in a private dlt so it was a hyperbatch of fabric dlt we are now shifting towards public permissionless dlts and then we start we just started with solano and we also support other or edm blockchains and then maybe as i lost as a lost point

our users can then really choose the infrastructure on which the instrument should be stored and you can either opt for super modern fancy solana maybe on the one side of the spectrum or you can if you have also maybe more regulatory requirements you can say i do want to have it within a csd and then in regard to csds i think s x is a it's a perfect fit because they're uh very efficient there will also allow a direct settlement of the instruments or not d plus two in a very easy and elegant manner um and so therefore we yeah as i said we're very happy to be able to to work together

with sdx yeah fantastic and maybe we'll talk a little bit about uh that partnership as well maybe kind of let's say unravel some of those maybe kind of complicated acronyms that you just mentioned as well to kind of uh ease it on on the audience uh a little bit so yeah um and so maybe uh patrick you can tell us more about uh this announcement with ftx and sdx and and kind of the importance of six and six's involvement in digital assets as well uh yes very happy to do so i might i would maybe just like to go one step back and just pick up something that stefan brought up something uh that is very important um the the the legal aspects they can only be underestimated when we talk

about tokenization then we tend all right or we tend to think just about it just in technology terms saying yeah i tokenize this i tokenize that technically that is not necessarily a very difficult thing to do however making sure that when you have an asset or others well let's say when you're an equity holder of a specific company then you have to make sure that the token truly represents and holds all the rights that are attached to to that holding right to make sure that you can really exercise your right and that they're undisputably exercisable when you are let's say the owner of that token and

that's not always so simple and it's it's in many cases not a technical question per se because there is still there is law that predicates some things and uh you know that that are that are let's say that this the legal foundation uh for for what we do so the what she often said is that the the um the nodes that are based on a global right sort of that's very very important because that means you can scale it right whereas if you are talking about um asset tokens let's say equity tokens when you look at the the the the legislations

then these legislations actually vary from country to country so there is no such thing as a one-size-fits-all so it means you have to still adapt in some way or shape to local law and therefore and i i just wanted to bring this point across i think technology in many cases is already advanced but um there's there's some boundaries that let's say prohibit the full or exploit the maximum use of this technology because they're still law they're still regulation in some way or shape and uh well that will not go away right and and in in most cases also for good reasons now

with that let me just preach to you to what sdx um decided to do so we are a 100 uh subsidiary of six and we started in 2018 realizing that there is a lot of change to come that will hit capital markets um and and the way things are done the way assets are represented etc etc by design uh you know it was we we sort of determined that we want to be starting the regulated corner right so we could say there is the open blockchain area and there's let's say the the the let's say the permissioned area fully regulated we said we start here uh not claiming that this is the only way or the only right way it's a

way and the reason for that is we wanted to sort of build an infrastructure that um existing uh capital market participants can actually connect in in in in in good faith and so we want to make we want to make sure that we are trustworthy infrastructure that is regulated that has full oversight from our local regulator finma um and by that also demonstrating that we comply with all the security on our requirements cyber risk et cetera et cetera et cetera so that comes at the price that means there's certain things you cannot do and so you have a bit less

flexibility in terms of which assets or acetones you can then bring on the platform but we thought this is worth the price to let's say start with equities and bond instruments or fixed income instruments and start from there and of course there are many other corners or regions on the landscape like the nfts etc etc that we don't have readily available but as as there is a commercial demand from the market we would be adding that of course right but um time will tell and there will be a sequence of new asset classes that we add and um yeah so the and also to maybe close the loop the

the security tokens or the acetogens that uh could be either equities or bond instruments um technically speaking there are these are the tokens on corda platform that we are using legally these are intermediate securities right it's a well trusted legal concept in switzerland um it's a it's intermediate security so if you look at the nestle shares for instance these are also intermediate and security so we wanted to make sure that uh the institutional players in the market feel safe with with what we do and sort of also then uh accommodate them with the accommodate them with the technology that we are building and then over the years then uh

very very likely this will open up and go in many new different or additional ways um harnessing other asset classes uh other platforms etc etc so the and the uh cooperation uh the the work we're doing with fqx is actually uh something that i consider a very good fit because when you look at the asset life cycle there is a point where you do an issuance so when you create a token and then there is trading and life cycle management so there could be coupons it could be dividends it could be anything of that sort right and for some instruments there is a maturity what we do not have actually on our

platform right now is everything that is pre issuance so when the instrument is being designed when you do book building when you do all of that right when you sort of write the prospectus or when you describe the asset and this is exactly where fqx comes in they have a very neat platform and they really complement what we already have right and so that's sort of the key connection and if you think of the fqx platform as a as a platform that really creates new tailor-made assets for specific needs then they could then in a in a seamless step enter the sdx platform where they can be made available for all those that are uh connected to um to sdx

so that was a very long short summary sorry for that very insightful uh really and i think that that bridges well on to to another topic whereby uh of course the digitalization of financial products like these i mean it's important that for this technological revolution but we can't forget kind of real world assets too and i mean plus you spoke a little bit about these uh before and i know they've been working on a lot of real estate tokenization for some time now i mean how does that asset class compare to what we've just uh been speaking about yeah i have to say i fully agree with patrick just today actually okay we spoke to a client and they call us a legal tech company right even though we only have one legal guy and 15 software developers but it just

it just it it just under highlights the point that it's we are so influenced by regulation and everything we do is yeah is is uh is influenced and and a lot of it has to be compliant everything we do we work with insecurity speculation right that so even though we have one legal guy we have 40 legal partners around the world in order to carry out our projects right so it's there's a lot of legal effort going into this and it's also still making it quite expensive to to tokenize in many geographies because there is a legal bill to pay as well in many cases you have to interface with a regulator in a sandbox process or at least to to discuss with them and notify them what

you're doing and get some kind of permission so it's but it's moving forward i would say so more and more jurisdictions are opening up to tokenization that's becoming clear and clarified in in more and more countries how you can actually tokenize so we we like to work in the u.s because it's one big country and the the regulation is the same all over the country so we see the u.s currently as taking the lead in this space if you if you use a wyoming-based company to tokenize you can you can use the tokens in in all the other states and it's a it's a big market so that's also where we see the biggest interest and the the most interesting projects right

um in europe it's a much more fragmented pattern it's a patchwork of regulation in different countries but uh but the the european union bringing in regulation and sort of converging over the next one or two years i think for sure and currently germany taking the lead i think for the most forward-looking regulation in the space and we are we have a germans to sit there so we also trying to be close to what is happening with the law and to be make sure our customers can stay compliant the way that we operate when we tokenize real estate is as early i mentioned to tokenize an sp a legal unit that owns the property and then tokenizes shares of that company

tokenizing the shares is from our perspective the easiest to do right now because the share is is well understood in the regulation and and many regulators or at least some regulators view tokenization as just a way to digitize the share and that's already supported to some degree or even completely in many countries so the token is just one step further where you actually have a token that represents the share it's not equal to the share but it represents the share and it allows you to update the check-up table which is then the legally valid indicator of where where the ownership resides so that we can work with that approach in the u.s in in denmark and in more and more countries um but

but but it's developing all the time and it's a moving target and we have to spend a lot of time on it but i think it's moving in the right direction where the regulators in in many cases choose to see tokenization of securities as just a digital version of the securities really and and nothing nothing nothing special in addition to that close i have a question if i may to let's say tokenize that building directly without the use of this fpv in

the middle let's say okay this is the building and now let me represent that in a tokenized form on ajax are we getting there and and not yet the problem with that is that you have to tokenize then some kind of investment contract around the building linking linking being linked to the title of the deed and also potentially having to integrate with a land title register which is not digital anywhere in the world and you have to convince the investors to to read and understand this very long investment contract regulating value appreciation distribution of income and so on rather than just selling them a share which is a recognized security

we see we see some we see a few companies looking at it this way and i think that it will come in the future right but but it's too early i think now [Music] thank you that's um too early i feel like that's a sentence we've been hearing for the past uh a couple couple of years uh at least i mean uh stephen maybe you can even comment on why you believe it's taken taken so long um and maybe even not so long but i guess the crypto space everything moves so quick so it feels long to to me at least i think one one aspect has been mentioned that there's one requirement then basis which

is needed is the law so especially for security tokens and for tokenizations you as patrick said that you need a proper legal basis otherwise just do it technically it's not sufficient so we needed a while in order to have the proper legal basis and now um i think it's also a bit of a hurdle to convince more traditional businesses for example to use dlt especially in our segment so if you're you're focusing on even the publicly listed companies so it took a little bit of an effort to convince them to shift towards using dlt now in the meanwhile it works

it works very well so therefore this was also a hurdle which we had to overcome and i'm very much convinced that tokenization will be more and more important i think one additional aspect is also that you do you do not only need the title side you also need to de-money side and now we have more and more stable coins we are even discussing uh cbdc and if you have then both the title and the money and you can very efficiently directly exchange the instruments then it's all the more interesting so i think this was also an additional driver we now have and uh therefore i think it's a it's a huge there's a huge potential in various

areas i i absolutely agree really staying it's kind of the edd one main topic in the the more property area i think nonetheless financial instruments in general are very efficient and it just provides a tool to very efficiently and directly transfer assets between a b2b model but also in a peer-to-peer b2c model so you know in a full spectrum um i think the the only aspect which might be a bit worrying is the regulation so we also see now that more and more regulation is coming not all the regulation is going into at least from my perspective an optimal way it's also a lot of

education needed in order to to teach those people then then creating a regulation that they understand how the technology works what the use cases are and we see it then we had the or the european union had the discussion this week there are um projects like the the basel committee um foreseeing very high capital uh requirements for financial institutions holding any type of crypto related assets um we also see more and more regulation at the gateways between uh crypto and fiat so that in the future you might not be able anymore to um switch fiat

it's crypto towards fiat if you're not if you're not based on a fully white listed kyc wallet so here we did there yeah this is the challenge to find the optimal the optimal moment of uh regulation yeah uh but there's a bit i mean uh patrick sdx just well just they got their regulatory approval last september i mean how have you been progressing since that part i mean i'm sure that has opened a lot of doors since absolutely absolutely look the the disgusting environment is a very supportive environment we had that that was quite a long journey

um to actually talk within my and our home regulator um to finally get the approval and they just did the right thing they wanted to understand how we are applying the technology uh making sure that it's it's uh it's waterproof and that takes that takes some time so that was an investment and uh no let's not let's not forget the last time they they let's say approved or gave the approval to an exchange or of that sort that's that's that's probably about two decades ago so right that's not something you do every every week or every not even every year so yes this has opened doors but that has all these platforms and i think as

we figure out you know that's that was just the birth of the baby now there's this potential that out there that we can now start explaining but that's not really um that takes a bit of time so we have onboarded to the platform already credits with ubs and zurich cantino bank and and of course we will be adding uh other other banks or other financial institutions uh for to grow their network so that's one dimension and the other dimension is adding new or actually more products and adding more assets etc etc so that that we just did the star just came out of the gate and uh look the the the requests or the ideas that are coming towards us are

actually enormous and super interesting we just talked about the d note before and what i realize is really there's now a bit back to tokenization when you look at the the uh blue chip equity markets for instance there is no that interest is not really that high at least not for now because these markets are already highly efficient and highly estimated straight through um and yes there can be there there's still a couple of things that can be done better more efficiently like the corporate actions handling and these kind of things but that will take some time but um these markets on the trading side there

are um facilitated in in sub micro or sub milliseconds uh time frame so technology that is based on dlt is not yet so at that performance that you could really facilitate you know transactions at this lightning speed so where i see the most interest is really in the private markets area right the things that are not publicly listed or are let's say uh no at least at least less frequently traded so and i think there's where uh technology including us as an infrastructure provider can add a lot of value those areas where we have capital markets not

yet organized that efficiently whereas where things are paper based where they function manually where let's say where you have you're holding on a piece of paper and you're safe but there is no account statement at your bank so there is no not another holistic view on your wealth and all these kind of things and i think these the the private markets be it private that really private equity that's where i believe uh we will see an enormous growth over the coming years very difficult to predict the exact order and speed because we know there is uh though that we have we have an environment that we have and want to comply with but um based on the interest i see uh i i'm

sure that this we are we are going to see a lot that will happen exciting i mean you spoke a lot about the financial institution side right big banks cbs credit suisse sorry cantonal bank but what is your perspective on what the retail audience right in terms of i remember back in the day when i was sold the dream of tokenization it was for anyone anywhere to buy anything right and that being even with 10 francs in their pocket are we approaching a reality like this at any time soon or are these kind of liquid assets going to become liquid only for uh institutions yeah that's a good question look i can now for talking for sdx or the way we are set up at least for now i don't know

how i don't have the crystal ball uh seeing the future in five or ten years from now for now because we are regulated only regulated financial institutions are let's say eligible to connect to this network let's say let's call that through a wallet we call it the node but um that's that's a requirement today that could change over time and it probably will and on the other side you have the public blockchain right where actually everyone could have a wallet in our case because it's a permission blockchain this is not the case but therefore i say this is a starting point um in in sort of this world garden for

now but in a very controlled and let's say high quality and institutional great there is the public blockchain space right where you have a different environment a different community and different ideas most likely over time now these are going to converge right there so the we are going to learn from the public blockchain space and public blockchain space will probably adopt some concepts from the regulated space that have proven as as valid and the speed at which these are maybe going to converge that's open we will figure out and uh and by that maybe let me add the thought that even though the

cryptos are out there for now a bit more than 10 years i mean uh at least in the case of bitcoin when we look at acid tokenization my personal view is all of that is still very early it's still very young right and uh we are not really very far in that journey so i would say all the funny and really interesting things are yet to come okay it's interesting you spoke about convergence right and that you're regulated so you can only deal with regulated uh institutions so are you saying to a certain extent that being centralized in that manner allows you to operate with those entities but then uh for example decentralized exchanges uh some uh projects such as ravencoin for example operating tokenization in uh a

decentralized way allowing the offering for retail audiences will kind of they will have their market on that side and you will have yours and maybe there will be some overlap but the ability to kind of trade these assets will be on one exchange for for some and then on another for another audience type i mean stephanie class please uh jump in or or patrick yourself but yeah just intrigue here but maybe just one thought to do that the on when when it comes to the assets trade on sdx of course on a private investors or carpets they can actually try these instruments just through their banks not directly let's say through their wallet so right everyone that is

connected in that what network uh the private investors they can access these these instruments right so it's um that is open but um you have to be connected to the network in some way or shape i think the other point you brought up um sharas is about interoperability and to me i would say that's the the one million dollar question now and when you think about interoperability also here it's quite easily said yeah let's make this all interoperable let's say let's connect this and this network and then uh then everything will be fine but the devil is really in the detail and when you now think about um you have a let's say an e note just as an example and there will be a there is a coupon

that is going to be distributed now when you have this coupon let's say hop over a couple of networks then you have to you really have to make sure that it really is disseminated in in in just in a perfect way otherwise it could be that some do not receive the coupon others might receive it twice um a part of that coupon could actually disappear in nirvana and then you are bearing a lot of legal risks right so the owners that are expecting the coupon from you maybe on the third network they would then you know hold like a claim probably against someone saying hey you

owe me some coupon what i want to say with that my personal opinion is interoperability until it's really investment right um will probably still take a while yeah i i fully agree specifically in regard to this aspect of interoperability it's a it's a word which is used quite quite often but as you said you really have to go into details in in regards to the the different types of exchanges and also the allowed participants from from my perspective there is definitely room for both on the one side you have sdx which is uh fully regulated providing all these

services relevant for banks those institutional investors you have everything you need you fulfill all your regulatory requirements it's nonetheless very efficient so this is one one segment uh from from our perspective we also provide the possibility to directly issue and uh store the instrument on a even on a public permissionless dlt so for an other type of audience having other requirements which might to directly exclusively exclusively control the instruments by themselves and there you then of course also have other other trading platforms um in regard to to the to the law uh we also see a certain shift there switzerland now introduced

the dlt trading facility is a licensed category uh the difference there with this license is now it's now also allowed to have up to retail clients and investors as participants so we also see this certain tendency from a from a legal uh perspective towards more open more decentralized systems can i comment can i can i comment also on the retail investor angle from from our perspective it's really a no-brainer that the retail investors will come into the space big time as it is right now the retail investors really don't have access to invest into real estate which is our primary focus right

it's i think it's less than two percent of the global population that is invested into real estate but industry reports indicate that it's more than 50 that actually would like to do it they just don't have the the access to it today um it requires in europe like 100 000 euros and upwards if you want to invest in a real estate product and you can of course you can trade a few of them on the exchanges but it's only a very limited amount of of of assets and properties that are available and and typically if you go into a real estate investment party you will be stuck with your investment for six seven or eight years there's essentially no liquidity right so i think this organization um activity that that we are all focused on will resolve that that matter and will

allow the the retail investors to come into the space that they haven't done it yet i think it's more a matter of awareness and education they have to find out that they have the option and they have to have some some goods on the the sales in the stores right there has to be some some some available assets for them to actually invest into and maybe also some successful cases right so it's going to take some time but it'll come for sure fantastic uh well i think we're kind of getting into the core of the webinar today with only just or only or just over 10 minutes uh remaining um which is tokenization going to be the next wave of mass adoption or are there elements uh to that uh i mean maybe the next wave which is a little bit further away but i mean because

before entering uh the webinar we were discussing a little bit about the metaverse and potentially its implication within uh tokenization i mean what are your thoughts on on that area yeah yeah i think the metaverse is a huge buzzword right i would say first and foremost and has been so for a while now but i also think there is something tangible behind it right i think there is a real business opportunity for all of us and there are real use cases also that will will be seen in the future as virtually virtual reality and so on becomes better and better and better so there's no doubt we cannot just ignore it we have to to look at it as a new

way of doing business and as a way to sort of stay relevant and and develop new uh areas of our business so so from our perspective we are looking very much at the idea of creating digital twins of real physical properties and using that potentially as a kind of ownership indicator of the the real physical property we are exploring that together with a few clients so i think this is definitely something we will see more and more in the future um so so yeah so from our perspective it's quite exciting and and and will potentially be be of of real value thank you um stefan please i i can tell

that you're you're going to say that it is the next wave at least i hope so thanks yes um you're absolutely right it is the next wave also what makes it all the more interesting is that it's not only about tokenizing and assets so you're not just digitizing making asset tradable it's you have also below this asset a super efficient infrastructure and tokenizing and assets also lies automation of a lot of processes if you for example tokenize an equity share of a company you can then very easily directly do for example a general assembly all these voting mechanisms if you then start tokenizing for example a fund share you can also build up a

very efficient voting model on the top and then you you really see a much bigger picture and there is a a lot of room and a lot of potential in in this so this is what it was the more or less short yes thank you patrick um i i think the look i i think it's mind-boggling right what's what's lying ahead of us there is just uh so many uh there's still things that could that can happen and but there will be also interesting side effects uh you alluded to that clause when you when you think about the metaverse and when you talk about physical or think about physical things uh maybe one way to look at that

if the the more you are going to tokenize physical assets it could be as small as this pen it could be as big as let's say maybe a car or a painting something that will be required and in this new world where you have more of that tokenization is is is custody right so we we we sometimes tend or we should not forget about these very basic services that on the light is this new metaverse when you are tokenizing things because if you are tokenizing that car or this picture someone needs to make sure that it's being taken care of right because someone else is holding the right to this to this object so i would

say um maybe as a business opportunity also think in this new world but don't forget uh the the the traditional qualities of the stuff we do so even there there could be good business opportunities and uh yeah quick comment to that so there's been a lot of projects done with nfts and and they haven't been taking good care of the custody angle because now we see actually a lot of cases where the nfts are somehow disconnected from the underlying assets because there isn't a careful carefully sought out mechanism for how keeping that link available and and even for making it compliant right so yes i agree very much no very very very insightful and we have

10 uh just 10 minutes uh left now and i mean i did mention that we're like allow our audience to ask a few questions and they have it in the chat box and i'm more than happy to to unmute any individuals they want to kind of join in a little bit of kind of like a zoom clubhouse in a way uh if they have any questions so feel free to ask them in the chat um we did have a few here and i'll just try and like uh pick pick one or two um so we we spoke a little bit about switzerland um klaus you mentioned that you're you've been operating a little bit in singapore and in the us and now slowly into switzerland both stefan patrick were both uh swiss-based uh here kieran is asking um are there any upcoming developments regarding

regulatory finality in switzerland that would be helpful for us to know any anything to look forward to that switzerland is preparing uh regarding um tokenization uh i told tutor awareness not that i'm aware of i mean what was introduced last year was the the dlt registered securities allowing you to digitize tokenize various assets including physical ones um what has also been introduced is the dlt trading facility as a licensed category which is also a useful tool for for secondary market platforms then switzerland also adapted one of the the other additional provision which is just half in practice

like the segregation of assets or crypto assets in bankruptcy proceedings so that we have compared to other switzerland as compared to other jurisdictions but a good legal basis in regard to dlt um nonetheless there are also in switzerland quite some yeah a broader range of questions are still open but it's also a new and highly evolving uh topic no i understand i mean maybe let's flip the question on its head and say there might be some regulators authorities in in the webinar today i mean what if there was something that switzerland could do to become either more competitive or more open to the tokenization world security token

world i mean what what what could they do by at the same time i mean taking into consideration their needs to have some layer of protection etc what would you suggest to them uh if they were right here in front of each name thanks um so from my personal perspective the collaboration with fema works very well so they're very open of course it could take a little bit less time as as always nonetheless they have a very elegant uh procedure and then i think specifically in regard to tokenization we have a really good basis here allowing a lot of tokenization mechanisms and we have even more legal certainty now for tokens representing other assets than for

native and payment tokens so um therefore we yeah so so we had a specific focus on this i think the only disadvantage specifically in switzerland is that there is no passporting if you need a prospectus so there's no passport thing of the european union which is a disadvantage if you have any type of e2c constellation i would actually just i agree with this um i i fully agree i think the the environment we have in switzerland with finma is is super constructive and i think many other countries would envious for that but anything that is about cross-border right um these these kind of things they have been with us and they will remain

with us that that just does not go away so there's only when i from from i would actually chime in with the stefan said there's only so much you can do here um when you actually want to broad branch out of the swiss market and harness let's say the the surroundings then it's always the cross-border aspects that would that will come in and come into play okay understood thank you um and maybe this uh next question uh is for you here uh klaus uh from paul um and it's related to the real estate tokenization i mean who is accountable for the maintenance of the physical real estate i mean you sell the tokens that's all fine and dandy but uh the actual

asset i mean where where does the maintenance come from i mean how is that person paid i mean how does this work in in real life it's the same as in in real life so so again you you'd have some kind of spv owning the property and potentially also having a budget for the the maintenance the ongoing maintenance and staff for that or using a service provider and then you tokenize less than 50 of that property right so you still keep the management of the property in the hands of the of the of the so that's a typical scenario right you can also sell off an entire asset and then of course the responsibility to manage it will cross over to someone else but but

it's similar to to real life it doesn't make a difference to whether you're tokenized or not on that on that perspective fair point uh it's the same virtually or in real life uh fantastic um and so i think john has an another question here okay it's quite quite an interesting one i mean how secure is tokenization and can the tokens be hacked and maybe if i add another caveat to that in terms of if there was a hack and and the tokens were taken uh by some hacker i mean i'm guessing that doesn't necessarily mean that they can appropriate that that piece of real estate so at all i mean at least i hope i mean what is your perspective i mean uh because is it secure i mean how does it

differ it is it is really secure and i can guarantee that the reason is that to have security tokens in your wallet your wallet has to be whitelisted so you have to you have to provide your your id and be go through kyc in order to even keep the token in your wallet the wallet is the token is self-regulating and self governing right so it it just doesn't allow to be transferred into a wallet that is not white listed so so first the thief would have to the hacker would have to be whitelisted with a wallet to be able to receive the token or somehow transferred into the own token and even if that was possible with a fake identity or something like that the the manager or the issuer can still override it and burn the tokens and

reissue them to the correct wallet this is required this you can't do this with bitcoin right but you can do it with security tokens through because they use special protocols that allow this functionality and it's required by law because it's a security okay hopefully there's no rogue property owners that just uh sell the asset and tokens and then decide to burn everything and keep the keep the asset um but i do understand john's skepticism here in terms of you know when it comes to kind of tokens you know everyone or a lot of people that i know that that bull bitcoin is like god it's not really tangible it doesn't exist how can i really trust this right i mean stephen patrick do you have any thoughts on kind

of like how like tokens representing real assets can kind of portray themselves in a more trusted way to two audiences that might not be aware of some of the things klaus mentioned i i think i i agree in in regard to what uh what claus said it's it is a very secure and sick it has to be secure on a on a technical layer just to be secure on a legal layer and then if you combine these both aspects then then you have a very very good basis and as clients also said if you're dealing with asset tokens or tokenized assets

then you have more possibilities also if you for example lose the asset in certain laws as for example the swiss law there's even a specific procedure for seeing a so-called annulment of the instrument that you received in a new one so here in in this area of assets it's uh even even more secure compared to uh other more native uh digital assets okay very interesting um and that's it what we're just about to to wrap up here i mean uh thank you so much for for taking the time so i think some really interesting insights i hope uh our audience was able to to benefit from all of these um do any of you have any closing remarks for our audience uh

today that have been listening so attentively to what you've had to say i already provide in mind that we will see a major increase in tokenized assets so i'm looking forward to it i think yeah very brief for me i think it's important for anyone if the startups but also institutionals larger companies to be exposed to this and try to learn what it is about and make form a business strategy around it to avoid getting potentially disrupted in the future my words close thank you for that well great uh ditto and it's been

amazing uh once again having all of you so thank you so much for for joining uh one of the crypto valley associations virtual uh series uh to the audience hope you really enjoyed the session here today i definitely uh did and we'll have more sessions coming up in in the following weeks and months and of course the crypto valley conference uh that is going to be in a few months time so make sure you uh you listen out for the announcements related to that and everything uh that is to come but uh yeah in the interim uh have a great evening thanks once again to claus stefan and patrick for joining us uh today thank you very much thanks a lot thank you thank you guys evening good evening