Mason Borda, CEO of TokenSoft: Is Programmable Code a Security?

Mason Borda is the CEO of TokenSoft. In this conversation, Mason and Anthony Pompliano discuss the framework he uses to think through digital securities versus non-securities, what TokenSoft does, what it means for a security to be programmable, and what most people don't understand about digital securities. ----- Curious about Cryptocurrency but don’t know where to begin? Storm Play is a free and fun way to start earning in exchange for you time. Simply download, register and discover microtasks that meet your interests and be rewarded with Storm Bolts. These Bolts can then be converted and withdrawn into your favorite cryptocurrency, including Storm Token, Ethereum (ETH) and Bitcoin (BTC.). Earn cryptocurrency rewards by playing new games and trying out cool products! Download the app to start earning crypto here! https://bit.ly/30pSxh9 (Available for iOS and Android). ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off. Mason Borda is the CEO of Tokensoft. In this conversation, we discuss the framework he uses to think through digital securities versus non-securities, what Tokensoft does, what it means for security to be programmable, and what most people actually don't understand about digital securities. I really enjoyed this conversation, and I hope you do as well. Are you curious about cryptocurrency, and you don't know where to begin? I've got a great way for you to try. You can use Stormplay, a free and fun way to start earning in exchange for your time.

• 0:46Anthony Pompliano?

  That's right, you don't necessarily have to make a financial investment to begin. You can simply download, register, and then discover these microtasks that they present you that meet your interest, and then you're rewarded with these Stormbolts. The Bolts are then converted and can be withdrawn into your favorite cryptocurrency, including the Storm Token, Ethereum, or my favorite Bitcoin. If you go and download the Stormplay app today, you can earn cryptocurrency rewards by playing new games and trying out cool new products. It's worth a try, and it's a great way to get started. Remember, go check out Stormplay in the App Store today. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management.

• 1:31Anthony Pompliano?

  You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. Alright guys, bang bang, I am here with Mason. Thank you so much for taking the time to do this.

• 1:50Speaker 01

  Yeah, thanks for having me.

• 1:51Anthony Pompliano?

  For sure, alright. You have been hard at work in the digital securities and tokenized security space for quite a while now, so maybe before we get into all that, let's start with your background and kind of how you got here.

• 2:04Speaker 01

  Yeah, so I got into the, I guess, the crypto space.

• 2:13Speaker 01

  When I was, I think it was 2013, me and my friend from high school wanted to start a payments company. And as we went into that journey, we learned about Bitcoin in sort of a deeper sense. I've always heard about it and had friends that invested in it, but dove into the tech for the first time. So there, we decided that Bitcoin wasn't going to work. And we thought it was too slow, it took too long to clear a transaction. And we also thought that the price was moving around too much. So we started a company

• 2:50Speaker 01

  that was basically using a fork of Litecoin to provide infrastructure for a dollar-based blockchain. And so that was sort of the entry point in learning how to develop and create wallets and indexers and all that stuff and applications on the blockchain. And then from there, went to a company called BitGo, worked there for a couple of years. And how we got here was, if you look at the, just the origin of the space with Bitcoin, the first application of a decentralized blockchain, it was people creating wallets,

• 3:33Speaker 01

  people creating exchanges or ways to purchase Bitcoin. And the space was traditionally trying to start, trying to figure out how to get packaged into regulations. And so those were banking-style regulations. So in the US, you have to have a money transmitter license if you want to hold someone else's Bitcoin. And it was just the industry figuring out how to like, package into those regulations. And so that's why there's a lot of client-side Bitcoin wallets, where the company doesn't have custody of your funds, you have custody of your own funds, which is, which is okay.

• 4:09Speaker 01

  One thing that we saw starting in 2017 was, so people have been trying to issue their own assets on a blockchain for a long time. The first notable crowdfunding was when Eric Voorhees tried to fundraise, I think it was on Bitcoin Talk or Reddit or somewhere, for Feedz2birds, an application he was working on at the time. And so this thing started to take off and we saw a lot of these sort of crowdfunding on the blockchain in 2017. It wasn't until the summer that we saw major law firms start to package these into securities regulations.

• 4:51Speaker 01

  And so that's when I saw a shift from, okay, all the infrastructure that was being built in the space prior was getting packaged into banking regulations. If this is going to be sort of a new era of securities regulations, there needs to be infrastructure that supports that. So we started the company around the summer of 2017 to help issuers of these digital assets on the blockchain comply with the applicable regulations. And so that became sort of a conglomerate of banking and securities and tax regulations that companies need to follow. And that's when we started the company.

• 5:31Speaker 02

  Got it. And so let's take a step back before we really dig into TokenSoft and just talk through this framework between digital securities and non-security digital assets, right? How do you think about the difference between the two? And is there a specific framework that you use to kind of categorize assets when you see them?

• 5:53Speaker 01

  Yeah, so as a technology company that services issuers of these digital securities, for all intensive purposes, we assume they're all securities. And so that's why when we started the company, we sort of set out for a search of sort of the most conservative securities lawyers from reputable law firms in the space. And the reason was, we wanted our clients working with the most conservative securities lawyers. They were taking the most conservative interpretations. And so... How do I think of the difference? So for the clients that come to us, they're all securities. They're all issuers of securities.

• 6:34Speaker 01

  But for digital assets, I think one framework is, so if you look at things like Bitcoin and how that came to fruition, it was a piece of software that was put out there that people could download and by performing some sort of work, they would get paid for it. So that's just like going to work every day and getting a check, right? You can do that and you can also set up your computer, mine Bitcoin and collect Bitcoin for that work that you do. So I think how the digital asset comes to fruition is one differentiation that's interesting to look at. For these securities, people generally take in money.

• 7:17Speaker 01

  They promise to create something or do something, just like when you fundraise for a company, you take in fundraising from venture capitalists and you promise to start a company that's doing what you told them you wanted to do. So I think that's perhaps one framework where there is fundraising involved and a promise to do something, but a securities lawyer will tell you in much more depth and color the nuances that go into that. But that's sort of, I think, maybe one high-level framework that could be helpful.

• 7:49Speaker 02

  For sure. And so what's your general take? You mentioned a couple of times the kind of conservative lawyers and the regulatory environment. What's your take in terms of how the technology companies are looking at this and where regulators are in terms of education?

• 8:09Speaker 01

  Yeah, I think for any startup in the space, it's important to sort of realize that the technology that we're building is completely new. We're essentially creating sort of capital markets from scratch on the blockchain. And so these things, they're gonna, and it all starts the same way. It's sort of a developer that has an idea, implements that in the technology, the technology gets some adoption, people start using it. People want to start making applications so other people can play with it as well. And then they start companies. And when you have a company, that's when you start to do a little bit more due diligence and say,

• 8:51Speaker 01

  and then speak to lawyers and say, hey, what are all the regulations that I should be worried about? You know, I'm doing X, what are all the things I should be thinking about? And so I think, you know, how do you think of the space? When, when we started the company,

• 9:08Speaker 01

  we sort of saw the space moving forward as, in the regulatory environment, as one that was going to figure out how to package the technology into existing regulations. And so there had to be a mapping. We don't, so I, I, I in the company don't necessarily share the view that regulations need to, need to change. Our role is more so to figure out how to package these issuers into the existing regulations. And so that's sort of the perspective that we came in with. We also expected regulators to pass guidance as they learned about how this technology was working and, and learned about how,

• 9:50Speaker 01

  how to sort of hedge risks. That's, that's what regulators are for at the end of the day. They're, they're there to reduce the risk when people are functioning in the market. And so when we started the company, we saw sort of the Dow report come out towards the end of the summer. We saw a little bit more guidance start to trickle in late summer again. But then we, we operate globally and so

• 10:15Speaker 01

  we saw Singapore's MAS pass the financial regulator there, pass regulations or pass guidance for these blockchain-based issuances November 2017. We saw Switzerland's FINMA pass regulations to these issuers as well on, in February of 2018 and pass additional guidance on the different types of tokens that can exist on the blockchain. Things that are asset-backed, tokens that are just used for payments and networks, things like that. And then GDPR came into effect in May of 2018. And then something called the CDD final rule went to effect in July of 2018 that also affected these issuers of these digital securities. And so, how should people be thinking about them?

• 11:00Speaker 01

  They should sort of be looking at the space, take the most conservative approach, just because it is very early, and sort of prepare for these regulations to change. So, when GDPR went into effect, all these issuers had to make changes to how they were storing and processing data. And it was very expensive to undergo for us. And so, things, there should be an expectation that regulations are going to change. There should be an expectation that the way they do things today may have to change as well. And so, those are sort of like some of the things that we think about when we're sort of sitting in the space.

• 11:41Speaker 02

  Got it. That makes a lot of sense. And obviously, you guys have a really unique seat in that you get to see kind of the full stack, right? You're looking at both the technology and the regulation, which I think is a unique perspective. Well, how do you think about value, right? You know, so as people are thinking of these, what I call electronic or analog assets, so things that have not been tokenized or digitized, and they want to bring them into this digital world, how dependent is value accrual, the asset itself versus the tokenization or digitization? And what I mean by that is, is there a difference if the asset is in an analog version versus a digital version?

• 12:25Speaker 02

  Or is it really dependent just on what is that asset? Is it attractive or not?

• 12:29Speaker 01

  Yeah, I think, I think the paradigm is actually exactly the same with respect to the asset. So, if we think about it, nothing's really changing about the assets out there. What's changing is the medium in which they're being transferred. So, if we look at traditional financial infrastructure, everything sort of like sits in databases, very well matured. And when I say matured, I mean, it's very scalable, but more importantly, it's also formed around the regulations. So, a lot of that is really baked in and hardened, and it's plug and play infrastructure today.

• 13:06Speaker 01

  What's happened is people started issuing these assets on blockchains is that we've sort of had to build fresh infrastructure on the blockchain. And so we've had to figure out sort of the regulations, we've had to figure out how to package technology into those regulations, but the asset is still the same. So I think for all intensive purposes, people should be looking at this as the exact same market. It's just the technology, the underlying technology is different and that enables and that enables different things that we haven't been able to foresee yet.

• 13:39Speaker 02

  Got it. And I think that that generally fits with what I've seen in terms of just the underlying asset is going to determine a lot of how it fits into the market. All right, let's move on to TokenSoft itself. Maybe give us a understanding of, you know, where you guys started and how the company's evolved today and where you are.

• 14:00Speaker 01

  Yeah, so we started the company in sort of late summer of 2017 and there were sort of two things that triggered the company starting. So if we if we look back at the space, it was companies that were trying to figure out banking regulations. So how do these wallets and exchanges plug into the existing regulations? And a lot of them, you know, had to get set up as money transmitters or trusts and able to hold assets for other people. A lot of the wallets basically were structured as non-custodial wallets, so they didn't have custody of other people's assets. And so in 2017, we saw major law firms start to package

• 14:43Speaker 01

  these digital assets as securities offerings. And so one one signal for us was, okay, there are major law firms that are agreeing on what regulations, you know, these have to be packaged in. And that consensus, I think, is really important because it gives a little bit more solid footing when entering the when entering sort of a new space from a regulatory perspective. And then the other the other thing was we started to see people with reputations start to do these Issuances as well. And that was important because before it was developers that you hadn't really heard about online that were sort of fundraising.

• 15:25Speaker 01

  And now we started to see sort of more serious people start to do these issuances of digital securities. So personally for me, seeing blockchain capital do their own token was sort of one of those, one of those signals. And that made me sort of pay more attention to it.

• 15:47Speaker 01

  The other signal was Brendan Icke from Basic Attention Token and Brave doing one of these as well. And so for me, that signaled the space maturing and it meant that, you know, there were reputable people out there that were willing to put their name to sort of experiment with this new technology. And so those are sort of the two signals that led to the starting of Tokensoft. And what we set out to do was there's sort of looking forward if this was to be a new era under, under the world of securities. There has to be infrastructure that's supporting that. So is it for existing exchanges?

• 16:27Speaker 01

  We sort of saw that as sort of very difficult for them to comply with the regulations for exchanges are completely different in the world of securities. And so we sort of saw sort of fresh ground for us to start a company, build all of our technology and infrastructure focused around complying with securities. Securities regulations globally and then helping other, you know, other issuers get packaged into those regulations. So that's what we're really designed and built for is to help these issuers of digital assets. Sort of structure them as securities offerings and to sort of comply with a, the conglomerate of regulations they have to follow when you, when you issue a security.

• 17:08Speaker 02

  Got it. And, and so as you're doing this, you know, one of the things that you mentioned there. Are these people who very early saw the opportunity and were able to create digital securities? How has that evolved, right? Are there any main differences or evolutions that you've seen from very early on, those first couple, to what you're seeing today?

• 17:32Speaker 01

  Yeah, so I think if you look back even to Bitcoin or Ethereum, it was developers that were experimenting with a new method of transferring money. In this case, it's sort of a new method of moving a security. And so Ethereum was sort of the first company that was famous for crowdfunding in order to build and release their products or their blockchain. And so initially, I would describe it as a space where it was just developers that wanted to work on a project that would take a Bitcoin wallet, take the public address, put it on a website, and announce that they're working on a project,

• 18:15Speaker 01

  and people that were interested in it would put money in. And that sort of became a situation where they would take money in and they would issue their own token in exchange for the money that they took in. And so you would put in Bitcoin, and you would get a token that would give you access to that company's network, for example, or their application. And my first sort of introduction to this was I was working at BitGo, and I was tasked with helping out this startup that came in. And it was called Augur, and they needed help setting up a wallet for a crowdfunding that they were doing.

• 18:59Speaker 01

  And so just hopped on the phone, helped get everything set up. And that was sort of my first introduction to it. And I sort of, I was very curious about it. I was like, okay, this is kind of interesting. This is, I never heard about these guys before. I never heard about this project before. And within the next two weeks, they raised $5 million. And so that's sort of what caught my attention at first. And that's what the space looked like early on. And so as people started experimenting with this, people started asking the question, hey, what if we tied this token to a physical asset? And that just started really happening in sort of late 2017.

• 19:42Speaker 01

  And so initially, these tokens were not asset backed. And it was a very casual industry of developers wanting to fundraise in order to build out their vision for a project. And so this sort of shifted when people started thinking of these within the context of securities laws and they started asking the question, hey, what if we take these traditional securities, attach them to a token on the blockchain and use that as the method of transfer for the security? And so late 2017, early 2018, we started to see a much more mature profile of client come through the door.

• 20:23Speaker 01

  And these were clients that had sort of traditional assets that were securities that they wanted to put on the blockchain. And so I would say maybe late fall 2017, it was a lot of seed entrepreneurs, a lot of career CEOs that were looking at experimenting with these issuances. And sort of late 2018, that sort of evolved to enterprises, institutions looking to experiment with this. So now I think if we look out at the landscape, it's sort of shifted. Initially, it was very informal. The second tier was sort of entrepreneurial, career CEOs and entrepreneurs looking at doing these.

• 21:08Speaker 01

  And now it's very institutional. So it's now institutions asking the question, hey, what if we put these securities on the blockchain? What do we gain from that?

• 21:17Speaker 02

  Got it. And so let's talk a little bit about as that was occurring, right? And we kind of move into where we are today. A lot of people describe these security tokens or tokenized securities, digital securities, as programmable securities. And so maybe touch a little bit on what programmable securities means and what the advantages of that are.

• 21:41Speaker 01

  Yeah, I think one interesting way to look at it is if we think about Bitcoin, Bitcoin, we just passively hold and send, or we receive, hold and send it. And there's nothing more you could do with it. Now that they are securities, we can't really treat them like we were treating Bitcoin, right? We're putting securities out there and with, for example, the equity on your cap table, you may have to authorize more shares later. You might do a round now, you might do a round later, and so more shares might show up on the cap table. There are a conglomerate of regulations that the security needs to follow as it transfers.

• 22:23Speaker 01

  And so because they're securities, we can't treat them as passive instruments like Bitcoin, where you just receive, hold and send it. You now have to be able to also administer it and to enable the issuance of additional tokens if additional shares are authorized. Or if a different round is done for a security for the same entity, but now there are, for example, different, perhaps there's no voting rights. So now these two classes of tokens or shares, they need to be the same token, but they also need to be segregated. And so a lot of these questions sort of come up when we enter the world of securities.

• 23:06Speaker 01

  And now we have a class of asset on the blockchain that is fully programmable, that we can sort of alter the compliance requirements of and the sort of behavior of as we go.

• 23:20Speaker 02

  And so as we can do this, there's obviously a number of benefits. What are there downsides or challenges that you think that introduces to the securities world?

• 23:30Speaker 01

  Yeah, absolutely. So I think some of the challenges that the space is running into and is going to run into is number one, security. So I think a lot of folks in the space aren't necessarily thinking of this with a security-first mindset. Something that was very prevalent in the world of digital assets with Bitcoin, Ethereum, that's sort of lacking today. I think another thing is, a lot of the traditional infrastructure that we need isn't quite there yet because regulators aren't comfortable approving them. And so I think those are sort of two of the things that the space is running into and are going to continue to running into that are sort of important. And it's just the nature of it.

• 24:15Speaker 01

  We're literally rebuilding financial infrastructure on the blockchain. And there's some pieces that are there, some pieces that aren't there, and some pieces that, you know, still need to be figured out.

• 24:26Speaker 02

  And then one of the detractions, right, kind of going along with that is this whole idea of, if I have Bitcoin, right, and you hack me, you steal my Bitcoin, and the Bitcoin is gone forever. I can't call up customer service and get it back. I can't call up the CEO of a company and tell them, you know, reverse the transaction. It's just gone. I think when people hear of digital securities or programmable securities, they are of the belief that, let's say I had tokenized Apple stock. If I get hacked, my Apple stock is taken, I can never get it back. And so the thought process is, you know, why is this better than a world where

• 25:09Speaker 02

  I'm not worried about somebody hacking my Apple stock in the non-tokenized world? Maybe kind of clarify some of the misconceptions there or even, you know, talk about the validity of that statement if you think it's valid.

• 25:24Speaker 01

  Yeah, so I think, I think one good analogy is, so we always try to treat these assets on the blockchain just like traditional securities would be treated. And part of it's regulatory, but a lot of it's practical. And for example, if you have a company and you have, let's say this company has 10 shares and they're managed in Carta. And let's say a hacker does hack in, to use your example, does hack into this entrepreneur's Carta website and now issues half the shares to himself.

• 26:03Speaker 01

  And so like the question comes up is, does that, does that person actually have ownership of the shares? Can they actually get away with that? And the answer is no. And so same thing applies with these tokens. If you have tokens that are sitting in the wallet that sort of reflect the securities in your company, then, and a hacker comes and takes the token, do you as the company owner and the issuer of that security, want to allow that to even be possible for someone to hack into a wallet digitally and to take the shares of your company and to go sell it on a broker dealer ATS?

• 26:45Speaker 01

  And so that's, that's something when, when we're sort of like building in technology, we're like hedging for a lot of that risk. And other concerns that come up are that the same technology would address would be, hey, what if, what if someone is holding my token? And today they've gone through KYC, they've gone through proper investor onboarding procedures. And in, I don't know, a year from now, they show up on a sanctions list for whatever reason. Do I want to, to make it possible for that person to continue to hold the securities in my company? And, and so the answer, the answer for that is similar and, and the answer is no.

• 27:29Speaker 01

  And the technology that enables the prevention of both of those possibilities is also similar. And so when, when we're putting technology out there, we do make all of these securities revocable. And they're either revocable by the issuer themselves or the owner of the contract, or they're revocable by the administrators of, of the contract. So that's possible. And, and so I think that's, those are some of the important considerations to take into place is, you know, this is new technology we're putting out there, but what are all the things that could go wrong? And how do we prevent against them? So. You know, it is possible for someone to steal the token.

• 28:12Speaker 01

  But there is recourse and proper, proper procedures in place to sort of remediate that situation.

• 28:21Speaker 02

  For sure. And then I guess part of what you guys have done here is you've got this like custody and administration, right? And I think you're kind of hitting on that with this idea of it's almost real time. We're streaming compliance, administration, etc. What's the response from the different types of asset owners, right? So are there specific types of assets where this is more important than others? Let's say a for-profit company versus like a real estate asset? Or do you see adoption and interest across all assets for this kind of real-time administration? And security and things like that?

• 29:00Speaker 01

  Yeah, so, so the way we were thinking about it is we, we know the space is young, but we also wanted to just put in the best practices from, from day one. And so one of those things that we did was for any assets that our clients are, are sort of holding or administering, we wanted to make sure they were handled in the most secure way possible. So from, from day one, we built out infrastructure for cold storage multi-sig wallets that could custody and administer these, these digital securities. And so, and the thinking is, you know, if, let's say it's a startup today,

• 29:38Speaker 01

  but let's say five years from now, the market cap of, of, of the tokens that are trading are maybe they're a hundred million, maybe they're a billion or a hundred billion. And it was this wallet that was putting, that was managing the smart contract and had ownership of that smart contract. You know, do you want that to be managed by sort of a hot wallet like, like a MetaMask, for example? Which is great for many things when it comes to a more, you know, consumer interface. But when it's the tokens on your cap table, you probably want them administered in the most secure way possible. And so I think that's, that's something that's just really important to, to sort of keep in mind is this,

• 30:22Speaker 01

  it is early, but that doesn't mean we should sort of sacrifice best practices that we've learned from, you know, the last 10 years of, of building on, on Bitcoin and, and other digital assets. I think. I think the other thing is, um, uh, the, the other sort of like facet of all of this is a lot of these compliance requirements, we're sort of building into the smart contracts in a preventative nature. Um, it's really easy to accidentally break the law with paper contracts, right? We don't always do all of the due diligence that we need to do when, um, we are doing a secondary sale of, of these securities. And, and so, and, and sometimes there's international considerations.

• 31:05Speaker 01

  Um, sometimes these securities aren't supposed to flow back from outside of the U S into the U S. And because we can program a lot of these compliance requirements into the token, we can actually make transfers, for example, from outside, outside of the U S into the U S, um, sort of, uh, preventative. And so we can have the blockchain enforce the restriction that, hey, these, these tokens should not transfer from outside of the U S into the U S for a certain period of time, or perhaps for a longer period of time. And I think that's sort of one of the interesting things is, um, the traditional world of, of finance is very passive when it comes to compliance and regulations.

• 31:49Speaker 01

  And as a result, they're subject to a lot of fines. Um, and these regulations sort of pass every, every 10 years, there's new regulations, um, that have different compliance requirements, like, like Dodd-Frank, um, on the finance side, uh, there's GDPR on, on more of the technology privacy side. Um, and for the first time, we can sort of make these compliance requirements, um, and, and enforce them with a preventative solution versus a passive solution. One where these companies are traditionally subject to a lot of fines. So I think when it comes to the administration, I think a lot of the back office, uh, automation and processing is, is really fascinating in terms of the cost savings and the preventative nature of it as well.

• 32:35Speaker 02

  Got it. And so where do we go from here, right? Like, one of the key questions I have that I think you probably have a unique perspective on is, I came out maybe just by a year ago now and said, hey, I actually believe that regulators are going to demand or force people to begin to digitize their assets at some point in the future. I don't know if it's a year away or 10 years away, but very similar to how they forced the use of Edgar, right, and they mandated it, or the use of XML technology so that the machines could actually read the data. This idea that you could be proactive in regulation and compliance and prevent people from doing things that they otherwise shouldn't, or rules prevent them from doing, seems like

• 33:19Speaker 02

  a good idea. It actually makes the regulators' jobs easier. Is that a world that you see where it's almost top-down mandate to move to this? Or do you think it is much more kind of bottoms-up, the asset owners will slowly adopt it, and over time, maybe we reach some level of penetration in the market?

• 33:36Speaker 01

  I think, yeah, so I think practically speaking, you know, should the regulators want to mandate this technology, I think, once they understand it a little bit better, and they sort of understand what's possible with it, I think that it does make a lot of sense to make a lot of these transfer restrictions and things like that automated and preventative on the blockchain. And the reason is, if all of these transfers are on the blockchain, they're also very easy to audit. It's very easy for a regulator to come in and say, who are all the people that are holding your token or your securities, and what are all the transfers, right?

• 34:21Speaker 01

  That's very easy information to get, because now we have a globally shared database with a single data model, essentially, and so we can pull out this information very easily, and it's time-stamped, it's audited, and these are all things regulators like. They like information that's easy to process, understand, and capture.

• 34:41Speaker 01

  And so I think that's that's really important. So it's really easy sort of to sort of sniff out bad actors in the space, just because the blockchain does hold the source of truth of what's happened, what hasn't happened. And also, I think, you know, because we're building technology from the ground up in the space, there's an opportunity to sort of package in best practices and a level of automation that didn't exist before. So and these like banks and financial institutions, they have 20 or 30 plus different databases from different technologies that they've sort of adopted over the last, I don't know, 30, 40 years. And now there's the opportunity to sort of have everything beyond modern

• 35:25Speaker 01

  technology be a lot more accessible and be very, be a lot more presentable as well. And, and, you know, at a faster, at a faster pace as well. And so I think, you know, should regulators mandate that everything moves to the blockchain? I, I think, I think they definitely should. I, I'd question, you know, I think the, the, the banks definitely have a big pocketbook to, to play with when it comes to preventing things like that. And I can see them either working to prevent that over the next five years. But definitely until they have a competitive, you know, perhaps until they have a competitive advantage and they can actually deploy the technology effectively as well internally. So I think,

• 36:10Speaker 01

  I think that makes a lot of sense. And I think that regulators should welcome the issuance of these securities on the blockchain, just because of those benefits that they, they gather from the transparency.

• 36:20Speaker 02

  Got it. No, it's really interesting way to think about it. All right. Is there anything else that you're kind of looking out and you say, you know, again, whether it's one year, 10 years out, that you think are just maybe not even foregone conclusions, but you really see as this should happen or this is likely to happen in this space?

• 36:37Speaker 01

  Yeah, I think if we look at it like really globally, if we, if we zoom out, I, I think right now our financial services and products are very locally scoped and a lot of that's regulatory. And some of that is because of time zones. And I think there's, there's really two benefits that we capture from, from building all these financial products on, on the blockchain and I think, and a lot of that's just from the technology, the underlying technology. And so with, with, with things like Bitcoin, obviously, there's a lot more characteristics,

• 37:19Speaker 01

  right? It's peer-to-peer, it's global, it's 24/7, but it's possible to use it in a manner that's, that obfuscates your identity. It's possible to, you know, to use it without ever identifying yourself. And there's a host of other sort of characteristics that come with Bitcoin. And then if we look at, and one is, one is decentralization, but we look at the world of securities, and if we package these securities on the blockchain, not all those characteristics sort of travel. And so, but the two that do that are very fascinating, I think, are the fact that the blockchain operates 24/7, and that it's globally accessible.

• 38:02Speaker 01

  And a lot of these underlying features in the technology sort of map into the products and sort of the user experience at the top. And so with, with securities, now that we're putting them on the blockchain, what are sort of the two paradigm shifts and sort of like, how is this industry going to form moving forward? So I think number one, because it's 24/7, people around the world can now access these digital securities around the clock. And with, with traditional markets, they're usually nine to five, and the activity sort of tapers off outside of that. And with, with, with the blockchain, this thing can settle 24/7. The other interesting paradigm shift that sort of the blockchain brings,

• 38:47Speaker 01

  I think, to the world of securities is the fact that we can, basically what we've done the past couple of years with the help of these, these securities law firms around the world is automate the compliance requirements as these securities are being transferred from one jurisdiction to another jurisdiction. So there's about 50-plus jurisdictions where there are securities laws that apply to these blockchain-based assets, and where, you know, Bitcoin or secure tokens aren't illegal. And so the past couple of years, we've basically automated a lot of compliance requirements

• 39:29Speaker 01

  for transferring these securities from one jurisdiction to another. So I think another benefit that the blockchain has sort of enabled or elicited out of the infrastructure today is the fact that we can automate the compliance requirements globally. And so you have two things that are sort of converging. One, that these securities can settle 24/7, and two, that they're globally accessible. So I think the next 10, 20 years, we're going to start to see emerge sort of a global financial fabric that's interconnected, that never sleeps, and that everyone around the world now has access to. And I think that's going to lead to a lot of very fascinating sources of growth, but also applications as well.

• 40:13Speaker 02

  Sure. So before I finish up, I always do a rapid-fire set of questions. What do you think the most important company in crypto is other than TokenSol?

• 40:22Speaker 01

  Bitcoin.

• 40:24Speaker 02

  I like that answer. I like that answer a lot. What would you say is the one regulation that you would change or improve if you could?

• 40:33Speaker 01

  I think this is more personal. I think a lot of the privacy regulations that are coming out, there's GDPR, California is going to have their own set of regulations come out as well. I think those are very helpful for an industry or for a technology sector that's grown very large on its own and has sort of operated in an unregulated manner. So I think privacy regulations, definitely.

• 40:57Speaker 02

  Got it. What do you think your most controversial thought is? Like, if you said it, then most people would disagree with you.

• 41:03Speaker 01

  Two years ago, it was that you had to follow securities laws if you were issuing a digital security.

• 41:14Speaker 02

  The fact that that was controversial is pretty crazy.

• 41:17Speaker 01

  Yep.

• 41:19Speaker 02

  What's the most important book you've ever read?

• 41:21Speaker 01

  Uh, most important book is Why Nations Fail.

• 41:25Speaker 02

  What was the takeaway from that?

• 41:27Speaker 01

  Um, it's, I think, so it talks a lot about extractive economies versus inclusive economies. Um, and, you know, extractive economies are ones where a central party can extract the wealth from the others. So you can think of like an oppressive government as one that does that. Um, and I think, uh, inclusive economies, ones where everyone wins. And I think, uh, Bitcoin and, and other technologies that are similar have really enabled, uh, that, that's sort of an economy on a global scale.

• 41:55Speaker 02

  Very interesting. I haven't read that. Maybe I should. Um, let's talk, uh, before I let you ask me one question to finish up, I always ask about, uh, aliens. Believer, non-believer?

• 42:05Speaker 01

  I think that there have to be aliens, maybe not that close, maybe a little bit far, uh, and, and inaccessible to us. Uh, they definitely have to exist. Uh, do they exist within the planet Earth, or have they entered the atmosphere? I, I think it's unlikely, um, but they definitely exist somewhere.

• 42:26Speaker 02

  It, uh, I don't know if you saw recently, there was this article, I think it was in the New York Times, but they don't hold me to that, that was talking about, um, military pilots now are starting to talk about, you know, like unidentified objects that they've seen. Uh, and it's pretty crazy, right? You know, obviously the, the whole caveat is like, they don't know what it is either. Um, but just the idea that there are things flying around, forget alien, you know, related, uh, in the air that we don't understand, um, you know, kinda makes you feel small in the world.

• 42:55Speaker 01

  I, I, I think if, yeah, if, if like people like us were able to sort of come to fruition and, and exist, I think there's a huge chance that that happens somewhere else. And whether they're like entering our airspace or not, like, who knows? But there, there has to be other sources of life somewhere else. If, if like, you know, if, if Earth was able to come about.

• 43:17Speaker 02

  For sure. Uh, what one question you have for me?

• 43:20Speaker 01

  Uh, why, why don't you, why don't you retweet me that much? You never, you never retweet anything I say.

• 43:27Speaker 02

  I can do that. I didn't even realize that. I actually don't really retweet people that much at all. And it's this weird thing where people are gonna kill, I will say any names, but there are some people who will like tweet and then they'll DM me the tweet and be like, yo, can you retweet this? And I'll do it every once in a while, right? Especially if it's like a company we're invested in, etc. But I'm always scared because I then like get caught up in all the replies to the tweet. Because when you retweet, somebody replies to that tweet, then like you're keep getting tagged. So like I just don't do that much, but the next good tweet you have, DM it to me and I'll definitely retweet it.

• 44:09Speaker 01

  Yep, might as well show my account while I'm on here. So that's the only reason.

• 44:14Speaker 02

  I was just gonna ask, what are the ways that people can follow you in TokenThaw?

• 44:20Speaker 01

  You can follow me on Twitter. My Twitter handle is Masonic underscore tweets. And you can follow me on there. And please make sure to read the satirical disclaimers up top. Because they are enforced.

• 44:39Speaker 02

  I think that's the first thing I've ever heard you shill. I'm impressed.

• 44:46Speaker 01

  Yeah, so by the way, my Twitter account's only available to accredited investors. So if you're not an accredited investor, please don't follow me.

• 44:55Speaker 02

  All right, man. Listen, I really appreciate this. I think that you've got this unique perspective. And you have been a voice of reason in a lot of the chaos for quite a while. So please keep doing that. And shoot me the next tweet, I'll retweet it. And I'll have to just get in the future.

• 45:14Speaker 01

  Cool. Thanks so much for having me. It was a pleasure.

• 45:16Anthony Pompliano?

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• 46:00Anthony Pompliano?

  If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening, and see you next time on Off the Chain.