Edwin Mata on security tokenization and bringing companies on-chain

0:00i'm ashton addison from block west capital for investmentpitch media and today on the Crypto Coin Show we have edwin mata co-founder of brickin working on stos bringing companies on chain and furthering tokenization of securities into the blockchain world edwin welcome to the show and thank you for taking the time yes of course thank you very much

0:22ashley for having me here it's been it's a pleasure to be in your podcast and honestly it's also a pleasure to be speaking about breaking and how we're dealing with securities and tokenization which is a space that is growing i mean there's been a lot of buzz in the back and since 2016 2017 and companies like us we're trying to still deal with

0:42what is the concrete way to approach the space and i think we actually hit it here yeah i'm really looking forward to hearing about you know stos and tokenization of securities because you're right about you know it going all the way back to 2016. i remember in 2018 it was supposed to be the year of security token offerings and i think

1:05that the they were probably ahead of the regulation because there definitely was not as many token offerings as i thought there was going to be and still it's an up and coming in part of the industry but it really hasn't taken shape in what i expect most companies to eventually become tokenized on the blockchain so what insights do you have onto the

1:32landscape and where stos and security tokenization sort of is at right now in 2022 yes of course i mean let's say that the regulation per se didn't evolve but the comprehension regards security indeed because one of the biggest aspects was actually the governing bodies such as the sec or for example in europe the spanish sect the european the french the

1:54german there was a lot of fear as to that the blockchain was being used to transact with securities and that's just put everything into like a situation where they were establishing that it might not be legal but securities have been in the like just forever no we want to go for history like the first securities of our issue were in the seventh century in

2:14japan when the first company was ever incorporated in the world that's crazy so during all these 15th centuries or whatever the knowledge and as to how securities have been evolved it's we went from a very verbal to a written to papers to paper to digital to docusign to kind of like and then suddenly it's everything it's in a token so it's like people don't just lost it

2:38so the thing is the space has evolved more in the comprehension as to how blockchain works and how literally a token is just a mere representation of the security so you really don't need a new regulation because the regulation is already existing proof of that is for example microregulation which is one of the biggest now utility token regulations that is going to come out

3:00here in europe and it's going to go probably through a wave around the world it's literally stating in the article two when it analyzes the objectives or the objects being regulated on the on the under such license we do not deal with securities and that's just a clue as to how everything has evolved to say like we don't need a new security regulation we just need for people to

3:24understand that it's just a new technology and like digital was a technology now we have token as a technology or blockchain so i it's just a matter that for the past five years there's been a lot of ongoing communications between regulator and private companies such as myself just to understand that do you really need a new regulation no you just need

3:46to comply with what you already have and don't go overview and pretend to be something that you're not you're a security teacher perfect well said edwin and i agree as long as you're complying with the current regulations then you may not need to rewrite the whole system and now it seems like there can be a lot of benefits for tokenizing onto the blockchain bringing

4:10companies on chain if i were a startup or a well-established company and i was looking to bring my company on chain i approached brickin and i didn't really know a lot about blockchain how would you help how do you hold your hand through this process of tokenizing and bringing the company on chain just to put into perspective like a

4:37bunch of those with the founders and even team members now which was grown we come from the sas industry right and sas industry has been an evolution as to how we interact with digital products or communicate in the sense that everything just becomes a click right so it's user experience you don't really need to tell like people that you're going to watch this

4:59show for an hour and the other one is going to call and that guy has to look it's just click next episode click that's netflix or here you have a sign it's it's all a matter of clicks right so one of the one of the main things that we have to really comprehend is the user experience or the issuer experience of the investor experience nobody has to know the

5:19blockchain is involved now that's one of the things that since we started developing this application or decentralized application is if i can make my grandma deploy a token we're good to go so we really went to non-technical people i didn't talk to my grandmother that i would be curious like like maybe i'll do it you know that's an experiment but the thing is the beauty of this is

5:43we did talk with non-technical local people i said like until we were able for them to do it themselves then we really said we have a product here so when asking when a company comes here is we give them the technology we give them the dashboard we give simplify all those pains that you have when you want to issue a token when you want to craft on when you have to go manage your

6:05crowdfunding your phones all those pains are packed into a single solution so when they come over here we obviously tell them about obviously they're reinforcing the fact that what you're doing is legal what you're doing it's according to the law there might be some complexities but still legal and there might be some uncertainty but still legal so we provided with the know-how that

6:28we have been building for the past three four years specifically we give them the technology and then we provide them with the best user experience for them to deploy their own tokenization selfcraft fund self-do everything because our approach is we're not an intermediary we're not a broker we're not an exchange we're not in a stock market we're nothing we're just a

6:49tech provider who gave them all the utensils or tools for them to self-deploy so that just also provides me with the legality that i don't specifically need any license because in the end i'm just a tech provider okay that makes sense and you mentioned some of the following steps after actually doing the tokenization you know one of the things that i've been curious about is

7:13the trading of securities and with regular utility tokens often a project will create a token and that's just available on the public market and anybody's able to buy it sort of hard to determine which jurisdiction or who is buying those tokens i know that this i'm guessing this isn't part of brick and per se but there are you know in the traditional finance

7:39world the securities are traded on like the nasdaq and more regulated exchanges how would that work once a company has moved on chain and their securities are tokenized in terms of trading them or getting them to the right investors and people speculating on them yes of course i mean what you're establishing is kind of like you already have a full-on market right

8:02so the creation of those markets are need to be regulated actually here in europe they're about to deploy the what is called the pilot regime for creating the first stock markets that can use dlt technology so what i'm trying to say here is there are different games right i mean a company when they want to go mass public let's call it like that they

8:23go through an ipo procedure but the first 10 steps which is the precede the c the a b c whatever until they reach that ipo is still private markets so tokenization has two different layers one is hitting the private markets kind of like at the private sector where you when i can go to you and say ashton why don't you invest in my company you're my friend fine i'll put you in my cap table

8:48you're good to go that's kind of like the private market when you go to the public markets you usually buy the shares through a broker so you really don't have the maintenance of the holding of the shares this is third party it's a different game because actually as a shareholder you're really not a shareholder the broker is who's representing you through their interest

9:06right i mean that's that's i'm not saying not going against it i'm just saying that's the game but it's a different game so tokenization right now it's trying to understand where it's gonna boom is it gonna boom at that level where they're gonna compete against nasdaq when they're going to regulate it and then it's a broker and everything i don't believe per se now

9:26this is more utp i like i don't believe that's decentralized because in the end you do have a broker and again you do not have the shares and that's just a public market using blockchain technology to be more optimized transparent and whatnot that's fine ghost corrector is number but at the private markets this is where it becomes truly interest and this is the water

9:46we're hitting where you might not be as liquid with all those huge order books and liquidity and market makers because that's already a huge market but you can create a market that it's private so if ashton wants to sell on a p2p market p2p markets a legal and you don't need a license you can do it and the legality in the back is that the issuer needs to

10:07be compliant with aml procedures and whatnot so he needs to accept that the buyer has a kyc and the seller has a kyc it's not as liquid as a full on market but to create that market that's why there's only one probably public market per country so you have nasdaq or you have the paris exchange or the london stock exchange but you don't have a second market in those countries right

10:34great to know and speaking of multiple countries and the differences maybe in the regulation between the nasdaq and the london stock exchange or just in those countries for securities with you working in europe is there a major difference in being able to onboard companies that start in america to the brick and platform versus in europe and are you able to do both

11:02well i mean you can do both but there's always like there's always a in especially in securities there's a part that is uncodeable so for example you registering before the sec in the united states for the issue of social security that's still something that i cannot go and nobody can because it's a subjective matter you have to fill in your white

11:23paper and your audits and your iforms and whatever so that's until i don't know when if it's going to be possible so you we what we have built here for example in bricking it's an expert ecosystem we have law firms working with us for tokenization in the united states so i provide the tech as later as the first layer let's say and then whatever is missing due to the

11:46specific regulation in that country we already have partners so if the company united states wants to let's say we use that technology to issue in the united states we give them the tech and we connect them with the law firms ecosystem that we have in the united states and they can pick to according to their needs or federal state or whatever their own law firm and that happens very

12:06much in other countries so for the past two years i've been closing law firms in various countries because i want them to give the tech and whatever speciality that country might have that i cannot code then it goes because it's a subjective matter so it's a lawyer drafting some document or as simple as that for example here in spain you just have

12:28to send an email with some certain information and you're good to go so but that email i cannot draft it interesting and you know working on this for the past few years how far along is brickin compared to you know where you need to be to ensure that security tokenization is more more prominent in at least in

12:56the blockchain space i feel like it's still very small compared to where it needs to be well completely i mean we started our journey let's say more from an educated education type of perspective where we started the market 2019. it was still a bus world and you in spain specifically very few stos united states had a big competitor when you enter there zero liquidity so

13:22it was i do remember a metric and i can give it to you it's stock market stock markets one of the biggest let's say aggregators from stos in the world they established that last year they finished june around 1 billion market yeah 1 billion is ridiculous when you're talking about crypto market i mean we hit 3 trillion and we're going to talk about all the private you know it's kind

13:46of like it's just a single dot in the space but the big butt here comes and this is what is for me mind blown we restarted what is the margin if you go today i think you will notice that the number is around 19 billion one year we did at x 18 of the total capitalization of a market so that's just ridiculous so that's just

14:17a pinpoint as to how the markets are reacting to securities and then if you read the news obviously i come from blockchain but i chill with corporate and institutionals and the government the regulatory it's just one big ecosystem you cannot neglect anything but i do read the news a lot and i understand that banks are trying to establish what is there's creating

14:38digital assets infrastructure they're hiring a lot of people in the tokenization space they're connecting with tokenization platforms i'm talking with banks so it's kind of like if you will ask me when are we going to boom right now we're on the early stages kind of like that propeller when you have the spaceship and it's like that first part two years from now i think it's gonna be

15:02quite interesting for the tokenization space as well wow that's very exciting and great growth numbers there and now you're you're poised for growth in this next three years and beyond i saw that brickin recently just closed a fundraising amount can you talk about that and the next steps on where that capital is going to go to ensure the maximum growth for these next few years

15:30of course we're going towards we did our community round so we already had a past community before we launched our ico and we built we raised two million through them we're right now in our strategic round closing some bcs that was the second phase and then we're gonna go for two more public rounds and in the back this is one of the biggest milestones

15:54and it's the 2 million yes it's money but actually one of my biggest milestones that i believe is we got a grant from the spanish government for 325 k and we literally told them we're a crypto company we're doing sdos we want to tokenize assets and they gave us to us so that would let's say now my firepower is a 2.5 mil and where is going it's actually one of the biggest things that

16:19matters for a company is because once you spend them one euro it's not going back right so we did a big growth we created the company as an organism kind of like we thought about all the departments all the different needs we already put into a big chunk that it's i don't have it here but it's kind of like just one big organism where we have

16:43all the departments and all the needs and we established that for us to grow and scale and penetrate different kind of markets and put ourselves into a brand we need this profile this profile this performance so last year we finished with nine people on the team and this year we're 25 and next year we fight and can raise the strategic and the public grounds we

17:06really want a times two and why because we need to be quick two years it's it's little time in the sense that when a competitor enters in two years because they heard tokenization just boom there's no space right now we're in bear market when the competitors try to raise money because they thought about raising money in 2023 money funds are going to be complicated

17:32especially now in a space where there's big players out there or capitalized players like myself so for me right now the strategic ground is to really go for the spaceship there's no little growth there's no medium growth i love that mentality in america where there's like everybody just goes for the moon and here in europe the mentality is like give me

17:54money to survive but here in britain we have acknowledged that money has to be i want to take the space there's a big space let's go for it very exciting looking forward to that and i definitely expect new entrants in the space as well so best of luck when that happens and really you know as you mentioned because the market cap of this is like a billion or and now 18 billion still so

18:22so small even just compared to bitcoin which is so small compared to the stock market there is a lot of room for growth and the portrayal from a lot of blockchain companies i hear is that you know they expect other blockchains and companies sort of work together for one common vision in that it's so small that if it's going to get anywhere near the size of the

18:45equities market they're going to need to work together to help grow this space and make it more prominent to bring it up completely completely agree i mean we're even sensing not just from the one thing i like about the blockchain space is there's not so many competitors i come from assassins like i said and the space was a little bit dirty in the

19:08sense like competitor always trying to kill all the competitors this space is we all grow in and we're all just a few for example in spain with like three companies in the tokenization space that's ridiculous okay the market cap is not there to be like 20 but still ridiculous and what i wanted to say is there's still collaboration with truth there's like let's build together

19:30we know that we have many competitors but it's not us it's the public's point of perspective the stos are correctly done is the sec looking for us in the comm are you doing the performance of an sto correctly or your clients and whatnot so that things is collaboration and now i would like to add there's another collaboration happening and it's regulatory organisms are actually

19:54approaching this kind of initiatives not just tokenization they're like the meta version of these i mean they're really subsidizing these kind of initiatives or they're even deploying sandbox environments where private companies can go and perform kind of a project alongside with a com with a with a regulatory organism so i think that's really what is

20:16happening in the space it's like we see the news and it's like oh the government is killing everything yeah it's their job in the sense they have to take care of things i mean don't expect them to just boom because problems happen luna happened and luna is teaching us a lot i mean if you want to see that everybody can just perform an ico and then a second one and third one probably in the

20:36coming months that's crazy there's regulation that needs to happen but at least obviously it's super slow not gonna lie i don't like everybody would like to go as fast as innovation but at least the first approaches are occurring united states about to deploy a sandbox that's also going to be massive so there's collaborations in the space maybe should be more but at least we're

20:59not independently trying to do our own thing well said and i'm looking forward to that sandbox and for you know there's almost every company in the world that isn't yet tokenized or you know hasn't been put on chain but they're interested in learning about the benefits of security tokenization and how they can do it do they just approach brick in or what

21:25is the best way to go about that yeah no they can look us on obviously on many social media on the website www.brickin.com and we can hardly jump on a on a demo and then help them tailor me what are the requirements and other people say like i have equity why would i tokenize and it's like yeah bring your equity online let's see how that happens because you have a document that is

21:49signed by your table in a cap table but it's static there's no movement so bringing a chain and putting life to something that is in an ecosystem already flooding out there's a lot of opportunities i mean early stages to organization yes but i'm already looking into d5 protocols where we can establish that the share has a value because it's

22:13backed by a real asset and you can probably collateralize that you can probably loan it you can probably lend it you can probably play with a lot of systems that right now who knows what's gonna happen but at least i know that in shares and in paper nah put it on your on the drawer and forget about it that's it that's why people raise money every six months or

22:33every 18 months or whatever because they don't know how to move that but if you put life well maybe everything can be changed you know very interesting i'm looking forward to seeing the growth of brickin's platform and just security tokenization overall i will leave the link to the platform in the description box below for the viewers as well to make it easy

22:58Thank you for your insights into everything securities and tokenization edwin all the best with bricken moving forward and let's follow up in the near future thank you very much for having me and yeah it's been a pleasure of a conversation thank you very much