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USV Co-Founder: The Future of Securities Tokenization

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Learn about the future of capital from the blockchain industry.

Original title: "Innovation In Capital Markets"

Original source: AVC

Original compilation: 0x26

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Fred Wilson is the co-founder of Union Square Ventures, and has invested in well-known Internet companies such as Twitter and Tumblr; in the field of blockchain, USV has invested in the Coinbase trading platform, Algorand, FileCoin and other well-known projects. Fred was one of the earliest investors involved in social media, known for his continuous and uninterrupted output of ideas on Twitter.

This article is an article published by Fred on AVC on December 14, 2020, expressing his views on the field of cryptocurrency Expectations and prospects. The full text is as follows:

A few years ago, maybe in 2016, we discussed the blockchain at the investor annual meeting and encryption technology. I remember someone in the audience suggesting that the NYSE and Nasdaq could rebuild their markets on the basis of these technologies. I responded that I think new markets for crypto assets that exist and are built on blockchains are more likely to compete with them.

We now have a 24 × 7 global encrypted asset market with a market capitalization of over $500 billion and a daily trading volume reaching hundreds of billions of dollars. Compared with the traditional capital market, this pales in comparison, but this is also the charm of the nascent industry.

The traditional capital market has not stagnated. For example, during the IPO process, there are some Innovation is happening. (SPAC, an overseas backdoor listing way)

But if you want to see the world we're headed to, I think it's best to look at cryptocurrencies market. They operate day and night and are global, anyone can buy, sell, hold and transfer these assets as long as they have a crypto wallet, browser or mobile phone. You don't have to be rich to invest in crypto startups, anyone can do it.

The crypto market is also innovating in areas such as locking, token vesting and governance. In a traditional IPO, existing shareholders are typically locked in for 180 days, after which the lock-up is lifted entirely. In the crypto market, we see various different forms of token redemption and locking being tried. What is happening now is a lock-up for existing token holders, and these lock-ups are much longer, but provide a small amount of early and timed liquidity.

We’ve also seen a lot of innovation around governance, with cryptocurrency projects working to make the community of token holders have a real say in how it works. In recent months, we have seen many communities make very significant changes in terms of total token supply, inflation rate, and technology roadmap. I can't think of a public company that allows shareholders to have such a degree of influence over their direction.

Right now, these markets are parallel universes, but I don’t think that’s going to last forever. Tokenizing securities and trading them on crypto markets is theoretically simple. That hasn't really happened yet, but I expect it to happen in the near future. We will then have the opportunity to see two of the same assets being traded simultaneously in traditional and emerging markets. When this happens, more and more arbitrage opportunities will emerge, and new markets will put pressure on traditional markets to adapt, change and evolve as quickly as possible. Although this is difficult, it is not impossible.

The global nature of the crypto market is also a challenge for regulators, who have been acting as a constant obstacle The role of innovation. For example, why must the wealthy invest in startups in the United States? It's just a way to keep the rich rich and everyone else not rich. If you trade crypto assets, and something is not allowed in the US, then you can trade it, take out a loan or pledge it elsewhere. Many/most people are doing this. This allows for continued innovation in the cryptocurrency space, even when some jurisdictions, such as the United States, are slow and hostile to capital market innovation.

So if you want to see the future of capital, look here, not there. All innovation, experimentation and new things happen "here". Rhythm note, the original text here refers to Coinbase, which extends to the cryptocurrency market; there refers to the US stock market, which extends to the traditional capital market.

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