Tokenization, often viewed as a Wall Street playground, also presents a “Trojan Horse” opportunity for consumers, according to Securitize President Brett Redfearn.
A New Era for Everyday Investors
In a recent interview with Decrypt, Redfearn, who previously served as the SEC’s director of trading and markets before joining Securitize in April, argued that bringing real-world assets onto the blockchain will directly benefit individual investors by leveraging cryptocurrency’s fundamental principle of disintermediation.
From Redfearn’s viewpoint, empowering investors to retain control over their assets in digital form unlocks efficiencies that are typically inaccessible within traditional financial systems.
Rethinking Stock Lending
He cited stock lending as a prime example. This common practice on major retail brokerage platforms passively generates revenue by loaning out investors’ shares to short-sellers. Currently, retail investors allow brokers to lend their idle shares, effectively forfeiting the majority of the profits to the intermediary.
However, Redfearn believes tokenization fundamentally alters this dynamic. By eliminating centralized gatekeepers, he contends that the technology opens new avenues for consumers to make their assets work harder, particularly within the realm of decentralized finance.
“I think that business is totally disruptible,” Redfearn stated emphatically. “There are a lot of opportunities when you start to disintermediate traditional businesses.”
Securitize’s Public Debut
Securitize’s stock is slated to begin trading on the New York Stock Exchange on Thursday under the ticker symbol “SECZ.” This listing will serve as a test of whether Wall Street’s growing acceptance of tokenization extends to the companies that have been instrumental in bringing the technology to the mainstream in recent years.
While Securitize has emerged as a leader in facilitating on-chain security issuance for firms like BlackRock, Redfearn acknowledged that the full potential of decentralized finance to drive the company’s growth hinges on the contributions of a broad range of independent developers.
“I believe that the sky’s the limit in terms of what builders are going to be able to achieve that’s going to bring benefits for investors who are interested in participating in this sort of tokenized securities ecosystem,” he added.
The Profit Split in Stock Lending
The revenue share from stock lending varies significantly for consumers. For instance, Robinhood reportedly retains approximately 85% of the associated revenue, while Charles Schwab divides it equally, according to NerdWallet.
Nevertheless, some financial institutions appear to be moving closer to Redfearn’s vision. Robinhood is expected to announce new products on Wednesday, and Compass Point analyst Ed Engel noted in a recent report that “tokenized equities compatible with DeFi” are likely to be among them. This follows Robinhood’s experimentation with the format for European customers last year.
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