If you're reading this and still haven't signed up, click the subscribe button below!
This week Cuy Sheffield, Tokenized co-host and Head of Crypto at Visa, is joined by:
Noah Levine, Investment Partner, Andreessen Horowitz
Cameron Drinkwater, Chief Product & Operations Officer, S&P Dow Jones Indices
Liam Horne, Product & Engineering, Tempo
🎙️ Listen to the latest episode of Tokenized here.
📷 Watch on YouTube.
We Cover:
Microsoft and Goldman Sachs object to tokenized trading on OKX-ICE
S&P extends risk assessment into smart contracts
JPMD and the case for connecting deposit tokens with stablecoins
S&P DJI’s case for the index becoming the token
Visa Pay builds cards into wallets, and the funding problem at the tap
Issuers Want a Say in How Tokenization Happens
Microsoft, Alphabet and Goldman Sachs are among 16 companies objecting to tokenized trading of their shares on OKX-ICE, the planned 24/7 venue from OKX and Intercontinental Exchange, according to reporting on the October 19 notice.
Public companies don’t choose which ETFs or mutual funds hold their shares. Under the SEC exemption, tokenized shares promise the listed stock’s voting, dividend and liquidation rights, yet issuers don’t choose the venue or custodian as they would for a NYSE or Nasdaq listing. Noah asked whether small caps would opt in for attention while giants stayed out. Speaking personally rather than for S&P Global, Cameron expects small caps first and large companies to participate too.
“I do think large companies want to participate in a tokenized investment ecosystem. They just want to have more control over how that happens, and so I think it's more of a how it happens, not a will it or will it not?”
Price formation is Cameron’s main concern for S&P DJI. Trades on these venues are published but don’t feed the consolidated tape. Automated market makers can drift from listed prices until arbitraged. Benchmark integrity is at stake. Issuers also bear reputational risk for failures in tokenizers, custodians or contracts they didn’t select.
Smart-contract risk underpins Cameron’s rationale for S&P acquiring OpenZeppelin, pending at recording and closed October 26. With risk in the contract and protocol as well as the asset, she sees code assessment as a natural extension of ratings.
In Cuy’s account, synthetics such as Robinhood’s sit outside the opt-out for real tokenized equities. He thinks they move fastest because issuers can’t control them, and expects a swing toward stock issued with the company involved. Cameron agreed, comparing synthetics to ETFs and other wrappers issuers don’t control.
Control has an upside too. Cuy recalled AMC making shareholders mail in proof of ownership for a free movie ticket, a check a wallet holding the shares could do instantly. Liam described perks tied to stake size or holding period.
JPMD Needs Connections Beyond the Bank
JPMD went live on Ethereum on October 19 for institutional clients.
Noah sees a misconception in treating tokenized deposits and stablecoins as competitors. Deposit tokens require a JPMorgan relationship, while stablecoins can reach recipients outside the bank.
“I look at tokenized deposits and stablecoins as sort of two isolated but yet very complementary things.”
His example was hypothetical. If Circle used JPMorgan as a reserve bank and backed USDC with the deposit token, minting and redemption could run 24/7, converting incoming USDC into the token and swapping back for outbound payments.
Cuy’s own snapshot shows how far apart JPMorgan’s two products sit. Kinexys, its permissioned network, has reported billions of dollars a day, while JPMD on public chains had about $1 million in supply, a few million in lifetime volume and roughly 11 wallets.
Liam expects deposit tokens to land in something like a Tempo Zone, a bank-run private chain keeping holders and transfers private while accessing Ethereum’s liquidity and integrations.
SPXA Makes Index Rules Part of the Product
Asked why JPMorgan would issue on a public chain, Cameron pointed to new investable products being built there. For an index provider, that changes the product itself.
“But onchain, we can program the index methodology as machine readable rules, and suddenly the index itself is the token.”
Cameron sees it happening in three steps.
Traditional managers replicate index files.
SPXA, a tokenized S&P 500 fund Cameron described as a first version built with Centrifuge, Anemoy and Janus Henderson, embeds machine-readable methodology for 24/7 creation, redemption and collateral use.
Liquid onchain constituents could let the token buy, rebalance and settle its portfolio.
Cameron called it early days, with utilization low. She tied the next stage to agentic portfolio construction, with stablecoins and tokenized deposits supplying the cash.
Visa Pay Builds Cards Into Wallets, and Funding at the Tap Is Still Open
Visa and Mesh announced a partnership on October 19 to let wallet users spend crypto and stablecoin balances wherever Visa is accepted, with rollout details still pending.
Cuy described Visa Pay, which Visa has worked on for over a year, as a way for wallets with their own domestic acceptance to spend across borders without asking users to sign up for a separate card. Mesh is one of its first integrations.
“We think there's a world where every wallet or every account could just have that acceptance functionality that's kind of built in, and being able to use Visa tokenized credentials to tap to pay, we think is really powerful.”
Liam said the companies Tempo works with tend to add features in a set order.
“I just want [a] balance, and then I want to earn on it, and then I want to spend from it, and then maybe you want to spend from the balance you're earning on.”
Liam sees the open problem in that last step, when the balance sits outside the card program.
“An example is that we have a customer right now that has private balances … when you tap the card, you know you have like a two-second window to get that private balance moved to wherever the card program needs it to go.”
The choice Liam called the frontier is between moving user funds during authorization and a company fronting collateral to the card program manager. Noah envisaged an onchain loan backed by consumer data or collateral being triggered during authorization.
Issuers Could Turn Control Into a Product
Cameron sees onchain transfer agents as the first step beyond paper records. If issuers run those records, the perks Cuy and Liam described become services companies can offer directly, giving large issuers a reason to tokenize on their own terms.
Thanks so much for reading the Tokenized Newsletter!
Please share this edition or share it with your colleagues if you enjoyed it!
Disclaimers
This newsletter is for informational purposes only and is not financial, business or legal advice. These thoughts & opinions and do not represent the opinions of any other person, business, entity or sponsor. Any companies or projects mentioned are for illustrative purposes unless specified.
The contents of this newsletter should not be used in any public or private domain without the express permission of the author.
The contents of this newsletter should not be used for any commercial activity, for example - research report, consultancy activity, or paywalled article without the express permission of the author.
Please note, the services and products advertised by our sponsors (by use of terminology such as but not limited to; supported by, sponsored by, Made Possible by or brought to you by) in this newsletter could carry inherent risks and should not be regarded as completely safe or risk-free. Third-party entities provide these services and products, and we do not control, endorse, or guarantee the accuracy, efficacy, or safety of their offerings.
It's crucial to provide our readers with clear information regarding the inherent nature of services and products that might be covered in this newsletter, including those advertised by our sponsors from time to time. When you buy cryptoassets (including NFTs) your capital is at risk. Risks associated with cryptoassets include price volatility, loss of capital (the value of your cryptoassets could drop to zero), complexity, lack of regulation and lack of protection. Most service providers operating in the cryptoasset industry do not currently operate in a regulated industry. Therefore, please be aware that when you buy cryptoassets, you are not protected under financial compensation schemes and protections typically afforded to investors when dealing with regulated and authorised entities to operate as financial services firm.
