Tokenization Is About to Transform Finance with Robert Leshner (SuperState CEO)

2025 in a lot of ways like the firing gun that set off the tokenization race. A year ago, if you asked them like, are people going to tokenize equities? Every single one of them would have said like, huh? No. If you ask those same institutions today, 100% of them say this is the future. It's inevitable.

What we like needed and what we need is the $700 trillion of stuff, of wealth, of assets, of ownership to make its way on chain. And like if that happens, the upper bound of DeFi is like $700 trillion.

Thanks for having me.

Yeah, excited to dive in.

Pretty good. I'm going to go with pretty good. You know, right now, 3 years later, we're starting to see a lot of examples of people being engaged in the security tokenization lifecycle, whether they're issuers, whether they're people purchasing the assets, whether they're intermediaries that are supporting different types of activity. We're starting to see a lot of tokenized security. My original comment 3 years ago is like the institutions aren't coming, and I think I said it in the context of they're not coming to like buy your protocol tokens and crypto tokens. They're not coming for crypto native assets. They're coming for the off-chain assets on chain. And I think that's playing out pretty well. I mean, not to kick anything else down, but the crypto market right now has been struggling, right? The institutions are not like coming in droves to buy everybody's L1 tokens. They're not buying their protocol tokens. There's been a lot less of that than I think people have hoped for. So, I'm going to give my comment pretty good accuracy rating. I'll go with a B+ or a minus.

Yeah, the gap that we're closing is simple. There's a lot of securities, whether it's stocks or bonds or other things that exist in finance that aren't currently on blockchains that exist in spreadsheets and databases and paper contracts and all these other things and they're just not tokens yet, right? And from the perspective of a DeFi founder, the ceiling for DeFi is too low if all we have are crypto native tokens of other crypto projects. The upper bound could only get so big. What we like needed and what we need is the $700 trillion of stuff, of wealth, of assets, of ownership to make its way on chain. And like if that happens, the upper bound of DeFi is like $700 trillion. If that doesn't happen, the upper bound of DeFi is like the same as it was in 2019 roughly. And so the pitch for Superstate is really simple. We're trying to make it easy for those assets to move on chain. Under the hood, it's complex. There's a lot of financial plumbing. There's a lot of policy and regulatory and legal work. There's a lot of operational work. There's a lot of technology work. There's a lot of things that have to happen for something as simple as saying we took a stock and we put it on a blockchain. There's a lot of moving parts, but we're at the point now where we take the stock and we put it on the blockchain. We take the fund, we put it on the blockchain, and it works.

That's right. There's a lot of problems that need to be solved and there's a lot of different approaches to solving those problems. So, the approach that Superstate uses is that we partner with a public company. We do this as the public company's transfer agent. A transfer agent is this type of entity that records who owns the shares of a security. And in doing this, we basically say we're keeping track of the issuer shares. We're keeping track of them in databases. We're keeping track of them in ways that can move inside the DTC and continue to trade in brokerage accounts and on traditional exchanges like the NASDAQ and NYSE. We're doing it in ways where it can do all of that, but the shares, the official shares of a company can be recorded as tokens on a blockchain. And this is a recordkeeping difference, right? This is not a functional difference of different economics, different rights, different characteristics. What we're doing at the end of the day is we're saying the share that a company issues can do all the things it's used to doing but can also now be extensible to interact with DeFi protocols, on-chain investors, and new systems entirely. And so when you really boil it down, what we're doing is we're saying there's a new option for how shares can live. And this is a really clean option, right? What it means is that the token on the blockchain is the same share of a company as the one that's trading on the NASDAQ. And you can actually bridge shares back and forth between those two systems. You can take a share in your brokerage account, you can move it into token form on Solana or Ethereum. And you can take a token on Solana or Ethereum and move it into a brokerage account. It's a really cool two-way bridge. There's other approaches out there, right? Like the easiest way to make a token on a blockchain is like, hey, this is not going to be the company's official share, but we'll buy some shares and we'll hold them in an account and we'll issue a claim against those shares that we as like a startup or we as a third party hold. That's the most popular alternative, right? There's advantages to that. I like that approach for how quickly you can spin it up. There's disadvantages. It's a slightly different asset. It's not the same as like the company's official shares are just recorded in a token. And so I think what we're starting to see, early on in this tokenization lifecycle, is there's going to be different approaches. I think there's going to be a market for many of them. I think you can have a situation where there's a company's official shares and there's also like wrapper tokens that people have made. A lot of the wrapper tokens are in some ways interesting because they're being issued offshore and they're not being issued to you as investors and they're permissionless and they're freely transferable and there's all these things that official shares are not, right? Official shares can feel a little bit burdensome. It's like you have to be KYC'd and you have to be on the company's books and records and like all of these things. There's a lot of different experimentation that's happening and I think it's going to bear fruit in multiple different ways.

Tokenization, when you look at like the process of like creating a token, is actually one of the things that's going to be similar in multiple different approaches, right? So at the end of the day, whether you're Circle who's like minting and burning USDC, whether you're Superstate who's like minting and burning a security token, whether you're a crypto project with a crypto native token that has like an adjustable or elastic number of tokens, there's a process to create and destroy those tokens. At the end of the day, you have in general like an internet and blockchain connected computer or server or wallet or process to make tokens and to destroy tokens against some source of truth like how many should there be, why should there be that many. The processes to like create on-chain transactions to make and destroy tokens, mechanically is not that different. This is also one of these things that's been tested for we're coming on like 10 years now of like making and destroying tokens. The difference and what makes tokenization tokenization is that that's really synchronized to something else, right? It's like synchronized to how many shares of the company exist or how do we increment the number of shares on a blockchain when we decrement the number of shares held in an off-chain system or in the DTC or somewhere else. Tokenization, making tokens, is not new. Using it for securities at scale is relatively new.

You know, when I founded Superstate two and a half years ago, frankly, at that time, it was a very different US regulatory structure. So I founded Superstate in hard, hard, hard mode, which was founding a company in the US to tokenize US securities in the Gary Gensler SEC era when they didn't want to allow anything through the front door. And part of this was saying like, hey, we just want to be there early before the door opens, right? Because whether it's a coin flip or what, I knew at some point things had to change for the better. And so that was extremely risky. When we started out, we were like, hey, we're going to stick to tokenizing a money market fund, the simplest, least controversial product. It doesn't matter how wicked the SEC is, you can't argue against a tokenized T-bill at the end of the day. It's such a low-risk, safe, and useful product. And so I didn't know when the door would open, so to speak. It could have been 2028, frankly. It could have been at some point in the future that wasn't honestly like early 2025. But 2025 was in a lot of ways like the firing gun that set off the tokenization race. Up until that point, we were able to start proving things out and building a lot of infrastructure. But the thing that has surprised me is that equity tokenization has accelerated from actually zero. I mean like a cold start. There was zero activity on the tokenization of equities prior to like early 2025 to it just being a flat-out race to figure out how to tokenize equities, to put it into practice, to go through the legal side, the technical side, the issuer side, like all of these nuances. The game really began out of nowhere suddenly. And that was surprising. And what I'm surprised at as well is just how far not just Superstate but the industry as a whole has come in basically 12 months. It's actually incredible. And I'm not just speaking for startups. I'm also speaking for traditional institutions too. A year ago if you asked them like are people going to tokenize equities? Every single one of them would have said like, huh, no. If you ask those same institutions today, 100% of them say this is the future. It's inevitable and we are trying to make our organization a big part of it.

I don't have to preach to the choir, right? At this point, I think most institutions in financial markets understand the advantages. Do they understand like the nuance details of like why the token is better and how it works and how a DeFi protocol works and how it can be transferred as collateral? No. Sometimes they don't know all of the details, but they know that fundamentally there's a big market here. There's at this point about $300 billion of like investment stablecoin assets on chain looking for homes. There's demand. It's not like starting from zero. There's hundreds of billions of dollars of demand right now. So they get that and they get that there's new use cases. They can see tokenized securities being used as collateral in a DeFi protocol to borrow against. They can see it being sent around to centralized intermediaries in token form as collateral. They see it flying to crypto prime brokers and trading desks. They can see tokenized securities work in different ways that have never functioned in historical markets. Just something as simple as transferring shares between two parties is just clunky in traditional markets. But transferring it between two wallets, it's trivial. It's like one click. And so people can start to see that there's significant benefits here. They're going to understand those benefits more and more every single quarter, but a lot of these organizations work in quarters. They don't work in weeks like startups do.

Yeah, I'll use a sports analogy, even though I'm not that good at sports analogies. I really think of this as like the bottom of the second inning in a baseball game. It's a long game. The score, whatever is on the board right now, doesn't really matter. Everyone's just getting warmed up and getting a feel for all of this stuff. And the game's going to be decided a little bit out, but every single inning counts and every at bat counts and every single day counts and every single action we take counts. I think it's too early to judge who's winning and losing. I think there's a lot of incredible progress that's been made. There's a lot of great experiments so far. There's a lot of great traction. There's a lot of great products, but it's just so early. And the reason I say that is just there's $300 billion of like potential market right now on chain. I think eventually we get to the point where there's 700 trillion of potential market where everything is on chain, the whole thing. And that's like 2000x our current market potential in a lot of ways. And that's when things get big and that's when every institution is fighting for and that's when the numbers get big and the revenue gets big and the success and failure outcomes change everyone's careers.