JD Durkin: Our next guest, Yoshi Yokokawa, co-founder and CEO at Alpaca. Been looking forward to our conversation all day. You’ve got a busy schedule here in Vegas. Thanks for chatting with us today.
Yoshi Yokokawa: Great. Thank you for having me here.
JD Durkin: Alpaca does a lot. Among your portfolio, which is very busy, you also power a lot of the tokenized stock boom. You and I were just talking off air. We’re talking a lot more about this stuff. Talk to me about your underlying products and the overall goal in this space.
Yoshi Yokokawa: Sure. So we do have brokerage infrastructure and a self-clearing firm. So we have a lot of asset classes connected to our infrastructure, basically. And then we also have a massive, you know, market share for the tokenized stocks’ underlying securities custody.
JD Durkin: I know you call this the biggest infrastructure shift that we have seen in many decades. We went from paper to electronic, and now from electronic to tokenized. Help this make sense for me and our viewers at home. How big is the scale of what we’re actually looking at?
Yoshi Yokokawa: Yeah, of course. Like, you know, when paper moved to the computer, that was like the 1970s. You know, we had to use computers. Now it’s kind of a similar shift, from the computer to on-chain. So we can imagine how it was with paper, and now it’s so much more convenient. That’s a massive shift, right? In terms of numbers, we’re talking about $350 trillion of financial assets moving from computer custody to on-chain. So that $350 trillion is the number that I think we can think about. That’s really, really big.
JD Durkin: We still have a global equity market that’s north of $160 trillion. Are we still in the early innings? Let’s talk about this in baseball terms, nine innings for a baseball game. Where are we in terms of this overall transfer to the world of tokenization?
Yoshi Yokokawa: I think we are really about to throw the first pitch.
JD Durkin: Wow.
Yoshi Yokokawa: Because think about it, right? Of that $160 trillion, how much has been tokenized? It’s only $333.5 billion. So that’s, you know, not even one basis point. So I don’t think even one inning has started.
JD Durkin: Yeah, that’s not really... Yeah. We’re just at the national anthem.
Yoshi Yokokawa: Yeah, yeah, yeah. I think that’s a much better example compared to, like, just about to throw the first pitch.
JD Durkin: Get ready to play ball, folks. Here we go. Your instant tokenization network allows securities to move between traditional and tokenized firms. Is that the hard part of the equation?
Yoshi Yokokawa: Actually, it’s a very important part of the equation, because after things are tokenized, we still have to provide liquidity. And to have the liquidity, market makers have to come in. Market makers have to hedge the position. So they need to have the connection to the TradFi securities as well, to hedge it. So this product allows people to have instant redemption from the tokenized asset to the TradFi asset, so they can actually have the position in the tokenized assets without worrying about hedging the positions.
JD Durkin: That’s awesome. We’re big fans of yours personally, and the entire team at Alpaca are really important partners for us back at the New York Stock Exchange. Really nice to have you here today. Thanks for taking the time.
Yoshi Yokokawa: Thank you very much.
JD Durkin: All right. We’ll talk again soon.
