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CRYPTO 101
Ep. 699 Tokenized Securities and Global Crypto Adoption with Jesse Knutson of Bitfinex
00:20:46
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- [00:00]
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Crypto 101 Host
Welcome to the Crypto 101 podcast presented by Gemini, your bridge to the future of money.
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Crypto 101 Co-Host
All right, everyone, we are joined by Jesse Knudsen. He is the head of operations at Bitfinex Securities. Jesse, welcome. And it's good to have you.
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Jesse Knudsen
Great. That's great to be here. Thanks for having me.
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Crypto 101 Co-Host
Absolutely. We appreciate you coming on here. It's funny, I was talking to Jesse just before we began, and I was like, where are you coming in from? Because I'm waking up at the time of making this, and it's morning times, like 8am over here. And he's like, yeah, I'm getting ready to wind down. It's 10pm over in there. So we really do appreciate you coming on. Opposite. Yeah, opposite hours, man. All the way from Taiwan, right?
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Jesse Knudsen
Yeah, yeah, yeah. I've actually been in Taiwan now longer than I was ever in Canada. So I'm Canadian. I've been in Taiwan 25 years, so more than. More than half my life, which is pretty surreal.
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Crypto 101 Co-Host
What's keeping you over there? Is it like the weather, the community, or the crypto freedom?
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Jesse Knudsen
Well, the wife, the kids, the dogs, the house.
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Crypto 101 Co-Host
That'll do it.
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Jesse Knudsen
That's what it is now. Originally, when I graduated from university, it was to learn Chinese, so that was a long time ago and turned out to be pretty good advice from a professor that I had at the time.
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Crypto 101 Co-Host
Yeah. Wow, man. Well, that's awesome. Those are all really good reasons too. And, you know, from what I've heard, it's. It's a beautiful place to live. But, you know, nonetheless, we appreciate you hopping on with here later at night for. For people who don't know, Jesse has a big background when it comes to not only crypto and obviously playing a role in One of the, like, oldest, most popular names in crypto and being part of arguably one of the largest ecosystem because you have the Ifinex ecosystem, which is kind of like the parent company to Bitcoin, Bitfinex securities and Bitfinex, the exchange and tether, and all these other critical parts of the crypto ecosystem. And so it's cool because I think we get a view from a couple different perspectives, given your background. But, you know, just give us an intro. Give us an intro to yourself and what got you started and what brought you into crypto in the first place, and we'll move from there.
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Jesse Knudsen
Yeah, I mean, my. My background, as you said, is in traditional finance. So I came over to Taiwan initially to. To learn Chinese, as we said at the beginning, on a recommendation from a. From a professor did that. Ended up working on both sides of the strait. So in China for a bit. Studied in China, in Taiwan, kind of found my way, fell into investment banking, actually. So they needed people that could speak Chinese, that could talk to companies, and then also could talk to clients that were mostly overseas. So I worked for Barclays in sales and trading and then later worked at Macquarie, was head of ECM for Macquarie here in Taiwan, and during that period got interested in bitcoin. So I guess a lot of it was around the fallout from the financial crisis and talking to clients, talking to coworkers, and just constantly trying to figure out how does this not continue to. How does this not end in tears? Eventually it didn't feel like any of the problems that blew up during the financial crisis were actually solved. And so we were always kind of looking around for different assets and different interesting things that could kind of fit into that puzzle. And we just stumbled across bitcoin. And I was lucky to have another coworker at Macquarie at the time. We were at Barclays at the time and a guy at J.P. morgan. And we kind of dug into it together and began to learn about bitcoin and understand it, and then eventually began to be the bitcoin guy within the bank and pushing all of these ideas and doing different things. And through that I was able to kind of leverage the bank's name and meet a lot people. And, you know, in 2016 or 17, we did a conference in Hong Kong in the Macquarie office. JP Morgan was doing blockchain, not bitcoin. And we did bitcoin, not. Not blockchain. And we had. We had Adam back. We had the CEO of Tether and Bitfinex at the time, jl. We had. We had A ton of people that were like really big names in the industry and came by and spoke to, you know, a closed, closed door meeting of maybe 70 institutional investors did a bunch of stuff like that. We made the first investment into a bitcoin mining company, I think by a Western bank in 2018. But after the market peaked, it was clear that the appetite within the firm to do anything else in bitcoin was just not there anymore. I decided to jump into the industry. I found my way over to Blockstream. I was friends with Samson Mo. He introduced me to Adam, who had also met at that conference previously and joined there as VP of financial products. And we started putting together different products built on bitcoin and backed by bitcoin and bitcoin mining, the first of which was the Blockstream mining note. And then eventually found my way over to Bitfinex Securities.
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Crypto 101 Co-Host
And it's funny, especially that JP Morgan story, because they've come full circle with that Jamie Dimon interview a couple of weeks back where he's like, I was wrong. It's here to stay day. It's real. And we had this kind of like aha moment where it's like even Jamie Dimon, who's been one of the biggest bears, like even he's come around. And I'm sure you've seen a lot more of this where you've talked to a lot of these people, they weren't as interested. Fast forward to the end of 2025 now and it does kind of feel like they've come full circle to a degree.
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Jesse Knudsen
Yeah, I think 100%. I mean, in those previous cycles, like, you know, 2017, those were, those were kind of scary times around the bitcoin fork and all of that because it did feel quite existential to bitcoin. And when bitcoin rolled over hard in 2017, you know, people were still saying, you know, it's going to go to zero, it's over. Fast forward to 2021. And then, you know, since then, nobody says that bitcoin is going to go to zero anymore. You just, you just, you don't hear that. So I think, I think, I think things have really changed a lot. And then on the security tokenization side, you know, we've been Bitfinex Securities. We've been in this business since 2021. We first got our license and even then when we spoke to our regulator and we're kind of pitching the business, I think they liked the idea, but they were somewhat skeptical. They thought it was an interesting idea. And I was over recently in Astana, Kazakhstan, where one of the jurisdictions where we're regulated and the regulators are very happy that they now have they're a global leader in security token frameworks. So everything has changed a lot and I think a lot of it is, you know, traditional finance has really kind of consensus, has really caught up to this view that we had a couple of years ago.
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Crypto 101 Co-Host
Absolutely. And I want to get into all of that and talk more about that. But let's first go through Bitfinex securities because we have a global audience. We've had probably a handful of our users go through and use the page Bitfinex Exchange. We've Had a lot of our users probably interact with Tether at one point or another. But we're here to talk about Bitfinex securities here. So give us the high level overview and how it fits into the whole iFinex ecosystem.
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Jesse Knudsen
Yeah, Bitfinex securities is the RWA and STO platform within the Tether and Bitfinex group of companies. And we do kind of two core businesses. We do primary offerings and we offer secondary market trading. So our whole kind of very high level idea is to put investors and issuers in much more direct contact to kind of take out all of the middlemen and let them interact a lot more directly efficiently and faster and cheaper. And then kind of along that tether last year also announced the tokenization business Hadron. So they're our default for actually doing tokenization and for working with issuers to let the issuers manage their own tokens. Once those tokens are created, they come onto Bitfinex securities and then we can do capital raises and open up secondary markets for people.
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Crypto 101 Co-Host
Yeah, I mean tokenization has exploded and it feels like every other interview we have we have a guest from all over the industry saying like, you got to pay attention to tokenization. And obviously you have Larry Fink talking about it and diamond and you have Vlad Tenna from Robinhood and you have all these other big guys who are from the TRADFI side and they're all like, yeah, I mean we think this is the future and we want to get plugged into it. What do you think are the most impactful or important parts of tokenization to watch out for?
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Jesse Knudsen
Yeah, I think it's a no brainer really. I mean, and I think that this is definitely the way that markets move, move eventually. I think it's probably somewhat inevitable. You know, if you look at the benefits of tokenization for investors or for traders, for big guys, I think it's things like real time settlement, you know, and 24, 7, 365 trading, you know, in my whole finance career was here in Taiwan. If you sell your TSMC on Friday, it's T plus 2 settlement. So you don't get your cash until the following week. Right. So if you're a hedge fund, you want to get your funds as soon as possible. If it's real time settlement, that's great, then you can go back and churn it again. And you know, part of the reason we've seen this with bitcoin recently, people dump bitcoin on Saturday because that's what they can sell. Right. But I'm sure people would prefer to sell the stuff where there's actually news. So if it's, you know, whatever it's something about, you know, China, the supply chain, they want to sell their Apple stock, they'd much rather do to trade that more directly. So I think those are the benefits. They'll probably pull in the big guys over time for investors I think it's regaining more control over your assets. Right. And I think this is one of the ways that we differentiate what we're doing with what a lot of the kind of the tradfi players are doing. There's a lot of smoke and mirrors out there. I think there's a lot of token tokenization. I think one of the important things is that investors are able to take their assets off the platform. They're able to self custody that you're able to trade a peer to peer, ping it to other platforms for arbitrage. I think these are all the benefits for investors and giving people more control over their assets. And then I think also inclusion is a huge part of it. So for people like a lot of your audience in North America, they have no problem getting access to U.S. public equities or stuff like that. Some parts of the world struggle some. So I think just as Tether was very, very successful by bringing a better alternative to a lot of emerging markets countries small and mid sized countries outside of the G7, I think that could be one of the big drivers for security tokens as well is that people just don't have access to higher quality investment products. And those jurisdictions, they also really are really hungry for capital. The banks just don't lend and that has knock on effects throughout their whole economy. So I think, I think that's kind of some of the interesting applications for it going forward.
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Crypto 101 Co-Host
Yeah. Do you think that tokenization has like a different role depending on maybe where you are in the world? Because it kind of seems like that's the case and I guess that makes sense. Right. You know there's all sorts of different needs depending upon where you are. But it kind of sounds like that's what we're getting towards.
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Jesse Knudsen
Yeah, 100%. I think you've got like these different jurisdictions. Right. So we're licensed in two kind of, you know what people in traditional finance would say are like peripheral jurisdictions. We're in the AIFC which is a financial center in Astana, Kazakhstan in Central Asia. And then we have the first license in El Salvador. We have license 0001 which is pretty cool. What both of those jurisdictions have in common is that they've got pretty smart leadership. The policymakers are familiar with the technology. They're familiar with bitcoin in Kazakhstan. That was a huge mining hub for a number of years. They were, I think, number two or three for global hash rate. So people there saw. Saw bitcoin become very big, mining become very big, become accretive to the economy. So they didn't have those worries about, like, what if bitcoin goes to zero? That that kind of wasn't their thinking on it. And then, of course, El Salvador is a very, very unique situation with a very young president who's got kind of a real view on how to. How to. How to pull his country out of the troubles of the past. So they've got vision and they've got understanding of the technology, which I think is pretty different than a lot of the G7 countries. And then also they don't have capital markets. So the capital markets in both of those jurisdictions are not strong. It's a really small percentage of gdp. So you don't get that pushback from the really deeply entrenched incumbents that you get in most of the G7. So I think. I think it is really different. And then what's happened is that you get much more flexible jurisdictions and you get these kind of commercially viable, you know, commercially viable regulatory oversight. So you can. You could actually grow a business and get big and. And, you know, hopefully eventually become accretive to the economy.
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Crypto 101 Co-Host
Yeah. You know, I'm interested to learn a little bit more about, like, how the corporate world in the rest, like, I mean, how do you say, like, what is the corporate structure from the rest of the world outside of the US Kind of look at crypto? Like, how do they look at it? What do they think of it? Because oftentimes over here, you know, obviously I'm from the U.S. a lot of our teams from the U.S. we talk to a lot of people and they're like, oh, they're always trying to talk about how this affects or impacts or relates to the US Market. And I think you have a little bit more of like a decentralized view because you talk to companies and countries from all over the world, especially on the other side of the planet from us like, what are their views? Do you think it kind of aligns with a lot of the stuff that we've heard from the US and the traditional financial side over here? Are they looking at different things? The same things? What is the big and the smart money across the planet looking at as it Relates to all this?
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Jesse Knudsen
Yeah, it's an interesting question and I think there's been this kind of divergence in bitcoin and crypto markets for a long time. Right. For maybe most of the past decade. In that it's easy. We have a plethora of investment options if we're in most western countries. And also payment options, payments are not a problem. So we don't really need Bitcoin or Tether. Probably in a lot of these markets you can get by just fine without it. I think the approach from the rest of the world is extremely practical. I guess maybe you don't get so much pushback on tether now, but maybe five or six years ago there was quite a bit and most of it was from the English speaking world. In Asia, especially in Chinese speaking Asia. Tether has been huge for a long time. That's because it's a very effective tool because people, to them it's just a tool. They could just move assets around really quickly, really freely and with little hassle. And I think security tokens are the same thing. It's, you know, people are struggling to access capital. Whether you're in Central Asia or you're in Latin America, you want to start a business. The banks aren't lending. You know, Bitfinex Security says they can put you in touch with investors. So they don't really care too much about the tokenization part. They just care that you can help them raise capital. And I think investors are a little bit the same too. Investors look at the economics and they, and you match those two together, you can, you know, you can earn a higher yield on some of these, you know, like the micro financing bonds that we have on the platform. You know, those are the kind of things I think investors look at the commercials and some of these kind of niche assets and that's what draws them to it.
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Crypto 101 Co-Host
Yeah, I mean, so looking on the horizon, what do you think the most interesting thing is? Like there's all these different catalysts. Like everyone believes that there's going to be a different catalyst that'll kind of cause us to have, you know, big legs up or effect on price or adoption or all these other things. From your view, what do you think that those biggest catalysts that are kind of yet to happen are. Because it would seem as if we're still in a lot of the build out phase where a lot of these companies and countries and groups and banks and all these different people, they're like, hey, we're interested in this. We want to build towards this, and there's all these different ideas, but what do you think the most interesting catalysts that are yet to come?
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Jesse Knudsen
Yeah, I think part of this is just a grind, right? That it's just a trend and it's just showing up and doing the work every day. And I think it'll happen over time. Number one, because of what I said, that I think there's significant technological advantages to what our product is, that I think investors will just pull them in eventually. The other part of it is the same argument in favor of bitcoin is the demographic argument, that as millennials and post millennials get older, they get more senior in their positions, they have more money, they'll just be more familiar with this technology, and it's not as scary, and that's what they'll expect. If you're used to trading Bitcoin on Bitfinex and then you go and trade on the NASDAQ or something, and you've got fixed trading hours and T plus 2 and whatever it is, the other restrictions and a myriad of intermediaries, it's just like a substantial user experience. Right. So people have a higher benchmark, I think, and a little bit more knowledge about what's up there. So I think part of this is just a trend that's going to play out over time and is just going to slowly pull these two spheres, the digital asset world and the conventional securities world that for most of the last 10 years have really been separate, is going to pull them closer together. I think in a lot of ways they're already very overlapped, but I think you're right. There definitely will be quantum leaps and exciting products that come to market. I'd like to see more of the companies within the bitcoin and the crypto space that are private. There's a lot of giant private companies. I'd like to see them do offerings rather than going to the nasdaq. I'd like to to see more of that. I think that would be exciting. The other thing that I'm looking forward to is, you know, we used to do a lot of depository receipts in Asia. So if you're a big Asian public company, like you're a TSMC or you're a Foxconn or whatever it is, you issue shares into the US As a depository receipt so that you can get American investors to invest, I think that tokenization can fill that niche as well, but fill it better and more broadly because you can go deeper into more jurisdictions, into more kinds of investors. So I think another Exciting thing is, you know, when publicly big, publicly listed companies start looking to tokenization to kind of fill that niche and to issue tokens alongside their conventional equity, I think that'll be really exciting and we're probably not very far away from it.
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Crypto 101 Co-Host
Yeah. And to a point that you said earlier, it really doesn't seem like anyone makes this argument anymore of like, oh, crypto could just be a dud. It could all go away, it could all go to zero. It's like no one's really making that anymore. And it seems like the idea of that has kind of been tossed out the window because they all believe like this stuff's here to stay. And to a point that you just made, like, this is stuff that takes a little bit of time. I think people in crypto are used to moving super fast in an extremely volatile manner. They want things to happen overnight. And like, obviously we all want that. But I think in the real world things do take a little bit more time than I think a lot of crypto investors probably expected to take. It always takes more time than whatever is expected. And I think the same goes for a lot of this. It's like we're seeing all the right things. We're seeing the build out and the infrastructure and the adoption and especially when it comes to tokenization. However, this isn't something that's going to be all said and done and finished by the end of this year and the next month or so.
- [23:42]
Jesse Knudsen
You know, I think it's going to play out for, for decades. Right. And I think you're going to have conventional con securities markets operating in tandem with tokenized markets. There's going to be more interaction. I think eventually the tokenized ones win. You know, I'm not sure which jurisdiction is going to win. I kind of think that the most of our competitors are focused on Europe, are focused on the us. We're kind of taking the tether playbook and we're focusing on the rest of the world. And I think that, I think that that's where tokenization can really get a foothold and you can make a difference because the regulators really want you to be there. And there's a, there's a really deep need for, for tokenization in these markets. I think eventually what we'll see happen is similar to, it's kind of like the whole world is the US's sandbox. That tether got big globally and then they looked for a way to incorporate it. And I think the same thing could happen with security tokenization where because you have so much legacy pushback within the US because it's such a big market that it's slower to develop in the US and then it gets brought in when it becomes a really successful proof of concept outside the U.S. yeah, absolutely.
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Crypto 101 Co-Host
And if everything does pop off, then you all get market share for the whole rest of the world outside the US and you'll have to be a huge market.
- [24:54]
Jesse Knudsen
Right? Yeah.
- [24:57]
Crypto 101 Co-Host
Absolutely. Well, Jesse, we appreciate you coming on. If people want to get plugged in, they want to follow what you're doing in Bitfinex securities and everything. Where can they follow you at?
- [25:07]
Jesse Knudsen
Yeah, look for Bitfinex securities on Twitter. Come check out the platform. Yeah, all our information is up there. Perfect.
- [25:14]
Crypto 101 Co-Host
Well, Jesse, once again, thank you for joining us and you'll have to keep us posted because like you said, this is, this is the long game.
- [25:20]
Jesse Knudsen
Yep. Yep. And look forward to speaking with you again.
- [25:33]
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