November 5, 2024 • 20 mins
Welcome to the Emerging Issues Show - the show where we talking about topics that are popping up on the peripheries of society and public policy.
Today, we are diving into a concept that is reshaping the financial landscape—“tokenization.” It’s being talked about as a way to give more people access to markets, but could it come with some hidden risks?
Our guest today is Daylea Duvall Camp, a fellow in the American Journey Experience Freedom Rising Fellowship program and author of the article “The Tokenization Trap: How you could lose everything on the blockchain.”
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Transcript
Episode Transcript
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Donald Kendal (00:00):
Alright. Welcome to the Emerging Issue Show. I am
your host, Donald Kendall. Thisis the show where we are talking
about topics that are popping upon the peripheries of society
and public policy. Today, we'regonna be diving into a concept
that is reshaping the financiallandscape.
This is a concept calledtokenization. So, it's being
(00:23):
talked about as a way to givepeople more access to markets,
but could it come with hiddenrisks? So today, our guest is
Dailey Duvalkamp, a fellow inthe American Journey Experience
Freedom Rising FellowshipProgram and author of the
article, the tokenization trap,how you could lose everything on
(00:46):
the block Chain. Daily, thankyou for coming on with me today.
Daylea Duvall Camp (00:50):
I thank you, Donald. Thank you for having me.
I've been following theHeartland Institute and
appreciating your work forseveral years now, so I'm glad
to partner with you on thistopic today.
Donald Kendal (01:00):
Oh, very gracious words from you. So let's start
off with the basics. I think,like, even my introduction could
probably go over the heads of,of, of many people that are
watching this episode. So let'sstart off with the basics. I
know that in this day and age,everything seems to be trending
towards the digitization,whether it's the replacement of
(01:21):
physical media with thedownloading or streaming content
or the digitization of records.
Everything seems to be going inthat direction. And it appears
that that's also the case whenit comes to assets or
investments, stocks, even claimsfor precious metals. So what
exactly is tokenization, and howdoes it differ from the
(01:43):
traditional ownership ofphysical assets?
Daylea Duvall Camp (01:48):
Well, tokenization is the process of
taking physical assets andrecording them on the
blockchain. So the blockchain isa Internet base. It's gonna be
an exchange center. It'sspecifically for these physical
assets that are turning intotokens. So you can't just it's
(02:08):
not like poof, the assetdisappears.
It's still going to have aphysical form, but where the
transaction is going to behappening instead of cash
exchanging from hand to hand,which would be the basic version
of what how we would do, youknow, a financial exchange for a
purchase. But this is all goingto be happening digitally. And
(02:31):
instead of me handing you aphysical item when we pay, say,
even with your credit card. Wephysically exchange the item,
and I pay via credit card, maybenot cash or Venmo. The
difference is we're going tohave the physical version is
going to have a digital versionwhere it's going to exchange via
(02:56):
the blockchain even if we don'tphysically exchange the good.
So how that happens is whenthere's a physical asset, say, a
painting, like a famous paintingthat's worth a lot of money,
it's going to have a physicalform. But there'll also be a
(03:16):
twin version. Maybe some somecould call it, like, a avatar or
really the token, but just howto picture it in your mind. So
it'll have its digital twintoken, and then that will be
what is exchanged on theblockchain. Mhmm.
Donald Kendal (03:37):
So, I mean, this, even in some of the examples
that I brought up, you know, thereplacement of, physical media,
maybe, instead of watching amovie on, like, a DVD, a
physical piece of media, youknow, you're streaming it off of
Netflix or something or thedigitization of records or some
of the other examples that Ibrought up. All of that is done
in the idea of, increasedefficiency. Right? Instead of
(04:01):
having to go to a store andbuying a physical disc, now I, I
wanted to go and buy this movieto watch, you know, but it's
midnight and the store isclosed. But, oh, because it's
everything's digital now, Icould just download it.
So everything is done underthis, this idea that it's all
efficient. Right? And I am I'mlooking at this, and even the
way that you described it, itjust makes it seem like, oh,
(04:23):
this is just a more efficientway of, trading goods. Yes.
There's a you know, you just youdescribed a painting, but let's,
you know, talk about, like, theidea of having, you know, gold
or something like that.
Right? Gold might not actuallybe in your house, but you have a
claim to it. Right? I own theownership rights to that gold.
And if I wanna trade it, I don'thave to physically take that
(04:44):
gold and give it to somebodyelse.
I just trade that digital asset.So it makes it all more fluid.
It's all more efficient. So whatis the problem here? I mean,
this this seems like, just amaybe a better a better way of
of dealing with physical assets.
What's the problem?
Daylea Duvall Camp (05:01):
Well, there's there's 2 pieces of the
problem. Well, the first problemis, like you're saying with the
gold, That is a there's aproblem that exist. I'm I'm
more, understanding and aware ofwithin the stocks Mhmm. Market.
You don't necessarily have yoursheet you don't have your sheet
(05:22):
of paper saying you own yourstock.
Donald Kendal (05:25):
Sure.
Daylea Duvall Camp (05:25):
The clear DTC has that, and I'm sure the
similar with the gold. However,the you have to look at the
contract of with whoever isholding your gold and how they
have it in custody. But currentand what they are allowed to do
with it. Are they allowed to gothen and exchange with your
(05:47):
gold? Because that can happenwith your stocks.
Your stocks, you don't actuallyown them. You are a security
entitlement holder
Donald Kendal (05:58):
Mhmm.
Daylea Duvall Camp (05:59):
According to the universe Uniform Commercial
Code Article 8, which is thebankruptcy proceedings of what
happens if banks and clearinghouses go bankrupt. It it
provides the order of who hasclaimed to the assets. And
currently, individualstockholders who own who are
(06:23):
actually security entitlementholders, they are unsecured
creditors.
Donald Kendal (06:29):
Mhmm.
Daylea Duvall Camp (06:30):
So you don't actually own what you think you
own.
Donald Kendal (06:34):
Right.
Daylea Duvall Camp (06:34):
Right. Own an entitlement to it.
Donald Kendal (06:37):
Right. Right. So Yes. Sorry. The the the DTC, you
mentioned that.
So that is I forget what itactually stands for, and and,
you know, I won't hold itagainst you if you don't have
that on the, on the top of mindor whatever. But so that is
like, essentially works as likea clearing house, right, where
everything kind of runs throughthis kind of centralized, you
(07:02):
know, organization orcorporation or whatever it is.
So they actually have the rightsto those physical properties or
the stocks or whatever we'retalking about here. And then
what you have, this digitaltoken version, is like a receipt
saying, hey. That thing that'sunderneath your roof, I I
actually have ownership to that.
(07:22):
I'm entitled to that. That'sthat's what you're describing
as, like, the entitlement ownerfor it.
Daylea Duvall Camp (07:27):
For the security.
Donald Kendal (07:29):
Okay.
Daylea Duvall Camp (07:30):
The what my article is about is the physical
assets that can becomecollateral for the stock. In the
digital ecosystem, you're goingto have digital asset
securities, which will bestocks. This the digital asset
(07:51):
securities, also d a s, is thetokenized version of stock. Now
your physical assets like yourhouse or car, anything else
that's physical, that is calleda real world asset.
Donald Kendal (08:05):
Mhmm.
Daylea Duvall Camp (08:05):
And that will be called RWA, real world
asset. The real world assetswill be collateral for and you
can use them as you can also,like, use it as cash. Right? So
it's similar to how now youwould get a mortgage. You get
the cash to buy the house, andyou pay the mortgage.
(08:28):
The house is the collateral. Soit's taking building blocks of
and from the foundation of ourfinancial ecosystem we already
have and just lifting it intothe digital world
Donald Kendal (08:39):
Mhmm.
Daylea Duvall Camp (08:40):
For, right, liquidity. So now all these
things, physical goods are nowon the blockchain in their twin
form that you can exchange anduse as cash instead of needing
cash. That's a potential problemis that we have all of this.
Everything can becollateralized.
Donald Kendal (08:58):
Mhmm.
Daylea Duvall Camp (08:59):
And then 2 is the speed because they're not
just on their by themselves.Each token has a smart contract
that has a program of its valueand when you wanna sell it, what
act you can preplan selling andbuying. So instantly and
(09:23):
irreversibly, things can bebought and sold. So then we
connect the DAS to the RWA,which is when it can become a
problem under the bankruptcycode, and you can literally own
nothing. Because if you havedigital asset securities that
(09:45):
you you're just an entitlementholder.
Your real world assets becomethe collateral to that security.
Because you didn't have cash,you used your real world asset
to buy the DAS. If DTC or thebanks, the big too big to fail
(10:06):
institutions, if they gobankrupt and there's a
transaction that is instantlyand irreversibly done to create
a financial collapse. You arethe last in line to now your
physical assets and yoursecurities.
Donald Kendal (10:26):
Right. Right. So then that little that little
entitlement coupon saying, like,I own, you know, that those
assets that are underneath yourroof becomes pretty meaningless.
You know, the the assets wouldbe used to, solidify, you know,
those those, those too big tofail banks and and holders of
(10:46):
those assets, that youdescribed. So so that that that
seems like a big issue.
And and you said that that's allfacilitated, through or outlined
by the UCC system?
Daylea Duvall Camp (11:01):
Yes. It goes through and breaks down under
certain, bankruptcy proceedings.It says that the it would be the
clearing houses would becomethem and their secured creditors
would be the the first in lineto have claim to the assets
before individual holders. Andthe reason this happens is how
(11:25):
you how do you become anentitlement holder instead of an
owner? It all depends upon howyou buy your stock.
If you get a paper certificateissued to yourself with your
name on it, that that you wouldactually be an owner of that
stock. But most since 1994 whenthis, bankruptcy proceedings was
(11:49):
changed, it was amended so that,we would become entitlement
holders. It transitioned It wasthe first step in this digital
move so that these transactionscould become more seamless
between, you know, the clearinghouses and all the banks.
They're exchanging constantlyall day long. And to make it
(12:12):
quicker and seamless, they didit digital.
They stopped issuing paper,securities. So if you don't
request that specifically, it'sgoing to be digitally, And
instead of it having your name,it has DTC's name on it. So they
are the owner.
Donald Kendal (12:30):
It just seems like such a crazy example of,
this thing. It's almost becomelike a meme in kind of right
leaning skeptical of the WorldEconomic Forum circles of the in
the future, you won't ownanything. It's like, could you
get any more direct than this?Mhmm. What before we get into,
(12:52):
like, solutions, how did thisissue get on your radar?
Because this just seems likesomething that's so nuanced and
kind of in the weeds that, I Iif I were to go outside and ask
a 100 people about this issue, Idon't think 99 of them would
would even be anywhere close toaware of this issue or not even
(13:14):
to mention the implications ofit. So how did this get on your
radar as an issue?
Daylea Duvall Camp (13:18):
Yes. It's fairly recently a buildup of
many years. So I the 9 the past9 years, I had been working in
banking as an accountant, a CPA,and then I started working at
Heartland this summer in thisfellowship program. And you guys
told us to start looking at someemergent emerging issues. And
(13:40):
something that was on my radarthat I had not really had the
time to really understand wasthe tokenization.
I heard this key term in a lotof the continued education,
podcasts and web webinars. Iwould see tokenization as a
topic, and it it wasn'tspecifically relevant to what I
(14:02):
was working in. So this was anopportunity for me to dive into
it and looking into how thesetokens, the real world assets
are becoming digital. I startedconnecting the dots of key
terms. Because in my bankingexperience, I had heard of
(14:24):
insecurity entitlements becauseI worked in, a part of a broker
dealer just doing the accountingaspect.
I was not a trader or anythinglike that. Just worked on the
regulatory reporting. So I wasaware of the transactions, the
derivatives market from thatperspective, but I did not know
(14:47):
the bankruptcy proceedings.
Donald Kendal (14:50):
Mhmm.
Daylea Duvall Camp (14:50):
I didn't I didn't know that. And and I it
wasn't something we talkedabout, so, you know, on my
level. You know? So I I don'twant to accuse anybody
personally that I may haveworked at as trying to steal
people's money
Donald Kendal (15:06):
To steal
Daylea Duvall Camp (15:07):
their assets. Assets. I don't I really
just want to stay away frompointing fingers like that. But
the the law is written in such away that we don't own what we
think we own.
Donald Kendal (15:20):
Mhmm.
Daylea Duvall Camp (15:21):
And hopefully, we can change that.
So that is the takeaway of whatneeds to be done. But working
through these looking throughthe tote what is tokenization,
connecting some dots on keyterms, and also learning of,
David Rogers Webb's work, TheGreat Taking, because he also
(15:44):
was in the securities market.And he was able to con he
learned the bankruptcy code, theUCC article 8, and that is what
he is trying to, expose andbring to light so that it can be
changed. But also the real worldassets becoming digital, it
(16:08):
built upon what David RogersWebb is, warning us of.
Donald Kendal (16:14):
Yeah. Yeah. Some of the, some of the implications
of this are are prettyunsettling. You already kind of
outlined the idea that in inthe, the idea of some, like,
financial collapse or anythinglike that or even some, you
know, banks or financialinstitutions kinda go in, heels
up that, you know, we, thinkingthat we own certain assets or
(16:36):
stocks or, you know, preciousmetals or something might
actually be just holding someuseless pieces of paper. And
that is a scary thought, and itdefinitely kinda pushes pushes
that idea of, you know, in thefuture, you'll own nothing.
And in this case, it might beliterally the case, but I don't
wanna leave people, feeling so,you know, hopeless. I know that,
(17:01):
you you're doing work on this.If I'm able to, I can probably
even share a document here that,that you had worked on. This is
a policy tip sheet called the2022 amendments to the Uniform
Commercial Code, aggregateproperty rights to tangible
assets. So this is a documentthat kind of outlines more
(17:24):
detail, and I'll have the linksto the article that I had
referenced at the beginning ofthe show as well as this in the,
in the the podcast descriptionof the show description of this
where you can go and find moreinformation.
But why don't we leave off witha question of just, like, what
what do we do? What so you'veyou've kind of outlined this
problem and the potentialimplications, negative
(17:46):
implications of the situationthat we find ourselves in. But
what do we do to combat againstthis?
Daylea Duvall Camp (17:55):
The UCC, the Uniform Commercial Code, is
state law, and so it can beamended from time to time. And
so we need to go to our statelegislatures and ask them to
greatly consider and to actuallyamend the UCC article 8. And my
(18:18):
policy brief goes into otherarticles that also need to be
addressed to protect ourproperty rights for physical
assets and also securities. Sowe really it's it's in our state
legislators, and we need to haveit amended in all 50 states
(18:39):
because the states will allworked. They want to have the
same law for cross statetransactions.
Donald Kendal (18:48):
Mhmm.
Daylea Duvall Camp (18:49):
So it's very important that all 50 states
amend the UCC articles 8 andalso according to my brief 9 12.
Donald Kendal (18:57):
Great. Great. Yeah. It's a it's a very
interesting it's a what I mean,admittedly, it is seemingly a
bit in the weeds. You have tokind of understand some fairly
abstract concepts.
But once you get it down, theimplications of this are pretty
dire, and it's a very importantthing that people need to
understand. State legislators,like you mentioned, need to
(19:20):
understand. But, I mean, I thinkwe know how the system works. I
think we know how the systemworks. I think we know how the
political gears kind of getmoving.
Most of it comes fromconstituent mandates. So a lot
of the issues that we might talkabout on shows like this or
other podcasts that talk aboutsome of these issues, is mostly
in the effort of just kind ofgetting the public to understand
(19:41):
these issues and to take itseriously, and hopefully that
translates downstream towardssome legislative action. But,
daily, we're already gettingtowards 20 minutes here. Is
there any kind of last thingsthat you need to that you need
to say or information you wannaimpart on our audience before we
wrap up this episode?
Daylea Duvall Camp (20:00):
Well, thank you very much for having me
today, and I hope that we canaffect some change in the future
on this topic.
Donald Kendal (20:09):
Yes. Absolutely. Well, thank you for coming on.
Again, that is Daily DuvallCamp. She is the author of that
Blaze article that I mentioned,tokenization trap, how you could
lose everything on theblockchain.
Daily, thank you again for beingon with me.
Daylea Duvall Camp (20:25):
Thank you.
Alright. Welcome to the Emerging Issue Show. I am
your host, Donald Kendall. Thisis the show where we are talking
about topics that are popping upon the peripheries of society
and public policy. Today, we'regonna be diving into a concept
that is reshaping the financiallandscape.
This is a concept calledtokenization. So, it's being
(00:23):
talked about as a way to givepeople more access to markets,
but could it come with hiddenrisks? So today, our guest is
Dailey Duvalkamp, a fellow inthe American Journey Experience
Freedom Rising FellowshipProgram and author of the
article, the tokenization trap,how you could lose everything on
(00:46):
the block Chain. Daily, thankyou for coming on with me today.
Daylea Duvall Camp (00:50):
I thank you, Donald. Thank you for having me.
I've been following theHeartland Institute and
appreciating your work forseveral years now, so I'm glad
to partner with you on thistopic today.
Donald Kendal (01:00):
Oh, very gracious words from you. So let's start
off with the basics. I think,like, even my introduction could
probably go over the heads of,of, of many people that are
watching this episode. So let'sstart off with the basics. I
know that in this day and age,everything seems to be trending
towards the digitization,whether it's the replacement of
(01:21):
physical media with thedownloading or streaming content
or the digitization of records.
Everything seems to be going inthat direction. And it appears
that that's also the case whenit comes to assets or
investments, stocks, even claimsfor precious metals. So what
exactly is tokenization, and howdoes it differ from the
(01:43):
traditional ownership ofphysical assets?
Daylea Duvall Camp (01:48):
Well, tokenization is the process of
taking physical assets andrecording them on the
blockchain. So the blockchain isa Internet base. It's gonna be
an exchange center. It'sspecifically for these physical
assets that are turning intotokens. So you can't just it's
(02:08):
not like poof, the assetdisappears.
It's still going to have aphysical form, but where the
transaction is going to behappening instead of cash
exchanging from hand to hand,which would be the basic version
of what how we would do, youknow, a financial exchange for a
purchase. But this is all goingto be happening digitally. And
(02:31):
instead of me handing you aphysical item when we pay, say,
even with your credit card. Wephysically exchange the item,
and I pay via credit card, maybenot cash or Venmo. The
difference is we're going tohave the physical version is
going to have a digital versionwhere it's going to exchange via
(02:56):
the blockchain even if we don'tphysically exchange the good.
So how that happens is whenthere's a physical asset, say, a
painting, like a famous paintingthat's worth a lot of money,
it's going to have a physicalform. But there'll also be a
(03:16):
twin version. Maybe some somecould call it, like, a avatar or
really the token, but just howto picture it in your mind. So
it'll have its digital twintoken, and then that will be
what is exchanged on theblockchain. Mhmm.
Donald Kendal (03:37):
So, I mean, this, even in some of the examples
that I brought up, you know, thereplacement of, physical media,
maybe, instead of watching amovie on, like, a DVD, a
physical piece of media, youknow, you're streaming it off of
Netflix or something or thedigitization of records or some
of the other examples that Ibrought up. All of that is done
in the idea of, increasedefficiency. Right? Instead of
(04:01):
having to go to a store andbuying a physical disc, now I, I
wanted to go and buy this movieto watch, you know, but it's
midnight and the store isclosed. But, oh, because it's
everything's digital now, Icould just download it.
So everything is done underthis, this idea that it's all
efficient. Right? And I am I'mlooking at this, and even the
way that you described it, itjust makes it seem like, oh,
(04:23):
this is just a more efficientway of, trading goods. Yes.
There's a you know, you just youdescribed a painting, but let's,
you know, talk about, like, theidea of having, you know, gold
or something like that.
Right? Gold might not actuallybe in your house, but you have a
claim to it. Right? I own theownership rights to that gold.
And if I wanna trade it, I don'thave to physically take that
(04:44):
gold and give it to somebodyelse.
I just trade that digital asset.So it makes it all more fluid.
It's all more efficient. So whatis the problem here? I mean,
this this seems like, just amaybe a better a better way of
of dealing with physical assets.
What's the problem?
Daylea Duvall Camp (05:01):
Well, there's there's 2 pieces of the
problem. Well, the first problemis, like you're saying with the
gold, That is a there's aproblem that exist. I'm I'm
more, understanding and aware ofwithin the stocks Mhmm. Market.
You don't necessarily have yoursheet you don't have your sheet
(05:22):
of paper saying you own yourstock.
Donald Kendal (05:25):
Sure.
Daylea Duvall Camp (05:25):
The clear DTC has that, and I'm sure the
similar with the gold. However,the you have to look at the
contract of with whoever isholding your gold and how they
have it in custody. But currentand what they are allowed to do
with it. Are they allowed to gothen and exchange with your
(05:47):
gold? Because that can happenwith your stocks.
Your stocks, you don't actuallyown them. You are a security
entitlement holder
Donald Kendal (05:58):
Mhmm.
Daylea Duvall Camp (05:59):
According to the universe Uniform Commercial
Code Article 8, which is thebankruptcy proceedings of what
happens if banks and clearinghouses go bankrupt. It it
provides the order of who hasclaimed to the assets. And
currently, individualstockholders who own who are
(06:23):
actually security entitlementholders, they are unsecured
creditors.
Donald Kendal (06:29):
Mhmm.
Daylea Duvall Camp (06:30):
So you don't actually own what you think you
own.
Donald Kendal (06:34):
Right.
Daylea Duvall Camp (06:34):
Right. Own an entitlement to it.
Donald Kendal (06:37):
Right. Right. So Yes. Sorry. The the the DTC, you
mentioned that.
So that is I forget what itactually stands for, and and,
you know, I won't hold itagainst you if you don't have
that on the, on the top of mindor whatever. But so that is
like, essentially works as likea clearing house, right, where
everything kind of runs throughthis kind of centralized, you
(07:02):
know, organization orcorporation or whatever it is.
So they actually have the rightsto those physical properties or
the stocks or whatever we'retalking about here. And then
what you have, this digitaltoken version, is like a receipt
saying, hey. That thing that'sunderneath your roof, I I
actually have ownership to that.
(07:22):
I'm entitled to that. That'sthat's what you're describing
as, like, the entitlement ownerfor it.
Daylea Duvall Camp (07:27):
For the security.
Donald Kendal (07:29):
Okay.
Daylea Duvall Camp (07:30):
The what my article is about is the physical
assets that can becomecollateral for the stock. In the
digital ecosystem, you're goingto have digital asset
securities, which will bestocks. This the digital asset
(07:51):
securities, also d a s, is thetokenized version of stock. Now
your physical assets like yourhouse or car, anything else
that's physical, that is calleda real world asset.
Donald Kendal (08:05):
Mhmm.
Daylea Duvall Camp (08:05):
And that will be called RWA, real world
asset. The real world assetswill be collateral for and you
can use them as you can also,like, use it as cash. Right? So
it's similar to how now youwould get a mortgage. You get
the cash to buy the house, andyou pay the mortgage.
(08:28):
The house is the collateral. Soit's taking building blocks of
and from the foundation of ourfinancial ecosystem we already
have and just lifting it intothe digital world
Donald Kendal (08:39):
Mhmm.
Daylea Duvall Camp (08:40):
For, right, liquidity. So now all these
things, physical goods are nowon the blockchain in their twin
form that you can exchange anduse as cash instead of needing
cash. That's a potential problemis that we have all of this.
Everything can becollateralized.
Donald Kendal (08:58):
Mhmm.
Daylea Duvall Camp (08:59):
And then 2 is the speed because they're not
just on their by themselves.Each token has a smart contract
that has a program of its valueand when you wanna sell it, what
act you can preplan selling andbuying. So instantly and
(09:23):
irreversibly, things can bebought and sold. So then we
connect the DAS to the RWA,which is when it can become a
problem under the bankruptcycode, and you can literally own
nothing. Because if you havedigital asset securities that
(09:45):
you you're just an entitlementholder.
Your real world assets becomethe collateral to that security.
Because you didn't have cash,you used your real world asset
to buy the DAS. If DTC or thebanks, the big too big to fail
(10:06):
institutions, if they gobankrupt and there's a
transaction that is instantlyand irreversibly done to create
a financial collapse. You arethe last in line to now your
physical assets and yoursecurities.
Donald Kendal (10:26):
Right. Right. So then that little that little
entitlement coupon saying, like,I own, you know, that those
assets that are underneath yourroof becomes pretty meaningless.
You know, the the assets wouldbe used to, solidify, you know,
those those, those too big tofail banks and and holders of
(10:46):
those assets, that youdescribed. So so that that that
seems like a big issue.
And and you said that that's allfacilitated, through or outlined
by the UCC system?
Daylea Duvall Camp (11:01):
Yes. It goes through and breaks down under
certain, bankruptcy proceedings.It says that the it would be the
clearing houses would becomethem and their secured creditors
would be the the first in lineto have claim to the assets
before individual holders. Andthe reason this happens is how
(11:25):
you how do you become anentitlement holder instead of an
owner? It all depends upon howyou buy your stock.
If you get a paper certificateissued to yourself with your
name on it, that that you wouldactually be an owner of that
stock. But most since 1994 whenthis, bankruptcy proceedings was
(11:49):
changed, it was amended so that,we would become entitlement
holders. It transitioned It wasthe first step in this digital
move so that these transactionscould become more seamless
between, you know, the clearinghouses and all the banks.
They're exchanging constantlyall day long. And to make it
(12:12):
quicker and seamless, they didit digital.
They stopped issuing paper,securities. So if you don't
request that specifically, it'sgoing to be digitally, And
instead of it having your name,it has DTC's name on it. So they
are the owner.
Donald Kendal (12:30):
It just seems like such a crazy example of,
this thing. It's almost becomelike a meme in kind of right
leaning skeptical of the WorldEconomic Forum circles of the in
the future, you won't ownanything. It's like, could you
get any more direct than this?Mhmm. What before we get into,
(12:52):
like, solutions, how did thisissue get on your radar?
Because this just seems likesomething that's so nuanced and
kind of in the weeds that, I Iif I were to go outside and ask
a 100 people about this issue, Idon't think 99 of them would
would even be anywhere close toaware of this issue or not even
(13:14):
to mention the implications ofit. So how did this get on your
radar as an issue?
Daylea Duvall Camp (13:18):
Yes. It's fairly recently a buildup of
many years. So I the 9 the past9 years, I had been working in
banking as an accountant, a CPA,and then I started working at
Heartland this summer in thisfellowship program. And you guys
told us to start looking at someemergent emerging issues. And
(13:40):
something that was on my radarthat I had not really had the
time to really understand wasthe tokenization.
I heard this key term in a lotof the continued education,
podcasts and web webinars. Iwould see tokenization as a
topic, and it it wasn'tspecifically relevant to what I
(14:02):
was working in. So this was anopportunity for me to dive into
it and looking into how thesetokens, the real world assets
are becoming digital. I startedconnecting the dots of key
terms. Because in my bankingexperience, I had heard of
(14:24):
insecurity entitlements becauseI worked in, a part of a broker
dealer just doing the accountingaspect.
I was not a trader or anythinglike that. Just worked on the
regulatory reporting. So I wasaware of the transactions, the
derivatives market from thatperspective, but I did not know
(14:47):
the bankruptcy proceedings.
Donald Kendal (14:50):
Mhmm.
Daylea Duvall Camp (14:50):
I didn't I didn't know that. And and I it
wasn't something we talkedabout, so, you know, on my
level. You know? So I I don'twant to accuse anybody
personally that I may haveworked at as trying to steal
people's money
Donald Kendal (15:06):
To steal
Daylea Duvall Camp (15:07):
their assets. Assets. I don't I really
just want to stay away frompointing fingers like that. But
the the law is written in such away that we don't own what we
think we own.
Donald Kendal (15:20):
Mhmm.
Daylea Duvall Camp (15:21):
And hopefully, we can change that.
So that is the takeaway of whatneeds to be done. But working
through these looking throughthe tote what is tokenization,
connecting some dots on keyterms, and also learning of,
David Rogers Webb's work, TheGreat Taking, because he also
(15:44):
was in the securities market.And he was able to con he
learned the bankruptcy code, theUCC article 8, and that is what
he is trying to, expose andbring to light so that it can be
changed. But also the real worldassets becoming digital, it
(16:08):
built upon what David RogersWebb is, warning us of.
Donald Kendal (16:14):
Yeah. Yeah. Some of the, some of the implications
of this are are prettyunsettling. You already kind of
outlined the idea that in inthe, the idea of some, like,
financial collapse or anythinglike that or even some, you
know, banks or financialinstitutions kinda go in, heels
up that, you know, we, thinkingthat we own certain assets or
(16:36):
stocks or, you know, preciousmetals or something might
actually be just holding someuseless pieces of paper. And
that is a scary thought, and itdefinitely kinda pushes pushes
that idea of, you know, in thefuture, you'll own nothing.
And in this case, it might beliterally the case, but I don't
wanna leave people, feeling so,you know, hopeless. I know that,
(17:01):
you you're doing work on this.If I'm able to, I can probably
even share a document here that,that you had worked on. This is
a policy tip sheet called the2022 amendments to the Uniform
Commercial Code, aggregateproperty rights to tangible
assets. So this is a documentthat kind of outlines more
(17:24):
detail, and I'll have the linksto the article that I had
referenced at the beginning ofthe show as well as this in the,
in the the podcast descriptionof the show description of this
where you can go and find moreinformation.
But why don't we leave off witha question of just, like, what
what do we do? What so you'veyou've kind of outlined this
problem and the potentialimplications, negative
(17:46):
implications of the situationthat we find ourselves in. But
what do we do to combat againstthis?
Daylea Duvall Camp (17:55):
The UCC, the Uniform Commercial Code, is
state law, and so it can beamended from time to time. And
so we need to go to our statelegislatures and ask them to
greatly consider and to actuallyamend the UCC article 8. And my
(18:18):
policy brief goes into otherarticles that also need to be
addressed to protect ourproperty rights for physical
assets and also securities. Sowe really it's it's in our state
legislators, and we need to haveit amended in all 50 states
(18:39):
because the states will allworked. They want to have the
same law for cross statetransactions.
Donald Kendal (18:48):
Mhmm.
Daylea Duvall Camp (18:49):
So it's very important that all 50 states
amend the UCC articles 8 andalso according to my brief 9 12.
Donald Kendal (18:57):
Great. Great. Yeah. It's a it's a very
interesting it's a what I mean,admittedly, it is seemingly a
bit in the weeds. You have tokind of understand some fairly
abstract concepts.
But once you get it down, theimplications of this are pretty
dire, and it's a very importantthing that people need to
understand. State legislators,like you mentioned, need to
(19:20):
understand. But, I mean, I thinkwe know how the system works. I
think we know how the systemworks. I think we know how the
political gears kind of getmoving.
Most of it comes fromconstituent mandates. So a lot
of the issues that we might talkabout on shows like this or
other podcasts that talk aboutsome of these issues, is mostly
in the effort of just kind ofgetting the public to understand
(19:41):
these issues and to take itseriously, and hopefully that
translates downstream towardssome legislative action. But,
daily, we're already gettingtowards 20 minutes here. Is
there any kind of last thingsthat you need to that you need
to say or information you wannaimpart on our audience before we
wrap up this episode?
Daylea Duvall Camp (20:00):
Well, thank you very much for having me
today, and I hope that we canaffect some change in the future
on this topic.
Donald Kendal (20:09):
Yes. Absolutely. Well, thank you for coming on.
Again, that is Daily DuvallCamp. She is the author of that
Blaze article that I mentioned,tokenization trap, how you could
lose everything on theblockchain.
Daily, thank you again for beingon with me.
Daylea Duvall Camp (20:25):
Thank you.
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