tokenization platform Securitization The company rose about 10% after the market after reporting third-quarter growth on higher operating expenses and announcing an expansion into asset-backed financing through strategic acquisitions.
Miami-based Securitize, which made its public market debut in July, operates in a relatively new corner of the crypto asset world that involves institutional tokenization infrastructure. Tokenized assets on the platform rose 9% year over year to $4.8 billion in the third quarter. Total trading volume increased 20% year over year to $4.3 billion. Revenue was $11.5 million, up 28% year over year.
This growth came as bullish sentiment towards tokenization gained momentum throughout the third quarter ahead of the Security and Exchange Commission’s long-awaited innovation exemption formalization on September 17th, which created a temporary avenue for trading in certain tokenized stocks and strengthened the regulatory outlook.
Carlos Domingo, CEO of Securitize, told CNBC in an exclusive interview that profitability remains well below year-ago levels, due in part to costs associated with the company’s summer initial public offering and the company’s expansion of its tokenization business during an active period for the sector overall.
Strengthening compliance
Domingo said the securitization strengthened “certain areas of the company, such as finance, compliance, legal (and) cybersecurity,” and “increased corporate costs compared to a year ago when it was private equity.” “We are in a very good position. Adjusted EBITDA…is a significant improvement from the previous quarter.”
Securitize reported an adjusted EBITDA loss of $2 million. In comparison, adjusted EBITDA for the year-ago period was positive by $3.6 million, an improvement over the second quarter’s loss of $5.5 million. The company saw a 183% increase in operating costs and expenses.
Also on Monday, the securitization board approved a $50 million share buyback and announced the acquisition of River One, an institutional asset-backed lending platform developing technology to connect stablecoin capital to traditional lending markets. Terms were not disclosed.
Domingo said Securitize sees an opportunity to modernize the $9 trillion asset-backed finance market by using stablecoins to fund real-world assets, generate yield, and tokenize investment positions and credit products.
The acquisition also marks Securitize’s expansion beyond its core market niche as the competitive landscape for tokenization expands with traditional asset managers such as BlackRock and Franklin Templeton and established financial market infrastructure providers such as DTCC and Broadridge entering the industry.
“We’ve been very active in tokenized funds, government bonds (and) yields…and obviously recently, we’ve been very active in tokenized equities as well. So this adds another piece of the puzzle to the emerging tokenization space to capture revenue growth.”
