Real-World Impact: Driving Utility and Adoption Through Tokenization | DAS London 2025 | Day 2 |
Summary
Stable Coins Growth: The podcast discusses the significant growth of stable coins, nearing a $300 billion market cap, highlighting their role as a borderless, regulated, and programmable form of money that is transforming consumer finance.
Tokenization Trends: There is a focus on tokenizing real-world assets (RWAs) like private credit and equities, with stable coins acting as a catalyst for broader blockchain-enabled financial products and services.
Regulatory Environment: The regulatory landscape, particularly the Genius Act, is seen as a positive force driving the adoption of stable coins and tokenization, with institutions and enterprises increasingly exploring these technologies.
Institutional Adoption: Institutions are moving towards wallet-based infrastructures and exploring tokenization for equities and other assets, with projects like NASDAQ's tokenized securities and Robinhood's stock tokens as examples.
Private Credit Opportunities: The podcast highlights private credit as a promising area for tokenization, enabling more efficient processes and democratizing access for smaller institutions and emerging managers.
Technological Advancements: The discussion emphasizes the potential of blockchain technology to improve transparency, reduce costs, and enhance liquidity in financial markets, with examples like DeFi and tokenized real estate.
Future Outlook: Panelists express optimism about the future of tokenization, predicting that it will become a standard practice within three to five years, driven by both consumer and B2B applications.
Challenges and Considerations: Despite the progress, challenges remain in terms of regulatory clarity and the need for infrastructure that can support large-scale adoption and integration with traditional financial systems.
Transcript
All right. Little different with the microphones. Uh yeah, if if you don't have your headphones on already, that'll be how you'll hear us. Um but yeah, so let's dig in. You know, we've heard a lot about tokenization already. Um a lot at this at this conference. So let's let's jump in. We got um 300 billion in stable coins. Uh more than 30 billion RWAS now. Uh so first just kind of want to get just a quick reaction to the growth of stable coins in recent months um to hit that about to hit that 300 billion mark. Uh because that'll be you know the cash leg of this onchain world. Uh so just quickly um maybe Santiago I I heard you talking about stable coins on a previous panel yesterday and just kind of the importance there. Uh how does that kind of set the stage for tokenized RWAS more broadly? Well, look, uh, stable coins are a killer product. Um, the reality is the entire world wants to hold dollars, and you're just filling that demand. It's borderless. Um, it is, uh, regulated now, the Genius Act, and so it is a very convenient product, and it's, um, I've said it time and time again, like even if we stopped innovating and we just kind of focused on stable coins, there is it will change consumer finance. It it's this idea of programmable money. And so um of course we're kind of now in the phase where like why did this um increase so much and I think you can point to a variety of factors. I'll let some of the other panels kind of dive into that but um it is I think still a tip of the iceberg. Um we don't need to focus on all the different other type of flavors of RWA. I was in a panel yesterday like I am kind of a bit skeptical that we can bring on more bespoke assets that you stitch together kind of offchain onchain. think we still haven't figured that out, but stable coins in their own right are are this seventh wonder of the world. It's just programmable money. I think they call it the quintessential killer app for for crypto and also the quintessential RWA. So, totally agree. Um it seems like definitely the regulatory and macro environment is very has been very conducive over the past year and so especially with Genius uh passing um it sounds like everyone and their mom is issuing their own stable coin. I think like any co any any company that has embedded distribution already is thinking about launching their own stable coin. Obviously, there's a lot of questions around interoperability and use cases and applications, but it is something that's very much top of mind, not only for cryptonatives, but also traditional web 2 companies, institutions, enterprises. And the way that I look at stable coins is very much kind of like the top of the funnel for a lot of different um kind of incremental blockchain enabled products and services. So access to dollars to Santi's point is like the the the first kind of country but then from there a lot of companies are thinking about um digital savings accounts being enabled through stable coins being able to earn rewards or yield on those stable coins through money market funds through uh DeFi integrations and then finally the ability to actually spend down or against those stable coins through stable coinbacked card products. And so this kind of order of operations is what a lot of different institutions and enterprises are are thinking through. And of course there is a huge retail side to this. But there's also the B2B aspects. And so when you think about the evolution of you know structured credit products and those being tokenized ultimately use of stable coins as a cash flow product and taking that tokenized uh programmable money and embedding it in a security that's an in incredible use case and I think that a lot of the institutional adoption we'll be seeing in the years to come will be really utilizing stable coins or tokenized deposits in a way that facilitates how most cash flows exist in products in Tradfi throughout the world. Yeah. And so outside of stable coins, that that number 33 billion in RWAs, I believe half of that is in private credit. We've seen tokenized money market funds and more um developments on the tokenized equities side. Now we'd love to kind of just hear some of the areas of tokenization that you guys maybe have the highest conviction in uh you know before we start digging into use cases and adoption. Yeah, I think tokenization is taking um the path of list resistance and what I mean by that is you start with the most liquid stuff which is the cash. We have a pretty big effort there, right? 300 billion. It's a the use case that we should be most proud in crypto that kind of came out of everything that we're doing here. Um I think next is tokenizing Tibils which that also happens like indirectly the fiat backstable coins are also a form of tokenized Tibils although the yield stays with the the issuer. uh now we have this second wave of um tibels where tokenization where the the yield is passed on to the you know the the holders and then from there on I think we'll we're going to see other types of u debt instruments perhaps other types of sovereign bonds and corporate bonds and um private credit as well and then we we got to a point where we kind of move over to the next uh part which is tokenized securities primarily equities now I think we're still very early and I think the way we're approaching tokenized um equities is probably not the form they will be long term. In fact, it's a it's a wrapped version in a way. It's also a debt instrument because it's an IOU that gives you the potential to redeem a a security or a unit of stock later on, but it's not actually the you know the underlying thing. So um we've seen some indication from a couple of uh projects that are actually building native tokenization of equities and I think that's exciting. I think that's very interesting. Um if we get the regulator on board as well just like we did with the stable coins u it will open up a massive um wave of innovation. Not the least that we can actually start trading these 247 instant uh settlement unlike what we currently have here. we still rely on the kind of opening markets to mint and redeem these uh these instruments and also when the markets are closed the spreads widen up a lot and doesn't really solve the primary issue that we started off with. Equities really are a great example of where you can really drive into the why tokenize the value proposition that's being presented both to the end investors but also to the issuers or the tokenizing agents. Um you know within hideera we've looked at projects like uh swarm markets you know they are innovating on the tokenization of equity side to ensure that the interconnectivity to other pools of capital remain um so you have defi enabled compliant uh tokenization of you know largecale US equities but ensuring that trade execution can also filter through to traditional markets where the liquidity is far greater. So it's creating the the bridge structures and the interoperability to traditional markets. I think that's one of the big themes within you know Hideera that we look at around how we bring on the next wave of of institutional adoption. It's ensuring that there's clear value proposition and that the connectivity is there both in terms of interoperability across networks but then interoperability to legacy systems which is key and that can come in terms of cache and in tokenized securities. I think like zooming out like to to your point around like what are the clear like first next steps of what we want to tokenize and what maybe what we shouldn't be tokenizing because you know when you go 247 365 markets market structure may or may not be there when you want to trade Friday night and there's look go talk to a high yield bond trader he'll tell you sometimes that market's dry and and and so there are inefficiencies there are the technology the infra the APIs maybe get bricked when there's that load surge and so we got to make sure that look every iteration Every event like this allows us to stress test. But I'll give you one example. There's a DeFi is a marginal improvement to the current paradigm of financial system in the sense that even if you have these issues that we know in crypto like the oracle pricing model, market structure and congestion and whatnot, you're moving from a opaque antiquated system and you're moving to a transparent system. So, if you want to have a digital representation of collateral, um, you might say, "Wait a minute, but like how do you verify that?" And I think like we got to remember like anyone that's been in finance in the global financial crisis, you don't understand your counterparty risk. You're relying on a regulator or an auditor to to not do that in a continuous way. But you have like you call up your people, hey, are you guys okay? Well, you know, yeah, of course we're okay. Steady lads, you know, we're deploying more capital kind of thing. Uh, in crypto at least, you have this ability. Imagine if you have all of this collateral represented as an NFT and you have some information about it. It at least prevents issuers offchain to like double pledge that collateral which happens time and time again. And so you're not going to fix everything. It's not a perfect, but at least it moves us from a more not a transparent system to a transparent system and it mitigates a lot of the issues that we continue to see in in Tradfi, which is just that opacity and off-chain and offbalance sheet items. So, it's just important to kind of remember like if we just do that, I think it's a very marginal improvement, meaningful improvement to avoid a lot of catastrophes in in Tradfi. Yeah. And I I want to get into private credit, but while we're talking about equities, you know, we've seen NASDAQ file for uh to tokenize securities on their exchange. We've seen Kraken's X stocks and Robin Hood stock tokens, which offer, you know, exposure to the the price of stocks, but not shareholder rights or things like that. So just kind of curious of how you kind of see um tokenized equities evolving and um you know the regulation that we're going to need to see to kind of bring this to the next level and and have these um so uh from my perspective it's just indicative of the way that institutions are moving from you know their siloed independent ledgers or account structures to a wallet based infrastructure. Um, it's coming in multiple different flavors. Of course, you're seeing the Robin Hoods of the world that are saying, "All right, we're going to distribute and, you know, through tokenized stocks to the retail population." You're seeing it on more of the settlement side where uh institutional ledgers are now really in an experimental phase of representing their assets in wallet infrastructure and I only expect that to accelerate. One thing I would add in the NASDAQ kind of uh development is a good example of that is I think over time we spent a lot of time kind of cultivating high quality asset tokenized asset supply in the ecosystem and now at least from an avalanche standpoint we're very focused on the on the demand side and that could be integrating with DeFi to the extent possible um but really and I think the unlock is integrating with traditional distribution channels so to the extent like you'll ever be able to access tokeniz equities on NASDAQ. Like that's huge because you're meeting investors, people, customers where they're at. And so from a mass adoption standpoint, and Santi knows this, we're very much aligned in this in terms of just really kind of abstracting away the the tech and meeting investors and consumers and and users where they are. That I feel like is going to be a really big unlock for crypto at large, but also specifically for RWAs. I mean, it's going to move from we're tokenizing these particular assets here and there to whole platform forms are going to say we're tokenizing all equities available through our platform or we're tokenizing all the debt products. It's going to be much more of a solid foundational level and to the point where people won't even know or care that it's tokenized ideally. Well, the thing about crypto is like the the over bullcase of tokenization is crypto is very good to find price discovery on a whole set of liquid assets and that's sort of the innovation of like a an AMM like the B you know that curve right where there's a that continuum you always find a price and there's always kind of a the ability to settle that and I think that is perhaps offers a glimpse into bringing more liquidity in secondary markets that in traditional finance just are really hard and and it you combine stuff we've talked about like stable coins, the ability to settle and and go to a stable unit of account on chain in a digital manner is instrumental. Like an example that's poly market, you had augur, which was kind of one of the early instantiations of prediction markets. It's really hard to spin up a prediction market if you don't have a a unit of account because it sucks that you win the bet or you win the market and then wait a minute, the collateral goes like you you actually lose money because ETH goes down 80%. So, but now you're in a very different state, right? Where so I think like the combination of these kind of money blocks and Legos where you have stable coins to settle into. You have like an AMM construct like unis swap kind of pioneered which is you have continuous price discovery. And so if you I think it offers a glimpse into 24/7 365 markets where if you want to open up the US, you know, the the rest of the world population that doesn't have access to Tesla stock on a Sunday, you could do that, right? and you can have kind of orderly markets. Well, it's the value proposition and access absolutely is one component of the value proposition. Uh, another one is the programmability of it. So, being here in London, there's a firm Archax which is a fantastic tokenization platform. and they've been working with a number of different chains including Hideera and they are pushing the envelope on how you can programmize assets. So taking various tokens and pooling them them together representing them in a singular asset that can be used as a collateral form can be transferable. So I think gone will be the days very soon where you know you have your mutual fund or 401k and in order to move that from one platform to another uh you have to liquidate those assets divest get a check mail that you have that check mailed to you deposit into a new institution. You should be able to and will be able to move these customized risk portfolios and really lean into the value proposition of an asset that can be a new collateral form once tokenized. Yeah. And in preparing for this panel, you know, I know Morgan and Santiago, you guys talked about having conviction in private credit as well. Um would just be curious of, you know, the the infrastructure gaps you're seeing in private credit and um and then maybe, you know, some of the some of the use cases that um you're testing out there. I'm happy to kick it off. Um so I think private credit's a really interesting uh use case in the context of leveraging this tech. this tech being tokenization, stable coins, uh blockchains in that today the private credit industry specifically like assetbacked finance is dominated by say the top 15 20 private credit managers and part of that is because you know a huge percentage of their um of their firm is middle and back office who are actually processing all the incoming loan requests, reconciling incoming loan requests against uh credit facilities that they give to various originators and then actually funding those loan requests. tests, which takes, you know, at best a week to kind of wrangle all the LPs and do capital calls and actually facilitate that that funding. And I think leveraging this tech being again blockchain programmatic credit facilities uh and stable coins allows um emerging managers, family offices, new funds to be able to actually participate in the space. And it's and it's an it's not a spin, but it's like an interesting conception in the concept of like democratization of finance. Usually it talks about like retail uh you know being able to kind of access finance, but it's really allowing institutions and lowering the barriers for institutions to actually um participate and even compete in the private credit space. Um, and it's something that we're kind of very focused on and convicted in in the context of um, bringing programmatic money or better money to to very traditional web 2 fintech originators and saying, you know, the value prop is not do you want to use this or you should use this better tech, but it's do you want better money and I mean they're not going to say no or they haven't said no so far, right? Yeah. I I think like HELOCs are probably a good example. There's a company called Figure Markets and look again they they've found a wedge in the origination side in the settlement approval times and that like go study that workflow and and I think the reality is when you're moving money in the traditional way it's t plus 5 and the reconciliation at the back office and like any bank out there you got you understands the biggest driver of cost in a bank is just back office and compliance and I think when you when you migrate some or all of that workflow to a smart contract with a very narrow defined set of logic that has been formally verified and and you have those guarantees that if X parameters are met that logic will be executed and you have atomic execution and you can inspect the collateral you can inspect all these different things you start seeing a world where money just moves at the speed of light and is much more efficient capturing yield if it's sitting idly and then you can you know draw down that vault so that's where we're going I mean it will take some time but you see these glimpses in instances like figure that gives us confidence that we're we're going to go much much higher with within Hideera. We're really focused on those applications that lean into the scalability of the of the blockchain itself. And so highly scalable institutional adoption from a B2B side is really the area of focus. Now today where we are we're seeing the infancy of this right we're seeing from uh private markets the tokenization of uh of real estate. So, uh, Red Swan, which is a broker dealer in the US, recently tokenized a building, the first building, uh, of the New York skyline, uh, hotel on Rivington. And so, you see applications like that that are driving, uh, you know, smaller scale one-off deals. Uh, but I think that the proof of concepts in many ways for the broadscale adoption of this technology, you're seeing it in in other avenues. uh zonix, which is a a tokenization platform, recently tokenized one world petroleum uh so oil and gas fields. And so you're seeing micro um products that are coming to market. Um but the technology is proving itself with this uh for larger scale adoption. I think uh private credit is actually very interesting example of keeping it low and you know there's a lot of noise around tokenized equities but actually being a lot bigger than the equities that we're seeing. So figure is is that example they've been just building and they've grown their TVL onchain um quite significantly. It's actually um a few I mean latest numbers say at least a couple of times higher than what we've seen in in equities and um I do think bringing on more sources of yield and you know private equity is one sorry private credit is one um will only enhance what we have in DeFi. Um in fact the more we have of that the more interesting um yieldbearing instruments we can uh build around and in DeFi one thing that we really like is um uh is composability. Yeah. Uh and Morgan just kind of wanted to double click on you know as you're as you guys think about designing pilots to test these use cases what goes into that decision? um you know how how are you just kind of thinking about the best ways to test the utility because obviously utility is going to be h how this space takes off. I love that you said double click it's a consulting term. Um so I I've picked that up somewhere. Yeah. All these conversations. Um, I think that for us, we always want to talk to the business side of the partner that we're working with. And in especially when we're talking to tradi a lot of the times we're talking to the digital asset teams which is great but we're moving to a point where they are involving business sponsors and people from the business to understand and validate and confirm like yes this actually is a pain point that I'm experiencing and this this is a business related outcome that will kind of help drive things forward whether from a risk and control standpoint or from a P&L standpoint. And so whether it's working with banks or even fintech originators, sitting down with them and kind of transcribing the capability into terms that they would understand that are um you know pal palatable for them. Um that makes a very big difference because again it kind of goes back to the to the better tech versus better money question. It's like um you know what is the so what what is the implication of this thing that we're talking about and to to verify that that is the case. And it's been really cool to kind of frankly sit in some of those conversations with the head of capital markets from so- and so firm and for them to talk about how the process works today and how it could be totally kind of revamped. They don't have to spend half a day every week kind of reconciling things over Excel or they can kind of draw down from a facility on a daily basis instead of a weekly basis. And those those are impactful kind of outcomes to their bottom line. And so really kind of validating that I think is a kind of a key part to to any process frankly when it comes to RWAS or onchain finance. Yeah. And Centi, you've been on a lot of panels so I've been listening to you uh the last couple days. Um but yeah, you've been talking about integrating blockchain tech into day-to-day operations. Morgan kind of mentions it there. Um it seems the the benefits of it are obvious and have been stated. uh what maybe are some of the hurdles that are still um there for businesses looking to do this? Yeah, I mean it dovtales really nicely what Morgan said. The the obvious skeptic in the room might say why hasn't this been adopted before? Like this technology has been around for quite a bit of time. And I think you know I started in version in November of last year when I saw a path of a very different regulatory regime and administration that would regulate sensibly these assets because the technology and the infrastructure is there and so I think like that was a key blocker. We're not there yet. I think there are sensible pieces of legislation that have been put forth, but I think DeFi as a whole, we still need to have more regulation there. I'm excited because I think the US will set the tone, right? Um to to for the rest of the world, maybe X Europe for a bit, but like the rest of the world really looks at the US. Um and so that's really, you know, but it might take time, right? Uh the other roadblock is at Inversion, we take this approach of like we want to own um the sandwich, right? We want to own the user aggregation layer. We're buying companies where we can inject them with this like rip replace old antiquated infrastructure, bring a workflow like you described, Morgan and make that business just structurally more efficient. Um, and then I think like every chain out there says that they are the best in in in TPS in in security along across all these vectors. The reality is until we stress test this technology, we're really not going to know. And and so I think I'm excited for that because we have 30 to 60 million active users in crypto today as a whole. What happens when we bring a billion users or 500 million? And I think it's just really understanding that sometimes we have a preference for partnering with D5 protocols, stablecoin folks. Uh you know, we're an avalanche L1, so out of the box um technology is very useful to us because we allows us to focus on what we do best. But you know there's some tooling that will be required as we build and you'll identify gaps in the particular workflow. So sort of like a I don't know in the same way that I think a lot of people didn't really imagine what the first, second or third generation of the iPhone was going to do. But we're talking about money and that consumer behavior doesn't really change that much. There's certain things that I, as I said earlier, if we just stick to stable coins and yield, it is a massive opportunity to change consumer finance in its own right. And but you know, like every good technology, like no one really imagined that the iPhone was going to allow you to order food and watch videos and do all of these things. We just got to be there prepared, listening to the customer and and building and iterating to serve what they want best, right? I'm not convinced that the value proposition is immediately and readily apparent to uh those that may be outside of this room. And so as an industry I think it is our responsibility to continue to demonstrate that um and that comes in the form of you know net new revenues for businesses. It comes in the form of uh cost reductions through automation. Um it comes in terms of expanding the client population uh uh that can invest in a variety of different products. And so uh you know every conversation is unique based off of the use cases but I'm sure Morgan has experienced this as well. The reality is with the change in the regulation with the US leading the adoption phase we find ourselves in now banks and other financial institutions are far more engaged than they have been in the past. And that's really what's going to be the significant change where we get to be able to stress test these networks and have the scalability because the size of the tokenization is uh is really insignificant relative to broader financial markets. I will say just on this point we always at Inversion have this challenge of lead with business logic not ideology. And so I can tell you I've spent we've looked at telco businesses and we go talk to the head analysts at a major investment bank about the thesis that we have and it's like can you walk into a room and can you talk about this technology with ever mentioning some of the lingo that we have are using here freely and if that executive that board you know the board or that analyst understands the business logic then then that's how you know this technology I'll give you an example in the telco space we we are evaluating the ability to offload. I'm not going to go into what that all means, but I can tell you I've talked to former CEOs of some of the largest telos in the world to validate this thesis. And I would describe Helium in a way without mentioning that it was crypto. And they would say, "Oh yeah, we do that. We do that. We have our hotspots in a in a highly dense area like London. We have our own hotspots." He said okay so the only difference between what you have deployed to allow you to make your business better and what exists in this new world called decentralized finance and decentralized physical infrastructure networks is that one is open and the other one is permission network and then you kind of go into the nuances and he's like huh that's really interesting we try we actually tried doing that before but we couldn't solve the reliability or the uptime of the hotspots and then I think you get into a more nuance discussion around why is this possible possible today and then you get them to agree on that and then the final question is is this actually possible regulation you say yes right yeah and uh we brought up regulation so obviously a lot of progress there in the last year and and um with Genius Act with with market structure legislation still kind of pending in the US maybe we'll pass next year um Rebecca Radig said on stage yesterday that's kind of her thought curious of um what the what what you guys are waiting for on the regulatory front to further unlock uh utility and um maybe some of the conversations that you're having with regulators or what's top of mind for you as um we look forward that next I mean I think it remains to be seen if we'll see changes in securities laws because I think that has direct implications for you know accredit investor accreditation laws and kind of what they're able to access whether an asset's tokenized or not. Same thing with tokenized equities. I mean, that would also be obviously a very big change, but it's it's um interesting to see a lot of the consideration for change in these like historically antiquated laws that potentially now are kind of potentially keeping pace with the the pace of innovation and technology. So TBD in terms of what happens there, I think um to the point that was said earlier, even where we're at today versus where we're at a year ago, it's been like a total 180 in terms of the conversations that we've been having, especially with banks and FMIs um about leveraging public blockchain infrastructure. Now they're like, okay, what do we use public blockchain for? Like how how can we engage and and what does that look like? And so, you know, I do think that we'll see more and more uh regulated banks um and asset managers have been has been here for for a bit, but banks and FMIs kind of leveraging uh more kind of open- source uh public permissionless networks. Um I still do think that there's like a world for um for purpose obviously purpose-built L1's um for very particular purposes and applications. Um, but it's been kind of great to see again more banks and and even neo banks like I think we'll see like we'll start to see really a sense of urgency among the banks and seeing some of them maybe get some FOMO when we see uh the neo banks and challengers really kind of getting involved and actually seeing net business outcomes and benefits and potentially eventually kind of taking some market share from banks. think that's really where we'll start seeing banks are willing to invest um the resources to upgrade um and and kind of uh override their tech debt. I mean, they have years and years of tech debt, right? But um but I think we'll get there. This is sort of the question no one wants to go first. Um but look, the reality is a lot of people ask what happens if after this administration, can we peel it back? And the reality is we're we're we're past that simply because Wall Street can now make money off of this industry. I mean, you have a very clear rationale and impetus from the Black Rocks of the world that look the Bitcoin ETF has been the most profitable, widely adopted ETF for Black Rockck. And so, I think you now have the ability for large institutions to make money off of this industry. And that matters a lot. And and again, it's sort of like Uber. Uber was super disruptive for the taxi industry and they face a ton of resistance in every single market that they went. You just have to sort of believe that if you're delivering extreme value to the end user in the same way that Uber did, you will prevail. Full stop. Like however, regulators historically have said crypto point to me what is the actual value of this technology beyond this speculation and casino that you've architected would go 50 times lever long and get liquidated. And that's the problem that we face ourselves in industry which is that we will no longer be able to blame a regulator, a market maker, an exchange for the fact that this technology did not get adopted. It's ready. We can deploy it faster. That's sort of the the only reason why I'm starting version and going to accelerate that because if in 5 years we don't have real GDP coming on chain through tokenization through serving end users not just speculative activity of memecoins which you know it's okay but we can do far more than that if we if we don't deliver that it we're going to find ourselves in a tough problem as an industry and saying okay what's what's what's the reason why we're sitting here in this room talking about this whole technology I wouldn't say that there's specific regulation that I'm looking to see, oh, this is going to pass and this is going to unlock, you know, a big change, a step change function. Um, you know, I was I was speaking uh with the chairman of the SEC just weeks ago and the reality is that the guidance that is being provided from both the executive and the regulator uh regulators across the world is enabling financial institutions to engage in the way that they weren't previously. So it's really a risk reduction that is occurring and then it's how well does you know the technology fit their specific needs. Yeah, I think um thinking from first principles, I actually fully agree with with what Santi said, which is we finally have a convergence between TRFI being able to make a lot of money. You know, like Black Rockck CEO saying everything that can be tokenized will be tokenized. Kind of great indication of the future we're going into. uh but also the fact that the US government I think is um seeing this as a massive strategic win where you have this new nent industry uh which is the fastest growing buyer of US government debt and and and this is like really at the core of it because while some other you know less friendly jurisdictions and countries are starting to dd dollararize you suddenly have a massive like borderless industry that is re like is dollarizing at the fastest clip ever and I think uh it just makes a lot of sense for um whoever is in you know in the administration to actually not just continue this but foster it and see it grow um just it makes a lot of sense from first principles to do it well stable coins are that first adoption tool it's very easy to adopt a stable coin I I would expect that as US dollarization continues to be pushed due to stable coins that there is the counter to that where uh more and more governments require the payments to be in stable coins of their native currencies. Now the payment industry as a whole is still just a fraction of the use of stable coins today. I mean we the the the real use cases of stable coins relate to onboarding to various exchanges and arbitragees. It's it's not the payment rails that we see on legacy systems, but I think that those are really being developed and that's what gets me really excited when you see uh supply chain invoice factoring that's being enabled through stablecoin payments across borders B2B. Uh you can cut down, you know, the the period from payment from 120 days down to a programmatic, you know, payment versus delivery type of function. And that can only really be done with this technology. It's it's really difficult and very very costly to do that on legacy rail. So I think the more that we can expand the use of stable coins regardless of whether those are dollar denominated or others the more the value proposition for non cryptoreated use case will will you know materialize. Let's not forget like we at Inversion have a thesis that stable adoption really happens outside the US or places like London because here you have Revolute, you have PayPal, you have you go to a place like Mexico, it's very cash based. People don't have access to credit um and it's a cash based economy. So why would the regulator to your point around we often get asked this question why would the regulator in a particular place like Mexico want that economy to be dollarized or or allow their end user to have dollars in the bank account? Because then that poses the to your point around first principle as well then that sort of destabilizes that local currency and then you go talk to regulator and say well you sort of have to the cuts out of the bag but you do prefer to digitize the economy because if you digitize the economy you can monitor economic activity and then you can you know tax it and so the informal economy in a lot of these pl most of the developing world is is you know very cashbased. And so and then once you have it in a digital manner then you can start thinking about okay maybe we'll incentivize people to convert to our local you know the peso stable coin and and I think that's a lot there is receptiv so it's like what is the better outcome and I think it's sort of like in this new paradigm that you cannot stop you would rather have a digital economy and and that's a better place and I think governments around the world are starting to realize I don't know if you guys would agree with that. Yeah, I I I agree. I think like it's the US and the kind of the dollar is leads the way, but everyone will have to follow because of, you know, the reasons that you mentioned. I I think it's just a a matter of time, but um everything is set in motion and I don't think there's a way to go back to be honest. Yeah. So, with that stage set, as as you guys mentioned, no longer the regulatory excuse, there's no longer as much of a lack of awareness of this technology. Um I think before the panel was sent you talked about a three to five year kind of ex execution window for making tokenization table stakes. Curious of what you think table stakes looks like um in the tokenization lens and and why you kind of picked that three to five year timeline window of again this is why I woke up one day and said god I I'm tired of sitting behind a screen or coming to these panels and pontificating about this goddamn technology. It's good. We use it. But someone has to deploy it at scale and and why I don't ascribe to this idea that we need to take another 12 years. I've been in this industry since 2012. I you know at some point you you say the tech is ready. The regulation is there and and so let's accelerate that. Let's actually muscle our way to go to market and development. So so what does that look like? I don't know. 3 to 5 years. Can we do it sooner? My northstar is can crypto be a relatable piece of technology for people without necessarily them understanding that they're using crypto because infrastructure is invisible. It should be invisible. So our northstar inversion is let's make crypto let's make all of this infrastructure invisible such that the consumer may not understand likely will never understand how this technology works but they will feel the impact and I think that is the northstar that is the standard that we need to hold ourselves as an industry is are we delivering real value to the end user that will facilitate all the conversations we have with regulators you can go in and talk to them say gosh you know look at helocks and look at how that's in a better process or look at, you know, cons the person that wins the most with this technology is the end consumer. And we just need to be playing a long-term game of delivering extreme value to the end user. If we do that really well and we kind of focus less on the near-term cash opportunity of maximal extractable casino, I think we would have done a really good job. And at Inversion, again, building distribution is very hard. convincing people to set up a wallet is hard. Now, thankfully, there's been billions and billions of dollars of venture funds that have done that, but I think now it's we got to invert the playbook and we say, "Okay, let's acquire real business and let's just kind of Trojan horse our way into mainstream adoption." I think we'll do that. I would take the well under five-year because I don't think that we are just in a consumer finance related focus. I think that there is a huge wave of B-2B applications that are coming and they have been we're we're in a call it a 2-year window where there is the adoption of the the technology the stress testing the the deployments on various chains and then there will be enablement of broadscale applications and I think that's when it becomes abstracted from the user and is facilitated by institutions that already have established customer bases, then you won't have the need for the direct engagement from a retail perspective. You'll be able to execute utilizing this technology through your existing infrastructure providers. You're, you know, you pick your bank, you pick your, you know, financial service provider. Yeah, I'm looking forward to in three to five years not necessarily having panels on tokenization but really talking about consumer lending and you know other other use cases, loyalty and rewards programs like really kind of digging in to vertical specific topics and having various executives talking about like how it helped their business and going beyond talking about you know this is a blockchain company but just this is just a company that happens to use blockchain. Um, so very much looking forward to to that. Yeah, we have a few more seconds. Alex, if you want. Yeah, I think we're at an inflection point. The Cambrian explosion is just around the corner. I give it like maybe two years. Yeah, looking forward to it. Great. Well, we'll end it there. Really appreciate the time everyone and thanks all for being
Real-World Impact: Driving Utility and Adoption Through Tokenization | DAS London 2025 | Day 2 |
Summary
Transcript
All right. Little different with the microphones. Uh yeah, if if you don't have your headphones on already, that'll be how you'll hear us. Um but yeah, so let's dig in. You know, we've heard a lot about tokenization already. Um a lot at this at this conference. So let's let's jump in. We got um 300 billion in stable coins. Uh more than 30 billion RWAS now. Uh so first just kind of want to get just a quick reaction to the growth of stable coins in recent months um to hit that about to hit that 300 billion mark. Uh because that'll be you know the cash leg of this onchain world. Uh so just quickly um maybe Santiago I I heard you talking about stable coins on a previous panel yesterday and just kind of the importance there. Uh how does that kind of set the stage for tokenized RWAS more broadly? Well, look, uh, stable coins are a killer product. Um, the reality is the entire world wants to hold dollars, and you're just filling that demand. It's borderless. Um, it is, uh, regulated now, the Genius Act, and so it is a very convenient product, and it's, um, I've said it time and time again, like even if we stopped innovating and we just kind of focused on stable coins, there is it will change consumer finance. It it's this idea of programmable money. And so um of course we're kind of now in the phase where like why did this um increase so much and I think you can point to a variety of factors. I'll let some of the other panels kind of dive into that but um it is I think still a tip of the iceberg. Um we don't need to focus on all the different other type of flavors of RWA. I was in a panel yesterday like I am kind of a bit skeptical that we can bring on more bespoke assets that you stitch together kind of offchain onchain. think we still haven't figured that out, but stable coins in their own right are are this seventh wonder of the world. It's just programmable money. I think they call it the quintessential killer app for for crypto and also the quintessential RWA. So, totally agree. Um it seems like definitely the regulatory and macro environment is very has been very conducive over the past year and so especially with Genius uh passing um it sounds like everyone and their mom is issuing their own stable coin. I think like any co any any company that has embedded distribution already is thinking about launching their own stable coin. Obviously, there's a lot of questions around interoperability and use cases and applications, but it is something that's very much top of mind, not only for cryptonatives, but also traditional web 2 companies, institutions, enterprises. And the way that I look at stable coins is very much kind of like the top of the funnel for a lot of different um kind of incremental blockchain enabled products and services. So access to dollars to Santi's point is like the the the first kind of country but then from there a lot of companies are thinking about um digital savings accounts being enabled through stable coins being able to earn rewards or yield on those stable coins through money market funds through uh DeFi integrations and then finally the ability to actually spend down or against those stable coins through stable coinbacked card products. And so this kind of order of operations is what a lot of different institutions and enterprises are are thinking through. And of course there is a huge retail side to this. But there's also the B2B aspects. And so when you think about the evolution of you know structured credit products and those being tokenized ultimately use of stable coins as a cash flow product and taking that tokenized uh programmable money and embedding it in a security that's an in incredible use case and I think that a lot of the institutional adoption we'll be seeing in the years to come will be really utilizing stable coins or tokenized deposits in a way that facilitates how most cash flows exist in products in Tradfi throughout the world. Yeah. And so outside of stable coins, that that number 33 billion in RWAs, I believe half of that is in private credit. We've seen tokenized money market funds and more um developments on the tokenized equities side. Now we'd love to kind of just hear some of the areas of tokenization that you guys maybe have the highest conviction in uh you know before we start digging into use cases and adoption. Yeah, I think tokenization is taking um the path of list resistance and what I mean by that is you start with the most liquid stuff which is the cash. We have a pretty big effort there, right? 300 billion. It's a the use case that we should be most proud in crypto that kind of came out of everything that we're doing here. Um I think next is tokenizing Tibils which that also happens like indirectly the fiat backstable coins are also a form of tokenized Tibils although the yield stays with the the issuer. uh now we have this second wave of um tibels where tokenization where the the yield is passed on to the you know the the holders and then from there on I think we'll we're going to see other types of u debt instruments perhaps other types of sovereign bonds and corporate bonds and um private credit as well and then we we got to a point where we kind of move over to the next uh part which is tokenized securities primarily equities now I think we're still very early and I think the way we're approaching tokenized um equities is probably not the form they will be long term. In fact, it's a it's a wrapped version in a way. It's also a debt instrument because it's an IOU that gives you the potential to redeem a a security or a unit of stock later on, but it's not actually the you know the underlying thing. So um we've seen some indication from a couple of uh projects that are actually building native tokenization of equities and I think that's exciting. I think that's very interesting. Um if we get the regulator on board as well just like we did with the stable coins u it will open up a massive um wave of innovation. Not the least that we can actually start trading these 247 instant uh settlement unlike what we currently have here. we still rely on the kind of opening markets to mint and redeem these uh these instruments and also when the markets are closed the spreads widen up a lot and doesn't really solve the primary issue that we started off with. Equities really are a great example of where you can really drive into the why tokenize the value proposition that's being presented both to the end investors but also to the issuers or the tokenizing agents. Um you know within hideera we've looked at projects like uh swarm markets you know they are innovating on the tokenization of equity side to ensure that the interconnectivity to other pools of capital remain um so you have defi enabled compliant uh tokenization of you know largecale US equities but ensuring that trade execution can also filter through to traditional markets where the liquidity is far greater. So it's creating the the bridge structures and the interoperability to traditional markets. I think that's one of the big themes within you know Hideera that we look at around how we bring on the next wave of of institutional adoption. It's ensuring that there's clear value proposition and that the connectivity is there both in terms of interoperability across networks but then interoperability to legacy systems which is key and that can come in terms of cache and in tokenized securities. I think like zooming out like to to your point around like what are the clear like first next steps of what we want to tokenize and what maybe what we shouldn't be tokenizing because you know when you go 247 365 markets market structure may or may not be there when you want to trade Friday night and there's look go talk to a high yield bond trader he'll tell you sometimes that market's dry and and and so there are inefficiencies there are the technology the infra the APIs maybe get bricked when there's that load surge and so we got to make sure that look every iteration Every event like this allows us to stress test. But I'll give you one example. There's a DeFi is a marginal improvement to the current paradigm of financial system in the sense that even if you have these issues that we know in crypto like the oracle pricing model, market structure and congestion and whatnot, you're moving from a opaque antiquated system and you're moving to a transparent system. So, if you want to have a digital representation of collateral, um, you might say, "Wait a minute, but like how do you verify that?" And I think like we got to remember like anyone that's been in finance in the global financial crisis, you don't understand your counterparty risk. You're relying on a regulator or an auditor to to not do that in a continuous way. But you have like you call up your people, hey, are you guys okay? Well, you know, yeah, of course we're okay. Steady lads, you know, we're deploying more capital kind of thing. Uh, in crypto at least, you have this ability. Imagine if you have all of this collateral represented as an NFT and you have some information about it. It at least prevents issuers offchain to like double pledge that collateral which happens time and time again. And so you're not going to fix everything. It's not a perfect, but at least it moves us from a more not a transparent system to a transparent system and it mitigates a lot of the issues that we continue to see in in Tradfi, which is just that opacity and off-chain and offbalance sheet items. So, it's just important to kind of remember like if we just do that, I think it's a very marginal improvement, meaningful improvement to avoid a lot of catastrophes in in Tradfi. Yeah. And I I want to get into private credit, but while we're talking about equities, you know, we've seen NASDAQ file for uh to tokenize securities on their exchange. We've seen Kraken's X stocks and Robin Hood stock tokens, which offer, you know, exposure to the the price of stocks, but not shareholder rights or things like that. So just kind of curious of how you kind of see um tokenized equities evolving and um you know the regulation that we're going to need to see to kind of bring this to the next level and and have these um so uh from my perspective it's just indicative of the way that institutions are moving from you know their siloed independent ledgers or account structures to a wallet based infrastructure. Um, it's coming in multiple different flavors. Of course, you're seeing the Robin Hoods of the world that are saying, "All right, we're going to distribute and, you know, through tokenized stocks to the retail population." You're seeing it on more of the settlement side where uh institutional ledgers are now really in an experimental phase of representing their assets in wallet infrastructure and I only expect that to accelerate. One thing I would add in the NASDAQ kind of uh development is a good example of that is I think over time we spent a lot of time kind of cultivating high quality asset tokenized asset supply in the ecosystem and now at least from an avalanche standpoint we're very focused on the on the demand side and that could be integrating with DeFi to the extent possible um but really and I think the unlock is integrating with traditional distribution channels so to the extent like you'll ever be able to access tokeniz equities on NASDAQ. Like that's huge because you're meeting investors, people, customers where they're at. And so from a mass adoption standpoint, and Santi knows this, we're very much aligned in this in terms of just really kind of abstracting away the the tech and meeting investors and consumers and and users where they are. That I feel like is going to be a really big unlock for crypto at large, but also specifically for RWAs. I mean, it's going to move from we're tokenizing these particular assets here and there to whole platform forms are going to say we're tokenizing all equities available through our platform or we're tokenizing all the debt products. It's going to be much more of a solid foundational level and to the point where people won't even know or care that it's tokenized ideally. Well, the thing about crypto is like the the over bullcase of tokenization is crypto is very good to find price discovery on a whole set of liquid assets and that's sort of the innovation of like a an AMM like the B you know that curve right where there's a that continuum you always find a price and there's always kind of a the ability to settle that and I think that is perhaps offers a glimpse into bringing more liquidity in secondary markets that in traditional finance just are really hard and and it you combine stuff we've talked about like stable coins, the ability to settle and and go to a stable unit of account on chain in a digital manner is instrumental. Like an example that's poly market, you had augur, which was kind of one of the early instantiations of prediction markets. It's really hard to spin up a prediction market if you don't have a a unit of account because it sucks that you win the bet or you win the market and then wait a minute, the collateral goes like you you actually lose money because ETH goes down 80%. So, but now you're in a very different state, right? Where so I think like the combination of these kind of money blocks and Legos where you have stable coins to settle into. You have like an AMM construct like unis swap kind of pioneered which is you have continuous price discovery. And so if you I think it offers a glimpse into 24/7 365 markets where if you want to open up the US, you know, the the rest of the world population that doesn't have access to Tesla stock on a Sunday, you could do that, right? and you can have kind of orderly markets. Well, it's the value proposition and access absolutely is one component of the value proposition. Uh, another one is the programmability of it. So, being here in London, there's a firm Archax which is a fantastic tokenization platform. and they've been working with a number of different chains including Hideera and they are pushing the envelope on how you can programmize assets. So taking various tokens and pooling them them together representing them in a singular asset that can be used as a collateral form can be transferable. So I think gone will be the days very soon where you know you have your mutual fund or 401k and in order to move that from one platform to another uh you have to liquidate those assets divest get a check mail that you have that check mailed to you deposit into a new institution. You should be able to and will be able to move these customized risk portfolios and really lean into the value proposition of an asset that can be a new collateral form once tokenized. Yeah. And in preparing for this panel, you know, I know Morgan and Santiago, you guys talked about having conviction in private credit as well. Um would just be curious of, you know, the the infrastructure gaps you're seeing in private credit and um and then maybe, you know, some of the some of the use cases that um you're testing out there. I'm happy to kick it off. Um so I think private credit's a really interesting uh use case in the context of leveraging this tech. this tech being tokenization, stable coins, uh blockchains in that today the private credit industry specifically like assetbacked finance is dominated by say the top 15 20 private credit managers and part of that is because you know a huge percentage of their um of their firm is middle and back office who are actually processing all the incoming loan requests, reconciling incoming loan requests against uh credit facilities that they give to various originators and then actually funding those loan requests. tests, which takes, you know, at best a week to kind of wrangle all the LPs and do capital calls and actually facilitate that that funding. And I think leveraging this tech being again blockchain programmatic credit facilities uh and stable coins allows um emerging managers, family offices, new funds to be able to actually participate in the space. And it's and it's an it's not a spin, but it's like an interesting conception in the concept of like democratization of finance. Usually it talks about like retail uh you know being able to kind of access finance, but it's really allowing institutions and lowering the barriers for institutions to actually um participate and even compete in the private credit space. Um, and it's something that we're kind of very focused on and convicted in in the context of um, bringing programmatic money or better money to to very traditional web 2 fintech originators and saying, you know, the value prop is not do you want to use this or you should use this better tech, but it's do you want better money and I mean they're not going to say no or they haven't said no so far, right? Yeah. I I think like HELOCs are probably a good example. There's a company called Figure Markets and look again they they've found a wedge in the origination side in the settlement approval times and that like go study that workflow and and I think the reality is when you're moving money in the traditional way it's t plus 5 and the reconciliation at the back office and like any bank out there you got you understands the biggest driver of cost in a bank is just back office and compliance and I think when you when you migrate some or all of that workflow to a smart contract with a very narrow defined set of logic that has been formally verified and and you have those guarantees that if X parameters are met that logic will be executed and you have atomic execution and you can inspect the collateral you can inspect all these different things you start seeing a world where money just moves at the speed of light and is much more efficient capturing yield if it's sitting idly and then you can you know draw down that vault so that's where we're going I mean it will take some time but you see these glimpses in instances like figure that gives us confidence that we're we're going to go much much higher with within Hideera. We're really focused on those applications that lean into the scalability of the of the blockchain itself. And so highly scalable institutional adoption from a B2B side is really the area of focus. Now today where we are we're seeing the infancy of this right we're seeing from uh private markets the tokenization of uh of real estate. So, uh, Red Swan, which is a broker dealer in the US, recently tokenized a building, the first building, uh, of the New York skyline, uh, hotel on Rivington. And so, you see applications like that that are driving, uh, you know, smaller scale one-off deals. Uh, but I think that the proof of concepts in many ways for the broadscale adoption of this technology, you're seeing it in in other avenues. uh zonix, which is a a tokenization platform, recently tokenized one world petroleum uh so oil and gas fields. And so you're seeing micro um products that are coming to market. Um but the technology is proving itself with this uh for larger scale adoption. I think uh private credit is actually very interesting example of keeping it low and you know there's a lot of noise around tokenized equities but actually being a lot bigger than the equities that we're seeing. So figure is is that example they've been just building and they've grown their TVL onchain um quite significantly. It's actually um a few I mean latest numbers say at least a couple of times higher than what we've seen in in equities and um I do think bringing on more sources of yield and you know private equity is one sorry private credit is one um will only enhance what we have in DeFi. Um in fact the more we have of that the more interesting um yieldbearing instruments we can uh build around and in DeFi one thing that we really like is um uh is composability. Yeah. Uh and Morgan just kind of wanted to double click on you know as you're as you guys think about designing pilots to test these use cases what goes into that decision? um you know how how are you just kind of thinking about the best ways to test the utility because obviously utility is going to be h how this space takes off. I love that you said double click it's a consulting term. Um so I I've picked that up somewhere. Yeah. All these conversations. Um, I think that for us, we always want to talk to the business side of the partner that we're working with. And in especially when we're talking to tradi a lot of the times we're talking to the digital asset teams which is great but we're moving to a point where they are involving business sponsors and people from the business to understand and validate and confirm like yes this actually is a pain point that I'm experiencing and this this is a business related outcome that will kind of help drive things forward whether from a risk and control standpoint or from a P&L standpoint. And so whether it's working with banks or even fintech originators, sitting down with them and kind of transcribing the capability into terms that they would understand that are um you know pal palatable for them. Um that makes a very big difference because again it kind of goes back to the to the better tech versus better money question. It's like um you know what is the so what what is the implication of this thing that we're talking about and to to verify that that is the case. And it's been really cool to kind of frankly sit in some of those conversations with the head of capital markets from so- and so firm and for them to talk about how the process works today and how it could be totally kind of revamped. They don't have to spend half a day every week kind of reconciling things over Excel or they can kind of draw down from a facility on a daily basis instead of a weekly basis. And those those are impactful kind of outcomes to their bottom line. And so really kind of validating that I think is a kind of a key part to to any process frankly when it comes to RWAS or onchain finance. Yeah. And Centi, you've been on a lot of panels so I've been listening to you uh the last couple days. Um but yeah, you've been talking about integrating blockchain tech into day-to-day operations. Morgan kind of mentions it there. Um it seems the the benefits of it are obvious and have been stated. uh what maybe are some of the hurdles that are still um there for businesses looking to do this? Yeah, I mean it dovtales really nicely what Morgan said. The the obvious skeptic in the room might say why hasn't this been adopted before? Like this technology has been around for quite a bit of time. And I think you know I started in version in November of last year when I saw a path of a very different regulatory regime and administration that would regulate sensibly these assets because the technology and the infrastructure is there and so I think like that was a key blocker. We're not there yet. I think there are sensible pieces of legislation that have been put forth, but I think DeFi as a whole, we still need to have more regulation there. I'm excited because I think the US will set the tone, right? Um to to for the rest of the world, maybe X Europe for a bit, but like the rest of the world really looks at the US. Um and so that's really, you know, but it might take time, right? Uh the other roadblock is at Inversion, we take this approach of like we want to own um the sandwich, right? We want to own the user aggregation layer. We're buying companies where we can inject them with this like rip replace old antiquated infrastructure, bring a workflow like you described, Morgan and make that business just structurally more efficient. Um, and then I think like every chain out there says that they are the best in in in TPS in in security along across all these vectors. The reality is until we stress test this technology, we're really not going to know. And and so I think I'm excited for that because we have 30 to 60 million active users in crypto today as a whole. What happens when we bring a billion users or 500 million? And I think it's just really understanding that sometimes we have a preference for partnering with D5 protocols, stablecoin folks. Uh you know, we're an avalanche L1, so out of the box um technology is very useful to us because we allows us to focus on what we do best. But you know there's some tooling that will be required as we build and you'll identify gaps in the particular workflow. So sort of like a I don't know in the same way that I think a lot of people didn't really imagine what the first, second or third generation of the iPhone was going to do. But we're talking about money and that consumer behavior doesn't really change that much. There's certain things that I, as I said earlier, if we just stick to stable coins and yield, it is a massive opportunity to change consumer finance in its own right. And but you know, like every good technology, like no one really imagined that the iPhone was going to allow you to order food and watch videos and do all of these things. We just got to be there prepared, listening to the customer and and building and iterating to serve what they want best, right? I'm not convinced that the value proposition is immediately and readily apparent to uh those that may be outside of this room. And so as an industry I think it is our responsibility to continue to demonstrate that um and that comes in the form of you know net new revenues for businesses. It comes in the form of uh cost reductions through automation. Um it comes in terms of expanding the client population uh uh that can invest in a variety of different products. And so uh you know every conversation is unique based off of the use cases but I'm sure Morgan has experienced this as well. The reality is with the change in the regulation with the US leading the adoption phase we find ourselves in now banks and other financial institutions are far more engaged than they have been in the past. And that's really what's going to be the significant change where we get to be able to stress test these networks and have the scalability because the size of the tokenization is uh is really insignificant relative to broader financial markets. I will say just on this point we always at Inversion have this challenge of lead with business logic not ideology. And so I can tell you I've spent we've looked at telco businesses and we go talk to the head analysts at a major investment bank about the thesis that we have and it's like can you walk into a room and can you talk about this technology with ever mentioning some of the lingo that we have are using here freely and if that executive that board you know the board or that analyst understands the business logic then then that's how you know this technology I'll give you an example in the telco space we we are evaluating the ability to offload. I'm not going to go into what that all means, but I can tell you I've talked to former CEOs of some of the largest telos in the world to validate this thesis. And I would describe Helium in a way without mentioning that it was crypto. And they would say, "Oh yeah, we do that. We do that. We have our hotspots in a in a highly dense area like London. We have our own hotspots." He said okay so the only difference between what you have deployed to allow you to make your business better and what exists in this new world called decentralized finance and decentralized physical infrastructure networks is that one is open and the other one is permission network and then you kind of go into the nuances and he's like huh that's really interesting we try we actually tried doing that before but we couldn't solve the reliability or the uptime of the hotspots and then I think you get into a more nuance discussion around why is this possible possible today and then you get them to agree on that and then the final question is is this actually possible regulation you say yes right yeah and uh we brought up regulation so obviously a lot of progress there in the last year and and um with Genius Act with with market structure legislation still kind of pending in the US maybe we'll pass next year um Rebecca Radig said on stage yesterday that's kind of her thought curious of um what the what what you guys are waiting for on the regulatory front to further unlock uh utility and um maybe some of the conversations that you're having with regulators or what's top of mind for you as um we look forward that next I mean I think it remains to be seen if we'll see changes in securities laws because I think that has direct implications for you know accredit investor accreditation laws and kind of what they're able to access whether an asset's tokenized or not. Same thing with tokenized equities. I mean, that would also be obviously a very big change, but it's it's um interesting to see a lot of the consideration for change in these like historically antiquated laws that potentially now are kind of potentially keeping pace with the the pace of innovation and technology. So TBD in terms of what happens there, I think um to the point that was said earlier, even where we're at today versus where we're at a year ago, it's been like a total 180 in terms of the conversations that we've been having, especially with banks and FMIs um about leveraging public blockchain infrastructure. Now they're like, okay, what do we use public blockchain for? Like how how can we engage and and what does that look like? And so, you know, I do think that we'll see more and more uh regulated banks um and asset managers have been has been here for for a bit, but banks and FMIs kind of leveraging uh more kind of open- source uh public permissionless networks. Um I still do think that there's like a world for um for purpose obviously purpose-built L1's um for very particular purposes and applications. Um, but it's been kind of great to see again more banks and and even neo banks like I think we'll see like we'll start to see really a sense of urgency among the banks and seeing some of them maybe get some FOMO when we see uh the neo banks and challengers really kind of getting involved and actually seeing net business outcomes and benefits and potentially eventually kind of taking some market share from banks. think that's really where we'll start seeing banks are willing to invest um the resources to upgrade um and and kind of uh override their tech debt. I mean, they have years and years of tech debt, right? But um but I think we'll get there. This is sort of the question no one wants to go first. Um but look, the reality is a lot of people ask what happens if after this administration, can we peel it back? And the reality is we're we're we're past that simply because Wall Street can now make money off of this industry. I mean, you have a very clear rationale and impetus from the Black Rocks of the world that look the Bitcoin ETF has been the most profitable, widely adopted ETF for Black Rockck. And so, I think you now have the ability for large institutions to make money off of this industry. And that matters a lot. And and again, it's sort of like Uber. Uber was super disruptive for the taxi industry and they face a ton of resistance in every single market that they went. You just have to sort of believe that if you're delivering extreme value to the end user in the same way that Uber did, you will prevail. Full stop. Like however, regulators historically have said crypto point to me what is the actual value of this technology beyond this speculation and casino that you've architected would go 50 times lever long and get liquidated. And that's the problem that we face ourselves in industry which is that we will no longer be able to blame a regulator, a market maker, an exchange for the fact that this technology did not get adopted. It's ready. We can deploy it faster. That's sort of the the only reason why I'm starting version and going to accelerate that because if in 5 years we don't have real GDP coming on chain through tokenization through serving end users not just speculative activity of memecoins which you know it's okay but we can do far more than that if we if we don't deliver that it we're going to find ourselves in a tough problem as an industry and saying okay what's what's what's the reason why we're sitting here in this room talking about this whole technology I wouldn't say that there's specific regulation that I'm looking to see, oh, this is going to pass and this is going to unlock, you know, a big change, a step change function. Um, you know, I was I was speaking uh with the chairman of the SEC just weeks ago and the reality is that the guidance that is being provided from both the executive and the regulator uh regulators across the world is enabling financial institutions to engage in the way that they weren't previously. So it's really a risk reduction that is occurring and then it's how well does you know the technology fit their specific needs. Yeah, I think um thinking from first principles, I actually fully agree with with what Santi said, which is we finally have a convergence between TRFI being able to make a lot of money. You know, like Black Rockck CEO saying everything that can be tokenized will be tokenized. Kind of great indication of the future we're going into. uh but also the fact that the US government I think is um seeing this as a massive strategic win where you have this new nent industry uh which is the fastest growing buyer of US government debt and and and this is like really at the core of it because while some other you know less friendly jurisdictions and countries are starting to dd dollararize you suddenly have a massive like borderless industry that is re like is dollarizing at the fastest clip ever and I think uh it just makes a lot of sense for um whoever is in you know in the administration to actually not just continue this but foster it and see it grow um just it makes a lot of sense from first principles to do it well stable coins are that first adoption tool it's very easy to adopt a stable coin I I would expect that as US dollarization continues to be pushed due to stable coins that there is the counter to that where uh more and more governments require the payments to be in stable coins of their native currencies. Now the payment industry as a whole is still just a fraction of the use of stable coins today. I mean we the the the real use cases of stable coins relate to onboarding to various exchanges and arbitragees. It's it's not the payment rails that we see on legacy systems, but I think that those are really being developed and that's what gets me really excited when you see uh supply chain invoice factoring that's being enabled through stablecoin payments across borders B2B. Uh you can cut down, you know, the the period from payment from 120 days down to a programmatic, you know, payment versus delivery type of function. And that can only really be done with this technology. It's it's really difficult and very very costly to do that on legacy rail. So I think the more that we can expand the use of stable coins regardless of whether those are dollar denominated or others the more the value proposition for non cryptoreated use case will will you know materialize. Let's not forget like we at Inversion have a thesis that stable adoption really happens outside the US or places like London because here you have Revolute, you have PayPal, you have you go to a place like Mexico, it's very cash based. People don't have access to credit um and it's a cash based economy. So why would the regulator to your point around we often get asked this question why would the regulator in a particular place like Mexico want that economy to be dollarized or or allow their end user to have dollars in the bank account? Because then that poses the to your point around first principle as well then that sort of destabilizes that local currency and then you go talk to regulator and say well you sort of have to the cuts out of the bag but you do prefer to digitize the economy because if you digitize the economy you can monitor economic activity and then you can you know tax it and so the informal economy in a lot of these pl most of the developing world is is you know very cashbased. And so and then once you have it in a digital manner then you can start thinking about okay maybe we'll incentivize people to convert to our local you know the peso stable coin and and I think that's a lot there is receptiv so it's like what is the better outcome and I think it's sort of like in this new paradigm that you cannot stop you would rather have a digital economy and and that's a better place and I think governments around the world are starting to realize I don't know if you guys would agree with that. Yeah, I I I agree. I think like it's the US and the kind of the dollar is leads the way, but everyone will have to follow because of, you know, the reasons that you mentioned. I I think it's just a a matter of time, but um everything is set in motion and I don't think there's a way to go back to be honest. Yeah. So, with that stage set, as as you guys mentioned, no longer the regulatory excuse, there's no longer as much of a lack of awareness of this technology. Um I think before the panel was sent you talked about a three to five year kind of ex execution window for making tokenization table stakes. Curious of what you think table stakes looks like um in the tokenization lens and and why you kind of picked that three to five year timeline window of again this is why I woke up one day and said god I I'm tired of sitting behind a screen or coming to these panels and pontificating about this goddamn technology. It's good. We use it. But someone has to deploy it at scale and and why I don't ascribe to this idea that we need to take another 12 years. I've been in this industry since 2012. I you know at some point you you say the tech is ready. The regulation is there and and so let's accelerate that. Let's actually muscle our way to go to market and development. So so what does that look like? I don't know. 3 to 5 years. Can we do it sooner? My northstar is can crypto be a relatable piece of technology for people without necessarily them understanding that they're using crypto because infrastructure is invisible. It should be invisible. So our northstar inversion is let's make crypto let's make all of this infrastructure invisible such that the consumer may not understand likely will never understand how this technology works but they will feel the impact and I think that is the northstar that is the standard that we need to hold ourselves as an industry is are we delivering real value to the end user that will facilitate all the conversations we have with regulators you can go in and talk to them say gosh you know look at helocks and look at how that's in a better process or look at, you know, cons the person that wins the most with this technology is the end consumer. And we just need to be playing a long-term game of delivering extreme value to the end user. If we do that really well and we kind of focus less on the near-term cash opportunity of maximal extractable casino, I think we would have done a really good job. And at Inversion, again, building distribution is very hard. convincing people to set up a wallet is hard. Now, thankfully, there's been billions and billions of dollars of venture funds that have done that, but I think now it's we got to invert the playbook and we say, "Okay, let's acquire real business and let's just kind of Trojan horse our way into mainstream adoption." I think we'll do that. I would take the well under five-year because I don't think that we are just in a consumer finance related focus. I think that there is a huge wave of B-2B applications that are coming and they have been we're we're in a call it a 2-year window where there is the adoption of the the technology the stress testing the the deployments on various chains and then there will be enablement of broadscale applications and I think that's when it becomes abstracted from the user and is facilitated by institutions that already have established customer bases, then you won't have the need for the direct engagement from a retail perspective. You'll be able to execute utilizing this technology through your existing infrastructure providers. You're, you know, you pick your bank, you pick your, you know, financial service provider. Yeah, I'm looking forward to in three to five years not necessarily having panels on tokenization but really talking about consumer lending and you know other other use cases, loyalty and rewards programs like really kind of digging in to vertical specific topics and having various executives talking about like how it helped their business and going beyond talking about you know this is a blockchain company but just this is just a company that happens to use blockchain. Um, so very much looking forward to to that. Yeah, we have a few more seconds. Alex, if you want. Yeah, I think we're at an inflection point. The Cambrian explosion is just around the corner. I give it like maybe two years. Yeah, looking forward to it. Great. Well, we'll end it there. Really appreciate the time everyone and thanks all for being