The Future Economy is Decentralized ft. Sandy Kaul
🎯 Summary
Podcast Episode Summary: The Future Economy is Decentralized ft. Sandy Kaul
This 72-minute episode of “The Journey Man” features Raoul Pal in conversation with Sandy Kaul, Head of Innovation at Franklin Templeton, focusing on the accelerating institutional adoption of blockchain technology and how tokenization is set to fundamentally rewire the global financial system, moving beyond simple crypto speculation into core infrastructure.
1. Focus Area
The discussion centers on the institutional adoption and infrastructural transformation driven by blockchain technology. Key themes include the tokenization of real-world assets (RWAs), the evolution of money market funds (MMFs) onto blockchain rails, the shift from traditional account-based finance to native wallet-based systems, and the future of personalized portfolio construction (direct indexing) in a tokenized environment.
2. Key Technical Insights
- Tokenized MMF Superiority: Tokenized money market funds offer significant technical advantages over stablecoins, including native yield derived from a broader range of assets (not just Treasuries) and the ability to facilitate second-by-second shareholder record-keeping and daily yield payout, overcoming the traditional T+ settlement limitations.
- On-Chain vs. Off-Chain Settlement: Franklin Templeton is highlighted as one of the few firms building an entire set of books and records on-chain, allowing them to operate at the speed of digital rails, contrasting sharply with competitors whose tokenized assets still rely on off-chain settlement windows.
- Portfolio as an Asset: Tokenization allows individual security holdings within a portfolio to exist as tokens in a wallet. The entire portfolio can then become a “token of tokens,” which itself can be used as an asset—staked, pledged, or utilized for earning streams.
3. Market/Investment Angle
- MMF Market Disruption: The US Money Market Fund market alone is valued at $7 trillion. Tokenization offers a superior, more efficient alternative to stablecoins for cross-border trade, supply chain financing, and treasurer use cases due to programmability and yield certainty.
- Threat to Intermediaries: Traditional financial intermediaries (like banks) face immense pressure as their account-based structures are challenged by native, wallet-based systems. Banks focusing only on tokenizing deposits are seen as taking a defensive, rather than truly innovative, approach.
- Regulatory Headwinds for Stablecoins: Recent regulatory moves (like MiCA and the US FIT21 Act) are specifically forbidding stablecoins from paying yield, potentially curtailing their utility as a primary cash management tool compared to tokenized MMFs which inherently carry yield.
4. Notable Companies/People
- Sandy Kaul (Franklin Templeton): Positioned as a long-term thought leader who foresaw the tokenization shift back in 2017. FT is actively building custom infrastructure to operate as a “digital native” while maintaining its traditional firm status.
- Franklin Templeton Tokenized MMFs: Mentioned for both institutional (global cross-border trade) and retail offerings (accessible via an app for as little as $20, with Venmo-like P2P transfer capabilities).
- Traditional Finance Institutions: A general acknowledgment that major TradFi players are now “panicking” and accelerating their entry due to the realization that these blockchain rails are the future infrastructure.
5. Regulatory/Policy Discussion
The conversation notes a positive shift in the regulatory environment, citing favorable tailwinds in DC, the implementation of MiCA in Europe, and clarity emerging from Asia and the Middle East. However, new regulations are also seen as potentially limiting stablecoins (by banning yield) while providing clearer frameworks for registered products like tokenized MMFs.
6. Future Implications
The industry is moving rapidly past the question of if crypto is viable toward how to integrate these rails. The future points toward 21st-century portfolios that are highly personalized, tax-optimized, and composable, driven by tokenization. This shift will fundamentally change how collateral moves, how markets connect, and how institutions plug into open systems, rendering older, session-based regional markets obsolete.
7. Target Audience
This episode is highly valuable for Financial Professionals, Institutional Investors, Asset Managers, Fintech Strategists, and Crypto Infrastructure Builders who need to understand the convergence of TradFi and decentralized technology at an operational and strategic level.
🏢 Companies Mentioned
đź’¬ Key Insights
"Somewhere within that we are going to need zero-knowledge proofs and stuff like that because in the end this becomes very sensitive. You do not want to show people your bank account. Crypto right now is as soon as somebody knows your wallet, they can see everything. And so we have to get to a place where we can obscure that..."
"Now, if everything were tokenized, that would all sit in my cryptographically protected wallet, right? My operating capital would be sitting there in the form of stablecoins or tokenized money market funds or tokenized deposits or central bank digital currency. My investments would be sitting there in the form of tokenized equities or tokenized portfolios or crypto."
"we need to understand that the wallet becomes the access point to the client. Right? That you know, that I cannot understate or cannot overstate how important this shift from account-based to wallet-based ecosystem is going to be."
"What is this whole new concept of return stream structurally, right? We have never really been able to do that because the contracts around any type of structure and trade have been so difficult to, you know, to put into place and to manage. But now we are really getting to the point where I can engineer portfolios of different types of DeFi yield and return and hedge them off in different ways and start to have these products that build one return on top of another return on top of another return."
"I think another thing that I am envisaging happening pretty fast is the massive pools of excess capital, the Apollos and the Blackstones and those people to enter the DeFi market in size as providers of liquidity."
"if you can get their mind around this idea that a token is not an equity, but a token is a way of sharing ownership of open-source code, that starts to help, but that is that is a big leap for a lot of the VC team might get it again, but the general portfolio managers that all this sounds like too much like early-stage technology investing."