How Blockchain & Bitcoin Are Reshaping Wall Street | Mike Cagney
🎯 Summary
[{“key_takeaways”=>[“Figure went public to capitalize on the massive greenfield opportunities in Web3 infrastructure, aiming to be a leader in the inevitable wholesale replacement of capital markets.”, “Cagney prioritized broad retail participation in the IPO, viewing blockchain as a democratization force that levels the playing field for all investors.”, “The core value proposition of blockchain finance rests on native digital securities, offering transactional and liquidity benefits far superior to tokenizing legacy assets (like DTCC securities).”, “Figure initially acted as the first consumer (originator and securitizer) for its own blockchain platform because traditional banks lacked the appetite to move early.”, “The company is demonstrating the ‘DeFi leg’ of its strategy by successfully using Bitcoin-backed loans to secure financing at lower rates than traditional counterparts.”, “The future involves native digital equities that allow holders to control lending and borrowing against their assets, potentially disintermediating prime brokers and freeing up significant capital currently held by custodians like the DTC.”, “The potential shift of trillions in bank deposits into interest-bearing stablecoins via DeFi poses an existential threat to regional banks, aligning with populist sentiment against bank profit derived from market inefficiencies.”], “overview”=>”Mike Cagney, founder of Figure, discusses the company’s recent IPO and its mission to modernize financial infrastructure using native digital assets built on blockchain technology. He emphasizes that the true power of this technology lies in creating native digital securities that unlock massive efficiencies in transactions, liquidity, and financing, moving beyond simply tokenizing existing assets.”, “themes”=>[“Blockchain Infrastructure Modernization (Figure’s Platform)”, “The IPO and Capital Strategy”, “Democratization and Retail Participation in Finance”, “Native Digital Assets vs. Tokenization”, “The Three Pillars of Blockchain Value (Transaction, Liquidity, Financing/DeFi)”, “Disruption of Traditional Banking and Narrow Banking”, “Stablecoin Regulation and Regulatory Battles (Clarity Act)”]}]
🏢 Companies Mentioned
💬 Key Insights
"Something has to step in and fill that void. And I think this is the gold moment for DeFi, right? And this is where again, you're not sourcing new capital. You and I are taking our money out of the bank in the form of stablecoin, but then we have a medium to reapply that in a lending ecosystem where we can earn direct yield and disintermediate the bank as the allocator, right?"
"But what's really powerful is bringing it on to DeFi, right? Where now I add that equity, I can use it to borrow to buy Bitcoin, or vice versa. I use Bitcoin to buy the equity. I do it seamless. I control my stock loan, right?"
"And so, you know, in the structure of equities, if you create a native a native digital equity on blockchain—so not a DTCC security where it's an IOU with the security itself on blockchain—it affords all the superpowers you get from blockchain in terms of I can transact bilaterally with you, and you know, you've transacted the asset. I can lend against it, and I know I have perfection of the asset. I know it's not double-pledged."
"I kind of bristle at taking a DTCC security and putting it on blockchain because that isn't the actual security and changes the paradigm of trading and borrowing and so forth. But when you have a true native digital security, you can really do some some incredible stuff."
"I'm like, I don't understand why you can borrow against your your Ethereum at 6.5% on Aave. I'm paying Goldman 7.5% right?"
"I think DeFi, the ability for anyone with capital, anyone who needs capital, irrespective of whether you're a large lender, a small lender, large borrower, or small borrower, you know, those are really the underpinnings of why blockchain matters and I think why it is so transformative."