Breaking Down RWA Silos: Grab Your Picks and Shovels

[Music] you want sit and as well please uh welcome Angie head of um uh Banking and capital markets at chain link uh so let's St this brief introduction of our speakers and let's start with anger with me first yes okay sorry hi Angie Walker I'm running banking Capital markets for chaining Labs um it's great to see you all been at chain labs for about a year we specializ in inoperability and data Oracles in web 3 and banking Capital markets very dominant web 3 presence fairly new to banking Capital markets but we're making big inroads around the financial Marketplace thank you samanta hi I'm Samantha I'm a partner with Rockaway we're a global investment firm focused on crypto and digital assets we run Venture strategies so investing in early stage startups in the space um and also a credit fund so out of that we're A lender to crypto companies and a liquidity provider across defi thank you Mona hi I'm Mona I founded enzyme which is um the first and I think largest onchain Asset Management protocol today I also run avanguard Finance which is um a regulated onchain asset manager we have um a couple of regulated onchain funds and we also service Dows and Foundations with their uh Crypton native treasury management thank you yeah so as I mentioned the real world assets topic is a quite hot narrative now uh so the tokenized real world assets I mean the blockchainbased uh digital uh tokens that represent either uh physical or financial assets uh like cash Commodities real estate bonds uh credit equities uh intellectual property artwork and Etc and tokenized real world assets represent the ownership or as onchain tokens and we see that currently everybody talks about toiz real world assets uh we see different banks making uh tests is a tokenization as well we see Larry fin the CEO of Black Rock the biggest asset manager in the world saying that uh tokenization will be the next step after the approval of Bitcoin and eum spot ETS he's the proponent of literally every uh real world asset will be uh tokenized and as well we see a lot of different predictions like for example by standard shed bank that uh uh te the market size of recognized real world asset will reach $30 trillion by 2034 we see as well some bare Market predictions by McKinzie that it will be2 trillion uh dollars by 23 uh uh 2030 uh and so on uh so we see that um there are examples of different assets to be tokenized so my first uh question is how oranization shaping Global Finance and what sectors are think the most significant impact so let's start with anger me f yeah um so from a chain perspective what we're seeing uh big inroads in our tokenization of things like money market funds there's quite a lot of uh asset managers and various organizations token tokenizing money market funds that's particularly interesting because as uh somebody said in a round table this morning there's no point in tokenizing something if you're not going to do something with it so money market funds are a great example there's a lot of uh short dated Treasury and cash selling around in Asset Management uh by tokenizing it we can start to mobilize that as collateral and we're doing that cross chain with a number of our customers so that's really exciting I'd say the other area where we're seeing tremendous growth from a tokenization perspective is is in regulated stable coins here in the UAE that's obviously very popular and we're doing a lot of work here in preparation for licensing next year but also in other territories like Hong Kong and in other parts of the world where regulated stable coins are going to very very quickly become uh mainstream um and in fact we launched uh with bank Colombia uh as part of the wena program a regulated stable coin in Colombia that's fat backed uh and we use proof of Reserve to continually validate the underlying assets that back the coin and to ensure no over minting so I think regulated stable coins and things like money market funds are going to be uh very fast growing along with other types of uh assets such as fixed income and real estate thank you samanta yeah so I think I your question started with a what point is it reshaping Global Finance I think right now we've seen a lot of opportunities or products broad on chain to serve what's perceived as kind of like crypto um entrenched Capital at that point I don't think it's really changing Global Finance right if it's just to serve these assets that have to live on chain I think the moment we see users come to access New Opportunities and do new things with them so because like either Capital efficiency is better on chain um or features like composability which you alluded to right where they can take an asset and use it to get yield on another dii platform or just at a high level do something that they cannot do in traditional markets I think that's when we try to or start to shape Finance um and so I think where we're seeing interesting things right now is private credit um and this is because these are areas of traditional markets that are often closed off right to many investors and are not transparent so where blockchains um to me what they offer is kind of open data transparency and automation if those features can fundamentally like kind of augment your experience with the asset class then it makes sense and so I I think with private credit we're seeing cool things where um like institutional firms are structuring agreements that are then coded on chain so individual users can participate at the at fair and equal terms that's very different than what exists in traditional markets thank youa yeah I mean just to share my perspective I think um for the almost the first 10 years in crypto the conversation has been about how do traditional Finance investors get exposure to crypto and now some of the largest organizations in web 3 organize themselves as Dows which manage their treasuries on chain don't have bank accounts don't have um uh any of the kind of centralized services or touch points that you would normally have in a company so um when defi yields crashed last year to below treasuries all of a sudden large protocols like you know maker Dow and um other like arbitrum Etc started to say say well hang on a second we need to earn yield on our stable coins and we don't have anything available to us and that's where I think suddenly we found a bit of a product Market Fit For Real World assets because suddenly they were yielding more than defi yields now it's the inverse again defi yields have um you know definitely massively outperforming treasuries on stable coins but the correlation between the two is extremely low and so uh for onchain treasuries and Foundations to have access to both it's really critical in a world where you really want to diversify your assets and construct a portfolio that's um going to be resilient against all market conditions uh thank you Mona uh yeah we uh as I mentioned your tokenization of us treasuries as well became quite a big topic and we see um the biggest asset managers starting offering tokenized money market funds like for example Franklin tempton 1.6 trillion fund already started offering it on Stella blockchain back in 2021 uh we see this year Black Rock as well launched the 100 million uh bidd money market fund uh we have seen the recent news with the UBS as well uh launching as well their own uh us Treasures tokenized fund additionally we see some tests with City Bank uh testing terization on Avalanche of the private Equity Funds and Etc and yeah still the terization of stable coins is probably the biggest use case uh and is the biggest market for the organization uh then the next one is private credit as samant mentioned uh so uh the next question I would like to discuss is on the uh challenges regulatory challenges with the real world assets uh so what are the main uh challenges facing real world assets toiz and how can they be addressed let's start with I think um the difference between a lot of real world assets and crypto assets is that most real world assets are securities and so there are still very heavy regulatory restrictions on how they can be traded uh due to Securities Transfer law so typically real world assets are only tradable within silos um and these silos don't speak to each other and also because of the transfer restri restrictions you there's limitations on how composable real world asset tokens can be with the rest of defi um so you cannot use your real word asset token as collateral in defi or you can and borrow against it and you know you cannot sort of maximize the opportunities available um due to the blockchain so I think that's a challenge um so finding a way to aggregate real world assets um and bring these silos together is something that I think is really key to unlock the real potential and a large part of that is also Regulators you know rewriting Securities Transfer law to be um you know to fit blockchain technology and to um really play to the strengths of blockchain Technology rather than forcing players to replicate old ways on top of new technology thank you Mona samanta what are your observations um yeah I think I think Mona said it really well um with Securities laws you have rules around qualified participants and you're going to need to kyc more I think there's an opportunity for um for the tech to play a role so things like more inventive approaches to sharing digital credentials right so I only need to onboard once and then maybe I can go across applications and use that in a way that feels seamless even though it's still verified can help um and then you know something we're thinking about that we'll see is just more data privacy um I'd say compliance coming into Focus right because if composability if you're using one asset across platforms um you're also sharing more about who you are on your transaction Trail I think that's part of the original promise of this technology but it also carries risks yeah the privacy issues are important Ang what do you says yes so just from a service and Technology provider privacy is super important we've we' been working for a long time on privacy and chaining and we launched privacy preservation actually at our annual conference literally four weeks ago so we can now provide complete privacy cross chain between transactions that occur on different chains whether that's public or private so I think that's super important to to the transaction life cycle in regulated Capital markets the other thing which I think we will uh need to demonstrate and we've been working hard on is industrialization and resilience in the same way that we would have to do within mainstream Capital markets and if you look at things like Mika and Dora in particular it calls out uh regulatory uh resilience and we've been working very hard to make sure anything that we do cross chain uh is as resilient as it is within traditional Capital markets I think the regulatory asymmet asymmetry between jurisdictions creates Arbitrage of course and so you're seeing us uh asset managers tokenized in APAC because because the regulatory environment is more conducive but I think that will uh normalize over time but we are working really hard on things like privacy between private and public chains for distribution purposes of assets and transactions thank you and mon you wanted to cover the issues of onchain management can you tell more about that what currently do you see yeah I mean it's linked to aggregation actually I think um um we know as one of the sort of onchain asset management providers in this space a real challenge is again like how to bring crypto and real world Assets in a way together where they're really fungible and people can trade in and out of them easily and currently the user experience is um is is challenging because you have to steal kyc with every participant you cannot um you cannot trade typically outside of this Silo for each our real world asset Silo and so I think the future is potentially um you know an onchain asset management provider aggregating all of the real world assets with maybe the support of chain link providing or um similar oracles providing the pricing mechanisms and um a you know a sort of fund interface where you kyc once potentially and then you can access all the silos from one place um but it's still early days and I think there's still a lot of challenges to figure out I think it would be a real shame not to be able to integrate real world assets with all the rest of the def composability um and all the innovation in the space there so I'm I'm confident it will happen but it's still not completely clear how thank you and uh institutional adoption is uh key for the growth uh so what initiatives are these organizations undertaking to lead the way in the sector and let's start with samanta yeah so I think like a lot of innovation it's easier in places where you don't have entrenched incumbents um and so when I think of real world asset like it's pretty obvious that this technology can just make Finance work a little cheaper a little faster get rid of things like transfer agents maybe make clearing systems less clunky but all of that infrastructure particularly I don't know in the states and Western markets has people who benefit from kind of How It's been laid out so I think there's a reason at least in our portfolio when I look at early stage projects um that touch kind of real world asset in different ways so whether it's the kyc sharing or um actual issuance or like loan origination on chain they are having more traction in places where Financial infrastructure is a little less entrenched um so here like in UAE we have some interesting startups that have Lois with big Enterprises that are willing to innovate um and I you know I think this is kind of akin to what you see in telecoms um or other kind of core infrastructure areas where those that maybe have been further back are looking for things to leave frog um yeah thank you and NG chenling cooperates with the leading financial institutions and uh makes t with the Swift and different biggest banks so from your side can you tell what do you see from the side of those organizations and uh what efforts do they undertake to uh make the adoption of real world toiz real world tets sure so um few examples of recent uh Innovations within the existing institutional uh uh participants so if you look at Guardian so we we did some really interesting work with Guardian during uh Mas Guardian showcasing at Singapore fintech with UBS and SBI uh we collaborated with them to build a digital transfer agent smart contract and demonstrated that uh Singapore fintech I mean that's pretty transformational in that we can drive the entire subscription Redemption process from a smart contract and then we went on with uh UBS and Swift to show how we could then facilitate from the smart contract the facit the triggering of the payments associated with the subscription and Redemption process super important I would say also the work we've done with swift is very significant around leveraging their existing infrastructure the existing uh pki infrastructure which is phenomenal uh to be able to facilitate full blockchain DVP typee transactions using the mt500 and ISO messaging uh protocols so that people who want to interact with each other can do so using the Swift infrastructure Network and then Bank Colombia is also very important because we obviously worked uh with them and we're working with Drex on the trade Finance program and hkma to facilitate full triggering of payments around trade F finance and things like e bill of lading so I think there are absolute material um innovations that are occurring both cross chain and between chains and traditional Market infrastructures that drive significant uh adoption of digital assets and and uh digitalization of existing assets and life cycles within regulated Capital markets are really starting to show the transition into the new world yeah thank you Andrew uh so yeah we are quite still early with toiz tril World assets and according to D Lama this Market size is only 8 billion currently on chain besides the stable coins and let's see what will will happen in the next 5 10 years and whether we will see the trillions of real world assets reconized thank you for the great discussion and Sam and monor okay [Music]