RWA Revolution: Transforming Global Finance at KBW2025

Hello. Hello everyone. Thank you very very much for coming to our session even though we have such a bad weather today. So I'm Yuki Kamimoto, a CEO of an Avenue Inc. So we've been operating the Japanese version of a CoinDesk, which is the world's largest crypto asset media, and also have been supporting institutional players to enter and promote blockchain related businesses since 2018 in Japan.

So I'm so excited to moderate this session today with a theme of asset asset

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Sorry, asset tokenization. I meant RWA asset tokenization, which has been clearly at the biggest trend in the industry. So the interesting interesting thing is that the boundaries between financial traditional finance and also blockchain ecosystem, it's clearly like rapidly disappearing, right? And we are entering to the like new phase that where um these two both ecosystem and the players have to work together, which is really exciting. So I'm so we're so fortunate to sit together with these amazing panelists here who are driving the transformation on a daily basis.

So in the next 20 minutes, let's ask them like quick catch up for like what's their view and what's their strategy and future outlook. Okay guys, so you want to start with just brief introduction and just say hi. Solomon, please. Absolutely. Thanks for having me.

I'm Solomon Tesfaye, Chief Business Officer at Aptos. For those that don't know Aptos, Aptos is an institutional grade layer one. We're primarily focused on trading, money movement, data slash infrastructure. The underlying technology was initially incubated within Meta's DM and Libra project. Okay, thank you.

John, please. John Nahas, also Chief Business Officer at Ava Labs. So we support the Avalanche ecosystem, been there for five years. I oversee all of our verticals and our international teams. Avalanche is a network of blockchains that are interoperable and customizable.

We also have our public permissionless EVM L1 as well. Thank you. Please. Hi, I'm Yuval. I'm also the Chief Business Officer, but the founder and CEO of Digital Asset.

We're the we're the creators of Canton Network, which is the first compliant, privacy preserving public permissionless network. Okay, thank you guys. So because it's such a short time, let's start with asking global successful use cases that stands out to you, each of you. So what's the recent and most successful use case in your ecosystem? And I mean in terms of uh asset tokenization.

And also what do you think your your blockchain is chosen for that role. Okay, Solomon, please. Absolutely. So there's a number of different applications that we're very excited about, but one that I'll just highlight is a Pact Foundation that's doing micro financing on chain. So what they're doing is they're doing small loans typically between 10,000 to 50,000 in emerging markets.

They're working with proven originators, lenders. They've put about close to 2 billion of loans on chain, about 600 million of active loans on chain. So they're really driving the RWA narrative for Aptos. And I I like it just because it's actually solving a real problem. Right now often times in blockchain you see basically different solutions are in search of a problem.

They're actually bridging the gap actually providing financing for SMEs that typically would have less access to capital. And then we also anticipate that they're not only going to be distributing the loans on chain through stablecoins, they're actually also tokenizing the actual loans themselves. So this is something that we're very excited about. Uh Okay, please. You asked recently, so I'll go back just the past couple of weeks.

Even this week, I mean when you talk about tokenization, even the tokenization of cash. So we're really proud to be working with B Docs and Woori Bank to to launch KRW1, the first Korean won stablecoin here in Korea on Avalanche. We have JPYC of course out of Japan. We have Toyota launching four chains on Avalanche to tokenize mobility. And throughout the past several years we've worked from every financial institution and enterprise around the world.

So yeah, that's just some stuff. I think we're talking about tokenization, but at Canton we we generally speaking prefer to use the term on chain securities because generally speaking tokenization are wrappers and they're not the actual asset. And as a result of that instead of taking risk out of the system, we're introducing new type of risk into the system. So the thing that I'm excited about the most is about a month and a half ago we announced a partnership with DTCC where we make US Treasuries, the biggest collateral in the world, available natively on chain. So if you hold US Treasuries now on Canton, you are actually holding the legal asset.

And who uses it? So for example, Broadridge brought 5 trillion dollars of US Treasuries on chain and they're doing about 300 billion dollars of repo transactions, bank financing each other every single day, which is getting close to about 10% of the US market. Thank you. Such notable use cases. So I think there are so many institutions who are interested in this field and trying to enter this field, but the biggest like one of the most important decision is like which chain they're going to choose, right?

So I want to I want you to point out more like what's your most strengths in terms of blockchain. Like is that like like technical features or ecosystem support or what's your advantages. Solomon, please. So there's there's a couple of advantages. When you think of Aptos, you really think of just a a high a high throughput chain.

When you think of like just basic requirements for high volume applications, is can this chain actually support whether it be credit card transactions or any other money movement for example is another high volume application. And so there's just a fundamental performance piece of this equation, then there's a practical piece. Does it have the integration with the regulated counterparties? If if we are talking about financial services, do they have the connectivity with like broker dealers and custodians and any other counterparty that they money transmitting license basically firms that are actually required to have those MTL licenses. So you also need to make sure that they have that level of connectivity as well assuming that the counterparty doesn't have those respective licenses internally.

So I think it really comes down to performance, like the basic connectivity. And then I guess the last point would be if they need some additional distribution. So right now primary distribution capital formation is very you know negligible within blockchain when you think about regulated products. And so they also want to have a conversation around how could you actually grow the pie as opposed to just use the existing channels that they have. Solomon said something that I like to say and I said here on the stage yesterday that you know, I think a lot of blockchains are solutions in search of problems.

And then they go out there and they look for use cases or assets that make them seem more credible and useful. We had you know, we had Avalanche from the beginning, our mission statement is to tokenize the world's assets and in doing so we've built a platform from the ground up that is built for this thing. So when you ask the question of which blockchain should they deploy on, our answer is not on ours, not on Solomon's, not on you can maybe do this. You can do it. It's to build it on your own.

Everybody's going to need eventually their own blockchains, their own blockchain. Every institution is going to need their own blockchain. Circle and Stripe are launching their own chains. We saw these we saw the initial phase here of people going on chain with L2s because it's aligned with Ethereum and that's great and it's safe and secure and just like with IBM and and SAP, no one ever got fired for doing the safe thing. But nowadays people are seeing the value of having the sovereignty of their own layer one blockchain.

That's that's regulatory compliant, that's based on their own compliance, that's based on their jurisdiction, that's based on their asset class or their use case or their business. Blockchains should be customized for the use case and the business that they're for. So when you ask me which blockchain should it be on, it should be on their own blockchains, right? Like you should have a chain that services your business, not fit your business onto your chain. So we've been doing that.

We have about 70 plus chains live now with over 120 or so on testnet coming over the next year. So we're excited to see where the where the space goes. Interesting. Please. I think I think we're going to continue taking from each other.

You used the word sovereignty and I like it. The reason for the name Canton is it's inspired by the Canton system in Switzerland, which every Canton has its own sovereignty and control. And I think the original layer one smart contract layer ones assumed a very homogeneous world. And we know that it's just not the case. Different countries have different laws.

Even within the same country, different corporations have to deal with different circumstances. So I totally agree this idea of having your own sovereignty and control. Do you want to have a centralized sequencer, a distributed sequencer? You could just be able to customize. But I think that for us, we a lot of people talk about performance, fees, technology will always get cheaper and faster.

We actually focus on what does it mean to have, like I said, books and records natively on chain? And therefore, you know, the idea of control, privacy, were kind of like first principle. A week ago, I think Ethereum said privacy is a human right. We wrote that in our white paper in 2015. Uh and I think that that is really what enabled us to work with top regulated institutions over the last year.

Thank you, guys. Um So, next I want to ask you about like future perspective. So, looking ahead, it's a such a broad question, but how do you see token tokenization evolve over the next a few years? So, one will be just asset diversification. Right now, the RWAs primarily driven by private credit and money market funds.

Um but now we're starting to see, of course, public equity through synthetic exposure with what Cracked Kraken and Backed are doing with X stocks, as well as Ondo and some a number of other players. But then also, then you're going to have to start to see commodities. You already see gold on chain. But you're going to see a lot other other other things, whether be carbon credits or whatever the case may be. There's a lot of different asset classes that are being brought to chain.

But then also goes back to what I mentioned earlier, there's going to be an emphasis on distribution. Right now, like I said, primary distribution is very weak when you're doing initial capital raises of any of these products, assuming that the counterparty doesn't have their own distribution themselves. But then, even further out, you'll have to start to see secondary. Right now, secondary has been extremely negligible because primary has been weak. Um so, I think it's really going to be asset diversification along with this emphasis on just distribution.

And then the I guess last point is utility. Now, you bought into a money market fund. You bought into a public stock that's been tokenized. Can I use it as collateral in some other environment? Can I Is there some other use case?

Um am I able to actually bring it into DeFi? Even though it's a permission asset, there's now basically derivatives, if you will, that allow you to actually enter into DeFi and then maybe even enhance your yield. So, I I think that's where I at least we see the the industry going. Sure. Thank you.

Um So, you mentioned collateral and I'll be a bit of a contrarian because um I think that we're all trying to go after the large institutional players. And I'm pretty convinced if you go and talk to any traditional clearing house and you say, "I would want to deliver a synthetic stock." Um they will close the door. Uh and they will not accept it as a result of the additional risk that we're inserting into the system. So, we're very much focusing on how do we bring assets natively on chain rather than uh creating new synthetic assets.

Uh and already today on Canton, you have stocks, bonds, life insurance, annuity, feeder funds, private credit, mortgages, all the way even to horse racing. So, what we're focused on is really bringing top quality assets into the network. And I think you utility will follow. You know, I think um I said this even yesterday, too. We we keep seeing technological improvements, right?

We talked about this. The technology is going to keep getting better, cheaper, faster every single year. Um but we're still stuck in this first generation business problem, right? Like we're Like the biggest trend of the last 6 months is equities are on chain. And you mentioned X stocks.

Well, X stocks are not really equities on chain. It's a token that represents a stock that's being held by somebody else, and you don't have true ownership of that stock. It's a synthetic. So, great, crypto. We solved no problems, and we've added more risk to the system, and we created just more headlines for the sake of whatever headlines we want to do in the short term.

Um we're working with Dinari. Dinari has an L1 on Avalanche that's acting kind of like an on-chain DTCC, where you can sell a stock on Base and buy that stock on Avalanche, or sell it on Aptos when it's on there. And it's the orchestration layer among all of them. And they have a broker-dealer. They have no action from the SEC.

They have an ATS. They're fully regulated, but operating on chain rather than using traditional incumbent systems. What I think really matters and what we're going to see in the next 5 years is nobody cares that anything's on chain. Like nobody needs to know. Nobody needs to care.

Blockchain should enable better financial services, better opportunities for people both in the emerging south, but also in the developed nations uh and around the world, so that you have neo banks and banks that are offering you know, continuous yield and automated payments and things of this nature that actually use the technology for better rather than just recreating the existing systems that happen, but on chain. Interesting. Sure. I'll add one point because John brings up a good point. None of us are issuers of product, right?

We're facilitating They're using our technology and basically bringing it making sure that it's accessible on chain. So, whether it's BlackRock with their money market fund, whether it's X stocks with their synthetics, and I share your views regarding uh some synthetic use cases and so forth. That's why they're only offering in very specific geographies. The issuers are going to decide what products they actually want, and it's going to be justified based on if they assume that there's some demand. But they're really just leveraging our our basically our layer ones or our infrastructure, rather, um to basically offer that and make sure that it's accessible on chain because there's so much capital formation on chain on the from trading and from payments and so forth.

The one thing I will add is I think that you will see a a little bit more of a mainstream appeal of DeFi, but without like the risky DeFi crypto-native stuff. But some of the primitives and some of the innovation that you're seeing in DeFi be adopted by incumbents and by new financial systems to offer some of these some of the benefits that we're seeing on the innovative side in DeFi, but more on the traditional side. Okay. Lastly, because we're in Korea now, so I want to ask you the your perspective on specifically potential in Korean market. Please.

So, Korea is very, very unique because of the just the the retail participation in crypto. Um really, when you think of like versus like Japan, which has a strong emphasis on institutions and their focus on RWAs and so forth. But then in Korea, like we're working with like Lotte. They're tokenizing vouchers. Over the last 3 months, they've basically sold 5 million vouchers to 1.

3 million uh users. There's there's a much stronger emphasis on targeting retail versus in other geographies where they're more looking at equivalent to accredited investors or qualified purchases or more for lack of better words, you know, larger check sizes, more sophisticated uh investors. And so, I think that I'm excited that that learning curve is less steep in terms of mass adoption because it's broadly accessible. It's This is my fifth time in Korea in 3 years. Um we started we we we saw a tremendous opportunity in Korea.

And I think what's different about Korea is I think the benefits are is that it's a very contemporary nation, very tech-forward, but rooted in tradition and its culture, which is very nice, and I think it's something that we could benefit from more in the west. Uh you know, we started our work with SK Planet 4 years ago to bring UPNT chain to bring OK Cashbag on chain uh here. We are We are working with Nexon for MapleStory Universe with an with their own chain for the game. Um and the Korean won now, right? Natively first on Avalanche.

And we're doing a lot more uh with tokenization here. Um have some more things coming up this week and next week. Um and frankly, I'm in Korea this week because I want to be working with Korean partners, right? Um this is a great conference. They do great job um bringing great people together.

And there's a lot of innovation, and there has been a lot of innovation in Korea for a long time. Yeah, so I think that um one of the things that um is exciting is that there's really good momentum. And as was said, you know, what's what's good is that the Korean consumer is already used to the technology. Uh so, there's a really big opportunity for some of the large corporations here to actually bring new assets into the market that the consumer is already used to interact with, but more traditional traditional crypto asset, which is a uh funny statement to say, but really having the same user experience. I do think that there is a big opportunity for Korea as one of the large exporters into the global economy to actually have a much tighter integration.

One of the things that I've been talking to some of the institutions that want to issue stablecoins is to make sure that they don't do that in a vacuum. Because at the end of the day, the US dollar is going to be the primary stablecoin currency. Uh and therefore, I think that if you're going to issue a stablecoin, do it both for the local economy, but also in a way that tightly integrates you to the global economy. Okay. Thank you.

Even though it was such a short time, I think all we all had a really sharp insight from each of you. So, I hope everyone enjoyed this session. Thank you very much.

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Well, thank you for sharing your inspiring remarks and two cents and insights. Well, thank you, gentlemen, and of course, our moderator.