Mike Cagney, co-founder of Figure Markets, talks about the future of equity trading on the blockchain, DeFi lending, rebuilding crypto's credit markets, and the institutionalization of crypto. He also discusses the need for a 'marketplace of everything,' and Wall Street's appetite for ATS, along with regulatory considerations.
Figure Markets aims to revolutionize capital markets by enabling decentralized trading of native digital assets.
Blockchain technology enhances efficiency in loan securitization processes, reducing costs significantly for Figure Markets.
Figure prioritizes regulatory compliance by leveraging transparency and blockchain technology to navigate regulatory hurdles.
Deep dives
Figure's Journey to Reshaping Capital Markets
Figure embarked on a mission to revolutionize the mortgage industry through blockchain technology focusing initially on the HELOC market. Over time, they broadened their vision, aiming to restructure capital markets, particularly emphasizing the securitization component. Their achievements include originating consumer loans on blockchain, conducting the first securitization of blockchain assets, and achieving AAA-rated securitizations. The immutability of blockchain aided in enhancing audit and quality control processes.
Transition to a Decentralized Exchange Model
Figure Markets evolved from originating loans on blockchain to embracing crypto and other securities. Their strategic shift involves envisioning a decentralized exchange where any native digital asset can trade without the need for traditional intermediaries. By emphasizing cross-collateralization capabilities and secure native digital asset trading, Figure Markets aims to democratize prime services and level the playing field for all market participants.
Embracing the Power of Smart Contracts
Smart contracts play a pivotal role in enhancing efficiency in capital markets. Through blockchain technology, Figure optimized loan securitization processes, reducing costs by 70% and streamlining loan reviews. The introduction of blockchain-based security perfection and cross-collateralization mechanisms enabled Figure to align with regulatory requirements while innovating within the industry.
Navigating Regulatory Challenges and Embracing Innovation
Figure Markets acknowledges regulatory hurdles but perceives them as navigable. By providing transparency and clarity on on-chain processes, Figure leverages blockchain technology to streamline regulatory compliance. Despite regulatory uncertainties, the company focuses on bridging traditional finance with decentralized solutions, fostering cross-border remittance and enhanced peer-to-peer asset transfers.
Future Landscape and Market Expansion
In the upcoming six to twelve months, Figure Markets plans to enhance onshore lending markets, democratize prime services, and introduce innovative products offshore. The company envisions standing up diverse crypto products, such as Ethereum gas perpetuals, single stock relaunches, and FX perpetuals, catering to evolving market demands. Additionally, Figure Markets prioritizes asset management solutions and aims to capitalize on real-world assets to drive market growth.
