# Figure and Navra: Blockchain Capital Markets Strategy

**Podcast:** The Milk Road Show
**Published:** 2026-11-03

## Transcript

Figure puts over two and a half billion dollars a month of assets on chain.
If we leave those on chain, you know, we'll exhaust the entire available DeFi pool in three months.
There are a few businesses that have really figured out how to make money in digital assets.
But the question everyone wants to know is how do they do it and what do investors need to know about all this?
Hello and welcome to Milk Road Crypto, the show that checked its seed phrase several times this weekend just in case.
I'm your host, John Gillan.
Today is Monday, November 2nd, and we are joined today by Mike Cagney.
Mike co-founded SoFi and Figure, where he's the executive chairman, and now he's the co-founder and CEO of Navra, which just raised $19 million in a Series A.
We're going to talk about that and a lot more things.
Mike has been one of the most successful entrepreneurs in the digital asset space.
He's learned a lot.
He's full of alpha.
He's going to share all of that with us today.
So if that sounds good to you, make sure you like and subscribe.
Share this episode with somebody who's going to enjoy it.
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Mike Cagney, sir, how are you?
Good, how are you?
I am really excited to talk to you, Mike.
I wanted to start.
There's a lot of things I could ask you about, but I wanted to start with figure.
There's a statistic that a lot of investors use called the rule of 40.
And our audience may not know about this, but basically the idea is you take your revenue growth plus your profit margin, and that should add up to at least 40.
On the last earnings call, figure said that their rule of 40 number is 150.
And this beat out everything else in the S&P 500 except for NVIDIA and Micron.
And I think this got a lot of people's attention.
I wanted to get your reaction to this and what you attribute this amazing success that FIGURE is experiencing to.
And just tell us a little bit about what's driving that number.
Sure.
So and last I checked, I actually thought it was Palantir was the only one that had beaten us out.
But who knows?
You might be right.
We're in rare air.
So I think, you know, one of the things that FIGURE's done that.
It makes a lot of sense.
And, you know, as you were saying, have you figured out how to make money on blockchain?
And it's sort of ironically, that's the name of figure.
And we get to say that all the time, pun intended.
You know, we use blockchain for three things.
We use the immutability of the ledger to reduce friction around transactions.
We use the ability to support bilateral, self-settle, self-clear marketplaces to create liquidity.
And we use DeFi.
And DeFi is an integral part of what we're doing because There's always been this thesis that, you know, if I borrow money from Goldman, for example, so let's say I pledge loans and they send me money in a typical warehouse fashion, you know, they might charge me SOFR plus 250 to finance my assets.
And they're just going out into the capital markets and raising money in the asset-backed commercial paper space at SOFR flat.
So they're making 250 basis points, 2.5% to sit in the middle of the transaction under the auspices of managing risk and liquidity.
But blockchain manages the risk in liquidity.
It manages the risk in that, you know, I can't put a loan with a bad FICO score or the wrong LTV or whatever into a pool because the blockchain sees all that data and it doesn't allow for that to happen.
More importantly, you can't double pledge an asset in blockchain.
And the last four major credit events we've had in asset-based finance have all been through fraud, through people double pledging assets.
And, you know, blockchain eliminates that ability.
And so, you know, further for DeFi to work, you have to have liquidity in the collateral and, you know, figure has a liquid capital market for its loans as an example.
But the premise is a concept in economics they call Pareto optimality, where by changing something, you benefit both parties.
And in this situation, by eliminating a Goldman as a capital allocator in the middle.
you generate a lower borrowing cost for the borrower, but a better return for the investor because you're cutting that 250 basis points out.
That's what we're most excited about in DeFi and the area that we're really leaning in on.
Okay, so I also...
saw something that stood out to me in this earnings call, which is that Figur's loan volume has more than doubled from a year ago to over $5 billion as of last quarter.
And I'm curious what you're attributing that growth to there.
Is it because of solving these problems, leveraging the blockchain and DeFi?
Is it other demands in the market that are just increasing the appetite here?
Where's that coming from in your view?
So I think they're interrelated.
I think solving the problems has allowed us to bring a bigger value prop to our partners.
And the bulk of what Figure does is B2B.
So we have a, I think the last earnings call, it was 400 plus partners.
I don't remember which exact number it was, who use Figure technology to originate assets.
But they don't just use the technology for asset origination.
They also are able to access the capital markets that exist on the blockchain that Figure's created, the DeFi financing that Figure's created.
And so what we've done is we really created a moat around what we have with blockchain infrastructure and that there isn't anyone else that has a capital market like Figures been able to build.
I'd argue it's the only liquid private credit capital market outside of GSC Mortgage.
And that capital market, that certainty of execution has given our partners comfort that they can ramp up their businesses when the capital markets go sideways.
They're not going to get stuck with a bunch of loans on their balance sheet.
it's allowed us to scale and grow.
And I think we're still in the very beginning stages of this.
I think the addressable market opportunity year, not just with home equity line of credit and secondly in position, which is how we started the business, but HELOC and first lien.
And I can talk about that a little bit.
You know, we're still in the early innings.
So where does that growth go and where does it come from as we get deeper into the early innings of this?
Is it more products?
Is it integration with more different blockchains?
How do you see the progression of growth from here for figure?
Yeah, I think it's going to come on a couple of different axes.
I think certainly the HELOC market, we're still a tiny player in a relatively large market space.
We're the largest non-bank lender, so I shouldn't call us tiny.
um you know it's we're still a small amount of what the total is and think we can continue to grow that i think the expansion of heloc into first lien mortgage is a huge opportunity and notably you know mortgage companies traditionally would do two three hundred thousand dollar mortgages and and that was one of their core businesses the cost to originate a traditional mortgage, a Fannie Mae, Freddie Mac mortgage has gotten over $11,000.
Some might say it's $13,000 and that number moves around a little bit.
If you're doing a $200,000 mortgage and it costs you $13,000 to originate it, it's really hard to make money.
And most mortgage companies have just given up on those small balance loans.
It costs less than $1,000 to originate a figure HELOC.
And so if you do that in first lien position, you know, that's a pretty big dollar differential.
And what we've been able to do is make those loans profitable for our partners again.
And they're starting to lean into that.
And I see that as a huge growth opportunity.
But outside of the mortgage space, we have an auto pool on Democratize Prime that I think now is maybe over $200 million, somewhere in that neighborhood and growing relatively quickly.
You know, the value probably brought to mortgage, I think, is extensible to any credit asset class, whether it's auto, unsecured consumer, small business, receivables.
So I expect you'll see those asset classes start working into the figure ecosystem and leveraging our connect marketplace for liquidity and democratized prime from a financing standpoint.
But I also see this extensible beyond credit.
One of the areas that I'm sure we're going to talk a little bit about today because it's a hot topic is equity.
And I think, you know, DeFi is an extremely high value add to equity.
It's really the point that a lot of the market's losing focus on when they have those discussions about tokenizing stocks and, you know, why this has or hasn't worked so far.
DeFi is going to be the real needle mover to get equity adoption.
This pullback on Bitcoin is scaring a lot of people and I am not one of them.
So if you want to see what I'm not selling and why, what's on my watch list and when I'm going to be deploying more capital into these markets, you can join Milk Row Pro today.
It's just a dollar.
The link is in the description.
I answer questions day and night in Discord.
I'll see you there.
Okay, I want to come back to all these points.
But before we get to all that, I got to ask you about Navra.
As I said in the opening, you've closed a Series A on this, raised $19 million.
You know, we talked a little bit about figure and some of the problems in the market you were solving there.
What are the problems in the market you're solving with Navra?
What's the opportunity you're launching this business to go after here?
Yeah, so like we talked a little bit ago about...
all the great value in DeFi as it's applied to asset-based finance.
You know, this disintermediation of the capital allocator, the Pareto optimality that happens to borrower and lender.
And it kind of begs this question of, hey, you know, if this is such a better framework, why hasn't the $6 trillion asset-based finance market moved on to blockchain?
And the reality is when we go to the DeFi pools, there's a couple billion on Morpho, there's six billion on Aave in terms of available stablecoin.
There's a billion dollars on Demo Prime.
In blockchain, we tend to think of those as big numbers.
In wholesale finance, those are not big numbers.
Those are tiny.
And FIGURE puts over $2.5 billion a month of assets on chain.
If we leave those on chain, we'll exhaust the entire available DeFi pool in three months.
And so we need to get these dollars over.
And in terms of why the dollars haven't moved over, well, there's three really glaring reasons.
One is usability is bad.
And this is where I can get in arguments with a lot of folks on the crypto side.
We've built these crypto OG products, like a MetaMask or a Phantom, and they do what they're supposed to do.
It's self-custody, it's autonomy of transaction and so forth.
they're not easy to use.
And so what people end up doing is they use Robinhood or SoFi.
They use these super apps.
Those super apps, you don't custody your own assets.
You don't have autonomy where you transact.
You're limited to their venues or protocols.
And so one of the first things that we're doing with Navra is we're building an application where we're feeding in data from these DeFi protocols into a common wallet experience.
So rather than using your wallet to log on to everyone else's protocol, everyone else's data comes to you.
And not only does that deliver a consistent user experience, it opens up another thing that Navra does, which is it lets you use an AI agent to do things like get me the highest yield across these three DeFi protocols and produce a 1099 at the end of the month.
And it will go and run that and do that for you.
And so we think that's an important element.
And certainly on the institutional side, being able to deal with with self custody that satisfies qualified custodial requirements and having enterprise control where, you know, it's not this issue of one person, one wallet.
It's, you know, one wallet might have 100 users on it and two can trade and five can move money and 90 people can see things and all that data has to feed a fund administrator and a fund accountant and so forth.
What we've done with Nav is we've solved that.
We're doing it both in a direct-to-user way, so we have the ability for entities and individuals to sign up directly and start using Navra, but we're also white-labeling it just like Figure does.
And in fact, some of Figure's big partners are going to be early Navra users, where they're going to take Navra and integrate it into their own mobile app.
And you're going to have not just the normal functions of that app, now you'll have a yield section or a securities prediction market trading section or some of the other cool stuff that We're bringing to market through the combination and partnership with Figure and Navra.
So Navra is really built to get the dollars to move over that aren't otherwise going to move.
And that's really where the bulk of the money is.
And we have to solve that problem or we're always going to be kind of in this medium nothingness land.
So we really, to move the needle and get real dollars over, we've got to have better experience and better enterprise controls.
Medium nothingness is my favorite kind.
Okay, I want to ask a little bit about this.
You're still the executive chairman of Figure.
And Figure, as you said, is still invested in Navra.
There's partnerships there.
There's a lot of collaboration going on.
What was the thinking behind breaking out Navra as its own company separate from Figure as opposed to doing this within Figure?
Talk me through a little bit of that.
Yeah, it's a great question.
The importance of Navra and one of the important value prompts of of the self-custody wallets versus the Robinhood super app is autonomy of transactional choice, right?
I want to be able to go to the venue I want to go to.
And, you know, I want to do it with a consistent experience and through a common interface, but I want to be able to go to this DeFi protocol if I like the yield here, this one if I can borrow cheaper here and so forth.
And it was going to be difficult for us to get those protocols to feed their data in as distributed apps if they viewed us as figure because they view us competitive.
And so, while Figure is an investor in Navr, they're on the cap table of Navr, and they're an important strategic partner, Navr is distinct from Figure.
Navr is focused on solving these three problems, delivering the best user experience, and that's predicated on having equal access to these DeFi protocols, whether it's to trade stock or to borrow money or to lend.
We want to bring the best in class into Navr and give people the choice.
Okay, so who are the ideal clients here?
Is it focused on institutional capital, individual investors?
Who are you going first?
Is it both, but you don't start with all of them?
How are you thinking about that?
Yeah, so the first thing that we're doing is Figure has an upcoming transaction that they're doing on chain that I won't go into more detail other than saying there's an upcoming transaction on chain.
You'll know more about it in the coming weeks.
But it's going to require a blockchain wallet and qualified custody backend and so forth.
And we're working with some large institutions to stand them up on Navra's early users there.
We're also bringing figure loan customers over.
So, you know, the 350,000 figure customers are going to start servicing their loan through Navra and be able to pay us in stablecoin and, you know, all this other cool stuff as it relates to that.
Earn yield under dollars constantly.
But the big opportunity downstream is going to be white labeling the solution into other people's applications.
And that's where, as I said, FIGURE has a massive white label ecosystem.
And I think a lot of those players are going to want to take elements of Navra and work it into their own apps, especially on the yield and new market access side.
Okay.
Just not to make you repeat yourself, but I think this is important.
You've said that some of the things that have stopped institutional capital or Wall Street capital from coming on chain, the three things I've heard you list are user experience and then keyless qualified custody, which I'd love to hear you elaborate on what that exactly means, and then enterprise control.
Talk to me a little bit more about those three separate problem pieces and how Navra is helping solve that and just a little bit more of the detail on that.
Yeah, so I think from a user experience standpoint, you know, the first thing is just changing the construct of wallet where I'm not logging on to Aave and Morpho and Camino.
That data is coming to me, right?
And I'm delivering a consistent experience.
And that experience is best in class fintech experience.
And, you know, the area where...
I'd say fintech has far exceeded what we've been able to do on blockchain is around UI, UX.
The Robinhood apps, the SoFi apps, they're very good apps, but they have this underlying problem, which is they custody your assets and they control your trading venue.
So being able to open that, deliver that experience, but where you have that autonomy is a huge value prop.
Around custody, We're huge fans of self-custody.
And in particular, we use what's called a multi-party custodial wallet construct where we have multiple entities that effectively think of it as controlling key shards, where they come together and form a block to basically form the key and release the asset.
And we call this keyless custody not because there isn't a key, but because you as the holder don't need a key.
right?
And there isn't a key loss experience.
There isn't, you know, other issues that you have with that because you have redundancy across these policy agents.
The challenge you've had is if you're a fund and you're holding a security, you need a qualified custodian.
That's, you know, the SEC requirements.
So how does an MPC wallet satisfy a QC requirement?
Well, you do it by introducing a QC entity into the signing process where A qualified custodian doesn't need to hold your assets.
They have to control the asset, meaning that they have to be necessary to sign and release.
So you can hold an asset in self-custody with a QC policy agent that's necessary but not sufficient to move the asset, and that satisfies your state and federal regulatory requirements as it relates to QC, or at least we have legal opinion that says it does.
And then, you know, on the last element, enterprise control, you know, again, it's just this reality that a firm is going to have lots of different people that touch an account and some people can trade and some people can move money and some people can see things.
And by the way, trades over a million dollars might require two people to sign off on it or, you know, whatever the process is.
you've got to have the flexibility to build that infrastructure in place, the full audit trail to track it and report to it, and the outcomes to feed into your systems, your fund administration or portfolio accounting or what have you.
If you don't do that, you're just introducing an enormous amount of risk and burden where firms aren't going to feel comfortable extending into this.
Now, one of the interesting things, just going back to the CUSI question, When we launched Open, we launched our equity native on blockchain.
And all these, I went to a bunch of hedge funds that weren't native blockchain hedge funds.
And they're all very excited to participate on the open transaction.
But they have their mid and back office people get on the phone with us.
And all of them would go to ChatGPT and say, what can go wrong with a blockchain security?
And it all came back around key management.
Well, you can lose the keys, you lose the security.
And they're like, well, that doesn't sound good because I'm going to get fired.
Right?
Like if I lose the keys, I am fired.
And that's very asymmetric upside downside for the mid and back office person.
And so we could have gone through the intricacies of, no, with MPC Custody, you don't actually lose the keys.
But instead, we did something that I think is very relevant to the hacks that have just happened more recently, which is...
There's a difference between a blockchain security and a blockchain bearer asset like Bitcoin.
Bitcoin possession is control.
A security, you still have a transfer agent, and the transfer agent's actually the definitive book and record.
Now, the transfer agent's just passive.
They're just watching what's happening on the blockchain.
And as they move from Mike to John, the transfer agent just automatically updates it, move from Mike to John.
But if John stole Mike's security, Mike can prove that.
He can go to the transfer agent.
The transfer agent says, John, poof, your security's frozen.
And Mike, here's a new one.
And that was what we needed to show them to get a degree of comfort, that there wasn't this crazy fireable offense that was sitting in the back of key loss, that it's securities, you're okay.
And that's been a constant point we've had to go back to as we brought more and more people on chain and dealing with security transactions is, everyone's like, well, what about the hacks?
What about what happened to Binance?
I don't want to lose $6.8 billion.
Well, and you even saw a little bit of this with Binance with how they froze Tether and USDC.
They still had a reasonable loss because they had a lot of things that weren't frozen or weren't able to freeze.
But what a lot of people don't understand is Tether and Circle also have transfer agent effective functions, right?
There is a registry of ownership that controls who has what.
And so they do have the ability to freeze your coin and to mint new ones to the old holder.
Gotcha.
Okay.
That's really helpful context on all of that.
I feel like I learned a lot in that, but just for future reference, if John and Mike have any disagreements, John pleads not guilty on the blockchain.
Okay.
I want to ask about another piece of this, because as you described this, there's a lot of moving parts there.
There's a lot of additional functionality that this is going to enable.
There's also AI agents that are built right into Navra.
And I'm curious how that complicates things.
I'm sure it helps in many ways too.
But talk about how you've gone about thinking about incorporating AI into this because agentic finance is a big topic.
And I'm curious how you're approaching this.
Yeah.
So you have to build pretty explicit rails.
And some of the challenge for folks is how they manage those rails and what they do with them.
I'll give you an example.
I actually saw a tweet today of someone that does something that I do, which is I have an agent that takes all my spam AI generated sales mail and responds to it and like this crazy, like off the wall deadpan stuff.
And it sent one out today about mermaids and talking walls as a response.
But I had to be very careful because if I get a legitimate request, like a journalist sends me something and my AI bot's like, oh, this is another one of those apps.
I'm going to show him.
And then someone's going to be like, Mike Cagney's on mushrooms.
And so you've got to manage the rails and that's important.
I think we're going to evolve to a stage where your mobile app is just going to be a number.
and a text prompt and you're going to tell your app what you want it to do, right?
I want to bet that NVIDIA is going to close over $220 on Friday.
I'll pay up to 20 cents a contract.
I'll put $10,000 at risk.
And if it closes at 200 and I'm not filled, send me a text message.
And it's going to do all that for you, right?
Or the simpler one that I talked about that we do today.
I want the highest yield across these three DeFi protocols and produce a 1099 at the end of the month.
It's just, you know, giving a transactional activity introduces an element of risk that you want to make sure you have guardrails to.
And, you know, transactions over X dollars or, you know, if there's a loss or what have you.
It's sort of germane to the way that these algorithms are built.
I shouldn't even call them algorithms anymore.
But, you know, I've...
I've been doing AI since late 90s when we used to use neural networks and genetic algorithms and trading patterns.
I was running prop trading at a bank and it was a big area of focus for us.
And our computational power was so weak, we could never actually do anything with them.
They were kind of novelty as opposed to functional.
But the interesting thing about a genetic algorithm as an example is it's designed to propagate itself.
And that can lead to...
unexpected results, right, in terms of its sense of survival and its sense of trying to perpetuate itself.
And so, you know, what we're trying to do is bring the benefit of AI in terms of, you know, managing routine tasks, doing traditional advisor work, you know, things that are very well defined and just making sure they stay in the ring fence.
You know, one of the weird things about crypto is that the longer you're in it, the more accounts you seem to end up with.
You buy in one place, trade somewhere else, earn yield somewhere else.
And if you actually need capital, you end up having to sell something that you probably wanted to keep.
That's why we at Milk Road are partnering with Nexo.
These guys keep the whole thing under one account.
You can buy, trade crypto, earn interest on what you already hold, and even borrow against your capital without having to sell it.
All in one spot, all in one account, all on Nexo.
So if you need liquidity, but you don't want to give up your position, or you're already holding crypto and you want to be able to do more with it, I think Nexo is worth your time.
We love working with them.
I think you will too.
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Okay, so you've got to have tight rails on this just like anything else to make sure it doesn't go haywire.
We're trying.
Well, if I get a crazy email from Mike, I'll know it's not mushrooms, I promise.
Okay, I want to talk about tokenized stocks and tokenized assets because this is something I've been following.
I know you've been following this too, and I'm curious what you think on this.
OKEx and ICE, the Intercontinental Exchange, are about to let people start trading tokenized stocks basically 24-7 around the clock.
But a lot of companies are opting out of this.
And I've seen you on Twitter following who's opting out, and I've seen you just paying close attention to this.
Could you tell me a little bit more about what's happening here, why these companies are opting out, and just what's going on with this tension that's unfolding?
Yeah, my tweets have been very polarizing to the blockchain community.
Not universally met with Great Reception, because I tweeted this weekend that 50 companies of the original, what, 62 have now opted out.
But I think that that's losing the focus of what the real point is, which is...
Why trade stock on blockchain?
And the TSV is the way that they're created.
They use an automated market maker to create liquidity.
And an AMM, by definition, has slippage versus a limit order book.
So limit order book is always going to be better execution.
So NASDAQ can nicely trade on a limit order book.
A TSV trades on an AMM.
So if your bid gets hit or your offer gets lifted on the AMM, By definition, it's worse execution than what was happening correspondingly on the limit order book at the same time.
And so you don't get better execution.
It's unclear that you can margin the security or get margin to the security.
And you don't control stock loan because the security is sitting somewhere else.
And it's a wrapper, it's an IOU on this.
And so I question the utility of it.
And I think...
We have to be very pragmatic when we think about putting markets on blockchain or putting businesses on blockchain.
We need a real economic reason to do it.
And there is one for securities.
I think that the ability, if you run a limit order book, you have a comparable level of execution.
If you allow for self-settle, self-clear, you eliminate the back office process of post-trade settlement and clearing.
You eliminate the need for DTCC in all kinds of dimensions.
The blockchain is the registry.
And you introduce potential for better margining, going back to that Pareto condition I talked about, where you disremediate Goldman as a prime broker and you borrow directly from the market and the market gets a better rate, you get a better rate.
You also introduce the ability to control stock loan.
And stock loan is a huge economic value prop that The brokerage industry, the sell side, basically goes to great lengths to hide how much money they make off of it because it's obscenely profitable.
And what a lot of people don't understand is if you have money in a typical brokerage account, like Robinhood, for example, and you have a dollar of leverage in your account, right?
It doesn't matter what stock is leveraged, it's just a dollar of margin leverage in the account.
They have access to all your securities to lend out themselves.
and you don't get any of the economic off of that.
That could be 2, 3, 4, 5% on your portfolio, sometimes even higher in certain circumstances when stocks are special and so forth, of incremental return that you aren't getting.
And blockchain brings that return back to you because it's self-custody.
You control your assets.
And so I think there's a real reason why the market should move over.
The question is, how are we going to hit the tipping point where borrow happens on blockchain?
Because that's where the liquidity is.
How do we hit the tipping point where the dollars that traditionally ultimately fund prime brokerage, the asset-backed commercial paper market, for example, how do we get that to feed in?
There's some serious logistical stuff we have to do.
And I feel like these TSVs are just sort of a shiny object, distraction.
that we're going to spend a bunch of time on something that's tantamountly amounted to nothing, right?
I mean, 50 of the 62 or 60 or whatever it is already opted out.
And it's just a waste of our time and brainpower and focus.
We should be focused on the real heavy lifting issues, which are how do we get companies to natively issue stock on chain, which you can do today.
You don't need any regulatory approval.
You don't need...
uh any any uh sandbox you don't need clarity you know you don't need any of these things you do it right now and it's just we have to figure out how to get how to make it happen so figure has something that's taking a different approach which is open and i'm curious you could talk to us a little bit about that and you know just like you said there aren't regulatory barriers to people issuing tokenized stocks if they want to how do we get them to want to what does that look like and do you have a strategy there Yeah, and Open is a great example of that where it was easy to get Figur to do it because we just said we're going to do it.
And what we need to do is we need to go to other issuers and convince them why they should do it.
And the first and foremost reason is it's good for your investors.
Well, a lot of companies don't care about that, even though they should, because they're your shareholders.
It gives your investors potentially better margining.
It gives them stock loan economics.
There's a bunch of things that can happen.
And so that's a lot of the discussion and brainstorming we're having right now, which is how are we going to incent more issuers to move over?
And it might need to come from the buy side.
It might need to come from BlackRock and Franklin and Fidelity for them to put pressure on the companies they're invested in.
and say, look, we want you to issue a blockchain share class because we want to get the leverage and we want to get stock loan and so forth.
And maybe that's what we need to do.
But, you know, we obviously haven't cracked it yet.
We've got OpenWorld coming on to open and, you know, we have a pipeline of a couple other names that we believe are going to come on.
But we haven't gotten widespread adoption that we'd hope we'd get.
And, you know, that's something we have to solve for.
Okay, so still early days and still solving for that.
I've also heard you say that you'd like to see the US Treasury Department copy Malaysia and start issuing bonds that trade 24-7 on a blockchain.
Is that like a...
a future state that you want to get to someday?
Is that something you're actively pursuing now?
Or like, what is your thought process on that?
Like the government bringing their bonds onto blockchains?
Well, the Treasury knows how to get a hold of me if they want to do it.
So my line's open.
Hopefully my AI agent doesn't interpret that as a sales call and respond with some wacky hallucinogenic response.
But...
Yeah, I know.
I mean, I'd love to help the Treasury do this.
I'm not sure why they haven't decided to lean in on it yet.
One of the biggest benefits of blockchain is real-time collateral mobility.
And so the ability to move your Treasuries 24-7 across wallets with very little friction.
Again, that's part of why you want an MPC QC construct back end because when you put your stuff with the traditional custodian, it takes them two, three, four, five days to release the collateral.
But it seems like there's a huge value prop for it.
It would increase the demand for treasuries and the treasury is trying to sell a lot of treasuries.
So they should be oriented around activities that boost demand.
So I don't know.
Hopefully we can see something happen on that front.
I'll do the work for free.
I will just, I won't charge a treasury a penny to put their treasuries on blockchain.
What a patriot.
Yeah, I hope they reach out and I hope they don't get a psilocybin response if they do.
Mike, I want to talk a little bit about the regulatory and legislative landscape here a little bit and just get your thoughts on this because we saw the Genius Act go through.
We saw the Clarity Act not go through Congress, but we've also seen the SEC, the CFTC trying to open the doors for digital assets, for tokenized assets in general.
How does all this net out for NAVRA, for FIGURE, for what you're doing with your business?
Are there still blockers or uncertainty?
that are holding you back or do you think you mostly have what you need to do business?
What's that outlook for you?
Yeah, look, I mean, FIGURE built the business up the way that it is today without clarity, without genius.
You know, our assumption has always been we need to survive irrespective of what happens because the regulatory winds change all the time.
And, you know, I tried to tell this to a bunch of folks I know who are getting banking charters right now.
And they're like, oh, it's great.
We can get a bank.
And I'm like, yeah, but if the old bank regulators come back in, your life's going to suck.
And, you know, and the problem with being a bank is you can't undo being a bank.
You're like a bank.
And so, you know, we've been able to operate without the overhead.
There were certainly aspects of clarity.
that we would have liked to have seen codified into law.
And, you know, it's not clear that that's not going to be able to happen, at least to the extent that they're good for the general public.
But I think Clarity really underscored the fact that our own industry, as small and nascent as blockchain is, was pretty divided.
And, you know, we weren't unified in our positions across things.
You know, there's certain...
certain entities, certain businesses out there that have been massive beneficiaries, the regulatory morass that we've had for the last, you know, prior four years before the last couple of years.
And, you know, I'm not sure how great incentive to see things changed or codified in the law.
So, you know, it is what it is.
And, you know, I think ultimately what will drive adoption is economic use cases, you know, reasons that people make more money on chain.
And, you know, that will drive the the political support behind it.
But it's never been a necessary condition for us.
It's been nice that, oh, if this happened, this would be great.
There's some things we could do that we weren't planning on doing, but are more upside to us.
But the blocking and tackling of our business was never dependent on legislation.
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Okay, that's a helpful update there.
Mike, I'd like to just get some thoughts from you about the outlook on the markets overall here for digital assets and for everything, because there's a lot of concerns in the macro landscape.
We don't have to go through the whole list, but the Fed's raising rates, oil's going higher, the equities markets are struggling, crypto is kind of middling, let's say.
What's your outlook for the markets here?
And do you think we need to see sort of a strong bull run come back to digital assets overall in order to get capital?
kind of off the sidelines or are more interested in coming to digital assets?
Yeah, look, I think one of the biggest conundrums that the Bitcoin maxis have had is Bitcoin's not behaved the way it should have under the more recent geopolitical and macro backdrop, right?
We've got high inflation, we've got risk of war, we've got all these, well, we have a couple wars going on.
you know, it didn't behave the way it was supposed to behave.
Now, I think part of that was it overran, you know, because it was fueled on the digital asset treasury side.
There was an artificial push on the price that got it to levels that probably outpaced where it should have been at that point in time, you know, relative to cost of energy and so forth.
And so maybe what it's done is it just normalized back to the trajectory that it needs to have.
But I think it's, caused a lot of head scratching and it certainly is not behaving like an uncorrelated asset.
It's just tied to risk.
And there's a lot of ways you can get exposure to risk.
And by the NASDAQ, you can short the VIX, you can do a whole bunch of stuff.
And so I think people want to see that normalized back to become less correlated.
more systemically and fundamentally driven, I should say, more fundamentally driven.
And then I think you'll start seeing potential reallocation and price support.
But it's faced a lot of headwind over the last couple of years and exacerbated by margining, by the...
The great thing about perps is you get 100 to one leverage, which works great when things are going your way and not great when they're not.
And a lot of people discover the hard way about margin calls.
And these things all just kind of laid in on one another.
It's funny because we sort of repeated the cycle of what we did in 22, right?
Late 21, 22.
And, you know, with a six-year half-life on that.
So hopefully we get smarter and smarter.
I always joke the blockchain industry and the crypto industry never loses an opportunity to shoot itself in the foot.
And, you know, we're certainly not doing that right now.
Well, I hope that changes in the near future.
Mike, I'd like to get your thoughts on, you know, we've talked a little bit about...
what you see as being the total addressable market and like we're in sort of this you called it a middling nothingness but it's really more of kind of like a tide pool and we're trying to break out into this larger ocean of capital larger markets larger economic use cases how big do you see the addressable market for digital assets being and what is the timeline from getting from this middle nothingness towards that promise lands on the on the horizon and what does that look like for you so so look i i think conservatively the asset-based finance market $6 trillion.
You know, that's KKR's number.
I think Apollo has it upwards of $20 trillion.
And that whole market should run on blockchain.
Like, bar none, there's no reason why blockchain isn't the best platform and ecosystem for asset-based finance.
That's one segment of the broader wholesale capital market.
But that in itself...
you know, let's say it's just six trillion, it's not 20 trillion.
Well, six trillion versus the couple of billion of stablecoin liquidity we have right now on DeFi.
It's a significant change.
So I think we're still in the very, very nascent stages of blockchain capital markets.
But what's been important is certain things have been de-risked.
Like what FIGURE's done with DeFi is they've de-risked the notion of the capital allocator, the necessary role of the capital allocator.
You know, with these upcoming transactions, I think we'll de-risk security issuance in different ways that the market, you know, hasn't seen before.
And I think, you know, de-risking these and then proving there's economic rationale behind them.
are necessary to kind of drive adoption.
Now, they're not sufficient in themselves, they're necessary.
So I think solutions like Navra will be bridges to get those dollars over to, you know, what's going to be alpha in the capital markets for early users for, you know, could be one, two, three years before that alpha is ultimately competed away.
So if I'm a fund right now, especially, you know, if I'm in credit, I would be crazy not to be looking at blockchain and DeFi as a way to beat my competitor set because they're not there.
And the reality is, you know, that structural arbitrage, that structural alpha disremediating the capital allocator is a sustainable alpha and someone's going to earn rent for a long time before everyone else figures it out.
Mike, I really appreciate you coming on the show today.
As I said at the beginning, you have a really amazing track record, really impressive results for your businesses in digital assets.
A lot of the team here at Milk Road are huge fans of you and your companies and your work.
So just thank you so much for coming on at this kind of very uncertain time in digital assets and sharing your perspective with us.
I know our audience is really going to appreciate this and the Milk Road team definitely does as well.
Where can we send people to find more of you and your work online?
Yeah, so I'm mcagney on X and Twitter.
So I'm just mcagney.
Sorry, on X and on Telegram.
And those are easy places to get me.
I'm pretty responsive out on both those social platforms, especially on X.
Well, thank you so much for being here, Mike.
And I'm looking forward to keeping up with you as we go after these several trillion dollars that should come onto the blockchains here.
But in the meantime, thank you so much for being on MillCard Crypto.
Really appreciate the conversation.
Thanks for having me.
I really appreciate it.
Thank you all for joining us.
I hope you all learned something today.
So until next time, as I always say, stay safe, stay educated, stay bullish, and we will see you all on the next episode of Milk Road Crypto.
Thanks for being here, everyone.
Bye.
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