Democratizing alternative asset investing: A conversation with ADDX’s Oi-Yee Choo

| Podcast

In this episode of The Venture, we feature a conversation with Oi-Yee Choo, CEO of ADDX, a full-service capital markets platform based in Singapore. Using blockchain and smartcontract technology, the fintech start-up provides mass affluent investors access to a range of securities. Thanks to its innovative approach, ADDX has also attracted funding from high-profile financial institutions. Oi-Yee sat down with McKinsey’s Andrew Roth to discuss ADDX’s mission and its recent efforts to expand its customer base to financial enterprises. At the close of the interview, McKinsey’s Anutosh Banerjee weighs in.

An edited transcript of the podcast follows. For more conversations on venture building, subscribe to the series on Apple Podcasts or Spotify.

Podcast transcript

Andrew Roth: From Leap by McKinsey, our business-building practice, I’m Andrew Roth, and welcome to The Venture, a series featuring conversations with legendary venture builders about how to design, launch, and scale new businesses. In each episode, we cut through the noise to bring practical advice on how leaders can build successful businesses from scratch.

In this episode, we share a conversation with Oi-Yee Choo, CEO of ADDX, a full-service capital markets platform based in Singapore. The fintech start-up uses blockchain and smart-contract technology to provide access to a range of securities previously unavailable to mass affluent investors. In less than three years, ADDX’s innovative approach has managed to attract funding from some high-profile regional financial institutions. Oi-Yee sat down to discuss ADDX’s mission to democratize investing and create a performance-based culture as well as recent efforts to expand ADDX’s customer base to financial enterprises. At the close of the interview, McKinsey’s Anutosh Banerjee weighs in.

Oi-Yee, over the years, we’ve had many founders and CEOs share their personal stories on how they started their businesses, and it always starts with a problem. Could you share how your career evolved and how it shaped the problem you wanted to solve with ADDX?

Oi-Yee Choo: I’ve spent a lot of time reflecting on why ADDX was such an interesting proposition. Leaving a traditional investment bank to join a start-up was quite fascinating. I spent more than 20 years in investment banking, mostly helping companies do M&A or raise capital. For the past two decades, raising capital was a big thing for the capital markets in Singapore, driven by REITs [real estate investment trusts]. While at UBS, I witnessed the evolution of investing being done at both the ultrahigh-net-worth level and the family business level and observed different types of products shifting toward private markets.

This was largely because private markets developed rapidly over the last decade, mostly for large capital sources like sovereign wealth and institutional pension funds. They started to capture the interest of ultrahigh-net-worth investors, as well as family businesses, because they have deeper pockets and a longer-term horizon. If you look at the way markets have moved, capital allocation has become 80 percent public markets and 20 percent alternatives. But this wasn’t really available for the mass affluent. We would do transactions that brought private companies to the private bank, and we would say to ourselves, “We’re sophisticated investors. We’re investment bankers. Why don’t we get a piece of this?”

But we couldn’t avail ourselves of these alternative assets because the ticket sizes were too large, and we didn’t have the capability of exiting a private-equity position as easily as a public-market position. A large bank would generally deem this an unsuitable risk for the average sophisticated investor, even a mass affluent one.

When ADDX approached me about a chief commercial officer role, they weren’t even licensed yet. I’m a complete technology newbie, so blockchain was not part of my vocabulary. But I saw what the technology could do, solving a need in a market in which the rich had a very well-developed tool set to enhance and optimize their portfolios but the mass affluent did not. It was that fairness and inclusivity of investing that drew me to ADDX, and the fact that the technology now exists to solve this problem.

I took on the role and realized a lot of my colleagues here felt the same way and were driven by that same motivation. We see the unfairness that exists, which we are addressing with our investing tool kit. That’s the simplest problem that ADDX is trying to solve: democratizing alternative asset investing for the mass affluent.

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But why build a platform to do that? You don’t need sophisticated platforms to fractionalize; you can fractionalize on a spreadsheet. But our view on fractionalizing is creating a size appropriate to the average investor.

For example, the minimum ticket size for a hedge fund in a private bank for a single investor is $1 million, which makes no sense for someone with a net worth of $5 million. But it makes sense for an investor with a net worth of $5 million to have some allocation in hedge funds. And the only way to do that is to break it down into $20,000 or $50,000 ticket sizes, and the investor can build a portfolio around that.

The second part of the problem is that when you monetize that hedge fund or private-equity fund, you need a marketplace, and that’s where the ADDX solution comes in.

I saw what the technology could do, solving a need in a market in which the rich had a very well-developed tool set to enhance and optimize their portfolios but the mass affluent did not. . . . That’s the simplest problem that ADDX is trying to solve: democratizing alternative asset investing for the mass affluent.

Oi-Yee Choo, CEO of ADDX

Andrew Roth: I like what you said about this mission to bring inclusivity and transparency to private markets. I’ve noticed that, here in Asia, the high-net-worth, ultrahigh-net-worth, and mass affluent segments typically transact through trusted relationships over coffee, so it’s very much a private marketplace. And getting access to those opportunities sounds like the first problem you’re solving by creating inclusivity. And with the platform, you now have a way to manage that in a transparent way on an exchange without going into complex terminology around blockchain and smart contracts. But a developer will typically ask, “Why can’t we just do this with a client–server model and a database for the platform?” How do smart contracts create the efficiencies that you need in a marketplace like this?

Oi-Yee Choo: I’m tech agnostic, but I suspect that blockchain presented the most efficient solution, which is why you see a lot of discussion of tokenization happening within the financial services world at the moment. And we use blockchain because the ledger itself is very powerful and immutable, and all the information flow is captured in a single platform. When you trade it, or when there’s asset servicing, all of that can be done within the platform. What smart contracts do on top of that particular blockchain is very efficiently execute transactions at the asset-servicing level. And today, within banks or traditional financial services companies, a lot of that is being done by systems that were designed 20 or 30 years ago.

Andrew Roth: Or even longer. Some banks are still using mainframe systems to settle transactions.

Oi-Yee Choo: Because of the immutability of blockchain and the ability for smart contracts to automate post–asset servicing, operations become very lean and efficient, and you’re not relying on reconciliations across systems to make it work. What we did was take an interesting concept built by the cryptocurrency world and repurpose it for traditional financial services.

We said, “Look, blockchain is very powerful from a technological perspective; how do we make it MAS [Monetary Authority of Singapore] compliant?” We were very fortunate to be accepted into the MAS regulatory sandbox. We built additional compliance layers, like making our chain private and permissioned. We also had to build around the KYC [know your customer] and AML [anti–money laundering] requirements of MAS, which means doing the diligence on individuals by ourselves to allow them into the chain to execute transactions. And we’ve been granted a traditional securities license as a recognized market operator.

Andrew Roth: You had to go through a few agreements with the Monetary Authority of Singapore to make it private permission, which means you still go through the compliance checks around AML, KYC, and so on to allow entities to transact on ADDX, right?

Oi-Yee Choo: Yes, that’s exactly right.

Andrew Roth: When ADDX was launched, and you were serving this purpose around creating inclusivity and efficiencies through the platform, was there a moment where you felt you really had traction? This notion of achieving product–market fit for start-ups is often an elusive one. When did you feel like you were really onto something and had predictable growth?

Oi-Yee Choo: I don’t know about predictable growth, because we got our license in 2020 and were born during COVID-19. We were excited and had planned all these road shows, and then all of a sudden the lockdowns started happening. And it forced us to digitize very quickly.

It was also a challenge working from home because we were such a new team. We had to intensify the interaction on Zoom, and it was exhausting because we were trying to solve problems, launch products, and make new relationships with issuers and investors. We learned a lot in those days and digitized more rapidly than we initially planned. We weren’t sure the first few deals were going to happen and were grateful for the partners who took those first leaps with us.

And when we did the first deal, we felt we proved the technology. It was a fund manager who started a small fund with his own investors, and it was a relatively easy package to execute. We said, “OK, this works. We managed to get investors onboarded, we managed to get the fund onboarded, and we managed to cross the trades.”

And then the second deal happened, and it was a hedge fund, which we thought was even better because it was quite well known in the market. And investors were very excited about it because they don’t typically have the opportunity to buy a world-class hedge fund at $50,000 ticket sizes. That’s when we said, “OK, we kind of got this.”

We’re very fortunate because we had very good partners, and we started bringing on more blue-chip names in Singapore. For example, within the Temasek stable, we had Mapletree, which is well known for their real estate products, and we brought on SeaTown, which is known for their private-credit and private-equity products. They’ve never needed third-party capital because Temasek funds them. But they saw an opportunity to bring in third-party capital and worked with us to attract smaller-ticket-size individuals who were very big supporters of SeaTown.

Andrew Roth: So once these blue-chip names started coming onboard, and you attracted more blue-chip names on the issuing side, did that start attracting more of the investors on that side of the exchange?

Oi-Yee Choo: I think it was a combination of both. I think investors started to see we could bring on interesting products and investment opportunities. And then issuers saw that we could do that and do it reliably, consistently. They may not see us as a very big-ticket player, but we allow them to aggregate a lot of smaller investors into that investment. The amount of work is roughly the same, and our process is very professional and very efficient; we’ve built a good reputation over time by helping issuers digitize their investors.

Andrew Roth: So, investors get access to interesting opportunities and investments. And issuers are getting efficiencies in pooling together a larger number of smaller investors.

Oi-Yee Choo: Yes, even within that distribution. For example, one of our deals had a couple of private banks launching a deal at the same time as ourselves. And we observed very little overlap between the customers that were distributed within the private banks and the investors we were targeting. We’re targeting investors with net worths between $2 million and $20 million, and this particular space has been relatively difficult to get into by the big private banks because, again, it’s a public ticket size. The private banks don’t have the infrastructure to support ticket sizes down to $20,000, so they don’t serve the individuals with $2 million to $20 million net worth very well.

We then had sort of an aha moment in terms of product–market fit when we saw this group of investors without any overlap, and then a subgroup of them had gotten very comfortable with our platform. They were building their own private-market portfolio through our platform. For example, they would have $20,000 of a real estate fund and $50,000 of a hedge fund and then do a series of investing across different product types because they didn’t have that opportunity anywhere else. That was the moment where we felt we had something special.

It was also when “digitization” became a big buzzword—less tokenization and more digitization. What digitization does is create opportunity. So I don’t even think about disruption in that sense. We opened up a completely new market in which no solution existed before.

Andrew Roth: Creating that transparency and those lower thresholds to enter is exciting. You hit product–market fit, you’re raising more money, and—from what I’ve read—you’re using this last round to scale. And scaling for you sounds like you’re also shifting into the B2B2C [business-to-business-to-consumer] market as well. And this is a decision facing many successful B2C players who attract entities wanting access to their platform. Can you share what that journey has been like and how you made the decision to step into B2B2C?

Oi-Yee Choo: That evolved from all the internal conversations we’ve had since launching. When we started, we realized it was an untapped market, saw the value proposition, and decided to go for it. And a few things happened that made us think very hard about what we call the “enterprise” or the B2B2C side. Even though we were newcomers, we knew we had a solution wealth managers wanted, because every securities house or bank we spoke to who saw what we could do said, “Wow, this is cool.”

And then several things happened. First, they became our shareholders, because they wanted a front-row view of what digitization and blockchain could do, either to complement the business or to potentially disrupt it. Our investors include UOB [United Overseas Bank] and Hamilton Lane as well as regional bank securities houses like Krungsri, Kiatnakin, Tokai, and Hanwha. And they’re all very excited about the way we’re approaching this problem. But besides investing in us, many of them also wanted either to bring us into their ecosystem or for us to work with them in their respective countries to develop blockchain and private-market thinking for them. I think that was the first signal.

The second signal occurred when we realized how powerful blockchain had become within the financial services debate. At first, in 2020, there was no debate about tokenization because I think people were too busy just trying to stay alive. And between 2020 and 2021, financial services companies all started developing their own innovation teams. There was a lot more openness about discussing partnerships, relationships, and infrastructure and supporting those efforts. We experienced that while speaking at conferences and noticed the nature of speakers change as well, so we knew that something was happening with the big banks.

Third, when we were doing direct-to-consumer activities, we realized there was a need for education. The first wave of users were very educated and understood private markets but didn’t have access to people like us—bankers, consultants, and lawyers. The second wave were investors who weren’t as clued in to the private markets and were trying to understand them. We knew education would become a very important consideration but also knew we couldn’t do it alone. And when we started talking to securities houses and banks, they said they also wanted a platform to help them educate their sales force on private markets and different types of products and how to position these products against their clients’ portfolios.

With these three things, we thought, “We should think about the enterprise because, at the end of the day, for democratization, it doesn’t matter whether we’re doing it ourselves or doing it with partners like banks. The idea is to get as much of that invested as possible. That’s the main mission.”

Andrew Roth: Instead of just having one B2C marketplace now, it sounds like you’re moving in a direction where you have multiple nodes or exchanges through your enterprise customers. How has that worked out? Enterprise customers are a different animal. And you’re now building tools or infrastructure to scale and meet the needs—and often the urgent demands—of an enterprise customer.

Oi-Yee Choo: Yes. We thought about it very hard. We talked to consultants and bankers all the time to get ideas and think about what kind of framework would make this happen and what inputs were needed because we were designing something from scratch.

As I mentioned, this solution doesn’t really exist for wealth managers. We needed a partner that could help us think through some of the design elements. And we needed a partner that could help us think through not just the tech piece but also the inner workings of a bank, which is very complex. It’s about operations, it’s about risk, it’s about legal, it’s about compliance, and then it’s about the frontline bankers who have to deliver the P&L [profit and loss]. And, generally speaking, the people delivering the P&L would get very excited about our product, but we knew we had to design the right fit for institutions across the different stakeholders.

Andrew Roth: Like you said, the frontline wealth managers must have been excited to offer these unique investment opportunities to customers. But without ticking all the boxes for the enterprise around compliance, security, and so on, it would have been a much longer—and riskier—journey. This path that you’re going down with the enterprise market, what are you calling it? And is this now the full thrust of ADDX?

Oi-Yee Choo: We’ve branded the enterprise product as ADDX Advantage, which has a few solutions. It could be as simple as a single corporate account or as complex as an enterprise sub-account structure. But at the end of the day, the idea is to get the wealth managers involved in either thinking about the product or being educated about the product. And then they can position it within their own client portfolios.

It’s designed to be a relationship manager tool kit, and the execution and settlement piece behind it is also operated by our exchange. That removes a lot of the pain points for securities houses and private banks, who would typically complain, “I cannot take on a complex private-market portfolio, because I don’t have the back end to do it.” This reduces the excuses for them not to take it on.

Because, as you mentioned, a private market could be as simple as a couple of people in a hotel lobby pitching to each other. But there are different types of funds, and these funds have different structures, different servicing needs, and different capital calls, distributions, and redemptions. Banks need a very wide range of operational capabilities, and if we can eliminate those pain points, it provides a great base level for the wealth managers to start selling, positioning, or advising clients on these products for their portfolios. Clients want impact, and the private-equity or growth space is one of the best options for impact, so we believe ADDX Advantage is a very powerful proposition.

But we’re also seeing that we learn a lot from the direct-to-consumer side as well. And a lot of the innovation we take from interacting directly with consumers provides a framework for us to continue improving the Advantage product. It could be things like reacting to the markets and how we look at positioning private markets in a volatile public-market setting, when capital preservation and yield become very important. Or it could be our data getting better in terms of demographics and user behavior as we grow and bringing some of these learnings across to Advantage.

But I want to be quite clear that I don’t see us competing with our enterprise clients, because they are private banks who advise and finance clients, and we don’t advise clients. Plus, a private banker generally has a full view of a client’s net worth across the public and private space. Frankly, they’re better placed to advise clients across their total wealth portfolio.

Andrew Roth: I think that’s an amazing way to enter the enterprise market. Instead of presenting a PowerPoint, you’re having a live exchange with real customers to show you understand the nuances and all the compliance and security issues they need on the back end to give them the confidence to bring it to their customers. That must be powerful, since I imagine enterprises are probably a bit tired of getting barraged by new fintech players with theoretical PowerPoints. You’re coming to them with a real business. That said, it sounds very positive, but I’m sure the start-up life, especially as a CEO, can obviously be stressful. I want to shift to what the journey has been like for you personally. What keeps you up at night?

Oi-Yee Choo: Yes, the start-up life is definitely much more interesting, and there are so many things that throw you a curveball. What currently keeps me up at night are the markets. The volatility in the markets is causing quite rapid shifts in investor behavior, and we’ve had to quickly learn how to pivot the pipeline of issuances to address that. Also, when you build a pipeline and are trying to launch deals, it takes some months to develop, curate, originate, get approvals, and launch. As a start-up, you don’t know what you don’t know. And then something happens, and you think, “OK, I’ve got to build a scenario for this.”

The second thing that keeps me up at night is figuring out how to manage talent. We’re building an enterprise—it’s a whole new experience—so how do we ensure that we create the right team with the right skill set to grow this business? It’s very different from a direct-to-consumer approach. A person with a consumer-focused approach may not be suited to selling platforms to a financial services company or a bank because the selling process is very different.

Andrew Roth: It’s a very different game, because the enterprise market is a longer sales cycle and requires a different skill set. As for managing talent, you’re up to about 120 people now, right?

Oi-Yee Choo: Yes, we’re about 120 people now. I don’t know how that happened. When I started two and a half years ago, we were around 50 people. And this growth is great. It shows we’ve built teams to reach a certain sort of critical mass for stability, but it is creating a different paradigm.

Andrew Roth: I think around 100 people is that formative stage in the growth of a business, where you make that move from knowing everyone’s first name, what they did over the weekend, and how their families are doing to then transitioning into something a bit more structured, where you’re probably more intentional on the culture and the leadership principles that you set in place. Can you share how you’re thinking about this word “culture,” and any principles you’re living by right now to build that up?

Oi-Yee Choo: A number of my early employees, some of whom were hired before me, used to reminisce about sitting in a room when there were just 15 or 20 of them. And it was very easy to just yell across the room to each other when you needed to solve a problem. I’m trying to sort of preserve that culture—although at 120 people, it’s getting increasingly difficult—because you want the solution, the alignment, and then the execution to be done quickly and in a very tight manner. As a start-up, you can’t afford to build in bureaucracy and you can’t afford to build in a decision-making process that becomes elongated, because then you either miss trends or are too slow to pick things up.

So the evolution from 20 to 50 to 100 and now 120 entails thinking about the soft and hard infrastructure you need to enforce culture—however you define it, and I think the right term for us now is a “performance culture.” And what does that mean? To me, it’s like Formula One racing, and you’re in the pit. The car zooms in and ten people leap onto the car, change the tires, refuel it, and then, boom, off it goes. That’s what I mean. The team needs to understand exactly what their roles are and execute with precision.

They have that framework for success by knowing what to do and how fast to do it but knowing how to execute is obviously a longer-term question, since there’s no right answer. But it starts with me and my senior management teams agreeing on a definition and then developing the HR infrastructure for the recruitment and retention of talent across those different aspects that reflect what we want to accomplish.

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Andrew Roth: I like the performance culture analogy with Formula One. I was just reading an article on how the manager of Team Mercedes described their culture as one where making mistakes is OK to prevent the blame game and things getting toxic. And what’s interesting about this analogy is, with 120 people, everyone must know their role, and you need to trust the people to your left and right to make those quick decisions and prioritize, thereby getting the job done without crossing each other. Is that kind of where you’re going with this, where everyone knows their role and there’s this high amount of trust between the people to your left and right?

Oi-Yee Choo: The cadence of doing something together, which could include decision making or designing something, that kind of training and practice is important. And I think that’s where the latitude for mistakes exists. With a bigger team, it’s a little bit harder, but in the earlier days we used to say, “We need to have a hypothesis, design around it, and then see if it works or not.” And I deliberately used the word “hypothesis” so people wouldn’t feel like they failed if they made the wrong decision.

Performance, to me, is about allowing that training and practice at a certain setting for different ideas or slightly less infrastructurally crucial things while making sure it’s done with a consistent approach and an acknowledgment that if it’s wrong, we do it some other way. Or, for example, if we plan and we’re always off plan, why is that? We dig into it and make sure that, the next time, we give the team more time or more resources so we get closer and closer to what we call performance.

The end goal is to make sure that, at a certain point, if we say we want to do something, we do it with a lot more precision. I get that nothing’s perfect. Nobody can predict things like the markets. But when we say we’re going to do something, we do it on time with a high degree of accuracy. It could be technologically related or it could be product-issuance related, but the closer we get to that ideal is the definition of performance.

Andrew Roth: So performance, in some sense, equals an agreed-upon process that’s followed in an amount of time but with the flexibility to ask questions, have a hypothesis, and quickly test and learn. I’m looking forward to seeing ADDX Advantage’s progress and how you grow the B2C part of the business. I love this approach to enterprise, where you have a lot more street cred when you have a thriving business to bring to them as an example. Would love to check in again, maybe sometime next year, and see how things are growing—maybe you’re way beyond 120 people.

Oi-Yee Choo: I look forward to that. I look back every year and say, “Wow. We’ve evolved so much. We’ve developed so much.” And I’ve been in this job for only two and a half years. But by next year, we’ll hopefully have very good news.

Andrew Roth: Amazing. Thanks for joining, and I look forward to talking again.

Andrew Roth: Now comes a segment where we invite founders and experts from McKinsey to provide more context and to draw practical insights. I am joined by Anutosh Banerjee from Leap by McKinsey.

Anutosh, thanks for joining the show. In this conversation with Oi-Yee, we talked a lot about the value proposition of ADDX and the problems they’re solving. I wanted to start by sharing how we see the world in Web3 and some of the technical layers. The foundation is built on blockchain, and then the smart contracts or the programs you can automate through smart contracts form a second layer. The third layer consists of the digital assets and tokens that can represent anything from NFTs [non-fungible tokens] to the metaverse to tokens themselves. Can you explain how blockchain is making the difference for ADDX?

Anutosh Banerjee: ADDX is running on Ethereum as their blockchain. In addition to providing the blockchain, or distributed ledger, it also provides ADDX the ability to run smart contracts on the blockchain. But ADDX is also able to offer a proposition where the securities it offers—either for issuance, trading, or custody—can be issued in a natively digital format: a native digital asset or a token.

Taken together, all three can open up quite an amazing array of applications. If you compare what ADDX offers its customers with a traditional financial services intermediary, they’re able to run with only a handful of client-service operations personnel because the chain is fully digitized from issuance through custody. And the smart contracts automate a lot of the operational processes that a traditional intermediary would normally run.

Andrew Roth: And this is where the efficiency that Oi-Yee mentioned comes into play. She also said the immutability of the blockchain is critical to that flow. This is a term that gets thrown around a lot. What does “immutability” mean to you when it comes to blockchain?

Anutosh Banerjee: In the context of blockchain, immutability comes about from the way the ledger is written. And because of the way the ledger is written and the amount of consensus that goes into it before any transaction gets validated, it becomes harder to change the blockchain or change the ledger. It’s not technically immutable, but the amount of effort required to tamper or change the blockchain-based ledger is an order of magnitude higher than the amount of effort required to edit or change a normal ledger.

Andrew Roth: Can you tell us how important smart contracts are in terms of this value proposition for ADDX itself? I think it’s worthwhile for you to explain how smart contracts are not new but are gaining a lot more traction, or perhaps product–market fit, at least for this part of the financial market.

Anutosh Banerjee: That’s a good point, Andrew. When you translate smart contract–based processes in a regulated environment, there are other considerations that come into play. In certain jurisdictions, like Singapore, outsourcing guidelines become quite relevant to consider. When you use a smart contract–based system to settle these transactions, what portion of the transaction are you outsourcing to this provider? And what kind of governance are you running on top of it? These are quite critical questions.

The advantage is very obvious, but it’s important to realize what the smart contract is providing as a service to the users. And in certain cases, like ADDX, it’s offering an internal operational efficiency. And because the service it’s providing is running so efficiently, it’s able to provide access at a $10,000 per investment price point, while an investment bank running a much more manual process can probably offer only a much higher ticket size.

Andrew Roth: I think that’s a great segue—this fractionalization of assets to a smaller ticket item for private markets. And issuers that may not typically seek to raise money through smaller investors now have a unified way to do so. What is your view around the tokenization of assets?

Anutosh Banerjee: When you think about the Web3 technology stack, the tokenization of real-world assets was probably one of the first applications to achieve early product–market fit. But we’re still waiting for the big moment when tokenization takes off, on both the investor side and the issuer side, and scales up in the near term. And there are many reasons for that, but let’s talk about a few on the investor and issuer side.

On the investor side, their portfolios are going through a fair amount of volatility, and they probably want to manage their asset liability much more closely. They want access to short-dated, smaller-ticket investments. A tokenization platform can issue a $200 million facility in $10 million or $20 million bite-size chunks, whereas a traditional investment bank may not be able to issue those kinds of assets at that size. A tokenization platform is able to create these commercial-paper programs that match the investor’s asset liability gap in a dynamic manner, especially given the volatility that’s ongoing in the markets right now.

Andrew Roth: It seems like in the last two or three years there have been a lot of investments around infrastructure and these layers—blockchain, smart contracts, digital assets, and tokenization. I think we’ll start seeing more in real estate, entertainment, and other types of asset classes. It’s a bit of a learning curve right now, but we’re still a few years, or less, away from where some of these breakthrough use cases around tokenizing new asset classes can make the difference. Do you feel like we’re close? Do you think we’re a few months off or a few years off?

Anutosh Banerjee: I think it differs by asset class, obviously. For example, the markers are probably here right now for real estate and precious metals. But the big opportunity, to your point about new asset classes, is in the sustainability area and the carbon markets, because the immutability of blockchain ensures that the underlying carbon markers have not been tampered with. On top of that, you’re able to issue carbon credits. These can then become tradable on the emerging venues, and this could become a huge trend in the second half of this decade.

Andrew Roth: I think one of the big takeaways for me is that when the topic of tokenization or crypto comes up, don’t let the noise we hear about that world drown out the value that can be created from the other layers around blockchain and smart contracts. Those two layers alone are creating massive efficiencies to take out intermediaries in the traditional Web 2.0 world.

Anutosh Banerjee: I think you’re right. Digital assets and tokens, that third layer of the Web3 technology, are where the bulk of the market cap currently sits in crypto assets. But when we look ahead and think about the opportunities presented by tokenization of real-world assets—as well as a lot of the NFTs that could allow things like the creative economy and metaverse-oriented experiences to take off—we expect a lot of these other kinds of tokens to make up a bigger proportion of the market cap for overall digital assets than they have so far.

Andrew Roth: Thanks, Anutosh, for joining the show. We definitely have to keep a close eye on all this, and I’m excited to see some of those new asset classes emerge and other types of tokens gain traction.

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