Capital Markets Are Moving Onchain with Franklin Templeton & Ondo Finance

Franklin Bi (Pantera Capital) sits down with Sandy Kaul (Franklin Templeton) and Ian De Bode (Ondo Finance) to explore why tokenization is no longer a back-office experiment and how it is quietly rewiring global capital markets.
The partnership: Franklin Templeton and Ondo Finance have joined forces to tokenize Franklin ETFs and bring US capital markets to hundreds of millions of people globally who have never had access via the crypto wallets and exchanges they already use.

Key Topics:

- Franklin Templeton's 5-year journey: launching a tokenized money market fund in 2021 and proving blockchain rails to the SEC

- Ondo's model: tokenizing treasuries, stocks, and ETFs as permissionless wrappers like stablecoins, but for equities

- Global access: hundreds of millions of offshore investors can now hold tokenized US assets in the same wallets they use for crypto

-24/7 markets: why real-time settlement, intraday collateral, and always-on rails change everything

-AI agents and tokenization: why machine-to-machine transactions at scale require blockchain rails and why this is the bridge for institutional crypto allocation

-Smart wrappers vs. dumb wrappers: programming stops, rewards, and collateral directly into the asset itself

-Back office to front office: 100% of Franklin Templeton's digital asset AUM comes from net new crypto-native customers

-The $700M Ondo Global Markets platform: 70% market share, 5% week-over-week growth, and a whale who bought $50M of Google stock

-What's next: perpetual swaps on equities, on-chain portfolio construction, Franklin Crypto multi-manager platform

-Rookie mistakes: smart contract edge cases, lost private keys, and the horror of checking lifetime gas fees when ETH is at all-time highs

Transcript

SPEAKER_01 0:00

This is going to be the bridge that will help institutional investors understand why they need allocations to crypto as an asset class because there are entirely new business models that are emerging that you cannot get exposure to in traditional ways.

SPEAKER_03 0:20

Welcome to this episode of Stateful. I'm Franklin B., general partner at Pintera Capital, and I'm excited to kick off this institutionally minded series of Stateful to shine a spotlight on the most important conversations happening inside institutions today around blockchain, tokenization, and digital assets. Our goal is to help you understand this moment of massive transformation in capital markets and digital asset investment by hearing from the people who are actually making it happen. And so I'm excited to chat with two trailblazers from Franklin Templeton and Ondo Finance, who recently announced their partnership to tokenize Franklin Templeton ETFs, as well as their views on what's coming next in the future.

SPEAKER_02 1:02

But before we begin, a quick disclaimer. This content is for educational and entertainment purposes only and does not constitute financial investment or legal advice. Please do your own research before making any investments.

SPEAKER_03 1:12

So I'd like to welcome Sandy Call, executive vice president and head of innovation at Franklin Templeton Digital Assets, and one of the most influential voices translating blockchain for institutions today, as well as Ian DeBode, who is president and chief strategy officer of Ondo Finance, the largest tokenized securities platform globally. Private ondo, Ian led digital asset efforts at McKinsey. So welcome to both of you. Thanks so much for joining us. So I'd love to just uh set the stage a bit. You know, obviously I've had some experience in the olden days of JPMorgan blockchain of trying to make something happen inside of an institution. And it is very much a miracle worker's job. So, Sandy, I'd love to hear from you on, you know, what started this journey for you into just digital assets, tokenization. What gave you conviction that this was something you wanted to champion inside of Franklin Templeton?

SPEAKER_01 2:10

Yeah. So actually, Jenny Johnson is the person who really drew me in. And it was her vision for Franklin Templeton that really, really encouraged me to leave the role that I had. I had been at Citibank doing thought leadership and advising asset and wealth managers on how new technologies were going to be changing the industry's business model. And Jenny and I started talking about blockchain back in 2018. Jenny had run Tech and Ops in one of her earlier roles at Franklin. So she really was intrigued by the idea of being able to have a centralized ledger that everyone transacting could be looking at, even if that ledger was decentralized in terms of its operation. And so she wanted to experiment with this because Franklin Templeton was running our own transfer agent business, which is where you keep the records on all of the funds. So with all of the thousands of mutual funds we trade every day, we had literally hundreds of thousands of records that we were keeping daily within Franklin Templeton. And she wanted to experiment and see can this blockchain really save me money and save me time? And so we had to launch a fund on the blockchain to test that. And we filed to launch our tokenized money market fund in 2019. We launched that in April of 2021. So we are coming up to our five-year anniversary of running that fund 24-7 on blockchain rails. And we really were able to demonstrate, not just to ourselves, but to the SEC, how much better these rails were and how they really passed through savings and cost to the underlying consumers by bringing down the total expense ratio on the funds. So they gave us permission to be able to issue our tokenized exposures as digitally native product. And that is the system that we have been building out since that time. And that has really informed our journey on how to think about tokenization and led to us working with Ian and the Ondo team.

SPEAKER_03 4:22

That's amazing. And I've got to say, it it really is unique in terms of what you see in the space from different institutions, where, you know, as you mentioned, Franklin Templeton has been running a transfer agent inside your house, and that gives you the insight into the complexity, right? I mean, there are firms out there that probably just only see one part of the stack and don't necessarily get the insight of uh being both an asset manager and also running the infrastructure that's needed to make this work. So that must have been a really just special perspective to have on, okay, this is how we're going to capture efficiencies from this, but also actually be able to innovate on the product itself. And, you know, it feels like we're finally there. I mean, you've been on this journey for five years. Uh, it's been 10 years since I've really even started on this journey as well. And now we've we've heard from the New York Stock Exchange and Nasdaq that they're also on their road to tokenizing equities. Ian, for you at Ondo Finance, how do you think about just Ondo's role and Ondo's approach, given that this whole system is finally starting to wake up to the potential here?

SPEAKER_05 5:33

Yeah, it's a great question. We get that asked quite a bit. And it's like, hey, is what all these stratfy firms doing now is that competitive with you, or does it actually help you? Uh and I actually personally think it really helps us, just like we help these stratfy firms. The partnership we have with Franklin Templeton is an example of that, but allow me to illustrate that a little bit. So for those of you who don't know Ondo, what we do is we tokenize treasuries, stocks, and ETFs. The reason we do that is because we fundamentally believe there are hundreds of millions of people globally right now who do not have access to these U.S. capital market products, but in reality would love to have access, ideally 24-7. And they want access in the same wallets and portals that they are used to investing for many people, particularly offshore outside the US, that is via their crypto wallet, their crypto exchange account. And so by tokenizing these stocks and ETFs, we allow them to be accessible on a global basis in permissionless form. The way Ando tokenizes the stocks and ETFs is very much like a stablecoin in the sense that if you want to mint and burn these assets with us, you have to onboard with us, but you can send them freely in the secondary market wherever you want to. That also has the benefit that just like stable coins, you can use them in DeFi however you want, right? If you want to take out a margin loan against your stock or ETF as collateral, you can do that 24-7 in DeFi with the way that we tokenize. It's a different model than the native issuings that, for example, Sandy has done with the Benji token. We do it in a permissionless form. We do we offer that to offshore investors. And as a result, these assets work really well in your average crypto wallet in DeFi and also on crypto exchanges. So we see a lot of demand offshore from the crypto exchanges. Think of you know Binance, OKX, Bidget, Gate. These platforms have hundreds of millions of users, and they're looking to now offer stocks as well. Ultimately, ideally to compete with Robinhood, essentially. It's significantly easier for them to list these token these assets in tokenized form because then they can use their existing custody infrastructure, their existing accounting systems. People can deposit and withdraw on these assets just like they would a crypto token. And you can have these markets 24-7 with stable coins. That is helpful because globally people want to access these assets just running on stablecoin rails and public blockchain rails, because globally a lot of people have figured out that stable coins are very helpful to get access to the US dollar, just like tokenized stocks and ETFs are also helpful for the US dollar, for the US capital markets. Now, ultimately, how does this tie back to MASDAC and the New York Stock Exchange and these other systems? When we tokenize a stock or an ETF, we fully back it, meaning that the moment we mint a token that represents this stock, we actually have to acquire the stock in the traditional financial markets and keep it in a custody account. Just like when a stablecoin issuer issues a stablecoin, they have to back it with either cash or a treasury, right? We have to do the same thing, but with the actual stocks or ETFs so for every single buyer that exists offshore that is buying one of our tokens from us, we have to go via our clearing and executing broker and acquire these assets on the New York Stock Exchange, on Nasdaq, on all these other traditional financial venues. So we essentially just allow for the distribution of these stocks in ETFs that are already trading on the New York Stock Exchange and the NASDAQ in the offshore markets where there is significant untapped demand. So ultimately, we just route flow to these venues and allow these assets to trade and be accessible in different ways. So I don't think we're competing with these venues at all, quite frankly. But there is one important caveat in all of it. These crypto exchanges, they want these assets to trade 24-7, right? And right now, the legacy infrastructure does not operate 24-7. Now, the beauty of tokenizing these stocks and ETFs is that once you deploy it on a crypto exchange, you could have a market maker that is deploying its own book on a crypto exchange and keeping these markets open over the weekend. And that is exactly what is happening right now. You can buy uh tokenized Tesla by Ondo on Binance over the weekend if you want to. And so some people have argued well, that really is competitive with the New York Stock Exchange and the Nasdaq because there is a different book with different liquidity sitting on a crypto exchange where that flow may not actually end up at the Nasdaq and the New York Stock Exchange. But that is why we at Ondo very much like the New York Stock Exchange and the Nasdaq and other exchanges to move towards a 24-7 model. Because then, quite frankly, these crypto exchanges wouldn't even need to deploy their own book. They would just be able to tap into the TradFi liquidity that already exists. That TradFi liquidity will always be deeper than what a crypto exchange can deploy on their own books. So as long as TradFi moves towards 24-7, I think crypto will obviously and honestly be the largest uh demand signal for it, right? Because you're dealing with an audience that audience that wants to trade 24-7. So if NASDAQ New York Stock Exchange move towards 24-7, I think we would love that. That would be great. We will be sending flow to them 24/7. So I actually think ultimately we all help each other by moving towards these 24-7 systems. It's not a matter of competition, really.

SPEAKER_03 11:08

Yeah, one way I think about it is, you know, early in my career, I got to sit next to the JP Morgan depository receipts desk. And that used to be the best way to move or provide access to US equities and other markets, or vice versa. But when I looked over at what was happening, there were there was millions in volume for stocks like Alibaba to trade on the New York Stock Exchange happening on a spreadsheet. And I feel like what's happening now is we've taken, you know, the insight that there is real demand outside of the US for these assets and said, look, why don't we serve that demand with just the best technology possible? It was possible before, but now it can operate just like an API. It just is like software. And that means it can be turned on uh very quickly and it can really spread um much more quickly as well. I guess, Sandy, for you, you know, one question that I have is people often point to the international access of tokenizations as a key benefit and even the main event. Franklin Templeton obviously serves customers across 30 plus countries. Would you agree with that assessment? Or do you feel like there's value for tokenized assets even to US investors?

SPEAKER_01 12:29

First off, we are really looking at 180 countries that we distribute in. So uh really quite out there around the world. Uh, but we're seeing demand in all locations, right? I mean, to be very fair, about 60% of our assets currently are coming from US-based investors. And this is because there are efficiencies using these blockchain rails. I mean, Ian spoke about 24-7, and that's a huge efficiency, but 24-7 means more than just trading access, right? What the trading access buys you and what the ability to run the system 24-7 gets you is real-time processing, right? Today, when we think about how to process securities, you have one entire set of rails where payments move, you have an entirely different set of rails where securities move, there's all these messaging networks that are constantly passing messages back and forth between these infrastructures to coordinate activities across different counterparties and intermediaries. It's complicated. I mean, we've made it work because the markets are successful and they have grown. But what I really feel is that in 10 years, when we look back at the last 50 years of growth, we're going to see how this very complex set of plumbing and this very complex set of handoffs and intermediaries and toll takers, to be very honest with you, have really inhibited growth. Right. I think that the volumes that we are going to see emerge from this 24-7 system are going to be exponentially larger than what we see happening today. And that is because I really am able to finalize a transaction within seconds, right? That is going to foundationally change how people think about portfolios and investing. I am programming the assets themselves, right? My stock is now sitting in a wrapper, or my ETF is sitting in a wrapper, or my fund is sitting in a wrapper that is not a dumb wrapper, like a mutual fund or a separately managed account. It is a smart wrapper. It is a piece of software. I can program in activities, I can program in rewards, I can program in stops, I can program in protections, right? I am going to start to make my investment instrument its own autonomous way of engaging with the system and settling itself, right? And this opens up again tremendous new possibilities. And we're already seeing these in the examples of our tokenized money market fund in terms of programming in things like use cases for supply chain management and letters of credit and releasing a letter of credit funded in our tokenized money market fund when a shipping container actually gets checked in at a port, right? These things happen in 60 days or more today, with these programmable contracts, they can happen within seconds. So I think that the volume of transactions is going to expand so dramatically. The functionality that you're going to see in being able to operate intraday, which we're already starting to see in the growth of intraday repo, intraday collateral movements, right? All of this is going to facilitate and act as a lubricant to the system that is going to really cause, I think, our volumes and trading activity globally to skyrocket. And I think that is going to really activate the financial inclusion that Ian was talking about for all of those outside the US that want to access the US capital markets. And it's going to open up markets outside the US much more easily to US investors. So I really see both audiences benefiting from the direction we're having in the marketplace.

SPEAKER_03 16:29

Yes, Andy, that's that's such a good insight that uh, you know, even though we're talking about expanding the so-called supply or access to capital markets, uh, there is this paradox that when you increase access, demand actually often increases as well. Uh, and the ways that people actually use those assets or productize uh those assets starts to become more and more creative uh over time. And when you're talking about 24-7 access, it reminded me of something else that, you know, in my life is running 24-7, which is my open claw agent. And that's something that I know you've shared your thoughts about, which is that tokenization actually has an important role to play in an agentic world where AI agents are a bigger part of our investing activity. Uh, I'd love to hear a bit more about that. Uh, how do you think about the link between tokenization and AI agents?

SPEAKER_01 17:23

Yeah, this is, I think, one of the most exciting areas that is really starting to hit home to people as we are learning more and really starting to understand the potential trajectory of growth in agentic AI. Right. I mean, estimates now have agents running 25 to 30 percent of all US online commercial sales within the next five years. When you think about that, it is unbelievable. I think it was 183 trillion worth of transaction volumes. And they are doing this at speeds and with computing power that they need these decentralized rails to be able to facilitate, right? They need to be able to access the certainty of the blockchain settlements. They need to be able to leverage the smart contracts and the automated execution terms. They need to have the digital identity that these rails provide because agents each have their own unique identity that needs to be verified to really allow them to transact. They need to be able to really look at the transaction pricing and do that instantaneous comparative shopping to look for the best deal in the best moment to minimize their own transaction costs. And as we were talking about with the security system, the way that we settle securities today, even the way that we do payments today and the way that we record transactions on even commercial transactional networks like MasterCard or Visa is so slow and still so tied to batch processes that there is no opportunity whatsoever that we are going to be able to allow for 183 trillion of machine-to-machine transactions to occur without utilizing these decentralized blockchain rails and protocols. And so I think that this is going to be the bridge that will help institutional investors understand why they need allocations to crypto as an asset class, because there are entirely new decentralized business models that are emerging in the crypto domain that you cannot get exposure to in traditional ways, right? If you think about an equity as being a way of getting exposure to the growth and the economic benefits of a company, you need to now think of tokens as a way of getting exposure to the growth and economic benefits of a network, particularly a decentralized network. And therefore, this is going to become the way that agenda AI is enabled. And you're going to have to think about your AI portfolio in terms of not only do I need to invest in the AI companies that are driving the creation of these agents, but I need to invest in the delivery infrastructure that is going to support the potential that they represent for transforming the economy. So I think this is going to be a huge driver of really bringing trillions of dollars into crypto investing. And this is why we need to get these rails right. This is why having TradFi coming into these rails is so important because the innovation that the crypto natives bring needs to be paired with the understanding of consumer protections, institutional quality due diligence, institutional quality controls, right? All of that needs to be in place for these trillions of dollars to shift. And that's what I think will happen within the next 18 to 24 months.

SPEAKER_03 21:05

Yeah, I completely agree. It's uh it's one of the areas that we're spending the most time on at Pantera, because at the end of the day, the stack for AI agents doesn't exist yet, right? And for banking infrastructure, payments infrastructure, and ultimately markets infrastructure for AI agents. I compare it to what's happening with SaaS companies today, which is that suddenly they're facing a new type of customer, which is that their former customers are now just sending their agents onto the internet to access APIs and figure out what software they need to get their job done. And the same thing's going to happen with investing, that agents will go out there and look for assets and look for the right portfolio risk and the right platforms and venues. And therefore, uh to make capital markets actually legible to agents is a whole new challenge. gonna have to face together.

SPEAKER_05 22:01

I agree for what it's worth. And we get sometimes the question of like, is the way Ando does his tokenization is all via permissionless rappers, right? And we get the question sometimes of like why does that even matter? And uh I think the fact that you want global seamless access to these assets is why it matters. Um people typically think about people when we say that but to Sandy's point increasingly I think the same is going to hold for agents right if an agent can hold any stock or ETF or commodity or crypto asset all on the same rails permissionlessly and move them around 24-7. I think the way we think about asset management, wealth management, roboadvisory all these things are going to dramatically change, right? But that is why permissionlessness also matters and why like stable coins already are increasingly thought of as a preferred way of payment for agents. Why? Because an agent doesn't have to KYC to a bank to actually hold it right you can just hold these things in a wallet. Any agent can spin up a wallet and you can hold these tokenized US dollars in there and use them 24-7 however you want that is very important and impactful for an agent. That is why certain traditional financial systems right now will not scale is because you have that onboarding barrier. And the same thing is going to apply to stock CTFs and name your other asset. And that is why permissionless rappers matter in the first place.

SPEAKER_03 23:34

I I I'd love to get more into just the moment that you both decided to partner together between Franklin Templeton and Ondo uh you know it's fascinating to me as someone who's been on the other side and tried to make things happen and hit my head against the wall when it comes to innovation and blockchain adoption. But I'd love to just get into maybe Sandy from your perspective what was the moment that made you realize you wanted to first of all partner instead of build internally and then to find a partner like Ondo to help you bring this to life.

SPEAKER_01 24:12

So I think Ian's last answer was critical to understanding why we wanted to pursue this partnership, right? This concept of permissionless tokens, this concept of not doing KYC AML, that sounds so scary to a traditional investment firm, right? This is so outside the bounds of how an 80-year-old asset manager with$1.7 trillion dollars in assets thinks but and honestly I'm gonna be completely honest here the first time I heard about permissionless tokens my gut reaction was no no no but the more I thought about it and the more I really began to understand is I do think we are experiencing a shift in the world where this idea of owning a return stream is really what I am looking to be able to have, right? It used to be I wanted to own the fund or I wanted to own the stock but we have seen institutions for years really working in this type of synthetic or derivative exposure. And I think that this is really the maturation of that and the democratization of that to a far broader audience. And so I love this idea of being able to take the return stream and turn that into its own asset. Right. Because I can then start to do things with that return stream like pledge it, lend it, post it as collateral, right? These are all things that really open up the utility of my investments and give me the opportunity to have each investment in my portfolio do more. And so I became very enthusiastic about this idea of permissionless tokens. And I felt like the infrastructure that Ondo has built, their thinking about it, their commitment to doing this in a regulatorily compliant way, that was all very attractive to us to really partner with them. And I don't see it as an either or right we're going to partner with Ondo and build product with them and we're going to continue to build our own digitally native product. And I think there will be use cases and there will be interested investors for that full range. So I think that this is a great opportunity for a traditional firm to really learn about this new investing audience and the capabilities of what these new permissionless tokens allow. And at the same time doesn't prevent us from continuing to build out the regulated product on our own that will service our traditional investment channels and service the traditional distributors that we've worked with for 80 years. So I think it's kind of a best of both worlds scenario.

SPEAKER_03 27:04

Absolutely and Ian I'd love to hear from you as well what was most exciting about this opportunity to partner with Franklin Templeton how does it show up in your mind in terms of the progress and the milestone that this represents for Ondo and for just the tokenized market overall.

SPEAKER_05 27:22

Yeah I think it's pretty meaningful actually because to Sandy's point most traditional financial firms when they hear about our permissionless rappers on these instruments go a little bit of like uh oh but you know for everyone listening to I can assure you we do it in a very compliant way. We have an approved prospectus in the European Union our assets are approved for secondary market traded by the FSRA in Abu Dhabi. So I think the fact that the wrapper model in and of itself that Ando does has also matured quite a bit right the fact that these assets are regulated under MIFID and classified as transferable securities, the fact that they can be traded in Abu Dhabi by Binance with their own local BD license that just all points more towards a regulatory framework existing around these wrappers. But these are still permissionless tokens just like stable coins are permissionless cash, we now have permissionless stocks in ETFs and to Sandy's point it does represent a true innovation on how you can use these things as collateral on-chain in DeFi 24-7. Now it doesn't mean that the native version should not exist. I mean the moment Franklin Templeton issues a native version of these instruments, Honda will hold the native version on-chain because that those rails are just significantly better so that we don't necessarily always have to use the legacy infrastructure. So I think it really is a world in which both models exist. But finding a regulated asset manager like Franklin Templeton who will publicly come out and say yes we like this wrapper model because it does represent true innovation and it is in story of and not or I think is a really meaningful milestone. And to be honest I am not surprised in the slightest that Franklin Templeton is the first to actually make that move given their track record in innovation and their embracing of crypto more broadly. So it was a pleasure to work with Sandy on it.

SPEAKER_03 29:16

Yeah now you see why I picked IM as a partner yes it's a full stack approach to make uh innovation actually happen. You know one one of the more notable takeaways I have from just seeing the news about about the partnership is just that it feels like there's been a real shift of talking about blockchain and tokenization as this back office solution, this sort of efficiency or optimization play to now being a real front office opportunity, right? To get net new distribution, new revenue streams, new customers. Sandy, is that something that resonates and if so how's that changing the conversation with your colleagues and with your peers?

SPEAKER_01 30:02

Yeah so I will tell you right now Franklin 100% of the assets that we are managing in Franklin Templeton and digital assets are from crypto native audiences. Every client we have did not exist as a client of Franklin Templeton until we started launching these products and pursuing these channels. So it has opened up entirely new audiences and the money coming in from these audiences is accelerating and growing and we fully expect them to be a major distribution channel for us. Right? So this is really the expansion of financial services into new models that are far more direct to consumer. And I think that is a key consideration because the entire financial services industry has really been built primarily around an intermediated model. And now we are seeing more individuals and more individually institution like families and institutions themselves wanting to use these rails to really run their own portfolios and run their own businesses. So I do think it's opening up net new audiences. So that is definitely a truly expansionary play for the front office. I think it is opening up new sources of flows. So as Ian said with the tokenized ETFs that we are creating every dollar that Ondo brings into the platform for a Franklin ETF, they are going to go into the open market and buy that ETF. So that is an additional dollar flow into our product so they are not only a new distribution channel they're also a new customer right and that is an unusual combination to find but I think that is going to become more and more the norm as these as people come to understand the potential of these technologies. And so I do think you need to approach this space in a very strategic manner to understand that behavior is changing, new technological capabilities are emerging and that the regulators are now listening. Right. And so those three things together are really opening up the aperture here on what we can accomplish in rewiring the system. And I really love being at the forefront of pushing that boundary in a way that does not get ahead of where the regulators are comfortable with us experimenting. And that is why again to go back to we're very excited about our partnership with Ando because I think we have found a very like-minded set of true professionals who are thinking in the same way.

SPEAKER_03 32:42

Yeah it's it's really admirable you know just in terms of how you design the launch as well that you went for five ETFs, not just one. And yes, you could have done it with an existing customer and it would have just been a fun experiment in the sandbox but instead you're going for net new customers. So I love that. And uh I think it really speaks to just the customer discovery that is happening in real time around hopefully a new audience coming to Franklin Templeton. You know what would you hope to see six months from now as a way of defining success for this partnership? What would be the early signals? What would be the metrics you'd want to be looking at to see okay yes we're gonna keep doubling down on this and yes this is playing out how we hoped.

SPEAKER_01 33:32

Yeah well from my perspective I always love assets. I am an asset manager so I always love getting assets. So that will always make me happy in addition to assets because I do view this far more strategically than just a distribution play, right? It's what's next, right? I want a thought partner I want a partner willing to push the boundaries with me, look at trying new things, right? Not everything we do is going to work and be successful and that's okay right sometimes you learn more from things that you tried and didn't work and you really decompose as to why that did not work and it gives you insight into a new path. So it's hard to find people to innovate with right that might be harder than even innovating is to find people to innovate with because it does take an ecosystem, right? You cannot innovate alone to change a marketplace. And so that to me would be success, right? I want the partner not just for the assets they can raise and the distribution they can help us access, but for this ability to be a true thought partner and true experimental partner in really bringing the combined expertise of our organizations out to the regulated space and helping bring along the entire global marketplace so that we're opening up this opportunity, fully realizing I'm opening up the opportunity for my competitors and peers as well but I'd rather have a bigger marketplace to compete in than a small little marketplace without volumes.

SPEAKER_05 35:06

And I think what does success look like I love the question as a hard answer because this is such an undefined category. We know there is demand offshore for US capital markets and a lot of these products we see that in our own numbers and growth for the on the global markets platform and the tokenized stocks in ETS right now it's at 700 million in total value. So in the gram scheme of things that's obviously very small. But we only launched in September platforms growing 5% every single week and we have 70% market share in that category. So I'm bullish and hopeful on what you know six months from now what it could be. But one of the difficulties we've already seen is you're dealing with an audience that often has never had access to these things. And so when they see even the concept of an ETF they're like what is an ETF they just don't know. So you have to educate them about you know what does a diversify portfolio even look like we're dealing we saw this was truly astounding we saw a trader the other day who was holding about 200 million dollars of Bitcoin they sold 50 million dollars of Bitcoin and just bought Google stock 50 million dollars of it in a single stock just holding Bitcoin next to it. And so we're like thank you very much whale we like this very much but at the same time oh my goodness please diversify your portfolio have you heard of you know these other ETFs have you heard of the Franklin Tembleton ETFs so then you have to start that user education so that they understand that it is better for their overall returns long term to actually have ETFs that give you an exposure to a wide variety of assets. And if you're a fundamental believer in a specific theme you can buy you know the AI ETF that Franklin Tembleton has. But you have to diversify your exposure because typically on these crypto platforms you're dealing with investors that made a very substantial portion of their wealth really betting on two to three tokens sometimes one right and so that's just one example of something we noticed of like oh boy we're gonna have to educate these people on just the basics that we all take for granted in the US but that's how you get adoption.

SPEAKER_01 37:18

Yeah I'll add a funny story to Ian's when Silicon Valley Bank blew up and we started to get our first big wave of subscriptions to our tokenized money market fund I had to run a lot of seminars to explain what a money market fund was to people. And inevitably they would start to get it and they'd be like ah it's like a stable coin. And so I was like how funny you know coming from that direction you know the instrument that's been around for 70 years gets compared to the instrument that's been around for five. But that is the mindset of the audience that is investing and you really need to meet the investors where they are.

SPEAKER_03 37:54

That's so true. And you know the behavioral change you're talking about is really the generational change. Yeah there are definitely crypto natives who will compare traditional assets to stable coins or to some DeFi project because that's sort of their their first context. But when you think about kids these days they're operating their whole world in Fortnite Roblox just the internet overall and so you know the minute they walk into a bank when they turn 18, they'll be so confused by how things work because they're so used to this virtual world or this fully digital native world that should be happening 24-7 and should be instant and uh um operate just like software at all times. And so hopefully by the time they they do walk into a bank things will have transformed quite a bit. Yeah I I love to take it maybe a little more into the future even for you both is you know for Ondo, Ian, what are you most excited about for the upcoming roadmap and for where ondo goes next yeah we've got uh two platforms launching or two topics I'd say that we're launching pretty soon.

SPEAKER_05 39:04

There's been a lot of talk about uh these perpetual swaps for Ola readers the perpetual swap's like a future but it has no expiry it's a uniquely crypto native instrument I think that was really rolled out on cryptocurrencies to allow for 24-7 leverage. But now increasingly people are also thinking through how to actually apply that to other assets like commodities like single name stocks even some ETFs. There are multiple platforms right now that have 24-7 perps on even assets like oil. I think I saw some crazy stat that these days 5% of futures volumes is essentially migrated already to oil perps. And so we're trying to innovate in how these professional swaps can work on uh equities first and foremost. So that's something that we're working on and very excited about and then this other bit is kind of to what Sandy was already alluding to earlier is we're reaching a very interesting point where all of a sudden you have these stocks, commodities, crypto, ETFs all living on the same rails they can move around 24-7, you can program them to do things 24-7, you can rebalance things 24-7. So how do you think about asset management and portfolio construction? What does that really mean for the concept of an ETF even or a wrapper or a diversify portfolio? So how do we innovate really in portfolio construction now that all these things are on public blockchain Rails and available 24-7? That's also something that we're working on and we're very excited about.

SPEAKER_03 40:29

And Sandy for Franklin Templeton what's next in your journey with digital assets and tokenization I know today happens to be the day that uh you've shared the news about the launch of Franklin crypto nothing to do with me of course but we'll love to hear more about that and uh you know what is exciting about uh the next chapter for you guys.

SPEAKER_01 40:52

We are building on these Rails, right? We've been building on these Rails for six years. And that has given us a very up close and personal experience of how effective it is to build in this ecosystem. And so we have put together our own investment team that has been doing their own coin level research, who has been putting out their own coin level price forecasts, really examining the discounted cash flows, examining the tokenomics and actively managing portfolios. And what we realized is that as people begin to understand the important role that these decentralized platforms are going to provide in the coming AI-driven world and just as we see the growth natively of these decentralized businesses like Deepin, decentralized physical infrastructure, digital decentralized identity, digital identity right these are brand new sectors that have never existed before that are supplementing DeFi, right? Decentralized finance. So there's starting to be more and more protocols that we think offer true growth value and are going to be key parts of investor portfolios going forward. And so our goal is to build out this multi-manager platform and multi-strategy platform to really offer our investors that direct insight into how we see this world evolving and to really bring that with the trusted brand name of Franklin Templeton. And we just think this moment is perfect in time because you know we have gone into a little bit of a pullback from the bull market we were in there's some great trading talent that is probably starting to feel the pinch of trying to operate with low levels of AUM. And I think that this is a great time to really bring that talent together give them a safe platform from which to really build their businesses and diversify our own trading talent to be able to offer a great array of strategies to our institutional clientele. So we're very excited about that prospect of building out this multi-manager, multi-strategy trading platform and then continuing to build out our suite of tokenized products for the crypto native audience. We see both audiences as really high potential and then I would say the third area that we're very focused right now is around this concept of what does liquidity look like in a world where you now are moved able to do things 24-7 and move things intraday. And so we're working a lot with the banks around reengineering their approaches to how they run these big treasury management businesses and corporate treasury businesses and really helping them think about how do we incorporate these new tokenized deposits that they're starting to create into this new ecosystem and how do we create that interoperability with them around stable coins. And into investable products. So those are the three areas that we're very excited about right now.

SPEAKER_03 44:05

That's fascinating and super exciting. I mean, as you said, you know, it's not just that capital flows are starting to cross over into the tokenized world. It's also the uh the talent flow, too. And the convergence, I think, of these two worlds, I think is is so exciting to see. Uh, and so kudos to you for just making Franklin Templeton just someone who's playing at the center of all of this, and Ian to you as well, for Ando just being at the forefront of all this. I'd love to take us into uh two lightning segments to just end the session. The first is one I call uh rookie mistakes. So, you know, obviously our audience comes to blockchain and crypto from all different parts of the world and all different levels of experience. And so, you know, I really wanted to honor that by saying, look, we all had to start somewhere. Uh, what for you was the biggest rookie mistake or misconception that you had at the beginning of your journey?

SPEAKER_01 45:05

So I think for me, one of my biggest mistakes was I did not understand that once you've set up a smart contract, it automatically executes, right? And so when we first started experimenting with smart contracts, I didn't fully think through all of the if-then possibilities that would occur and didn't really think through all of the right protections and and kind of auto stops that I needed to build into the contract. So yeah, that that showed up real fast when we got into the you know the testing and the code authorization. And that was a very uh, I was a little embarrassed by that one.

SPEAKER_05 45:47

Yeah, I think for me, I didn't fully appreciate the whole concept of not your keys, not your crypto until I actually lost my keys for the small wallet, small wallet, luckily. But you know, this is most people start by having crypto just on a centralized exchange, but then all of a sudden people are like, oh wait, I can actually have a self-custodial wallet, I can move these funds there. And so I was just experimenting with some flows. Um something got stuck. I removed the browser extension without actually having copied my private key. And I was like, oh, luckily this is a long time ago. Uh, but yeah, not your keys, not your crypto, Jalen. Very important.

SPEAKER_03 46:24

Uh definitely. I I think for me, my worst mistakes have just been around something you mentioned a lot, Sandy, which is uh liquidity. That uh liquidity is not evenly distributed, especially for new nascent assets that look like something familiar, but might actually be something totally different. So price slippage has not been my friend, at least.

SPEAKER_00 46:48

Well, um the first time I saw the peas on my crypto executions, I almost fell off the chair.

SPEAKER_03 46:53

Oh, yeah, that that's a whole other story. Uh just looking at the history of transaction fees that I've paid over the years, and when you figure in price appreciation, that is mind-blowing.

SPEAKER_04 47:07

You used to have these gas checkers, right?

SPEAKER_05 47:09

Where you could just like be like, How much gas have I spent over the years? And don't do that when ETH is at all-time highs. No, it's not good.

SPEAKER_03 47:17

Awesome. Well, the second segment is really about writing the headline. So, you know, when we reach the point where we feel like mission accomplished, um, what does that look like to you? How would you define the headline for that in one sentence?

SPEAKER_01 47:34

Net new inflows to tokenized products exceed net new inflows into off-chain launches.

SPEAKER_04 47:43

Investors agree tokenized products are better than their traditional alternatives.

SPEAKER_03 47:48

Those are two very, very good ones. I love that. I will definitely keep that in my back pocket. Sandy, Ian, thank you both so much for joining us today. It was a really fun conversation, and I'm really looking forward to following along as the both of you just continue to lead this space forward.

SPEAKER_01 48:05

Thank you so much for having me.

SPEAKER_03 48:06

Thanks so much.