John Hoffman of Ondo on tokenization as the next ETF revolution

Transcript

At some point all assets will be onchain. I think this market is over hundred trillion dollars in time as as all markets move on chain all assets move on chain. Ono just crossed $4 billion in total value locked. It is putting Black Rockck portfolio strategies on chain and Wall Street is coming to crypto in a big way. What does this mean? What does tokenization actually look like? And what do investors need to know about all this? Hello and welcome to Milkroad Crypto, the show that knows that the best time to be bullish is when the market is panicking during a tiny pullback. I'm your host, John Gillan. Today is Thursday, October 15th. We will be releasing this episode tomorrow on the 16th. And today we are joined by managing director and head of product portfolios at Onondo Finance, John Hoffman. Before, he ran the ETF business

in the Americas at Invesco and led distribution at Gayscale. John is an expert on all things Wall Street and crypto. He's going to share a lot of wisdom with us in this episode and he's going to tell us all what's going on at Andondo. If that sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going to enjoy it. And as a reminder, our podcast today is free and that would not be possible without our wonderful partners at Nexo, the digital asset platform that lets you trade, earn, and borrow all in one place, all from one account. So keep an ear out for more information on them later in the show. But for now, welcome to Milk Road Crypto, John Hoffman. Sir, how are you? >> Thanks for having me on today. uh longtime listener of the program. So,

it's an honor to to be here with you today. >> Well, I'm a big fan of your work, too. I've been following Ando for a long time. Uh John, I thought a great place to start the conversation would be with you just introducing yourself a little bit to the audience and telling us about your story. As I said, you spent almost 20 years at Invesco in ETFs. Um and you were at Grayscale as well, and now you have jumped over from Tradfi to to digital assets. Talk to me a little bit about that transition and what that's been like for you. Yeah. So I you know started my career in management consulting. I was actually buying ETFs in my personal account in the early 2000s and thought it was a tremendous technology for you know delivering investment returns and I joined the ETF industry in the early 2000s when it was

a relatively small you know unknown category. spent nearly 20 years uh you know working in various capacities on the ETF space watching it go from you know kind of a cottage industry to now a mainstream technology you know as it relates to crypto and and maybe John just setting up uh Ando where I currently um lead the the product portfolios business you know I think that uh by way of introduction you know ando is is really focused on you know building the infrastructure to power open always on global capital markets and it's really about improving the investment experience for everyone. And so, you know, I made the transition to crypto uh a couple of years ago. You know, when you think about crypto, we're

15 years into this technology. And a lot of, you know, truly innovative technologies, they take time to to ultimately deliver the promise that they set out on on the front end. And I think that we're at a point now in crypto where uh the promise um that was originally set out upon is is now starting to manifest. And you know, Ando is is really leading that charge on the tokenization front. >> Gotcha. Yeah. Well, I want to talk about what Ando is doing on that front. Um, but I I think that the thing that stood out to me about Ando so far has been the growth. It took stable coins, I think about three years to hit a billion dollars. Ando hit that with their tokenized stocks in just under eight eight months. And it seems like there's like a big push towards this across the

regulatory backdrop from the SEC and the CFTC, but also across Wall Street. what do you make of the speed at which Wall Street is moving towards tokenization and and talk to me a little bit about that. >> Yeah, so to your point I mean stable coins I think it was to your you know three years to reach a billion in TVL tokenized treasuries did that in about 18 months. Um on stocks which is um the platform that that tokenizes US equities and and ETFs reached that milestone in eight months. And so when you zoom out and actually you know think about where those markets went stable coins are now you know a $300 billion market. I think there's nearly $9 trillion annually of of transaction volume, you know, moving on on stable coin rails. And so certainly uh very significant in terms of the speed of adoption, you know, as

it relates to tokenized equities. Uh I think there's kind of two factors there. One is, you know, we're talking about a global borderless technology, right? Anyone with an internet connection and a wallet, you know, can access this. And and so when you think of the addressable market uh you know really it's it's you know 8 billion people um which is different than how traditional finance has you know been built which is very much driven by you know local markets local regulation. This is a global borderless technology more akin to the internet uh versus kind of like the traditional individual library market if you will. The second element I think is is really around demographics, right?

You know, you look at the the demographics globally and you know just here in the US $85 trillion is going to transition from Gen X, Gen Y, Gen Z uh over the next 7 to 10 years and those generations that are inheriting that capital that have already started to inherit that capital are more digitally native. Um, you know, I know my kids uh can can move around an iPad and you know, a remote control or anything a lot faster than I can. You know, a lot of these these folks grew up with with this technology, you know, attached to their high chair. And so they trust the technology, they understand the technology. Uh, and I think that's really going to speed up the adoption here, you know, eas um, you know, traditional analog technologies.

>> All right, John, like we said, you spent a lot of your career in the ETF space. I've heard you say that tokenization looks a lot like the early days of ETFs. I wonder if you could elaborate on that because the ETF business is now I think it's like $16 trillion of assets are in ETFs or something like that. Uh but what what makes you think this is the analog to tokenization that's appropriate here and and what do you think that that means for the growth of tokenization? >> Yeah, look it's it's an analog for me because you know I think we're all for shaped by by our perspectives. My perspective was very much in the ETF industry. I I think you could translate that more broadly as well. Look, ETFs are a mainstream technology today, right? Uh in the US, we've had 16 consecutive months of a hundred billion

dollars of net inflows. You know, it's a commonly accepted way to invest in the US uh and globally quite frankly. Uh when I started in that market, that was not the case, right? Um, back in the early days, there was actually an article written uh that referred to ETFs as weapons of mass destruction and and it pontificated that um you know, passive investing was going to be the demise of capitalism in America. Uh and and and you know, clearly there was other motivations there to attack the the ETF as a structure. You know, we heard a lot uh in the early days. I you know, my current technology works great.

I don't need something new. You know, I think even Jack Bogle was was very adverse to ETFs in the early days. uh you know somebody that pioneered you know the the mutual fund and I remember when we were doing fixed income ETFs there was criticism you know how could you take something that trades OTC by appointment over the phone and bring it on exchange and allow it to trade you know electronically uh you know throughout market hours and so I remember you know we used to do events and and one of the the things we would say um to you know sometimes when the audience was wasn't paying attention to kind of wake them up was if you don't like change you will hate irrelevance and then people started kind of listening. I think it's a similar situation here with tokenization. It's the early days. I hear a lot of people

say, you know, is this a solution in search of a problem? Uh, you know, the markets are tremendously efficient. And so, not everything worked in the ETF. We tried a lot of things. I remember active non-transparent, you know, was a big uh uh strategy there that never really worked in the tokenization market. We're in the very early stages. is there's tremendous technology here that ultimately, you know, will reshape markets. Uh, but there's still a lot of skepticism. And so, it reminds me of those early days of ETFs. There's a lot of education that has to happen here.

And I think that look in in 15, 20 years, hopefully faster than that, probably faster than that. We're all going to wake up and this is going to be a mainstream technology. And you know, we'll be talking about the next innovation uh that people feel, you know, uh isn't needed uh that will ultimately, you know, transform how they how they invest. 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 Road 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. Well, John, I appreciate the sense of humor, but also the

perspective. Education is a big part of what we focus on here at Milk Road. I want to get an education on some of the products that Ando has been launching because you guys have been very busy this year. Uh last month you launched something called Ono intelligent portfolios. And as intelligent as they may be, I think a lot of people are still kind of confused as to what this product is. What is this in plain English? How does this work? Tell us about this. >> Yeah. So, so John, maybe if I could spend a moment just setting up ando because it really builds on how we got to Ando intelligent portfolios. Um, and I mentioned that, you know, we're focused on building the infrastructure to power these open, always on global capital markets. And we started by tokenizing treasuries. We took the most liquid assets, you know, to to to start

with. Uh, we're number one in in tokenized treasuries today with two capabilities uh over $2.5 billion dollars of TVL. Next, we we uh built Ando Stocks, which is focused on tokenizing stocks and ETFs. And that, as we talked about, ramped up very quickly to over a billion dollars. We've got over 450 uh listings there. We've done over $30 billion of notional volume since that launched and we're we're number one in tokenized stocks and ETFs. We then launched and perhaps exchange that is using RWA um per right.

So what's cool about this is you can actually take the stocks and use those as collateral on the per exchange. So it again it's kind of a modular build. Each each element is building on the next one. The last thing which we very recently launched which you just touched upon iso intelligent portfolios. So we had to start by getting the assets on chain. Now what we're doing with intelligent portfolios, it's really about assembling these assets into you know professionally curated investment strategies that are delivered to investors globally uh in a single onchain you know token. And so that was you know the launch of intelligent portfolios. It's a new category uh in a lot of ways. We started with seven

capabilities there, seven different portfolios. But again, it's really about delivering a single portfolio token powered by best-in-class, you know, asset allocation and and security selection. And I think in a lot of ways, John, this launch is is, you know, again, using my ETF parallels here, this is the spy moment for uh the tokenization market. Um you know, we're not tokenizing a fund here. We're opening a a completely new category uh you know professional portfolio construction, asset allocation, security selection, automatic rebalancing, you know, digital return patterns that are instantly accessible to anyone in the world, I have to do caveat that outside

the United States today um that has an internet connection and and a wallet. >> That's an important caveat, John. I I I think you know as you alluded to people already have ways to get allocations and and access to to stocks to ETFs. Differentiate this product for me. What makes it different from what's already on the market? What makes it more attractive? Talk to me about that. >> Yeah, so it's it's a great question. I think there's a number of factors to think about um you know Visav I I'll do this kind of visav what's available you know in traditional finance today. Um there's an element of 24 by7. So these these tokens uh you know can trade 24 by7 uh 365. So there's a there's an element of of um timing uh access right I touched upon that briefly. You know

nearly anybody with an internet connection in a wallet has access uh control I think is a really interesting factor here. I use the word control but what I mean by that is uh you know you could self-custody this asset. You could also send it peer-to-peer. So John, I could send you, you know, shares of Tesla directly without an intermediary uh which opens up all sorts of new uh paradigms um with this element of control, but I could also take this asset because I control it and bring it to DeFi uh and perhaps lend that asset to unlock additional utility. And again, there's certainly lending markets today in Tradfi, right? I can lend my my ETF shares or I can lend my uh stock, but

ultimately my broker dealer is the one that, you know, facilitates that and determines the uh who they're going to lend to and the counterparties and the rates associated with that. This control element here, I can choose who I'm lending to. I can choose what type of risk I want to take on. I can control the terms of that loan. uh which I think is is about you know uh to some degree you know precision and and control is is kind of how I would think about that element. The real you know element here which again is is still in the very early days is the automation uh portion of this right. When you move the asset from an analog technology to digital so that it is a digital asset uh instantaneously it is native you know to

this this digital market where uh we think that you know AI is going to play an increasingly important role and so you know now this asset can directly interface with AI. I would think about it like email. Email wasn't just about, you know, moving from, you know, speeding things up and enabling me to send something to anybody in the world. Uh now with my email, I can plug in the AI agent to, you know, respond to my email. Uh I can have the agent, you know, schedule for me. Um and all of that is unlike I certainly couldn't have my AI agent do that with my mailbox out in front of my my house, right? Uh so I think there's a similar element here of what this is going to enable uh from an AI uh element too. And then lastly just like the personalization and

customization um elements which you know I think are are different to your visav you know what's been built in on traditional analog rails. >> Okay. It's very helpful. I I wanted to ask you specifically about this. I'm glad you brought it up. They're called intelligent portfolios and I've heard you make comments about you know the intersection collision whatever you want to call it of AI and tokenization. How is artificial intelligence or super intelligence uh involved in in these products today? How might they be in the future? What does that look like right now? >> Yeah. So, the branding on these of of intelligent uh portfolios, I think there's there's, you know, kind of a today thing and a tomorrow thing. You know, from a today perspective, you know, these are intelligent in the sense that uh you know, the first portfolios were built by professional allocators.

You know, as you as you mentioned, uh some of the portfolios are powered by BlackRock, the world's largest asset manager. So there's an intelligence layer in the composition. Uh the second is the intelligence around the programmability piece, right? So um these run on smart contracts. So the invest divest rebalance that all happens automatically uh through the smart contract. So there's an element of of intelligence visav the the smart contract. Uh and then you know how we constructed these is different than you know how vaults are uh constructed today or other onchain portfolio strategies.

There's actually a custodian here that custodies the underlying asset. So a qualified custodian holds the underlying composition which we think is you know an intelligence uh improvement on on you know some of the uh current structures in in in the digital asset realm. As it relates to the go forward, you know, there's a connotation that you can pull on there with, you know, this is the asset, but artificial intelligence, which will be the intelligence layer to power, you know, this will be the the asset uh or the um the the value transmission layer that is going to intersect with that intelligence layer.

And so, we're kind of laying the breadcrumbs there uh to the intersection with AI in terms of how this is this product line is named. >> Gotcha. Okay. Yeah, that's really helpful context because people use the word intelligent. It always means different things and the future could be different than today. So helpful context on that. Uh I do want to ask about this. The branding on these says powered by Black Rockck and you know Black Rockck and Ono have had kind of a long-standing relationship. Tell us a little bit about Black Rockck's involvement with these products, what that partnership has been like and and what what that the nature of that relationship is today. you know the the launch that we uh of intelligent portfolios started with seven capabilities um uh that really span income capabilities. Uh three of them are oriented there uh two of them are

thematic. So think of like an AI portfolio uh a mag 7x with crypto uh and then two of them are um growth oriented uh uh growth strategies. Um the other way you can think about this is by you know the the powering of them. And so as you pointed out three of the portfolios are powered by BlackRock uh in that BlackRock provided the investment strategies. So they did the asset allocation, the security selection, they did the waiting for uh three of the theo intelligent portfolios. And so you know Black Rockck is obviously the the largest asset manager in the world. Um, you know, I think if what that means to me is, you know, they are having the

most client conversations. They're closest to what's happening in the market. Uh, they're picking up on trends and and obviously they've been a tremendous, you know, uh, organization in terms of innovation and being client-led in the products that they develop. uh and you know their their their work here uh indicates to me that you know they're seeing the direction um that we just talked about this convergence of digital assets and uh and crypto and actually there was a a paper that they uh issued last week called the the machine economy uh which talks about this convergence of AI and digital assets and so uh three of the portfolios are are powered by BlackRock I think um you know they're they're clearly uh very

forwardlooking on on where this industry is headed and um you know it's been great to to be in market uh with three of these portfolios that are powered by by BlackRock. >> Gotcha. Awesome. So that's a helpful context there. Black Rockck I believe is the first strategy partner you've had on these but could very easily bring in more. Um how do you see that happening? Are there other asset managers you'd like to see, you know, engaging with these products as well? Is that a focus for you in terms of growing the product? Um and and talk to me about that. >> Yeah, so again using that that ETF analogy here. I mean, you know, this this to me was the spy moment um of this market, right? SPY was just the S&P 500.

You couldn't have done leveraged, inverse, currency, commodity, you know, smart beta, single stock. You couldn't have done all of those things until you had done SPY. Um so I, you know, we view this as the starting point. This first capability set, you know, is is a passive allocation. Where I think this will go is you'll see capability that is actively managed. You'll see uh the combination of perpetuals and prediction markets and options all packaged into you know a single intelligent portfolio. You'll see more managers uh you know you'll see some of the the world's greatest you know asset allocators and risk managers and portfolio managers powering uh intelligent portfolios in the future. And so uh that's where we

think it's headed. you know, there's probably a day where, you know, um through a different platform, you know, anybody would be able to spin up a portfolio uh to offer, but at the, you know, our focus right now is really on curating best-in-class uh asset managers and asset allocators um to bring that capability uh to people that, you know, may not have had access to to that in the past. And so, uh that's where we're focused today. This was the starting point. that lineup is certainly going to progress um you know across that that paradigm that I described.

>> Okay, so definitely sounds like more to come there. Uh John, I think a great question to ask about this is just who is actually managing the portfolios because you know you see intelligent portfolios, you could think maybe AI is running it. You see powered by Black Rockck, you could think maybe Black Rockck is running it. Is it? Is it the user themselves? Talk to me about who's actually managing the portfolios day-to-day and you know if I'm a user engaging with these products, um who's who's running my money basically? Yeah. Yeah. It's a great question. So maybe I'll describe the workflow. So I'll use mag 7x um as an example here. So the ticker is mag 7x0 forondo. Um John, you would come into this product in stablecoin. So you would deliver USDC to the smart contract. So your wallet would would interact uh with with the smart

contract. That USDC, you would receive instantly MAG7X token. Um, so if you were buying $1,000, you know, you deliver $1,000 of USDC and you would receive the Mag 7X token, you know, right at that instant. Behind the scenes and mechanically and programmatically, that $1,000 is going to um, you know, interact with the smart contract, which has the methodology for uh, in this case investing that capital. And so instantaneously, the smart contract would be executing the underlying basket. So in this instance it would be buying the seven mag seven stocks uh plus iBit and eay the bitcoin and ethereum those tokens would be delivered

again instantaneously to the qualified custodian and uh you would be now long mag 7x tokens. So this is uh an automated you know uh process as it relates to the smart contract. There's a tremendous number of checks and balances that are done on chain to ensure you know the security and kind of quality of that. Uh but ultimately you know this is this is machine uh machine run. There are humans that are that are watching the process and and ensuring you know um uh that that everything is working efficiently but the actual movement is all automated. And so when you think of what that means, you know, uh, visav traditional structures, you're taking a lot of the human element out of this,

right? And so that enables us to deliver these a lower, you know, cost structure uh, than traditional vehicles. It takes a lot of the the the middlemen out of that equation and, you know, streamlines the process uh, for the end investor. And that's that's ultimately what intelligent portfolios are are doing. >> Okay. I think that's very helpful context because these new products can be sometimes confusing. So just hearing the ma the machinations of how it works I think is helpful. Uh John I want to talk about the tokenization race because there are a lot of other players in this race. There's a lot of other people competing for for capital for market share and you know equities and and treasuries. There there's a lot of different asset classes at play too.

Let's just start with treasuries. You know you like we said at the beginning of the show you guys crossed 4 billion in TVL. You're still the biggest tokenized treasury platform. You're ahead of Franklin. You're ahead of Circle Black Rockck many others. How have you guys been able to, you know, reach and maintain such a dominant position on tokenized treasuries? What's giving you that advantage in that marketplace in that asset class? >> Yeah, so look, I think it's it's very much a um, you know, co I wouldn't call it competition, right? I think that in a lot of ways it's a co-opetition, right? We are we're actually working very very closely with all of all of the names that you just mentioned to, you know, pioneer this category together. So in the case of you know O USG which is our our um US uh treasury fund available to

US investors and and USDY which is the permissionless uh treasury product uh for for folks outside the US you know some of that capital is actually managed by some of the names that that you just mentioned. So, it's really been about, you know, combining our technology and our ability to develop technology, you know, with their expertise in in capital markets. And, you know, we are, as it relates to kind of the rankings that you mentioned, you know, number one in tokenized treasuries, number one in tokenized stocks and ETFs, you know, but but it's really hasn't been about being number one. It's really been about um you know empowering investors and coordinating that with you know the existing ecosystem uh to deliver a better capability set for investors. Uh

the product has to be better. You know if there's switching costs or in this example new learnings and new technologies the product has to be that much better for people to come to it. And we've approached it by really, you know, partnering uh with the various elements of the ecosystem to develop something that is better for end investors. And that's kind of our northstar is is really about is this better for end investors. >> Gotcha. Okay. So, you're focusing on good products and coopetition. I'm trying to start a fight, John, but coopetition is a good way to frame it. Uh let's talk about tokenized stocks because this has gotten very crowded, right? like there's Robin Hood, Coinbase, Binance is also a big competitor in this space and a lot of these platforms have very large

distribution networks through their their users they already have. Um talk to me about the tokenized uh equity space and how plans to differentiate itself and continue to thrive and grow despite all this competition that's in the space. >> Yeah, look, I I think that the competition is is um is fantastic, right? And I think that as you've pointed out, uh we're in the very very early stages of this this market. And so, you know, I think we'll we'll really worry about competition when this market has matured. But at this point, um there's so much education that has to happen. Uh there's tremendous, you know, um uncertainty out there as it relates to these products. There's a giant education gap that needs to be closed.

And so as more um you know people come into this market uh that's going to you know uh alleviate that burden as we collectively educate the end user and you know the model that we pioneered as it relates to stocks uh in the early days was was very much critiqued by by others in the market um and now we see it as a point of validation. Nearly every other issuer of tokenized stocks has has kind of followed the model that we pioneered. Uh which which you know tells us that the strategy that we deployed you know was the effective one despite you know a lot of naysayers in the early days and some of the most outspoken critics of this model you know have have um you know capitulated to to this model uh because it works. Um and

so you know what I would say is more competition is good for this space just as the ETF market. Again, when I started, there were three issuers. I think there's over a thousand issuers today. They're all growing. They're all, you know, prospering because it's a very large market. And the more education that can happen collectively, you know, the better um for the product line. And I think we're in that stage as it relates to stocks. Visav, you know, what we're doing to to to compare that to others. You know, as I talked about, we've been building sequentially. Uh we started with treasuries, then stocks, then per now onto intelligent portfolios. Each of these things build on top of each other and we are kind of you know snapping these Lego pieces together to create better solutions for clients. And so um as it relates to our

moat and kind of you know where this will be longer term there are capabilities that only we can deliver you know at this point in time and we'll continue to uh do that with an eye towards adding value to end customers. At the end of the day, capital is going to, you know, flow to where it's treated best. And, you know, our focus is on building capabilities that empower investors globally. 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. Telem sent you. I think this maybe segus into a question that I had in mind, but just like so people understand, there are different versions of tokenized products. They're not all created the same way. They're not all brought to market the same way. Just so people understand's offering, like for example, if I'm a taxi driver in Brazil and I buy some Apple stock ono, what do I actually own? Is it the same thing

that like an investor on Wall Street would get if they bought Apple in the legacy system? Is it a different product that has different rights and and like what are the distinctives that are different? What is the same? And and what is what is Ando's product actually offering when they bring this to market? >> Yeah. So, you know, using this example of the the taxi driver in Brazil, right, that that maybe has an Apple phone and has, you know, followed US capital markets for a long time, but has been um excluded from, you know, this this market in certain capacities. You know, in the first instance, this is about them getting access to the world's most innovative uh companies, right? And and what have produced, you know, tremendous returns from an investment perspective.

So this taxi driver in Brazil buying uh one share of we'll say Apple on a you know that would be the the tokenized version. Uh what actually happens there is again they would deliver stable coin instantaneously. Uh we are acquiring a share of Apple. Um that share of Apple is sitting um in an entity. Uh an equity linked note is issued. So the the actual thing that this taxi driver would own um is a token that is an equity link note that seeks to you know provide the economic return of Apple stock. And so some people ask well how do I know that you know you hold the shares of the Apple stock? um you know each day uh we actually or we

don't we have a third party that's unaffiliated with a trust company that looks at that account and produces a daily attestation report showing every position that we have uh so anybody could see that we are fully collateralized um you know every single day uh and so you know it is it is providing the economic seeking to provide the economic return of Apple stock I think to your point um it doesn't have all of the rights uh that you would have if you owned Apple in the US. But what we have, you know, seen is this particular capability has found product market fit very very fast adoption which tells us that there is an audience of people that really are seeking the economic participation and

are okay without having all of the rights um that would come along with holding the stock outright in the US. >> Okay, perfect. Just really helpful context on that. Sean, I want to talk about some of the critics because you've alluded to a few times like in the early days of ETFs, there were a lot of people who you wouldn't have guessed would be opposed to ETFs who were opposed to it and vocal. Um, one one uh like let's say institution that caught my attention was the IMF. Uh, they recently said that tokenized stocks are much more volatile than their their non-tokenized counterparts and they're like raising confir fears and concerns about the volatility of these markets and them unwinding really quickly and things like that. uh how do you respond to critics like this who say things that like this this advancement in tokenization is

actually going to bring more and different kinds of risks that are are not worth taking on. Uh what is your reaction to that and how do you deal with an institution like the IMF putting that out into the market? >> Yeah. So again I think that that we have to you know decompose um that statement to you know the idea that there are different models as we talked about and you know we are seeing most of the market converge on the model that we pioneered with this instant you know liquidity leveraging leveraging traditional financial liquidity right um that's that's what we built this model on. There are other models that are not constructed that way and you know the the stock does decouple um you know at certain points in time and there is

higher volatility. Uh but to say that all tokenized equities you know create higher volatility um or are less liquid I think we have shown through the data set on our capability that that's not necessarily accurate. So again, reminds me of of of you know, 20 years ago in ETFs when again uh you know, leveraged and inverse ETFs were going to increase liquidity in the market. Um and and you know, that was going to ruin uh the US capital markets. Um we've seen that that didn't play out. Uh reminds me of when, you know, passive ETFs were growing um that you know, it was going to to ruin capitalism. You know, that that didn't necessarily play out here as well. Um so it's something that look we we certainly

take for for it's important to look at this is the IMF uh wouldn't dismiss it but um I think it's also important to unpack it and you know I think that that statement may have been related to other models which have diverged significantly in underlying price um and have had higher volatility um because of the way that they're they're constructed. uh we leverage tradition tradfi liquidity and in that model you know we have not seen that and we measure that you know very very closely every day very diplomatic of you well done John okay I want to ask a question about the US because as we discussed most of products are for investors outside of the US right now I think in August you made a comment saying that there was quote a path here in the US um the clarity act failed but

the SEC and CFTC have been very forthcoming um with support of regulation innovation exemption just, you know, give me a quick touch on what your outlook is for US markets and trying to bring ono products onshore in the US. What does that look like for you right now? >> Yeah, so I I would say like look on the back of clarity stalling out. It it was um very it was great to see the SEC move quickly with the innovation exemption and and we hope that the SEC continues on that that track. You know, I think this is very much a starting place. Um you know, and and ato we have the licenses registrations the infrastructure, you know, to turn this on in the US. we've got a broker dealer, a transfer agent, RAIA, you know, we we have the the the licenses and tech staff

to to do that. Um, but I'll go back to, you know, we want to make sure that what we roll out is not just a replatforming, you know, of the existing world, uh, for the sake of of doing it right. We want to make sure that it's actually an improvement and that it truly adds value, you know, to customers. And so we don't want to see the features and the benefits that helped us find product market fit outside the US fall away with with customers, you know, here in the US. And so we're we're studying this very very closely. We're talking to clients. You know, we're validating the models that we've seen success with in other markets. Uh and we're watching the US market very very closely. And you know, when the time is right, we'll

we'll announce our our uh plan here. And ultimately, you know, we want to make sure that it's it's a step function improvement on capability that, you know, is currently available or relative to what's currently available here today. >> Gotcha. Well, I'm trying to get you to spill the beans, but we'll just keep an ear out for more information on that. It's it's all ongoing. I understand that. Uh John, we're getting close to time here, but I want to get your thoughts on the outlook here because the the institutional bull run in crypto and digital assets has been very strong. It seems like Wall Street is moving in this direction as sort of a break neck speed. what is the the next steps look like?

What does the end of 2026 look like? What are you watching for? Just give us a little bit of the road map ahead uh from your seat. >> Yeah, I look I I I think that if you just, you know, take a big step back, if if this technology is better, faster, cheaper, more accessible. Um every market that has digitized through time has gotten bigger. Um you know, it has gotten more efficient. It has got more, you know, more accessible. Um costs have come down. I think we're going to see that play out with this technology. In terms of when uh ultimately, you know, this isn't a big bang moment where we wake up and everything is done. This is going to be a a progression over a period of time. We're seeing the early signs that this technology, you know, is

truly disruptive and and innovative. Uh if I forecast out, you know, I won't put a time on it. Um but, you know, at some point all assets will be, you know, onchain. I think you know this market you know is is is over a hundred trillion dollars in time as as all markets um you know move on chain all assets move on chain. Um you intersect that with what we talked about on AI earlier. you know, AI is probably um you know, kind of the the front end to markets at at some point. And I think you move from uh you know, individual decisions to um you know, people thinking about, you know, more outcomeoriented um and goals-based thinking that the AI ultimately, you know, gets them to that

that that outcome. If the techn is better, uh it will prevail. Um there are certainly a lot of incumbents and and legacy technologies that don't want to see this happen. uh but in time as I said on the front end you know capital will flow to where it's treated best and it's just a function of time um you know for this to fully unlock everywhere. That's wildly bullish and I agree with you on all of this. Uh John, something I hear a lot from our community is sort of like this dislocation that's happening and frustration because a lot of our audience are self-directed investors who are very market savvy, very paying attention and see that future that we're moving towards. And I do think Wall Street is moving as fast as it can.

However, it feels like it's taking a really long time and I'd love to hear your your perspective on that. Like what would you say to people who are maybe feeling frustrated or impatient um with with what's playing out here and you know how how do you manage emotions uh through a big change in the markets like this? What's your outlook on that? >> Yeah, so when I when I started in the ETF market, I thought you know wow this is this is such a superior technology for delivering investment returns to what's currently available. by next week, everybody's gonna, you know, figure this out and ETFs are are just going to be the biggest thing. And a week went by and, you know, as a couple dollars came in and, you know, we have to think that that technology is 33 years old and mutual funds are still

larger than ETFs, right? Um, despite being a a far superior technology and so, you know, this does take time because in finance there's switching costs, there's capital gains, there's taxes. uh you know you can't just instantaneously um change the asset base. I do think it's going to happen a lot faster here though because you will be able to actually switch the um you know the form factor. I think you take one of these things out of the equation meaning you know today you could deliver stock uh to our our uh broker dealer and receive tokenized equities on the back end and keep the same cost basis. So like one of the major frictions that was you know uh uh in in the migration from mutual funds

to ETFs was taxes. um you are going to see much wider on-ramps open uh whereby people will transition entire portfolios you know from kind of the analog world to the digital world but retain you know the same cost basis potentially right uh so I think this will be faster um you know what I would say is um you know this is happening it's speeding up um and it's going to happen a lot faster you know than than the 33-year progression that I had there for folks that see it you know there's there's ways to capitalize on this from an investment perspective. Um, but look, patience is is a uh a critical patience and emotions, I should say. You touched on both of those are are probably the most important part of of investing,

right? Um, and so another element of where I think AI will will be very valuable is taking the human emotion, you know, out of investing and being more pragmatic about it. Um, I think we'll see a future that that's powered in that way as well. John Hoffman, managing director and head of portfolio products on Finance. Thank you so much for being on Milk Road Crypto. I really enjoyed this conversation. I know our audience will too. Uh where can we send people to find more of you and your work online? >> Yeah, so I'm John Hoffman uh 2038 uh is my my exhandle. Um for more ono ando finance, you can certainly learn more about the capabilities and what we're doing. And John, I I really appreciate the the time here. It's fun to be on a program that I that I listen to. Well,

I'm very flattered that you listen to the program. Keep it up. I'm going to keep following you as well. And yeah, man. I'm I'm really excited to have you back in the future and kind of catch up on what Ando's doing and how all this is playing out. So, thank you so much for being here. >> Thanks, John. >> And thank you all for joining us. I hope you all learned something today. I know I did. So, until next time, 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. >> Thanks for listening to Milk Road. If you enjoyed the show, make sure you like and subscribe. And if you're struggling to find winners in the market, that's exactly what Milk Road Pro is built for. Our analysts have called some of the

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