The Neobank Bull Thesis (...And The Big Winners) - Galaxy VC

Transcript

in some ways coming to the realization that you know stable coins are in part about bank deposits and they're about um banking everybody uh and everything sort of the internet becoming a bank all sort of tend to fall into [music] you know two buckets of quality assets which is something that you know we feel like we've been missing for so long we had we've got Bitcoin we've got ETH now we've got stable coins and yield on those stables but the long tale of assets in crypto [music] are just not investable >> welcome back to the rollup I'm Robbie. >> I'm Andy. Rob and I met at the University of Florida [music] in 2017 where we first found out about digital assets. We learned a lot along the way and we're bringing you face to face with the leaders of our industry. Sit back, relax, and enjoy today's episode.

All right, Andy went to go jump out of a plane, but instead we've got Will from uh Galaxy Digital, Galaxy Ventures arm at Galaxy Digital to chat about capital allocation in 2026 and beyond with gold ripping, central banks dropping the dollar, accumulating metals, and Bitcoin. Like the big question is whether or not we're going to get the catch-up trade on on Bitcoin and the tokens. Um Will, you're a friend of the show. You've been been here before. Welcome back, man. >> Thank you so much. exciting to uh be here in 2026. I think this will be a good year for for everybody who who's listening to the show.

>> Absolutely, man. Well, um you guys had a great year in 2025. Uh like you were saying behind the scenes, you guys had some key themes that, you know, I'm quite curious to see and hear whether or not you think those are going to roll over or you think we're going to get, you know, a fresh set. So, yeah, tell us first, you know, what went well in 25, what didn't go so well, and then, you know, we'll we'll look forward to 2026. Yeah, I think um you know we set out with the starter I think last time we chatted on the on the podcast we talked a little bit about fund one the fundraising process you know transitioning Galaxy from a balance sheet investing firm and a sort of a tra trading and investment firm as a public company to doing um externalized with

funds and and that process. you know, we set we went into fund one um thinking like payments would be our key theme, right? We were we were seeing this was in, you know, winter sort of Jan, Feb, March 2024. Bridge had just raised their series A, you know, um there were tons of companies that were sort of getting founded around that time. We were incubating a company around that time that was in the payments and tokenization spaces. We then backed a company in March of 2024 uh rail uh which then got bought by Ripple over the past summer. We thought payments like crossber payments was going to be the key theme for the fund. Um and the use

cases of stable coins and crossber payments you know and and that that that's been true. Um that has been a key idea. You know, just last night I was on the phone with a company in China. Um, and they're they're moving payments across borders from China to Latam in one to two minutes, they said. And and usually I've heard it fast or slower because of some of the end end nodes. And so like that stuff is real. Settlement across borders is happening very quickly with stable coins. The thing that surprised us in 2025 was the emergence of this cards category. Um where um you know and that was really into the back half of 2024 even. But the emergence of of stable

coins not as a payment instrument but as a dollar access mechanism in in um in emerging markets um and the the the use case of of stable coins and then the connection to the card as a way to spend people's savings balances in emerging markets who are holding you know uh alternatives to a local currency. That's really the story with businesses like Rain and Red Pay, you know, which are portfolio companies. That sort of took us took us by surprise in some ways. Um, and we, you know, invested heavily in that category. And that was actually kind of our key category and key theme in in 2025. You know, um, we were, you know, series A investors in RAIN uh, in

Jan. We were series A investors in Red Pay in October. I guess it was in December of 2024. >> And um I think that became because of the the the the fat margins of interchange visav the comparatively lower take rates of crossber you know B2B payments that actually became a really interesting category really quick. Um and so you know company a couple companies in that bucket went on to raise series B's and then you know Rain announced a series C recently and so we've participated in the um sort of uh you know the the uplift uplift from that and the growth in those markets. Um

and so that was a key theme in 2025. I don't think that stops in 2026. Uh to be clear, I think you know that use case is um here and going to continue to grow. The the TAM is essentially, you know, the the global consumer who would rather hold their money in US dollar stable coins than say, you know, Thaibot or um, you know, Viet Vietnamese dong or, you know, or, you know, or Mexican peso or even would rather hold their dollars on the internet than, you know, in their bank account because they've got a crappy, you know, regional bank um who with a bad user experience. And so I think that that will that will continue to to to play out and those markets are big. Um I think it's the themes for 2026

in some ways. One of them is an expansion of that um you know an expansion of that category which is like we think I guess going into the fund we thought stable coins were about it was it was a lot about payments and moving money fast across borders. And actually we're in some ways coming to the realization that you know stable coins are in part about bank deposits and they're about um banking everybody uh and everything sort of the internet becoming a bank uh and that's been a core realization that I think translates into those card businesses but I think continues to be true as you look into categories like lending um you know how do you generate margin uh or net interest margin on people's savings

things uh in different ways and so onchain lending lending and uh servicing and securization which is a sort of slightly different point. Um uh so these are some of our key themes in you know 2026 equity perpetuals uh as well. So um yeah I don't know that's kind of how we think. >> Yeah that that's great. I mean that that sets us the scene here for how you and Galaxy are thinking about 2026 and you know how you can take a theme and a thesis around payments and sort of develop it evolve with it. Maybe it doesn't play out exactly how you think it will but still end up having quite a few wins in a category and then it sort of offshoots into several other

categories like you said stable coin cards you end up taking more of a B2B approach with stable coin payments. tokenized deposits is something we're hearing more about. And so it sort of has grown into, you know, several offshoots that are now positioned to do quite well um in 26 and beyond. >> And yeah, >> I think the territory is just like really um really rich. Like you can walk in as an investor to a category where you have a thesis and then be surprised on the way in the ways in which the thesis evolves if the market size is big enough to allow that to happen and the like opportunity set in the frontier of innovation is rich enough. I mean I think this with stable coins that's certainly true. So I think lending

markets and you know um I think Ave and Morpho you know really pioneered and and and Maple and and others really pioneered interesting stuff that like now we're going to get that that tree start to branch out. >> Yeah. um in those kind of markets. Uh in my in my view in in 2026, especially as they converge with stable coins and you know this concept that people are all across the world, especially in emerging markets, replacing their you know deposits at their banks with, you know, a stable coin over the internet in a in a multi-IG wallet or in a um you know, in an MPC wallet for institutions or just in a hot wallet in MetaMask and

what you know, whatever. And so um I think that's a that's a really there's going to be a rich frontier of innovation that happens there as people want to get yield on those assets. And then you know how do you allocate um uh between managers and curators of the the yield who create different opportunities you know Athena not to go into an entirely different direction but like as a you know Athena is running one just one trade right which is the basis trade on Bitcoin. there's a lot of other trades in the world with a lot, you know, that generate a lot more alpha uh that people have historically been tapped out of and and and could theoretically um use it as a savings instrument. So, I'm excit we're we're

pretty excited for the like frontier of innovation that will come and [snorts] just kind of spiral from here. Um >> uh but that all requires the market being big enough, the regulatory environment being, you know, like available for those changes to happen and um the the entrepreneurs being, you know, in a position to design things that are that are interesting. So >> yeah, >> um >> absolutely >> that's how I think about about 2026. Uh >> practically, >> is built for big moments, the most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game.

Not your keys, not your [music] coins. From the team that pioneered cold storage, Treasure has just released its new wallet. Guys, [music] if you are still using hot wallets in 2025, 2026, you are missing the entire point. Secure your coins. [music] Get a treasure at treasure.io. Holiday is unified crypto payments. Give your users more wherever they are. Go to holiday.xyz to never write a smart contract again. Um to tokenization is another interesting area. Um >> we've and I think tokenization merges in some of those onchain lending categories as well. But like we yesterday our um company Tenbin announced their seed round. Uh we led their led their $7 million round. Yuki the founder he's

been in the you know crypto space. Um you know the CEO has been in the crypto space for a long time as a researcher at Sorella as an investor at Fambbushi. Jake, the CTO, um, you know, at Spearbit. And so these guys have been in the in the industry for for a while, realizing that, okay, instead of tokenizing an SPV, like an interest with within an SPV, let's tokenize a position on the CME instead, right? was in some ways the insight that Guy and Athena had originally which is like let's tokenize a position a short position um a short future position on you know buy bit and Binance and and actually Yuki's applying that kind of principle to gold and

>> um and FX you know currencies and then and then wrapping that on chain and then that's when it becomes interesting because you throw it in a and morpho and pendle and that's where you get the composability so there's there's going to be a ton of cool stuff Superstate, another portfolio company, had announced their round early this year. Uh, their series B. We were a series A investor with them and >> also, you know, followed on the series B at Galaxy. We've got close ties with, you know, Superstate and really love the team and think they're really innovating in the issuance of, you know, public common share, tokenized common shares, um, and at at the transfer agent level.

And so, it's feels like a good time, I think, to be a crypto entrepreneur and a also an investor in the space. We had Jim on just a couple of days ago talking about the series B um talking about, you know, tokenized equities and and it sounds like you've got you guys have both sides covered and >> as you know, we've >> been building out this thesis around NEO finance and it it feels like there's really two buckets and and it came as a result of, you know, the DeFi frontier being so rich that has now exploded into a tree of, you know, all of these all of these these categories which include the RWA, the tokenization protocols, the stable coins, all of these things all sort of tend to fall into, you know, two

buckets of quality assets, which is something that, you know, we feel like we've been missing for so long. We had we've got Bitcoin, we've got ETH, now we've got stable coins and yield on those tables, but the long tale of assets in crypto are just not investable. >> And now we're bringing on >> we're bringing on equities. We're bringing tokenized equities to the to the table. And then we've got, you know, essentially fixed income, which is the entire other side of the equation where, you know, bringing bringing fixed income on chain looks like stable coin products built in with DeFi yield sources. Um, but also like exogenous yield sources so that it's not just rehypothecation and leverage and emissions that is paying that yield. And so we believe that DeFi really grew into this really robust

landscape of NEO finance. And what that looks like is, you know, a Cambrian explosion of neo banks which provide the user experience that people are looking for when they're accessing these some the these sorts of products. But it also is the quality assets underneath which we think is generally going to take, you know, the current crypto landscape and and turn it into a much more mature, professional, legitimate, you know, landscape overall. And so it seems as if Galaxy Ventures kind of has things on both sides, right? you guys have uh the uh you know tokenized equities portion of the equation as a bridge between the legacy financial markets and and you know the modern tokenized financial markets and then also from the fixed income side of things you know you guys

you know with Tenbin are are tokenizing some of these ETF positions and correct me if I'm wrong but what that does is it provides a stable source of yield as a result of income that's paid via this ETF position. >> Yeah. Yeah. I mean, so 10 tenbin, how it works is they take a position on a futures exchange that's essentially paying uh you know, pay paying you, right? Um so they're if they're going long the future, they're getting paid to go long the future. And they actually one of the things you can do um and not to frontr run Yuki and the team on this but one of the things that's interesting you can do is you can actually because you can um you know use only a percentage of the full position in margin you can keep the remainder on chain earning in sort of low yielding

vaults and so earning if you have let's say >> you know 3x margin you actually retain 66% on chain yielding in you know a morpho vault or or or something else that that that's demonstrably low risk, right? And so you're replicating essentially the the um you know the exposure to to gold or Mexican peso or Brazilian Royale without actually you know in some ways you are holding the spot. Um like the CME is abstracting all the custody of those positions away from you like the custody of the gold which is something that Paxos with their Paxos gold product or Tether with their Tether Gold product is like tokenizing and giving to you. the CME is is um you know abstracting all that away because you're

just taking a position on a regulated you know high highly liquid exchange. It also brings liquidity to the position out of the box because issuance and redemption is essentially a trade right on that on that exchange. Now I would say on Tenbin they're not not really on the um fixed income side as much as they are on the um I guess in some ways they've got the variable yield which is a a feature but they're kind of on the tokenization I guess. Where do they fit? They're neither debt nor equity, right? They're more like commodities and currencies is how lies maybe. So, a third category I do think and we will have, you know, further announcements on the fixed more fixed income side where, you know, we made an investment uh which I which I won't, you know, I I I I won't uh frontr run ourselves here, but we

made an investment in December that we're pretty excited about where um there's, you know, some um component of onchain loan servicing, right? So the the workflows that you'd see in traditional asset back lending are actually getting brought on chain once you bring like loan servicing. So paying agent, calculation agent, verification agent, these you know uh service providers who will actually go in and check that all the like payments are being made to the right people in the waterfall and all of the you know the numbers are right and you know and and payments are being made on time and administering all of the like fund flows in these SPVS that really power you know asset back lending aspect securization.

uh like all that can be done on a blockchain full stop and then once you bring those flows on blockchains um you can securitize them you can create secondary markets around them and so >> we made a really exciting investment um in December on that on that front so we're trying to bring it all together like in one >> portfolio um with some of these you know some of these key ideas but um you know definitely it's been it's been an exciting time and hopefully it's you know it's the it continues needs to be the right valuation environment and everything else to make such investments. So >> looking for yield that stands out, Infinifi gives you just that. Deposit stable coins and earn far more than the current savings rate. Infinify is a

battle tested, reliable DeFi platform that is ready to go. Head to infinifi.xyz. Havachi is fast and [music] private per trading secured by ZK with Celestia underneath. Go to habachi.xyz to start trading today. Trade on anything, [music] economics, weather, sports, crypto, and more. All on couchy.com [music] 24/7 for the world's biggest prediction market. You're just going to have to come back and talk to us about uh about this investment that you guys made in December. >> Maybe maybe with the founder. Yeah, >> absolutely. Would would love to. Yuki, you know, is a friend of the show as well. We're we're we were an investor in Serella. Uh so, uh yeah, shout out Yuki.

He's always welcome as well. Open invitation. Well, you know, I just a couple things left is, you know, >> we're going all in on this NEO finance thesis. It seems as if, you know, the underlying components here you guys are investing in as well. >> I'm curious, give me your brutally honest feedback on Neo Finance as as an asset allocator in the space. You know, one you're doing a great job there at Galaxy Ventures. So, I'm quite curious to get, you know, your your unique perspective on on this thesis. >> Yeah. um the bear case or just the >> generally just brutally honest like curious where where your head is at and just your perspective on on kind of this you know this next frontier of what of DeFi and legacy finance ultimately

coming together into what we believe is is where there's product market fit for a lot of tokenized products. Yeah, look, I think you guys hit the nail on the head um actually with the term like the I will say it's a term of art because I think it'll stick um uh in some ways the same way fintech did back in you know early days like we had a view and I think it's like other people have the view too so I'm not it's not like a unique view per se but like there was a view in 2022 that you know we had built really interesting protocols uh a and you know at the at the time compound and unis swap and chamino and you know all these interesting protocols

and there were like very few interesting assets to trade to trade on them right like it was basically like you could trade and move around the assets that represented the ownerships and the protocols themselves. So it was this highly circular phenomenon. Um but in some ways a parallel financial system was being built right that was different and in a lot of ways better than the traditional financial services industry where you know to move a you know a payment across borders you need to like get like six banks involved and it's going to take you you know depending on what corridors it's going to take you three business days right so like clearly we were operating in under like better financial infrastructure and I think the view and the issue was the quality of assets in that environment

we're significantly worse, right? You don't have Apple, right? You don't have the ability to like own an own own a company's equity on on on chain and move them around in DeFi and trade them and lend them and, you know, get an interest rate derivative permissionlessly on them and, you know, send it around to your friend, you know, across borders. And I think that transition is still happening. We're not by any means like fully there. Um I think the quality of tokenized assets on chain still needs a lot of work. um in terms of on one hand the distribution of of tickers that are available on chain and on the other hand um you know for the wrapped assets which have broad distribution of tickers like what you don't really have is like high

quality legal guarantees right because you're kind of doing pass through to some Cayman SPV and you know and and so there's some like some big caveats to make there and and I think but I think that that process is is underway um and I think it will it will happen over time. um you know that that'll need a positive regulatory environment that'll need you know when a politic says you know like project crypto like I want to bring every ticker on chain like that's what you want to be hear hearing but I think you know the neo finance speaks to the idea that um you know finance run on a shared ledger is a better system than finance run on um on distinct ledgers

whether that you think about that as bank deposits and you G, you know, systemically important banks and regional banks for payments. Uh, or if you think about that as the DTCC versus, you know, the South Korean or Hong Kong, you know, stock, you know, stock systems and and tickers there like and how dis discombobulated those are with ADRs and, you know, ETFs and so so um I think there's a belief at least in our team and and broadly at Galaxy that those things will get fixed over time. there's massive you know phase shifts uh underway in a lot of ways hopefully should get better for the consumer and I think it will get better for the

consumer um and when those platform shifts happen we want to be investing in the companies uh that are um you know making them happen and at Galaxy broadly like we want to be contributing to that from an institutional infrastructure perspective and making sure we're helping you know uh some some of our clients are banks and asset large asset managers in the existing world and and we want to make sure they navigate that those transitions smoothly as well, right? And um and so we're not myopically focused on disrupting banks and asset managers. Uh but we will back them. We will back the companies disrupting them if they are going to get disrupted, right? Uh and so uh that's I don't know how we kind of conceptualize

it. So I think it's absolutely spot on. Neo Finance, you heard it here first. the rollup uh coined it coined the term uh send it send it uh to everybody is basically what I what I would say >> get get distribution on that ticker neo finance >> neo finance you guys issue it on chain put put it in the smart contract so nobody else can steal it >> you got it man well uh well it's always a pleasure having you join us um always a unique perspective uh you know coming from uh a a bridge that also sits you know at the crosssection of of legacy finance. Like you said, you're talking to banks, you know, you're helping them disrupt themselves before they get disrupted, which uh I think is is

something that they they certainly appreciate and we appreciate you coming on and sharing uh your wisdom with us. So, >> uh whenever it comes time to to announce that that next uh that next portfolio company, you just just join us here. We we'll be happy to have you. >> Yeah, we will definitely do that. Um that that'll be a good one. I think you'll like uh the founder is fantastic. So I think that'll be a good episode. >> Awesome. Thank you so much, Will. Really appreciate. We'll see you next time. >> Thanks, Robbie. See you.