Tokenized Assets. Global Liquidity. Onchain Settlement - TOKEN2049 Singapore 2026

Transcript

All right. Um, honored to be with you all on our opening session of the day. I have three absolutely world-class panelists here with me. We're going to get started with a super quick round of intros. Jenny, could you kick it off for us? >> So, Jenny Johnson, CEO of Franklin Templeton Investments. We're about an 80-year-old company. Uh, we've got 1.8 trillion in assets under management. We uh have been doing uh blockchain technology and work around there since about 2017. >> Excellent. >> I'm Richard Teng, CEO of Binance. We're the largest crypto exchange, and then now we pivot to a multi-asset global exchange with more than 330 million customers globally trading across different asset classes now.

Uh, so very nice to be back in Singapore to see all of you. >> I'm Yuval, I'm the co-founder and CEO of Digital Asset. Uh, we are the creators of Canton Network, um, public network with uh privacy capabilities. >> Excellent. All right. I would love to start. We're going to talk about the new institutional market. Um, and I think we're speaking here at a very interesting point because we're going through an inflection point in digital assets market structure and the rules that govern this new industry. Um, you know, just to maybe set the scene here, we had stablecoin legislation pass in the United States last year in the form of genius.

Um, we got very, very close with a market structure bill called clarity, which did not end up passing. But, we now see the SEC and the CFTC really leaning in, and global regulators rethinking their stance on this new industry. Jenny, I'd love to maybe call on you first here. How should we in this audience understand the changing rule sets of crypto, and how's that going to impact this market? >> Well, I think when the genius act passed, that was a huge um catalyst, I think, to sort of this recognition, okay, this is going to come more mainstream. And and it has to come mainstream at some point. Um and you know, the Clarity Act that that I think the the probably the biggest issue with the Clarity Act is there is a view with

the administration that there is a conflict of interest and so you had it sort of fall between parties. But the reality is as long as you get regulatory clarity, sure, you'd love to have it be legislated because once it's legislated, you can't change it and the concern of course is you get a new regulator in with a new administration, do they unwind rules? But that's tough to do and in the US people they don't like to whipsaw back and forth on that. So I actually think we um we achieved a lot uh and and it's been very clear with both the SEC and the CFTC that they are trying to provide some clarity for the industry. So I think that's important for institutional adoption.

>> Mhm. Yeah, my my view is actually right. So but if you look at it until the genius act uh despite all the key benefits that we see in blockchain and crypto, right? Adoption was still mainly among the the mass retail. Right? People understand the beauty of 24/7 transferability as much better than traditional banking system where you need 2 to 3 days to transfer assets and for the recipients to receive it. It's only with the genius act that firstly in the states you see so many financial institutions coming on board, the payment providers release supporting stablecoins, etc. And then throughout the rest of the world you see Singapore, you see Hong Kong, you see the likes of Korea uh and different

parts of the world because of the competitive pressure that US is being such a big marketplace and once US put his mind and resources to something that the rest are forced to say, "Hey, I need to react to maintain my competitive edge, right?" So actually I do hope to see the Clarity act coming to place as well because it's only with that that you don't reverse the course of progression firstly. And then secondly, you have the rest of the world saying that hey guys, it's time to get serious. And the institutions with that need to come in a big way. But even without a lot of those, I mean innovation is taking place if you just look at tokenized RWA, it's taking off in such a big way. It's another killer app within

the crypto blockchain space other than stable coins. So we are seeing innovation taking place. But the innovation is afraid of backtracking at some point in time. I think that's the biggest fear of the among the industry. >> But I but I don't think you can rely on the clarity act. I mean if the midterms go the way everybody thinks they're going to go, you're you're not going to get more momentum. >> Absolutely. Sorry about >> So I think the good news is with the clarity on the regulatory environment, you can still move forward on that innovation. >> Yeah, I I I totally agree with Jenny. I think we start seeing institutional adoption when the administration change even before genius. And I think that what institutions want to know is that the regulators are not going to go after

them. At the end of the day, using blockchain, in my opinion, didn't violate any US law even before genius. Genius introduced legislation around a new novel asset class which is called a stable coin. But with respect to using blockchain technology to mobilize treasuries, money market funds, equities, I I don't believe that there was anything in the law that prevented it. So my view is kind of similar to if you remember in the days of Uber and Airbnb, by the time people got their act together and decided, okay, we want to legislate against those companies, it was too late. There was no way to reverse the trend of people using these type of services. And I think that that's our

job now as an industry because of regulatory clarity is to bring use of this technology to a level that it really doesn't matter what happened in 2028. There is no going back and I think that that's where the institutional adoption is really key. >> Yeah, you kind of anticipated my next question there which is you know, this is sort of the I would say house view is that we have a certain amount of time to build something very valuable and entrenched in terms of usage for consumers so that even if a less friendly regulatory administration were to come in, they wouldn't want to tear down existing business.

Where do the three of you you each occupy very interesting seats in the market? How do you see that adoption that entrenched usage happening? Is it So we're kind of sitting on the eve of tokenized stocks. Genius is being implemented I believe January 18th in the United Is it going to be stable coins? What's the catalyst that you foresee? >> So the reason we got involved in this you know, back in 2017, I had run technology at Franklin Templeton and you looked at it and I you've all made a really important point. So when we got our Benji tokenized money market fund approved at the SEC under the Gensler administration there, they had us parallel process our

shareholder record keeping system which we built on chain and our old system and at the time there were only really two asset managers that had an all and I laughed cuz I said you know, we have I think we had four record keeping systems globally. We sell we have clients in 160 countries and I said nobody ever asked the programming language of any of them until it was on blockchain. Like this is a programming language. It shouldn't even be a discussion and and the reason we were interested because the programming language does three things really well that to me explains why there is no way this is going to stop. Water runs down the hill no matter how much gravity is a strong force no matter how much you try to stop it. Number one, it has a source

of truth. There is a huge cost in all financial services firm reconciling data between systems because of the latency of data and it gets populated at different times. The second it is as ability to do smart contracts. All this work we do when we do an agreement, we you know, have people who have to track the terms of the contract. That gets programmed into the individual transaction and the third it has a payment mechanism. We looked at that and said, "Man, if that can be the rails of the industry, it is going to dramatically drive down costs and increase innovation." And in fact, when the SEC had a parallel process, it cost us something like over the 8 months to do it like $75,000

to do the transactions on the old system and it cost us $1.67 to do we we use the Stellar blockchain to do on Stellar. $1.67 versus $75,000. So, if you want to open a Benji account on our old money market fund, you need $500 to open it up because anything below that the other shareholders were subsidizing you. On the on the Benji product, you need $20. We could probably go down to $5. From a financial inclusion, that's a huge advantage, but more importantly, just driving down costs and and the velocity of transaction, it's going to dramatically improve it. So, we looked at it said, "The industry's going to go there."

There's a lot of businesses models that are threatened by that, but there there's no way this is going to stop. >> Can I actually ask a quick follow-up and you probably might be getting ready to answer this, but one interesting thing about this particular moment in time is a lot of RWAs, so you know, treasuries, dollars, all sorts of different assets are moving on chain and it seems like we kind of have this parallel record-keeping system. There's the old system which is the source of truth and this new system of blockchain, but the new system is actually better in a bunch of ways. It's cheaper, faster, 24/7 global.

And what are we going to get something where that's the ultimate record-keeping system? Do we make that transition or is there always going to be two? >> 100% So, sorry, can I don't mean to steal all the thunder from my panelists, but um so just take what we do with our money market fund. The other money market funds that are out there are shadowed on chain. They're digital twins, which means you get none of the benefits of the technology. So, in the case of our Benji money market fund, we calculate the yield every second and we pay it to you at the end of the day. You get cash in your account. If you're a corporate treasurer, that's really significant, right? The only reason we could do it is cuz we're natively on chain. And and you know, honestly, Nasdaq's coming out and

they're trading it's T+1. Why? They could be atomic settlement. It's T+1 because all of their clients' back office can't handle atomic settlement yet, but it will come. >> I Just just maybe to >> [laughter] >> Just to put in perspective in terms of the numbers that Jenny talked about, this cost of reconciliation is estimated right now to the industry at about $130 billion a year of just cost. When you think about the friction of movement of assets, it's is estimated that there are roughly $40 trillion worth of assets globally that could be used for lending, collateral, securities that are not being used as a result of friction. And

a lot of times we like to say digital asset, that cost is really just a tax on humanity. No consumer is benefiting from this friction and cost, right? There are some middle players that that are benefiting from that friction, but as an overall industry, nobody's benefiting. And I think that, you know, the goal of this technology is really to reduce that cost and friction down to zero. And as a result of that, that would enable use cases that benefit all the way from businesses to consumer. As Jenny mentioned, I think treasury management is a great example. We're hoping to announce very soon that we're using Benji with a Fortune 100 company.

That that company alone sits on $10 billion of cash at any given point of time because of that friction. One company estimated it 2x the total tokenized money market fund right now out there. And that's just a single company. And they believe that if they can convert the digital to digital money market fund and back into cash in real time, they can generate over $300 million of revenue a year. That is a huge benefit to a Fortune 100 company. Think about what that that mean to individuals that now can sweep their cash accounts into yield products without even thinking about it, small businesses. The amount of revenue and

yield that the whole industry can help generate is pretty massive. And that goes back to my point. As a regulator, why would you ever try to turn that back, right? Like what that that just would not be a rational thing to do. >> I'm just going to add two different two other perspective to this, right? I think all those are excellent points, but just from our angle. So, for the longest time, many individuals are constrained by where they are born. Right? Where you're born, the type of opportunities, the type of access you have is very different. If you are born in Singapore, for example, versus, you know, some different parts of the world, whether it's Middle East or different parts of Africa, you probably could don't get the same access to the banking

system, the payment system, uh the investment landscape to you would look very very different, right? So, for us, when we started to do this this year, especially when we pivot from being a crypto exchange offering uh many other products including US stocks. I think one of the great things is global access, right? So, for people that don't have access to US stocks for the longest time through tokenized products, firstly, gain access at very very low cost, right? Wherever they are in the world. So, one issue is global access because many of people around the world are not given the same opportunity. There's a still a lot of friction points to gain access to you know, US stocks to the top Hong Kong

stocks to the top Korean stocks, etc. So, that's one perspective. The other perspective is 24/7 trading, right? >> Yeah. >> If you look at traditional exchanges and and Jenny mentioned this slightly just now, talking about whether it's Nasdaq or New York Stock Exchange, many of the traditional equity exchange around the world operates 8 hours a day or slightly less than that, right? So, there's huge liquidity risk throughout the night, throughout weekends, throughout holidays where the market is closed because news events are happening, corporate news are coming, industry news are coming, um global events take place minute by minute, second by second, but a lot of investors, traders, institutions, retail, whether with the use of hedging

or otherwise, are not able to take new positions or hedge their existing risk and offset risk, right? So, what we are seeing this year when we started to do a lot of this RWA tokenization, especially for US stocks. So, now we have about 7,000 US stocks available on the platform, 1,000 of them tokenized. And a very interesting phenomenon take place, right? So, for the US stocks that we trade on a tokenized basis, close to more than 40 plus percent of the trading take place outside of US trading hours, right? Because as I mentioned, news flow keep coming through, people don't may not want to stay in Asia time zone throughout the night to trade US counters, right? So,

but they are trading during that day. They are They are taking positions. They are hedging their positions. So, that become very interesting. The 24/7 ability to trade anything and you can put them on chain, as you mentioned, and get different type of views, etc., is something that is transformation and new and allows people to hedge risk. The The traditional financial institutions, Nasdaq has announced they are going to 23/5 uh by 6 December. They can't move to 24/7 uh because of the structure that they have with their broker-dealers, right? So, many traditional institutions face those challenges, which is how they are set up in the past or because of all

those structure that put in place. >> I have a question on the 24/7 trading. Is there a lot of desire on the institutional side or is that more of a retail trading behavior and desire, do you think? >> Well, it's I mean, one of the things, you know, a mutual fund prices or an ETF prices essentially at the market close. An ETF will do more during the day. A mutual fund has one end of the day. You have to do this thing called fair value pricing cuz events can happen in the window and and so, there's an adjustment to the extent that um to the extent that you have access to those markets, it'll absolutely evolve that way. And as a matter of fact, I

remember years ago there was a fraud in a company in India. And we have local asset management in India and then we have an a global emerging market team. And I remember the local Indian team was able to exit at a significantly higher price than the global team cuz the global team was in a way concerned of thinking about it and didn't have access. They weren't Now, that was a a while ago. We've structured things differently, but there's no question, when an event happens, it's going to be about how quickly you can access to make your decision.

>> Very interesting. >> I think it [clears throat] really depends on what what is the driver of of trading. I mean, when you look at most most funds that track an index or a strategy, they would be interested to trade when there is a lot of liquidity because they don't want to have a lot of slippage. I think retail, which is probably less sensitive to slippage, would want to trade whenever they want to trade. But if anything, the war in the Middle East showed is that liquidity can show up when there are meaningful events, even when it's outside your traditional liquidity windows, right?

So, in the US market, it is known, open auction, close auction is where you're going to see most of the liquidity when it's business as usual trading day. But, if suddenly there is a war and there's a very important event that can change the prices of oil, guess what? The liquidity will show up instantly outside your usual trading hours. And I think that that's the point that Richard is saying is that it's the ability of these systems to be available. I think what you're going to see is very similar. I don't think you're going to see necessarily the volume patterns change significantly. You might actually see a new volume pattern for Asia

trading where people will say, "Hey, as market makers, I'm a former market maker, we can provide liquidity during the Asia hours and we know that there's now a good amount of demand. So, you'll see also some spikes during Asia hours." But those will remain kind of constant, but the ability of the systems to suddenly spin up liquidity during a special event will happen instantaneously. >> I have a uh just one more follow-up question on the on trading equities, which is we're talking about public equities that already trade on the New York Stock Exchange and the Nasdaq. What about on the on the private side? You're starting to see some innovation in crypto markets, markets like pre-IPO perpetuals, things like this. And this is also coming at a time where there's

there's been a lot of debate around this forever, but companies staying private longer, the general public missing out on wealth creation opportunities. And you know, I think the probably the best examples of this are Anthropic and OpenAI, where this has benefited such a small number of people in such a hugely disproportionate way. Um so, you're starting to see exchanges innovate at the level of offering privates, but actually the issue where sometimes they're like, "Hey, whoa, whoa, whoa. I don't really want this." And there's this very interesting dance that's going on right now. So, I'm curious if the three of you have perspectives on the opportunity for privates that haven't gone public yet.

>> So >> No, no, go go ahead. >> I'll start on sort of why that's all happening. And and then you go more, I think, specifically in the tokenization. So, so we have we're top 10 alternatives manager. We have about 300 billion of our 1.8 trillion in alternatives in private markets. The reality is private markets continue to grow. Companies don't want to go to public. Nobody wants to be a public company CEO. And so, they, you know, what used to be 3 4 years to go public around 2000, it's now 10 11 years before companies are going public. So, that early growth is being only to qualified access to qualified investors, right? And so, the SEC and in the US in particular, but

other markets, they're trying to figure out ways to get access cuz the average investor has been left out. On the credit side, it used to be banks were the big lenders. The post-financial crisis, the the capital requirements for banks changed. It created this huge proliferation of private markets. My argument is it's more of a regulatory issue than a because private assets are illiquid. They are absolutely illiquid. And if you're in a private equity fund, what you thought was 10 years is now going 12, 15 years. So, the concern is that the average investor doesn't understand that illiquidity risk. I have you tokenization is a great technology to help it, but you have to have market

makers and things to make it liquid. It doesn't just make it liquid overnight. >> Right. >> Yeah. So, if you look at it, I mean, there are a lot of investors in many of these companies through different series, right? C and C series, etc. And there are there are a lot of employees with early stock options, right? So, they want exit mechanism, they want proper price discovery. Actually, and before that, there are some platforms out there that serve that, but it's to a much smaller scale. I think what we are seeing now is given that the general greater awareness globally of many of these companies, we offer pre-IPO tradings, right? For for SpaceX even before you went public and for the likes of Entropics. So, what we are seeing is that because of the brand name of any of these

companies, right? There are a lot of interest. Price discovery is taking place, although sometimes without full information, right? So, I think that that's the key challenge for some of these private markets. How do you make sure there's better information flow from the company? I think some of these companies are a bit hesitant about having their stocks being traded as you mentioned, but there is there are huge demand for for all these products out there. And as a platform, I mean, what we can do is try to satisfy them and bring about proper price discovery for these different products.

>> Yeah, I I I I agree with what was said. I I think the there is a liquidity, but there's actually also an information issue when it comes to privates, right? One of the reasons why it's challenging to be public is because of all of the disclosure mechanisms that you subject yourself to, which as a private company, you don't have to. I think that a lot of even as myself as a CEO of a private company, I mean I think a lot of founders CEOs um would want to have control over their cap table and can try to to do all kinds of special terms saying you cannot uh sell your shares into an SPV. If you do that, we'll void your shares. Like there are

mechanisms where you could try to make it challenging. But then someone will just list a perp on your stock. And good luck with you saying you're not allowed to do that. Those things, in my opinion, are a thing of the past. And what we need to do with organizations like Binance, for example, is how to make these offerings also good for the privates. Because again, one of the challenges is imagine you're a public a private CEO, you do want to go public. And now for whatever reasons, because the market doesn't understand your your company or whatever, it trades at like a significantly lower valuation than where you think you should IPO.

And that can do a lot of damage to your IPO plans and stuff like that. So, I actually think that companies like Binance could be super helpful for private companies to say there are ways to make these products efficient. Because it's not just liquidity. Like I said, a lot of it has to do with the information asymmetry that exists in private companies. Because I just don't think that again, there's a way to to to stop this from happening. And therefore, we should just make that offering as good as possible for private companies as well.

>> All right. We're in our closing minutes here. I want to focus on stablecoins. So, stablecoins have been one of the key success stories, you know, outside of Bitcoin, I would say of of crypto today. Um we got legislation last year in the form of genius that's going to get implemented in January of this coming year. Um and I would love if let's imagine that the four of us are sitting down two years from now and we're talking about what happened with stable coins over the last couple of years. Kind of a two-part question here, but I'd love to understand from your perspective what's the quantum and the sort of like right now there's a duopoly in between USDT and USDC. I would imagine we're going to see a lot of additional issuers come to market. So does that composition relatively stay

the same? And then I would I would ask you to think too, what are some of the second and third order implications of massive adoption of stable coins that might not be quite as obvious. So do you get more people trading on exchanges and DEXes? Do you get more people depositing into borrow lend like money market funds like like kind of the Morpho and Aave's of the world? I know that's a many part question here. Sorry, I can never help myself. >> My my my view is that at the end of the day whether you call it a stable coin a tokenized deposit at the end of the day money on chain will have multiple characteristics that will drive its adoption which is the creditworthiness of the issuer.

Do you believe the issuer has safe money on chain? But I actually think the second part is even more important is the distribution of said money. I mean I can ask how many people here hold Diners Club credit card and probably the number is zero, right? And the reason is nobody accepts it, right? So I think where you're going to see the competition where where it's for example open standard is where are you going to have more usage of holding that money on chain? Right now the duopoly is primarily driven by crypto trading.

Right? As we start seeing more and more use cases that are outside of crypto trading I think players like credit card like Visa Mastercard Stripe have massive distribution that should not be underestimated. It's a question would they actually be able to, you know, you know, build this product and and and launch it successfully, but I think that that's the thing that I look at is what are the new use cases, as you said, outside of crypto kind of traditional crypto trading that are going to be introduced. And I think there there are other players that have quite bigger distribution right now. It's just a

question would they be able to execute well. >> Yeah, totally agree. So, everything people look at the success of USDT, USDC, and you see a lot of other stable coins being issued, right? But the key challenge is how do you get to the right scale? How do you bring about distribution? How do you bring about the utility and the use case? And continue to grow. I think that's one dimension. The other dimension is regulators around the world are starting to look at this space, are starting to regulate. And some the regulation somehow doesn't match each other as well. I think that's one big challenge. look at, USDT, for example, they face some challenges in in the likes of Europe and some other jurisdiction, right? So, again, the the backing, the total

transparency that regulators demand, I couldn't impose on this, going to continue to escalate and and elevate on that front. But there are also other experimentation like tokenized deposits coming through, right? So, how does that impact the landscape, I think. But everything is a big use case of blockchain, so everybody wins in my view. >> I would just add that I I agree with all the points made here. I think that part of the concern on stable coins is that they have the potential to drain the banking system of deposits.

And if that happens, banks are absolutely fundamental to every economy. They are the velocity of money. They are the multiplier of money. Uh and so the two have to figure out and I think a lot of banks, that's why they're starting to try to issue their own. There has to be a way to bring the two together. Now, the argument is that it's actually really expensive to have a bank checking account. They charge you a lot of fees and you know, they'll say, "Well, I a very prominent bank CEO said, "Well, we give ATMs and they should pay." And I looked at it and thought, "I'm not sure my kids have gone to an ATM in a very long time." [laughter] Um but

you you need that infrastructure because for consumer loans, for a lot of the system, and so these two things have to figure out a way to come together. And I think that's, you know, where ultimately a convergence happens and the regulators are tentative on trying to figure out how to deal with that. All right, everyone. That is all the time we have. Please give a warm round of applause to our panelists, everyone.