TradFi is Building on the Avalanche Avax Blockchain... Here's Why | Morgan Krupetsky

Added: 2026-05-11

[00:00:00]We're spending a lot of time on private credit and specifically assetbacked finance and fintech lending. That space is really interesting because there's no clearing house. There's no exchange.

[00:00:11]It's very bilateral as it operates today. And it's really an area that I think is still very opaque, not standardized, and really can therefore stand to benefit from this tech being blockchain, stable coins, tokenization, and smart contracts.

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[00:02:52]Link will be in the description. Hey everyone, welcome into the Thinking Crypto podcast. I'm your host, Tony Edward, and we are recording at station 3 in New York's financial district. And joining me today is Morgan Kpetsky, who is the vice president of onchain finance at Ava Labs, which is the technology company building the Avalanche blockchain. Prior to joining Avalabs, Morgan spent time at City almost over a decade, beginning with roles focused on institutional FX and macro, covering hedge funds, uh, asset managers, and pension funds. Morgan, great to have you.

[00:03:27]>> Thanks for having me. It's good to be here.

[00:03:29]>> Yeah, I'm excited for this conversation.

[00:03:31]Full disclosure, I'm a big fan of Avalanche. I am an AVAC token holder, but also Morgan, you spent a lot of time at City. you have the Treadfi banking perspective and now you're in crypto.

[00:03:43]So, I'm ready to, you know, dig into your perspective on what's happening and adoption we're seeing. So, great, great to have you here.

[00:03:50]>> Yeah, it's good to be here. Thank you.

[00:03:51]>> Let's start with your background.

[00:03:52]Where'd you grow up? How'd you end up in finance?

[00:03:56]>> Yeah. Um, I grew up outside of Philadelphia, um, and went to college in New York and, uh, have been living here ever since. And so, I, you know, I guess that makes me a a true New Yorker. um you know inherently you know going to school in really the financial capital of the world. I think there was a big kind of pipeline of uh you know university to financial services just inherently kind of uh from a cultural standpoint and so um you know I think part of it is like you don't know what you don't know but in you know my schooling I was attracted to macroeconomics and so did kind of a series of internships in various parts of financial services and found that I really liked it. Um, and so started at City right after I graduated in the kind of uh institutional rotational program uh specifically within sales and trading and stuck around for for quite some time. Um, while I was still at city, I had a couple other roles kind of in the process uh before diving into crypto and digital assets which I know we'll talk about, but uh that was kind of my my foray in in Tradfi. So along that journey, was it at city that you discovered blockchain and crypto?

[00:05:08]>> Yeah, so it was interesting because I spent the majority of my career in what they call like the front office or the first line of defense uh in the business in kind of directly revenue generating uh businesses and uh you mentioned earlier I was part of the FX and macro derivatives desk covering hedge funds, asset managers and pension funds. And um that was the majority of my time. And then the last kind of couple of years I spent in the in the second line of defense uh working for city chief compliance officer. I was sort of chief of staff and kind of through both of those experiences I saw, you know, how end-to-end processes worked um not just as it related to trade execution but also post trade a lot of reconciliation, middle and back office processes um the kind of uh managing of risk and controls and saw kind of firsthand how those things were linked. Um and inherently I saw how sometimes processes would inherently not necessarily run smoothly because and this is not necessarily just specific to city but I think it's any large bank or any large enterprise or institution that you know because it's the result of you know very like older a lot older systems and um sometimes M&A and sometimes uh you know lack of prioritization in terms of spending the time and resources to actually streamline systems. A lot of the times uh there would be you know manual processes that would be put in place kind of make checker type of processes where inherently systems wouldn't talk to each other and therefore you know bodies would be thrown at having to reconcile things internally let alone when you talk about going from kind of one institution to another institution. And so as I was, you know, observing this, at the same time, we had, you know, the last kind of crypto bull market and I got a lot more interested in kind of going down the rabbit hole and really understanding what the tech was about. And so my kind of for into the space was less on like the Bitcoin maxi side of things and more of like how can we use smart contract capabilities to really upgrade legacy financial services infrastructure and institutional workflows. So, it's really not like the sexy part. It's like the plumbing. But, it really kind of got me excited cuz I, you know, took a step back and saw the potential of what the tech could do as it related to really upgrading how processes would work within financial services, but also obviously kind of other industries as well.

[00:07:37]>> Well, you were certainly ahead of the curve because we're seeing City along with other banks and Wall Street firms are all integrating blockchain technology. It's not just about Bitcoin or Bitcoin ETFs, but tokenization, stable coins, using blockchain to move information and data. All that's being built now.

[00:07:54]>> Yeah, totally. It's interesting. So, when I first joined uh Avalabs, I was specifically focused on institutions and capital markets. So, bringing banks and asset managers onto Avalanche in some way, shape or form in the context of their blockchain and digital asset strategies. And so that was a lot about educating institutions around not necessarily what was blockchain because at that point luckily I think they were more or lessish on board but they had digital asset teams but it was what is avalanche what are the differentiators and the USPS and how can we leverage the underlying technology to and we'll we'll get into this but um basically either upgrade how we do things enter net new markets uh capitalize on net new revenue opportunities and really since then the worlds of tradi tokenization have really converged um and I think will continue to converge and so at this point you know while before I think there was like a spectrum of different types of financial services institutions in terms of those that have been really progressive for a while and those that were very new I think especially after the election it kind of gave a green light for a lot more institutions to really start standing up digital asset teams hiring digital asset heads to really kind create both, you know, to your point, a crypto and digital asset strategy as well as more of like a blockchain strategy.

[00:09:16]>> You know, you mentioned the election.

[00:09:17]So, I'm curious, prior to the election and, you know, the favorable environment we're in right now, were firms like city kind of sitting on the fence saying we get this and we want to build with it, but we're not we don't want to be in trouble with the regulators. Was that the the crux of it?

[00:09:33]>> Yeah, I mean, I think there was always a um a spectrum, right? firms like JP Morgan had been really at the forefront of um leveraging blockchain infrastructure relatively for quite some time and then there were others I I won't name names who were just like we know this is a thing and we're keeping up to date with the news but we don't really want to touch this for a variety of reasons one of which to your point was regulatory clarity um and especially with the likes of FTX and Celsius that didn't really help the industry's cause um luckily from an Avalanche standpoint, and I know we'll get into this, but Avalanche really allows institutions to stand up their own private permissioned environments if that's what they want or if that's what the use case kind of demands. And so we luckily early on had a little bit of a wedge even four years ago in working with the cities and and JP Morgans of the world where you know historically they were used to building on what we would call like enterprise chains like a hyperledger that was fully isolated from you know the DeFi innovation and composability and and and um with avalanche L1's it really allowed them to like step into the world of public permissionless in a way that still allowed them to you know address a lot of their compl liance and regulatory requirements, but start to get a little bit closer to, you know, the public permissionless realm, DeFi innovation, composability. Um, and now, especially after the election, there's still definitely use cases that demand private permission networks, but really there's been such a a turn in the tide of, okay, now we really got to do something in the space. We have to figure out what it is, why are we doing it, and really start to operationalize um and in production uh various types of use cases.

[00:11:22]>> Pardon the interruption. Hi, I'm Tony.

[00:11:24]I'm the host of the Thinking Crypto podcast. I wanted to ask you if you can please support the podcast by hitting the like button, subscribing if you haven't as yet. You can leave a comment below as well. And if you're listening on a podcast platform such as Spotify, Apple, or wherever you get your podcast, please be sure to follow and hit the fivestar rating. I'll let you get back to the content. Thank you so much.

[00:11:45]>> And Morgan, it's it's fascinating because you're seeing even the the detractors are now capitulating, if that's the right word. Yeah. And we're in this race and it seems that the direction the puck is heading in is blockchain rails powering markets and the economy. It seems that's what the end goal is.

[00:12:02]>> Yeah. I mean, I guess blockchain just in general, and to take a step back, it it's always been, you know, conducive for the transfer of peer-to-peer value.

[00:12:12]And that value um is encapsulated in a variety of different tokenized assets as well as in tokenized cash or digital forms of money that is stable coins or tokenized deposits. And so when you have both of those things leveraging a common set of trade transaction and settlement rails also being uh reflected in common kind of token standards. It provides for the much more seamless transfer of value where you know historically enterprises were built on systems that inherently don't talk to each other whether it's intraco company or interco company and as a result of that historically that's why we saw a lot of intermediaries pop up or the need for intermediaries to pop up to basically take data from one place to another to reconcile it right which is inherently not automatic and errorprone because a lot of A lot of the time it's you know governed by you know manual processes and so to be able to instead leverage you know sometimes I call it like the world's excel sheet uh that you know inherently you could see how uh value whether it's on a wholesale level or on a retail level how that could really help to upgrade you know how we work today. M before we get into the ecosystem and all the great things that are being built on the Avalanche blockchain for the viewers and listeners who may not know give a quick overview of Avalanche as a blockchain and the capabilities and things like that.

[00:13:38]>> So Avalanche actually is not a blockchain. It is a network of many blockchains. It is anchored by a public permissionless liquidity hub called the Avalanche Cchain. uh which is EVM compatible which basically means any anything that anyone has built for Ethereum or a Hyperledger can very easily be ported over uh onto Avalanche.

[00:14:01]Um and then on the avalanche chain that houses kind of all of the primitives and native integrations that make you know any kind of public permissionless ecosystem tick right so that's DeFi primitives stablecoin integrations custodial integrations on and off ramps tokenization platforms so on and so forth and so when people think about avalanche oftentimes they're thinking about the activity that exists on the liquidity hub or avalanche Cchain however the network also allows allows builders, whether that's a government agency, a financial services institution, an enterprise, to stand up its own individual or series of customizable layer 1 blockchains um that can be public and permissionless. They can be private and permissioned or they can be hybrid. They can be uh public and uh permissioned. Um, and so importantly, those networks are natively interoperable with each other as well as with the Avalanche Cchain, which means that just because you're launching your own chain doesn't mean again you're in isolation. You can bring in USDC, USDT users, other types of tokens into and out of your environment to Cchain or to other networks if that's what your kind of use case demands for. And so in general, you know, when we talk to different types of partners, we don't we're not necessarily prescriptive to say you have to launch on Avalanche D chain or you have to launch your own L1.

[00:15:30]It's very dependent on the particular use case and the application and the particular kind of compliance and other types of requirements. Um and therefore it doesn't necessarily as a network beholden a partner to a particular network toolkit or logic. It's really dependent on the particular use case.

[00:15:47]And so that customizability, the ability for, you know, a regulated financial services institution, let's say, who's building a uh collateral mobility platform to really cater the network and the chain to the use case. And that includes things like permissioning across validators, transactors, smart contract deployers. It doesn't necessarily mean that validation, if it's permissioned, has to be centralized. it can be distributed among a whole host of institutions who have an economic or business interest in validating that network but it's very malleable um and so that customizability we found has really resonated with a variety of different types of builders >> that's really great so let's do a mock scenario so let's use JP Morgan and city so let's say they both build on I don't know if what makes sense is Cchain or you know one of the their own L1 version they have the privacy So JP Morgan can't see city's information and vice versa, but if they want to transact with each other, they can.

[00:16:47]>> Correct. Yeah. And I mean to your point exactly like it's not necessarily that city and JP will for sure have their own chains. What we've actually found is institutions who have been issuing and tokenizing assets. It behooves them to uh issue those assets where users liquidity and other types of integrations exist which is on Cchain.

[00:17:08]But to the extent that uh an institution or a group of institutions is building an application that might be more conducive for an L1 environment. So for example, if they're building again like an engine for collateral mobility or an exchange of some kind that might be more conducive for its own L1. Now within that L1, to your point, you can have a variety of different institutions interacting and trading. But when it comes to settlement, perhaps it makes sense to settle those trades back on their respective networks. And if that's the case, let's say, you know, two institutions come together, they decide on a particular trade, the asset and the payment can settle on the respective institutions L1's and do so in a way that doesn't require third-party bridges or third party assumptions because it's using Avalanche's native int network interoperability capabilities. Um, and so there's a bunch of different kind of configurations and again it just depends on and we always sit down with institutions and sometimes they kind of like think they know what they want or they're saying we absolutely need this and I'm like you actually don't need that. Here's a here's a more efficient way to kind of solve that. So we always try to get to the crux of like what are you trying to solve? Why do you think you need what you are saying that you need? and then let's talk through different ways to express that need from a blockchain architecture perspective and help you help you get there.

[00:18:36]I want to make sure I wrap my head around this and this is a general question I have even overall for what of what's being built with these institutions because many of them you you alluded to this they kind of have the wall gardens right they tried to build their own internal permission chain which is fine but now they're noticing hey we need to get to public chains to sell and communicate with other folks Avalanche being one of them um so when they transact how is that data or money or whatever it is going back internally so and you And this is where your perspective is going to be great because you worked at a bank so you know how this all works. So if city's operating on this L1 on avalanche, how does the value of whatever they're doing get back to the bank itself?

[00:19:17]>> You mean internally?

[00:19:17]>> Internally. Yeah.

[00:19:18]>> Well, at this point, unfortunately, I don't think banks are in a position to like custody USDC, which I hope that they will, but a lot of them are either already have or are working on tokenized deposits, right? And so that I guess in a certain sense from a token standard perspective is very similar to a stable coin like USDC. But inherently it reflects uh the token reflects a tokenized deposit or a deposit that exists already within the bank and that is within the bank's custody. And so it's kind of similar in that sense in that in this case I guess city it would be the issuer of the of the tokenized deposit. Um but hopefully we'll get to a point where where a lot of these financial services institutions can start to really custody at scale um stable coins in which case you know that would probably follow the same model that any institution kind of custodies uh a stable coin um and in the case of USDC for example if uh an institution is building let's say on their own L1 and they want to pull in let's say USDC from Avalanche Cchain into their environment they don't necessarily have to contract with Circle to integrate native USDC onto their network because that's probably going to be a very difficult uh proposition to get Circle to do that.

[00:20:41]I'm sure they have a large pipeline.

[00:20:43]They don't really care about necessarily integrating uh all these different chains, whether they're L1's or L2s. And so what would happen instead is that through Avalanche's native interoperability protocol, they would basically pull in USDC into their environment. Um the and I think I mentioned this, but the interoperability doesn't necessitate in the context of Avalanche third party bridges. And so it really relies just on the two validator sets of the network to facilitate that interchain messaging. Um and so for example, let's say you have a city chain and a JP Morgan chain. Presumably those chains are permissioned. Um they have a permissioned validator set probably run by city and JP Morgan respectively. City in the case that they want to send an asset or a payment to JP Morgan, they would ping that network to say, "Hey, we want to send you whatever 10 10 tokenized deposit units." Um the validators of the JP Morgan L1 would basically look up on the validator registry of Avalanche which is held on the Avalanche Pchain and say who is sending me this message? Oh, this is the validators of the city network. we trust the city network to receive that message and to receive that uh that payment and they choose to accept that message and therefore that transfer or that message happens and goes through again just relying on those two already known and trusted validator sets. So that would be an example. I mean obviously you can send payments assets you can ping a chain for has this transactor been KYCed. There are so many you know there it's a very lowlevel and like kind of arbitrary protocol that you can layer on on top really anything that you want but those are kind of some examples from an institutional perspective.

[00:22:33]>> That's great insights. See that's that's I wanted to just for even for myself.

[00:22:37]>> I know we're going down the rabbit hole but that's that's kind of what it would look like. I know it's fascinating and I'm I'm so interested to learn how the the piping and the moving parts and components all work and you know obviously you being at a bank and I and I'm fascinated to see how they're integrating all these things. So it's it's amazing what's being built and look there's been a wave of institutional announcements on Avalanche uh there's a lot so uh ETPs you got Broadidge uh payments infrastructure and much more I would love to dive into talk to us about these things and also dive into Broadidge. Sure. So I would just to take a step back like the commonality behind I think most of the builders and companies deploying on Avalanche are generally speaking they've been solving real world problems uh aiming for real world adoption by real world businesses.

[00:23:28]Um they're generally less direct to consumer and more B2B or B2B TOC. And we call these partners, whether they're in financial services or gaming or payments or sports and entertainment, we call them tech enablement partners. And they're the ones who we basically work in tandem with on a kind of go to market or BD strategy and ultimately reaching out to different types of businesses that would benefit from the blockchain enabled product, services, and capabilities that those tech enablement partners bring to the table. Um so that's you know the ecosystem at a at a high level obviously we have a robust and top tier kind of defi ecosystem but even the defi primitives that exist on avalanche um between various types of vault infrastructure borrow lend protocols I almost look at them as kind of top of the funnel where even those protocols we actively pitch to different fintexs wealthtech platforms and neo banks to embed in their backends to start offering new product services and capabilities to their clients. So I I almost see like the DeFi partners as tech enablement partners in the same way. Um so that's really kind of the commonality and I think in general as we've really pivoted to focus on this like better business strategy, it's really about how do we via our partners deliver better business outcomes? Is it cutting of costs? Is it creating efficiency? Is it entering in that new market, capitalizing on a new revenue opportunity? And largely when we pitch to these ultimately end clients, we don't really talk about Avalanche. We talk about the business benefit that that business gets by leveraging a slew of tech enablement partners on Avalanche. Most of those customers don't have large digital asset teams, nor necessarily should they, who shouldn't be thinking about building all of this stuff from scratch. Um and so the you know the idea is that they are sold on the capability and there is an agreement that is kind of struck between them and the tech enablement partner and it happens to be on Avalanche and that's how it should be right like people shouldn't know or care what network they're using if they're even using blockchain. Um and that's really kind of the go to market motion that we strive for as it relates to Broadidge in particular. Um maybe just as a summary uh a few weeks ago um we announced with Broadidge that they have built a purpose-built L1 an avalanche L1 within our network and it is really meant for the transmission of corporate actions uh to a variety of different platforms not just on Avalanche but across a variety of different chains. Today Broadidge is a huge piece of you know financial market infrastructure in the world of TRFI specifically again as it relates to corporate actions I think they cover you know over 90% of you know US uh equity corporate actions today corporate action communications today and oftent times it's still via like mail and like paper trail um and in this world where you know and we'll talk about this as a theme but more and more companies are exploring tokenized equities um both uh kind of as a mirror token as well as native onchain issuance. Broadidge really saw this as a way to start to explore how to upgrade their own kind of infrastructure and rather than potentially sending via mail, exploring, hey, if somebody has um a wallet with, you know, Google shares and Apple shares, how do we send the communication, the the opportunity to vote, for example, to somebody's wallet directly, right? because all of this information again is onchain on a public ledger. Is there a way for us to do that directly and therefore maybe make it again the process more efficient, bypass certain intermediaries that are now no longer needed or the the need for them is kind of reduced. And so it's really their answer to start to kind of come into this new world where equities are uh now natively issued on chain.

[00:27:42]>> That's pretty profound. And I've gotten those mails where, oh, you got to vote by this and and >> and do you actually vote?

[00:27:49]>> Oh my god, no. And and I feel so annoyed. My wife's like, why are you getting I'm like, we're invested in this and that's why they keep sending it to us.

[00:27:55]>> And it's like three months ago cuz we don't check your mail every day.

[00:27:58]>> And then it keeps sending like multiple copies. And I'm like, oh my gosh. But if that is fully digital and having the verification via blockchain and tokenized assets, that would make my life a lot easier.

[00:28:09]>> Yeah. Yeah, I mean it'd be cool to see it like kind of like through like a pop-up notification, right? Where you can just decide and then probably you'd be more inclined to participate in governance if it was right there and very easily accessible.

[00:28:21]>> Yeah. See, I find that so fascinating and it's so important to tell these stories, these use cases because sometimes people are very distracted by price and then uh sometimes negative headlines. But to see this type of adoption, this type of building, real world use case, trady, >> it's a novel concept.

[00:28:37]>> Yeah. Right.

[00:28:38]>> Yes. and and and uh I I think these need to be the headlines, not this meme coin or whatever. You know what I mean?

[00:28:44]>> You and me both. You and me both.

[00:28:47]>> Yeah. I mean I I do feel like um you know over the past four years we've seen and we talked about this like definitely more institutional interest and enterprise adoption where I think the industry has has grown up somewhat um and is um focusing a lot more especially with stable coins on like real world use cases and maybe less so cryptocasino. I mean, I know prediction markets are obviously huge, but even there, I think there's there's an effort to kind of like institutionalize or professionalize them a little bit more so and so I think that there's a lot of scope to um to see that like market grow up as well.

[00:29:25]>> Yeah. I mean, I think is intercontinental exchange, parent company, New York Stock Exchange, they invested in Poly Market. Huge.

[00:29:30]>> Yeah. Totally.

[00:29:31]>> Yeah. So, to your point, industry is growing up and >> I look, a lot of people are probably going to hate on me for saying this, but I think the Tradfi folks coming in are helping us to mature. Yeah.

[00:29:40]>> Um, obviously I love crypto. I I missed some of the 2017 days because it's just like it was fun, but we had to grow up.

[00:29:49]>> Yeah. It's really It's really ironic to see. I think there was like a crypto ethos of like we don't need the institutions and we're going to build our own banks and and and like shunned kind of tradi and now everyone's cheering or most people are kind of cheering the institutionalization bringing trifi into this kind of realm and not necessarily because I think they're going to have the same role but um but I think it it definitely brings more resources into the space more talent into the space and new innovation and new new kind of opportunities for adoption.

[00:30:26]>> Yeah. And the key word there is adoption because I think of look I'm a techie. I was early to this. I was it it pulled me in, right? It had a gravitational pull because I love tech. But I think about my mom and dad and for them to even invest in Bitcoin or crypto, they probably want Fidelity. You know what I mean? Because they trust Fidelity, trust JP Morgan. Those are names companies they worked with have accounts with already. And if I want them to use certain types of apps to do web three things, they probably want to use a brand they're familiar with, not necessarily a crypto startup. Again, again, it's all about demographics and and the segmentation, >> of course. Yeah, totally. I mean, how Gen Z kind of looks at investing is very different than uh millennials and and older generations. And by the way, this is not financial advice, but um I think I think various institutions just want to ensure that their clients kind of have at their fingertips what it is that they need in the way that they are comfortable with accessing it. Which is also I think why we saw a lot of popularity with the crypto ETFs, right?

[00:31:30]like it provided a a new but traditional way to access uh a net new asset in a way that I think a lot of uh institutions and individuals were comfortable with.

[00:31:42]>> Speaking of ETFs, Bitwise, they launched an AVAC ETF recently which is huge and there's a lot lot more coming I would imagine. Yeah, I mean it's uh again not financial advice, but it's exciting to again see um these different kind of uh ways to be able to offer uh you know through Bitwise for example access to uh to crypto assets. Um, and so I think it just lends kind of another um point for for credibility, for legitimacy, and um really allows um you know, Bitwise and others to start really telling kind of the avalanche story from an educational standpoint. Um because as much education as we've done, it's not going to be over anytime soon. And so I think the more kind of partners we have of the ecosystem working on education, telling the story, not just of the platform, but also to your point, the use cases that are being deployed on the platform, the better. Um, and so definitely excited to to see that.

[00:32:43]>> Yeah, there's still billions of people who don't have they they haven't touched this. They don't know what it is. Some are maybe turned off by certain headlines, but education will help solve that.

[00:32:54]>> Yeah, I think so. I think so. And it's interesting to see um from like an order of operation standpoint uh you know in general banks have been not quick but um have definitely prioritized offering kind of uh crypto products um you know obviously starting with the basics uh to their customers with ETFs and I think over time we'll start to see kind of a lot more blockchain based uh products being offered ideally with the blockchain components being abstracted away. Um, but a lot of different companies are looking at uh kind of issuing um wallets, digital wallets, uh, non-custodial wallets to their customers. And then through that, there's so many different, you know, products and services you can offer to your customers through that channel. Um, and so, you know, I think over the past year, I've really seen it seen it accelerate.

[00:33:51]>> Yeah. An example I'll give is the folks at Franklin Templeton just because I remember a Sandy call at Franklin Templeton talking about this. We're moving away from the accountbased setup to the wallet based setup and everyone's trying to build their own wallet that self-custodial wallet and that could be folks their financial hub their digital identity all kinds of things.

[00:34:09]>> Totally. Totally.

[00:34:10]>> It's fascinating.

[00:34:11]>> Sandy also a city alum.

[00:34:13]>> Ah I didn't know that.

[00:34:15]>> Yeah she's great.

[00:34:16]>> Um yeah she's great. I had her on many times. Um, the tokenization race is heating up. A lot of tokenization happening on Avalanche as well. Do you believe that, let's say, the Clarity Act gets passed this year, plus the Genius Act rolling out will help boost more adoption, more building, we're going to see a next wave of innovation, so to speak.

[00:34:34]>> I hope so. Yeah. Yeah, I mean I think um in general just on the regulatory point, especially for really kind of established incumbent institutions, um the more clarity, no pun intended, that there is um the more understanding of the guidelines and guard rails that institutions and enterprises can start to operate within and within. Um I was going to say around, but they're not doing it around. They're doing it within the guard rails. Um, and so I think that that's only net positive for the industry. I think we saw an example of that. What happened post Genius, there was this such a renewed push and focus on stable coins. It was no longer, you know, what is our blockchain and digital asset strategy, but what is our stable coin strategy? Um, and we saw not just banks, but a lot more types of enterprises, Western Union, PayPal, others really, really kind of push forward in the space. there was a lot of M&A activity obviously in the specifically within the stable coin space that has and likely will continue to happen. Um so if that's any any indication I think clarity and just further global uh you know regulatory clarity can only be a net positive in terms of um uh giving institutions the green light to really start to productionize and scale a lot of their deployments. Um, and so from a tokenization standpoint, I think inherently that that, you know, that will help as well. Um, in terms of kind of themes that we've seen from a tokenization perspective, you know, I've always considered sta stable coins as like the quintessential tokenized asset.

[00:36:15]Um, and so obviously stable coin market cap over time has grown tremendously.

[00:36:21]And I think as a result of that, a lot of institutions saw that growth, especially asset managers and they're like, "Oh, stable coins inherently don't, you know, offer yield to the to the holders of their stable coins." I know that's obviously a hot topic as it relates to clarity, but I think that really was an impetus for a lot of asset managers to start offering money market funds or tokenized money market funds.

[00:36:42]Um, obviously there's a whole slew of asset managers who have who have launched tokenized money market funds, many of which are on Avalanche. Um and so to date, a lot of the uh kind of subscribers or buyers of those money market funds have interestingly been stable coin and synthetic dollar issuers. Um and then I think uh you know by extension fintech, wealthtech platforms and neo banks who um are starting to be able to offer to their customers you know digital savings accounts um as generated by by money market funds. So I think we'll see that continue and I think by extension there we've started to see uh especially kind of the synthetic dollar issuers waiting into the world of private credit um and other types of fixed income products and so I think I think that will continue um there's obviously been a very big theme around tokenized equities um which I think will continue there's a lot of uh initiatives out there between uh superstate and others working on native onchain equity issuance um which I think is a long road but it's definitely worth it because that is really where you start to see actual like efficiencies in the endto-end process not just of of issuance but you know trading clearing settlement so on and so forth. Um and then in addition to that uh you know we've been very focused specifically on private credit asset back finance fintech lending which we can talk about um and really everything in between. So, um, we we've seen a lot.

[00:38:16]I think, you know, the space will will continue to evolve and, um, it's it's exciting to kind of see a variety of different types of institutions getting involved as well.

[00:38:25]>> Yeah. And it feels like we're at this pretty significant moment in history because Morgan, we're we're about two blocks away from the New York Stock Exchange, Wall Street, and if we're going to 27 24/7 markets, there's not going to be an opening and closing bell.

[00:38:38]That's going to be a thing of the past.

[00:38:40]We're going to go. It's going to be I don't know. The bell is going to be put in a display, right? And we'll go through it at the museum. Remember when they used to do this?

[00:38:48]>> Remember we used to all gather, >> right? I I it's and know but I'm also like, you know, we're going to go nuts uh having 24/7 markets and all these things trading, you know, while we're sleeping and much more.

[00:39:01]>> Yeah. I mean, I also think like and not necessarily as it relates to 24/7 trading, but I also think like just because the tech enables it doesn't mean that it like needs to happen. For example, uh the technology enables um kind of atomic DVP uh settling or swapping an asset for for a payment which means that if you kind of look ahead not just 24/7 trading and settlement um or trading but also 247 settlement and gross settlement, right? So theoretically assets and payments are going to be swap swapping or can be swapping in gross time or in gross in gross um in a way that might ne not might not necessarily be uber capital efficient for for institutions. And so just because that can happen there's a question of whether it should happen. And so rather than just continuously swapping and settling assets for payments, maybe it makes sense to net trades on a on an intraday basis more regularly that in a way addresses a lot of the kind of counterparty credit risk and other types of risks that you know clearing houses kind of address today, right? But do you have to go to the other extreme? Like maybe not. Um and so I think there's a lot of kind of uh innovation and thinking to be done from a business standpoint of what and and regulatory of like what actually makes sense in the context of the business as it marries to the technological capabilities.

[00:40:36]>> Yeah, that's a great point. Just because we can doesn't mean we have to. And maybe in the cases where we have to and uh yes, you have international teams, but that's maybe where AI agents and much more can come into play. Yeah, I mean, throw AI in there and, you know, I'm sure the possibilities are endless.

[00:40:52]And so, yeah, it's it's really interesting to think about um how the tech enables certain things and how does the business as well as the regulatory component keep up. Um because there's also a lot of questions uh around especially in the context of tokenized assets, the ability to um leverage and transport digital identity. Um, and so today like it technically it's possible to, you know, have an NFT of all of your credentials and technically tokenization platforms can read those credentials and determine that you are KYC, that you're an accredited investor, but from a regulatory standpoint, that's not necessarily doable today. And so it's solved by the tech, but how does the kind of regulatory part keep up and evolve? you still have a lot of those kind of open questions.

[00:41:48]>> Oh, absolutely. Um, I did want to ask you about uh onchain lending and borrowing and the whole DeFi aspect or ecosystem on Avalanche. Um, I'm a big believer in DeFi, but it feels like we're still in version 1.0 where there's still tweaks that need to be made. We still see exploits, you know, what's your outlook on DeFi, but also, you know, tell us about what's being built on Avalanche.

[00:42:09]>> Yeah. Um it yeah in the grand scheme of things even though DeFi has been around for a long time I still think it's it's early but it is exciting to see um various types of uh DeFi protocols borrow protocols specifically like the morphos and a of the world partnering with uh very large and established fintexs whether it's Coinbase or or or others where you're really starting to see the convergence in production really at scale.

[00:42:39]Um, and so I think it's mature enough at least to to see that convergence. Um, to the point where to your point is your mom going and getting like a loan on a probably not, but to the extent that those types of capabilities are powered in the back end on Fidelity like that could be really interesting. I think um I think there's a bunch of innovation happening in this space. I think vaults infrastructure is like the hot topic in meta today. A lot of different types of asset managers are exploring the idea of being being curators and using the capabilities of the vault infrastructure and overlaying like a regulatory lens with being able to form capital more quickly and more efficiently to be able to uh distribute funds in a more efficient way in terms of like fund dispersements and allocations. And so I think like the DeFi primitives are being considered in the context of like how again how Trafi operates today. Um things like term loans I know are being explored as well, right? So if you have like a loan on a certain platform kind of annoying to like continuously monitor LTV and and and your position. So to the extent you can kind of take out like a term loan, I think that's something that is actively being explored today. So um the building blocks are there but there's definitely tweaks, optimizations and net new innovations that are that are being explored especially with um the introduction of more and more real world assets or tokenized assets coming into the space as these you know various looping strategies are explored. There's a lot of things that people are working to figure out as it relates to onchain nav as well as uh liquidation mechanisms particularly for less liquid assets. And so I think all of this stuff is actively being worked on today.

[00:44:31]>> Yeah. And maybe going back to the theme we talked about earlier, Trady coming in and assisting with DeFi or offering some of their own DeFi solutions that could help us mature or grow past some of these things we're experiencing now.

[00:44:45]>> Totally. Totally. And I think like in a in an interesting way and maybe this is more C5 related, but I think um you know when we saw kind of the the various unfortunate series of events that happened in 2022 and 2023, I mean a lot of it was stuff that already caused kind of blowups in TRAI in some way, shape or form historically which is why we have certain like market structure regulation and standardization. And so I do think to your point there will be a little bit more kind of like institutional rigor um and and and innovation that's hopefully kind of overlaid on some of these um cryptonative uh primitives.

[00:45:26]>> All right, final item here. Um next 12 to 24 months, what are you what are your priorities? What are you doubling down on?

[00:45:34]>> Uh that's a good question. Um we're we're and I think I mentioned this earlier. We're spending a lot of time on private credit and specifically assetbacked finance and fintech lending.

[00:45:44]I think that space is really interesting because um really there's no there's no clearing house. There's no exchange. um it's very bilateral as it operates today and it's really an area that I think is still very opaque, not standardized and really can therefore stand to benefit from this tech being blockchain, stable coins, tokenization and smart contracts.

[00:46:10]And so to the extent that this tech can really be introduced as upstream as possible in the origination of loans for example, you can start to kind of create an environment an opportunity for verification and servicing to be done on chain as well. And as a result of that really start to chip away at a lot of the third-party service providers that currently today take a ton of fees between the ultimate borrower and the ultimate lender where you know at scale you can start to even provide more competitive rates to borrowers and better rates of return to lenders. Um and so this is a space where um we're working with a variety of different capital partners, credit infrastructure platforms to bring both uh crypto or blockchain native originators as well as web 2 fintech originators onto Avalanche by way of by way of this tech where again it solves real world problems for for the space, right? like the prevention of the double pledging of collateral, the ability to kind of monitor collateral in real time and do kind of compliance risk management in real time as opposed to on a delay by 30 days via PDF. All of these things are solving real world problems for the kind of ABF space which we're really excited about. And so that's one of the you know few areas that we're very focused on.

[00:47:39]Obviously, stable coin adoption uh by both retail as well as kind of institutions on a B2B and wholesale payments perspective is something that um you know we have and continue to focus on as well. And then tokenization in various uh shapes or forms but um but I said a lot so let me pause there.

[00:47:57]>> All great stuff. Love it. And I'm like I said at the beginning I'm a fan of the Avalanche uh ecosystem AVAC token holder. So I'm excited to see the future updates. I have some wrap-up questions here for you. They're rapid fire. Sure.

[00:48:08]>> Favorite food?

[00:48:10]>> Uh, I love a good burger, so I'll say burger.

[00:48:13]>> Favorite uh musician or band?

[00:48:16]>> Um, I've been listening to a lot of Shade Day recently, which is like very I feel like cliche, but she's so good.

[00:48:24]>> Uh, favorite movie.

[00:48:26]>> Favorite movie. Um, my favorite chick flick is How to Lose a Guy in 10 Days.

[00:48:31]Um, but I like, you know, Mel Brooks movies. Uh, and you know, uh, really any type of movie that's not a horror movie.

[00:48:40]I really don't like horror movies. So, we'll we'll leave it at that.

[00:48:43]>> Favorite book?

[00:48:44]>> Um, I've been reading a lot of books around kind of like spirituality and manifestation and positive thinking, which really helps to offset a lot of like the deep digital asset crypto smart contract research that I do on a day-to-day basis. So, uh, so it's been good to kind of balance it out with those types of books. Yes. Good stuff.

[00:49:03]Uh, and when you're not working, what are you doing for fun?

[00:49:06]>> I'm trying to be active because my job requires me to either be on the ground at a conference doing things like this or sitting at my computer for hours on end. So, try to be as active as possible, Pilates, tennis, skiing. Um, so try to try to get some activity in.

[00:49:23]>> Well, I'm with you on that. I'm in the same boat at the computer or doing this >> or doing this. Maybe next time we can uh we can do a tennis lesson. You know that that's actually it's funny. I was thinking about uh podcast themes and you know you have uh hot ones. You're eating hot wings while having an interview, right? Maybe I can introduce >> engage to get the person vulnerable because it's so spicy. But I Yeah, I think we have to keep noodling that.

[00:49:47]>> Yeah. Yeah. To come up with a good idea.

[00:49:49]Morgan, absolute pleasure. Love what's happened with the Avalanche ecosystem.

[00:49:52]Thank you so much for joining me.

[00:49:54]>> Thank you for having me.

[00:49:55]>> Thank you so much for tuning in. Please hit the like button. Subscribe if you haven't as yet. If you're listening on a podcast platform such as Spotify or Apple, please follow and leave a fivestar rating. Thank you so much.