Geoff McAlister, CEO - MiPool Technologies, on Precision Capital Management and Programmable Assets

Ajouté : 2026-05-07

[00:00:05]Ladies and gentlemen, welcome back to the Finstep Asia token bites. We are here at money 2020 Bangkok. I said 2020 a lot of times, but yes, here we are.

[00:00:14]This is my third time here and uh it's quite exciting. What we seeing this year is this overlap merger of traditional finance with decentral finance and a lot of interesting companies. Here with me is a friend Jeff Mallister, CEO and founder of Myool. We will go deep dive into what my pool is doing. But we'll also have a conversation around how a banker turn uh turned D5 person is now become an entrepreneur and what he is building to bridge tre with D5 and how that is going to be potentially one of the major things that we see being driven in traditional finance and the evolution of money. Jeff, welcome to Token Bites.

[00:01:01]>> Thank you, Mashia. Great to be here and uh money 2020 Bangkok is certainly uh certainly an impressive event. It's really good. Really good.

[00:01:08]>> And we we've done now this with the two of us. We were in Hong Kong together then >> met back again in Dubai when I was there uh on the other side of the channel and then here we are meeting here again. Uh but Jeff, you've as as talking to the audience, you've you've had a distinguished career if I may say so uh working for some of the top banks in the region both uh in uh the A&Z but also Hong Kong and the Middle East. So you've kind of seen the whole gamut of Asia.

[00:01:37]Tell us a little bit more about your career. How did how did you get into finance and what you enjoyed doing and how did you get into risk in particular?

[00:01:46]>> Sure. I guess I would frame it as as a long career, but um it's um No, it's been really good. Uh I started with Westpak in Australia.

[00:01:54]>> Yeah.

[00:01:54]>> Uh in uh working with Westpec Treasury.

[00:01:58]>> Sure.

[00:01:58]>> Uh and um >> Awesome.

[00:02:00]>> After Yeah. After >> after 4 years with Westpack, I moved to the UK.

[00:02:07]>> Okay. and uh I worked with uh various large banks in in in the UK including um City and uh RBS >> as well. Uh I was fortunate then to go to New York with RBS >> and uh this was all uh following Treasury. It was mostly risk and markets risk focus and then um and then uh moved on to Goldman Sachs uh for a while uh and then uh >> well eventually finished up my Tradfire career as a as a chief risk officer uh for a small bank in Southeast Asia and uh and then moved into crypto in 2021.

[00:02:51]So you were in in Laos at the time with the with the bank in Southeast Asia.

[00:02:55]>> Yeah, absolutely. Yeah. Next door.

[00:02:57]>> Yeah. And how is I mean I know you've gone from like one end of Apac from Australia then you went to UK and then you were in Asia but how have you seen just I won't dwell too much on this but culturally how have you seen the different you also work for >> retail banks, commercial banks but then a very high >> high-end sophisticated investment banks which are very different cultures. have been that nuances you've seen as differences both culturally from a region but also from a work perspective.

[00:03:24]Yeah.

[00:03:24]>> Yeah. It's been actually yeah very interesting the the the very wellestablished develop developed banks >> uh you know they have the benefit of being in the business for 100 plus years some of them like correct 150 years and and the >> the processes and and the knowledge is institutionalized and it builds up o over that time and it's surprising how much that that you sort of absorb that is built up over all that time >> and then then moving to uh newer, younger, less developed banks. Um you know, for example, I moved to to Abu Dhabi in 200 12.

[00:04:03]>> Uh and and that was really working with a bank that was really growing fast and rapidly and becoming very much a a global best practice sort of bank, but it it was lacking that 100 years of of sort of experience. Um but they they sort of brought that in and uh yeah it was and it was very much a building job.

[00:04:27]So working for the newer banks is actually kind of um a bit entrepreneurial cuz you're building >> correct >> building. So it's actually I found that more >> more interesting in many ways.

[00:04:41]>> And again that's just one of the things that people sometimes forgets that banks are also of different sizes, shapes and age, right? or and uh uh quite a few times there is this conversation around entrepreneurship and being entrepreneurial but there's also [music] entrepreneurship where when you are and that's something I've had as experience is joining newer teams or uh younger teams and then you're growing and it's very entrepreneurial and you of course you have your governance layers and decision layers but still in terms of building you do have that flexibility [music] to own it right I think ownership becomes significantly more >> definitely in the the the newer younger banks there's a lot more opportunity [music] to to to own it and and bring your experience from from other places.

[00:05:22]>> Yeah.

[00:05:23]>> Over. And how did you bring that experience from banking into digital assets, crypto?

[00:05:31]>> Yeah.

[00:05:32]>> Blockchain, whatever you want to call it now. I mean, it's all merged and blurred, but what attract what attracted you to the at that time the crypto rodeo? Although the firm you'll talk more about it, but they went in the rodeo. But yeah.

[00:05:44]>> Yeah. So, no, look, I I became interested in in crypto sort of pretty early, but I didn't step in until like on a permanent basis until 21.

[00:05:55]>> Sure.

[00:05:56]>> Um I started on a personal basis playing with it a little bit in 2018.

[00:06:01]>> Okay.

[00:06:02]>> Um >> the ICO just a little just a little bit.

[00:06:05]But um >> uh I mean I found so initially with Hex Trust I was head of head of uh group risk.

[00:06:12]>> Yeah. And uh in terms of bringing over from tradfi there it was probably [music] you know risk appetite sort of framework and defining these kind of things. Uh and then then I was um head of markets uh as well. Um and again it sort of bringing in some of that sort of institutional uh structure and and discipline I guess.

[00:06:36]Yeah. And what what are your general thoughts on you know digital assets the key differentiator you saw from like not just I'm not talking about culture but from an asset perspective operational perspective hexrust at the time you joined was primarily a custodian right and then when you became head of global markets was expanding into broker dealer and other elements of uh of the capital markets world and digital assets and how did you see that move right custody is is a very strong, highly governed, highly restricted uh and it's almost like one service one product [clears throat] and then you go into global markets which has a very different goes back to the uh more so traditional finance investment world in some senses. So >> yeah, look, I mean firstly uh firstly the 24/7 broker dealer service is is is a very real >> uh uh challenge. Yeah.

[00:07:32]>> Uh to manage uh the resources uh to to manage the team across 7 days uh so that you know you're replying to a client within a minute.

[00:07:44]>> Um 24/7 100% 100%. So you've got to be staffed and rostered. So people still want to get two days off a week.

[00:07:54]Correct.

[00:07:54]>> But um it might not be Saturday, Sunday.

[00:07:56]It might be Tuesday, Wednesday. But that's actually a real something that that banks are not used to managing.

[00:08:03]Very true. So that's something you have to sort of uh work out.

[00:08:06]>> Yeah.

[00:08:06]>> Um everything else there's a lot of similarities with with the global markets business in traditional banking, you know, products, you know, clients, services. uh it's in the end it's about serving the client and and delivering the best product that suits them and and the best execution you can you can manage.

[00:08:24]>> I think that's also you you touched upon the term best execution and and while we were at when I was a part of the team at VA and when we the rules were being built out one of the key elements was >> bridging this governance good frameworks that exist in traditional finance which have been lessons learned. Sometimes we feel you know a lot of the crypto was very opposed to the way traditional banking works and legacy saying it's very old school you know doesn't fit in here but there are all these things you think of like best execution a classic example that's been learned over decades of saying okay how do you do the best fork in your customers and users ensuring best governance is best execution you have to find it and that's a fiduciary duty and a regulated duty for you which is now being brought into crypto as well earlier it was not necessarily It was more >> self-governed, let's put it that way.

[00:09:18]But now it is a regulatory requirement as well, right?

[00:09:20]>> Yeah. No, that it's essential. Um, yeah.

[00:09:24]Yeah, look, I mean, I think I I was excited to move into crypto and I knew it was a young young market, but I I was still, you know, fairly surprised at at still how immature it was, especially in like 2022.

[00:09:38]>> Mhm.

[00:09:38]>> Um when people were falling over left, right, and center um with with with basic basic things that they weren't doing right, you know, >> and most of it was risk, right? And we're talking about Terra Luna to begin with. That's where it's about not managing >> uh or projecting what risk could be there and the impact thereof. So a bit of hubris, a bit of mismanagement and then subsequently FTX with governance and again uh rolls into risk and you've been in risk for a while and how >> how did you build that framework in uh in hex trust but also we'll we'll talk about my pool very soon but how did you build that into okay the regulations are at X >> but in reality you need to be 2x 3x >> of that so how do you build the head >> and and and just as an addition to that we spoke about 24/7 7 in traditional finance it's at in most cases it is at best 235 and I'm talking about the futures world and you know like CME and ICE and etc who do operate 23 five or 22 and a half [clears throat] and five >> uh but none of them are and maybe FX markets is the closest you get >> 6 days a week >> 6 days a week so you still don't have it so how do you manage this risk at all times of y >> and especially when you're in one region and can have a cuz the same product unlike say you're trading something in the US it's a US product may not impact Asian markets and vice versa but this is a product that has roots globally >> and it keeps going 24/7 in most of the major crypto >> activities so no there was a couple of points there but but >> and and and actually yeah I mean I was bringing in what I had experienced and and learned from from the tradfire world which and what I had implemented there >> uh in terms of defining a risk appetite and getting that sort the framework and the boundaries for for the firm's appetite. Sure. So like approved up front and and so that you know you know what the rules of the game are and where you can play and and then when when you need to >> for a client you maybe sometimes you need to do a bit more than what's already agreed and there's a clear escalation route in terms of how you get that get that approved or not.

[00:11:50]>> Um so that's that's important and that's something I'd implemented at other banks in in Tradfi. Yeah.

[00:11:56]>> Uh, in terms of running the the book, a global book, um, yeah, again, it was very much something I'd experienced way back at at Westpack on the FX desk at Westpack and you again, it's it was a six day >> book if you like. uh but that that global book where you hand over from from one desk to another desk in another region to another desk and there's there's a handover process and >> so yeah literally just sort of implement that within within um the the market's business. So you hand over the the ongoing trades and and orders that are being worked and the status so that there's like a formal handover process from each each shift to the next shift.

[00:12:39]Yeah. And I guess that's now what we seeing as a move is earlier predominantly when you were dealing and correct me if I'm wrong but it would largely be cryptonative funds cryptonative trading companies etc. [clears throat] not too many traditional finance institutions coming in but now you're seeing that merger and we'll come to my pool as well on that and so how are you seeing that evolution of blockchain cryp I mean digital asset >> based products >> in entering into the merging with the I won't even say entering it's merging with traditional finance five convergence is >> uh is there there's probably element of regulations but you know there's also the McKenzie report when looking at the banking uh the annual banking report which is >> is a must read for those who don't gives you a very good outlook of global uh banking status but also trends would love to hear and I know you do uh have some points around that but yeah so how are you seeing that convergence as you rightly pointed out and uh what are the numbers we're seeing as well yeah >> so look I'd say yeah convergence is 100% the right word the the the McKenzie global banking annual review as as from 25 as Mushia said. Yeah, as you said, >> I um yeah, it's a really good report. Um I mean for for my pool, it's it's sort of uncanny how it aligns to to what we're doing, which we can go into a bit later. But I always I've always believed I mean for for many years now that the the the whole value layer of the economy is coming online via sort of blockchain DT enabled infrastructure. So that that the whole value layer is coming on like everything. Uh so I've been sort of a big big believer in that for for quite some time and um yeah and I was surprised to see that no one was really really tackling uh the mortgage market and which is a huge huge market uh that will benefit a lot from from the efficiency gains of of coming onchain >> and uh so yeah so that's what we're doing now but it's it's the whole value layer is coming on >> and if converses and you then took the plunge into entrepreneurship. you were you've been entrepreneurial for a lot of your career as you've mentioned and when you're working for a growing startup now a pretty big scale up that's also a lot of leadership and entrepreneurship but >> going all in on your own right u is as in it's a bit like as I said jumping into the pool the first time or or you may have been like into the deep end >> into the deep end yes uh I don't swim but I just float about uh but how how was that how did you take that plunge as it were yeah Look, uh the opportunity is just too good to ignore and there's there's so much so much benefit that can be gained by doing this. Um and uh >> it's important to have strong support from the family.

[00:15:45]>> Agreed.

[00:15:46]>> Essential.

[00:15:46]>> Yes.

[00:15:47]>> Half tip to my wife.

[00:15:49]>> So, so that's critical. And um yeah, it's it's it's great to be in a position to to to take this forward.

[00:15:58]>> Yeah. And how are how's that experience been so far as as an entrepreneur?

[00:16:02]>> So >> building I mean I I wouldn't change it but uh it's it's certainly comes with some frustrations in in terms of >> you want everything to happen [snorts] yesterday.

[00:16:13]>> Yeah.

[00:16:14]>> And um and things just move slowly, right? So uh especially you know when your clients are large financial institutions effectively um those conversations and and getting to the right people in in the organization uh to get to the decision makers is is obviously you know takes time >> and playing on the pun you know Xiaomi is little rice right uh but here we have my pool which is not me poolool but it is again bite-sized mortgages in a way would love to hear what is my pool and what are you >> bringing to the >> to the house as it [laughter] >> okay thanks um yeah I'm sure many people in Europe will probably call it me poolool cuz that's what Europeans do but yeah my pool is mortgage investment pools >> okay >> so uh we're working with banks to tokenize mortgages to to enable them to distribute ute those assets onchain so they can recycle mortgage capital onchain. So our MVP is effectively a web 3 alternative to the mortgage back security.

[00:17:29]>> Yeah. Now I'm going to bring three things and I and we can go one at a time probably. I think the first thing is for people to kind of understand how is this structured as such right this this is web 3 is it crypto because quite often when we talk about tokenized assets people >> mix the two or confuse the two uh say bitcoin versus uh real world asset tokenization which is what you kind of doing. So one would be let's start with that and I'll follow up with a couple of other elements about the the model and structure. Yeah.

[00:18:02]>> Yeah. I mean, so it it yeah, real world asset. It's it's I mean, people refer to CDI. I mean, you might call it hybrid DeFi. I mean, >> sure.

[00:18:13]>> It's it's not DeFi.

[00:18:16]>> It's um very much sort of gated so for professional professional investors.

[00:18:22]>> Yeah.

[00:18:23]>> Okay. Um there is a way that retails retail will be able to participate via licensed regulated funds that invest across the asset class.

[00:18:32]>> Understood.

[00:18:33]>> But that's a later step.

[00:18:36]>> Uh so yeah it is it is not DeFi. It is very much a a a infrastructure layer orchestration layer to to support the banks uh and enable them to manage this asset class on chain. So there are some autonomous components.

[00:18:55]>> Uh we have a proprietary um engine uh Wade waterfall automation dispersement engine.

[00:19:02]>> Um and so that that that manages a lot of the lift uh on chain >> uh because as as you mentioned with the MI Xiaomi uh little rice analogy, >> the mortgages are being uh tokenized but they're also being uh fractionalized. So uh for every dollar of principle that's outstanding uh there's one mortgage participation token minted. So you can have basically a syndicated loan format where 10 investors can buy 10% each of the one mortgage.

[00:19:39]>> Sure. uh or you can have a a fund that can buy 10% of a thousand different mortgages uh to to to get a nice diversified portfolio and they can construct it with >> specifying their risk appetite or or in terms of LTV um uh duration yield uh geographic distribution and and borrower profile and so on. Yeah. So it's all model of blocks that people can pick and build, right? So and just for the audience who not as familiar, Jeff made a very important point about tokenization and fractionalization, right? So when when we're considering real world assets or any assets that are brought on chain, meaning representing those assets on the blockchain with investment rights, potentially legal rights as well depending the regulatory [clears throat] framework. That's tokenization step one. Now that can then be broken into multiple parts. That's where fractionalization comes in. But it's not necessary that all tokenization leads to fractionalization. But all fraction, you know, you fractionalization of real world assets on the blockchain is tokenization. So you could have a whole one full mortgage without breaking it up as one single token if someone wanted to do it. If you wanted to do it and now >> why would somebody want this?

[00:21:00]>> Why?

[00:21:01]>> Okay. So I'm going to the second question was yeah >> I'm not play going to play devil's advocate but I'm going to bring in the question a lot of people have which is >> I started my career 21 years ago as a trader in futures market trading euro dollar futures that does not exist anymore largely it's a futures for figuring out the uh US dollar overnight rates right they they've renamed that now because of other reasons but that was one of the largest interested markets in the world which determined >> the base for mortgage mortgage rates especially in the US >> and mortgage back securities and structuring of that and then basket >> you know putting [clears throat] them in a basket and selling them >> has been uh largely credited with causing the global financial crisis >> uh because of the way it's illquid there's there's a bunch of different things right so when people look at this and they okay again one you're packaging them together then you are tokenizing this are you making it more complex. Do people understand this? Is there a chain effect if people start selling this? You know, all these questions come up. So, it would be great to hear and you've been you were at the thick of it at that time as well. So, you very well understand where people are coming and everything digital assets usually seen as more risk, higher risk. So, how does that very differ from >> No, no, completely. Yeah. 2008 was interesting. I was at Deutsche Bank in uh market risk >> at the time. So it was um certainly an interesting experience but I mean I would I would take some issue. Yeah. And I know a lot of people kind of point fingers point fingers at the mortgage back security process for 2008 but it was really you know it was really before that it's it's kind of crap in crap out right so it was the ninja home loans that were really the problem. I mean, the fact that that mortgage back securities enable banks to to package mortgage debt and and sell it and recycle capital is is a is been a really important innovation um to support banks in capital management. And uh I mean it's still super important market. It like today in the US you have about 1.5 trillion >> uh a year in in new mortgage back securities issued every every year. Uh so it's not something that that has gone away.

[00:23:23]>> Sure.

[00:23:23]>> It's still a critical piece of the banking market.

[00:23:27]>> Sure.

[00:23:28]>> Uh but it does have a lot of room to improve. Uh and um one of the issues back then was was and it still is today is transparency on understanding understanding the performance of of those mortgages in in that um basket that's being securitized. And maybe I don't know. So just to quickly go through that process, you know, the banks, >> the traditional mortgage back security process is is batched.

[00:23:56]>> So you have to >> basically build up 500 million or a billion dollars worth of mortgages uh to make it worthwhile cuz it's expensive.

[00:24:05]>> Yeah. uh and and that that takes time to build that up and then establish a dedicated SPV for that particular batch and and governance around that and then issue the securities and distribute the securities and and it so there's capital sitting on the table for this whole time and and >> it can take sort of 2 months up to 6 months to to to originate and distribute these these mortgage back securities which is capital sitting on the Um so that's sort of one area that can be addressed to compress is is to reduce that time.

[00:24:41]>> Uh the other area is uh cost.

[00:24:44]>> It's it's quite expensive uh over the life of the the asset. Yeah. uh and and you know and it varies from across the quality of of assets but it can be sort of you know uh towards towards you know towards 200 basis points over the life [snorts] of of the weighted average life of the of the securitization structure >> and I'm just I'm going to build on that transparency piece and then that's what blockchain brings but of course there is ways of masking >> personally identifiable information be for institutions or individuals >> but you do see transactions happening and the you know you you get the at least a look at where what are those mortgages what do they represent and it's real time everybody who's involved in the process probably will have that not necessarily outside now there were two elements which one of besides >> um you know crap and crap out as as as you put in uh >> uh sec co we can call it that uh the other challenges that bec that we saw with uh MBS's in general and on top of that was you know CDS as well collateral debt uh secretization or securities credit default swap sorry credit default swaps my trading is getting away from you myself for correcting me you had the swaps on top of that to cover the risk >> was liquidity right and one of the major >> elements or some call it a challenge some call it a hurdle and some call it market reality is with many real world asset tokenization be it bonds be it property etc >> I won't I will talk about the legalities and other elements first but second the major challenge seems to be the primary market's fine like when you do the primary >> it's people are looking at it as purchasing the underlying >> right so okay so property yes we'll purchase it it's primary the people who are real estate investors will be interested others challenge starts coming in for secondary market, right?

[00:26:50]And that is >> where the capital lock in solved to a certain extent. You're break, you know, fractionalizing it. So, okay, more liquidity at issuance.

[00:26:59]>> But what about the secondary market? So, how do you see my pools >> tokenized mortgages and for investors who purchase these?

[00:27:09]>> What is the pathway to a fairly liquid secondary market? Because when you don't have a active secondary market >> and if there is pressure in the market due to various reason that's what happened >> and I mean Leman >> essentially had a lot of assets but they were not liquid enough for them to be able to >> fund their margin calls etc in [clears throat] time and that's led to the bankruptcy and then the whole chain reaction right >> and you have and then the market just crashes. Uh so how are you seeing the evolution? I'm not saying it's there yet, but I do want to think that'll be a concern that people will want.

[00:27:45]>> Yeah. I think I think and obviously in crypto we're used to seeing sort of liquidity challenges and and massive price drops.

[00:27:54]>> Yeah.

[00:27:55]>> Um uh that that swings are massive which which can can be pretty crazy. Uh I think with the RWA space at least if it's properly structured.

[00:28:05]>> Sure. uh you know they are anchored in in a real world asset which has real world value and and depending on the asset real world cash flows >> right so uh to to the extent that that >> they become liquidity challenged in the market I mean there's a huge opportunity for for market makers okay >> uh to to come in and um put a little bit bit of balance sheet on the and and and and support and buy at a discount uh these sort of mortgage participation tokens. So, >> and how would you know the the banks manage their risk? You had credit default swaps. Would that still be something that would happen now for my pool uh based mortgages when somebody else say I mean it's always a lot of banking products or investment products have two sides to most people think it's only for the upside but typically there's a coverage and there's a hedge and you know that's why you have insurance as it were right a hedge is a insurance how would people and my understanding may be limited of that space per se but how would people cover their liability and get this hedge uh if they need to >> on on the credit risk >> on the credit risk of would it be still the underlying standard one that they had from before or would they be you you >> you envisage [clears throat] a newer evolution >> most of the credit default swap market was you know sort of really I'd say largely on named entities >> um >> you know I don't know to hand how how much of it was on individual mortgage back security issues >> but um certainly you know in terms of the bank I mean they >> they're selling the exposure correct so so >> the investor who buys the mortgage participation token >> correct >> is is buying the full economic performance >> of that asset so so that means uh prepayment risk uh so if somebody prepays the loan early you your your duration is suddenly sort of reduced from you might have expected it to be longer is going to be reduced Having said that, you also receive the prepayment fees >> flow through and then the default risk um to the extent that there's uh a default in one of the mortgages then then the investors that's holding the mortgage participation token is you know is on the hook for that that default.

[00:30:42]>> Correct. they they do get a governance process where they become uh the title holder of the underlying collateral via via a deed NFT.

[00:30:53]>> Okay.

[00:30:53]>> And then then they direct the work out of the loan and the liquidation or actually the pool holders can even decide to extend a grace period as as well. But you have the full economic performance. You own it. Um and yeah to the extent that that that there becomes distressed assets there'll be a market for distressed assets as well which is again is another really interesting opportunity for market makers um for for an asset that is anchored in some real world value right um even even if the cash flow has has temporarily stopped because the the borrower is in trouble >> and you you touched upon the legal deed as such right It's one of the elements a lot of people talk about when it comes to tokenized real estate. Let's just stick to that for now. Um, >> so you have the >> as long as the transaction is >> on the blockchain, right?

[00:31:54]>> I wouldn't say digital, I'm going to say on the blockchain specifically.

[00:31:58]>> It's all fine. You [snorts] settle it, you get things done. But now there is this off-chain element, right?

[00:32:04]>> Which is two parts. one being where are you seeing and Dubai's been running a bunch of uh PC's with Dubai land working with VA and >> and a couple of players in tokenizing uh properties and then of course bringing in the legal framework that supports >> that digital twin as it were of that property to be uh cuz here it's mortgage is a layer above that because you first is the investment liability and then but typically the mortgage is backed by the underlying home Right. And that's if that value changes etc. you know uh when you do have when something >> you have to sell the property. So long story short, how is there now a mark uh ability for saying this say a fund comes and buys uh whole myole of a an area a block of towers right which have about a thousand mortgages >> per uh say thousand one surve >> and then >> they're selling that to their investors from additional investors LPS But in this case the mortgages go bust or whatever right.

[00:33:20]So now will they get legal ownership of the property uh onchain or I mean uh onchain yes probably but what happens offchain is that we seeing the legal framework ready for that right now or it is then you're just an a joiner to the claims on the once it's sold and it's somebody else who owns the title deed as it were.

[00:33:41]>> Yeah. So I won't I won't >> sorry I'm getting too tech maybe a bit >> it's fine it's fine I won't go into the full nitty-gritty of the of the complete detailed structure but uh I mean the UAE is is a really good sandbox uh for this cuz the as as you know and we're also partly responsible for the the the the regulatory uh uh framework in the UAE is is quite advanced I I guess I would I would say the most advanced in the world uh so uh and and we there's a number of options you know there's VAR there's DICc DFS SA um and and they have a like a sandbox environment uh ITL the innovation testing license environment >> and then there's um there's 80 ADGM and FSR right >> uh so and then there's the there's national Gregs coming in as well now with ESA and so on so I mean there's there's we're kind of blessed blessed with with a few different paths that that we can decide to to employ >> and um so yeah the framework is is ready and the the the legal structure I mean DFC is obviously a worldrenowned uh market with with an established legal framework that is is >> it's common law framework >> very close to English law so >> so um it's it's a perfect place for for this sandbox to happen [music] >> to to bring mortgages on chain >> uh I think yeah Right.

[00:35:10]>> Okay. So, we are >> it's evolving. It'll it'll probably bring in come in soon, but this is a lot of it is going to be digital asset based >> transfer of ownership and liabilities to a certain extent.

[00:35:22]>> Yeah.

[00:35:23]>> Uh I know look a lot of these models are things people would have thought about 5 10 years ago and there is this [clears throat] evolution. It's I think very important is >> as we evolve the structures also come in. It's foresight is not always going to be possible for >> because a lot of time with regulators and especially when they're very established regulators, people forget that it takes sometimes 2 3 4 years >> for a change in law.

[00:35:49]>> So when there's okay here's an innovation that's coming up. They can think about approaching it but changing the law won't happen till they actually see >> practically and I think that's where the rest of the regulators >> are are evolving and we'll see more conversations around it. I want to take this forward in terms of what next right uh in terms of people how do you see Michael uh how do you see you've you've been speaking to some large financial institutions as well both in the Middle East UA in particular but also here at money 2020 having those conversations >> uh I without naming the bank a very large bank yesterday when we bumped into them I actually found that very refreshing where the person when they >> heard about what you were doing they were like oh yeah this is very interesting let's have a chat. They're very traditional bank. Yes, they're doing a bunch of tokenized stuff, but for that very openness to have that conversation for me was a a wave change to even two three years ago. Right. I attribute that.

[00:36:43]>> Impressive to see actually, isn't it?

[00:36:44]Yeah.

[00:36:45]>> I also attribute it to regulators uh in in in particular in the region Hong Kong, Singapore, UAE who have shown the willingness to put time, effort in understanding these products and building regulations in around it, right? which then encourages >> traditional finance participants to come in because they're regulated and they need to touch only regulated >> elements largely speaking. So how are you seeing as as >> as you go into these conversations? What are they loving about it? What do they want changed about it possibly?

[00:37:17]>> Okay.

[00:37:18]>> So uh I guess if you're not early, you're late. [laughter] >> So So um you're 100 100% right. sort of 5 years ago um even sort of three two years ago I'd say >> I'd say the the market wasn't ready >> uh for this but I I think the market is ready now I mean we're certainly >> probably early as in the the only project I know that that's working on this at the moment >> but um >> yeah if you're not early you're late so uh I think we're getting the timing right and you saw some of the traction uh with that bank uh being very interested in open and and happy to to take it forward to explore and that's a big traditional bank.

[00:38:02]>> Uh so uh in the UAE uh the banks again I would say are quite progressive with with looking [music] at digital assets and digital asset solutions. They've got many live use cases. There's multiple approved regulated stable coins in the UAE.

[00:38:19]>> Uh there's there's multiple banks that have crypto trading in via their wallet.

[00:38:26]>> Correct. right via their mobile banking app.

[00:38:28]>> Uh so they are quite advanced and forward thinking and forwardlooking and I I would say you know hats off to them.

[00:38:37]They're they're moving compared to other global banks at a pretty pretty good pace and there certainly uh has been some strong positive positive interest in that. We're in sort of fairly deep structured discussions on the pilot >> now and um looking to identify the bank that will join a pilot where we tokenize >> $50 million of mortgages and and then they'll be sold and to uh a tier one global investment manager that we're we're talking to.

[00:39:11]>> Sure.

[00:39:12]uh and and managed across my pool in terms of the the loan orchestration and life cycle management. Uh but so yeah, they're it's slower than we would like, but but they're they're 100% really really interested and and going through a very full formal due diligence committees um all the way >> uh to to look at doing this >> much faster than we used to see fintech a few 10 years ago, right?

[00:39:40]would take a year, two years just to do due diligence, but now you're seeing at least the structures are all in place thankfully due to what fintech brought in where you do have the structures.

[00:39:48]>> You're right. Yeah. They've got these kind of innovation labs established and teams that are established to to look at and assess these kind of projects.

[00:39:56]>> Correct.

[00:39:57]>> Yeah. Um but uh I've c certainly seen some very you mean you saw the interest from that one >> um >> one one big bank. Uh I saw some strong interest today from a bank uh Philippines bank sorry yesterday.

[00:40:10]>> Yeah.

[00:40:11]>> And also from another um uh from a large American bank uh yesterday as as well.

[00:40:17]>> Okay.

[00:40:17]>> Uh and u you know we're also talking to a large UK bank just to to to very early stage. Um but but there's there's interest. There's definitely >> okay >> I think the time is right there's appetite. Having said that, um there's also the non-bank issuers. So the the sort of or fintech mortgage providers that >> or even just the pure home financing, home loan.

[00:40:43]>> Exactly. Right. Yeah. So and a lot of these guys at least in the US or in Australia or or Europe, they do have the model to originate um and then distribute uh just to originate, distribute, originate, distribute. And so uh we're we're going to start talking to these guys soon as well.

[00:41:03]>> Okay.

[00:41:03]>> And I expect they will probably be a bit faster to move.

[00:41:06]>> And I I just reiterating the point and correct me if I'm wrong. Essentially when it comes to my pool or the infrastructure layer for tokenization of the mortgages, >> this is the mortgage is owned by the banks sold to >> professional investors.

[00:41:24]>> My pool is not the investment platform per se. it's white labelled or it's the infrastructure layer.

[00:41:30]>> Yeah, you can think of it as a as as a loan management system on chain >> that that that orchestrates the or or onchain servicing platform for automated service automated servicing platform for the for the tokenized mortgages and the whole life cycle management. So, but there's there's kind of a bigger a bigger picture that that's moving to >> and that is basically lifting up what I call isolated repetitive infrastructure that exists in every bank.

[00:42:04]>> Yeah.

[00:42:05]>> Uh that in this case is a loan origination system or which is the whole life cycle management of of the mortgages for example. Yeah, >> but lifting this onchain basically enables it to become a shared infrastructure >> for the for the industry, >> right? So, and I think this is a theme that will happen going forward that a whole lot of the the guts of the internal IT infrastructure and and platform solutions within a bank >> Yeah.

[00:42:41]don't need to reside entirely within every single bank. Um they can be lifted up on chain and become shared infrastructure for the industry.

[00:42:49]>> I do see I think it's an important point. You will see a lot more of these shared services and you of course have the challenges of crosschain management which all coming in [clears throat] uh evolving in parallel. So before we close what's if you had to say in 3 years time where do you want my poolool to be and where do you want the uh ecosystem to be uh with my pool?

[00:43:09]>> Yeah. Okay. So, uh basically the MVP which is the which is the web 3 mortgage back security equivalent in 3 years time will will be >> live and running in the UAE and um a couple of other markets uh including the US.

[00:43:27]>> Uh that's the MVP. Then there's the the the core which is the the full loan life cycle >> which which enables primary loan origination on chain.

[00:43:39]>> Okay.

[00:43:39]>> Where the bank can use its tokenized deposits >> to extend to its client uh a mortgage and the bank retains all of the client facing uh and relationship. Uh it it's just using the platform as infrastructure to extend its tokenized deposits to fund your mortgage. Um so that'll start happening as as well by then. That should be live as well by then.

[00:44:03]>> Um and ultimately it moves to like for for bank capital management going back to the the uh McKenzie global banking report from last year where they really focused on precision capital management. Yeah. and and my pool enables exactly that for the mortgage book that that would basically have programmable mortgage assets and and this will ultimately lead to programmable balance sheets >> that is an exciting element to look at programmable balance sheets it's uh >> it's it's a way we're moving forward as I say it's the convergence the blurring of the lines and the way forward and >> as I've said recently for a lot of things in finance most People look at like a watch three hands don't understand there hundreds of parts underneath or maybe are not very aware and same thing needs to be for use cases when it comes to blockchain. People need don't need to worry about keys and phrases and you know crosschain etc. They just need a product at the end of it and that's right >> that's what it matters. you we had a you had a more if I can use the term mechanical watch and then you have uh Apple watches still show time and that's what they want so show us the money as it were. Uh Jeeoff this has been a fascinating conversation. Thank you so much for joining us and we will have you back in a few months time for sure to know what what's been the progress and not just with my pool but how is the industry evolving on on this. So uh byte-size mortgages it is in tokens. Uh thanks once again >> ladies and gentlemen follow us for more such conversations from money 2020 and beyond as we bring in founders and CXOs who are at the cutting edge of finance and money and to a certain extent AI as well. So from Bangkok signing off click like follow and subscribe on our channels and thanks once again to our guest Jeff Mallister. Cheers. Thank you.

[00:46:06]Thanks.