'Ondo Global Markets Will Do For US Equities, What the Stablecoin Did for the US Dollar' | Markets Outlook

The latest price moves and insights with Ondo Finance Chief Strategy Officer Ian De Bode. To get the show every week, follow the podcast here. Ondo Finance launched Ondo Global Markets on Wednesday, a new platform offering fully backed, tokenized U. S. stocks and ETFs to investors worldwide. Chief Strategy Officer Ian De Bode explains how the tokens provide direct, on-chain exposure to U. S. assets, making capital markets more accessible, transparent, and portable for international investors. De Bode joins CoinDesk's Jennifer Sanasie to discuss the launch. This content should not be construed or relied upon as investment advice. It is for entertainment and general information purposes. - Midnight is introducing a novel approach to token distribution. The Midnight Glacier Drop is a multi-phase distribution of the NIGHT token, aimed at empowering a broad, diverse community to build the future of the Midnight network. Holders of ADA, BTC, ETH, SOL, XRP, BNB, AVAX and BAT are eligible to participate in the first phase. Help usher in the next generation of blockchain with rational privacy and cooperative tokenomics on the Midnight network. To learn more, visit midnight.gd and prepare for the Midnight Glacier Drop. - This episode was hosted by Jennifer Sanasie.

• 0:00Speaker 00

  There's about 400 million people out there, primarily outside the US, who have a crypto brokerage account. I think if we can convince a lot of those people who hold a crypto exchange account, but then do not have access to US stocks just yet, even if we get a couple of percent of them to actually adopt these stocks and ETFs, I think that would be a huge success.

• 0:27Speaker 01

  Ondo Global Markets launches today. The platform represents a quantum leap moving beyond debt instruments to offer on-chain tokenized versions of over 100 US equities and ETFs from Apple on to SPY on to investors across Asia, Europe, and Latin America. Hey, everyone. Welcome to Markets Outlook on CoinDesk. I'm Jen Sinasi, and today we're joined by Ondo Finance Chief Strategy Officer Ian DeBoe. Hey, Ian.

• 0:54Speaker 00

  Hey, Jen. Thanks for having me. It's a pleasure to be here.

• 0:57Speaker 01

  It's a pleasure having you. This announcement is something that I think the folks at Ondo have been teasing for a while, Ian. The last time you, the last time you and I spoke, you said that Ondo is going to do for equities what stable coins did for the dollar. I think that's the perfect place to start this conversation. Tell me a little bit about what this enables. And if you could do a little compare and contrast to what stable coins enabled for the dollar, I think the audience would appreciate that.

• 1:26Speaker 00

  Oh, 100%. Yes. Thank you, Jen. We're very excited to finally launch this platform. As you mentioned, we fundamentally believe that Ondo Global Markets will do for US equities what the stablecoin has done for the US dollar. And essentially, a lot of that is about global access to the asset, first and foremost, in a very seamless way. A lot of people globally that do not have access to the US dollar have figured out that a stablecoin is a very good way to get access to that asset. In a very similar way, our Ondo Global Markets platform is tokenizing these stocks, meaning that we put a token on-chain that represents the economic exposure to the stock. That token is fully backed by the underlying stock or ETF. And in a similar fashion, like a stablecoin, we

• 2:10Speaker 00

  Make that available on on-chain rails, on blockchain rails. We're starting on mainnet Ethereum, but we'll soon expand it to multiple networks so that anyone globally who has found a way to be active on-chain via a Web3 wallet or a crypto exchange account is going to be able to access these assets that really have been a incredible engine of global wealth creation for a lot of people. But with on the global markets, we really aim to make that accessible to a global audience.

• 2:39Speaker 01

  Midnight is introducing a novel approach to token distribution. The Midnight Glacier Drop is the first in a multi-phase distribution of the night token aimed at empowering a broad, diverse community to secure the future of the Midnight Network. Holders of Ada, BTC, ETH, Sol, XRP, BNB, AVAX, and BAT are eligible to participate in the Glacier Drop phase. Help usher in the next generation of blockchain with rational privacy and cooperative tokenomics on the Midnight Network. To learn more about the Midnight Glacier Drop, visit midnight.gd and claim your night. Tell me a little bit more about it being fully backed by that actual stock because, correct me if I'm wrong, I feel like we've heard of similar products, but the on-chain

• 3:24Speaker 01

  equities haven't always, it hasn't always been clear if they were backed by that actual stock. So I'd love to dig into that a little bit deeper.

• 3:32Speaker 00

  Yes, very much so. Not all models are created equally. Not all tokenization is created equally, as we like to say. We fundamentally believe that the best way to tokenize something is to actually back it one for one. And not just one for one, but also have a meaningful collateral buffer on top so that when people hold a token on-chain, they can always be assured that they have the ability to redeem that token against the cash value of the underlying and not have to worry about these things being unbanked. As you mentioned, other companies have large tokenized stocks and ETFs in the past, but typically these things are really derivative products, meaning that they represent synthetic exposure. The token is supposed to track the

• 4:13Speaker 00

  value of the stock. A lot of the issuers don't back it with the underlying, so you're taking quite a lot. A lot of credit risk, counterparty risk when you hold a token like that against the issuer. Our model is very different in the sense that what you're holding really is a tokenized product that is fully backed by the underlying as well as a large collateral buffer. And users of our tokens, investors also have a lot of investor protections. We have agreements with third parties that actually check our accounts to make sure that we are holding all of the underlying. They will post daily attestations that are accessible to everyone. So we're taking a very transparent approach with the best in class investor protections that are available on chain.

• 4:56Speaker 01

  I want to get to why this is such a big deal in markets outside of the United States. But let's take in the U. S. For just a second. If I am someone who wants to invest in stocks, what's the benefit for me to opt for a tokenized equity over the more traditional way of getting an equity?

• 5:16Speaker 00

  I really love that question. It's the number one question I get. A lot of people can conceptually understand that tokenizing stocks and ETFs is helpful for a global audience. But then what about in the U. S.? Even I think in the U. S. Tokenizing an asset and or, you know, a stock or an ETF can be helpful. Because a lot of people in the U. S. Have a brokerage account, but they are locked into that specific brokerage accounts. And not all brokerage accounts are created equal. I am very fortunate in the sense that I have two different brokerage accounts. One has to trade for five trading, the other one does not. On one brokerage account, I can take margin, but I can only reinvest it in more stocks. On the other brokerage account, I can take it off platform. The rate I get between the different platforms is very different, but I can't really shop it around.

• 6:00Speaker 00

  I can't easily move my assets from one account to the other. And then on top of that, I need to have a crypto account to hold all my crypto in because a lot of these brokerage accounts still do not accept crypto. So even for a U. S. Audience, tokenizing stocks and ETFs can have meaningful benefits because essentially what you enable is to transfer assets between the various brokerage accounts and to have one single account where you can have both your stocks, your ETFs, all of your other U. S. Capital Markets products, but also your crypto in one place. So it significantly has. Is the mobility of the asset, where you can send it to, the utility of the asset, getting different margin rates, you can essentially shop it around in DeFi. So we do believe that the tokenization of securities has meaningful benefits for a global audience.

• 6:43Speaker 00

  The platform that we just launched, to be clear, is only available to non-US investors in the primary market. But we do fundamentally believe that over time, it makes a ton of sense to tokenize all stocks and ETFs. And we're working with the SEC to also come up with the US version.

• 6:59Speaker 01

  Thank you for fueling my curiosity there, but let's get back to the product at hand. Walk me through how a user in, let's say, Asia can mint and redeem SPY on or Apple on when US markets are closed.

• 7:14Speaker 00

  Yeah, so we have architected this in such a way that it is possible for a user directly onboard with us and then into and burn the assets from us. We have also taken a distribution approach where we partner up with a lot of the crypto native distribution venues to make these assets available on those venues as well. So specifically, what does that mean? People can go to one infusion, they can go to CowSwap, some of these other, you know, DEX platforms, as well as on a lot of the crypto exchanges to actually acquire these assets and all have their stocks in crypto in one portfolio.

• 7:48Speaker 01

  I mean, you've been working on this for a long time. Talk to me about your ideal first wave users. What do those customers look like?

• 7:56Speaker 00

  Over time, we would hope that truly a global audience figures out that tokenized stocks and ETFs are a seamless way to get access to US capital markets. We do expect the initial wave of adoption really to happen with the same audience that is using stablecoins right now. It is very easy to understand that if a stablecoin gave you access to the US dollar, you can now use that stablecoin and get access to US capital markets through a wide variety of these ways that are just described. So we do expect the initial adoption cohort essentially to be the stablecoin users. Over time, we quite frankly, expect a lot of the, almost call it the web two brokerage businesses, the web two fintechs globally,

• 8:37Speaker 00

  to migrate to these on-chain rails because quite frankly, a tokenized stock ultimately, we believe, will be a better version than the traditional stock in a clearing broker account.

• 8:47Speaker 01

  All right. And the last thing I'm going to ask you is if we're looking into the future, one, five, 10 years from now, what does success look like for on the global markets?

• 8:56Speaker 00

  Oh, boy.

• 8:59Speaker 00

  I'm getting ready for this clip to be played a lot of times on how I was so wrong five years from now. But I do believe that a true success of on a global markets would be that over time, a meaningful volume as well as number of users truly start using tokenized stocks. People underestimate the potential scale, I think, of adoption for stocks and ETFs globally. I think there's about 400 million people out there, primarily outside the US, who have a crypto brokerage account. I think if we can convince a lot of those people who hold a crypto exchange account, but that do not have access to US stocks just yet, even if we get a couple of percent of them to actually adopt these stocks and ETFs,

• 9:44Speaker 00

  I think that would be a huge success.

• 9:46Speaker 01

  And it's always such a pleasure. Congratulations on the launch and I look forward to seeing how the product evolves.

• 9:53Speaker 00

  Thank you so much, Jen. Always a pleasure. Thanks for having me.