Weighing Figure’s growth potential after Nasdaq debut

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Figure went public yesterday, and Gemini was set to follow suit today. Somewhat related (you’ll see), we were reminded of how the biggest asset managers could help fuel a tokenization boom. 

Let’s hone in on Figure, which just debuted on the Nasdaq. Shares of FIGR opened at $36 on Thursday — 44% above its $25 IPO price. The stock was trading around $33.20 at 1:30 p.m. ET. 

Making another appearance in this newsletter (after I cited his COIN vs. HOOD report) is Blockworks Research’s Marc Arjoon. His latest write-up points out a regulatory edge Figure has over certain competitors — 180 lending and servicing licenses, 48 money transmitter licenses and the distinction of being an SEC-registered broker-dealer.

Founded in 2018, Figure focuses on home equity lines of credit (HELOCs) and uses the Provenance Blockchain. The company claimed in a recent filing to reduce the time it takes to fund a home equity loan to a median of 10 days (compared to the industry median 42 days). 

“With over $17B in equity unlocked for homeowners and 40% of HELOC volume transacted on Connect, Figure is the largest non-bank HELOC lender in the US,” Arjoon noted.

The company — with partners like banks, credit unions, fintechs, etc. — dominates the private credit tokenization space:

Though HELOCs remain Figure’s main offering, the company introduced a stablecoin earlier this year and looks to diversify even more. 

Figure building its presence in the Debt Service Coverage Ratio (DSCR) loans space and expanding into unsecured lending could contribute to its revenue growth in the years ahead, Arjoon predicts. 

Pantera Capital Partner Ryan Barney said in a Thursday letter that he expects Figure to ultimately cement a spot among a cohort of Web3 public companies comparable to the “Magnificent Seven.”

“The reason is simple: They are proving that blockchain can re-architect the foundation of capital markets, not just disintermediate a few steps,” Barney wrote.

Other candidates for such a group could be Coinbase, Robinhood, Circle, Gemini, etc. Time will tell.

The BlackRock news we already knew

On the topic of transforming capital markets, I wanted to at least bring up BlackRock’s tokenization ambitions before we break for the weekend.

A Thursday Bloomberg report (citing anonymous sources) said the world’s largest asset manager is looking into making ETFs available on the blockchain. 

No kidding.

The firm declined to comment on specific efforts here. But didn’t you read BlackRock CEO Larry Fink’s March investor letter? Plenty of interesting bits, along with the explicit line: “Every stock, every bond, every fund — every asset — can be tokenized. If they are, it will revolutionize investing.” 

So of course BlackRock is looking into that — especially with the traction the firm has seen with its tokenized money market fund, BUIDL. Nasdaq, as you read recently, is looking to tokenize the securities trading on its exchange.

Bloomberg Intelligence’s Eric Balchunas pointed out that he views this more as modernizing rails than a wholesale pivot that will disrupt the nearly $14 trillion ETF industry. 

Fink noted in that letter that identity verification would have to be solved before tokenized funds become as familiar to investors as ETFs. We’ll need patience as we monitor how these efforts evolve.

That’s enough reading for a Friday afternoon. Get on outta here and enjoy your weekend.

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