Stablecoins ‘tip of the iceberg’ as RWA space matures: Ondo CEO

The growing attention to stablecoins is set to help fuel a new wave of on-chain assets, Ondo Finance CEO Nathan Allman said.

Circle’s successful IPO has created “even more of a buzz” around the blockchain space and what’s next, he told me in an interview last week.

CRCL stock has surged (with help from the Senate’s GENIUS Act passage last week), opening at $250 on Tuesday — up roughly 70% from a week ago.

“I think it’s the tip of the iceberg,” Allman said of stablecoins. “We’re going to see, in a lot of ways, the exact same playbook being run for other large, liquid assets.”

Like BlackRock, Franklin Templeton and others, Ondo offers on-chain access to tokenized Treasurys. The company’s tokenization platform — set for launch next month — intends to let applications and wallets offer exposure to US publicly traded stocks, bonds and ETFs.

There’ve been plenty of attempts to tokenize private markets. Allman told me that while he worked at Goldman Sachs from 2019 to 2021, his team explored tokenization for syndicated loans, which can take weeks to settle.

“But in reality, there’s a lot of general automation and digitization and standardization of documentation that has to be done before tokenization really is the limiting factor of accessibility,” the Ondo CEO said. “So I think that work is being done around a lot of these other asset classes in parallel.”

Tokenizing illiquid asset classes doesn’t make them liquid, Allman added.

He acknowledged that firms like BlackRock and Apollo Global Management are focused on creating more liquidity around private asset classes, and that will help allow for broader tokenization adoption there in the future. Apollo started offering tokenized access to its Diversified Credit Fund, for example, in January.

“The vast, vast majority of regulated financial assets will settle on blockchain rails in the future,” he noted. “That’s not a crazy prediction.”

Keep reading for more excerpts from Blockworks’ interview with Allman.

Blockworks: What did you think of the investor demand around Circle’s IPO?

Allman: Stablecoins are obviously by far the largest [real-world asset] — really the only one — that we’ve seen yet get substantial product-market fit. Stablecoins are a great model for us…to think about the benefits of tokenization that most resonate with the marketplace.

There are a lot of theoretical benefits for tokenization, from driving efficiency gains through reduction in settlement times and enabling onchain programmability. But I think what stablecoins have most tapped into is just expanding accessibility globally, especially in the case of Tether really getting into LatAm and Turkey and certain parts of APAC.

Read more: Digesting Stablecon: Execs bullish on imminent financial infrastructure revolution

Circle, with USDC, has obviously seen more traction in the US [and] in DeFi. But we have been very focused at Ondo on tokenizing other assets…on taking that value prop that stablecoins have demonstrated and reapplying it to other assets.

Blockworks: As Ondo gets set to launch a tokenization platform, what do you make of some of the high projections for this segment?

Allman: I think the fact that assets settle on blockchain rails will be abstracted away over time, so the statement there’s $1 trillion, $5 trillion or $10 trillion of assets “tokenized” won’t hold the same significance at some point in the future.

Securities settlement is very regional and fragmented today. Every country seems to have its own securities settlement depository, and I think there will be a big push to have settlement happen on distributed databases. Not necessarily public Ethereum; I think there are certain compliance and other features that may necessitate permissioning in certain parts of the stack.

Blockworks: What was your takeaway from meeting with the SEC earlier this year?

Allman: They’re extremely open-minded and thoughtful and willing to engage with us, which is really exciting to see and encourages us to want to be more transparent and want to put more effort into figuring out how we can bring our products into the US.

There’s a variety of potential paths to how we could bring something like Global Markets — tokenized US public securities — specifically to the US. We haven’t settled on which path makes the most sense to put all our eggs into, so we’re having ongoing conversations related to that.

But the meeting definitely left me much more optimistic that there will be a path, and we and others … won’t have to put so much effort into staying outside the US indefinitely.

Blockworks: How does Ondo seek to differentiate from bigger traditional players that might be wading deeper into the tokenization space?

Allman: Primarily through ecosystem and distribution. We’re a vertically-integrated platform building not just the tokenized assets but also the infrastructure and protocols to create utility and distribution around those tokenized assets. [Ondo Chain is] meant to be this hub for securities issuance onchain, where issuers can bring assets onchain initially and then have them distributed to the broader public blockchain ecosystem.

We’re going to be working on other similar protocols for creating utility for tokenized securities — both those that we issue and those that others issue on Ondo Chain. So we sit in sort of an interesting part of the ecosystem, in that we very much want to encourage these other issuers.

This interview was edited for clarity and brevity.

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