Stephen: This is your host, Stephen Sargeant, the Around the Coin podcast. This episode is everything you need to know about Real World Asset Tokenization. We bring on Angus O'Callaghan Head of Markets at XDC network. It's a layer one blockchain started around the same time as Ethereum. That's building on a hybrid approach of both public and permission blockchain services to some of the biggest real world asset tokenization companies around the world.

And their partnership with Keith O'Callaghan, no relation, who's the head of asset management and structuring at Archax Capital building. some of their customers are BlackRock. They're building in the real world asset tokenization space.

We cover everything about RWAs regulation, how these companies and trad fire are intersecting with the defi, and what are some of the things that they have to consider, including consumer protection. We even talk a little bit about Coinbase. 24/7 announcement that they're opening up the markets for Bitcoin and e-derivatives and futures.

This is a great conversation if you are a business, if you're a payments, if you are an entrepreneur in this space, this is probably the podcast you should listen to about RWAs and tokenization of everything. Let me know how you think about the podcast and the comments. Talk soon.  

This is your host, Stephen Sargeant, the Around the Coin podcast. We are in for a treat today. We have Angus and Keith O'Callaghan, no relation, but Angus you're the head of markets at XDC Network. And Keith, you are at Archax, which is like a capital markets place that's housing some of the next, the new evolution of tokenization and marketplaces.

So Angus, why don't we do a quick introduction of you, Keith, figure out how you guys partnered other than your last names. And then we're gonna jump into a little bit of your background.

Angus: Absolutely. Thank you for having me, Stephen. So I am one of those guys that spent 15 years in traditional finance and then made the break across to digital assets/crypto as a profession in 2018. yeah, so, crypto to me was 2015 when I first bought my, bought my first Bitcoin.

Obviously one of those people that wished they'd bought more at the time. But that's where we are. Since then, I've worked some of the largest asset managers, banks advising them on crypto asset strategy. And most recently I've had the pleasure of being head of trading and markets at XDC network.

Stephen: I am curious before we get into Keith's background, Angus, you spent some time at Deutsche Bank, I believe in 2016 and transitioned to their digital asset division in 2019. That seems pretty early for our bank to even be opening up a digital asset. This is after maybe the 2017 wave, but you know, after that 2018-19 crash that we had, what was Deutsche Bank doing into digital assets at that time?

Was it more supply chain focused? Was it more maybe settling, from customer to customer? What were they touching on in digital assets back at that time?

Angus: Absolutely. It was very early days. And I can assure you there was two of us. In the bank globally who are actually looking at digital assets. So it was very early on. And I know some of the banks on the street were looking at it closer than us, but there was, it was investment in the future as much as anything.

So I very much had a corporate development role, so investing in platforms and protocols and people using blockchain technology. And what we were looking for is to enhance our user experience and as you say, supply chain finance or trade finance, Deutsche Bank being one of the biggest trade finance banks in the world.

Definitely in Europe. So that was the focus from them. So we were working on a lot of the initiatives. Some of them, a lot of them were built on r three's quarter at the time because that seemed to be the institutional platform in 2018. So yeah, we were just looking at how we can improve our processes, but I mean, that was seven years ago and how the market has changed over that period.

Stephen: I love it. Keith, talk to me. You had a very similar path working in finance. When did you kind of touch into crypto or, get antiquated with the crypto landscape?

Keith: Yes. Yeah, so I've always been in the tradify side of things, so I worked at Morgan Stanley and then onwards and then shifting over to hedge fund clients, so I, I moved from like sell side to buy side and then, kind of starting off hedge funds, running hedge funds. And the, the last hedge fund I was operating for a family office, an American family office was that they, they had kind of looked during 2018 at, at, at crypto, and.

They were in intellectually interested by it, but, at the time, like I was running A-S-C-C-R-I-A and the UK FCA manager, so we were hypersensitive to anything that would impact regulation, so, and obviously the IRS how, how the IRS was gonna deal with cryptos completely unknown as well, so we took the view that we wouldn't buy and hold directly crypto, but I would go out and find essentially hedge funds that would find strategies for us.

And at the time, we're used to, we're, we're used to hedge funds being the Ferraris of the financial market, and what we saw or what I saw, I just couldn't find any, allocate, any place I could allocate cash to. And then simultaneously, the guys who founded ouArchax, we worked together in hedge funds, they came along and talked about, regulated tokenization, things like that, so moving beyond crypto, but actually looking at the, kind of the ultimate blockchain implementation. And that was super interesting. So the family office agreed for them to be housed in our hedge fund business. And then they grew, asymmetric growth from that point onwards. And then I actually then decided to move over into the into, into our tracks, which, just, I, I loved hedge funds, it was a great business, but it did ossify I think for the previous, the last 10 years of my career in hedge funds, everybody was kind of doing the same thing.

There was no innovation. And then I walked into this, Alice in Wonderland environment where, you know, from a tradify perspective, you're trying to get a grip, you're running just to, to stand still. So it's been super fun these last few years.

Stephen: I am curious, both of you have worked in tradify. You've had the, the, the hint of crypto, maybe never going, all in with the organizations you're working with. How do you balance like, oh, catching something that your customers are demanding versus like, Hey, this is a trend or a fad, which people have said about Bitcoin for the last 15 years as well.

But like when you look at something like the Metaverse and you're seeing companies go all in on the metaverse or meme coins, or Solana, how do you balance like, oh, this is innovation, versus like, Hey, this has long gen longevity or scale. I'm curious of how you look at that. Before you went in, all in on RWAs.

Keith: Angus, do you want to run with this question?

Angus: Yeah, absolutely. So I think it's been what, what drives any business. It's client demand and any successful business builds what their clients demand. That's one of the things that I saw when I was at Deutsche Bank, and it's gonna be very clear, I think over the next year is the custody of digital assets, whether that's in prime brokerage.

Going back to Keith's points around hedge funds, there are a lot of hedge funds that are now trading crypto and they want to custody their bonds and their equities and their cash and their crypto all in one place. So I think the change in the US regulation about the clarification from the OCC now enabling US banks to custody crypto I think there's gonna be an explosion there.

From a US regulated bank perspective.

Stephen: I love it.

Keith: Yeah, I, I, I, if I can maybe chime in from the perspective, so like, in our minds, we bifurcate the two, crypto versus blockchain, they, they're, they're obviously symbiotic, but in, in essence, one is a, a very nice way to sec, essentially securitize every asset under the sun, and like I've done securitizations in my career, it's been around for 40, 50 years in, in, in, in terms of its evolution, but it kind of stopped about 20 years ago.

What tokenization does is essentially supercharge, securitization of any asset in, in, and, and gives it kind of superpowers. In essence. That's what it does. On the other side and in crypto, like we, we are, we're, we're both a tradify business and a crypto business. The tradify would encapsulate tokenization and, financial assets and that.

And then on the, on the crypto side, we're not blind to, that's where a lot of the money is in terms of transactions. And that's, so we run an OTC desk, we do an exchange. We do defi, we do all these things for our clients, but but ultimately when we started out this, this was about regulated tokenization and, so we've, it's been a good business in the sense we've got two bites of the cherry, one on the crypto side and one on the regulated tokenization side.

Stephen: Talk to me about this like, real world asset tokenization landscape. It was a buzzword maybe two years ago. Everyone was talking about RDAs and, tokenize, every building around the world, including, Trump Tower and the Eiffel Tower. Everyone's gonna tokenize everything.

And even before that, I remember security token offerings was a big, was an acronym at 1.2. Gimme the lay of the lamb of where we actually are. Outside of the hype and the headlines of real world asset tokenization and maybe what are some of the benefits that we're seeing right now, currently, not what the future might hold.

Angus: Absolutely. So, I've been in RWA tokenization since 2019. It's actually when I moved from Deutsche Bank. I moved to work for a company called Imar which is the largest property developer in the world. Printing around six to $10 billion worth of fresh real estate every year. So I looked at tokenizing actual bricks and mortar whether that was hospitality units, residential units, commercial units that we owned.

And we had a large portfolio to choose from. 2019, the regulation was very unclear and it was very difficult. It was an uphill battle. But I think, pretty fast forward to 2025 where we are now. If we look at what's actually the real world assets are being tokenized, it's money market funds, it's financial products.

And I think the tokenization of financial products rather than bricks and mortar, I think is much more achievable and low hanging fruit compared to when you have the, it's much easier to. Replicate on chain. What's happening in traditional finance world when you look at a money market fund, for example, whereas if you have bricks and mortar you have all the legal that goes behind that, the valuations, it's very, very difficult.

But it doesn't mean that the mortgages on the back of that residential or that commercial real estate or the mezzanine debt that's associated with it, why that can't be tokenized. I think that's much more likely to happen in the short term than the actual tokenization of the bricks and water itself.

Stephen: I just wanted to add there, you, you created your organization created a layer one blockchain. Is there a reason why you built your own blockchain versus maybe, building on top of Ethereum or Solana or another blockchain? What was the, the benefits? We all, we all know have many founders that come on here.

It's extremely difficult to build your own blockchain and maintain it and attract top talent developers and builders of apps. What was the, the reason for building your own blockchain?

Angus: Yeah, absolutely. So XDC is actually a bit of an OG chain. So the Genesis block was actually 2018. So we're almost as old as Ethereum. So the concept of layer two blockchains didn't even exist back then. So I mean, if we compare ourselves, 'cause we're almost a similar age to Ethereum and myself, almost a similar age to them in terms of my time in crypto and digital assets.

We have our consensus mechanism is relatively unique. It's delegated proof of stake which effectively means that all of our nodes are KYC. So we know exactly who's signing those transactions. Whereas on Ethereum, you don't know who's on the other end or you potentially do not know who's on the other end.

And that means that and also we have the flexibility because to build what we want, 'cause it's our own layer one whilst it is EVM compatible. And, but it's, we can change what we like with it. I think one of the key aspects of that is it's a hybrid blockchain. So Ethereum being fully public, there are some private blockchains layer twos that are built on top of it, but we have both within our, so we have the open source layer one blockchain, which the XT C network, and then we have subnets underneath that.

So effectively you have the self sovereignty of your own data, but utilizing the XDC network technology. So you very important for supply chain management and trade finance because you may want to interact with a customer and not let the wider world know what side, what size deals you're doing and how much is going through.

So it's, yeah. So we're the best of both worlds.

Stephen: That's what I was gonna ask. That was a terminology and, and key. So, R Tax Capital and XDC Network combined and they partner to drive innovation and growth especially when it comes to real world asset tokenization. But, R Tax already had, as you mentioned before, you already had a suite of services and solutions including things like a crypto change, stable coin issuance.

What was the benefit to you and that you believe that this partnership will help you solidify going into 2025?

Keith: Yeah, I, I think was it from our perspective, let's say in terms of protocols, we we're, we're kind of protocol agnostic, there's a lot of great protocols out there. I do find, from my perspective, certain protocols. No matter how good their technology is, sometimes they don't have the vision or they don't have the drive or the cohesive cohesiveness that's needed, and not singling out particularly XDC, but XDC is an example of one of those protocols where the, where the founders and the team, they have a clear vision and they can articulate it and they can communicate it, so, so, was it if, if from an R tracks perspective, we've an opportunity set, we'll give site, we'll give, we'll give site to to, someone like XDC on that.

And then, they'll be on the phone, the next minute, and then we can actually start kind of working through how this might work, the opportunity, the potential benefits for the XDC community and that, so, so I would I, I'd hold back kind of advocating any particular.

Blockchain because in essence we will mint to like a, we have a tokenization engine that has XDC and several other, Solana, arbitra, et cetera on that, and it's really about it's about, the engagement between us and the, the protocol and then the, essentially the messaging and that that human interaction, it's, it's, people don't necessarily view it as important anymore, but for us it's, that that friendship and, and that, that, that, us and me, us explaining where we are and, the protocol explaining where they are and how we can benefit each other, so, so that's that I, I would say that would, that drove the, the partnership per se, and then, one, one of the XC group, we know we knew for a long while as well, so that, that kind of, helped us along in, in that journey, so, overall I would say like we've, we've done our first trade or, well, we've done our first transaction with XDC, which is, tokenizing, some institutional money market funds, and that's really just to kind of get it done. And now we move to the next phase.

Stephen: Angus, do you feel it's easier 'cause you have this hybrid blockchain, do you feel it's easier to communicate with the Tradify? 'cause their concern is always about too much transparency with some of the value transactions that they're completing and they're a little bit scared of like full decentralization, which they've been sold on for years.

Do you feel like having this hybrid approach gives an opportunity for, whether it's Archax capital or others to come into a space building a private nature and expose what they need into the public chain as they grow or scale throughout your organization?

Angus: Yeah, absolutely. We are very proud to be partnered with Archax. One of the key drivers, they've got a fantastic team super knowledgeable, super smart and experienced. And yeah, just been a pleasure to work with. And, one of the main driving reasons for working with Archax is their regulatory status.

As Keith alluded to, they have all the licenses that are required to enable us to do business with. Institutional and professional clients in the UK and Europe. And that's very important to us because I think, regulation is, is it's not just coming. It's gonna be the future.

And it will be the regulated players that win out in this. So the ones that have maybe not abided by the regulations so far may have got a little bit of a head start, but as the regulations do bite in and clarification comes in I think that's gonna be the main area of growth. And as Keith said we're very proud to have the tokenized money market funds from Archax on the XDC network.

So that includes BlackRock, fidelity, state Street, and Aberdeen. All money market funds are live on the XDC network through our partnership with Archax.

Stephen: The partnership highlighted like this, total addressable market, tam of like $30 trillion is what the, the tokenized real world asset industry is supposed to get to within less than 10 years. Do you think a lot of this demand is being driven by the success of the Bitcoin spot, ETF in the US and the overall optimism, this Trump administration has around stablecoin legislation, you know the custodianship of digital assets.

What do you think is driving this $30 trillion number and what's the biggest benefit to your clients, Keith and Angus?

Keith: Yeah. I, I'll take a run at this. I, I think like if, maybe just park the ETF question. I think the ETF question, our ETF development and the ETP development in Europe is very important, because it essentially normalizes an asset. Crypto is an asset.

It will eventually be incorporated in as a security in the uk, probably in the us like the US has, the CFTC / SEC bifurcation in terms of how they're going to to, to, to manage that exposure. So what it did is it kind of normalized it and also brought the names, it brought traditional names.

I don't think it particularly helped, I would say crypto firms. What it did is help to normalize the story and allow. Allow compliance officers and lawyers and all of these guys to get comfortable at the in, in, at the institutional level that okay, this is something that we can look at.

And, that's kind of reflected in a lot of the partnerships we've signed, with like BlackRock, fidelity, Aberdeen, state Street, like a broad, like all the names in the street, that you really want to be involved with. They're, they're interacting with us and like, I like, we're sizable, I would say in the, in the, in the crypto blockchain world as a firm, but we're a minow compared to actually tradify firms.

Hopefully that will change in time. So the fact that, we get this interaction and involvement, at very high level at all these institutions tells you the, the effect that, the, the the BlackRock well and the various ETFs in the US have had, had, but also now we're moving to a much more kind of, I would say a sustainable legislative framework and regulatory framework.

And all of that is just enhancing, people getting more and more comfortable with utilizing what's it this technology for real world assets.

Stephen: Angus, have you seen the uptick in people thinking like, Hey, like we see this trend, we, we see the momentum, but we don't know where to start. We don't know what, should we be building our own blockchain? Like internally through some of these big organizations? Should we be utilizing, a layer one like yours?

Like tell me about a little bit about the demand you've seen over the last, I would just say even like three months, maybe 12 months.

Angus: Yeah, absolutely. I mean, if we go back, say we're gonna go back 48 months when I pick up the phone to an asset manager or, they probably didn't even have a digital asset team. A few of the banks might have a coalition of the willing, a small group of people scattered across the globe that are trying their best to get some sort of digital asset strategy.

But now every bank I speak to has a very sizable. Fully focused digital asset team with some very senior people on it. And I've, I speak to the asset managers a lot including the ones that I have tokenized money market funds on XDC and the level of seniority of people that are involved and are focused on digital asset now.

I just didn't think it would happen this quickly. So there's a lot of people being repositioned out of certain roles into very senior roles in digital assets because they see this as the future. So that's, across the largest asset managers in the world, the largest banks in the world.

Keith: Maybe I'll just jump in there, just to kind of picking up some threads in relation to this. Public versus private. So this is, I would say the untapped question. People are going along and not really addressing it, because I, I know regulators, I've been, I've worked as a regulated.

Person in hedge funds and investment banking for, 30 years or so. So I know, somewhat how, how regulators thinking, it's important for a regulator to obviously be, be able to understand the risks, in terms of, exposure of issues to, for consumers and the like.

But also there is an element of who do I point a finger at if it goes wrong, if there's a security settlement issue on mass in the us you go to like the DTCC and you kind of say, okay, you're at fault. You're the person and there's someone, essentially the vase catcher that's there.

The difficulty for a regulator, and it, it still probably hasn't been addressed yet, is that, for for public chains, if it goes wrong, who do we blame? Who's responsible? There's issues around, if a transaction was validated in the US but it was two persons in Europe, does US law.

Oh commercial law override, there's all of these kind of outstanding issues that, they're, they're quite nuanced, but they're actually quite powerful overall. So like, I would say just, anecdotally, I would say that like from our tax perspective, we always use for our own business, we always use private on public, but we do deal with private chains in on behalf of customers, and but you know, I can say that there's probably a transition towards the private and public, as people get a bit more comfortable.

But it won't happen on mass until regulators kind of come up with a defined position of, okay, we are comfortable with a public chain, and subject to these particular, requirements, so yeah.

Stephen: Can you talk to me about regulation? You're regulated, I believe, obviously in the UK you might hold licenses in the eu, but we see that, the markets and crypto asset regulation. MICA coming outta the EU is probably the most comprehensive regulation we've seen with digital assets. Many saying maybe too comprehensive.

What are your thoughts about the regulations in the UK versus maybe the rest of the eu? And then how do you navigate that EU market? Is that of more benefit to you? You get one license in, a European Union country and you can take it amongst the other member states. Is that more beneficial than, following the travel rule and all these other owners, regulatory requirements?

Keith: So I, I will just make a general comment about regulation, and I'd bring it back to, let's say when I was run running in a, a fund manager. So it was very clear because of the concepts of, let's say, regular, a regulatory equivalency. So if I want to do something in Hong Kong or in the US or in Europe, et cetera, I kind of knew what the, the, the direction of travel was.

Because there was, over the years, there was a mutual understanding between regulators that if. You're a good regulator and I'm a good regulator, so if you re and therefore you regulate your guy as well, and I regulate my guy as well. So therefore, we're gonna have this concept of equivalency where we will lower the bar in terms of letting your guy into to, to access our market.

That doesn't exist in, in, in crypto, so there's a complete siloization, the silos of regulation happening everywhere. The us uk, Europe, Hong Kong, Singapore, elsewhere, other places are quite slow and, and they're catching up now. So the, if you're looking to do a global.

A global crypto business, you've got, it really stash away a lot of cash just to invest in that compliance journey. It's, it's, it's sometimes insane, because it's constantly moving. But going directly to your question, like, like we mainly operate outta the UK and, and, and, and the eu, we have just like we've, we've got a kind of a small license in, in Dubai, and we probably, we'll probably make a move in the US in the next hopefully few weeks.

So like, obviously we're very interested now in the us we think it's, it's, we think it may start throwing up all capital and all talent, sucking it in away from Europe and the uk. So we need be, we need to be prepared for that as a business. But so I would say about Micah, Micah is a is is, as you say, it's a very comprehensive bit of legislation.

It the rule of McHenry is that it's better to have legislation than not to have legislation because if you follow the legislation, no matter how onerous it is, you, you can't be essentially attacked for making decisions, and then someone applying 2020 hindsight to what you've done.

In the uk we have a kind of a amalgamation of, of various little rules that they've put in, but it's in no way a like what's happening in Europe. So I would say in Europe it's a good thing that they've done this. But what, what happened since really is ESMA and the regular kind of tightening up things and changing things,

so it's actually making it quite difficult, I would say, to have a commercial business in in Europe at the moment, and I think like in, in time it will start regularizing itself, so it'll be, had big legislation like and A FMD in, in Europe, I even GDPR in Europe, it, it's tends to migrate outwards and it tends to normalize behaviors, so I think, I think Mika's got a lot of, we need Mika too, basically to kind of, okay, we've got this out. It's been a good thing that we've done, but now we need to, because, because Europe will fall behind, so a hundred percent that Europe will fall behind on the basis of, the kind of the strenuous economic requirements to run a business in, in, in Europe, but. The thing is that Europe has done something that the UK hasn't done, which is put their cards on the table and say, this is how we're going to do it. So it's a very good start. And I think looking back, kind of maybe that was kind of how we, we experienced ai, f and d, which was the big investment management directive, and it took us a while, we're all complaining and then we just normalized it and then it got on.

So I think I'm, I'm quite hopeful for Europe on, on, on, on that. On that basis. The UK is, has been much slower, so we've got a set of regulations that people can sell to retail, certain crypto assets, but there's a kind of a regulatory motor around the uk. But it, it is definite.

It is definite that the political uncertainty and, upheaval in the UK has kind of delayed everything. The regulators was looking for direction. It wasn't getting, I don't think the direction it was, it needed, now it's slowly starting to happen. But realistically I think it'll be 2026 before we start seeing sizable moves in UK regulation.

You though, we are expecting something on stable coins quite soon, which, again, is, is good to have, it'll regularize it, it doesn't look like the best legislation in the world, but at least it's legislation and that's for, for anyone running a business. You want certainty. You, you need certainty.

Stephen: Yeah, and it's what's, really put the US back in terms of there was no clarity. And then, regulation by enforcement, many would say, Angus, I'm curious your thoughts, you're here balancing, this decentralized nature of a blockchain, but you also realize a lot of these tradify companies coming into your space, they also want, compliance.

They have tax and accounting, principles and reporting that they have to do. How do you balance this kind of Web3 and, I feel like Intersection used to that with NDX.

Angus: Yeah, absolutely. So I mean, I think, just to follow up on Keith's point there, I mean I was heavily involved in MiFi two when I was at Deutsche Bank on the equity trading floor, which went live in 2018. And that regulation reverberated globally. So whilst it was European regulation it impacted the US and Asia.

Not to the same extent, but especially from an equity trading perspective, that impact was there. I think Micah will have a similar impact. And Micah too, as Keith alluded to is required. And GDPR as well. Because we've gotta realize that today's world is very global. Especially these traditional finance entities, they operate on a global basis.

And they like to have a lay as much as possible, a level playing field so they don't have to, so they can operate in a homogenous way as much as possible. Because, maintaining the legal and compliance and for each jurisdiction is very difficult.

Stephen: I am curious Angus, we see like, you talked about global, you know the buy bit hack has shocked, the crypto universe over the last couple weeks. Companies, crypto exchanges are scrambling to make sure that they, those tainted or stolen funds aren't laundered on their own platforms.

But I'm sure there's a lot more interest from your investors, customers and partners on how safe your technology, your platforms are. What has been, maybe the biggest concerns or would you notify companies that they don't have to worry about because, maybe cybersecurity is at the top priority for your organizations.

Angus: Yeah, I mean, cybersecurity and the resilience of the network is absolutely key to us. So, we, our smart contracts the protocol itself has been verified by the top names in the game and the, the reports are there to show the resilience of the platform itself.

And that's why we, try to engage with regulated entities as much as possible. Because whilst we are a platform it is our partners who are building on the platform that the regulation really does hit with and, we do our best in the design of the platform to make their lives as easy as possible.

I hop back to, our delegated proof of stake mechanism where all of our nodes are KYC. That's unique. And for regulated entities knowing that a KYC. Entity is there, and when we say KYC entities, I'm talking SBI holdings in Japan, Deutsche Telecom, GSR, some of the biggest names in Tradify and Web3.

So, some of the biggest market makers in the world are running nodes on the XDC networks. So these are trusted regulated entities. And that's very key to us and gives reassurance to people that are operating and building on XDC that it's a robust system and that they're in a safe environment.

Stephen: Keith, I'm curious, you, you mentioned a lot of organizations, BlackRock and others. Do you get, like, does your Slack channel start going off with like, Hey, what's going on here? Or are we at the maturity of crypto that these things do exist? They will happen from time to time, but I think the large scale nature of this attack and the sophistication has to probably bring some of your partners, investors, and clients into question, what are some of their risks?

Especially 'cause they're coming to you and you're going to other platforms, to offer these offerings.

Keith: Yeah, so, so I, I would say again, there's, there's two types of assets. There's, crypto, which is bearer is a instrument by its nature. And then you've got real world assets, which is generally a non-beer instrument, so in terms of the real world assets side of things, there's.

I'm not saying that you shouldn't be worried about a hack, but ultimately those real world assets exist somewhere, and, and the way we structure it and the way investors now are looking to have these structured is to have a a regulated custodian, or a regulated trustee holding the assets, so immobilizing the assets in, in essence, and servicing those assets so that and then, our normal process is to immobilize and then to tokenize those underlying assets and they go out.

But e especially in terms of financial products, is it you're required to have client categorization know your customer? So, there's a certain kind of, let's say permissioning that's done at the at the stable coin, or sorry, at, at the at the smart contract level, and, and, and it's like white listing addresses, things like that, so, for real world assets, you're not going to ever really be subject to that mass. Was it a robbery of of assets like in essence, because we hold the assets and, and we hold a private key for a smart contract, and we're the tokenize, or if we cannot work with other tokenize, but ultimately we can burn and, and was it resend those tokens as they, as they are in terms of real world assets.

The bulk of real world assets, especially in the financial market, are non-beer. There's certain instruments, like stable coins and the like, that are are bearer by, by like, so we run a number of stable coins for clients as well, so we structure them. We run the mint burn operation, we do the tokenization. In that, in that instance, there's probably a bit more scope, so if someone gets, while it gets hacked, it hasn't happened before, but, how do we interact with that? I'm, I'm, I, well, it's really up to the issuer to decide what they want to do, but in terms of. The crypto side of our business.

Yes. That's, that, that is subject like every other crypto firm, to hacking, so we, we, I, I would say we've got two things going for us. We, we use, we use ripple custody and we use fire blocks, so two of the, kind of leading custodial systems.

And and then I would say just because we're a Tradify firm, or was it cyber has been a big issue in, in, in every, the SEC, the FCA, every regulator has been pushing this for 20 years, before you get a regulated firm or, or you need to have done a lot of work in terms of mapping out your, your vulnerabilities.

So I would say those two things have protected us. Like, but in, in the end, like, you have to run the best business you can. You can never say, you can never say never to these things, but, but definitely in real world assets because of their nature, they're non-beer, so they're therefore controllable.

So someone can, someone can steal 'em and then we can just burn them, if, if, if, if they steal them.

Stephen: right. Like similar to Tether, they have control over somewhat if they wanna freeze certain assets that are being used in their stable coin, you would have a similar power, I'm assuming,

Keith: Yeah, well, it, it's, it's really up to the stable coin issuer themselves. I think most stablecoin issuers really don't want to say, well, they, they, I think they're very comfortable to say that, look, we can, we can lock the wallet, but I don't think they're ever comfortable to say that we can burn in wallet, because that goes against the whole ethos of what crypto is about, but, but ultimately, I would say all regulated stable coins will have a, a, a, a sanctions list built into them, and that allowed be maintained by smart contract or by an smart con or by an oracle. So that will, that will just ensure that, terrorist organizations and like can't access it.

Whether, a like let's say for example a tax fraud or something like that can be addressed. It's a very legal question. 'cause now we're talking about extra territorial things that, we're really at government level, when you bring 'em down now to like a stable coin level.

Very interesting questions. No particular answers, but, in the end we'll deal with it, if, if it happens. And issuers and stable coin issuers have to, will have to deal with these things.

Stephen: Do either of you think that you know the whole consumer protection angle, especially with what happened at buy bid FTX. Salesy and other places. Do you think it's a consumer protection thing that's slowing down these regulations for coming into formation, or do you feel like the regulators just aren't educated enough to, create regulations on the technology that they're not so well versed in?

Because most of the talent is in the private sector. I'm curious about either of your thoughts on this.

Angus: I mean from, from, from my perspective I think they've just been caught asleep at the wheel as much as anything. You can go on any retail trading platform and, you can trade CFDs at 2050 x leverage. And commodities and a lot of commodities are more vol volatile than crypto assets themselves.

So, people refer to it as gambling, but I'm very much people should have the choice as long as they are. They have the means in order to do it. But crypto is seen as a casino, but you know, that that level of we mean coins being the, the latest phase from the casino world, but that's been available to retail traders for years.

So, CFD and spread betting on the likes of IG or whoever. Yeah, that, that's always been available. It's just the fact that it's crypto that yeah, just the regulation needs to catch up.

Stephen: You can't even watch a football game without seeing, like what bet you can make on how many field goals, halftime score. It seems like betting and fantasy, sports has now become a lot more regular. When I started in crypto, I felt like the IRS was looking if somebody sent crypto to a, a gambling service provider that has completely gone away with like, the president launching their own meme coins.

Before we go to Keith Angus, I'm actually curious 'cause you have a blockchain. I'm always asking blockchain founders and builders, how do you attract top talent to build on your blockchain? Because it seems like giving away tokens or grants only last for so long, and that might attract a lot of people.

But a lot of developers are just bouncing from blockchain to blockchain, trying to collect as much tokens as possible. So how do you attract and maintain top talent at XDC?

Angus: Yeah, absolutely. So we have an in-house incubation lab and we have a VC arm with an assets under management, about $150 million. And yes, we do have a grant program ourselves, but we're working with some of the. Best incubators on the streets, whether that's launch pool or 10 te. So we've got about five or six external incubators which we do provide not just financial assistance, but technical assistance in order to build on XDC.

And as you say, it's, if it works people, it's, it's about if you've got the right platform and people build on it and it works, they will stay around. The gas fees on XDC are almost de minimis. If you've got an old school calculator, you'd struggle to get in the gas fee on your transaction because there's not enough zeros.

Right. It's, it's, it's almo, it's almost gas less. So if you, and. 2000 transactions per second in excess of that. With six second finality, the technology is there. And once you're built on a chain, there has to be a good incentive to move off of that chain. And it's not just for an additional grant.

Because, there's a lot of protocols that do have large treasuries and they can throw grants around. But if you can get people building on the network and it's got a great community and it's got great engagement, once people are built, they will stay. Because there is no incentive to move because it's not gonna be cheaper, it's not gonna be faster.

Stephen: I want to go to you. You know Archax. When you're dealing with financial products, speed, finality has to be important. How huge is transactions per second in your line of work? Do you have that many transactions or is it, the speed of the nature or the finality of the transaction that's more important to some of your customers?

Keith: I would say at this moment in time, I would say the, the speed of transaction isn't very, very important for RWAs. It's like, as you say, finality is finality stability, a a, a blockchain that has implemented some sort of KYC / AML. Framework in, in the way it, it's set up, so it's, it's those kind of aspects, kind of. But in time, yes, the, the transaction transaction rate, because like there's some projects that we've got in the pipe in relation to digital bonds, in terms of and then also, was it to tokenized financial assets like treasuries and that, if we're successful in that, that would be essentially shifting, is it that market into a much more fluid fluid environment where price discovery and price liquidity should increase.

And therefore, attributes like, was it gas fees and trans TPSR, become very important at that point.

Stephen: I am curious, when you're talking to some of these clients and they talk about settlement, like, traditional settlements, and correct me if I'm wrong, two to three days to settle something simple like a bond versus like six or seven seconds. How much is there a huge cost savings, like based on different types of infrastructure that you're working with?

Like people say like, oh, like the days, like you can settle so much quicker. What's the financial benefit of settling quicker? Is there one or are you removing so many different financial intermediaries from the process? That's where the real savings come in.

Keith: Yeah, I, I, well, I, I can, I can say from our perspective, it is, was it you, you, you've seen, both settlement cycles in the US and in Europe, start to compress, and the reason it, it's, it's, it's, it's compressing is because of, capital utilization, and risk, post LeMans, do, did I really want transactions that were settling in, like, t plus whatever, where I could get, literally take risk off the table within, within a second, so, I, I think even on the tradify markets, they're moving that way anyway, there, there's, there's plans to implement T one and, and the like, and on a, on an another side of. Our business, was that we've created a central securities depository, kind of like D-T-T-C-C, like your clear, we're doing that because, we feel that that market for digital securities, that structuring that that exists in the stratify market that doesn't exist in this market.

And, for us to be able to convince the big players to come in and, settle their trades, but, but have the look and feel of what they're used to, but accept in a, in a digital structure is going to be is going to be critical, but. Again, the cost saving is, is, is dramatic. Like I, I, I, I, I ran hedge funds for 20 years, the, the pain of, of, of, was it trades that weren't matching?

Like we, you, like you've, you've got like several people in, in this pipe, everybody trying to agree and silly things like, a dollar, a dollar off in terms of like a, a 20 million trade, a dollar off, and, you get the stupidity, so whereas, the, the solutions that Angus and XDC and, and

Angus: Yeah, I'll jump in. Well, well, well, Keith comes back to us and Yeah, I a hundred percent agree with Keith. The velocity of capital is absolutely key. And the reduction in risk and reduction in costs is, abso, it's, it's monumental. So whether that's counterparty risk as Keith said, back, only have to look back to 2018.

Lehman Brothers exposure, things like that wouldn't exist. If the trade was settled in, six seconds, for example. So that's counterparty risk. And then obviously the reduction in cost is absolutely huge. And that's not, not just across equities and bonds. I mean, it's fx.

There's, there's obviously, there's mitigating factors for for fx CLS for example, which is one solution which reduces counterparty risk. But not all currencies are on CLS. A lot of volume is still off. So yeah, I mean, I think it, it solves a lot of problems from risk and cost perspective.

Stephen: We've talked a lot about stable coins in this conversation. Maybe just final thoughts on, like, Keith, where are we going with stable coins? People are saying 2025 is the year of the stable coin. You probably see it better than, many people that come on this show. What's the demand? What's the, the use cases that you're seeing your customers are using it for?

And then is there a need for stable coins as much if you're doing real world asset tokenization, that can settle in seconds. The, the need for a stablecoin doesn't seem as, as much, considering that you're, you, you can solve, you can solve a lot of those problems with the RWAs. What are your thoughts on stablecoin?

Keith: Yeah. I, I will say going back to one of your early points about, the effect of, let's say, the big Bitcoin, ETF on crypto firms and, and the crypto industry. I think actually the stable coins are, are the things that are moving everything forward, so, I, I would say that the, the legacy stable coins, are being slowly but surely not, not outlawed, but strangled out of, out of particular markets. The EU essentially is pushing out, stable coins that don't fall within its remit, of, of understanding. And it, it is changing the landscape a lot, so I would say in, in, in terms of stable coins, there was, I remember when we started off this, like we got approached, we did a physician paper 'cause like we did lots of structuring in our previous life, so we can structure these things quite easily.

And yeah, I remember us discussing, is this a business we want to get into? And there was this discussion about cbdc and like cbdc will obviously displace stable coins, but actually the more I've gotten into it, the more I believe now the stable coins are here for the longer term. Just because with cbdc, governments are just slow.

People don't trust governments, and even the, the construction of some cbdc, they're extremely limited. You can have let's say 3000 sterling in your CBDC It doesn't pay interest. The, it's the maximum balance you can have. What's the point? And, and I would say, the banking industry in terms of that type of market has, has done a great job.

It does, it does the job effectively. You don't necessarily need CDBC, I believe to, to help the banking market. However, stablecoin is completely different. Programmability, it's fluidity. All of these things. Just, it's a great enabler because every time we look at things like creating new products, stablecoin no is in the mix.

If we're talking about, if we're talking about rewards, if we're talking about staking, was it all of these things. Stablecoin always comes into, in, into the dialogue. So I'm, I'm super bullish in on stablecoin. The reality is that there's issuers coming out out of every direction at the moment.

And, there's obviously a limit to how many US dollar stable coins do we want, and that, but that's just natural capitalism mean it'll work itself out in terms of, how good they are in terms of the quality of the smart contract, how well they're supported, where they're listed, et cetera.

I think that's I, I think that's a key point, but I think definitely I would say, non USD stable coins is going to be a very interesting area. You've got people like, I would say Zoia who are doing a good job in terms of addressing the emerging market side of things, so I think there'll be a big push, Archax included, who, who will be looking at different currencies and potentially creating baskets of currencies, kinda like index currencies, commodity like currencies.

'cause ultimately, if, if I create a US dollar stable coin, I can create. Basic, any type of currency on, on, on, on that basis, so I think I, I think the growth is there. I I do see two from our client base. I see two separate cases where stable coins are utilized, one in a public way, so the kind of the tether USDC way and then in a private way where it's a large conglomerate that's doing something, and stable coins suddenly frees up a huge amount of, of, of, of cost quickness, and allows the whole community within that private network to actually interact with each other, lend each other money through staking contracts, things like that.

There, there's, it just creates amazing versatility, so, so I'm a, I'm, I'm a big proponent of stable coins, I think they're here for a while yet. And and they've given life. I, I think without them, the crypto, the crypto environment that we exist in now probably wouldn't exist in the way it does.

Stephen: It's definitely been the killer app that we've all been talking about. Angus, I'm curious from your side what are you seeing, whether it's stable coins or other applications building on your platform or just anything else you're seeing in the industry that the viewers and listeners should be, thinking about for 2025?

Angus: Yeah, absolutely. So, USDC actually is now on the XDC network. So they we're using the USDC bridge. So that, that was just announced last week. So we have other stable coins that are on the network. But USTC obviously being the second biggest in the world. I mean, from my outlook on stable coins is, yep.

USDC, USDT are obviously head and shoulders above the rest. But I think there's a lot of margin there and the structure of stable coins going forward is going to change. Because if we look at Tether as an example, right, they make almost twice as much profit in a quarter than BlackRock. Which an $11 trillion asset manager.

Right. So just to put that into perspective, the size of tether at $150 billion or something like that is able to make more profit just by collecting the yield on the US treasuries that they've invested in. So I think us, so we will classify it. Some people seem to refer to it as Stablecoin 2.0 is the yield bearing stablecoin.

So the SEC has just approved the first one. And I think many more will follow suit. Because, why would you hold on to, even though Tether, it's a bit like dollars in the FX market, most, most trading is actually done against Tether. I think, unless if a yield bearing stable coin takes hold which I think it will in due course, especially with interest rates where they are it's a sizable amount.

People will park their funds in a yield bearing stable coin or a money market fund perhaps. Where if it's, if it's easy enough to get in and outta those positions at minimal cost because 5%, a decent amount of money if you're, if you're sitting on and off of it.

Keith: Yeah. Can I just jump in there a bit to, just to kind of give some other color on this first thing I don't like, I wouldn't say like, if you push the SEC to say, have they approved the first US table coin? I say they would say no, we've approved, essentially face certificates. That's what what it is.

It's, it's a, it's a kinda like Reg D type or maybe a Reg A or Reg D type instrument, which is quite limited in terms of what it can do, but, it's a good start, and I'm not knocking it, but it's not, it's not like, it's not the killer. It, it's not the killer thing. I think it is coming down the line.

I do think yield bearing stable coins are gonna be very difficult to implement because in the us in in, in all leading jurisdictions, it would possibly be viewed as a collective investment scheme. 'cause you're essentially managing assets. For profits, for, for clients, and this is usually, the kind of how we test concept, when you're looking at collective investment schemes.

But one thing that we're doing actually that's I think is quite interesting is that we're using money market funds as we've worked, we've got together a group of like leading custo, global custodians, leading asset managers, banks, to, to come in towards a network where we're working to create a money market fund tokens as essentially a settlement kind of firstly a collateralization network.

But ultimately when, the way I look at it is that if I can tokenize a, an asset that's constantly earning, and if I accept that it's $1 a, you accept it's $1, and I'm earning interest up to the time that you, that I transfer it to you. Then in things like treasury management, are you worrying about putting up money in a savings account disappears because the second it hits your wallet, you're gonna get airdropped, that interest on a ongoing basis.

So it kind of displaces. Dis displaces fiat eventually, I think if you get, create this kinda securitization within tokenization, and I will say, something that always surprised me about the US' pushback against stable coins is that it seemed to be besides us having an interest in not them not doing it, it's is for the benefit of the US dollar and the, the US m the US treasury markets.

Because if stable coins really take off in substance, what you're doing is essentially locking in that market. Whereas before you had large pension funds holding these securities. Now they're not so much because people are retiring, they, they gotta pay off, pay pensions. They're selling these treasuries.

So, I said governments around the world should be really focusing on stable coins, saying, okay, this is going to, as, as pensioners come out and just spend their money, I'm gonna get these guys who are gonna essentially create stable coins, which is essentially anchoring my debt markets and anchoring my, my currency to some extent, I saw without me having to take out a gun and shoot someone, like, I, I don't, I it's soft power, perfect soft power, so I was always surprised why the Americans didn't really grab it by the neck and run with it years ago because it's so much in their interests.

Stephen: Especially with all the alternative now markets happening with BrickX and the digital yen. Like there's a lot of markets that are happening outside of the traditional US oversight. And that especially North Korea, Iran, Russia, China, so the government, that US dominance, definitely the stable coins in USD backs, available coins are definitely, holding some of that dominance based on what you're saying.

Guys, this is an amazing conversation. I always like to end the conversation to see like, what are you, your tech friends, the crypto, you guys, are working in a fast-paced world, many vices and the traditional and the crypto hedge fund space. What are you guys tinkering with playing with on your own, or what are some of the, heavy tech and dev people, doing with on their weekends?

Keith: I, I can take a run at it first, so obviously AI is a, a huge thing. It's a huge thing now in hedge funds. I hadn't realized how huge, but hedge funds are pouring. Real money into this, to develop their business. So obviously now we're doing the same thing, but I would say just to kind of, in, in terms of real interesting things that I'm seeing people do, I've two of my children doing computer computer science degrees, so they're, they're in this space, but the big thing they're talking about now is, is vibe computing, which is essentially, essentially kind of creating a kind of a terminator where, where you and the AI work together and, and you let the AI do the programming, which is super interesting, so I think that's probably the, the most advanced thing I've heard now and all, all the guys I know in, in on, in computers, the mats are super excited about this.

Stephen: Super interesting Angus.

Angus: Yeah, I hate to be boring, but unfortunately it's gotta be AI as well. I mean, everyone is focused on it, whether it's, creating pictures or, I mean, I'm not quite sure how we lived without AI previously and it's not been around for that long. I mean, I'd say I use it on an hourly basis, and that's both personally and professionally.

So yeah, all my friends are talking about it. What's the, what, what's the latest agent? What are you using now? And further that's from Canva, copilot, grok, you name it. And XDC actually has its own AI agent which helps people developing on the XDC network to write code. So you can talk to the AI agent and it will come back with suggested code to help you, build your, build your programs and build your protocols on the XDC network.

So yeah, we are fully engaged in ai both professionally and personally.

Keith: I give it about two years and there'll be just three robots talking here, like, very

Stephen: I curious, we, I just typed it in there quickly. Like Coinbase is launching this 24 7 market when it comes to like FUT ETH Futures and BTC futures in the us What are your thoughts on the outside looking in, especially a lot of you played in the finance space. Is this good for the industry, maybe, bad for the industry, or, what are your thoughts on this?

Keith: Yeah. Well, I, I, I can say from from my own experience, like, like we, we traded the markets, generally we closed with the US markets and our settlement guys were old school, they, they settle their trades and, and, and that was that, so if I came along to them and said, we can do 24 7 trading, the question is why would we want to do it?

And it's and we, we get that, but, but the reality is that we're offering it to clients. Like obviously, Coinbase are doing their perps, in Bermuda as well, so they're, they've, they, they've come from nowhere. To really, they're, they're really killing it on, on, on, on that business, it's super impressive what they did. But so, so, so like the reality is, is, is is when you're given something that, you don't necessarily see, see the use case of it immediately suddenly it, it becomes absolutely, embedded in your life. If you go back to, was it Steve Jobs when he wanted to do, the iPhone?

It, it was it was really about collecting your music, not, not about apps, making a phone call and having your music on a, a, a small thing. It wasn't about, the what, what the explosion that happened afterwards, so in essence, we all started like an older, new guys, like, I remember the first mobile phone and it was kinda like, why do you, why do you need it?

Because like we just arranged to meet in town and. But now I, I can't like have kids everywhere, I've got to, just make sure that everybody's still alive, and it's so it, it eventually, if you create, if you create the optionality, the optionality eventually does get taken.

Stephen: Angus, any thoughts from you? Clothing thought.

Angus: Yeah, absolutely. I mean, it seems that the market is gonna go that way for good or for bad. So I used to like it on the trading floor when the markets opened at eight and shut at four 30 because then you will risk off, you pass the book to the states and then that was it. So, that follow the sun model will still exist and we know it will have to exist in a 24 7 market.

So that, that's gonna be quite interesting. And, Coinbase with gonna be quite interesting. 'cause I remember it goes back to FTX actually. So Coinbase, so FTX had actually, this was pre the Coinbase IPO they'd created a synthetic market for Coinbase. And I think it was trading at about $620 at the time.

And yeah, and then it listed at 410. So yeah you can see that dislocation, but obviously this time round it's being done properly. And yeah, it'll be exciting to see. But it seems that Coinbase are really pushing ahead with these initiatives now.

Stephen: Gentlemen, this has been a great conversation. Congratulations on the partnership, and you can see with your two wise minds why it makes sense for Archax Capital and XDC to get together and, build out the RWA ecosystem and give access to a lot of your partners to the f you know, the facilitation of a lot of these assets.

Thank you so much. Where can people find you, Angus to get in touch with you?

Angus: Absolutely. So, you can find me on Twitter, you can find me on LinkedIn. And yeah, it is XDC dot org. If you want to come have a look at the XDC network. And yeah yeah, look forward to working and yeah, please don't feel, feel free to reach out. Absolutely. Anytime.

Stephen: And Keith, where can people get ahold of you and, throw some money at our tax capital to invest in all these RWAs?

Keith: Yeah, well, yeah, no, so we're, we're all over LinkedIn and, and Twitter and we've got a good team that look after TG channels and WhatsApp channels and like, so, so LinkedIn is probably the easiest place. It gives, it gives a lot of information. And obviously Archax.com is the website.

Stephen: Awesome. Thank you gentlemen. And thank you for coming on. Around the coin, we'll probably have you baby back at the start of next year to see what one year under the Trump administration and what's opened up in the RWA space. I might have to bring you on next week at the rate Trump's going.

So it, it's great to have you guys on the, on the podcast.

Keith: Brilliant. Okay, Stephen, thank you so much.

Angus: Thanks for having us, Stephen. Thank you.