It's always a gift to have you all on the show. How you doing, man? Great to see you.
Good. Great to be with you guys.
Glad to have you back. You're one of our early guests. I mean, we've been doing this show since February. You were in March. A lot of changes on our end. A lot of change definitely on the Canton side. I would love to start unpacking. I mean, since we've had you on, a16z led a massive round, a $355 million round. Visa is a super validator. We've seen USD1. We've seen repo, DTCC tokenization. I mean, the list goes on. And I probably could just rattle off accolades for the next 10 minutes, but you just had Canton Summit last week. I'd love to just dive in first with kind of a recap there. What was that like? What was it like for those who weren't in the room?
Yeah. So, first of all, thank you, and yes, a lot of change, but primarily for the industry, which is a good thing, and I guess we are part of it. So we are all reaping the benefits, which is really good.
This was the first time we did a summit, and you know, we've been thinking quite a lot about what do we want it to be. And I think that after, you know, an industry that is now, you know, 12-plus years old, having another summit that talks about what is happening in the future is not something that we want to do. Yeah. And you know, we didn't want to have magicians on stage, you know, all kinds of influencers.
So to be honest, there were people from the, I would say, from the Xverse, but they were not on stage, right? We want them, you know, I do think that having people that participate online is great to have them in attendance, but at the end of the day, what we thought would be the best thing to do is to go, you know, boring, boring, old, you know, tell us what you're already doing on the network. So most of the sessions were people that are in production running on Canton today and really just talking about why they're doing it, why they selected Canton, but actually more importantly, why what they're doing on the network is going to generate money for themselves or for their clients.
We love boring here. We could talk about boring use cases all day. So we don't shy away from that. What is the most boring yet impactful use case kind of example right now running on the network that you would call out, besides — so we talked a lot about repo, so let's switch gears.
I think that a very easy use case to explain is treasury management. And I think you're going to see a lot of people going after this. So just to explain to the listeners, you know, we as individuals, we do our own treasury management. So you could think about an individual, right? We have our bills. We pay cell phone bill, utility bill, rent, all kinds of expenses, but we can also invest our money. Now the best thing for us to do is to make sure that at any given point of time that our money can work for us, meaning they can get yield, whether it's through DeFi protocols, through investing in treasuries, money market funds. You want to try to make your money make as much money for you until the point that you then need to convert it into cash because you need to pay rent. And you know, that is true at an individual level. You don't want to get stuck at a point where suddenly you need to pay your rent but all of your money is stuck in a private equity fund, as an example, right? Because you won't be able to liquidate and you won't be able to pay your rent, and hopefully we all want to live somewhere. So the same analogy works for companies, and there it's just at a much larger scale, where companies that have businesses all over the world, they need to make sure that at any given location where they operate, they have enough cash at any given point of time to fund their business operations.
And that's what you would call an operating cash flow. And they would have a function, a treasury management, that tries to maximize the yield out of their balance sheet while not putting their business at risk from not meeting their financial obligations. Now, if you think about the world as it is today, moving money around the world or converting your money into yield products is not something that happens in real time. Now imagine that now, because of the industry that we've all been part of, you could actually move money around the world 24/7 real time, but you can also convert it into yield products. That means that all of these companies can actually generate much more yield from their balance sheet. So to put it in perspective, we have been working with a few companies that we're talking about companies that carry billions of dollars of cash on their balance sheet. And the way you could think about it is any billion of dollars of cash that they will now convert into a money market fund, it means that they can generate another, give or take, $35 million of EBITDA a year. And that's without changing your business. It's without doing any kind of clever things. It's just saying like, well, I have much more efficient money on my balance sheet and therefore I will see much more revenue. And what was in the summit was an integration partner. So it's a company that does treasury management for roughly 4,000 corporates. We're integrating Canton into them. And the first client that we're going to go live with is a very exciting client that you probably all use regularly. We use, I use them regularly. A lot of people use them regularly. They operate in many countries and they have a lot of money that goes in and out at very high frequency, and I think that they will have tremendous benefit from that. But once we go live with them, the goal is to make this product available for 4,000 corporates to start taking advantage of.
What would that experience look like for the corporates? Are they going to be aware of this, or how are they going to be like bringing this to market? What's their experience ideally going to be like?
I can't stress how that is the most important question. And just generally speaking in this space, I think that we're seeing a lot of tremendous things happen in the space, but for the most part, it's still very much driven by retail that are willing to go through hoops and loops to kind of get access to these cool products that are being offered. Not very much at the corporate level. And I think the reason for that is that corporates inherently, if you work at a corporate, you're not really getting paid to take risk. You're getting paid to make sure that the business operates properly. So if you now need to download a wallet, you need to have seed phrases, and if you don't get the seed phrases right, you might lose all the money for the corporate and all kinds of things like that. I'm exaggerating on purpose, but you get the gist. It's something that I think will be much harder for corporates to pick up. So how do you make the integration very seamless? Meaning I tick the box on a new offering and I don't really need to reinvent my business to take advantage of it is the key, and that's why doing the hard lifting integration with the integration partner that is already offering services to these corporates is where you try to make it much more of like a click, accept a new product and I can start using it, rather than click, accept, now here's a manual of all the different software that you need to download, all of the different new roles that you need to create in your company to manage keys and all of those things. And as a result of that, you're just not going to see any pickup. So most of the effort we're doing with the partners that are enabling this new product offering with a goal for the corporate clients to just accept terms and conditions of a new product and being able to use it.
It's such a great moment to be in where things that are already being used, adopted, integrated into these systems for enterprise can now just have things like what Digital Asset offers natively available. Versus, I mean, I remember when I was at Coinbase on the institutional side, a huge thing that we were trying to sell was like, hey, just use Coinbase, onboard to the institutional product of Coinbase. But it was, you know, completely separate. You had to manage it separately. You had to onboard with it separately, hold those assets separately, account for it separately, and you know, try to build integrations and make it smooth. But like, it seems like we're in a moment now with this industry where it's just now available natively where you already are. And so it makes it so much easier to keep things as is versus having to download different things or whatever. Like, what do you, when you think about that, like would you say stepping back, I know you've been building Digital Asset for many, many, many years, like do you look at this moment now as that where we're entering this moment of like the just check the box moment? Like have we actually gotten to that point where you're going to start seeing corporates and enterprises actually it's going to feel that simple, or is that still premature to say?
So in a recent all hands, or I'm trying to remember, our investor update, what I said is I feel like from a willingness and eagerness and excitement about our industry, we're like at, you know, 7 to 9. From a progress, we're still at like the first to second inning, which is kind of weird to say after so many years. I still don't think we're at that check the box point in time. And again, I think that when you really break down the activity on chain, it is primarily still very retail driven, which is not necessarily a bad thing, but it just means that in order to get, you know, to the point where we can say this industry is processing in the tens, if not hundreds of trillions of dollars of money every day, you need to get institutional adoption and we need to focus. So we as a company made an investment in a company, I cannot share because it's not public, but we made an investment in a company that is really trying to streamline the experience for the institutional customer. So when you look at a lot of the tokenized equities that exist out there, when you ask like hedge funds or other players why aren't you participating, they're saying too complicated. I connect to NASDAQ, I trade, it settles, goes through DTCC, it works. Here the experience is still just very complicated. So I still think that from an institutional user experience we're in early stage. The nice thing about it though, I don't think that we as an industry need to show that much progress to get everyone excited. I think you could actually, even if in absolute terms we're going to show that we can process 1 to 2% of what I would say mission-critical industries and show that that is now growing month over month, I think that that's enough to get the investors very excited because now they can finally see a trajectory. Okay, cool. It works. Customers are using it. They're driving the utility out of it. Now it's all about adoption, right? It's not about a product market fit or something like that. So I'm totally fine that I still think that we're in the very early innings of this industry.
What does your time horizon look like? I think for, you know, we think about how much the internet's grown in the past 30 years, and it's really easy in this space to think about near-term, the next year, the next two years. And if you're in the first inning now, what is your time horizon? What are your expectations? How do you lead a team into the next 5, 10, 15 years to, you know, move into the third inning, move into the fourth inning, and by what time frame? Just to have like realistic expectations while also, you know, keep investors happy, everything you have to do, like it feels like such a balancing act.
Yeah. So I think that one thing that we as an industry should give ourselves some credit, because a lot of times people talk about this industry and they're saying like, look, 10 years haven't really changed much. The reality is that even the internet did not change the books and records necessarily of financial services. Even AI now, right, you're interfacing with systems. We as an industry are actually trying to become the backbone of the financial industry and getting people to get comfortable with new technology to say, well, now this is how we manage our books and records as an industry, in my opinion, is a significant ask. It's a significant ask and shouldn't be taken lightly what a big ask it is from the market participants. So for me, I think that the way I think about it is we as an industry should, you know, try every couple of years to roughly double or quadruple, you know, the activity that is happening, you know, on a monthly basis. So I think like about two years ago, Broadridge was doing $1.5 trillion of repo every month. Now they're doing 7 to 9, right? And I think that, you know, that's kind of how I think about it. Like in two to three years, we should get to a point that on a monthly basis, we're getting close to, you know, $50 trillion of value that moves. And I think that that's, and potentially you're going to see even a much faster exponential growth. But you know, I'm not aiming for anything else other than just to see the trajectory, because again, once you see these institutional players month over month increasing their volume, it's really all about adoption. And I think for a long time it was a question, does this technology have a product market fit, which I think it does.
