Figure co-founder and executive chairman Mike Cagney said decentralized finance is a better fit for asset-based finance, or ABF, because it can avoid rehypothecation, improve collateral arrangements directly, and support self-custody, autonomous venues and liquidity-backed structures. In a post on X, he said Figure has already brought ABF on-chain, but the broader market remains in its early stages and roughly $6 trillion in assets has yet to move over at scale.
Cagney also laid out five reasons traditional finance has been slow to adopt on-chain applications. He pointed to weak user interfaces, arguing that products such as Robinhood and SoFi won in retail partly because they offered a better experience. He added that qualified custody and recoverable self-custody have been difficult to combine, while hedge funds and similar firms need multi-wallet setups, multi-user access, tiered permissions, full audit trails and exports for fund administrators and accountants. On regulation, he said the framework is becoming clearer, with precedents for natively on-chain securities taking shape and attention turning to the CLARITY Act and related guidance. He also argued that KYC is more manageable than many assume, since blockchains can support programmatic screening and wallet-level permissions.
Figure co-founder and executive chairman Mike Cagney said in a post on X that decentralized finance is better suited to asset-based finance, or ABF. He wrote that DeFi can avoid rehypothecation while enabling collateral to be perfected directly, alongside self-custody or autonomous venues and liquidity-backed collateral structures.
Cagney said Figure has already brought ABF on-chain, but described the broader shift as still early. He said a roughly $6 trillion market has not yet migrated on-chain at scale.
Why traditional finance has not moved on-chain in size
Cagney listed five reasons he believes have kept traditional finance from adopting on-chain applications more broadly.
- First, user experience remains weak. He said apps such as Robinhood and SoFi won in retail in part because their interfaces worked better.
- Second, qualified custody and recoverable self-custody have been hard to achieve at the same time over the long term.
- Third, hedge funds and similar institutions need support for multiple wallets, multiple users, tiered permissions, complete audit records, and exports for fund administrators and accountants.
- Fourth, regulation is starting to come into focus. He said precedents for natively on-chain securities are becoming clearer, and pointed to hopes around the CLARITY Act and related guidance.
- Fifth, KYC is more solvable than many people think. He said blockchains can support programmatic screening and wallet-level permissions.
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