Mike Cagney says DeFi is a better fit for asset-based finance and can avoid rehypothecation

News Editor

2026-09-07 02:15:50

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, because it can avoid rehypothecation while supporting direct collateral perfection, self-custody or autonomous venues, and liquidity collateralization. He said Figure has already brought ABF on-chain, but the sector is still in its early stages and roughly $6 trillion of the market has not yet moved on-chain at scale. Cagney also listed five reasons traditional finance has been slow to adopt on-chain applications: weak user interfaces, the long-running tradeoff between qualified custody and recoverable self-custody, institutional needs for multi-wallet and multi-user setups with tiered permissions and full audit exports, an evolving regulatory framework despite clearer precedents for natively on-chain securities, and KYC tools that he said are more solvable on-chain than many assume through programmable screening and wallet-level permissions.

According to ChainCatcher, Figure co-founder and executive chairman Mike Cagney said in a post on X that DeFi is a better fit for asset-based finance, or ABF. He said it can avoid rehypothecation while allowing direct collateral perfection, self-custody or autonomous venues, and liquidity collateralization.

Cagney said Figure has already brought ABF on-chain, but the broader market remains early. He added that about $6 trillion of the market has not yet migrated on-chain at scale.

Why traditional finance has been slow to move on-chain

Cagney listed five reasons traditional finance has been slow to enter on-chain applications.

User interfaces remain weak, and apps such as Robinhood and SoFi have won on the retail side for that reason.
Qualified custody and recoverable self-custody have been difficult to combine over the long term.
Hedge funds and similar institutions need multi-wallet and multi-user structures, tiered permissions, and full audit trails that can be exported to fund administrators and accountants.
Regulation is still being sorted out. He said precedents for natively on-chain securities are becoming clearer and pointed to the CLARITY Act and related guidance.
KYC is more manageable than many believe, he said, because blockchains can support programmable screening and wallet-level permissions.

This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan.

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