Tokenisation: bringing the Jetsons and the Flintstones together

Just two weeks into her new role as CEO of Securrency, Nadine Chakar is explaining why she left a decades-long career in banking, most recently as head of State Street Digital.

Securrency is a fintech that is banking on most financial assets being tokenised and settled on the blockchain, using smart contracts and automated business logic, in the next few years.

“I feel 10 years younger,” she says on a recent visit to Securrency’s Abu Dhabi offices. “I’ve worked in Europe and the US for a long time, but when I came into Securrency’s offices here, I shook everybody’s hand on the way in.” In all her years of working for banks (ABN AMRO Mellon, BNY Mellon, State Street) in Europe and the US, Ms Chakar says that kind of thing never happened.

But it took a lot more than a few handshakes to convince Ms Chakar, who has been described as “one of the most powerful women in finance”, to trade the relatively safe confines of a more than 230-year-old bank for the uncertainty of working for a fintech company. “When this opportunity [at Securrency] popped up, I’m not going to lie, my mind and heart struggled,” she says.

“But the promise and possibility of being able to change the world of finance, as we know it, was just too appealing. [...] There is a different spring in my step. This is not something that I was seeking. Hopefully, it will be my last hurrah.”

A multi-trillion-dollar market

Ms Chakar acknowledges she is stepping away from what was essentially a profitable and successful business at State Street Digital, a business she helped set up to take advantage of the opportunities provided by digital assets and tokenisation. 

But she says it is a calculated risk, as she believes Securrency's technology is second to none.  “We can run it on any network. Right now we are running it on Ethereum, and we’re doubling down with private markets — closed-ended funds, open-ended funds, real estate, giving fund managers the ability to tokenise funds and the retail investor more freedom to take these assets and fractionalise them. This is not pie in the sky, it is stuff that works today.”

The digital assets market is predicted to be worth $16tn by 2030 and Ms Chakar is excited by what it potentially means for an industry mired in costs and inefficiencies. “Look at how much money, time and effort has gone into T+1 settlement when you can move money in a nanosecond,” she says excitedly. Ms Chakar says tokenisation can help clients find new markets and ways of raising liquidity, and do it much cheaper, faster and better. 

“You can tokenise money market funds and use it for collateral and exchange collateral in real time. Think about how much risk you could move out of the system.”

One of Securrency’s investors and clients, WisdomTree, did something really innovative, she says. They got Securities and Exchange Commission approval to tokenise eight or nine funds and hold them on a registry on the blockchain.

“WisdomTree existed to disrupt the ETF [exchange traded funds] market, and this is just the next evolution of digital, tokenised products,” she explains, adding that this is how the next generation is going to buy financial services.

Going out on a limb

Securrency’s mantra is “Global liquidity and financial freedom for all”, something which Ms Chakar certainly seems to buy into as she talks about opening up investments and financial markets to more people, including the unbanked, using Securrency’s technology.

But could she not have done that within the relatively safe confines of State Street Digital, a business she helped set up to take advantage of digital assets like cryptocurrencies and tokenisation? State Street is also an investor in Securrency and while the bank was incredibly supportive of setting up the new digital business, Ms Chakar says it is difficult to just rip up more than 200 years of acquisitions and legacy infrastructure.

“This is what I wanted to do, but it is hard to innovate from the inside. What I liked about Securrency is that it allowed me to do what I know — traditional banking — but bridging the old and the new. I want to bring the Jetsons and the Flintstones together.”

But is there any place in this new digitised, tokenised world for the one she left behind — custodians, exchanges, centralised securities depositories [CSDs]? Ms Chakar insists that the two worlds will continue to co-exist for some time. “Existing market infrastructures [CSDs, exchanges] will not disappear overnight,” she says. “Clients will not digitise every asset, which is why we need a bridge between the old and the new.”

“You can’t take $700 gazillion [worth of assets], flick a switch and make it all digital. When you’re managing money on behalf of mom and pop, it is very difficult to take the plunge into decentralised finance and trade with someone you don’t know. But if you want to see broad institutional adoption of DeFi, Securrency is the answer.”

Eventually, Ms Chakar believes digital assets will overtake the traditional rails, “but that won’t happen in my lifetime”, she says. “But I want to set the rails and watch it grow.”