Everything’s in place for Web3 minds to deliver value to every area of finance, beginning with home ownership and extending to areas like instant payments and budgeting. For John Nahas, Ava Labs’ chief business officer, it’s about time.
3 keys to the impending boom
Nahas said three developments brought us to this point. The first group consisted of open-minded asset managers from firms such as Franklin Templeton, Apollo, Hamilton Lane, and WisdomTree, who envisioned what could be achieved on-chain and with cryptocurrencies. Once they knew it was here to stay, they focused on how to benefit.
Crypto ETFs were next. Registered investment advisors had something to sell. That made crypto mass-accessible in a familiar format. Familiar issuers like BlackRock and Fidelity helped.
The 2024 federal election was pivotal. Nahas said the Biden Administration was anti-crypto, while Trump’s embraced it.
“With the election, it tipped over and became open season for innovation,” Nahas said. “And now, with legislation actually coming, it is historic; it’s something that this industry has been asking for for a long time.”
“The detractors like to say this is an unregulated industry, and it’s the Wild West. No, that’s like shooting someone in the foot and saying that they’re limping. We’ve been asking for this for the longest time. The GENIUS Act is the cherry on top to open things in the market.”
Are the regulations enough? Nahas said they bring clarity, which is always welcome. He finds them fair and notes they can be improved where needed over time.
“From where I sit in dealing with institutions, asset managers, traditional finance planners, payment companies and enterprises, nobody is willing to take a shot or do anything, if they could wake up one day on the wrong side of the line, period full stop,” he noted. “They would not even do anything at all, because they could wake up one morning and be on the wrong side of a line that didn’t exist yesterday. No one could take that chance, or even think about taking that chance.
“Now it’s twofold. There is some regulation for a vast majority of things, primarily stablecoins. Additionally, innovation will not be hindered. It will not be penalized. Previously, if you tried something and made a mistake, or you didn’t know you made a mistake, you were going to eat it.”
Nahas said there is now a give-and-take with regulators that didn’t exist before. Innovators feel safe to experiment and to discuss issues with them.
Home ownership, payments: Areas ripe for improvement
Home ownership structures could dramatically change in the current environment. As more investors, especially younger ones, embrace crypto, they should be able to use those assets as collateral for mortgages.
It’s silly that they can’t. Nahas said top-tier asset managers have crypto-backed ETFs, and public companies run crypto treasuries. More regulatory clarity is en route. The naysayers are running out of excuses.
Nahas quickly added that there needs to be standards, perhaps weighted algorithms in favour of large caps and Layer 1s, ones accounting for meme coin volatility. Stablecoins should be accepted without question. Tokenized assets are simply traditional assets in a new form.
“It’s wholly un-American to not be able to qualify people’s assets for their ability to get a mortgage, which is the cornerstone of the American dream,” Nahas said. “I think Mike Novogratz likes to say there are more people who own Bitcoin than dogs in America.”
“This is a large demographic that voted in overwhelming numbers in favor of this industry. And I think the numbers show that an equal number of people under the age of 40 own crypto as well as equities; under 30, it’s even higher. So this is only going to keep increasing in penetration.”
With stablecoins facilitating digital dollars, it changes the way society can pay for anything. Nahas said we can pay our mortgage daily, hourly, instantaneously. Imagine the economic boost from the interest savings. Lenders could charge higher rates, and consumers would still save money. Institutions would also benefit from the added liquidity provided by faster payments.
“Mortgage lenders get paid faster, so maybe they take that money and issue new mortgages and new loans because there’s a lot of plumbing that can be updated from, to give an analogy, landlines to mobile, right? You’re making a tectonic shift in the tech stack and the ability to execute on things.
“This can ripple out into so many other use cases. The payroll system in this country is biweekly and inefficient. You can effectively pay people daily. It can be programmed to autopay your mortgage, your car and everything else. You’re creating a very efficient market. The epitome of markets is to become efficient, right?”
What’s coming for Web3
Nahas said it’s an interesting time in the industry as incumbents begin to define their strategies. In the past, companies would crawl and walk before running, but they’re now feeling the heat to immediately deliver. That could bring big changes.
“I think we’ll see a big MNA season in crypto and consolidation,” Nahas predicted. “I think there are too many protocols and projects. So I think you’ll start to see some applications get bought by institutions or enterprises that you maybe wouldn’t have thought of. I could see a major movie studio buying an NFT marketplace, because that becomes a content distribution channel.
“I think you’re going to see consolidation between the incumbents and Web3 companies, because the choice is simple. They either build it themselves. That’s going to be slow, they’re not going to do it right, and they’ll be left in the dust.
“They’re going to buy, and those who buy are either going to have a team that can run it or are going to trust the team to run it there. They also need to have a strategy, or they’re going to partner. They’re going to run to people and ask how to do stuff together.”