Delay in On-Chain Transition of $6 Trillion Asset-Backed Finance

The on-chain transition of the asset-backed finance market, valued at approximately $6 trillion, is being delayed due to user experience issues, custody, and institutional authority management problems. Mike Cagney, co-founder of Figure Technologies Solutions, stated that DeFi is more suitable for asset-backed finance. He pointed out that while Figure has transitioned asset-backed finance on-chain, the overall market is still in its early stages and large-scale transitions have not yet occurred. Cagney mentioned that traditional finance struggles to enter on-chain applications due to a lack of interface experience, the coexistence challenges of qualified custody and self-custody, and the requirements of hedge funds. He explained that apps like Robinhood and SoFi have succeeded in the retail investor market primarily due to user experience. He emphasized that for on-chain finance to handle institutional funds, authority separation and accounting output are necessary. Cagney's remarks suggest that although on-chain finance is suitable for asset-backed finance, addressing operational systems and internal control requirements is essential for actual institutional applications. The key challenge remains whether regulations, custody, and institutional authority systems meet the internal control standards of financial institutions.