Pipes or Plumbing? Wall Street’s Onchain Bet | DC Fintech Week 2026

Good morning and welcome. I'm Sandra Weed, co-chair of the Fintech and Digital Assets practice at Gibson Dunn. I want to start with a confession. I find infrastructure remarkably attractive. It's okay, laugh.

But you're going to see soon why my position is absolutely correct. Right now, the biggest names in Wall Street are making serious bets on what sits underneath finance. Tokenized funds, tokenized deposits, and new rails that run around the clock. Which brings us to our title, pipes or plumbing. We were talking backstage, they might sound the same and that might have something to do with how handy we all are, but they aren't.

[snorts]

Pipes are proprietary. You build on them, you own them, you decide who connects. Meanwhile, plumbing is shared. It's a foundation on which many build. So, the question that regulators and market participants are asking is this, when legacy institutions go on chain, are they are they laying shared plumbing or building private walled gardens with better technology?

And so, we have the right people here on stage to help us answer this question. And by the end, we will have answered it definitively. There will be no more conversation to be had. Totally kidding. But let's turn quickly to some introductions.

Uh I'm Samara Cohen. I'm the global head of market development for BlackRock, which is really just a fancy way of saying I am a career plumber of financial markets. So, imagine my excitement at being able to join this this conversation. Very uh happy to be here with you today.

Hi, good morning everyone. My name is Bis Chatterjee. I'm the head of partnerships and innovation for our services division. We're largely focused on new product development and new business development.

And I'm Peter Curly. I'm the head of regulatory affairs for Ando Finance and on this panel I am the public chain representative. I think we're actively tokenizing markets and bringing them on public chains is our core business model.

Good morning. I'm Caitlin Azar. I've been serving as the acting superintendent of the New York State Department of Financial Services for the past year. Prior to that I led the research and innovation division and we have been in the business of regulating virtual currency and looking at tokenization for a decade.

So like I said, we have the right people on stage. So as I as I said, our title poses a choice. So let's kick it off with sort of the top line question. Is on chain infrastructure building new pipes, meaning parallel systems that might eventually overtake or replace the old one or is it better plumbing that's sort of happening inside what's sort of existing infrastructure? Not all at once.

I'll take. Same order or yeah, anyone? Okay. Um

The aspiration I think is creating better markets, which is neither and both of those things. So however, I think you know, one of the reasons I'm excited to see everybody gathered here and and to see some of the papers that were written is I'm not sure that better markets are necessarily the unmanaged outcome here. And so the ability to take what is already highly functioning in global capital markets Um, expand it using these novel technologies, hopefully, so that more investors can participate in more investments. To me, that's the definition of better markets, which is the aspiration, but will require a lot of collaboration across different industry participant participants to to actually see happen.

So, I think that is a nice way of sort of tying it together. Anybody else, any other triggering thoughts?

Yes, so Howard, I would say from our perspective, it's ultimately about the client. And you know, as Amara had a point, whether it's a market, client, individual, institutions, this quality of service they're looking for. Below the hood, it's really for us to make sure we take the best of all technologies and make them all work together to give the client experience and that efficiency.

What I I would observe is that there's a risk that it won't work together. I think as Amara was kind of recognizing. Right now, there's a lot of different offerings coming to market at the same time. Not And they're competing along the lines that you're suggesting. Some want to be more proprietary.

We're focused more on the on the open chains as a as a linking mechanism to bring the the markets together. But it's an open question and kind of a fight. And so, certainly that's been part of what we've been emphasizing is both the need for the systems to work together. It's not a single choice that we're going to impose upon the markets. We think people want the different models.

That's why they're out there in the first place. But that there is an important role for institutions like the SEC to make sure investors interests are well served.

Yeah, I can share, you know, from our perspective, you know, we have an interesting vantage, right? Because we're regulating some of the the kind of digitally native early movers in the space. And you know, some of our largest traditional institutions active in capital markets. And you know, so I think the answer, like everyone, is both. Really, we're seeing those digitally native companies um, really imagine an entirely new infrastructure, um, an entirely new set of kind of trading and activity only on chain.

And then, you know, our traditional players really working on their own back end and thinking about um, how they can modernize. And you see that across, you know, from tokenized deposits to obviously tokenized securities and, you know, stablecoins as as the original layer there.

Love it. All right. So, let's talk about what's real. This is I think something that's, you know, we're we're going to be talking about sort of where we are and where we're going. So, what's real?

This is, you know, City Token Services just expanded into Japan and the UAE and is now live in seven markets, which is, you know, quite a feat. Um, what does a corporate treasurer get from tokenized deposits that 24/7 dollar clearing alone can't deliver?

So, Sarah, you know, when we went live with City Token Services about a couple of years ago, we'd been working on blockchain technology for 10 years before that. Um, it was really the decision to go live was really unlocking client needs both from the corporate side as well as the financial institution side that we found had kind of got to a tipping point where our clients, you know, most of them are global in nature, whether they're asset managers, whether they're multinational corporates, needed to manage their liquidity on an always-on basis. You know, they had multiple legal entities all over the world, subsidiaries, uh, or or the people that were, you know, transacting in global markets were trying to, you know, get the most optimal market liquidity and returns. And so, they had to move their capital at a much more faster rate. We saw things, you know, market-moving changes like the lockdown created a much more push into digital commerce which, you know, as all of you know, um, you know, you don't have markets that shut down, you know, on a Saturday.

You You see a sign on your e-commerce marketplaces closed on the weekend, come back Monday morning. Same thing we're seeing in the securities industry, you know, settlement cycles are moving from T+2 to T+1. So, it was very kind of important for us to meet those client needs. And so, that's the reason we led with Citi Token Services and we're seeing the adoption. We're seeing more and more use cases come from clients, whether it's managing their liquidity to be available when they need it, where they need it, rather than have to pre-plan and pre-forecast and move it.

And that's both from the payment side, from the liquidity side, and from the settlement side behind securities. The other thing which we found was we had other ecosystems in the bank, like 24/7 dollar clearing, but you had to go through, you know, legacy Swift-based technology, which is also getting upgraded from their end. But you had to go through complex handover from like one institution to the other. And at the end, if you're moving money from point A to point B, all the parties in that chain had to have a 24/7 operating ecosystem. And that's where I think, you know, our vision is that as we create more 24/7 operating ecosystems, whether it's a blockchain, whether it's a non-blockchain, you need to start creating this interoperability.

Otherwise, these things will stay in narrow corridors and be limited to individual institutions.

Yeah, and and just, you know, what it can you tell us about sort of the choice to go with sort of permissioned private versus, I know Peter's going to talk some about sort of the flip the flip side.

So, Sarah, we benefited Citi from having one of the largest global footprints. We're in physically in 90 plus countries. We have thousands of like wholesale and institutional accounts that, you know, bank with us. So, we had the luxury of not having to build a network, but, you know, our our focus was to take our existing network and make it 24/7. And that's where blockchain really helped.

I think from a perspective of risk, safety, soundness, our initial plan was always to go with a, you know, private permission market within the city ecosystem, but our plan and our strategy includes integrating with public networks because in the end, you know, our clients use cases, whether it's on the capital market side or the corporate side, will take our clients into markets which are serviced through public and open systems. And I mean, if you look at historically, you know, financial transactions happen over internet-based protocols. Those are open markets. So, we are familiar and comfortable with, but I think we're also seeing a sign from the regulatory ecosystem around the maturity it needs to understand what it means to do business. So, we are following our clients' journey and we think in the very near future, we will have to work on integrating into public blockchains as well.

Yeah, and I was saying in counseling sort of, you know, financial institutions, that is not an uncommon story, right? Where you start versus where you're going.

Yeah, so that has kind of, you know, defined our design choices. So, even our own internal ecosystem is designed on on components and technology on the blockchain that is compatible with other public networks.

So, Peter, you started in a different place in terms of, you know, skipping forward to sort of that the public instance. Can you sort of talk a little bit about the fact that, you know, Ondo certainly is a, you know, public chain you know, you're providing that that sort of contrast to what Biz was talking about. Um, who's buying the token I share? Um, and sort of what what's animating that from your perspective?

Yeah, almost in a way similar to what Biz was describing. We're also meeting customers where they are. This cohort of customers are crypto-native, long crypto already, looking for diversifying assets in traditional markets where they are comfortable trading, which is on chain. So, that's what we saw as over the last year, we've grown the the um stocks TVL up to about a billion dollars. Early adoption was in very much like diversifying assets, so large ETFs, uh gold, even uh ETFs focused on fixed income um were some of the largest early phase uh take-up of our products.

As we shifted, and now we're up over 400 products uh on-chain, now we've seen them uh also looking at other single stock diversify things, things not correlated with their on-chain investments, as well as ones that are. Um so, like Micron or others that are focused in things that they understand, we're seeing people establishing long positions in those on-chain because they like to trade on-chain. That's where their corpus is of activity, and so we can meet them where they are. Um so, that's a nice story, we think, in terms of expansion. The other little variation there, just for uh like the more technocratic crowd here, is it is relatively expensive for uh people to trade US stocks offshore.

So, a lot of all almost all of our investors have many options, many are high-net-worth individuals choosing to trade on-chain. What they tell us is that it's more expensive to trade on-chain when you're in a in Asian country because the interme intermediation chain is longer. And so, we are both meeting them where they are and giving them a product that um gives them excellent execution, but at a lower cost. So, what's not to like is kind of what we're hearing from from folks there. They're looking for us to expand both the the types of products we offer and the range of services, and that's our next um uh kind of evolution in in terms of expansion is expanding the way they can trade with us.

Yeah, so where where the market is may be absolutely contextual, right? And so, I think Co-CEO is like there's not that singular answer, and so sort of room room to play. Um Samara, you already sort of touched on this, this idea that um we we have this potential for coexistence, right? It may not be an either or, it may be sort of a both situation. Um I know you've given a lot of thought to this, but how do you think about um you know, what it takes to build something coherent without sort of inadvertently creating silos?

Um well, I really appreciate what Peter said at the beginning, which is that this is an open question and a bit of a fight, because I think we should be eyes wide open that that is actually what's happening. We all love to wave our hands and say, you know, we can have an internet and an intranet, and both of them are really useful. I think that's an an analogy that's pretty helpful. However, at the end of the day, what is going to happen over the course of the next 6 to 12 months is we will likely have multiple tokenized models on the same underlying asset, which will at best create investor confusion, and at worst create real um market fragmentation, liquidity fragmentation, and undermine price discovery. So, how do we settle that?

And I think some of the answer to that is that is the price of innovation, and we can be willing to bear some of that for a certain period of time, and I really commend um what the SEC did with the innovation exemption to at attempt to put guardrails around live production, because this is not a technology we can paper trade into existence. But what I hope we learn at the end of the innovation exemption is how to create price coherence, which really for me comes down to the conditions to affect arbitrage. Number one, valuation clarity. How do we ensure across all of these different tokens, um we know the attributes that will contribute to pricing. They probably should trade at different prices, and particularly if they have different, you know, counterparty risks and exposures.

Um market access. We need market participants to be able to trade both the permission to city token and the, you know, permissionless Ondo token so that they can execute the arbitrage trade. And of course, they need certainty of execution that they can do these trades and both sides of them hold.

So, a massive group project is what you're saying. I do think it's a massive uh group project.

Yeah. [laughter]

Listen, if you shuddered, it's okay. Um we're all doing this together. Um so, Caitlin, you um DFS has been, you know, the leading tip of the spear with respect to supervising digitally native financial institutions for now a decade. Saying it out loud, you know, it's happened, right? Um what have you learned in terms of, you know, the ways that the risks show up differently uh where you're talking about sort of a blockchain native or um a blockchain compatible offering?

Yeah, I mean, you know, I read a lot of long memos about the group project uh on a daily basis. So, you know, we're obviously heavily thinking about this right now as, you know, we see that experimentation. You know, we have to think about what I tell my team is first, right? The traditional financial risks, the traditional risks that we see have to always be there as our base, and then how are we using, especially our um experience in the virtual currency space overseeing that and really our depth of knowledge chain risks in particular and the unique aspects that that brings to the the trade and the the counterparties um to inform kind of our supervisory approach. And then, of course, where these two things blend and where I see blockchain risks kind of enhancing traditional risks.

Um so, you know, in the tokenization space, we're thinking a lot about um obviously settlement finality and what that means across the different flavors of, you know, tokenization and and where it is actually existing in terms of the asset itself. Um, how are we unwinding transactions? Kind of the the feature of blockchain is also the bug in a lot of cases and how are we managing that? Um, you know, we talked obviously about permissionless and permissioned. Um, you know, that blockchain resiliency, where do we actually see independence of the nodes?

Um, who has control? There are financial incentives across all of these chains. How do we think about that? Um, and we spent so much time obviously creating resilient kind of central infrastructure and now we have a different type of infrastructure with a lot of different, um, incentives that we need to parse through. In terms of traditional risks that I'm seeing kind of enhanced, um, you know, we already spoke about it here.

That's, um, you know, really consumer awareness and understanding about new types of tokens, right? Synthetic tokens that we understand is, you know, just price exposure in the traditional markets. Now we have access to that across DeFi of, you know, traders who not who might not be as familiar with that. So, um, how do we understand and and talk about that consumer piece? And then third-party risk, right?

We have new types of players who are fundamentally again, you know, minting the tokens, creating that compliance layer and we've spent so much time building that kind of central counterparty structure, um, that we know is protected. What does it mean to have these new third parties providing such an essential rail?

This is a whole extra panel and I think you're going to have or people are going to be clamoring to talk to you afterwards, for sure. There's a lot there. Um, Peter, you ran clearance and settlement, um, policy at the SEC. We've got this innovation exemption. Um, how do you think about that?

Is Is it we thinking about it as a sandbox? Is it sort of designed to, you know, create, you know, sandbox here in the US can sometimes be a a loaded term. Like, how how should we be thinking about this moment?

So, uh, I'm a fan of the innovation exemption with qualifications as always but in in these circumstances, but I think just really kudos to the SEC for getting that out the door. It took a while and we're we're happy it's here. And I think our our core message is to them to keep going. So like it's not or like we call it a beachhead, not a sandbox or something else like play with the metaphor, but it is really a beginning and we want them to keep going and they've said they want to keep going and expand on it. This is one lane in the highway, not the whole highway.

And we do expect more people to in the short run like use the innovation exemption. We've already seen a few examples of that coming on online, which is great. And then modify it. We think it is just the beginning of one that's one way to do it, but the the real need is to keep going. Um and so certainly in our case, one of the other elements that we like about the exemption affirmatively we call attention to is their incorporation of public blockchains.

Um so that's one of the elements of of the exemption qualification together with permission assets and permission venues. But they the fact that they're calling attention to the role of permissionless blockchains and putting it as an affirmative obligation we think is a noteworthy new development in the regulatory space that the regulators can learn from and hopefully adapt themselves in their own ways. Um so so overall optimistic that this is the beginning of a really a good trend and one that you know, over time will expand into areas that um you know, the SEC will accommodate. Um and then maybe one last thing which is that the um So we also kind of say that uh while we love the public chain exception, we look forward to the day when it's not a requirement. When people can freely choose and know the roles of public chains and private chains and can adopt them affirmatively.

Right now we think there's value in the SEC calling attention to it in the way they have. And to really make people focus on the fact that it is a possibility and should be a live possibility in their planning. But over time, we'd hope that they let the market decide.

So tomorrow we've got till 2031, which sounds like the way distant future, but it's kind of it'll it'll come up on us fast. How do we use this time? Like what do we want to know or understand by the time we find ourselves sort of on the other side of the exemption?

So I think whether it's 2031 or 20, you know, 36, 10 years from now, a fail is spending the next decade modernizing around the edges of the market where we have the opportunity to actually define and create a better market. And even a year from now is not too soon to start to see measures of success. Uh, incremental liquidity, more investor participation. Um, and those are the things we need to align around. What does success look like?

Um, and then figure out where we work together to really start achieving it.

Yeah, so we are running low on time in part because um, this is a conversation that cannot be contained. Um, it doesn't fit in a sandbox. It might be a beachhead for conversations we have throughout um, throughout the conference. But I hope you'll join me in thanking our esteemed panel for joining us this morning.