Blockchain – the mysterious and alluring technology upon which Bitcoin and so many other cryptocurrencies are built. As our industry continues to grow, there are more and more applications for this new form of technology, invented by Satoshi Nakamoto when he wrote the Bitcoin whitepaper in 2008. Today I interview Brightvine CEO Joe Vellanikaran about yet another such application. . Brightvine is a blockchain-based fixed income platform that connects high-quality real asset issuers with digital investors. In March, I interviewed Joe about the announcement of a partnership with Angel Oak Capital Advisors, the technology venture arm of the Angel Oak Companies, which works on innovative mortgage solutions. The purpose of the partnership was to leverage Brightvine’s platform in exploring new investment avenues for investors. Today they announced the first collaboration results of this partnership, the first bank subordinated debt issuance leveraging blockchain technology, called BFNS 2022-1 – a $147.55 million subordinated debt securitization. Naturally, I had some questions.
CoinJournal (CJ): Can you summarize how exactly this capital and project raising being carried out on the blockchain is a boon for those who may not be familiar with your approach?
Joe Vellanikaran (JV): In a typical securitization, the process of coordinating documents and updated data among multiple participants is a manual and labor-intensive process. The Brightvine Portal allows instant validation of each document against immutable blockchain records, ensuring that documents used by all parties are always accurate and up to date. The distributed ledger ensures that whenever a data point is updated, those changes are populated in real-time for all stakeholders.
CJ: We interviewed you about the Brightvine and Angel Oak partnership when it was announced in the second quarter of this year. This is the first collaboration – did you delay due to contagion in the markets?
JV: Our partnership with Angel Oak is on schedule – we’ve been actively working with them since our last announcement to prepare Portal Brightvine to support a variety of their asset classes that can take full advantage of the Portal’s key features, including more efficient securitization, real-time data distribution between parties and blockchain-validated documents.
CJ: How much has the chaos of the past few months and the downturn affected this partnership in general?
JV: Many large institutions have become champions of blockchain technology in recent months, despite any downturn in the cryptocurrency markets. Either way, using the best technologies to create the most secure, efficient and accurate financial infrastructure makes sense now more than ever. We view our partnership with Angel Oak and the BFNS 2022-1 results as the first of many exciting announcements in a long-term collaboration.
CJ: The housing market has been showing signs of slowing down recently, what do you think about it?
JV: We have heard calls from government agencies and other organizations for the private sector to step up and help in the real estate markets and that is what we are looking to do. Brightvine’s goal is to increase liquidity for mortgages, fixed income and real estate by building new technology infrastructure that can connect these markets to new forms of digital investors – whether rates go up or down, people will still need mortgages, and our role is to help increase efficiency on the backend of that financial infrastructure.
CJ: Do you believe that as many cryptocurrency projects will go through this cycle as in the previous crypto winter?
JV: What we are seeing in the cryptocurrency market right now is a slight contraction and correction as projects succeed (and fail) while traditional and cutting-edge companies are trying to prepare for a Web3 future. As we emerge from this crypto winter, the next big wave of companies and products will also emerge – and the winners will be those that bridge the gap between TradFi and DeFi and create something new that enables digital transformation to lead us into a truly decentralized future.
CJ: How might the Fed rate hikes, which of course affect mortgages, impact this collaboration and the business model going forward?
JV: With the Fed’s rates rising, it becomes more difficult for people to repay loans, but the demand for housing and the need for mortgages is going nowhere. We believe the efficiencies and new demand that Brightvine can generate for these markets can help reduce these fees over time.
