How Blockchain is Enhancing Efficiency and Transparency in Finance

What inspired you to start Hashnote, and what unique value does it bring to the cryptocurrency and blockchain ecosystem?

Hashnote is about bridging traditional finance and on-chain finance. We always want to be a regulated and responsible player in the industry. We also want to add significant value to our investors via the use of blockchain, so we are very thoughtful about where, how, and what we deploy.

The things I’m really focused on are where we can increase efficiency, which usually leads to reduced fees, increased returns, or reduced risk due to the fact we’re doing things on-chain. Those are the things we can do on-chain that make us better than other products in the market.

We also ask ourselves, ‘What can we do to prepare for a world where all financial instruments are settling on-chain?’ I think it’s relatively inevitable that the majority of financial transactions are going to end up settling on-chain.

What is the major challenge you faced in bridging the gap between traditional and decentralized finance?

There are a couple of challenges. I think the one that everyone is going to point to is regulation—it’s very unclear. At Hashnote, we went with the regulated fund structure because it’s the one where there is the most clarity. It’s also challenging to build things that are value-added, unique, and desired by the next set of users.

A lot of people have a wrong approach to tokenization. They take a traditional security product and tokenize it at the very end. And I think that’s kind of a garbage way to do it. I think if you’re going to do things on-chain, most of the time, it has to move on-chain very early to be able to harvest the value of being on-chain, whether it’s the automation or the decentralization or the verifiability.

How does Hashnote enable the security and transparency of digital assets for its users in the rapidly evolving landscape of blockchain technology?

All of our activities are done on-chain; hence all of our clients can see transactions that happen on their behalf, verifiable on-chain. All their fees are on-chain, and any intermediate steps that happen are on-chain as well. Our users can go into our user portal, click on a transaction, and see the transaction hash on Ethereum, which includes all the information related to the transaction. It gives you this transparency in a way we’ve never had in traditional finance, where you dig all the way to the base layers to find out what happened. Transparency is something we value, and many of our clients value as well.

One of the reasons we are partnered with custodians first is because it gives many of our clients the security of having their assets at the custodian of their choice. From a TradFi point of view, custodians are not a security issue; they’re really like an accounting construct, a way to know who owns what and how. In crypto, custodians are security and technology issues. They’re the ones holding your private keys. If something goes wrong there, it’s kind of like the end of the world.

What kind of products does Hashnote see as generating the most interest among investors?

Our most well-known product is USYC, a collateral token for posting as collateral in trading or investment use cases. The main draw of this product is that it’s very competitive compared to the traditional finance equivalent. My real goal is to make that yield-bearing collateral available in the traditional finance space, to be able to post tokenized collateral at the CBOE or EUREX, and I think that’s a real improvement in the traditional finance space.

The second product is called Harbor, which is a yield solution for crypto. This is interesting because of the types of activities you can do with assets as a digital assets custodian that you cannot do in traditional finance. For instance, the appeal of Hashnote Harbor is that you can keep your assets productive, generating yield, while the assets never leave the safety of your custodian. We’ve partnered with Anchorage Digital and Two Ocean Trust on that product and we’re looking to deploy it on other custodians as well. We also partnered with Copper, and we’ll be the first collateral available there in yield-stable assets.

The third type of product we're looking at is much more crypto-native. We partnered with CoinDesk Indices to provide a CoinDesk 20 Index Fund, and the demand for that product has really picked up in the wake of the bitcoin ETF approvals. The next step then becomes, “What’s next after the Bitcoin and ETH ETF approvals?”. It is a broad-based index fund. It doesn’t make sense to go down the line of tokens one by one. Why get exposure to one asset when you can own a broad-based representation of an asset class? Exposure to the CoinDesk 20 Index perfectly fits the bill.

Can you unpack Hashnote’s relationship with CoinDesk Indices?

Hashnote provides institutional investors and RIAs with streamlined access to the CoinDesk 20 Index through its CoinDesk 20 Index Fund Series, enabling efficient portfolio diversification. It delivers exposure to a market cap-weighted basket of the top 20 digital assets within the CoinDesk 20, offering a compelling alternative to traditional Bitcoin investments.

The feedback on the CoinDesk 20 has been overwhelmingly positive, with clients and industry participants recognizing its value as a reliable benchmark for comparing crypto investments. Furthermore, accessing the index via Hashnote simplifies the investment experience, providing straightforward access without the burden of managing multiple wallets and private keys.

For more information, visit the Hashnote CoinDesk 20 Index Fund Series page.

Authors' views and opinions are their own and not associated with CoinDesk Indices. The interview was conducted by CoinDesk Indices and is not associated with CoinDesk editorial.