Private credit is moving into a new era, with capital, underwriting, and returns being separated in ways that redesign risk. Cap is bringing that model on-chain. Joining us is Steve Wallace, Head of EMEA at Cap. Steve, welcome to the show.
Thanks Rachel. Good to be here.
Cap tries to rethink how private credit works by separating the people who provide the capital, the people who generate the returns, and the people underwriting it. Can you break that down in simple terms?
On one side we have depositors — people providing capital in return for a yield. Those US dollar deposits form the finance pool that borrowers access when they want to borrow from Cap. But in order to do so, we have introduced a funded underwriter model, where an underwriter needs to guarantee the borrower by putting up collateral against the loan. If the borrower defaults, it is that collateral that is used to top up the reserves and make the lender whole again. That is the three sides of the model.
You have argued that private credit has an incentive problem — that the people making lending decisions are not always the ones bearing the risk. How does Cap change that?
The people pricing the risk and responsible for accounting for it are putting financial capital against it — that is what we are bringing through the underwriting piece. We are not trying to remove risk from markets. We are saying that those making the decisions should have financial accountability for what happens to the lender's capital. And that is also where scale comes in — we have a number of underwriters representing different geographies, different sectors, and different sizes of borrower. That gives what we call a canvas of credit that borrowers can access, but in a protected way through an underwriter who has put up collateral against that borrower.
Does greater regulatory clarity make it easier for platforms like Cap to bring institutional credit online?
It depends which market you are in. Here, the regulators are very open. I met with the FSA last week and I am meeting with them again next week — they are consulting around DeFi at the moment, which is a very positive thing. They are not only engaged in a positive way but have a very strong background in this as well. When you contrast that to the previous environment in the US, where people were very worried about criminal charges or fines, we are thankfully past that. But yes, there still needs to be some regulatory clarity — and that is only helpful when institutional capital wants to access the space.
Franklin Templeton has backed Cap. What does that tell us about how seriously mainstream finance is taking crypto?
Very seriously. I was lucky enough to work at Franklin Templeton in Dubai from 2020 to 2022. When Jemmy Johnson became CEO, we saw this evolution — Franklin Templeton getting engaged not just with blockchain technology but with digital assets holistically across their operating model. When a manager with approximately $1.7 to $1.8 trillion in assets moves into the space, that is a really strong signal. That is actually why I moved from Franklin Templeton full-time into crypto — I could see where the future was going, and Franklin Templeton was showing me that.
Why is the UAE so important for Cap's growth plans specifically?
Three key things. First, the regulatory environment — everyone knows how progressive and engaged it is. Second, the government — whatever the technology, whether it is AI, crypto, blockchain, data centres, or bitcoin mining, the government is very progressive and engaged. Third, the capital markets that bring those three together. We also have investors here in the region who have backed Cap, so it makes absolute sense that this is the next place for us to be.
What developments in credit and digital assets will have the biggest impact on Cap's growth over the next twelve months?
The conversation in crypto has evolved through three stages. First it was all about yield — what is the return? Then it was about transparency — where is that yield coming from? And now, over the last three to six months, it is about risk management — what is the quality of that yield and what is the risk of losing capital, not just the return on investment? That supports what we are focused on. We have a strong yield, we are fully transparent — you can see who the underwriters are, who the borrowers are, where the reserves are, the borrower rate, and the rate we provide for depositors, all open access. The next stage is providing more detail and framework around risk management, and we are already having more engaged discussions with risk officers and risk managers at institutions.
Thank you so much for joining us, Steve.
Great. Thanks again Rachel. Appreciate it.
