Interviewer: Alright, once more we're live from definition at token 2049 Singapore. And of course this is where institutions and builders and tokenized credit and stablecoins meet, and it is powered by Accountable, the verification layer bringing institutional finance on chain. And now I have the pleasure to be joined by Tarun Gupta, founder and CEO of CoinShift, which helps organizations manage and grow their on-chain treasuries. Tarun, welcome to FinTech TV.
Tarun Gupta: Thank you for having me.
Interviewer: So first of all, uh, CoinShift began as a treasury tool for crypto organizations. How has the company evolved, uh, since those early days?
Tarun Gupta: Yeah, so I founded the company in 2021 as an on-chain treasury management solution. And we were managing roughly like $1 billion in AUM from organizations like Awe, Bitcoin, Uma, Zappa, like some of the biggest Dows, and they're sort of off-chain entities, registered entities, so they used us for payroll, crypto payroll, cash flow reporting, like all their Treasury sort of functions. And we did that for like 3 years and uh there is a joke we make in the industry like there are 500 Dow tools versus like there are 300 Dows. So a lot of these tools just came right in the last few years. But what happened, the industry has changed and evolved a lot, and most of these Dow sub-Dos does not exist right now. So we decided to move the business into asset management around 2025. We launched a yield bearing stablecoin. In partnership with Paxos and uh Steakhouse Financials, one of the top risk managers in the space, we scaled that to 170 million in like 3 or 4 months. It was like a roller coaster ride for us, and, uh, what happens is like US has passed this genius bill and Paxos decided to shut down the underlying stablecoin which we were sort of building on top. So we need to shut down that entire product because it was a heavily regulated product out of Abu Dhabi. So we need to shut down that product and then I was like, OK, we need to build everything from scratch, and we took like 8-10 months to rebuild the entire issuance infrastructure and compliance infrastructure ourselves. So today Coinshift can issue any kind of private credit or loan and put it on the blockchain. And make it available for everyone to use it basically. So yeah, this is a short journey.
Interviewer: Amazing. So Tarun, it's been quite a journey as you said right now. So let's talk about today and you just started to do so. What can we say is the main problem that you are solving for your customers today?
Tarun Gupta: Yes, I think the core problem we see in the market is, so there are two sides of the market right now. One side of the market is where you have these stablecoins are growing at an alarming rate, right? So it is roughly $200 billion. It will go to $1 trillion. Nobody has this question why it will go like this. Right, because of the efficiency, whatever it brings to the table. Now when these sort of assets or, or sorry, uh, like, uh, you know, cash will move on chain, right, it will look for the yield or interest rate, right? That is the second most important thing. And that's why you need credit. Now the question comes where this credit will generate the interest rate. Right, so you need very sophisticated sort of issuers we call it like real world assets, uh, uh, RWAs, right? So these two sides need to meet each other. So there is one side who wants yield. There is another side who wants to originate the credit. And imagine stablecoins can directly finance all these like AI infrastructure, robotics infrastructure. So the next wave of basically entrepreneurs is not only going to be like VC focused equity only, uh, there will be like founders can raise money directly from these like, you know, stablecoins. So that is where, uh, the, the coin shift is focused and we build our own product around this, right?
Interviewer: And today at definition you have a panel, uh, that is about trust in yield bearing assets. So allow me to ask you this. What does trust mean to you when you design a product?
Tarun Gupta: Yeah, it's the most important question, right, because when you start allocating into Defi or or blockchain, there are levels of risk you are taking, right? So you need to starting from trusting the platform. You are going to use plus trusting the curator who is going to manage the allocations for you right and then you need to trust the underlying issuer and then how transparent the underlying issuer is. It's very, very important. So for us to underwrite somebody, right, who's originating credit, it's very important to see all the loan book and line items in the loan. If you don't have like transparency around the loan book, you'll not be able to underwrite and predict the loss. Because one thing in credit we need to understand, it's like the upside is capped. And sometimes the downside is like, you know, not capped, so you need to have a balance between upside and downside also, otherwise, why it's a credit, right? So, so it's very, very important you need to map out your losses. And protect your losses. Uh, and if the issuer is not sharing those things, it's a, it's a red flag, basically, right? So this is the core thing for trust basically.
Interviewer: So, uh, I'm talking about when, when someone, uh, looks at yield products for the first time, he, he has a yield product and they're assessing it for the first time. What are the first things that you believe are primary or main that they should check and make sure of?
Tarun Gupta: Yes, very, very good question. So if you're looking at any vaults or or any yield which is marketing, let's say, you know, 10% APR, 15% APR, there are a few questions you need to ask, right, because there is a cost of dollar borrowing in the world and if somebody is able to offer way above that rate, right, we need to see that there is like we call it risk adjusted yield rate. So there is a risk-free rate. Risk-free rate we call it basically the, the software, right, uh, where, where you have this treasury rate. Anything above that is like a risk you take. So if somebody is saying we're offering 10%, that sort of treasuries are running at around 4%. The 600 BPs of extra interest rate is going to come from some risk, right? So you need to ask this question how these all points are adding in the yield and what risk I'm taking? And it's not, does not mean 10% products are bad, but it means there is a risk. And if you don't understand that risk, right, you are likely to lose money, right?
Interviewer: And the question of where the yield comes from is quite a common question, right? How would you explain this to a newcomer in a way that they wouldn't understand in simple terms?
Tarun Gupta: Yes, I will give you like a primer on this. So for the last few years, Defi has been generating yield from only on-chain activities. So let's say I have Bitcoin, right? I want to borrow against that, right? So I will put it as a collateral. I will borrow. So the Defi lender is just generating the money from somebody holding Bitcoin and taking the leverage. But when the market goes down, nobody borrows, right? Like nobody really wants to borrow or do the leverage whatever. So in that time, D5 yields shrinks and it goes below software, right, and it becomes unattractive almost, right? Why will you lend money to D5 versus you can put it into treasuries? So this is where you need to understand like. Now the industry should need to have real yield sources like, you know, there is GP financing, there is like reinsurance markets. These are real economic activities on the ground, and if stablecoin and DI can fund that and finance that, the yield will be coming from the same sources which is getting done by like TI. But now you have better capital formation through stablecoins, right? So you are going to fund, I think SpaceX has like taken some loan from Apollo, right, to finance that. What if tomorrow they can raise money from stablecoins to finance their data centers, right?
Interviewer: Tarun, thank you very much for giving us some of your time and good luck with your panel today.
Tarun Gupta: Thank you, thank you, appreciate it.
