How Is Blockchain Driving Disruption?

Albert: So, to set the stage here, my name is Albert Vanderlaan. I am the head of the capital markets group here at Orrick. I'm really pleased to be joined today by Robert Leshner, the CEO and co-founder of Superstate. I would love for you to just give a little background on yourself, the company, and then we can dive into some questions about crypto and everything related.

Robert: Sure, well, thanks for having me on the program. I've been an Orrick client since 2011, and Superstate's actually my fourth company, so I've gotten to go through the journey a couple of times to get to this point. And what Superstate is—it actually builds off of a lot of things I've doing in this space for the last decade or so—is we're trying to create an opportunity for the tokens that live on blockchains, that are traded on blockchains, that are borrowed and lent in blockchains, that are portable around the world because of blockchains. Instead of them being the assets that people know and are used to today, they're actually the securities that people understand from Wall Street—and that make up the foundation of our capital and financial markets. What we're trying to do is to take financial assets that are well understood and put them into a new form factor, on-chain, so they can do hyper-modern financial programming things.

Albert: That makes a lot of sense. Just for level-setting for our audience: a few of the things that you just mentioned, I think would be great to unpack just from an initial piece of it, because there's a lot of terminology that gets thrown around. So, “on the chain,” “blockchain,” “crypto.” Where, in the history of where that has been and where it's going, do you think we are? And what, as a baseline, should people understand about just blockchain versus crypto, and what they all mean within that ecosystem?

Robert: Yeah, that's a big question. And blockchain is a huge umbrella at this point. But I would say we're at the beginning of the third act of blockchain. I'll get to that in a second.

Act One really was Bitcoin. Bitcoin is a blockchain. It's not a programming environment in that it's a system that records ownership of an asset, Bitcoin. And the asset is transferable to anyone. It's global and it's very fast. It's not instant, but it's fast. And it is relatively inexpensive to send Bitcoin around the world. And so that was sort of Act One.

Act Two was the rise of Ethereum as a blockchain. Ethereum is not just a blockchain to move an asset around. You can move “ether,” the native currency of the blockchain around, you can transfer it—and it moves a little bit faster than the Bitcoin and it’s a little bit cheaper. But the core differentiation is that you can deploy computer programs onto this blockchain to add logic to how assets on the blockchain move and behave. In addition to being able to add computer programs, you can also deploy what are known as tokens on this blockchain. And those can represent anything that can be created by a company, created by person, created by an autonomous computer program.

But in Act Two, which is a little bit defined by the last couple of years, you're able to create assets and add logic to them. And we've seen this logic being really interesting. If you've heard of decentralized finance? This is also a broad category of items, but it's the ability to create computer programs on this blockchain for people to trade, for people to borrow and lend these tokens, for people to create derivatives, for the people to try to create pretty much anything functionally.

A lot of the assets that have been made on this blockchain are what we call “crypto native” tokens. They're tokens that only really exist in the ecosystem of the blockchain itself. They don't derive their value from an off-chain company, they don't drive their value like an off-chain asset. So, what we've seen is just a lot of crypto native tokens and we've seen a huge growing ability to add really interesting financial applications and markets around them.

Now we're finally entering Act Three, which is we're taking the programmability of the blockchain—Act Two—and really for the first time we’re combing this with off-chain assets and off-chain wealth. What I mean by “off-chain” is things that derive their value not from within the blockchain ecosystem, but from outside of the blockchain ecosystem. So, taking T-bills from the financial market and putting them on-chain in a token—that's a very popular use case. Some people call them “real-world assets”, but I'm not huge into that term. Taking off-chain assets and bringing them on-chain as tokens in some way and combining that with the programmability of the blockchain itself.

The result, Act Three—we are relatively early in the journey. The result is that you get programmability of financial assets that haven't been very programmable in the past. It's not easy to add logic and automation around fixed income or stocks or any of these things, but we're entering this era where that's finally becoming achievable.

Albert: Fascinating. By the way, I think that's the best recitation I've heard of all of that in approximately a minute and a half, so kudos to you for being able to do that. Amazing. It shows the depth and breadth of your knowledge here! With all of, that where does stablecoin fit into that? I'm guessing that's coming in the third act because it does have a relation—from my understanding—to something in the real world, but maybe not?

Robert: I would say that stablecoins are the first thing that really proves out this concept. With stablecoins, in general, there's a dollar sitting in a bank account and a token is minted against that. There's a company that stands in the middle that says, “we're holding the dollar in a bank account” or “we're a holding a T-bill in a bank account, don't worry about it,” and issuing the token against it. That's the first things that's really started to get to product-market fit, or scale, within crypto, from the off-chain world.

So, there's, you know, almost $200 billion of stablecoins today. At this point, it's a couple percent of the U.S. money supplies in the form of stablecoins, so it's becoming quite material. It's the first thing to really pilot the idea of an off-chain asset being represented in a token form. And in its simplest version, stablecoins are significantly superior to how dollars in bank accounts move around today, right? So, if I want to send a wire, in general, it's time consuming. It's extremely inefficient. There's going into banks, there's phone calls, there's all these things. It's not instant. It takes hours, even though it's incredibly fast and intraday.

There's a huge time cost to it and it's not programmable. I can't add logic to send wires very easily. Contrast that with the stablecoins themselves. The reason why they're so popular is you can send anywhere in the world, basically instantly, and basically for free. So, there's a hyper-liquidity to a stablecoin compared to its traditional off-chain counterpart. Not only that, but people are also able to build applications and logic and programs around these stablecoins to make that movement even more efficient. Two hedge funds could automate the netting of stablecoins between them based on what's happening in markets—or anything that they can think of.  It just shows that the form factor itself is superior to the traditional counterparts.

Albert: And in a much more instantaneous fashion, which again, to your point, makes it just a little bit more available to that type of a transaction happening in that real-time environment.

Okay, switching gears a little, in terms of the historical regulatory environment, there's been a lot of uncertainty about how tokens and crypto and other pieces of this environment are being regulated. The SEC took a position for quite some time that it was going to be a security. We're seeing some, I would say, movement in that area right now. What's the current state of play? It seems to be evolving every day—we're talking here in early June 2025. A lot is in flux. What's the current state or regulatory environment for crypto and tokenization in this manner?

Robert: Yeah, it's a really interesting question because when you ask this question every couple of years, the answer is generally different. In June 2025, we're at the point now where we're hopefully going to see legislation for the first time, to really define a lot of assets that have already been created.

There's really two main pieces of legislation being debated right now. There's the stablecoin legislation and the market structure legislation.

The stablecoin legislation says, “Hey, we now have $200 billion of stablecoins that have been created. How do we deal with that? And how do we enable new stablecoins to get created and/or existing ones to be regulated?” It's really answering a question that's almost backwards looking: We're here, so how do we deal with this?

In general, it's not going change that much for the largest stablecoins. In general, the largest stablecoins, like USDC, are backed by a dollar. They're generally transparent, they're generally well run. Tether is also generally backed by a dollar—it's a little bit less transparent.

But the stablecoin legislation will create a framework to say, in a couple of years’ time, you have to reach this standard—which is basically transparency and backing according to standards and working with credibility. Which won't be that hard for most stablecoins, but it'll really prevent immature stablecoins from coming to market. And so that stablecoin legislation is again, it's sort of backwards looking.

Market structure is the same way. Today, there's far more crypto assets that are being traded than public companies that exist. In the U.S. there's something along the lines of like, 4,000 public companies. There are 4,000 crypto tokens a day that get created.

Some of them, when you look at them from the top down, are very clearly not securities. Right? Things like Bitcoin, things that are completely autonomous, they have absolutely no ability for anyone anywhere in the world to intervene in them or give them value, right?

Albert: Hence the whole blockchain theory.

Robert: Yeah, hence the whole blockchain theory, right? Things that are like so obviously, you know, commodities.

And then you have things that sort of look like securities. There's sort of a business—you know, there's a company that's making a token, that's selling it to people. And you're like, all right, well, that's sort of a security.

Then you have everything in between. You have all sorts of projects that might have at one point had a company that was building this thing. But the company went away, and now it's running on its own, and it looks more like Bitcoin, but it was founded by a company. You have everything between—they don't really look like securities.

Market structure legislation is also somewhat backwards looking; which is, how do we deal with the tens of thousands of crypto assets that exist and that are publicly traded? How do we finally start to answer the question about like, what is the security? What is in the security, how do things move in between those classifications? And how do we create market structure for the end investor that is good for the end investor? But also, good for industry to create clarity around what is this stuff from a legal perspective. We haven't had this clarity for the last 14 years of crypto and the opinions around how this stuff has worked has changed by the composition of the commissioners of the SEC.

Albert: The SEC, that's right. Which is an interesting facet in and of itself, because is the SEC the right regulator? I think a lot of commentators are arguing no, it should be more of a commodity, it's in that domain, as a general matter, much more than an SEC and a security and something that should be regulated in that manner. That's where we've fallen into this trap of having to look back a lot, I think.

Hopefully—and I would love to get your insight on this—the market regulation would also dictate going forward, a little bit of, where does this truly sit on a go-forward basis? Yes, we've got a lot of things to clean up, but is there anything out there in that legislation so far that we've uncovered that's going to really be the driver for how this is looked at and viewed on a go-forward basis?

Robert: I would say, and just to back up a little bit, I think at one point, the SEC was the ideal regulator for crypto. That was during the ICO era. So, if you rewind to 2017, there was an era of crypto, in which the common operating procedure was: You had a company that hadn't built anything yet that was doing public fundraising on the promise to build something. That is very objectively, securities behavior, right? And the SEC came in pretty hard into that, saying this is very clearly securities behavior, for good reason. And the industry at large stopped behaving in that way. Going forward, I think, legislation removes a lot of the necessity for even opinions about what the regulatory structure can or should look like. When you have legislation, stablecoin and market structure, then suddenly I don't think we have to have this conversation much anymore.

Albert: And there's now intertwinings with the rest of the financial system—which is another turn I'm going to take here—which is this new overlay (I like the way you structured it in acts) here in Act Three, where you're seeing companies getting overlaid into it and other assets getting overlaid. How is that mapping over now to things like treasuries? And are crypto companies leveraging treasuries to be able to you know, develop other aspects of their business? Or just leverage it in more of a traditional financial manner? What other areas are crypto companies really engaging in with the traditional financial system, including the development of ETFs and things like that?

Robert: Yeah, it's a really interesting question. So, there's a couple things. I'll start by looking at this from a super high level.

So, there were really two directions of the bridge between crypto and trade fights, right? Direction one is crypto assets coming back to TradFi. The ETFs are a great example of this. The Bitcoin ETF takes a crypto asset, packages it in a TradFi form and brings it back to the existing market structure of traditional financial markets, right? You have Bitcoin wrapped in an ETF trader on the NASDAQ, right? Very effective.

The alternate path is taking something from traditional financial markets and bringing it onto crypto rails. And this is the area that I'm interested in and focused on at Superstate. We're seeing a lot of activity here. First, we're seeing, after stablecoins, the second major asset to be brought over, besides a dollar that sits in a bank account, is the idea of bringing T-bills or low risk, high liquidity government debt on-chain and token form.

So, this was our first product at Superstate. It's a very common first product for a lot of the firms engaging in tokenization because it's easy to understand and it's incredibly safe. It's very hard for someone to lose money in short duration T-bills. Got it. And if they do, then we have much bigger problems.

Albert: Not for this discussion, but yes, absolutely.

Robert: Exactly. And so, T-bills are the second major asset class. While stablecoins are like $200 billion, tokenized treasuries are maybe $6 to $7 billion right now. So, it's still small by comparison, but this is up from zero. So, if you look at the curve and you zoom out, you're like, Oh my god, it's an asymptote, it is a J-curve. It's going crazy, but it's actually still relatively small as a market, even though the growth looks pretty amazing.

After that, the next major area that people are looking for bringing assets from traditional financial markets onto crypto rails are public equities. It's enabling either companies or indices or ETFs to be traded on blockchains as well as in traditional venues.

This is not that wild of a concept in general. I mean, a lot of companies have multiple listings, right? You can be listed in the U.S. and in Canada, or the U.S. and London, or the U.S. and in Hong Kong, right? There's no reason why you can't be listed in America and on a blockchain as well. This is a rapidly growing area of focus for firms that are engaged in tokenization because the potential is so powerful. Stocks settle T plus one. And they're really not portable at all. Try sending a stock to somebody, right?

Albert: I do it all the time for my clients and it is difficult.

Robert: It is difficult, right?

Albert: In any manner.

Robert: In any manner, private and public, it's horrible, right? And so, taking a system that settles slow and is basically not portable at all and it's not programmable at all and bring that on chain. I think that's the next area where there's just a huge amount of energy and focus being directed.

Albert: I think that medium term to me is the most interesting because right now you have, you know, traditional currency, you've got Bitcoin, you got gold, you get some of those other things, and Bitcoin interestingly operates and trades somewhat like currency, somewhat like gold. It's in its own little space. Taking all of that into consideration, kind of my last question for you here is, where do you see crypto in 10 years? What does this look like? Have we replaced the existing financial system? Are we moving towards different mechanisms that are making things faster and better using blockchain-type technology? What are we looking at here down the road?

Robert: There are really three things that play out on different time frames. And this goes back to the very beginning, where crypto is a very large umbrella with a lot of different things happening within crypto. So, I'll focus on the three biggest things that I think are going to happen.

One is that I do think that Bitcoin as a currency, that competes with every world currency out there, is going to continue to make traction. It's this slow inevitable domino in my mind. And I'm not here to shill Bitcoin, but I think that it continues to make progress, across nations and companies, as a credibly neutral asset that can't be tampered with and can't be inflated. And I think that becomes increasingly appealing over time. I think Bitcoin has a bright future ahead of it if you wait. That's the first thing I think will be successful in 10 years’ time.

The second is I do think stablecoins and most currencies are going to go onto blockchain rails, right? The advantages of them is that you genuinely have a better payment system and movement of funds system today on blockchains than you do with the rest of the financial system. And there's obviously talk of different countries making CBDCs, or central bank digital currencies. Or basically saying, well, we can just take our official system and move it onto blockchain rails.

There's a lot of opportunity and difficulty in doing that. But most currencies will, in some way or another, go onto blockchain rails, because they work today. Compare the entire U.S. banking system versus stablecoin system. Stablecoins are technically far superior. And there's a lot of counterarguments that the incumbents can make. But there is a reality in that the stablecoins are just genuinely more efficient and better and faster and cheaper and programmable. So, I think those are going succeed in continued scale—I wouldn't be surprised if we're talking about dollars in the trillions in the not-too-distant future.

Albert: Okay, got it.

Robert: And lastly, this is where I'm spending my time. I think securities are going to increasingly come on-chain. It's going to do it in ways that sort of work with the existing financial system. You know, a lot of the origins of crypto are in like “Oh, we're going to build a parallel financial system that's completely walled off from the traditional markets!” You know, I don't see that happening or playing out that way. I see crypto becoming deeply intertwined with traditional financial markets, and there being essentially like, an opportunity to take the benefits of crypto rails and traditional markets and start to combine them in interesting ways.

Albert: That’s awesome. Well, really appreciate you coming in today. Thank you so much for your time.

Robert: My pleasure. Thank you.