Blockchain — the intriguing and powerful technology underpinning Bitcoin and many other cryptocurrencies — continues to reveal new real-world applications as the industry matures. Since Satoshi Nakamoto published the Bitcoin white paper in 2008, developers and businesses have experimented with many uses for the distributed ledger. One promising area is using blockchain to streamline and secure traditional financial markets.
Today I speak with Joe Vellanikaran, CEO of Brightvine, about one such application. Brightvine is a blockchain-powered fixed-income platform that links high-quality real-world asset issuers with digital investors.
In March I interviewed Joe when Brightvine announced a partnership with Angel Oak Capital Advisors, the technology arm of Angel Oak Companies, which focuses on innovative mortgage solutions. The partnership aims to leverage Brightvine’s platform to open new investment channels for investors and modernize the infrastructure around mortgage and fixed-income markets.
Now the partners have revealed the first tangible result of that collaboration: the inaugural bank subordinated debt issuance using blockchain technology, named BFNS 2022-1. This securitization totals $147.55 million of subordinated debt.
Naturally, I had a few questions for Joe about how this deal works and what it means for the broader market.
CoinJournal (CJ): Can you briefly explain how this blockchain-based issuance and fundraising process provides an advantage, especially for those unfamiliar with Brightvine’s approach?
Joe Vellanikaran (JV): In a typical securitization, coordinating documents and ensuring data is current across multiple participants is a manual, labor-intensive task. Brightvine’s portal enables instant validation of documents against immutable blockchain records, ensuring that all parties use accurate, up-to-date documents. The distributed ledger also means that when a data point is updated, the change is reflected in real time for all stakeholders.
CJ: You and I spoke about the Brightvine–Angel Oak partnership when it was announced earlier this year. This is the first collaboration — did you delay the deal because of market contagion?
JV: Our partnership with Angel Oak remains on schedule. We’ve been actively working with them since the announcement to ready the Brightvine portal to support a variety of their asset classes that can take full advantage of the portal’s core features, including a more efficient securitization workflow, real-time data distribution among parties, and blockchain-verified documents.
CJ: How have the recent turbulent months and the overall downturn affected this partnership?
JV: Despite crypto market slowdowns, many large institutions have become strong proponents of blockchain technology. Using best-in-class technologies to build the safest, most efficient, and most accurate financial infrastructure makes more sense than ever. We view our partnership with Angel Oak and the BFNS 2022-1 result as the first of many exciting announcements in an ongoing, long-term collaboration.
CJ: The housing market has shown signs of cooling recently. What is your perspective?
JV: We’ve seen calls from government agencies and other organizations asking the private sector to step in and help housing markets, and that’s precisely the role we aim to play. Brightvine’s goal is to increase liquidity in mortgages, fixed-income securities, and real estate by building new technology infrastructure that connects these markets with new types of digital investors. Whether rates rise or fall, people will continue to need mortgages; our role is to improve the efficiency of the back-end infrastructure supporting that market.
CJ: Do you expect as many crypto projects to follow this cycle as did during the previous crypto winter?
JV: What we’re seeing is a necessary contraction and correction in the crypto market as projects succeed or fail while both incumbent and cutting-edge firms prepare for a future shaped by Web3. As we emerge from this crypto winter, a new wave of companies and products will appear. The winners will be those that bridge TradFi and DeFi and deliver innovations that advance a truly decentralized digital future.
CJ: How do the Fed’s rate hikes — which obviously affect mortgages — impact this collaboration and Brightvine’s business model going forward?
JV: Higher Fed rates make borrowing more expensive, which can limit affordability, but the demand for housing and the need for mortgages persist. We believe Brightvine’s efficiency gains and the new demand it can unlock will help improve market functioning and, over time, contribute to better outcomes even in a higher-rate environment.