Mike Cagney stands as a pioneering figure in financial technology, having transformed the landscape of capital markets not once, but multiple times through his founding roles at SoFi and Figure. His most recent venture, Figure, exemplifies both the evolution of his vision and the power of blockchain to rethink core elements of the financial system—including asset origination, marketplace liquidity, and the very structure of credit intermediation.

Mike Cagney’s Pioneering Contributions

From his early days leading structured product groups at Wells Fargo to launching SoFi, Cagney has consistently targeted inefficiencies within capital markets. SoFi’s founding premise—enabling alumni to directly fund loans to students from their alma mater—introduced risk-based pricing and disintermediation in the lending space. After scaling SoFi, Cagney sought to push further with Figure, focusing on how blockchain could “directly connect sources and uses of capital”.

Figure’s strategy is underpinned by Cagney’s conviction: that blockchain technology can replace trust with verifiable truth through transparent and immutable digital ledgers. This core innovation unlocks a host of efficiencies—streamlining transactions, reducing costs by over 150 basis points (as shown in Figure’s own pipeline), and dramatically shrinking the role of traditional bank intermediaries. Under his leadership, Figure accomplished several industry firsts: originating loans directly on-chain (2018), completing the first securitization of blockchain assets (2020), and achieving the first AAA-rated blockchain securitization (2023).

How Blockchain Is Transforming Capital Markets

The fundamental promise of blockchain in capital markets, as articulated by Cagney, is to enable peer-to-peer connections without traditional intermediaries. This manifests across three main dimensions:

• Transactional Efficiency: By putting asset origination and settlement on-chain, Figure has demonstrated tangible cost reductions, removing layers of fees and manual reconciliation.
• Liquidity: Figure has built liquid secondary markets for private credit assets that previously lacked this feature, making it possible for assets to be traded with the sort of ease historically reserved for standardized government-backed securities.
• Decentralized Finance (DeFi): The most transformative aspect, according to Cagney, is the move toward a system where anyone can lend directly to others. This “Pareto-efficient” model means both borrowers and lenders get more value—lenders see higher yields than at banks, and borrowers pay less without bank overhead.

These advances go beyond a single product or use case. While Figure initially gained attention for blockchain-powered home equity lines of credit (HELOCs), its core innovation is a comprehensive marketplace that supports asset origination, secondary trading, and—importantly—direct, bilateral financing transactions.

Democratizing Prime: A Vision for the Future

Cagney’s “Democratized Prime” vision eliminates the centrally controlled capital allocation—such as banks and prime brokers—and empowers end-users to lend and borrow directly, using transparent collateral rules enforced on blockchain. Institutions can cross-collateralize assets seamlessly and deploy capital more efficiently. Instead of relying on slow, fragmented legacy systems, blockchain enables fast, permissionless liquidity and real-time risk management.

Through Figure, Cagney’s team has shown that this model can support massive scale. For example, the shift to a marketplace operator model (Web3.0) has rapidly boosted Figure’s profitability, with a growing percentage of transactions now occurring without Figure’s direct intermediation.

The Regulatory Context and the Genius Act

Recent U.S. regulatory change—especially the introduction of the Genius Act—has tipped the scales in blockchain’s favor. The act allows for legal issuance and use of stablecoins, clearing the way for established banks like JPMorgan to launch their own digital currency rails. This new environment enables consumers to self-custody digital dollars, transact seamlessly online and offline, and access rewards or yields directly through their holdings, challenging the dominance of traditional deposit accounts.

According to Cagney, this shift threatens regional banks’ deposit bases, forcing them to innovate or risk obsolescence. The move of trillions from deposit accounts into stablecoins—as predicted by treasury studies—will force credit formation and lending to migrate towards decentralized structures, further propelling the adoption of blockchain in mainstream capital markets.

The Broader Impact: Expanding and Democratizing Credit

Figure’s approach not only reallocates existing capital but also “grows the pie” by welcoming new classes of investors and reducing barriers for participants through improved risk-adjusted pricing, faster settlement, and expanded market access. The platform’s liquid secondary markets enable broader participation, invigorating previously illiquid segments of the private credit sector.

Banks with vision and adaptability may thrive by leaning into this new architecture—integrating stablecoins, offering blockchain-based products, or embracing DeFi models that preserve the customer relationship. Others that resist risk being left behind as blockchain’s efficiency, transparency, and open architecture become the new standard for capital formation.

TLDR

• Figure is a blockchain-based financial services company founded by Mike Cagney.
• The company aims to directly connect sources and uses of capital through blockchain technology.
• Democratized Prime is a new lending product that seeks to eliminate the bank as a capital allocator.
• The Genius Act is a significant regulatory change that could catalyze the adoption of blockchain in finance.
• Cagney emphasizes the importance of decentralized finance (DeFi) in creating more efficient capital markets.
• Figure's marketplace model allows partners to sell loans directly to capital markets, increasing profitability.
• The company has demonstrated significant transactional efficiency and liquidity in its operations.
• Cagney believes that the current regulatory environment is favorable for innovation in fintech.
• The future of banking may involve a shift away from traditional deposit accounts to stablecoins and DeFi solutions.
• Cagney predicts a seismic shift in financial services as blockchain technology becomes more widely adopted.