A crypto token representing $13 billion worth of home equity loans experienced an 81% flash crash on Friday, raising questions over how such a violent price movement could occur. The Figure Heloc token, issued by blockchain-based fintech Figure, usually trades around $1 because of its relationship with the firm’s YLDS stablecoin. Starting at around 10pm London time on October 24, the token began to fall, dropping to a low of $0.19 before recovering, according to price data from Figure Markets reported by ...

Core Insights - Expanding access to credit is a significant challenge in consumer finance, with legacy systems causing inefficiencies and limiting capital access [1][4] - Figure Technology Solutions aims to modernize consumer lending through AI and blockchain integration, enhancing loan origination, underwriting, and trading processes [1][3] Company Overview - Founded in 2018, Figure started with home equity lending and has developed a vertically integrated model encompassing origination, marketplace distribution, and capital markets execution [3] - The company is expanding its product offerings beyond home equity loans to include a variety of credit products and digital asset marketplaces [3][5] Market Potential - Figure estimates its addressable market in lending and capital markets at approximately $185 billion in annual revenue potential [5] - The asset tokenization market is projected to reach $16 trillion by 2030, while the stablecoin market could approach $5 trillion in the same timeframe [5] Operational Efficiency - The company claims to have achieved profitability with a capital-efficient model, generating revenue from fees on originations, servicing, and technology usage [6] - Partner-branded lending constitutes 77% of total originations, with 168 active partners as of mid-2025 [6] Regulatory Framework - Figure holds over 180 lending and servicing licenses, 48 money transmitter licenses, and SEC registration as a broker-dealer, which supports its scaling ambitions [7] Performance Metrics - For the 12 months ending June 30, 2025, Figure facilitated approximately $6 billion in HELOC lending, a 29% increase from the previous year, with a compound annual growth rate of 70% since mid-2021 [8] - The Figure Connect Marketplace processed $1.3 billion in loan volume in its first year, connecting originators and investors directly [8] Financial Performance - For the six months ending June 30, 2025, net revenue was $191 million, up from $156 million year-over-year, with net income of $29 million compared to a $13 million loss the previous year [12] - Adjusted EBITDA reached $83 million, more than double the prior year [12] Product Diversification - Although HELOCs currently account for 99% of originations, Figure is exploring new products such as debt service coverage ratio loans and digital asset-backed loans [12] - The company plans to use IPO proceeds to invest in new product development and expand its loan marketplace [12]

Summary of Key Points from the Conference Call on Stablecoins and Banking Industry Industry Overview - The increasing adoption of stablecoins poses a long-term risk to bank deposit economics, with legislative efforts in the US Congress likely to accelerate this trend [1][8] - The full impact of digital assets and blockchain technology on industry profitability is still uncertain, as the sector is in the early stages of this technological shift [1] Core Insights on Banking and Stablecoins - Current concerns about banks retaining deposits are less significant; however, future value creation related to deposits and payments may occur outside the banking sector, particularly in private credit and direct lending [2] - Major banks are actively exploring stablecoin initiatives, with reports of a joint stablecoin project among the largest US banks [3] - Regulatory frameworks, such as the GENIUS Act and STABLE Act, are essential for stablecoin adoption, addressing interoperability and consumer payment ecosystems [4][12] Legislative Developments - The GENIUS Act aims to establish a regulatory framework for stablecoins, requiring issuers to maintain reserves and be authorized by federal or state regulators [12] - The STABLE Act focuses on transparency and accountability for stablecoin issuers, mandating regular reporting and reserve disclosures [12] - The SEC has clarified that stablecoins are not classified as securities, which may facilitate their adoption [16] Market Dynamics and Risks - The potential for stablecoins to draw deposits away from banks could lead to increased volatility in the US Treasury market, with a projected $0.90 demand for T-bills for every $1 that leaves traditional banks [11][65] - The shift towards stablecoins could pressure bank margins and alter the balance sheet composition, as traditional payment providers face competition from blockchain-based solutions [49][50] Expert Insights - Mike Cagney, CEO of Figure Technologies, discussed the transformative potential of blockchain in capital markets and the risks stablecoins pose to traditional revenue streams [5][8] - The development of blockchain infrastructure could diminish the economic value offered by traditional payment providers, threatening the existing payment model [10] Adoption Challenges - Barriers to widespread stablecoin adoption include the need for a clear regulatory framework and consumer preferences for existing payment systems, such as credit card rewards [4] - The integration of stablecoins into the financial system is expected to accelerate, but banks must not underestimate the risks to their existing revenue streams [8][31] Future Outlook - The potential introduction of yield-bearing stablecoins could further disrupt the banking sector, with significant implications for deposit flows and competition among financial institutions [34][51] - The Treasury Department views stablecoin development as a priority to maintain the USD's status as the reserve currency, indicating a push for the US to lead in stablecoin innovation [30] Conclusion - The stablecoin landscape is evolving rapidly, with significant implications for the banking industry, regulatory frameworks, and market dynamics. The ongoing discussions and legislative developments will shape the future of stablecoins and their integration into the financial ecosystem [8][30][31]