Figure Technology Solutions Bets on Blockchain Rails to Reinvent Capital Markets

Figure Technology Solutions (NASDAQ:FIGR) Chief Executive Officer Michael Tannenbaum said the company’s core strategy has remained consistent since its founding in 2018: building capital markets marketplaces on blockchain rails while using automation to lower costs and improve liquidity.

Speaking with Gautam Chhugani, Bernstein’s digital assets analyst, Tannenbaum described Figure as a company focused on “the future of the capital markets on blockchain rails.” He said the company’s largest revenue source remains its mortgage-related business, where Figure has built a network of 380 partners that use its technology to originate assets into an embedded blockchain-based capital markets system.

Tannenbaum said Figure’s model has evolved from using its own balance sheet and inventory to seed markets toward a more capital-light marketplace approach. He said Figure Connect, which launched in June 2024, now accounts for more than 60% of the company’s volume. Under that model, Figure provides the technology and rails but does not touch the loans or put them on its balance sheet.

Tokenization Focused on Efficiency, Liquidity and Lien Perfection

Tannenbaum said tokenizing credit is important because blockchain can improve three areas: transaction efficiency, liquidity and lien perfection.

On transaction efficiency, he said Figure moves loan attributes on chain upfront, reducing the need for third-party diligence that is common in loan sales. He said blockchain-based standardization allows investors to understand and rely on loan attributes more efficiently.

On liquidity, Tannenbaum said tokenization alone does not make an asset liquid. Instead, he said Figure is working to standardize origination and trading rails for asset classes such as mortgages and consumer credit. He compared the company’s role to aspects of Fannie Mae, ICE and Tradeweb, saying Figure aims to create liquidity in consumer asset classes by providing standardized infrastructure.

On lien perfection, Tannenbaum said blockchain can help prevent double pledging and double sales of loans, which he identified as key fraud risks in asset-backed and warehouse lending markets. He said blockchain gives lenders and investors more certainty that they have ownership or a lien on a specific asset.

Originators and Investors Use Figure for Cost, Speed and Standardization

When asked about Figure’s position in home equity lending, Tannenbaum pushed back on focusing on HELOC market share, saying the company does not track that metric internally. He said the broader opportunity is tied to the $35 trillion of home equity outstanding, as well as first-lien mortgages and other asset classes.

For originators, Tannenbaum said Figure’s value proposition is lower cost and faster execution. He said the company can originate a mortgage at about $1,000 in cost, while later describing the industry cost as about $12,000. He attributed the savings to a technology system paired with embedded capital markets.

Figure’s partners include independent mortgage banks, regional banks, fintechs and home improvement-related financing companies. Tannenbaum cited Flagstar as a recently announced regional bank partner and Lowe’s Home Improvement as an example of a retailer using Figure’s platform for home-related financing.

For investors, Tannenbaum said Figure offers consistency, scale and yield. He said the company was the first to securitize blockchain assets, the first to have them rated, and the first to receive AAA ratings from major agencies including S&P and Moody’s. He said demand comes from real-money accounts such as insurance companies and pension funds, as well as on-chain participants seeking yield.

Expansion Beyond Home Equity

Tannenbaum said first-lien mortgages represent a much larger opportunity than second-lien home equity loans, describing the first-lien market as 25 times larger. He said Figure sees the broader mortgage market as addressable over time and expects capital markets to become increasingly tokenized across asset classes.

The company is also working in small business, auto and other consumer credit markets. Tannenbaum said Figure generated $60 million of volume in the first quarter through small-business partners, with home equity products being used in some cases as alternatives to business loans. He said Credibly has signed up to use Figure’s Democratized Prime product as a replacement or supplement for warehouse financing.

Democratized Prime was described as a short-term financing marketplace similar to a warehouse line or commercial paper market. Tannenbaum said it helps originators finance loans while they aggregate them for sale. He also described Figure’s $YLDS stablecoin as “the oil of the capital markets,” used for settlement and servicing within the marketplace, though he said it remains a relatively small contributor to profit and loss.

Unit Economics, Credit Risk and Tokenized Equity

Tannenbaum said Figure has become increasingly capital light as Figure Connect has grown. He said the company earns technology and processing fees while taking on less balance sheet exposure, leading to higher margins. He said margins are approaching 50% and referenced medium-term guidance of around 60% margins.

On credit risk, Tannenbaum said Figure’s mortgage borrowers have an average FICO score of 740, average income of $180,000 and average remaining home equity of about 30% after the loan. He said the loans are diversified and have an average loan size of about $100,000.

Tannenbaum also discussed Figure’s relationship with Sixth Street, which he said has helped establish a permanent equity vehicle, referred to by Figure as “the guarantor,” designed to buy loans in the Figure marketplace. He said the vehicle may be especially relevant during weaker markets when other buyers are less active.

On tokenized equities, Tannenbaum said Figure is focused on blockchain-native equity because of its potential role in prime brokerage and securities lending. He said the company issued an all-blockchain share class, FGRS, and completed a secondary transaction in February to demonstrate that such a structure could work.

Regulation and AI

Asked about the Clarity Act, Tannenbaum said Figure has operated successfully across different regulatory environments and does not depend on a single legislative outcome. He said the legislation could help clarify the role of DeFi on Democratized Prime and provide more certainty for institutional investors. He also said $YLDS, because it is structured as a security rather than a GENIUS Act stablecoin, could be positioned differently if transfer rules become more flexible.

Tannenbaum said AI is a major challenge and opportunity for companies, but he argued that AI alone will not fix inefficient origination processes. He said Figure is using AI to help adapt new asset classes to its mortgage schemas, in marketing, customer service, voice AI and coding. He said about 30% of Figure’s coding is AI-generated, but added that the company is focused more on using AI in products than on cutting costs because it is already operating with a lean workforce and high margins.

About Figure Technology Solutions (NASDAQ:FIGR)

Figure is building the future of capital markets using blockchain-based technology. Figure's proprietary technology powers next-generation lending, trading and investing activities in areas such as consumer credit and digital assets. Our application of the blockchain ledger allows us to better serve our end-customers, improve speed and efficiency, and enhance standardization and liquidity. Using our technology, we continue to develop dynamic, vertically-integrated marketplaces across the approximately $2 trillion consumer credit market and the rapidly growing approximately $4 trillion cryptocurrency and digital asset market.

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