Brightvine announce $147 million securitisation of subordinated debt

Blockchain – the mysterious and seductive technology upon which Bitcoin, and so many other cryptocurrencies, are built. As our industry continues to grow, there are more and more applications to this novel form of technology, invented by Satoshi Nakamoto when he wrote the Bitcoin whitepaper back in 2008. 

Today I interview the CEO of Brightvine, Joe Vellanikaran, on another one of those applications. Brightvine are a blockchain-powered fixed income platform that connects issuers of high-quality, real-world assets with digital investors.

Back in March, I interviewed Joe on the announcement of a partnership with Angel Oak Capital Advisors, the technology venture arm of Angel Oak Companies, which works in innovative mortgage solutions. The goal of the partnership was to leverage Brightvine’s platform in exploring new investment avenues for investors.  

Today, they have announced the first result collaboration of this partnership, the first-ever bank subordinated debt issuance that leverages blockchain technology, called BFNS 2022-1 – a $147.55 million securitisation of subordinated debt.

Naturally, I had a few questions. 

CoinJournal (CJ): Can you please summarize how exactly this capital raise and project being carried out on the blockchain is an advantage, for those who may be unfamiliar with your approach?

Joe Vellanikaran (JV): In a typical securitisation, the process of coordinating up-to-date documents and data across multiple participants is a manual and labour-intensive process. The Brightvine Portal allows for instant validation of each document against the blockchain’s immutable records, ensuring that the documents being used across all parties are always accurate and up-to-date. The distributed ledger ensures that any time a data point is updated, those changes are populated in real-time across all stakeholders.

CJ: We interviewed you on the partnership between Brightvine and Angel Oak when it was announced back in Q2 of this year. This is the first collaboration – did you delay it as a result of the contagion in the markets?

JV: Our partnership with Angel Oak is right on schedule – we have been actively working with them since our last announcement to ready the Brightvine Portal to support a variety of their asset classes that can take full advantage of the Portal’s key features, including a more efficient securitisation process, real-time data distribution across parties, and blockchain validated documents.

CJ: How much has the chaotic last few months and bearish turn affected this partnership in general?

JV: Many large institutions have come out as champions of blockchain technology in recent months despite any downturn in the crypto markets. If anything, using the best technologies to create the most secure, efficient and accurate financial infrastructure makes sense now more than ever. We see our partnership with Angel Oak and the results of BFNS 2022-1 as the first of many exciting announcements in a long-term collaboration.

CJ: The real estate market has shown signs of softening recently, what are your thoughts on this?

JV: We have been hearing pleas from government agencies and other organisations for the private sector to step up and help with the housing markets and that’s what we are seeking to do. Brightvine’s goal is to increase liquidity for mortgages, fixed income and real estate by building a new technological infrastructure that can connect these markets to new forms of digital investors – whether rates go up or down, people will still need mortgages, and our role is to help increase efficiencies on the back-end of that financial infrastructure. 

CJ: Do you believe as many crypto projects will go under this cycle as they did in the previous crypto winter?

JV: What we are seeing in the crypto market right now is a slight contraction and correction as projects succeed (and fail) while traditional and cutting-edge companies alike are trying to prepare for a Web3 future. As we emerge from this crypto winter, the next great wave of companies and products will also emerge – and the winners will be those that bridge the gap between TradFi and DeFi and create something new that enables digital transformation to usher us into a truly decentralized future.

CJ: How are the Fed’s rate hikes which obviously affect mortgages, impacting this collaboration and business model going forward?

JV: With the Fed increasing rates it makes it harder for people to afford loans, but the demand for housing and the need for mortgages isn’t going anywhere. We believe that the efficiency and new demand Brightvine can drive to these markets can help reduce these rates over time.