Ron Totaro has been on the leading edge of fintech innovation for the past 30 years.
He comes to Protego fresh off his tenure as CEO of Tassat Group, which pioneered a real-time, blockchain-based payment solution for legacy banks. Tassat has since processed some $500 billion of transaction volume this way, earning the company a 2021 Google Cloud Innovation Award. At the time of his departure, Totaro was working with partner banks and regulators to build a Zelle-like network of financial institutions that would employ a fiat-backed stablecoin to drive value for the consortium's members.
"I've had a chance to build and scale 50 different businesses," says Totaro, whose past financial-services career includes executive positions at ACI Worldwide, FICO, GE and American Express.
Now he is taking the helm of Protego Trust Bank to offer the financial market something new: a federally chartered trust bank providing digital asset custody and blockchain-as-a-service to crypto natives and legacy financial institutions alike.
In this Q&A, Totaro lays out Protego's roadmap, explains how TradFi can benefit from blockchain and shares his vision for a world of tokenized assets—from stocks and crypto to mortgage loans and fiat currencies. The interview has been edited for length and clarity.
What about Protego made this opportunity the right move?
I want to drive innovation in the most regulatory-compliant, efficient way possible. I'm a big believer in blockchain and the ability to have many, if not all, assets tokenized in a safe, secure, immutable manner. This trend that started with crypto assets will extend to a large array of both traditional financial instruments and new ones still to come.
I also believe traditional institutions will be driving the adoption of digital assets. Having a bank like Protego that is OCC-compliant and meets the highest standards of audit, security, compliance and risk is a great solution to help institutions grow.
Tell me about your time as CEO of Tassat Group. How far did you get in that effort to bring blockchain-based payments to U.S. banks?
Tassat was my first foray into blockchain. We developed an early-stage product with Signature Bank to process B2B payments in real time by tokenizing U.S. dollar deposits. Think of banks being able to create their own stablecoins that are one-to-one backed by U.S. dollar deposits, so that the Federal Reserve and the FDIC and other regulatory bodies know what the origin of that token is.
By being the first to deliver this kind of capability—first to Signature Bank and then to other banks—Tasset has now processed about $500 billion of transaction volume. A big part of that business was having institutions that were doing heavy-scale trading of crypto assets use this platform to settle their trades. There are many different B2B use cases, whether it be retail, cargo and logistics, or health care. Mortgage and real estate is another very large use case, where value will be tokenized in a way that requires not just real-time settlement for transactions but also smart-contract capabilities to drive what I call programmable payments.
What were your biggest takeaways from Tassat?
When I was at Tassat, I probably spoke to 300 CEOs. For a CEO, they don't care about what will shave some basis points off their costs. They want to know: How do I attract new customers? How do I retain existing customers? How do I generate more deposit income? How do I generate more fee income?
Traditional financial institutions are really trying to figure out how to participate in this evolving ecosystem of digital assets from a growth perspective.
What services will Protego offer upon launch?
We’ll offer four services once we receive the charter from the OCC. The first is custody. We will have a full array of custodial capabilities for both digital assets—whether crypto or novel kinds of digital assets—and fiat currencies. Not just U.S. dollars but any nation’s currency. As we scale our custody business, we're going to be issuing digital wallets to customers that are AML- and KYC-approved. We will have strong standards and Bank Secrecy Act risk management and compliance that exist in this space.
We’ll then offer trading services, exchanging fiat for a digital asset or a digital asset for fiat, within the closed walls of Protego's platform and within the Protego customer base. That's very compelling because a lot of traditional players want to ensure they're dealing with counter-parties that are just as compliant and on the up-and-up as they are.
We'll help the counterparties to define the terms they want to use in dealing with each other. That will become a big part of what we offer over time. We're basically a facilitator, not an exchange. We'll be a platform to enable trading and lending services with trusted counterparties.
You've mentioned custodial, trading and lending services. What's the fourth service?
The fourth is what we call issuance. That's helping institutions to create their own tokenized assets for various use cases. This goes under the banner of enabling traditional institutions to create new business models and capabilities.
You accepted this job during what many people are predicting will be a long crypto winter. Were you not discouraged at all by the bear market?
Crypto is just a subset of digital assets. It's a fairly big subset right now, but I believe there will be a lot of institutions driving adoption of digital assets for their customer base, and those assets need to be held in a safe and secure manner. Hence the need for the capabilities of a bank like Protego, which will have best-in-breed, zero-trust architecture for custody of any digital asset—both crypto and non-crypto. That trend is only going to grow. And just because the notional value of crypto has declined doesn't necessarily mean that somebody doesn't want their Bitcoin held in a safe, secure and regulatory-compliant manner.
So yes, maybe there's less trading going on. But the functional services that Protego is trying to offer are as sound and truer than ever. I think there will be a flight to quality once Protego is up and running. And it will come at the expense of those that aren't armed with the regulatory approval and the capabilities and assets we have. So that's how I view the marketplace. It's less about the year-over-year price of Bitcoin.
What are some areas where TradFi is ripe for improvement?
There are a lot. The average bank is doing tens of thousands of institutional wires a month, and that involves a high-touch process, typically, with 15% to 20% error rates. Imagine banks having the operational capability, using blockchain, to send money in a readily automated manner without operational risk. Any movement of an asset or a payment you can name, blockchain is going to provide improvements for it over time.
Also, Protego can enable the creation of new business models. If certain banks or mortgage lenders want to tokenize REITs or mortgages, then they can create and issue new tokens for that, but they still need a place to house them. So a company like Protego benefits those institutions. They're hard-pressed to create those new assets if they don't have what they think is a safe and reliable place to keep billions of dollars of value.
Where do you see the greatest potential—using blockchain to fix inefficiencies in TradFi, or fixing the problems in today's crypto markets in order to make digital assets a more investable asset class?
Our biggest value is helping traditional financial institutions build new business models. Those business models could be crypto-centric—in other words, they're offering crypto services to their customers and those assets need to be housed with Protego. Or say I'm a bank and I want to tokenize the mortgage business. Protego could help them to create a mortgage token. That would give them a competitive advantage if they can figure out the model and the infrastructure to sell, service and deliver a capability like that.
Protego is offering blockchain, tokenization and digital assets as an infrastructure capability. The world is evolving and moving to this. It's a big secular play in very, very large markets, and there's infrastructure required to make these new ecosystems evolve and run well. Mind you, I believe the current structures of government and regulatory law are going to dictate the constraints of how this innovation is going to happen. But, the innovation will happen nonetheless.