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The Stablecoin Revolution & What Comes Next for Global Payments Speakers: Katherine Ross, Diogo Monica, Paul Faecks, ...
Transcript:
Hello. This is very I have to just, you know, let the cat out of the bag. It's very strange to be talking to you guys, not hearing my voice back at me. Yeah, it's very strange. Um, but admittedly, I'm very, very excited about this panel. I think it's going to be really interesting. Do already said that he's going to keep it spicy, and I'm holding you to that. Um, for those of you who don't know, I'm Kathern Ross. I'm the senior editor of news at Block Works, and I'm going to let my panelists introduce themselves. Uh, thank you. Um, thanks everyone for being here. Uh Rob Hadock. I'm a general partner at a fund called Dragonfly. About five billion under management. Invest in and around the crypto space since uh since 2018. I'm Paul uh founder of of Plasma. We are a blockchain focused on stable coins. Uh and we recently launched and and uh uh moving stable coins across the globe. Uh Simon Taylor, uh author at FinTech Brain Food, uh the weekly newsletter focused on where fintech meets the future. Uh, I also run a podcast called Tokenized, weekly show dedicated to the institutional adoption of stable coins and tokenized real world assets, available wherever you get your podcast now. And uh, I also lead market dev for Tempo, an L1 focused payments chain incubated by Stripe and Paradigm. I'm a subscriber of uh, fintech food. So uh, one one of us is here in the audience. Um, I'm also a general partner at Ahan Ventures. um which is a venture fund focused on digital assets. I'm the chairman of the Near Foundation and I'm also the co-founder and executive chairman of a company called Anchorage Digital. Thank you guys. Um so I think it's important before we really get into the meat of this conversation which is discussing like the future of st stable coins and what they've done but I think we should start by looking back briefly and just looking at what happened on Friday. And the reason that I think it's important is because it it was kind of a it was a test case for a lot of crypto and stable coins. I would say we can argue about this, but I would say that they really passed the test. And I'm curious to get your thoughts on and Rob, I kind of want to start with you because I know that you're going to keep it real with me, but I'm curious to get your thoughts on what happened Friday. What are the takeaways in the stable coin lens? Yeah, I so I mean broadly for those in the uh audience who don't know and I'm guessing maybe most people do, we had kind of a significant downturn uh in price action on Friday following um I guess some tweets around uh tariffs with with China um in crypto specifically like relative to traditional markets. Obviously, we had something around $30 billion worth of like liquidations that happened across all of the exchanges and um both onchain and and offchain. Um some of the tokens, especially the alt tokens hit like, you know, we're down 80% uh at one point in terms of their draw down across different venues. I think, you know, in the stable coins specifically, if I were to, you know, kind of focus on that, I think one thing that this probably did highlight was there is like kind of market structure or micro structure issues that we still have in crypto, right? So, um, clearly, uh, with stable coins being used as collateral across a bunch of different venues, there's, um, there's risk involved, right? Because if you're going to have a mass amount of liquidations, people need to be kind of like four sellers or they need to, um, of of that collateral, that collateral of being stable coins. If they're four sellers, theoretically, um, there is a world in which like there's a supply demand imbalance and you could um, see like deping, you could see, you know, people having flight to to quality, etc. I think one of the things that highlighted to me is that stable coins are continue to be mostly a liability, right? Which is that your liability on whoever the the underwriter is or whoever the counterparty is um that is issuing that stable coin, right? And so uh one of the really interesting things that you saw was that across different venues, there's different prices, right? And so um Tether uh actually was the only one during that period of time that was trading above a dollar across a bunch of different venues. Um, now the other stable coins were in some form trading below a dollar, whether that was a few bips or whether that was, you know, call it multiple points. Um, and what does that tell you? That tells you that people are probably actually like moving from whatever they hold as collateral today into Tether specifically, right? There's more demand for Tether than there is for the other stable coins. So, I found that to be pretty interesting. I think there's a conversation to be had and I'm happy to have it if people want to around um Athena and uh specifically around the USD stable coin which on Binance um at one point hit 65 cents um on pretty much every other venue hit you I think buy it hit 95 cents on on curve it was basically 3 to five pips off um but I think broadly what it tells you or it continues to highlight is just that stable coins in so much as we have somewhat unsophisticated and immature market structure in crypto still to uh have to perform in stress environments as credit, right? And they do perform as credit, right? And so being able to be robust credit is actually still very important. And being able to think through like how we structure stable coins for a future that is, you know, more sophisticated and much bigger, I think is still a really important part about how we grow this ecosystem. I I want to point out something that is interesting which is even in this topic how refreshing is it that we have something and then we can actually talk about the market infrastructure and structure and modify it in real time. In fact the particular event that happened around Binance and USD and the fact that they were using as a price oracle their own book which ultimately what led to actually the price decrease and liquidations on their own exchange that actually was set to change already. So we're seven days away from them actually using oracles and using better market infrastructure for pricing. And yet this happened, you know, a few days before, but even then like the speed at which this evolves and the speed at which the community comes around and points to there's a weakness here on the microsstructure on the macro structure of how we actually set these things up is truly refreshing because in traditional finance these things change in decades and in crypto they're going to change in weeks. Well, consider how different that is to 2008 where the single biggest problem was nobody knew what was going on and that caused a contagion and panic. Crypto Twitter had solved it in hours and some of the breakdowns and some of the deep dives are just some world-class analysis that you got to say and founders kind of announcing that spirit of transparency I think is really refreshing and the amount of learning you can do just by paying attention to that space. I do think it it sort of speaks to an interesting um bug that stable coins have as a topic which is there's this broad category set of things we call stable coins but actually the credit risk of those things may vary some of them like Athena are more synthetic and derivative in their nature some of them are onetoone backed and then you know there was everybody will remember a few years ago teruna that's way off on the risk spectrum I do think we need to start thinking about our terminology and phrasing and framing so that people understand when they're using collateral, they're not necessarily always using the same things interchangeably. I imagine most of the traders in this case probably do understand some of that. But as somebody interested in how this thing really does take over all of Trady, then we do need to get smart on that and tight on that. Well, and I think that the point here too is that like like Binance actually does haircut USD separately than it does USDT and USDC, right? Um, and so like the sophisticated actors know, I think to your point, okay, well, there's been this like crypto uh trend of like just taking like anything and like wrapping it and tokenizing it and then calling it a stable coin, right? We have like things like USDA, which is just like loans against data centers like and you continue to have these these things and uh that are stable coins, but they're stable coins backed by, you know, some sort of synthetic or indogenous type collateral. Um the terminology is to your point like I guess part of the confusion for a lot of people and I think does create risk with regulators creates risk with like traditional market participants. Um but all the sophisticated actors the exchanges like they they they know like they they know that these things are different. Um it's just about a lot of it's about education I think. Yeah. And and so where I'm coming from is I spend a lot of time dealing with the opposite end of the curve where uh MNC's are trying to adopt stable coins and uh various regulators are wrestling with how on earth they make sense of this stuff and then this happens. And so yeah, I that that was kind of the direction of where I'm coming from. I appreciate everybody has their own risk management that's sophisticated. I I think one one interesting thing to to to point out is I mean the like most recent real DEC of a stable coin was USDC during the kind of SVB crisis. Yeah. uh where where it was uncertain if if if SVB would like survive the weekend basically and and I mean USC was trading at 80 cents 85 cents across venues and and and so I do think like the the unique risks associated with kind of certain even like deemed as specifically like safe stable coins especially where like they rely on fully kind of trading rails and they hold a lot of cash which I think is in a kind of uniquely vulnerable position in in in comparison to US treasuries for for example. I I do think that is still I don't think there's been like a proper like true like uh postmortem on like like basically how does how does market infrastructure kind of deal with that reality like you're still to to a large extent and I think in Europe specifically na exacerbates that that problem like you're forced to hold cash as as as backing which just by design actually isn't all that great of a collateral uh and and and so I actually do think like a lot of things need need to change on that but but let me just say like structurally one of the things that crypto has that is amazing is while in traditional finance we're still debating when settlement happens and T plus2 T+1 in crypto we have proof of reserves for a lot of these projects uh even when the the parties that you're relying on for counterparty risk are centralized parties there's ways for you to actually prove on chain that the pers that are backing this or your hedge uh or the cash that exists on these banks actually is there and right now we're actually going from proof of reserves on a weekly bas basis to proof of reserves on a daily basis to hopefully proof of reserves as close to real time as possible which is something that structurally traditional finance cannot give you. They cannot give you this type of structure. There's no credible neutral platform on the internet that allows you to aggregate all of the pieces of the supply chain um supply chain financial supply chain that you're depending on for this particular product that you just bought say a stable coin or some RWA or some structured product credit risk product or whatever. They cannot do this in real time and we can in crypto which is beautiful. Every time every day that goes by the proof of reserves is getting to a point where we can actually judge risk more accurately. So you do solve some solvency risk questions but liquidity risk is interesting because you come to redeeming assets that are offchain and there's a timing mismatch there. That's kind of uh there's kind of an interesting question. So um I think Tony um at UBIX has opinions on this. I just saw him uh in in the crowd. But the ability to clear at par certain types of assets I think will become really really crucial to to kind of closing that liquidity gap if we do start to use this stuff for payments at scale uh in the kind of volumes that you know you would expect in a tried 5 payment system today. Yeah. But the I think the one thing that we have to talk about, right, is that and I guess this is kind of like the genesis of this conversation is that these things shouldn't actually trade at par to each other, right? Like they because they are credit, right? And like they are credit with different counterparty risks. They're credit with different collateral. They're credit with, you know, different I mean different audits, different reserves, right? So like like USDT has a very different counterparty risk than USDC. Now it's clear in crypto that people have decided based on how they trade that tether actually has better credit than than circle and there's a lot of reasons for you know why that might be true but it is different credit right and like that is structurally part of what is happening with stable coins right now is that they are liabilities right fully understand that but that's true in banking as well but the dollar is on a par between different financial institutions with well yeah because of because of Fed access right so that's different right indeed but this is where I think you could the nine European banks um se 10 uh global G7 banks they're starting to think of like well actually if we're going to have something that could do crossber at par what would that settlement asset be the bank of international settlements project agora there's a lot of push to actually could you solve some of that liquidity risk consoly risk at scale onchain for uh all of tradfi and I think the timing there is going to be like trfy doing is going to take forever but I do think there's a path to the existing stable coins getting to that that clearing uh can can help you get towards yeah but you're what's happening there implicitly is that you're substituting credit risk of the bank or the issuer for credit risk of the government right like that's or some other entity yeah but like in this case the central bank right so and so that's like somebody else is back stopping it right so that's the question right if we're if we expect everything to trade at par then is it that we need to have a CBDC, right? Because otherwise it probably shouldn't be trading that popular. But I mean it stable coins don't trade at especially like I mean as you as you said as of today they trade like this specifically on on on Friday, right? I mean, I think the market is like the the most honest signal on how crypto markets kind of value different types of collateral is where does it actually trade in times of stress when everyone's like I need to get to safety and like I need to be in like the cash that the tokenized cash on on on chain. I think the market like is yelling at you that USDT is like the the most pristine collateral. Uh but consider who's in the market as well. Um I I think that's uh that's an interesting question like would uh and consider the objectives uh of like taking payments globally like I wonder if the traders that are in market today and what their opinion on what the best collateral is would be true in 5 years 10 years if there is more adoption of payments. I actually I mean I think if if you look at the the data on that I think it's even more glaring. I think on on on one hand I mean yes the the the the trading universe is pro I mean very western skewed right and and and so that's where circle and and USDC have a very strong foothold and if you look at the data on like the stable coins that are happening at scale now in global south in Southeast Asia in in in South America you have 80 85% USDT dominance depending depending on on the data you look at. I mean um the the Bank of International Settlements has this like very long study out on like what stable coins actually get used in like true payments use cases and the dominance of USDT is overwhelming in in that and I do think that is like a very durable distribution advantage and that may change over time and like that there's no guarantee that that is kind of the the same in 10 years but I actually do think the split on the true payments in stable coins that are happening right now it's very lopsided towards USDT Yes, I I I just wonder yeah to your point does that continue but but Sam one one of the things is that if you go straight on chain and if you're trading directly on chain you are taking counterpart risk of these and you should be able to judge that these things are not trading at par and in fact some D5 pools do trade them at par which is maybe potentially part of the of the issue but what's happening is that the private market is stepping in many of the financial institutions right now that are coming into stable coins will interact not directly on chain but through some provider that is willing to take on the risk of doing it at are so there will be a bank that will be a federal chartered bank that will take a deposit and will guarantee that the stable coin comes I see where this was going but what you're willing to underrite it because you know depending on how good you are it becomes an actual product it becomes a way to make money if during a market downturn somebody's willing to sell you a dollar for 95 cents that you actually know for a fact because you have proof of reserves that is actually worth a dollar you know I call that money you know that's 5% that you can clip directly on that trade So somebody will take on the risk and it doesn't have to be that the world is everybody interacts on chain. It could be that these rappers actually exist and this becomes a product. Good point. So one thing that we've kind of circled about that I want to get a little bit more into the meat of is regulation. And I think that we're in an interesting space, especially in the United States, of where we really are starting to see stable coin regulation come to a head, but there's still conversations happening and um Casey Wagner has been reporting for block works that, you know, we the banks aren't really for stable coin issuers having yield and that's causing a whole other conversation and I want to kind of dive into that with you guys because I think that you will all bring interesting perspectives to it. So, I guess my question for you is is what if the banks are able to put a stop to yield being okay with stable coin issuers, what happens next? I think, you know, by the way, the answer is we go further on the risk curve and crypto finds some other way of generating the yield. That is the only answer. And by the way, we're going to make this mistake multiple times until we we learn. One of the original problems around the crypto ecosystem is that the regulators did not welcome the crypto companies into the fold. A lot of the issues and the companies that went bankrupt that were horrible for crypto in its reputation only were able to operate that way because they weren't regulated. So I can guarantee you that if a lot of the companies that went bankrupt were within the regulatory regime and were within the regulation of the OC or the new IDFS or whomever in the United States, they would not have gone bankrupt and nothing as egregiously bad as it happened would have happened. And this is the same thing. If you push the yield out of from the regulatory perimeter in the regime of the Genius Act, then all of a sudden you're going to get some derivative. You're going to get some wrapping. You're going to get some creative way. Crypto people are very creative. You're going to find some creative way of doing it. Wouldn't it be great for it to be a creative way within the the the rules and so that everybody's aware of what can be done and what can be done. So, I think that would be making the mistake twice. When you say the bank lobby, not all bank lobbies are created equally. Um the American Bankers Association hasn't said much that it's the ICBA who's lobbying against this who are the uh community bankers association. So the small banks and there was a report I think uh a stat originally put together by Goldman that was quoted by the US Treasury that anticipated stable coins would drain $6.6 trillion of deposits from financial institutions. Now if you're the board of a bank, it is your fiduciary obligation to fight against whatever is going to create deposit flight. Like that is existential because if you don't have deposits then you don't have funding for your balance sheet to be able to lend. And 60 to 80% of lending in Main Street, United States comes from those community banks to SMBs. That is a lending source that could potentially be threatened. So they you have to consider why they're making the argument they are before you can deconstruct it. I think one of the deconstructions is fundamentally that which is well you'll just make the problem worse. But that doesn't solve the problem of the community banker. I actually, you know, being from a fintech background, think that the last big financial services uh legislation in the United States, uh the uh DoddFrank Act, uh had a really interesting quote called the Durban amendment. If you're not familiar with the Durban amendment, it essentially capped the swipe fees on debit cards for all but the very smallest banks. And the idea was that when you walk into a store and swipe with your big bank card, that big bank card wouldn't reward the big bank nearly as much as it would the small one. So the smaller bank has a right to win and survive. But what actually happened is Chime and Robin Hood and Cash App and all of these giant brands go out and they partner with these incredibly small little banks that most people have never heard of. Coastal Community Bank, Lead Bank, who go on to become actually not just supporting the fintech industry in the United States, but supporting most of the crypto industry and stable coin issuers as well. And they go on to have some of the best uh return on equity, return on assets of any financial institution in the United States. So, there's this interesting model where it can be an opportunity for financial institutions. And that's the argument that's uh like it's one thing to say it's a stick like oh well we'll just make the problem worse but where's the carrot for the financial institutions and the banks because if we want to bring all of institutional liquidity on chain then we have to welcome those institutions themselves on chain at least a subset of them. Yeah, I um I get the point. I also just think the community banks are like in their last gas of like a dying breath, right? So like most yeah, the community banks have been dying for a while, right? Like this and we continue to do things to try to save them. This is a very I think US specific point. Maybe I don't I don't understand the European banking market as well, but um we've been trying to save them for a while and it continues to be that people don't actually want to deal with their local banks. The economics of a local bank are really tough. people are engaging, you know, primarily with their financial services providers digitally. The digital offerings of community banks are, you know, much worse than uh than than they are of of larger banks. And typically because of funding, right? You get better rates now from, you know, JP Morgan or whoever else, right? And so uh the community banks continue to be very you know concerned about what their future looks like at a time when we are just probably going to have a commoditization of like what they offer right and so they won't be able to have the right economics and then you have better unit economics at the large banks and better unit economics at the tech forward startups right and so those who aren't tech forward in the middle are probably going to die right and we can continue to try to save them for as long as possible and like you know as They I just think they need a right to play. Um and and that doesn't have to be a legislative thing. I think it's more of a narrative and an argument which is there's an opportunity for you. Well, I if you talk to and actually I'll reference someone else's stable coins. If you talk to Chad Cascarella at Paxos, right, he'll tell you that he thinks community community banks their only way to survive to adopt stable coins, right? And he'll tell you that like, you know, he's on the the path of trying to get every single one of them to digitize their business using stable coins and tokenized assets because that's how they can control their economics. That's how they get better um uptake on their ROE and their their return on assets. That's how they can keep a better user experience for their end customer and that's how they survive. And I think that's like a reasonable point. I just don't think they'll do it, right? Most one I think that's also like a that that has materially changed in the last probably year or two, right? But I mean the SEC killed Silvergate completely. Uh, and I mean this is like not a conspiracy theory, but like that that's an objective fact and they killed them for servicing a lot of the very large crypto players and and and like the US government, specifically the SEC just not being comfortable with that. And so I think also this whole every bank just has to shift into stable coins. That was suicidal two years ago. Yeah. And so like I think there just hasn't been a lot of time for anyone to like really lean into that strategy. model as well. I think that there's some banks that have done that extremely well. I mean, lead bank, cross river bank, like there is these entities that are like fast moving and and and who now service a lot of the the the stable coin ecosystem, but banks haven't had a lot of time to adjust to the new reality of, oh, I won't get killed if I interact with crypto in any capacity. So, the UK market's very different. I did want to bring it to the UK. I saw the Lord Holmes um on stage earlier and and and had a good chat with him on the way out and and I know they had uh the right honorable Nigel Farage here earlier and and I I do think that the UK has an interesting opportunity. It's got a very concentrated banking market as most of you guys know and that sort of means that the big banks aren't going to move quickly. They're all as big and as slow as each other. Uh there isn't that sort of uh lead bank customers bank equivalent in the UK. So it's very difficult to get them to do anything meaningful or to have the entrepreneurial ecosystem in quite the same way. And there isn't the lobbying impetus in the UK in quite the same way there is in the US despite the fact that it is outside of New York biggest global financial center. And yet it now I think eyes Singapore and the UAE and sees like global competitors really starting to emerge and there's just a slowness. I hope that becomes a last mover advantage, not like a complete slide into irrelevance. My fear is we've just got to get on with it. Um, we really do have to get something out there quickly. But from conversations I've had, there are some very, very thoughtful policy options that you could have for functional equivalents in a way that Mika can't. Like MA is just a mess. Now, it was designed as market structure regulation, not payments regulation. But that won't get cleaned up until PSD3, which might be 2030, 2032, who knows? The UK has a really interesting opportunity to do a Euro dollar 2.0 to have that moment in which it's plays to its strengths and becomes the best clearing hub for stable coins in the world. That would be really, really interesting. I think the ambition is in this room of people that can do it. I just hope that that's enabled and unlocked. So, let's talk about the UK, too, because what you kind of touched on this, but I want to I want to see if I can press it a little further, which is aren't you afraid then if the banks are not going to be capitalizing on stable coins and the energy around stable coins that it just gets left behind like the UK just gets left in the dust here? Yes, the short answer is yes. And I think the the statements um coming out of the the Bank of England have shifted. They were still very much warning the big banks off doing too much in the space. And I think there's a lot of um global financial crisis scar tissue coming out in a lot of those statements uh and around systemic insolveny risk. sort of looks not dissimilar to the US a while ago, but it's it's interesting how different uh the Treasury um sounds are to the bank and uh where that nets out and starts to normalize over the next 6 to 12 months. Uh especially with Revolute potentially looking to IPO in the not too distant future. There are a few things that you know this country sorely needs some tax revenues and needs an IPO story. it has one ready made in Revolute and I can't think of many fintexs in the world that are more aggressively leaning into crypto as a part of its long-term growth strategy. And so whether I note with interest that um uh the right honorable Rachel Reeves uh was at the launch of the Revolute HQ a couple of weeks ago in in Canary Wolf. I wonder if there are these sort of things working their way through behind the scenes that would enable that. Again, I think that window and that of opportunity is closing. Got about 6 months to get this right. And if not, then yeah, you might as well call it game over. I'm actually curious what what is um I guess the most pointed way to ask this question is what is UK's right to win a world where 99.9% of tables are dollar denominated. And it's pretty clear that anything that they do is one further step, one added risk layer than whatever I I think it's quite clear. It's being the um bridge to onchain FX. Um, if you have large regulated financial institutions that can enter token markets and can clear stable coins uh of multiple currencies uh and can do that against fiat, then where is the global financial center for clearing for for US dollar, euro and uh GBP? Historically, it has actually been London um that's been the major FX center. So, but this implies a world where stable coins are now 99% dollars. Correct. Yeah, I think so. because which is not the world we're living in right now. Correct. No, but it it's not. But it's also inevitable that if we are going to get to uh last mile solving and to global corporate treasury and to being able to pay suppliers in local markets, you need FX. So FX becomes the next logical bottleneck in in the stable coin market. And who has a right to win in that? I would argue it's London. Yeah, it's got to be interesting that it hasn't happened yet uh that we've all been waiting for it to happen. because there's no demand for onchain GBP um in the crypto markets. Uh but there is demand for it as a payments instrument in the real world as an FX instrument. Uh I think that's fairly the problem like the story around like uh stablecoin FX is and okay well it's 99% USD has been entirely around like what do people actually hold right there's no demand to hold GBP on chain there's no demand to hold a euro on chain there's no demand to hold you know the kuna on chain no demand to hold anything else on chain right because people see the US dollar as you know the the thing that they want to hold it is the the gold standard right global south yeah for treasury managers yeah but for the real economy No, I know I mean it is empirically true that there is no demand today onchain to hold any other currency. Now your point around is there demand to hold GBP if you're a GBP denominated business or bank of course right like you don't want to take that FX risk or do we want to hold euro if we're a euro denominated business absolutely right 68% of global FX is done in US dollars right 99% of of us of uh stable coins is currently US dollars is stable coins going to meet somewhere between those two like yeah they have to right like if we're going to have any real payments the question becomes is and and I guess I'm going to give a point of view. It's not just a question, but like I think we're broadly in a currency cold war at the moment, right? Mostly between China and the US, right? With the UK kind of like figuring out like where the it's supposed to, right? And like the the how does that evolve over time? I think it's pretty clear that like if you're not a G20, like your currency is probably going to get devalued and it's going to continue to get devalued. like there's going to be probably a um just sort of a I guess a culmination of a lot of smaller of countries realizing that like they just do not have the ability at their uh at their Federal Reserve or their Federal Bank to control their monetary policy in the way they want to with the the globalization that has happened and with the currencies uh continued proliferation for other countries, right? And so then it becomes does the UK, does the EU want to proliferate their currency in the same way that the US the US government does or that the Chinese government does, right? And it's not clear to me that like the ambition is there or even frankly the capability is there in the same way. And so like I think like if we're talking about onchain FX like I do think we're we're certainly going to get you know uh more. It's not going to be 99%. But it's not clear to me that the GBP is the next one to come. I agree with you on ambition and capability but also London as an FX clearing center whenever uh that does emerge I still think has a has a right to win. One thing that we talked about a bit when we were prepping for this panel was the way in which we've seen the industry really enjoy the success of stable coins and how this has now led to institutions really coming in because we've got a very institutional audience. I want to talk a little bit about what you guys think is the next step for stable coins. What keeps the momentum going? And Rob, I'm gonna just toss it to you first. Um, I do I do actually think it's treasury management to to like actually get like pull back a little bit, but um, no, I mean we we see in the US, right? There's a bunch of Fortune 500s who are actively out with like, you know, RFPs using, you know, what name your consulting firm to like try to figure out how to plug in a uh, you know, plug in stable coins into like their global operations, right? I think that's like very clearly like a next step in evolution where like if you are Coca-Cola and 80% of your water comes from Western Africa like you do not want to park money at some bank in Western Africa you want to continue to park as much money as possible at JP Morgan but you need to pay your suppliers right it's you know you can send a wire through JP Morgan which today still loses your wire half the not half the time but you know some percentage of the time right and still today like you know has you know 7 to 14 day settlement into Western Africa correspondent banking system doesn't serve them Well, and so, you know, it's clearly a better product for that, right? If you can get intraday and real time yield generation and not have to, you know, uh, manage your yield product versus your cash product, you know, uh, in the same way and you can get, you know, better, you can essentially like clip, you know, more uh, more bips on top of that, like that's a better product, right? So, it's it's pretty clear to me that like tokenized assets are better. And then when we start thinking about, okay, well, um, you know, are there going to be tokenized equities? Can we trade 247? Is there better collateral management doing that you know and then if I have you know more tokenized assets more tokenized stable coins etc to be able to interact with those other tokenized assets like these things are these things are needed right it's like stable coins are infrastructure needed for the rest of a tokenized economy if we are going to move in that direction right and so I think that's a I I think that's a big one um I do think it is a uh to the point around the GBP and the euros I think it is uh Mika is going to get in the way of that for a lot of the European uh companies. I think I expect the I I don't know what will happen in the UK, but I'm not not bullish. Um but I I we'll see broadly broadly bearish but but like in the US and in and the financial hubs in in Asia like we're very clearly and in Latin America, we're very clearly seeing people I think work towards that future. I agree. I mean, I think you it's easy to forget how incredibly naent of of an ecosystem of stable coins are. They basically didn't exist four or five years ago. Uh, and so like this entire growth is kind of a phenomenon of the last I mean basically since 2020 is is is really when stable coins kind of meaningfully took off. And I think a lot of the kind of infrastructure and and and processes are highly highly highly nent and will look wildly different in probably a few short years. And I I do think that like it's it's tough to to underestimate how incredibly valuable stable coins are as a kind of export dollar product where I think the yes it's tokenized kind of collateral across across venues and you can like easily move money but but really you do have so much global demand for USD that just isn't being met in in the traditional banking system. And so really on the payment side um it's this really interesting justosition really where stable coins really have two use cases which on on one hand is kind of the very cryptonative trading collateral moving money between between venues and then it's like the non US non-EU kind of retail and consumer access to USD payments. I think those are really the the two things I think that changes and and you probably do have kind of especially on on the payment side of more more things coming but that is I think an accurate description of of where stable coins are as as a market right now and I don't think anyone has productized the the payments particularly well but it's still and like I I spend so much like I you go to El Salvador and like there's a small kiosk and you can you can pay with USDT on draw and you have to like get out for Binance and Trust Wallet and oh my god, do I have energy for the gas and the whole thing like obviously won't look like this in two years, three years. It's just too valuable to kind of just be this kind of shoehorned system of randomness basically that has just kind of emerged out of out of the demand. And I actually think that is kind of the the biggest opportunity and biggest change is really kind of productizing the stablecoin payments well especially on the kind of consumerfacing non non US non Europe um um um kind of for that audience I think that is where I think incredibly valuable companies are going to be built. I think there's this interesting sort of uh G20 down market that I think Tether historically Tron now plasma are uniquely positioned uh are uniquely positioned to uh be the dollar for everybody else. A global corporate treasurer was using the dollar quite historically to to move it around but they were using the correspondent banking system. A stable coin is a better product to do that especially if you are going local to local. So if I'm going from um India to Brazil, uh I don't necessarily need to go through New York in order to enable that. And so that sort of like those local routes, those local corridors are as valuable to a multinational corporate as they are to to kind of uh somebody who lives there and has a has a local corner shop. And I think that seems to to Rob's point to be where the real action is. The question is how old is that corporate? So if you are uh you know 100 year old company, you really want your banks to do that for you. You want them, you've got 10 different banks, you have uh SFTP uploads from your ERP system going to all of those banks. You're trying to manage all of that complexity. Bank, please solve it and please continue to lend to me. If you are uh new bank or revolute and you have 70 million 100 million customers then you are thinking very differently about what stable coins enable you to do and I think that's kind of the sweet spot here of the next stage of stable coins is stable coins for that growth business and it can be a fintech or or a non-fintech company but then also what that enables think about what Coinbase has today is what your neo bank will have tomorrow and what your bank will do in 10 years time. Coinbase offering uh yield to consumers uh via the partnership with Morpho is something that Sockgen also offers, right? That that's something that blew my mind that Sockgen's SG Forge has a partnership with Morpho. So these onchain credit markets become available when you've got stable coins as a base layer. So where I think that goes is um the G20 payments infrastructure will start to come soon. I think one thing to we're talking about treasure management which is an institutional type of what's next. I think on the retail side it's kind of interesting to see these parallels but the second biggest reason why people hold stable coins in the global south is because they want access to the dollar and they don't want to be exposed to a local currency like Rob mentioned um they see the dollar as uh the gold standard for where to park their dollars. But if you look at it in another way, stable coins are essentially tokenized dollars. And the next thing after you have enough money to live and stashed away is you start looking for investment. And that's where we're talking about RWAs. I think it's absolutely true the fact that stable coins are the way that you get money on chain, but then you're going to keep the money on chain. And you now want access to dollars because you don't have it, but next you're going to want access to Tesla and the S&P 500. And that is three orders of orders of magnitude larger than you know M1 and M2 supply and just the dollar denominated um demand. And so from a retail perspective what's next is they come through stable coins. They get the stable coins on chain. Now they access the capital markets and the investments. And I think the metric that we need to start tracking to see if this transition is happening successfully really is the number of stablecoin dollars that never transition back to traditional fiat and that stay on chain. So that's the metric to look out for and he did it right on time. That's our panel. Thank you guys so much for joining us. I thought this was a great discussion so I appreciate it. Well done, gent.
