So we ended up after really taking some time looking at hyper Electrofabric, Ethereum,
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also its benefits on scalability. We wanted to have EVM compatibility for smart contracts.
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Welcome to the Thinking Crypto podcast. I'm your host Tony Edward and with
me today is Carmel Cadet, who is the founder and CEO of MTech.
Carmel, great to have you on. Thank you so much for having me.
Excited to be here. Yeah, Carmel, I'm excited to learn about
m TAG. I've heard a lot about you guys over the years and in
talking to folks at the Digital Dollar Project and many others. So let's start
with your background. You know where you're from. Where'd you grow up?
Sure? I am originally from Haiti, born and raised. That is part
of the story on why am tech, to be honest. When I migrated
to the US, I became very fascinated by financial services and how financial products
were broadly accessible to people and how it improved their lives, their career,
their health, and their centative living. And I always wondered why wasn't that
available from anywhere around the world. Personally, I deeply believe that everyone deserves
access to an inclusive and a resilient financial market. And I didn't know what
to do about it at the time, but I ended up with a re
at IBM where I fell in love with technology, and that's where really the
combination of financial services and using technology to try to make financial markets better is
where we land. So I looked at your LinkedIn profile and I saw your
time at IBM, and it looked like you worked a lot on blockchain tech
and innovations there. Tell us about that. Was that your first encounter with
bigcoin and crypto and blockchain? Oh? Good question. So my background is
in corporate finance. I join IBM right after college, actually got my internship
in between, and I went back to finish my finance degree. Then John
IBM and corporate finance. Always worked in software portfolios at the company and got
to see really some amazing technologies being done and how we transformed enterprises around the
world. I like to say that everyone is using IBM, they just don't
know it just because it runs through the wires of our world. But really
got to see how impactful technology can be. But I started in corporate finance,
got to see you know, software, security, WebSphere, middleware,
everything in between. Then ended up going to Treasury and work for IBM,
so really a good sense of how to manage kind of corporate finance at a
global level. Really loved it. Worked on restructuring about thirty two billion dollars
of assets for IBM, and then IBM asked me to launch the IBM Blockchain
division back in twenty seventeen, so I was binge watching doing I was leaving
from attorney leap as they were launching getting ready to launch a division, and
then I came back kind of hit the ground running. So I was binge
watching on blockchain and digital currency doing my maternity leave, and I have a
picture of my son around three months trying to say blockchain actually, which is
really funny. But I ended up being exposed to really the technology before I
got exposed to bitcoin. I opened my first bitcoin wallet back in twenty seventeen
and was very proud of myself on how much I figured it out. You
know, back then it was there was no coin base at the time.
But really fell in love with the idea of how do we use technology to
bypass some of the rigid structures that have made financial services hard to access for
people around the world. Coming from the corporate world, definitely understood risk management,
profitability, and had an appreciation for why banking services and banks moved away
from a lot of a lot of countries and a lot of regions and you're
you know, given where you are, you have an appreciation for this.
The Caribbean has become over time a very high high risk region for financial services
and it was not worth the investment that was needed in order to maintain banking
services. So blockchain for me was really a light bulb moment. Can we
provide better visibility, better integration, automated workflows that made financial services accessible,
usable, but also more trusted. Absolutely, and certainly this technology comes at
a good time where it can help those folks who are under bank, don't
have access to proper financial services and so forth. So where did the idea
of starting MTech? How did that come about? Understanding your background and seeing
that need, where did where did it go from? You know, I
see this need, but I want to I want to participate, And how
did you know starting that company come about? Yeah? Just crazy idea man
to get to get started on the central banking side. But I had the
rare opportunity to be at the table when the first central bank digital currency was
being created. I was at IBM at the time and Central Bank of Bahamas
was looking for a blockchain based solution to modernize their payment infrastructure and that was
going to be the first CBDC. I me and my team at the time
decided to pitch. We got some partners to work together, and we didn't
think we were going to win, but we actually ended up winning and ended
up kind of really helping the team architects. So we were part of the
first phase the first pilot rollout. Very exciting stuff. But the thing that
really made sense to me is if a central bank is looking to At the
time, we didn't call it that, but now I can say that tokenize
their cash, their sovereign currency. Can we provide financial inclusion by design?
Can we actually make financial market more resilient by having blockchain technology, distributed ledger
technology, better traceability as far as market activity. Quickly understood that actually that
can counter an time money laundering capabilities. People didn't really understand that at first,
but the traceability and the visibility of activities allows you to really deep dive
and find and find better patterns and understanding how money moves. So for me,
that was really exciting. That was the answer to my question seventeen years
before that when I moved to the US and I saw it and I could
not un see it. So I decided to make the decision to leave IBM
and became an IBM partner when we left, and helped IBM with the delivery
around the CBDC and Bahamas. But the very simple idea was to bring cash
on blockchain. To put cash on blockchain, we think that could you know,
financial inclusion, resilience, but also better liquidity. If you think about
how paper cash works, it's very limited. Yes, you know, more
privacy, but you know, very limited to peer to peer or physical transportation.
And we thought that could be that could be something. So I beg
my husband to let me take half of my phone one K everything I could
borrow against it and lunch and lunch M tech I had. My son was
two at the time. Very very big decision, but we thought that this
could really make a difference if we could bring blockchain to central banks, that
was a game changer. Wow. I love that and I really appreciate your
entrepreneurial spirit, and uh, you know it is risky and given that you
know the time or period in your life, having a young kid and so
forth. And you said borrowing against your pour one K. So that's awesome.
And tell us about the services that MTech provides. And obviously you're working
with central banks, but how are you enabling them to build this infrastructure and
so forth. Sure, as you can imagine, central banks are very conservative
institutions, but interestingly enough, they are also very much the anchor of most
financial markets. Any running and scaling and active financial market, you would find
a central bank or some monetory authority that does practically two main things, issue
sovereign currency in that market, so provide that sovereignty of currency, but also
regulate the financial market. So if you're going to have financial service providers,
central banks are not direct financial service providers, right, They regulate the private
sector that is supposed to enable that delivery of financial services. And what we
realized, so after I left IBM, studied m tech, started working with
the Bahamas project, but started talking to central banks and realizing that there are
just any other enterprise. They are a financial institution that has a different mandate
than what on the retail side are familiar with. But they were desperately in
need of a digital transformation and that's what we kind of stumble onto. And
when we started talking to central banks, realizing that for them, their processes
were very manual. The systems that they use haven't changed over fifty sixty years.
Some of them don't have any systems. When it comes to processing basic
things like license applications or regulatory reporting for a compliance is done still today via
paper submission or electronic uploading on a website. Yeah, go to the OCC
website and you will find a licensed charter, licensed playbook, a handbook for
you to download and you know, have some night reading or probably hire a
lawyer to go figure it out for you. Right, But the processes were
very very are still our old systems, manual processes, and what we also
find out is very expensive way of doing things. For printing cash, the
US spends about eight hundred million dollars a year to print paper cash. And
as economies are becoming more digital, some people would say, who's using this
paper cash anyway? Right? I mean, do you have cash on you
or do I have? You know, why are we spending eight hundred million
dollars to print paper cash in the digital economy, and in smaller central banks
spend about ten million dollars a year. So there was that high cost component
versus what we knew was possible and what we saw coming down the pipe around
the tokenization of assets and how much simpler and efficient and scalable that could be
for central banks. And that's where we landed with an opportunity to build modern
central banking infrastructure. And when we think of that, we bring a platform
play to them where they can digitize their workflows on the regulatory side, on
the digital currency side, then we bring really macro services and software services to
do data analysis and APIs for them to consume data, receive data in near
real time, build better dashboard analytical dashboards for them to get a better sense
of what the market is doing. And then on the tokenization side, we
really took an approach on how do we provide a Web three unable digital cash
platform, so we partner with Layer one protocols. There are certain things that
we wanted to make sure that we could have. Enterprise governance was very important.
If I walk into a central bank, it's very hard for me to
explain who's going to govern the network that they're going to put the country's currency
on. The second thing is the scalability and of course privacy we saw we
see really kind of a really love and hate or a lot of confusion on
what privacy really means. But with the rise of bitcoin and digital assets,
you also see that people are comfortable having some level of you know, transparency
into what's happening, but maintaining their private information closer to their chest. And
we thought that we could actually deliver that. So our portfolio of services is
a platform based, highly modular, so a central bank can deploy a module
that for their digital regulatory sendbox, we deploy that for them. On one
side, you have the central bank, on the other side you have the
financial ecosystem, and then we build what we like to call central banking as
a service in between. Wow, Carmel, really great insights there, you
know, telling us about many of the central banks, which is a bit
eye opening for me that they haven't fully upgraded their systems in like fifty to
sixty years, so you guys are helping them to do that. So that's
really great. And you mentioned some of the layer one protocols. Are you
able to tell us which block chains you have worked with and are currently partnered
with? Sure? I mean coming from IBM of course started with hyper ledge
or Fabric, had a good appreciation for how that could work into some enterprise
use cases, but we also saw some limitations around financial services and tokenization of
assets when it comes to hyper Ledger. Great great crital cal for some use
cases, but we believe that long term, the retail aspect of cash as
a liquidity asset, as a very liquid asset would really take hold and be
better used on a public ledger, public network with EVM compatibility that can be
interoperable with other assets, just like Cache is today. So if you walk
up to someone and say top up my bitcoin wallet and they take your cash
and they send you bitcoin from their wallet, that nature of it I think
will continue to happen and we wanted to make sure that we build with that
in mind. So we ended up after really taking some time looking at Hyperludri,
Fabric, Ethereum Stellar each have their pros and cons, we landed with
hithero hashgraph for us, so not a typical blockchain protocol if you will,
which has also its benefits on scalability. We wanted to have EVM compatibility for
smart contracts. Imagine central banks needing to uh tap into the benefits of not
wasting money for the government, for example, or government payments, imagining smart
contracts making sure that the wallet is still valid before disbursing funds or making certain
disbursements for special programs. So we knew smart contracts were going to be a
component of it. So we really took some time to research, and we
really like working with Hi or hash graft. They've been a great partner and
but definitely a great protocol. And of course the energy, the fact that
we work in emerging market, the energy consumption and the distribution nature of the
running of the network is something that we knew that we needed to officecate.
It was too much to ask governments and fund institutions to not only adopt a
new technology, but also having to figure out how to manage notes. I
saw that very painful, painful process in their early days. It literally kills
so many blockchain projects. M man, I'm getting so much insights here,
so I appreciate your knowledge and all the things that are I'll slow down here.
No, no, no, It's great because I have like a ton
of questions like the steam engines going here. So you mentioned hyper ledger,
fabric Fabric and I interviewed those folks, and I know their blockchain is private,
but you mentioned you know you're leading towards leaning towards the public blockchains.
But question for you, I know with central banks and financial institutions, privacy
is a concern, and how are they navigating that where maybe, like you
said, the retail version is pretty much open, is pseudononymous to a certain
degree, or are you using like a private aspect of those blockchains? And
I'll give an apple like Avalanche has subnets, private subnets, XRP Ledger has
I believe what it's called the private ledger or something like that. But you
know, some of these blockchains are building these like subnets which have a private
lager. Is that what happening happening with Yes, he there absolutely have what
they call a special purpose network that an institution can deploy. But of course
the trade off also comes back in right, So in the moment that you
want a private network, you have to have your own governance mechanism. Who's
going to manage the nodes who's going to determine the rules of you know,
how frequently transactions are processed. Do you use a typical blockchain or do you
use any other consensus mechanism. There are some problems that I think it's if
you can address the issue of privacy with a public network, then the benefits
are so much greater on a public network. Right, Just that if you
make a list of pros and cons you end up with so many more benefits
if you can figure out the privacy issue, because you're right the same way
in early days of cloud, right, there was this perception of kind of
well everything is in the cloud, and you know who's controlling the cloud kind
of thing. But in blockchain, you see you started with a mechanism of
private networks wanting to keep things. From an ecosystem perspective, the economics actually
just won't let that happen. And I think it's you can look around the
world you'll see the struggle of private network scaling up. It's hard, it's
really hard, and the ones that have scaled up are more open and public.
Are there use cases that you can imagine a private network be better?
For sure? There are some ecosystems let's say trade or food traceability, where
an organization wants to see its own supply chain, right, and you integrate
into that. I didn't want to have your own visibility. But I think
for financial services some of the problems that we have in today's financial system is
the silo aspect of the financial services and the limitation that comes with those silos,
meaning each organization make the rules on how you get it and get out
right. And that's what blockchain was essentially actually turned out to solve very well.
How can you provide broad access I like to say decentralized access. I
like to say centralized governance, centralized centralized issuance, but with decentralized access and
public networks do that very well. You know, as you're saying that,
I was thinking about JP Morgan's jpm coin and they use Quorum, and that
would be like that private centralized blockchain and it's only between maybe their branches or
things like that. Yeah, And you know what, that's a really good
example because JPM, if I'm not wrong, ended up partnering with Consensus and
transferred chrom over to Consensus with meta mask and so on, which kind of
brings you closer to the more public network aspect of it or ethereum, But
you're right, that's where they started. Internally, the benefits are limited though,
I mean jpm coin was moving money between their accounts. I don't know
if they need a private coin to do that, right. The benefits of
it really become exponential when when you step out of your network and being able
to have interoperability more and with more flexibility. Yeah. Absolutely. Now I
don't know if you can tell us, but how many cential banks are you
working with and could you give us any names? Sure, we are working
with six central banks today. It's it's a lot to get six central banks
to go to that digital transformation, as you can imagine, We anticipated maybe
one a year starting in twenty twenty two, but we ended up with bankov
Ghana was our first client. We signed the first pilot agreement with them during
COVID. It was quite a trigger for digital transformation. But banko Ghana has
been such a great model around innovation in this space. Around twenty twenty they
set up the Financial the Fintech and Innovation Office at the Central Bank with a
real mandate of engaging fintech, ecosystem, safe innovation and web three blockchain and
digital currency type of approach, So I'm very part of the team. We
actually did a pilot for a ECD hackathon, so that was their first cbd
web three unabled CBDC hackathon, and that was very successful from a central bank
perspecise being able to see can we actually use a public ledger for this,
So we were happy to be able to showcase that and then but they started
with the regulatory sandbox. So the regulatory sandbox is actually a very popular solution
that we're bringing to market because it allows the central banks to navigate their process,
their slow process around putting regulatory frameworks in place and the speed at which
innovation is happening. So we bridge that gap by enabling them to say,
all right, innovators, we know we don't have a regulatory framework for you
yet, but come to the sendbox. We want to make sure that you
have your compliance, your consumer protection, that you're not going to do money
laundering with whatever product you're launching. Will give you a sendbox license and will
supervise how you're doing, and that will inform us on how we should actually
regulate this space. But it also accelerates your go to market right so it's
kind of a win win and being able to do that with a digital platform,
having real time visibility into their performance and to their data is something that
we enabled and we have six central banks who are deploying that today. Central
Bank of Nigeria was our second client, and we're working with Liberia, Sera,
Leon Guinea and Gambia. So there's a zone that we kind of tapped
into and they're very, very excited to not only digitize what they do,
but also regional integration over time. Wow, that's amazing. Congrats on this
success. And you know, as you're saying that, I can't imagine what
it's like to pitch a central bank and you know, moving and you know,
trying to get them from the analog to digital world. So that's pretty
incredible. Now. I remember reading and I think I was talking to Chris
John Karla the Digital Dollar Project about this that Chris that you guys ran a
pilot for a US CBDC. Tell us about that and were there any updates
with the FED receptive if you can't tell us anything there, so can't share
too much on what happened on the Digital Dour Project side. But actually when
we join the Digital Dour project. We started talking to essentially financial service providers,
fintech companies who are trying to think of how can they build on CBDC
in a perfect There are two use cases that we started working on. One
was being able to provide financial inclusion. And I know people don't think that
the US have a financial inclusion problem, but there are the size of Ghana
in the US that don't have bank accounts in the US about thirty million people
about in the US that don't have bank accounts for various reasons. Granted,
but the access has moved away from local branches and so on, and whether
people are digitally unable to access digital services. But they were in a very
underserved and under bank region where they had a community of people who are either
in shelters or coming out of you know, jail or coming out of different
situations that don't have bank account How could they provide digital cash to them?
Right, they don't have to have a bank account to hold cash and CBDC
on a retail CBDC if you design it properly, if you have the right
regulatory framework around it, you don't need a back account to hold a CBDC
and that was the beauty of why digitizing cash and tokenizing cash got us excited.
The other use case was also very interesting where they wanted to issue their
own stable coin for their local community but back it with CBDC as reserves.
So that was a very interesting mechanism. So you can have the retail and
you can have the wholesale component of it if you will, where it can
really be interchangeable as far as what you do with a CBDC if you are
a financial service provider versus if you are a user. So those are very
you know, two use cases that we started working on with the digital or
project participants. We're still going through that as you can imagine as people you
know, we're building, but those are the early test cases that became very
interesting. And I think that's probably what Chris is referring to. That's fascinating
and I didn't think about that. But stable You said a localized stable coin,
so it could be maybe are you thinking a country wide, nationwide or
like state specific, using the United States as an example. Think of it
as just like the US Circle you know, enables or let's say Ripple issues
their own stable coin. Think of it as a community base or more targeted
type of stable coin that another issuer would would would issue and it would be
US dollar and it would be one to one, but instead of having cash
directly, which cash doesn't pay interests. Cash is really kind of one to
one. You could create different business models around your stable coins that are different
from the CBDC that is back from whether you wanted to create rewards program or
have a voucher program where if you're using the stable coin, you can go
to all the registered you know, ecosystem stakeholders if you want to, if
you're in that community, you want to go to that grocery, you want
to go to this vendor. You have certain vendors that accept the stable coin.
Those are the use cases that I think are going to be very interesting
on how moving the resilience that they can have with the backing of cash being
one to one. If you think about it, Circle is doing the same
thing, right, so they have one to one backing US dollar, but
it's just with black Rock instead of with the FED. Black Rock ends up
having an account of the FED, so you kind of like you still have
the intermediary here that I think over time, as central banks think through how
do they provide an efficient infrastructure to the market that you might see people really
engaging and connecting directly into into a central bank system, a CBDC system.
That's so fascinating. And as you're saying that, I'm thinking about all the
things that have been brought up and discussed over the years, such as new
stable coins have the reserves, right, some are using US treasuries. Now,
I know there's a big question about teather even though there's they have monthly
or quarterly attestations. I've heard Howard Lutnick at Caunterfitz General say they do have
the reserves. But you know, to your point, if these CBDCs are
put into play, and let's say the United States creates a digital dollar,
they would have these stable coin issuers use that as the reserve. So that's
fascinating. Yes, I think so too. I think so. And you
end up addressing privacy pretty well right the retail side when you look at what
the central bank can see. The way you can tell whether there is a
level of privacy when it comes to CBDC on the retail side is one whether
the central bank is the direct interface provider. We've seen a couple of central
banks think about how to introduce their own app that that's one and their own
app is the only way to get access to the CBDC. I think that
there's at least a perception of the central banks senior information directly, but central
banks don't really want to do that because the idea of doing KIC and AML.
Central banks don't want the risk of doing that, so they're not in
the business of doing that. So I think there's a natural disincentive for them
to get into that role. What most central banks are expecting and have expressed
desire to do. The design is really to make CBDC and cash available through
the private sector solutions. The same way you have to go to an ATM,
you don't go to the central bank. You don't go to the FED
directly to get your cash. You go to an ATM to get your cash.
There's going to be an intermediary that provides that and that information. Your
information is with your provider, not with the central bank, right, And
one of the benefits of using a public ledger is that you can actually see
what the central bank sees, right, and the central bank can say here's
what's on the ledger, here's what we see, there's no private information on
there. In order for us to get your private information, one, it
has to be under the constructle whether it's aml or any suspicious activities. But
then we still have to go through your financial service provider and work with them
for any investigations and so on the same way it's done today to be honest,
right, if there is any suspecial activity, then your bank is part
of the conversation as far as getting information. But that for me is a
benefit of using public ledger that everyone can see what's visible. And then putting
the second thing is putting laws around that and making sure that it's not only
codified, but it is legally kind of stated that the central bank does not
receive PII under certain you know, except under certain circumstances. And then the
second thing is that the token is designed as a bearer's instrument, meaning if
you hold it, it's yours, just like it's cash. No one is
coming to you and kind of taking your cash from your pocket. So a
central bank should not be able to kind of take cash out of your wallet
again, minus the extreme circumstances that would require that. But I think that's
a good way of being able to address that. For Cremel, Let's walk
through a mock scenario here potentially hypothetically here, right, I have JP Morgan
as a bank five years from now, could I see a JP Morgan being
intermediary where I can access Circles, US, DC, Paypals, p y
US, the Ripples News stable coin. You know, depending when it's launch
or something else. Do you see banks being intermediaries versus you know, people
in the general public don't know who Circle is, they don't know who Ripple
is, right, but they know they know who Bank America is, and
TD Bank and JP Morgan DC. A scenario like that, I definitely see
banks playing a role. However, I think they have a few things going
against them, right and which opens opportunity for their players. I think the
banks don't necessarily have a problem that digital asset is solving for them. You
could, you could think about it on the settlement side, security settlement on
wholesale transactions, securities, UH trade payment and so on that take a few
days. But I would argue, depending which bank you're talking to, if
they're the one holding that cash, they have the float for two days,
they're not trying to give that up for twenty four to seven settlement right,
money comes in and out really fast that way, I think the opportunity,
however, you're going to see the Circles of the world and the Paypals of
the world leveraging either their own network or building networks around the product that they're
they're they're building, and I think Circle did it right. Instead of them
being the issuer, it's really working with different issuers and different channels to make
sure that this can be accessible in different platforms, and PayPal paypals start with
its own network, but bringing it into more open networks for it to be
a more liquid asset while they maintain the one to one that they received for
that I think is also going a very scalable model. But I think you're
going to see a lot of FinTechs play into this space. I actually think
that the digital asset landscape of products of fintech products has not arrived yet.
I think there's a whole new generation of financial products that are going to run
on digital assets instead of bank rails, whether those are bank stable coins or
bank infrastructure. But I think you're going to see new payment entrants just by
default going into digital asset payment types and that requires a different business model if
you think about it right, different compliance, different partners, different ecosystem to
plug into, different risk profile that you need to manage. And depending on
which countries, it might be easier to actually expand globally and have your products
be used globally if you have a digital asset compare if you are a financial
institution and you have to give access to people to your system versus. I
think there's quite a bit of a new set of products that will that will
be very attractive to individuals, businesses small and large. I'm seeing more and
more corporates actually partner with smaller companies to get into their Web three strategy.
I think that's going to come. And you know, with the ETFs and
the laws that just passed in the US, I spent a lot of time
in Africa. There's a lot of headlines that kind of make things confusing on
where things are. But I think compared to two years ago, the conversation
is very different, just very different. Back then, it was you know,
no no, no, no no to you know, today it's okay,
how do we make money with this? Or how can we actually regulate
this or you know, it's it's a different conversation now. Speaking of regulations,
there's been a lot of political narratives here in the United States. You
know, certain political parties taking the action well we're against CBDCs and or you
know, in your right to we want to we're concerned about your right to
privacy and so forth. And I see, you know, the pros and
cons there's tons of pros for CBDCs and digital currencies. I think the one
con, which is just a potential just if you put the guardrails in place,
I think like kind of what you're alluding to, where the CBDCs are
the reserves, but the retailers using stable coins. I think that would work.
But privacy is still a big concern for folks. And you know,
Congressman Tom emer who I've had on the podcast a couple of times, he
introduced a CBDC Anti Surveillance State Act. I want to get your thoughts on
that. And obviously that's in the United States. But what are the folks
in Ghana and so forth? How are they approaching are they do they have
the same level of concern? Yeah, I mean I'll start the last question.
I think there's a kind of a learning curve for everyone, right,
Like I said, two years ago, everyone thought bitcoin was going to be,
you know, just for fraud and only bad people used it. And
then until you have black Rock, who wants to use it? You know,
like we'll put a whole etf around it. So I think there's that
learning curve. But look, I have I have a maybe sarcastic way of
kind of thinking about this stuff. But if the Congressman is pro bitcoin,
then you have by default a level of transparency and openness to your information that
you already are providing. I think privacy is a tough term to get people
to agree on. Actually post that on Twitter at some point it's like what
is privacy to you? And I got different answers for everybody who replied.
I think when I look at what the bill proposes, it's not anti CBDC.
It's anti CBDC that violates your privacy. And I think I believe that
there's a way to solve for that. And if you solve for that,
then what you're talking about is having a US dollar version of bitcoin, and
I don't think a lot of people would be against that, to be honest
with you, you know, because bitcoin is something that you can't control.
Yes, decentralized and so on, but is that the only asset that you
want to be using. But at the same time, the US prize itself
and providing kind of safety and security to the world when it comes to their
Google currency. People have different opinions about that, but that's where we are.
Do you actually see that role in a web three world? Do you
move away and say we're not doing CBDC because it is not something that's going
to be private while everyone else is either issuing their own CBDC or you're seeing
a transfer of trust from the US dollar to bitcoin. I think that's going
to be a very interesting conversation for policymakers in the US. In Europe and
Asia, they are much further along as far as deciding. I will never
forget where I was when I think it was Governor run the Centus at the
time who took the charge on Twitter on anti CBBC. I was sitting at
a BIS summit, which is the Bank of International Settlement, which is a
tink tink of central banks in Switzerland and Basil at the time in Switzerland,
watching the European Central Bank monetary Authority of Singapore and Bank of France arguing on
whether they should have programmability of their CBDC, not whether they should be doing
CBDC. Is debating whether we should have programmability and whether the idea of programmability
changes the nature of the singleness of money. Very deep currency central banking conversations
that are really more advanced. And then I opened Twitter. I happened to
be opening Twitter on that and because I was kind of trying to post as
the event was going on, and then Twitter was blowing up around you know,
kind of US is not doing CBDC. I think it's a matter of
time, to be honest with you. I think the odds and the dynamics
happening around the world is going to make it a really tough choice for the
US to not do this. So maybe it's the model you're talking about before,
where they do the wholesale CBDC. I don't know what blockchain, Maybe
a private blockchain is running behind the scenes. But like you said, the
stable corn issuers are given regulation and they start pushing it to the masses,
but they have to hold the CBDC as reserves. I think that makes sense.
Maybe that's Yeah, that's definitely a model. That's definitely a model.
What ends up kind of throwing a little wrench, and that is that central
banks have a mandate, legal mandate to provide sovereign currency in their country.
And if you delegate that a bit to the private sector one hundred percent,
meaning let's just stay reserve, you guys take the retail. If there is
a failure in the market where circle drops or ripple drops, then what fills
the gaps? Right in finance, we call that concentration risk, if you
will, meaning that central bank as a regulator depends on only on the private
sector to provide money and currency. It's not a risk that they're going to
take, at least for the foreseeable future. They will continue to maintain cash.
There's a reason that they still spend a lot of money printing cash is
because a lot of people still want it. To be honest, and second,
it's the last result alternative. When svbs have opening what FTX is happening,
everybody wants their cash. If you could give it to them in paper,
it would be even better just for them to put it on a mattress
and feel safe. But I joke, but you know, you want to
kind of cash out of those assets, right, because there is a different
risk profile. Any company that issues stable coins is only as strong as their
balance sheet. The US government or the central bank runs on their GDP as
their balance sheet, right, So very different risk profile the likelihood of a
central bank failing versus a private sector failing. But you're right. I think
those guys are feeling going to fill in a big gap and then giving people
choice on whether they want to keep digital cash, stable coins, bitcoin,
other private tokens David token if they want to. You know, the idea
of really having different assets and tokens that they that they want to keep in
their portfolio, I think is going to be something that people actually ask for
and look for. I'm so intrigued by how they're going to figure this out,
you know, is it circle ripple, PayPal the other issueres are tied
into the treasury or so, I don't know, right, Yeah, I
mean, I think those guys are definitely looking forward to that. I think
those guys, if they're not, they should be, but I think they
probably see that. Think about it, right, Imagine if you had your
reserves very compatible as far as asset type or technological standards to your private stable
coin, right, so if you need to tap into your reserve, you're
not waiting for two days while you have twenty four to seven stable coins running
right fed now is not a you know, twenty four to seven system.
The TPS or SEPA system and Europe kind of runs in certain times and you
have to shut down and do settlement and so on, so that compatibility is
not there, and I think there's a great efficiency for those players to have
reserves in kind of central bank stable coins while backed by or to back their
own private stable coins. So what's on your twenty twenty four road map?
Oh man? Okay, So one thing that we're seeing right now, definitely
the timing around central banking digitization is upon us. We are It's crazy to
say, but we literally have a backlock of central banks that we're trying to
get to and building for them. Both on the regulatory side, meaning sendbox
from going from sendbox to supervision for not only current Web two type of products,
but Web three that is coming down the pipe, right, so they
need better tools. We are building that. On the central bank side,
we're also seeing the opportunity to create value for the financial ecosystems. One thing
that we realize that central banks are regulators. It is not their job to
make your life easier as a regulated entity, and that creates kind of a
lot of fragmentation on the ecosystem on how did they engage regulators, how did
they do compliance, how did they become more resilient, and how did they
minimize their compliance risk and get shut down in the middle of them growing.
Those are things that those are problem and pain points that we're looking at addressing.
So for us, we're looking at bringing the Sandbox into more countries,
increasing our product portfolio with the central banks that we were winning, and we're
very hopeful of a new CBDC launching soon. We'll see. That's awesome.
Well, I'm excited to see those updates. I got some wrap up questions
here for you. First, if you could create your own metaverse, what
would the theme be? Oh man, I never had that question before.
If you put your oculus on or yeah, yeah, yeah, Well I
would definitely reinvent Haiti. I would reinvent Haiti. I would love to take
Haiti and everywhere with me, at least the Haiti that I have in my
mind and what I remember and what my parents had to talk about. That
would be pretty cool, given how almost impossible it is to imagine today.
I was to my mom for a good hour last night and just talking about
how things are happening in Haiti right now. Given how impossible it seems,
I think creating a metaverse that recreatesd it that reimagined it would be really cool.
That's awesome. And I got some rapid fire questions for you. Favorite
food, favorite food. I'm a foodie, so that's a hard one.
Tacos, I'll say tacos. Favorite musician or band John Legend, Nice,
favorite movie, dirty Dancing. Favorite book Seven Principles of Vision mm hmm by
Dr Miles Monroe. I gotta check that out. And when you're not working
at m tech, what are you doing for fun? Uh? Going to
baseball practice, basketball practice, cooking, not hanging out with my friends or
calling my friends enough, that's for sure, and then trying to exercise.
That's kind of like my thing. So I'm trying to, you know,
kind of maintain and protect my regime a little bit. But those are the
things that kind of take me away from MTAP. Awesome caramel, absolute pleasure.
I appreciate your knowledge and insights, and I got to have you back
on because I'm fascinated by what the central banks are doing in the future of
digital currencies and CBDCs. But congrats on all the success and thank you so
much for joining me. Sounds good. Thank you for having me. I
think it's been a long time coming and I'd be happy to come back,
so let's do it again. Awesome