Speaker 1: And banks themselves will issue on the same technology as
Speaker 1: stable coins. They'll issue a coin it'll be just as
Speaker 1: interoperable as a stable coin, but it'll have a couple
Speaker 1: of extra benefits. One is it will be able to
Speaker 1: pay interest, not yield. It'll be FDIC insured, it will
Speaker 1: have Reggae consumer protections, and all those wallets will have identity.
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Speaker 2: Welcome into the Thinking Crypto Podcast. I'm your host, Tony
Speaker 2: Edward and my guest today is Greg Kidd, who is
Speaker 2: the co founder of hard Yaka and the CEO of USBC. Greg,
Speaker 2: great to see you, Great.
Speaker 1: To have you back on Hey, thanks for having me. Greg.
Speaker 2: You've been head of the curve in many ways in
Speaker 2: the crypto industry, investing in different crypto companies and projects
Speaker 2: going back years, and we've spoken i think a few
Speaker 2: times over the years. So I'm curious what's the latest
Speaker 2: with hard Yaka and any new investments, any new developments
Speaker 2: on your end.
Speaker 1: So the big thing for hard Yaka now is we're
Speaker 1: all in on USBC, which is a deposit token runs
Speaker 1: on the same rails as stable coins, but it'll be
Speaker 1: issued directly by banks and including our bank, which is
Speaker 1: Vast Bank, which will be the initial bank to issue
Speaker 1: a deposit token running on either Permission Ethereum or on Solana,
Speaker 1: and that will be new to the market. Right now,
Speaker 1: it is still a stable coin, but shortly we will
Speaker 1: bring it over and bring it within the banking ecosystem.
Speaker 1: We can kind of talk about the pros and cons there,
Speaker 1: but that's the big focus of hard Yaka going forward,
Speaker 1: especially with the stable coin legislation coming down the pike
Speaker 1: in this country in the next six months.
Speaker 2: Yeah, let's talk at bit about USBC because I'm a
Speaker 2: user of Uphold, a platform you've been invested in and
Speaker 2: a platform I've bought and solo crypto on, and they
Speaker 2: have a rewards program where they offer five point two
Speaker 2: five percent on USBC if you were to participate in
Speaker 2: that program. So you mentioned it's a stable coin format now,
Speaker 2: but you said it will be or evolve or be
Speaker 2: transformed into a deposit token, right.
Speaker 1: So, currently for stable coins, they're issued by FinTechs like
Speaker 1: Tether's a fintech circle is issuing USDC along with Coinbase,
Speaker 1: and USBC is currently issued out of the Bahamas under
Speaker 1: the darract. It's a regulated entity out there. All of
Speaker 1: those have their funds invested in banks and other marketable securities.
Speaker 1: But the difference will be going forward with deposit tokens
Speaker 1: is the middleman will be cut out and banks themselves
Speaker 1: will issue on the same technology as stable coins. They'll
Speaker 1: issue a coin. It'll be just as interoperable as a
Speaker 1: stable coin, but it'll have a couple of extra benefits.
Speaker 1: One is it will be able to pay interest, not yield.
Speaker 1: It'll be the FDIC ensured, it will have Reggie consumer protections,
Speaker 1: and all those wallets will have identity. For stable coins,
Speaker 1: they might have identity, they might not, And maybe that's
Speaker 1: okay for some folks, but for folks who want to
Speaker 1: know that the entire ecosystem is green, it always has identity.
Speaker 1: Deposit tokens will have few that feature in a way
Speaker 1: that stable coins can't match.
Speaker 2: So do you see both of these products coexisting as
Speaker 2: the digital economy un full of stable coins and depositokens?
Speaker 2: And do you see depositokens being used more on the
Speaker 2: commercial side while stable coins on the retail site.
Speaker 1: They will coexist. There are a lot of situations where
Speaker 1: the fact that the stable coin can be held in
Speaker 1: a non custodial wallet without identity is not problematic. It's
Speaker 1: actually desirable. There's a lot of DeFi stable coins are
Speaker 1: really popular in trade file so like the most liquid
Speaker 1: piers are, for instance, tether, Bitcoin or te Solana, So
Speaker 1: there are going to be uses for that. But when
Speaker 1: it comes to actual things like day to day commerce,
Speaker 1: we're betting that kind of the protections you have, like
Speaker 1: when you use bank money and something goes wrong and
Speaker 1: you can get it back, that'll make a deposit token
Speaker 1: still using all the benefits of stable coin technology for
Speaker 1: being able to be moved twenty four to seven really
Speaker 1: really cheaply and in a way that's programmable, good for developers.
Speaker 1: So we think that both of those will coexist. We
Speaker 1: think they'll be liquidity providers. Will be one of those
Speaker 1: liquidity providers. We'll make sure there's one to one parody
Speaker 1: between the stable coins and the deposit tokens.
Speaker 2: So for the folks who are listening and they're like, wait,
Speaker 2: deposit token, I've not heard about this. So let's say
Speaker 2: this goes live right for USBC, will I would users
Speaker 2: be able to take the token and be able to
Speaker 2: use it the same way to use stable coins.
Speaker 1: In addition to yeah, just think like a stable coin
Speaker 1: is a dollar that's on chain. It has an address
Speaker 1: and you can just send it from one address to another,
Speaker 1: just like crypto, but it is a US dollar. This
Speaker 1: will be the same. They'll have one additional feature. It'll
Speaker 1: also have a bank account number. So there's no way,
Speaker 1: for instance, for you to get your paycheck deposited directly
Speaker 1: into your USDC address because it goes through a different system.
Speaker 1: It goes through the banking system, and so this will
Speaker 1: basically be a bridge between the banking system wire transfers
Speaker 1: acch fed now and the crypto rails, which is blockchain, right,
Speaker 1: and so there's no reason. Remember the days when phones
Speaker 1: you had a CDMA phone or something else and they said,
Speaker 1: well why don't we put both chips in the phone?
Speaker 1: Or used to buy a laptop and it was either
Speaker 1: one ten or two twenty and if you plugged it
Speaker 1: into the wrong one, it blew up, and then they
Speaker 1: just started making things dual voltage. Well, that's what a
Speaker 1: deposit token is. You'll have both a crypto address, but
Speaker 1: it'll also have a banking address, and so you can
Speaker 1: use it in either world.
Speaker 2: Wow, that's interesting. That's definitely going to be a disruption
Speaker 2: of the stable coin market. It seems like with maybe
Speaker 2: taking some market share, people going to deposit token versus
Speaker 2: stable coins.
Speaker 1: Well, come on, right now, the whole stable cooin market's
Speaker 1: only two hundred billion. I expect within three years to
Speaker 1: be ten x that. So this is this is just
Speaker 1: the fact that all money is going to shift from
Speaker 1: being digital to being tokenized, whether as a stable coin
Speaker 1: or a deposit token. It's just a better form of
Speaker 1: a digital dollar. And so this is going to be
Speaker 1: a growing market. So I think this can be a
Speaker 1: huge increase in stable coins. I think, you know, it'll
Speaker 1: just be right alongside that will be deposit tokens. And
Speaker 1: that's the way that the banking industry will participate. They
Speaker 1: don't need stable coin legislation. They already have the authority
Speaker 1: to hold a deposit. They just need to make sure
Speaker 1: that deposit operates in the same efficiency as a stable coin.
Speaker 2: So would that in mind, and to repeal as saw
Speaker 2: one to one in the FD I see saying they're
Speaker 2: going to remove some restrictions. Do you see this year
Speaker 2: being a boom for deposit tokens and stable coins and
Speaker 2: these banks kind of what you're like, what you're doing
Speaker 2: going all in?
Speaker 1: Well, you know, our bank. The when we bought I
Speaker 1: bought Beast Bank, it actually had the first non objection
Speaker 1: letter from the OCC to do crypto. Now we're not
Speaker 1: actually doing cryptos. So when I talk about deposit tokens
Speaker 1: or even stable coins, we're using blockchain and we're using
Speaker 1: distributed ledger technology, but we're not actually using or holding cryptos.
Speaker 1: So even with SAB one twenty one being repealed, I
Speaker 1: don't think banks like mine, I don't think we have
Speaker 1: any particular advantage in crypto over companies that are pure
Speaker 1: custodians or incidental custodians because they're already in exchange, they
Speaker 1: already have those skills. I think the best thing that
Speaker 1: we can do this is just our decision is be
Speaker 1: a bridge between the dollar world, which we live in,
Speaker 1: and the crypto world. So we might have customers that
Speaker 1: are crypto companies that need to hold dollars at a bank,
Speaker 1: and they'll have a choice, you know, they could hold
Speaker 1: dollars in a stable stable coin function, or they may
Speaker 1: want to hold them in a bank function because once
Speaker 1: again they won't be held in this system in a
Speaker 1: pooled account like they used to do, like for a
Speaker 1: square wallet or the way Coinbase, every user will have
Speaker 1: their own actual account, and companies like crypto companies, when
Speaker 1: they need to deal with dollars on behalf of their customers,
Speaker 1: they won't need to hold those dollars in a pooled account.
Speaker 1: They can just access those dollars directly through open banking.
Speaker 1: So this is a different way of the banking industry
Speaker 1: serving the crypto industry. They'll give crypto companies a treasury account,
Speaker 1: but they won't need to hold pooled funds anymore. That's
Speaker 1: how we got into trouble with FTX and finance too.
Speaker 1: The banks had an opegue FBO account. That will end,
Speaker 1: we believe, and people will move to having their dollars
Speaker 1: directly at the bank, but in a form that's on
Speaker 1: chain and then through APIs. All those crypto companies or
Speaker 1: other fintech companies, they can still do everything they used
Speaker 1: to do with a pooled account, but now they'll just
Speaker 1: be able to do it by interacting directly with the
Speaker 1: bank's ledger, which happens to be a blockchain ledger. So
Speaker 1: I think it's good for all parties concerned. I mean,
Speaker 1: there'll be more compliance. Crypto companies and fintech companies will
Speaker 1: be able to do everything they've done before and more
Speaker 1: they'll get closer to the rails of ach and wires
Speaker 1: and they'll be able to just jump right into DeFi
Speaker 1: or whatever else they want to do trade FI. So
Speaker 1: I do see all parties working more closely in this
Speaker 1: new arrangement.
Speaker 2: Now, what you're doing to usb C is a proprietary.
Speaker 2: Are you planning to sell this technology or lease it
Speaker 2: out or go to other banks and pitch this technology?
Speaker 1: It's not proprietary, and really any other bank is welcome
Speaker 1: to join. The technology is not rocket science, really creating
Speaker 1: very little here. What is necessary is you got to
Speaker 1: get the licenses. So the hard part to do basically
Speaker 1: a deposit token is you've got to be a bank first,
Speaker 1: and you've got to be a bank that's willing to
Speaker 1: have some of its assets it's deposit asset's sitting on
Speaker 1: a blockchain. Now, there aren't that many banks out there
Speaker 1: that are comfortable with that, and the ones that are,
Speaker 1: to some extent, like a JP Morgan coin, they're doing
Speaker 1: it in a very siloed way. What I'm suggesting with
Speaker 1: USBC is the tokens aren't to be issued by one bank,
Speaker 1: but a consortium of banks. So every dollar that's out there,
Speaker 1: some percentage of it it's going to be of this
Speaker 1: bank or that bank. It's not like this deposit tokens
Speaker 1: at Bank A and this deposit tokens at Bank Pepe.
Speaker 1: They'll all share in the float of the USBC. And
Speaker 1: that means, you know, you don't get a run on
Speaker 1: any one bank. It's a collection of banks. You can
Speaker 1: think of it as like there's a collection of banks
Speaker 1: behind the visa or whatnot that are collectively issuing tokeniyes deposits,
Speaker 1: and they can shift the balances around between them, depending
Speaker 1: on one has a bigger loan book or one has
Speaker 1: a smaller loan book. But the point is the people
Speaker 1: on the other side, the people that hold these tokens,
Speaker 1: just like the people that hold stable coins. They'll have
Speaker 1: an address and they can just move it around, just
Speaker 1: like you move a stable coin around. The difference here though,
Speaker 1: because it's a bank and because of the licenses, it'll
Speaker 1: be FDIC insured and it'll have consumer protection. What consumer
Speaker 1: protection means if your money you wake up one day
Speaker 1: and it's gone, you can say I didn't authorize that.
Speaker 1: Like with a bank account, you get your money back
Speaker 1: when I wake up in my money's gone. At coinbase,
Speaker 1: they're like, have a nice day, right, Like they're not
Speaker 1: under the same regulatory regime, and you know that gives
Speaker 1: them some freedom, but it also gives pause to some
Speaker 1: consumers who'd like to know and some businesses who'd like
Speaker 1: to know that if your money moves without your authorization,
Speaker 1: I don't care for whatever technical reason, you get your
Speaker 1: money back. And so that's the world of banking. It's
Speaker 1: different than the world of money transmission.
Speaker 2: Now we know FDIC insurance set up. It doesn't cover
Speaker 2: the entire deposit amount I think was up to two
Speaker 2: hundred and fifty thousand dollars per person or whatever. Maybe
Speaker 2: will this be different or is follow the same model?
Speaker 1: Well, that's true, it does just cover up to two
Speaker 1: hundred fifty thousand. There are a bunch of secondary market schemes.
Speaker 1: I used to work at Promontory. We had the Promontory
Speaker 1: inter Financial Network, which had a very clever amount of
Speaker 1: software that just took deposits that were above two fifty
Speaker 1: and cross deposited them at other institutions. So if you
Speaker 1: had five million dollars, your money would actually be cross
Speaker 1: depositive at other banks. That network routed over three thousand banks,
Speaker 1: and so there's a way to basically by by basically
Speaker 1: breaking up into packets to make depositive charts extensible so
Speaker 1: you don't lose it simply because you have a big
Speaker 1: deposit concentration. Now, Silicon Valley Bank had a problem in
Speaker 1: that regard, and you know, people just took it as
Speaker 1: safe until it wasn't, and then they realized a lot
Speaker 1: of their money wasn't insured. But for almost every other
Speaker 1: bank and certainly banks that participate in these networks of redepositing,
Speaker 1: virtually all the funds can end up FDIC insured, and
Speaker 1: so that level of confidence is achievable.
Speaker 2: And I think you may have answered this, but I
Speaker 2: want to make sure I understand. So USBC right now
Speaker 2: in stable coin format once again, I can earn rewards
Speaker 2: on it five point two five percent on like uphold.
Speaker 2: Will the token itself be morphed into fully a deposit
Speaker 2: token or it will be split some of it as
Speaker 2: a stable coins.
Speaker 1: We'll just move it all over to deposit token because
Speaker 1: to us, you'll keep doing everything it does as a
Speaker 1: stable coin, but you'll us get better guarantees. And so
Speaker 1: that that's just a matter of when we move the
Speaker 1: technology that's already operating offshore and bring it on shore
Speaker 1: to work with a bank. And so to get it
Speaker 1: to work with a bank is just going through all
Speaker 1: the regulatory clearances to make sure they're comfortable that the
Speaker 1: ledger we're using as bank industrial strain.
Speaker 2: And you mentioned it will be on the Ethereum and
Speaker 2: Salona blockchains. We've seen stable cord issuers, you know, try
Speaker 2: to put their token on different blockchains so that you
Speaker 2: have more into operability, more reach. Are you planning to
Speaker 2: expand to all the blockchains?
Speaker 1: We're also working with Stellar right now. We're open to
Speaker 1: other chains at the end of the day, though the
Speaker 1: user shouldn't even know which chain we're on. If they
Speaker 1: dig underneath, they can see. But if they're just moving
Speaker 1: money from one user to another, you know, we'll make
Speaker 1: all that. You know, like it shouldn't matter when you're
Speaker 1: making a request on a browser whether you use Safari
Speaker 1: or Chrome right and to us, all those chains just
Speaker 1: they have different pros and cons. You will eventually just
Speaker 1: work our way down the list and and do them
Speaker 1: all because we're not we're chain agnostic for USBC, and.
Speaker 2: I know I think you mentioned it earlier, but I'm
Speaker 2: assuming this the USBC can be a access globally right
Speaker 2: wherever you're at.
Speaker 1: The big watch words always, they're in all of our
Speaker 1: strategic docs, they're in the principles and strategy for the bank.
Speaker 1: And what they're really in is in the executive order
Speaker 1: that came out from the White House that uses two
Speaker 1: words open banking and fair access. And to US, open
Speaker 1: banking means as long as you have the credentials and
Speaker 1: you've delegated responsibility any third party application, any app the
Speaker 1: developers ought to be able to get access to your
Speaker 1: funds with your permission to do what you want. And
Speaker 1: fair access means if it's legal and it's licensed, going
Speaker 1: to be non discriminatory, and so it's not just race, religion,
Speaker 1: and gender, it's also national origin. We don't see why
Speaker 1: somebody who has proper compliance credentials should be disallowed from
Speaker 1: holding a US dollar simply because they live on one
Speaker 1: side of the border or another. Obviously, stable coins they
Speaker 1: don't have any concern with this, But even for deposit tokens,
Speaker 1: we view it as a fundamental principle of non discrimination
Speaker 1: and fair access that everybody ought to have access. Now,
Speaker 1: if you're on like the O fact list, your uses
Speaker 1: may be sharply curtailed, right, And so we expect everybody
Speaker 1: in the world to have access to US dollars in
Speaker 1: a compliant form. And really one of the differentiations from
Speaker 1: stable coins is stable coins just basically service those same
Speaker 1: people by plausible deniability. You know, it's in a metamoskqualle
Speaker 1: it has no identity, We don't know who holds it. Yeah,
Speaker 1: you know, Tether issued it, maybe they knew who they
Speaker 1: issued it to, but two hops away, it's it's just
Speaker 1: out there, right. And so for some use cases that
Speaker 1: may be okay. But you know, I personally don't think
Speaker 1: that Walmart's going to want to show up with, you know,
Speaker 1: three billion of payments from wallets with no identity. I mean,
Speaker 1: maybe they're okay with that, but I think at some
Speaker 1: point in time when a bomb goes off or you know,
Speaker 1: some big tax evasion or money laundering scheme and you
Speaker 1: find out that you're part of it because you had
Speaker 1: no idea whose money you were taking in. Yeah, that
Speaker 1: like nobody's really talking or thinking about that right now,
Speaker 1: because we're all in you know, hey, stable cooint you
Speaker 1: celebration time because we're going to get some rules, but
Speaker 1: those rules aren't going to fix those problems. But those
Speaker 1: problems didn't go away, they just haven't really come to
Speaker 1: the surface yet. And so we're kind of taking the
Speaker 1: long term view that eventually there'll be a bunch of
Speaker 1: people that are okay dealing with the gray market of
Speaker 1: wallets with dollars in it that don't have identity, but
Speaker 1: we're going to be focused on the green market of
Speaker 1: wallets that or sorry addresses that all have identity. And
Speaker 1: so you cannot hold a USBC without an identity. That's
Speaker 1: just part of the smart contract that's built in. And
Speaker 1: it can be privacy preserving, that's a that's a different issue,
Speaker 1: but it can't be anonymous. M got it.
Speaker 2: Yeah, I mean, and it seems like all the regulations
Speaker 2: are moving towards having fully KYC AML set up for
Speaker 2: whether it be stable corn issuers.
Speaker 1: Crypto ex only KYC at the point at which it's
Speaker 1: issued and redeemed. But there's a world in between, right,
Speaker 1: and so that is a big glaring you know, it's
Speaker 1: a big glaring loophole. It's like, you know, in America,
Speaker 1: all gun dealers have to you know, put people through
Speaker 1: background checks. But if you buy online, you know, peer
Speaker 1: to peer, or you go to a gun show, no checks,
Speaker 1: and guess what happens when you have that kind of regulation. Yeah,
Speaker 1: you get what you get, right, and so you know, look,
Speaker 1: that's the world stable coins are in. We like it.
Speaker 1: I mean, I participate in the wild West world. But
Speaker 1: I'm also like put my regulator hat on and my
Speaker 1: law enforcement hat on, and I know that for some
Speaker 1: economic activity to bring that into the to bring that
Speaker 1: into blockchain and distribute the Ledger technology, you're gonna need
Speaker 1: some You're gonna need some compliance, and you're gonna need
Speaker 1: some identity.
Speaker 2: So on that note, obviously market Structure bill in play
Speaker 2: is here stable coin legislation. How do you think distable
Speaker 2: coin legislation will affect what you're doing? Is it just
Speaker 2: gonna amplify it, you know, be better for you guys,
Speaker 2: because to your point, this is where the puck is going.
Speaker 2: As far as regulations, well.
Speaker 1: I think it's gonna bring in a whole bunch of
Speaker 1: integrators of people like we've already seen them starting come in,
Speaker 1: like with Visa and Stripe, they're already integrating stable coins
Speaker 1: into their stack, and USBC works just like a stable coin,
Speaker 1: it just has more compliance built into it, and so
Speaker 1: it's terrific for us. The more uptake there is of
Speaker 1: stable coins, once again, that just raises the opportunity for
Speaker 1: USBC is just one more type of token that you
Speaker 1: can plug in if you're concerned about compliance, consumer protection,
Speaker 1: and security in terms of insurance and whatnot. So we're
Speaker 1: definitely psyched to be along for the ride for sure.
Speaker 2: And Vasbank Outside of what you guys are doing here
Speaker 2: with the deposit token, are you planning to offer any
Speaker 2: financial services to crypto companies, banking services and other things
Speaker 2: like that.
Speaker 1: We'll do all the standing boarding stuff. You want to
Speaker 1: get a checking you know, we'll do all that as well,
Speaker 1: But really it's the inbound from their legacy world. Wire
Speaker 1: transfers still come in. You know. Think of it like
Speaker 1: the window at the casino. You know, somebody's got to
Speaker 1: run that window where you buy your poker chips. But
Speaker 1: let's be clear, nobody hangs around the window at the casino.
Speaker 1: They go to the tables, right, and so you know,
Speaker 1: we will still provide window services to every type of
Speaker 1: fintech crypto company. We're going to do all the boring
Speaker 1: stuff as well, and we're going to keep it boring
Speaker 1: because you know, the fintech's and the crypto companies, they're
Speaker 1: doing the fun stuff and we're just trying to basically
Speaker 1: remove friction at the window so you can get right
Speaker 1: to the casino.
Speaker 2: So I want to get your perspective on Operation choke
Speaker 2: point two point zero. We're seeing a lot of information
Speaker 2: coming out of the Fed FDIC, many these folks conversations
Speaker 2: up blocking crypto companies from getting banking services. Look, I
Speaker 2: don't know what happened with SVP SVB, but it seems
Speaker 2: like there was an agenda to shut down these banks
Speaker 2: that were helping crypto companies. In hindsight, looking back in
Speaker 2: what you're doing, what's your perspective on what happened there?
Speaker 1: Well, I mean Operation choke point KESS cost me a
Speaker 1: couple of extra years and many many millions of dollars
Speaker 1: to get like finally get my my bank charter. You
Speaker 1: know what I had to go through to get through it.
Speaker 1: You know, I feel very privileged and lucky and fortunate.
Speaker 1: I thank the team that I worked with, but you know,
Speaker 1: we had a lot of insiders and but even me
Speaker 1: who'd been a Federal Reserve regulator before, worked for years
Speaker 1: at Promontory, had cash, you know, promise to like not
Speaker 1: do a lot of things. I'm lucky that we still
Speaker 1: even have running water and electricity at the bank because
Speaker 1: of all the things I had to promise I wouldn't
Speaker 1: do before they would let me buy a bank. You know,
Speaker 1: when we tried to first do this at a state
Speaker 1: charter level and had to go through the FDIC, you know,
Speaker 1: we had a year to close the deal. After we'd
Speaker 1: reached the commercial terms. We did the pre approval process.
Speaker 1: All it was was a simple change of control. In
Speaker 1: the entire year period, the FDIIC never even acknowledged that
Speaker 1: our application was complete. They just ran out the clock.
Speaker 1: And so Operation choke Point is running out the clock
Speaker 1: on people, just give us a little bit more time.
Speaker 1: On the last day of my commercial terms after a year,
Speaker 1: I received a letter of thirteen pages of single space
Speaker 1: questions for things like well, I can't say what was
Speaker 1: in the letter, but that was a year endo the
Speaker 1: process and the application had never even been acknowledged this
Speaker 1: file and so that type of coughish behavior, you know,
Speaker 1: really was the hallmark of the last administration. You know, again,
Speaker 1: I'm not really I don't talk about this from a
Speaker 1: political point of view, but if anybody has any question
Speaker 1: as to whether Operation two point zero was real, it
Speaker 1: was real, and remnants of it are still out there.
Speaker 1: Obviously there's been a new memo at the top to
Speaker 1: knock it off, but you know, it takes a while
Speaker 1: for that to percolate down, and so you know, there
Speaker 1: are a lot of people out there still running around
Speaker 1: checking boxes doing risk theater compliance theater. You know, we
Speaker 1: haven't gotten to the point yet where real risk and
Speaker 1: real compliance actually catching bad guys, worrying about real consumer
Speaker 1: protection as opposed to going through the motions is what
Speaker 1: regulators are doing in the trenches. Look, there are some
Speaker 1: good regulators, but look, a lot of what's still going
Speaker 1: on out there is just theater, and so it will
Speaker 1: take time to change. I hope it does change. The
Speaker 1: tone at the top has changed, and they've told folks
Speaker 1: to focus on real risk and allow some competition and
Speaker 1: innovation in the marketplace.
Speaker 2: Greg, what do you think about? This is something I've
Speaker 2: thought about over the years, and once again putting all
Speaker 2: the political stuff aside, the more I look at it,
Speaker 2: I don't think it was a political thing Demo crawd
Speaker 2: versus Republican type thing. It almost seemed like it was, Hey,
Speaker 2: we control the money, We're the Fed, we're the Treasury.
Speaker 2: We worked with the biggest banks in the world. JP Morgan,
Speaker 2: and you see the tone coming from Jamie Diamond. This
Speaker 2: was more of a control thing. We can't see where
Speaker 2: the currency is going, as far as it going to
Speaker 2: stable coins, bitcoin, all coins and so forth, we're going
Speaker 2: to lose control. But now that there's etf rappers, now
Speaker 2: that we're going to put stable coin legislation through and
Speaker 2: make it law, now we're easing up. And maybe the
Speaker 2: political show or backdrop was just theater.
Speaker 1: Well it kind of breaks kind of strange and weird.
Speaker 1: Like there's even a while back there with Jamie Diamond
Speaker 1: and Elizabeth Warren we're having like a bromance getting down.
Speaker 1: But you know, many different bedfellows and different people defected
Speaker 1: from the ranks to the Democrats at different times. We've
Speaker 1: seen that with tech, just depending on you know, who
Speaker 1: kind of put their interests ahead of their principles and whatnot.
Speaker 1: But there's not a clear dividing line. Obviously, clearly Republicans
Speaker 1: were more willing and open to basically allow innovation in crypto.
Speaker 1: It didn't used to be that way. It used to
Speaker 1: be kind of flipped around. People got there on the
Speaker 1: wrong side of receiving donations from Sam Bankman Freed. You know,
Speaker 1: the Democrats went like, you know, one hundred and eighty
Speaker 1: degrees in the other way to be anti crypto, to
Speaker 1: show that they were no longer like under Sam's spell.
Speaker 1: So it was a sad four years and I'm glad
Speaker 1: that's in the rearview mirror, hoping for better going forward.
Speaker 1: I'm sort of in the political spectrum myself. You know,
Speaker 1: I ran for Congress last time, so I've got some
Speaker 1: inside baseball insights. But I think there are good folks
Speaker 1: on both sides of the aisle that are actually interested
Speaker 1: in seeing the US be a leader. There are still some,
Speaker 1: I would consider them lutite segments that are still afraid
Speaker 1: of or just think this whole thing is like smoking
Speaker 1: mirrors and are going to keep their foot on the break.
Speaker 1: But I hope it doesn't just seesaw like four years on,
Speaker 1: four years off again. I personally believe this is an
Speaker 1: area like AI where the US could be a world leader.
Speaker 1: And you know, I want there to be good regulation.
Speaker 1: I want there to be tough regulation, but you know,
Speaker 1: I don't want I don't want to be in a
Speaker 1: Tony Soprano kind of situation anymore where it feels like
Speaker 1: a shakedown world. And having been on the wrong side
Speaker 1: of the shakedown when I was at Ripple, to you know,
Speaker 1: being an investor in coinbase, to like having my application
Speaker 1: never being acknowledged as even being filed, you know, I'm
Speaker 1: ready just to roll up my sleeves and get to work.
Speaker 1: And I really like the space, and I feel like
Speaker 1: we're finally at a time where what's going to happen
Speaker 1: in the marketplace is going to be determined by like
Speaker 1: who executes, as opposed to like who's the best at
Speaker 1: threading the regulatory needle. And look, I've been pretty good
Speaker 1: at threading that regulatory needle, but I don't think that
Speaker 1: should be the highest that that shouldn't be what determines
Speaker 1: success in this There's a lot of other people that
Speaker 1: are really good at building products and operating you know,
Speaker 1: value add for for customers and businesses and stuff. And
Speaker 1: it's sort of sad that you know you have to
Speaker 1: be like you know, an insider to even get a
Speaker 1: seat at the table to play in this game.
Speaker 2: So are you anticipating that we see a boom in
Speaker 2: innovation and building capital coming back to the United States,
Speaker 2: companies feeling less afraid right, no more in regulation by
Speaker 2: enforcement because we're going to have a better sec CFTC H.
Speaker 2: I mean, you got a White House cryptos Are you
Speaker 2: get a Secretary treasure of the Treasury who's pro crypto?
Speaker 2: All these people are pro cryptona.
Speaker 1: Well, the boom is already on. The boom is definitely
Speaker 1: on right here. And I was at it for twenty eighteen,
Speaker 1: it was again in twenty twenty one. I'm sure there'll
Speaker 1: be another bus. There'll be a big shakeout. Like there's
Speaker 1: a gazillion people that are working on like stable groin
Speaker 1: stable cooin integration. We're putting a couple of bets in
Speaker 1: on that. But you know, it's like any gold rush,
Speaker 1: it's going to be it's going to overshoot and come back.
Speaker 1: Question is I you know, is that going to come
Speaker 1: back later this year? Is it next year? But you know,
Speaker 1: we're in it for the long haul, and so we
Speaker 1: try not to get buffeted by these up and down cycles.
Speaker 1: But it is party on right now. People are really
Speaker 1: really psyched and are integrating stable coin solutions token I
Speaker 1: solutions at a breathtaking pace. Yeah.
Speaker 2: So on that note, you know, with the boom and
Speaker 2: bus cycles, do you foresee there's going to be some
Speaker 2: consolidation with the stable coin market because it seems like
Speaker 2: everyone is launching a stablecoin, even Ripple as you know
Speaker 2: you mentioned you were. There's so many people doing it now.
Speaker 1: I mean there's two different arguments. It's it's kind of
Speaker 1: like there is an argument why there could be like
Speaker 1: a gazillion stable coins, which is kind of I call
Speaker 1: it the wooden nickel argument, Like you go to every
Speaker 1: carnival and they each have their own wooden nickel. Of
Speaker 1: course you can't use the wooden nickel across the carnivals,
Speaker 1: and so there'll be a bunch of that wooden nickel
Speaker 1: stable coin ism and that'll keep a lot of people busy.
Speaker 1: But that's like, to me, a lot of little copy
Speaker 1: serves and aol. So the big game out there, and
Speaker 1: really why we call it USBC versus us DC is
Speaker 1: a swing for the fences to make the US dollar
Speaker 1: the ubiquitous form of payment. The star trek kind of
Speaker 1: payment at a global level that works locally, and it's
Speaker 1: going to be kind of like Glengarry Glenn Ross. There's
Speaker 1: like you, first place is a Cadillac, second place is
Speaker 1: steak knives, and third third place use you're fired, right.
Speaker 1: So I do believe there'll be some you know, some
Speaker 1: consolidation at that unless unless some of these tokens get
Speaker 1: some specialized you know, niche, there probably will be one
Speaker 1: stable coin that's really good for everything that likes to
Speaker 1: be done without identity. It's a little bit you know,
Speaker 1: because there's a lot of stuff in the world that
Speaker 1: I don't want to call it, like you know, shady
Speaker 1: stuff in sunny places. There's a demand for that. But
Speaker 1: you know, the question is who's going to be the
Speaker 1: compliance solution that's integrated, you know, in the commercial realm
Speaker 1: for consumers and businesses. That mantle is still to be taken.
Speaker 1: I think USDC has the lead there. We're obviously looking
Speaker 1: at coming in that with a different vector and and
Speaker 1: you know, other folks, the paypals, the ripples of the
Speaker 1: world that a lot of other folks are going to
Speaker 1: kind of try to be like, you know, grab that
Speaker 1: one percent, but like I'm not in that grab one
Speaker 1: percent kind of world. I'm in the I'm in the
Speaker 1: Catalyz versus stake lives fight. That's how I see it
Speaker 1: for sure.
Speaker 2: Well you probably can't answer this, but you know, are
Speaker 2: you guys looking at possible acquisitions of some of these players,
Speaker 2: even if we startups building certain stable coin infrastructure or
Speaker 2: payment solutions and things like that.
Speaker 1: Well absolutely, either either acquisitions or investments or having options.
Speaker 1: USBC will go public this year as a reverse merger.
Speaker 1: It's kind of a boring way to go public. You
Speaker 1: just buy a public company. We will be funded with bitcoin.
Speaker 1: Oddly enough, I think kind of crazy thing that you're
Speaker 1: actually going to fund it with bitcoin. We're not spending
Speaker 1: the bitcoin, that's just the capital base and the you know,
Speaker 1: the goal will be to basically use that public company
Speaker 1: stock for acquisitions when necessary or to pay options. That
Speaker 1: is the vehicle. The reason to be a public company.
Speaker 1: I think USDC will through Circle will go public this
Speaker 1: year is people want the transparency, so we want the scrutiny,
Speaker 1: we want to be audited. We want to show that
Speaker 1: we're on the up and up. But USBC, remember it's
Speaker 1: not the bank, it is the scheme. You can think
Speaker 1: of it as as like a new form of visa.
Speaker 1: And so that's the entity that should be the public
Speaker 1: entity that receives the scrutiny. Whether that invests in or
Speaker 1: partners with banks, with market makers, with ledger, companies, with
Speaker 1: identity credential providers, all those will be part of the
Speaker 1: eCos not clear that they need to be acquired, but
Speaker 1: they need to be part of the ecosystem. We always
Speaker 1: talk ecosystem and having taken a company public before, where
Speaker 1: I bought sixty two companies in nine months. What a
Speaker 1: pain in the ass actually owning stuff. It sucks, man.
Speaker 1: So it's much better to have just APIs and aligned
Speaker 1: incentives because otherwise you feel like you got to put
Speaker 1: a suit on and it takes all the fun and
Speaker 1: joy out of out of doing this stuff.
Speaker 2: Question on wallet support, tell us a bit about what
Speaker 2: you're doing there and plans to get other walls to
Speaker 2: support and eventually with the repeal it solable on one
Speaker 2: to one and all these things that are happening in
Speaker 2: the banking industry opening up. Could we see in banking
Speaker 2: apps the ability to move stable coins, supporting USBC and
Speaker 2: other things.
Speaker 1: Yeah, the whole goal here. And it's really not difference
Speaker 1: between USDC or USBC is it's your coin, right, It's
Speaker 1: not your coin at this custodian or that custodian. I mean,
Speaker 1: you can have your money at a custodian or you
Speaker 1: can just have it self custodically and then it can
Speaker 1: appear just like USDC can appear in a MetaMask wallet.
Speaker 1: It ought to be able to appear in a Wells
Speaker 1: Fargo wallet if they want to let you do that,
Speaker 1: and the same thing in a square cash wallet or
Speaker 1: a Venmo wallet. And so those all those wallets are
Speaker 1: going to have to decide do they want to be
Speaker 1: exclusionary and not let you see your stable coins or
Speaker 1: your deposit tokens because they want to push theirs, or
Speaker 1: they want to be inclusive. And you saw this battle
Speaker 1: play out when when Financed for a while kicked USDC
Speaker 1: off their platform, right they wanted people to use their
Speaker 1: stable coin. And that's that's kind of a channel conflict.
Speaker 1: We won't be in that channel conflict. We're we're like, hey,
Speaker 1: you know, we're doing the coin, you know, comparing any
Speaker 1: wallet you know up to you. You know, we don't
Speaker 1: care what else is in the wallet user choice, right,
Speaker 1: and so in this world wallets might have some of
Speaker 1: the money being held by that wallet company custodially, but
Speaker 1: the question is will they support other non custodial sources
Speaker 1: of assets, including stable coins and deposit tokens. We hope
Speaker 1: they will. We think that if they don't, they'll be
Speaker 1: kind of lame, and that everyone will be forced to
Speaker 1: basically let you see your money wherever you use it,
Speaker 1: whether it's in a wallet, a marketplace, could be a metaverse,
Speaker 1: you know, could be a remittance company. It's your money,
Speaker 1: it should appear and go wherever you go. Yeah.
Speaker 2: Absolutely, I wanted to get your thoughts on the SEC.
Speaker 2: Obviously there's a regime change. The Crypto Task Force has
Speaker 2: been formed hester PURSS leading that, and we seem to
Speaker 2: have more friendliness coming up from the SEC. Do you
Speaker 2: anticipate that cases against coinbase and binance and these things
Speaker 2: will be thrown out? Non fraud cases, ripple settlement public
Speaker 2: coming in the works. What do you think those things
Speaker 2: will happen this year?
Speaker 1: Yeah? I've never understood why if you have a problem
Speaker 1: with somebody's practice and it isn't like fraud, just go
Speaker 1: in and say like you know, let's have a conversation.
Speaker 1: The conversations don't have to be like, oh, mister Koshogi,
Speaker 1: come on in and pick up a wedding license and
Speaker 1: then you come out chopped up in pieces. And so
Speaker 1: that approach the disc work between the regulators and the
Speaker 1: innovators is to me, you know, fearful and ridiculous, but
Speaker 1: it has characterized sort of our country's behavior for some
Speaker 1: period of time. So I do believe there will be
Speaker 1: coordination collaboration between the regulation. I want the regulators to
Speaker 1: be tough on fraud and root that out. But if
Speaker 1: people are just trying to do things right and there's
Speaker 1: a market problem or a structuring problem, let's have rules
Speaker 1: right and regulations and we can have a public policy debate,
Speaker 1: like we can decide for stable coins whether states should
Speaker 1: be able to license those rather than just the federal government,
Speaker 1: and we can decide at ten billion dollars, you get
Speaker 1: both a federal regulator in addition to a state regular
Speaker 1: that's just you know, intelligent people can disagree on those points,
Speaker 1: but those should be resolved through just like negotiations. And
Speaker 1: Congress should do its job, and it's doing its job
Speaker 1: right now in this regard and not like in court
Speaker 1: through like you know, reading the fine print and trying
Speaker 1: to dage like a rock fell on his head so
Speaker 1: it might fall on ours. Maybe we shouldn't do that,
Speaker 1: Like that's a ridiculous way to actually run a country.
Speaker 1: And we've seen the results in terms of retarding innovation
Speaker 1: and leadership that we experienced during the last administration for
Speaker 1: doing that.
Speaker 2: Do you think we're going to get more all cots
Speaker 2: XRP Solana, Some of these ETFs filings have been piling up.
Speaker 2: We got bigcoin in e theorem, of course, hoping Howdy
Speaker 2: gets steaking as well.
Speaker 1: I have no idea why there would not be you know,
Speaker 1: a Salona ETF or a x r P e TF.
Speaker 1: I mean it just it. At some point, you know,
Speaker 1: you're pretty too far down the you know, far down
Speaker 1: the map. But absolutely right.
Speaker 2: Bitcoin reserve. Yes, a lot of states throwing their hat
Speaker 2: in the ring. Federal level. We have a bill. Do
Speaker 2: you think that happens this cycle? Or maybe I have
Speaker 2: the theory that they approve it. But it's not necessarily
Speaker 2: to start buying right away, but just holding on to
Speaker 2: the two hundred thousand plus bitcoin you already have in custody.
Speaker 1: I think there's a strong chance that they'll get the
Speaker 1: foundation in. Like, people can argue about the number, but
Speaker 1: you know, it's hard for people. I mean, people will
Speaker 1: argue that the government shouldn't own any bitcoin. But to me,
Speaker 1: even if you you know, even if you're not a
Speaker 1: Michael Sayer fan, you got to acknowledge that from just
Speaker 1: from a risk point of view, do you really want
Speaker 1: to be like, have none of this asset. It's like,
Speaker 1: it's one thing to say you're betting on bitcoin, it's
Speaker 1: another thing to say you're betting against bitcoin. So betting
Speaker 1: against bitcoin is kind of like going short on game stop.
Speaker 1: And I would not if I was the government sell
Speaker 1: down my position. I do believe that bitcoin is probably
Speaker 1: the best hedge against inflation and rampant government spending. You know,
Speaker 1: gold's done pretty well too, But but bitcoin is just
Speaker 1: it's got its advantages and stuff. So I tell people
Speaker 1: it's a risk to not have any bitcoin. I'm not
Speaker 1: telling people to put, you know, fifty or even five
Speaker 1: percent of their wealth into into bitcoin, but to have
Speaker 1: none at all, I don't know. In a mad Max world,
Speaker 1: you probably need canned food and bullets and stuff like that.
Speaker 1: So probably have a little bitcoin on the shelf.
Speaker 2: Yeah, absolutely definitely agree with you there. And there's talks
Speaker 2: of possibly, you know, as rumors, but crypto stockpile, not
Speaker 2: just bitcoin but a bunch of different digits.
Speaker 1: Yeah, the same thing. I mean, like, you know, you
Speaker 1: don't want to just have peas, you might want to
Speaker 1: have some corn and Brussels sprouts as well, So I
Speaker 1: wouldn't you know, I'm not a bitcoin maximalist, but but
Speaker 1: I you know, I do have I do have some
Speaker 1: bitcoin down there in my in my cellar, right so,
Speaker 1: but you know I have the others as well, so
Speaker 1: that that's me. I'm not giving investment advice here, but
Speaker 1: I like gold coins.
Speaker 2: Too for sure. So Greg, I got to ask you
Speaker 2: about this. I wish I didn't have to, but mean coins,
Speaker 2: it's madness right now. I have a love hate relationship.
Speaker 2: I believe in the free market, but I believe there
Speaker 2: needs to be some sort of guardrail because people are
Speaker 2: getting rugged. What are your thoughts on how does mean
Speaker 2: coin crazy?
Speaker 1: I mean, to me, it's just silly stuff, and you know,
Speaker 1: like it is, it's, uh, you know, a Greater Fools
Speaker 1: type type theory stuff. And if you want to spend
Speaker 1: some of your life on that. To me, that's like
Speaker 1: just uh, you know, betting on the ponies and stuff
Speaker 1: like that. And and so I have some regulation, but
Speaker 1: at the end of the day, a fool and his
Speaker 1: money quickly parted, and and and But the point is
Speaker 1: with meme coins is did you have fun doing it right? Like?
Speaker 1: You know, It's like what I said when I you know,
Speaker 1: you know, when I did business in Russia, I was
Speaker 1: like lost all my clothes and lost all my money,
Speaker 1: but had a lot of fun doing it right. So
Speaker 1: you just got to know what you're getting into when
Speaker 1: you're getting into it.
Speaker 2: Yeah, I would prefer to go to Vegas to get
Speaker 2: some free drinks and maybe some nice girls walking around,
Speaker 2: you know, versus But it's the same thing, right it is.
Speaker 1: But but you know, people like that stuff, and like I,
Speaker 1: you know, I I watch people just do all their
Speaker 1: money in the slots. But but look, I play poker,
Speaker 1: so we all have our vices, you know, we know,
Speaker 1: like just in moderation, right, So appreciate I hope. I
Speaker 1: hope people don't lose their life savings on meme coins.
Speaker 1: And to me, it's really not that different than just
Speaker 1: people buying lottery tickets and do another just wasting time
Speaker 1: and money in their life, and that's a great thing
Speaker 1: about being alive.
Speaker 2: Yeah, for sure, Greg, great stuff. I'm excited for the future.
Speaker 2: Updates are on USBC and one it goes fully deposit
Speaker 2: token status, we'll have to have you back on to
Speaker 2: and talk a bit about some of that stuff, but
Speaker 2: thank you so much for joining me.
Speaker 1: Sure, in the meantime you can just hold it as
Speaker 1: a stable coin and just earn some yield on it.
Speaker 1: I mean, it's not the most exciting thing around, but
Speaker 1: it is. You know, it's better yield than most stable coins,
Speaker 1: so just keep that in mind for sure.