Speaker 1: There is a consorttion of banks that's looking at launching
Speaker 1: like top seven currencies, a stable points on a blockchain.
Speaker 1: There's a tremendous amount of innovation that's going on in
Speaker 1: tokenized deposit and can tokenize deposits become an inner bank
Speaker 1: settlement mechanism.
Speaker 2: Being in the crypto industry and building from the stable
Speaker 2: coin standpoint, I think you have a head start, so
Speaker 2: hopefully your product wins here and you know, with the
Speaker 2: collaboration of the.
Speaker 1: Crypto industry, that's what I'm betting on.
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Speaker 2: visit the link in the description. Hey, folks, welcome into
Speaker 2: the Thinking Crypto Podcast. I'm your host Tony Edward and
Speaker 2: joining me is Kevin Latinity, who is the CEO of
Speaker 2: Borderliss XYZ. Kevin. Great to have you back on.
Speaker 1: Hey, Thanks Tony, it's great to be on the show.
Speaker 1: It's always great to see you, Kevin.
Speaker 2: Some big announcements coming out from Borderalists, and in addition,
Speaker 2: I want to get your take on what's happening with
Speaker 2: the stable coin market. There's been some big updates around
Speaker 2: black Rock and much more. Let's kick it off with
Speaker 2: the big news run Borderalist Benchmark tell us about this launch.
Speaker 1: We are We are super excited about this. The more
Speaker 1: that we've been spending time with non crypto native companies,
Speaker 1: so you know, the traditional PSPs, larger corporates, the FinTechs,
Speaker 1: et cetera, et cetera, and we've been spreading, you know,
Speaker 1: the good word of the gospel of stable coins right, better, faster, cheaper,
Speaker 1: et cetera. One thing that has become really clear is
Speaker 1: that there isn't a great benchmark for the FX rates
Speaker 1: and stable coins. If I think about traditional efs, I
Speaker 1: can go to Bloomberg. If I think about crypto, I
Speaker 1: can go to coin market Cap. But there's all these
Speaker 1: different data sources about what is the price of an asset.
Speaker 1: But if I think about the rates in the stable
Speaker 1: coin world, that doesn't exist. And the larger and larger
Speaker 1: FinTechs we've been talking to, they ask an incredibly good question,
Speaker 1: which is our stable coins actually cheaper than traditional fiat
Speaker 1: rails right. And there's a lot of people on the
Speaker 1: camp that say raw, raw stable coins better, faster, cheaper
Speaker 1: all day long. I don't think that's quite true. If
Speaker 1: you look at markets like ust Europe, Swift settles, T zero,
Speaker 1: it's the most traded effects pair in the world. Those
Speaker 1: spreads are incredibly tight, et cetera, et cetera. But if
Speaker 1: you look at like South Africa to Brazil, for sure,
Speaker 1: stable coins are a giant cost savings there. Right. But
Speaker 1: the question is like, how do we actually answer that
Speaker 1: fundamental question? And you can go to an exchange, right,
Speaker 1: you could look on binance, or you can look somewhere else.
Speaker 1: You can go to an orchestrator. You can go to
Speaker 1: a bit so, a yellow Car, a trace Finance, and
Speaker 1: a Venia honey Coin someone like that, but you only
Speaker 1: get to see their rates. And what we feel like
Speaker 1: the industry is missing is this credibly neutral benchmark that
Speaker 1: is able to aggregate across all these different pockets of
Speaker 1: liquidity and say, Okay, this is the mean, this is
Speaker 1: the median, this is the standard deviation, this is the minims,
Speaker 1: this is the byside, this is the cell side, et cetera.
Speaker 1: And what we realized is that we have a very
Speaker 1: interesting connectivity because our core product is connecting PSPs orchestrators,
Speaker 1: et cetera, into a whole network of global counterparties for
Speaker 1: on and off ramps, that we're actually seeing all these
Speaker 1: different transactions and all these transactions being you're saying all
Speaker 1: this different FX rates data in neur real time across
Speaker 1: seventy different countries from dozens of different providers, and we've said,
Speaker 1: wait a minute, maybe we should make this data available
Speaker 1: to everybody. And that's the genesis of the borderless benchmark.
Speaker 1: So already live that that borderless doxygs list benchmark. You
Speaker 1: can go and this is super early. I will caveat
Speaker 1: with that. We're big in you know, building public. I
Speaker 1: will tell you it's our beta version. Alex will tell
Speaker 1: you it's the zero point zero zero zero zero zero
Speaker 1: zero zero zero one. You know, it's not pulling from
Speaker 1: all the data and the network yet, it's pulling from
Speaker 1: maybe ten percent of the data, and over the next
Speaker 1: few months we're going to make it twenty percent, sixty percent,
Speaker 1: et cetera, et cetera. We really want to encourage as
Speaker 1: many people who want to be part of the benchmark
Speaker 1: to contribute their data and their rates, and we've got
Speaker 1: a process for that on the website where group will participate.
Speaker 1: But that's the fundamental question, right is what is the
Speaker 1: FX rate? What is USDC to BRL, what is USDT
Speaker 1: t K. Yes, that's not answerable. Now, finally, with the
Speaker 1: Border's benchmark, people have a place where they can go.
Speaker 1: The basic version of this is completely free. It's on
Speaker 1: the website. Anyone can go click on it, see the data,
Speaker 1: see the spread, start to get an understanding of what's
Speaker 1: going on. And then for borderless customers, we're going to
Speaker 1: build a lot more of this data into the intelligence
Speaker 1: layer of the platform and be able to understand, Oh,
Speaker 1: what is the USDC price versus the USDBT price and
Speaker 1: what corridors do I have an advantage for using this
Speaker 1: stable over that stable? Are there differences and rates biaus
Speaker 1: of liquidity between different chains, all those sorts of things.
Speaker 1: You know, what about business payments versus consumer payments? What
Speaker 1: about first party versus third party? Right, not every provider
Speaker 1: does third party payments. If I need third party payments,
Speaker 1: how does that change the depth of liquidity and therefore
Speaker 1: the FS price answers to all these questions is what
Speaker 1: we're trying to brent to solve for. And you know,
Speaker 1: we've got a few early folks that have taken a
Speaker 1: look at it, from some of the largest payments companies
Speaker 1: in the world that I've said, this is incredible, and
Speaker 1: we need to show this to like three teams internally
Speaker 1: right away, so we're pretty jazzed. But this, to us
Speaker 1: is that incredibly neutral, community driven effort to say, not
Speaker 1: stable coin provider one versus two, like let's go battle
Speaker 1: over FX rates, but stable cooin industry. As we try
Speaker 1: to bring on flows from TRADFI and PSPs and corporates
Speaker 1: and banks, we've got to be able to give them
Speaker 1: these basic building blocks that they're used to getting from
Speaker 1: traditional payment rails, and this is our first step. But
Speaker 1: trying to kind of coalesce community center of mass by
Speaker 1: providing all this data in one place.
Speaker 2: Kevin, that's really profound. I kid you not. Last week
Speaker 2: I was talking to someone about this the FX markets
Speaker 2: and how stable coins can make it better with the
Speaker 2: instant settlement and the real time transactions and the blockchain.
Speaker 2: But to your point, this facet of the infrastructure is missing,
Speaker 2: and I feel having this data out there will help
Speaker 2: boost adoption and stable coins because people need to know
Speaker 2: all these things you mentioned, but there's no central place
Speaker 2: to get it. But you have this solution now.
Speaker 1: We've started it right, I would hardly say it's the
Speaker 1: solution we are you know, about ten percent of the
Speaker 1: bordless network. Data is now being incorporated that will grow.
Speaker 1: But we've started a place to have this and our
Speaker 1: ask to the rest of our industry is come help us. Right,
Speaker 1: this isn't a borderless thing. This is a stable coin
Speaker 1: industry wide thing, right, and we're just we're the connector
Speaker 1: here that is already in so many of these different
Speaker 1: conversations that we're able to be a distribution channel for
Speaker 1: all this information. So please, you know, come contribute to
Speaker 1: the benchmark. Let us help you distribute all that out,
Speaker 1: you know, into the PSP's corporates and orchestra in the world,
Speaker 1: and let's create a very very real stable coin FX
Speaker 1: benchmark that can answer these sorts of questions for the
Speaker 1: Fortune fifties, for the largest banks, for the largest payments
Speaker 1: companies on planet Earth, and get them to adopt stable points.
Speaker 1: Because if that happens, the tide that will rise from
Speaker 1: that is going to make everybody who's contributing to this
Speaker 1: industry so so much more about.
Speaker 2: I love that you're open to collaboration and working with
Speaker 2: the rest of the industry to get more data as
Speaker 2: well and make it you know, you just have more
Speaker 2: points of views and plugins of information and that it's free.
Speaker 2: That's that's awesome, that it's creating open access and dumb question,
Speaker 2: do you have to talk to the likes of a
Speaker 2: Circle or a Tether or not necessarily you just need
Speaker 2: to work with the payment companies and the banks and
Speaker 2: so forth.
Speaker 1: We're more focus on the payment companies and the banks
Speaker 1: and so forth. You know, obviously we would love community
Speaker 1: support from the likes of Circle and Tether and others.
Speaker 1: I'm sure they have a lot of very interesting data
Speaker 1: that can be contributed to the benchmark that would help
Speaker 1: us all make something a much much stronger product and
Speaker 1: therefore bring a lot more folks into our industry. But
Speaker 1: ultimately we're starting with kind of the banks and payments
Speaker 1: companies and those folks. And I'm a big believer that
Speaker 1: that open networks always win. That's what we're trying to do.
Speaker 1: We're trying to not necessarily create and own something for
Speaker 1: our benefit. We're trying to be the community organizers of
Speaker 1: something for everyone's benefit.
Speaker 2: You know, Kevin, this reminds me, and you can correct
Speaker 2: me if I'm wrong here, but it reminds me of
Speaker 2: some of the indexes and the products and aggregate data
Speaker 2: that Bloomberg and the S and P Global and these
Speaker 2: folks have created for trad fi assets. Is it kind
Speaker 2: of akin to that.
Speaker 1: A one hundred percent agree. You know, when when we
Speaker 1: think about what is an FX rate, kind of bloom
Speaker 1: Bloomberg mid Market spot rates come to mind as an
Speaker 1: index and the benchmark of what FX rate data should be.
Speaker 1: And maybe, you know, one day they internalize this and
Speaker 1: they own the fx rates benchmark, and we will have
Speaker 1: failed as an open network. But I think that this
Speaker 1: information is so powerful and growing the stable coin industry
Speaker 1: that it can't be internalized by a gatekeeper. It's got
Speaker 1: to be coalesced as a community effort with data from
Speaker 1: all sorts of different people and then made available to
Speaker 1: the world. And that's kind of why we're taking this
Speaker 1: open network approach. And you know, maybe will be proved wrong.
Speaker 1: Maybe someone like a Bloomberg will come in and put
Speaker 1: it behind a two hundred thousand dollars a year subscription
Speaker 1: and you know, try to own the data versus making
Speaker 1: it available to the community. But we'd like to think
Speaker 1: that the crypto ethos of builders and a decentralization is
Speaker 1: strong enough that if we're going to have a stable
Speaker 1: coin related benchmark. It should be a credibly neutral, open
Speaker 1: standard versus Yeah, one corporate company's walled garden.
Speaker 2: Oh absolutely, And I do think you have a head
Speaker 2: start obviously, being in the crypto industry and building from
Speaker 2: the stable cooin standpoint. And I don't know if these
Speaker 2: folks are I think they're still trying to find their
Speaker 2: way in the market, but I think you have a
Speaker 2: head start, so hopefully your product wins here, and you know,
Speaker 2: with the collaboration of the crypto.
Speaker 1: Industry, I don't think Borderless beats Bloomberg by any way,
Speaker 1: shape or form, but I think the stable coin community
Speaker 1: can beat Bloomberg. Yeah, and that's what I'm betting on absolutely.
Speaker 2: In regards to innovations that are happening in the stable
Speaker 2: coin space, you know, there's folks creating stable coins for
Speaker 2: the Euro and other disease and you may have already
Speaker 2: addressed this indirectly, but will this product be able to
Speaker 2: capture that as well? So let's say eventually there's a
Speaker 2: digital I don't know, yen or something whatever, and people are,
Speaker 2: you know, going between a US dollar back stable coin
Speaker 2: and a digital yen. Will this platform be able to
Speaker 2: track all that exactly.
Speaker 1: So, right now, we're starting with USDC and USDT, and
Speaker 1: we're trapping both of those tokens against a bunch of
Speaker 1: primarily emerging market VA currencies. Right, USDC against USD is
Speaker 1: not necessarily super interesting. But USDC and USDT against like BRL, MXM, AESZRE,
Speaker 1: Argentinian paysos like those are the very interesting things condition
Speaker 1: with like APAC currencies as well that are coming. And
Speaker 1: then we want to start to add more stable points, right,
Speaker 1: we want to start to look at like okay, USDG
Speaker 1: and a USD. And as we're in this expansionary environment
Speaker 1: post genius app, you know, what does that look like
Speaker 1: for the corporate white label tokens as well? Right, if
Speaker 1: there's an Amazon USD, what does that look like compared
Speaker 1: to USDC or to USDT. That's really the core of
Speaker 1: credible neutrality. And then we want to get into the
Speaker 1: euro stable point pairs. We want to get into the
Speaker 1: other stable point pairs. You know, my my goal, if
Speaker 1: I could wish for anything, you know, five years from now,
Speaker 1: is to have this open, credibly neutral layer that's able
Speaker 1: to ingest data from all of these different fragmented market
Speaker 1: participants and give the treasury team at you know the
Speaker 1: world's largest companies, one single source where they can go
Speaker 1: and they can do real, live rate comparisons across their
Speaker 1: entire treasury program, find cost optimizations and make very compelling
Speaker 1: arguments back to the CFO that says, hey, this is
Speaker 1: you know, the Bloomberg Fiat mid market rate superimposed on
Speaker 1: top of the stable point market data. And when we're
Speaker 1: managing our US Euro treasuries, we should keep doing that
Speaker 1: the way we've been doing it. But when we want
Speaker 1: to go and deploy capital to the market's A, B
Speaker 1: and C, we're actually going to achieve twelve basis point
Speaker 1: average cost savings, which at our scale saves US millions
Speaker 1: of dollars. And now that's the argument to go and
Speaker 1: use stable coins versus oh they're trendy. I see our
Speaker 1: competitors do it like actually giving that power to those
Speaker 1: treasury teams to go take the business arguments, quantify it,
Speaker 1: and take it to the CFO where he looks at
Speaker 1: it or she looks at it and says, oh, wow,
Speaker 1: well this is a no brainer. We're about to say
Speaker 1: three four million dollars a year, go do it? Are
Speaker 1: you able to tell us some of the names of
Speaker 1: the folks that you're going to be pulling this data from.
Speaker 1: I know some of this stuff might be under NDA
Speaker 1: and you probably can't, but I have to ask let
Speaker 1: me answer your question indirectly. So the data that we're
Speaker 1: showing is all anonymized for a lot of reasons NDAs
Speaker 1: other things of that nature. But we do make the
Speaker 1: Borderless network members public on our website Borderless likexpizing slash ecosystem,
Speaker 1: and you can see all the different auto off proadors
Speaker 1: that we're connected to. You can see this like global
Speaker 1: map of the rails coverage and currency coverages and things
Speaker 1: like that. So while I can't directly answer your question,
Speaker 1: if you go and you look at who is on
Speaker 1: Borderless's network, Borderless's network feeds the benchmark and you can
Speaker 1: get you know, some indirect sense of where this is
Speaker 1: coming from.
Speaker 2: Got it? Yeah, that makes sense. So folks go check
Speaker 2: out Bordalless's partners thest.
Speaker 1: That'll give you some sets of it. Oh for sure,
Speaker 1: not every partner is there. It's about ten percent. Like
Speaker 1: I said, it will grow more and more and we
Speaker 1: will add more partners as well. So not only will
Speaker 1: more partners be included, but also we'll have new partners
Speaker 1: that are joining. So this is you know, there's an
Speaker 1: old saying in kind of startup world, which is, if
Speaker 1: you're not embarrassed by your product launch, you didn't launch
Speaker 1: it early enough. I think I am decently embarrassed by
Speaker 1: how kind of like raw and basic this is. So
Speaker 1: I think it's the wrong time to put this out
Speaker 1: in the world and then ask people to help us
Speaker 1: make it.
Speaker 2: Absolutely and how real time is the data? Is there
Speaker 2: any lag on that front?
Speaker 1: We snapshots the rates across the network providers on an
Speaker 1: hourly basis, and then we cash that and then we
Speaker 1: turn that into more of like a daily rage. So
Speaker 1: right now we have the last thirty days of data available.
Speaker 1: That's what we really wanted to launch with, was like
Speaker 1: a month of historical information of the very least, so
Speaker 1: you could start to see some trends. Sure, and it's
Speaker 1: interesting because you can see days where the buy cell
Speaker 1: spread widens, days of titans. You can see volatility increase
Speaker 1: and decrease even with a month's worth of data. It's
Speaker 1: actually quite interesting at this point, and you know, part
Speaker 1: of part of what's important to us is trying to
Speaker 1: figure out. I'm not going to show you three thousand
Speaker 1: different data points at some point hour by hour. So
Speaker 1: for you know, maybe last seven days and last thirty days,
Speaker 1: we'll show you hourly snapshots, and then for older history
Speaker 1: we'll compress it to like a daily average or something
Speaker 1: like that, so that you're also not overwhelmed by the
Speaker 1: volume of data. And then part of what we're thinking
Speaker 1: about is, Okay, if that's the approachable answer, which I
Speaker 1: think it is, then what does it look like for
Speaker 1: like analysts and you know, other folks who want to
Speaker 1: go deeper. How do we balance consumer friendly and approachable
Speaker 1: on one side with then maybe some sort of like
Speaker 1: an expert mode or analyst mode on the other side
Speaker 1: that lets you add a lot more reporting that lets
Speaker 1: you out data more granularly. How do we give you
Speaker 1: API access to the benchmarks that you can really pull
Speaker 1: this into your in house you know, data analytics suites.
Speaker 1: And there's a ton that we want to do with
Speaker 1: this that we think would really benefit the industry.
Speaker 2: It's exciting, man, and I think certainly a core part
Speaker 2: of the infrastructure that's needed for stable coin adoption. I
Speaker 2: love it. You know, while I am not involved in
Speaker 2: FX at all, or you know, any of these things
Speaker 2: I am really fascinated by. It's like, I want to
Speaker 2: look at the data and see what's what's moving, what's happening,
Speaker 2: and even you know, aligned at with maybe geopolitical things
Speaker 2: that are happening and how that affects markets.
Speaker 1: I think, you know, we are not an analyst company.
Speaker 1: We are a technology infrastructure company. But I would love
Speaker 1: to see some market analysts and others kind of partner
Speaker 1: with us on this benchmark and start to be able
Speaker 1: to look at wait a minute, this was the real
Speaker 1: time impact on USDC. Something else ff rates when Trump
Speaker 1: announced the China tariffs as an example, right, like, what
Speaker 1: did that do to the dollar? And specifically you know
Speaker 1: we have fs stuff around this, but what did it
Speaker 1: do to the stable coins that are dollar backed compared
Speaker 1: to all these other global currencies? And I think this
Speaker 1: could feed a ton of interesting insights and research and
Speaker 1: things of that nature. And I hope that there's some
Speaker 1: very talented researchers who end up using this and creating
Speaker 1: these insights because I would love to see them.
Speaker 2: Absolutely great stuff, man. And you know, on the other
Speaker 2: side of the business, how are things going with talking
Speaker 2: to different folks about adopting stable coins. Obviously we're talking
Speaker 2: posts Genius Act being signed into law. You know, it
Speaker 2: takes time for certain things to be implemented. But how
Speaker 2: are folks feeling about stable coins? I think historically the
Speaker 2: biggest challenge with stable coins has been regulatory risk, and
Speaker 2: some of that certainly exists.
Speaker 1: Right. Some of the conversations that we've had with people
Speaker 1: are great. The regulatory climate under this administration is very favorable.
Speaker 1: But what will the regulatory climate look like under the
Speaker 1: next administration? And if these people heavily adopt stable coins
Speaker 1: and the next administration is unfavorable, does that put a
Speaker 1: target on their back three four years from now that
Speaker 1: they're going to regret. So there is still a little
Speaker 1: bit of regulatory uncertainty, I would say from people that
Speaker 1: we talked to, But by and large, this is the
Speaker 1: unlock that people have been waiting for. Right The banks
Speaker 1: that we're talking to were thinking about bank consortiums they
Speaker 1: issue stable coins. The large corporates that we're talking to
Speaker 1: were thinking about how can they issue a stable coin
Speaker 1: into their own existing user base, distribution base, you know,
Speaker 1: B to B vendor supplier base, et cetera. A lot
Speaker 1: of the large FinTechs are talking about how do they
Speaker 1: leverage stable coins and lights Bark had a phenomenal partner
Speaker 1: summit last week and as part of that they had
Speaker 1: a bunch of you know, major fintech CEOs, including the
Speaker 1: CEO of Sofi, and he was talking about the stable
Speaker 1: coin that Sofi wants to launch. Right, so we're going
Speaker 1: to see this giant explosion of more and more stable coins,
Speaker 1: and that's all Genius Act based. Genius Act is that
Speaker 1: regulatory unlocked along with the new SEC policies or kind
Speaker 1: of the new SEC leadership with kind of Gensler stepping
Speaker 1: out and FDIC in Federal Reserve leadership saying okay, you
Speaker 1: know the bank regulators are okay with stable coins. Genius
Speaker 1: Act gives you a compliant issuance framework and the SEC
Speaker 1: isn't going to randomly decide that everything on a blockchain
Speaker 1: is the security and come tabon with the wells noticed
Speaker 1: and those three things combining are starting to enable people
Speaker 1: like so Far to very credibly say we're looking at
Speaker 1: a stable coin and there's a ton of plans that
Speaker 1: we have for what we want to do with it,
Speaker 1: and that that is really cool.
Speaker 2: Yeah, it's exciting, man. Certainly folks are more optimistic. They
Speaker 2: want to build, people want to innovate, and Kevin just
Speaker 2: on Thursday, I think just yesterday, black Rock announced they're
Speaker 2: going to launch a genius compliant money market fund tailored
Speaker 2: for stable coin issuers. Love to get your thoughts on
Speaker 2: that and what they're trying to do there. It's very
Speaker 2: clear that if you're trying to sell picks and shovels,
Speaker 2: there's two really big picks and shovels businesses for stable
Speaker 2: coin issuance. It's the technology providers that are going to
Speaker 2: enable the issuance of the tokens themselves. So these are
Speaker 2: companies like Bastion, companies like Anchorage, companies like Braille, et cetera,
Speaker 2: et cetera, different regulatory families, Bridge US some of this
Speaker 2: stuff as well, like who is selling you the technology
Speaker 2: to issue the stable coin? And then the other giant
Speaker 2: pick and shovele is going to be the asset management.
Speaker 2: And I think that's what Blackrock is saying and saying, hey,
Speaker 2: wait a minute, we don't need to pick winners and
Speaker 2: losers if we can have the best kind of asset
Speaker 2: management programs for stable coin issuers. We can then go
Speaker 2: to what's going to be hundreds of different stable cooin issuers,
Speaker 2: which candidly most will fail, that's what's.
Speaker 1: Going to happen in this market. But we can go
Speaker 1: to hundreds of these issuers and say, hey, here's how
Speaker 1: Blackrock has a product that's going to manage all those
Speaker 1: reserves for you in a way that's going to make
Speaker 1: it really easy for you to be genius compliant. You're
Speaker 1: going to tap that on with your technology provide or
Speaker 1: and kind of regulated issue or again whether it's a
Speaker 1: beast gen or an anchorage or someone like that, and
Speaker 1: then that's going to let you take that white labeled
Speaker 1: stable point to market as you know Sofi USD or
Speaker 1: Amazon USD or you know Revolute USD or PayPal already
Speaker 1: has p y USD I and drive that into your
Speaker 1: user base.
Speaker 2: It's just amazing what's happening, the innovation coming native companies
Speaker 2: as well as the Wall Street firms.
Speaker 1: But theres America has been unleashed. Yeah, it's been the
Speaker 1: unlock right this this industry has been, I would argue,
Speaker 1: illegally persecuted by the previous administration for years Operation Choke
Speaker 1: point two point zero all these different things, and now
Speaker 1: what we're seeing is not even what happens when it's encouraged.
Speaker 1: What we're seeing is what happens when you unlock innovation
Speaker 1: in America. And the answer is America is really really
Speaker 1: good at being at the forefront of innovating with global technology.
Speaker 1: We've seen that since the birth of Silicon Valley, America
Speaker 1: has been the innovation economy. And now the handcuffs are
Speaker 1: off and are there going to be bad projects? Of
Speaker 1: course there will be are a lot of projects going
Speaker 1: to fail. Of course they will. But builders are now
Speaker 1: out there. They're trying. The playbook is fair. There's a
Speaker 1: sandbox that you can play in, and that's just unleashed
Speaker 1: innovation across the board.
Speaker 2: Hey, but Kevin, not everyone is too happy about some
Speaker 2: of the stable coin innovation. Some of the banks, the
Speaker 2: banking lobby I've been trying to push back on stable
Speaker 2: coin yield in the you know, be a the Genius Act.
Speaker 2: Now they're trying. I don't think they have been successful.
Speaker 2: But what are your thoughts on them pushing back?
Speaker 1: I think, you know, there's a top track that banks
Speaker 1: are really disintermediated by stable coins. I don't think that's true.
Speaker 1: I think banks have a major role to play in
Speaker 1: stable open innovation. But when I see things like the
Speaker 1: banking lobby arguing against stable coin yield being passed through
Speaker 1: and things of that nature, I see that as incredibly defensive,
Speaker 1: and I see that as coming from almost the point
Speaker 1: of fear where they're trying. You know, banks have been
Speaker 1: a regulatory monopoly since this country was started, since like
Speaker 1: banking legislation was really put into place many many, many
Speaker 1: many many years ago, where banks have never had to
Speaker 1: compete in the free market economy. Banks have only had
Speaker 1: to compete within other banks, like within their you know, monopoly,
Speaker 1: They've only had to compete within within those folks. And
Speaker 1: now they're competing with software companies, they're competing more globally.
Speaker 1: Like it's massively changed. And I think we see this
Speaker 1: happen all the time where the incumbents, instead of embracing
Speaker 1: that competition and using that to drive better products, drive
Speaker 1: better pricing, and drive better user experiences, drive better distribution,
Speaker 1: they react by trying to recap the better products. Right.
Speaker 1: I think of the taxi lobby versus Uber. Taxis could
Speaker 1: have been the biggest distributor of Uber. Right, think about
Speaker 1: how many Uber drivers were in new markets versus taxi drivers.
Speaker 1: Taxi drivers could have been the ultimate infrastructure that's filling
Speaker 1: the Uber rider demand. But no, they said, we're going
Speaker 1: to fight Uber. The taxi lobby is going to make
Speaker 1: a right share illegal, they're going to block them at
Speaker 1: the airport, They're going to do all these different things.
Speaker 1: And ultimately it didn't matter, and the long term mover
Speaker 1: still became widely popular because it was a much much
Speaker 1: better product. I think the same thing's going to happen here.
Speaker 1: Banks are saying, hey, you can't do this, you can't
Speaker 1: do that, we want to stop from breamlast that all
Speaker 1: distin sensivizes or hurts the ability to compete long term,
Speaker 1: it doesn't matter because stable coins on a blockchain are
Speaker 1: such a better product. The ability to move value immediately
Speaker 1: around the world, the ability to track that value, the
Speaker 1: ability to have that on a decentralized ledger that we
Speaker 1: all agree on. All those things make such a far
Speaker 1: better product. Then in my opinion, that energy would be
Speaker 1: much much better serve figuring out how banks can support
Speaker 1: and play a role in stable coins, and to be
Speaker 1: fair that banks are right. There's a consorttion of banks
Speaker 1: that's looking at launching like Top seven currencies as stable
Speaker 1: coins on a blockchain. There's a tremendous amount of innovation
Speaker 1: that's going on in tokenize deposits, right, not stable coins,
Speaker 1: but tokenized the posits and can tokenize deposits become an
Speaker 1: inner bank settlement mechanism. I think the answer is yes,
Speaker 1: And there's a lot of places where that makes more
Speaker 1: sense for stable points, for bank level settlements. Sable coins
Speaker 1: make more sense for businesses and retail users. Tokenize the
Speaker 1: posits make way more sense for financial institutions. That's where
Speaker 1: the efforts should be, not in blocking stable point awards.
Speaker 2: Absolutely well said, and you know, part of me thinks also,
Speaker 2: you know, could this be a delayed tactic. Let's slow
Speaker 2: these crypt native guys down because we want to launch
Speaker 2: it on stable coins. We don't want to lose the customers, right.
Speaker 2: We want deposits people keeping their money in checking and
Speaker 2: savings versus putting it on an exchange or or you know,
Speaker 2: some stable coin platform earning higher yield and even staking.
Speaker 1: I think the you know, the advantage the banks really
Speaker 1: have is around counterparty risk, and I think that's what
Speaker 1: they should lean into. If you're a large multinational if
Speaker 1: you're one of the world's largest pannings companies, right, and
Speaker 1: you're talking about really doing size. You're not talking about
Speaker 1: crypto size. You're not talking about fintech size, right, You're
Speaker 1: talking about actual, real, true institutional volumes. Circle is still
Speaker 1: a fintech startup, just typode, right, And what is the
Speaker 1: counterparty risk of that? Heather has a phenomenal job building
Speaker 1: incredibly deep liquidity around the world. They're a private company.
Speaker 1: I think you have a tremendous opportunity as a bank
Speaker 1: to say, do you want counterparty risk on Circle as
Speaker 1: an issuer, or do you want counterparty risk on this
Speaker 1: consortium of BOVA, JPM, et cetera as your stablecoin issuer?
Speaker 1: And if I were them, that's where I would go
Speaker 1: very very hard into and say stable coins are amazing.
Speaker 1: Stable Coins should be able to do everything, because that
Speaker 1: means our stable coin can do all these different things.
Speaker 1: And what matters is who issues your stable coin and
Speaker 1: who do you trust from a counter party risk standpoint
Speaker 1: to issue that. Obviously it should be us, this consortium
Speaker 1: of the major banks that you already trust from a
Speaker 1: banking perspective, and they're going to be the right votes
Speaker 1: to lobby around, you know, things like FDIC insurance for
Speaker 1: stable cooin accounts, right, Like that's going to come from
Speaker 1: bank lobbying. So instead of fighting yield, go lobby for
Speaker 1: making the stable coin products better, and then go make
Speaker 1: yourself the center those stable coin products. And that's the
Speaker 1: role that I think the banks have to play is
Speaker 1: actually as issues as counterparties that are already trusted for
Speaker 1: trillions of dollars of settlements and payments flow. Go go
Speaker 1: do that. That's what you do best.
Speaker 2: Yeah, No, that's well stated, and we'll see how it
Speaker 2: all balances out. You know. Well, you give the example
Speaker 2: of Taxis and Uber and this is like the age
Speaker 2: old thing, right, Netflix and Blockbuster and upmobile and a
Speaker 2: Harson Buggy and so on. Something that happened recently with PayPal.
Speaker 2: I don't know if you can speak to this, but
Speaker 2: you know, I know where you're going headlines right where
Speaker 2: Oh some of they minted three hundred trillion in py
Speaker 2: usc But my overay wasn't that Because I know humans
Speaker 2: are going to make errors, right, people gonna have fat fingers.
Speaker 2: But the point is we all and as the public
Speaker 2: saw it, at the same time that it happened, right,
Speaker 2: Because it's on chain, man, and when they burned it,
Speaker 2: we can confirm they burned it. So you can't do
Speaker 2: that at a bank. There's no way I can see
Speaker 2: what's happening at JP Morgan, But on the blockchain, I
Speaker 2: can see it.
Speaker 1: How many stories are there on Reddit and other places
Speaker 1: where someone says, I woke up in the morning and
Speaker 1: my bank account had ext one hundred thousand dollars in
Speaker 1: any right, and no one ever knows. So human error
Speaker 1: is a thing. Should human error be minimized? Absolutely? You
Speaker 1: need operational controls, you need processes, you need all these
Speaker 1: different things, checks and balances within your organization and through
Speaker 1: the underlying technology in order to make sure that these
Speaker 1: things happen as infrequently as humanly possible. But the great
Speaker 1: part about blockchain based systems is that is a trustput
Speaker 1: verify right. We all saw it, we all saw the mint,
Speaker 1: we all saw the burn. No one has to take
Speaker 1: Paxos's word for oops, sorry, we fix it. Go. This sucks, like,
Speaker 1: let's be honest. Paxos is one of the world's best
Speaker 1: crypto companies. Yeah, and they made a giant error that
Speaker 1: they should not have made, but it happened, and the
Speaker 1: beauty of blockchain means that every one of us was
Speaker 1: able to independently verify that in fact it was fixed,
Speaker 1: versus a bank saying trust me, bro, it's all good.
Speaker 2: Yeah, yeah, absolutely yeah. And I love that transparency that
Speaker 2: this technology brings on. Like you said, we can not
Speaker 2: just trust, but we can verify. We can look at
Speaker 2: the data and see it on chain real time most
Speaker 2: of the times, if not maybe a week later, the
Speaker 2: salutes will figure it out on the blockchain. And that's
Speaker 2: the great thing, man, Kevin, awesome, awesome stuff. Love this product,
Speaker 2: the benchmark product, folks. You can check it out. The
Speaker 2: link will be in the description. Go check it out.
Speaker 2: And Kevin, I'm looking forward to seeing the data pour
Speaker 2: in because you know, as a nerd, I'm going to
Speaker 2: look through it and take my own takeaways from it,
Speaker 2: even though I'm not in the FX markets at all.
Speaker 1: Absolutely, Tony, thanks for having me on. Your questions are
Speaker 1: always insightful and I always enjoy your time together. So
Speaker 1: thank you again.
Speaker 2: Awesome man.