WEBVTT - Evolving Money: Stablecoins in Practice and Policy (Sponsored Content) 0:00:00.280 --> 0:00:03.400 Since you're a subscriber to this Bloomberg podcast, we thought 0:00:03.400 --> 0:00:07.080 you'd be interested in a sponsored podcast called Evolving Money, 0:00:07.640 --> 0:00:11.879 produced by Coinbase and Bloomberg Media Studios. It explains how 0:00:11.920 --> 0:00:17.000 institutional investors are adopting the world's newest asset class, crypto. 0:00:17.840 --> 0:00:20.720 Here's a recent episode. 0:00:22.760 --> 0:00:26.040 You had the government sending a message to innovators and 0:00:26.079 --> 0:00:29.000 developers that they should basically take any ideas that they 0:00:29.000 --> 0:00:32.479 may have and take them overseas or put them in 0:00:32.479 --> 0:00:34.879 a drawer somewhere and just abandon them. 0:00:35.200 --> 0:00:38.800 That's forr. Shuerzode, the chief policy officer of Coinbase, talking 0:00:38.840 --> 0:00:42.040 about the way things used to be with stable coins. 0:00:42.400 --> 0:00:45.360 But the message from Washington has changed in the last year. 0:00:46.200 --> 0:00:48.440 And so what you're seeing now with this sea change 0:00:48.479 --> 0:00:52.879 in governmental attitude is it's actually a permission structure around 0:00:53.000 --> 0:00:56.000 developers and innovators who want to think creatively about different 0:00:56.800 --> 0:00:59.760 payment solutions that could be executed on with the use 0:00:59.800 --> 0:01:00.800 of stable coins. 0:01:01.520 --> 0:01:05.680 That unleashed creativity is powering a movement amongst major financial 0:01:05.680 --> 0:01:09.520 services companies who are now integrating crypto into their operations. 0:01:09.959 --> 0:01:13.600 In many cases, they're starting with stable coins. There are 0:01:13.600 --> 0:01:16.240 a number of reasons for that including the ability to 0:01:16.240 --> 0:01:18.640 move money more cheaply and efficiently. 0:01:19.160 --> 0:01:21.400 By our account, there's about two hundred and fifty different 0:01:21.440 --> 0:01:25.720 projects have been announced by any number of financial players 0:01:25.760 --> 0:01:29.640 and developers, So the biggest banks, the payment processors, the 0:01:29.720 --> 0:01:33.080 credit card companies, corporates and others to integrate, and I 0:01:33.120 --> 0:01:34.760 think we're just at the tip of the iceberg. 0:01:38.400 --> 0:01:40.720 I'll talk more with Fayr about policy trends in a 0:01:40.720 --> 0:01:42.920 couple of minutes, but first I want to give you 0:01:43.000 --> 0:01:45.400 a peek into one of those two hundred and fifty 0:01:45.440 --> 0:01:48.600 different projects he referred to check out dot Com. It's 0:01:48.640 --> 0:01:52.080 an example of a major financial player investing in stable 0:01:52.120 --> 0:01:58.160 coin infrastructure right now. They are a PSP that's a 0:01:58.280 --> 0:02:03.000 payment service provider, visible intermediary working behind the scenes when 0:02:03.000 --> 0:02:07.160 you buy something online. Checkout dot Com started out processing 0:02:07.240 --> 0:02:11.520 credit cards, then moved into debit cards, and because they're global, 0:02:11.800 --> 0:02:16.480 they also facilitate currency exchange. Now they're deploying a major 0:02:16.560 --> 0:02:19.520 upgrade to their platform that will allow consumers to shop 0:02:20.000 --> 0:02:24.240 using stable coins and vendors to get paid in stable coins. 0:02:24.720 --> 0:02:27.920 That's what we're going to explore today. Stable coins in 0:02:28.040 --> 0:02:33.720 practice and in policy. This is evolving money and I'm 0:02:33.720 --> 0:02:37.200 your host, Angie Lao. The show is co produced by Coinbase, 0:02:37.280 --> 0:02:39.920 one of the largest cryptocurrency platforms in the world, and 0:02:39.919 --> 0:02:43.800 Bloomberg Media Studios. Now in the series, we are exploring 0:02:43.880 --> 0:02:48.320 how crypto is being adopted by traditional financial institutions as 0:02:48.360 --> 0:02:52.760 the next logical evolution of the monetary system. And this 0:02:52.919 --> 0:02:57.200 episode is all about stable coins, which are cryptocurrencies designed 0:02:57.200 --> 0:03:00.800 to maintain a stable value because they're to a fiat 0:03:00.800 --> 0:03:04.320 currency like the US dollar, so the price is fixed, 0:03:04.360 --> 0:03:07.720 but the currency is highly liquid, and because it can 0:03:07.760 --> 0:03:10.720 be moved on crypto rails, it's faster and cheaper to 0:03:10.840 --> 0:03:15.080 transact compared to legacy banking systems. According to a report 0:03:15.120 --> 0:03:18.200 in Forbes, stable coins were used in more than thirty 0:03:18.320 --> 0:03:21.640 trillion dollars worth of transactions last year. To give you 0:03:21.680 --> 0:03:24.280 a sense of scale, that is more than Visa and 0:03:24.400 --> 0:03:28.320 MasterCard combined. Now, to be clear, the majority of those 0:03:28.360 --> 0:03:32.720 transactions were trading in cryptocurrencies, but other use cases are 0:03:32.760 --> 0:03:38.280 growing fast. Payroll, international purchasing, even retail shopping is all 0:03:38.560 --> 0:03:45.320 increasingly being done with stable coins. My first guest today 0:03:45.360 --> 0:03:49.080 is checkout dot COM's chief product officer, Moron Kilbeggi. I 0:03:49.120 --> 0:03:51.680 started our conversation by asking him to walk me through 0:03:51.720 --> 0:03:54.600 the firm's five year relationship with stable coins. 0:03:56.040 --> 0:03:58.800 Back in twenty twenty one, we were one of the 0:03:58.800 --> 0:04:02.920 first payment service provider to offer stable coins settlement to 0:04:03.000 --> 0:04:06.000 our merchants, and so this is already a very long 0:04:06.040 --> 0:04:10.680 time ago in crypto world, or in digital crypto years. 0:04:10.480 --> 0:04:11.760 In crypto years exactly. 0:04:12.720 --> 0:04:15.880 We offered a service that unfortunately we had to wind 0:04:15.920 --> 0:04:18.919 down because the regulatory framework was just not there and 0:04:18.960 --> 0:04:22.279 we were not able to find the right partners in 0:04:22.360 --> 0:04:25.280 banks and so forth in order to offer that service. 0:04:25.360 --> 0:04:29.440 But this is something that we are in the process 0:04:29.520 --> 0:04:35.600 of re launching as we speak. And essentially it's merchants 0:04:35.640 --> 0:04:39.320 that are acquiring funds with us want to get settled 0:04:39.320 --> 0:04:43.560 with stable coins. What does that mean. It means that 0:04:43.600 --> 0:04:47.679 they can settle. They can get settled twenty four by seven, 0:04:47.880 --> 0:04:51.640 which is one of the big advantages. The settlement is immediate, 0:04:51.680 --> 0:04:55.440 you're not dependent on the bank hours and so on 0:04:55.480 --> 0:04:58.440 and so forth, and you're not dependent on the bank rails, 0:04:58.920 --> 0:05:01.279 and the merchant will be able to you to choose 0:05:01.320 --> 0:05:04.160 how they get settled, whether they get settled with regular 0:05:04.200 --> 0:05:06.720 fiat or whether they get settled directly into their wallet 0:05:07.160 --> 0:05:08.320 will be up to them. 0:05:08.480 --> 0:05:11.920 What are the markets that you're focusing on and how 0:05:12.000 --> 0:05:13.280 is it all going to roll out? 0:05:13.960 --> 0:05:16.800 In your mind, we are an enterprise shop, right like, 0:05:16.920 --> 0:05:25.240 we support enterprise merchants that almost uniformly are international, like 0:05:25.279 --> 0:05:27.919 they operate in multiple markets all time, and this is 0:05:28.000 --> 0:05:30.880 part of what we abstract away that complexity. 0:05:31.120 --> 0:05:34.200 You know, we give them the ability to accept payments 0:05:34.560 --> 0:05:39.240 with one global API that they can just integrate and 0:05:39.320 --> 0:05:43.000 accept payment across the world. And so for sure international 0:05:43.200 --> 0:05:45.279 is a big part of this. You know, in terms 0:05:45.320 --> 0:05:49.240 of rollout, we're going to start rolling out something which 0:05:49.279 --> 0:05:52.039 is pretty unique for US because we're a europe based company, 0:05:52.080 --> 0:05:54.960 where a UK based company, But we're going to start 0:05:54.960 --> 0:05:57.760 with the US and we're going to roll out from there. 0:05:58.520 --> 0:06:03.120 Is the marketplace in the United States already asking for this, 0:06:03.360 --> 0:06:04.080 demanding it. 0:06:04.880 --> 0:06:07.640 So it's a very good question, and the honest answer 0:06:07.720 --> 0:06:12.360 is that I don't know. You know, we believe in 0:06:12.400 --> 0:06:16.200 the theology and the philosophy behind stable coins. We think 0:06:16.320 --> 0:06:19.880 that there's a future world where stable coins sit along 0:06:20.680 --> 0:06:25.520 other type of currency and enable cross border like borderless 0:06:25.800 --> 0:06:27.880 payments across the board. We look at this as an 0:06:27.920 --> 0:06:31.159 experiment as something that could potentially. 0:06:30.680 --> 0:06:31.640 Do good in the world. 0:06:32.080 --> 0:06:33.560 We want to put this out there, we want to 0:06:33.600 --> 0:06:36.400 see how people react to it. And the interesting bit 0:06:36.480 --> 0:06:38.000 is that in some of the big merchants in the 0:06:38.000 --> 0:06:41.919 world are interested and curious because they have customers that 0:06:41.920 --> 0:06:45.240 are cross border, that they have customers that have wallets 0:06:45.279 --> 0:06:47.440 with stable coins that they're currently not doing anything with 0:06:47.560 --> 0:06:50.599 except for buying other forms of crypto, and so using 0:06:50.680 --> 0:06:54.360 it for retail is a logical next step for them 0:06:54.400 --> 0:06:57.920 as well. And so I think that it's a it's 0:06:57.960 --> 0:07:01.080 kind of an experiment within the ecoss them where there's 0:07:01.120 --> 0:07:05.119 a merchant making it available for the consumer and seeing 0:07:05.120 --> 0:07:07.599 what the consumer adopts and chooses at that point in time. 0:07:10.240 --> 0:07:13.040 Checkout dot Com is upgrading their platform to handle a 0:07:13.040 --> 0:07:17.560 payment system that currently handles relatively speaking, little volume, but 0:07:17.640 --> 0:07:20.600 the word relatively is doing some pretty heavy lifting there. 0:07:20.800 --> 0:07:23.520 As I mentioned off the top, stable coins were used 0:07:23.520 --> 0:07:26.600 to settle more than thirty trillion US dollars in transactions 0:07:26.640 --> 0:07:29.960 in twenty twenty five, and thirty trillion is a number 0:07:29.960 --> 0:07:35.200 that has even the most traditional financial services companies asking themselves, Hey, 0:07:35.400 --> 0:07:38.720 how can we get involved. Morn says they see this 0:07:38.760 --> 0:07:42.040 as a market with substantial growth potential around the world, 0:07:42.160 --> 0:07:44.120 especially in developing economies. 0:07:46.760 --> 0:07:49.680 If you're living in in an economy that has a 0:07:49.800 --> 0:07:55.040 very high inflation rate and a very unstable currency, getting 0:07:55.080 --> 0:07:58.360 exposed to an equivalent of a US dollar is something 0:07:58.400 --> 0:08:02.160 that is good for you. You want to buy cross 0:08:02.160 --> 0:08:08.000 border and obviously not pay cross border fees and FX 0:08:08.040 --> 0:08:10.320 fees and so on and so forth, then there is 0:08:10.360 --> 0:08:15.160 another benefit for you. And you know, frankly, like in 0:08:15.240 --> 0:08:20.160 many countries, access to debit and credit card is not ubiquitous, 0:08:20.560 --> 0:08:23.600 and this is an alternative form of payment that has 0:08:23.640 --> 0:08:27.240 potentially a lower barrier of entry in multiple geographies. So 0:08:27.720 --> 0:08:32.600 I can definitely see a very good use case for 0:08:33.040 --> 0:08:38.040 cross border payments for cross border retail and for developing markets. 0:08:38.640 --> 0:08:43.800 But what about larger, more established markets. 0:08:42.760 --> 0:08:46.280 For developed markets like the US and Europe. I think 0:08:46.280 --> 0:08:49.600 a lot of this is going to come down to preference, 0:08:50.400 --> 0:08:55.040 and people sort of preferring stable coins because you know, 0:08:55.160 --> 0:08:58.079 they've they've traded to for other crypto and they have 0:08:58.559 --> 0:09:01.560 liquidity in their in their wallets, and you know, rather 0:09:01.640 --> 0:09:05.360 than trading again to a fiat currency, they just want 0:09:05.400 --> 0:09:08.600 to use it right there. And the convenience actually of 0:09:09.000 --> 0:09:12.280 paying with a stable coin through this experience that we're 0:09:12.320 --> 0:09:14.600 building is actually, it's going to be pretty convenient. It's 0:09:14.600 --> 0:09:17.800 going to be pretty good, and so I think consumer 0:09:17.880 --> 0:09:21.880 preference is probably going to drive that usage and utility. 0:09:22.360 --> 0:09:25.640 And if I switch over to the merchant side, it's 0:09:25.640 --> 0:09:30.480 all about liquidity and availability of funds. And the more 0:09:30.679 --> 0:09:35.440 the ecosystem builds itself out where vendor to vendor payments 0:09:35.480 --> 0:09:38.040 can happen on stable coins, where cross border payments can 0:09:38.080 --> 0:09:41.200 happen on stable coin, then there becomes a flywheel where 0:09:41.440 --> 0:09:44.679 it starts making more and more sense for merchants to 0:09:44.760 --> 0:09:48.440 do this. And then down the line, I think that 0:09:49.320 --> 0:09:53.080 some treasury teams are starting to think about, you know, 0:09:53.240 --> 0:09:57.319 managing their own treasury completely on stable coins and not 0:09:57.400 --> 0:10:01.680 having to deal with you know, cross entity settlement between 0:10:02.080 --> 0:10:04.920 multiple entities within one company. You can run it on 0:10:06.160 --> 0:10:09.679 a ledger internally, and so that sort of plugs into 0:10:09.720 --> 0:10:11.559 this settlement and acceptance page. 0:10:11.600 --> 0:10:13.920 If you look at it down the line. 0:10:13.960 --> 0:10:16.959 When you are getting ready to roll out in the US, 0:10:17.160 --> 0:10:20.800 what is the biggest current constraint that you're experiencing right now? 0:10:20.840 --> 0:10:25.800 Is it regulation? Is it consumer wallet adoption? Run't it readiness? 0:10:26.000 --> 0:10:28.600 Operational complexity? Which is it? 0:10:29.280 --> 0:10:32.400 Despite the fact that stable coins have been around for 0:10:33.080 --> 0:10:37.280 a number of years for US as a fiat based business, 0:10:37.360 --> 0:10:40.000 there are still a lot of stakeholders that you need 0:10:40.080 --> 0:10:44.520 to make sure that they're comfortable, and there are some 0:10:45.200 --> 0:10:49.040 operationalization hoops that you need to go through. It's about 0:10:49.120 --> 0:10:53.040 ensuring that our regulators know what we're doing and are 0:10:53.400 --> 0:10:56.079 happy with it and don't have concerns with it. It's 0:10:56.559 --> 0:11:01.240 getting the contracts in order and in place. Nothing is 0:11:01.280 --> 0:11:05.880 a blocker, but there are challenges, right like, even in 0:11:05.920 --> 0:11:07.960 the US, they are in different regimes, right Like there's 0:11:08.080 --> 0:11:13.080 New York which has its own license versus other states. 0:11:13.200 --> 0:11:16.080 There's complexity there and how you operate and where your 0:11:16.240 --> 0:11:20.120 entity is, and all of those things influence the timeline 0:11:20.480 --> 0:11:24.920 and the implementation path. The technological build is actually the 0:11:25.240 --> 0:11:29.439 easiest part, right everything around it is complexity. 0:11:33.679 --> 0:11:37.240 Complexity is the focus for my next guest, fiarshire Zod, 0:11:37.679 --> 0:11:41.320 because if the technological build is the easy part and 0:11:41.480 --> 0:11:44.840 everything around it is complex well, Farrier's goal is to 0:11:44.880 --> 0:11:48.280 make sense out of the complexity. He is the chief 0:11:48.360 --> 0:11:52.160 policy officer at coinbase, and his job is to work 0:11:52.200 --> 0:11:56.000 with governments and establish the regulatory framework that will let 0:11:56.080 --> 0:12:03.439 people like Moron launch their technical solutions. You're starting to 0:12:03.480 --> 0:12:08.120 see the enterprise and a lot more institutional players coming 0:12:08.160 --> 0:12:10.720 into the space. But where are we right now in 0:12:10.800 --> 0:12:16.240 terms of regulations? What is allowed right now? And where 0:12:17.080 --> 0:12:19.599 will we be allowed to go? What is the trajectory? 0:12:20.400 --> 0:12:22.959 It's a good question. It's also a very sophisticated question 0:12:23.080 --> 0:12:28.480 because you have two things happening simultaneously that are happy 0:12:28.600 --> 0:12:31.920 somewhat in parallel, but they will converge down the road. 0:12:31.960 --> 0:12:35.440 And that is you have the Genius Law having been 0:12:35.480 --> 0:12:38.720 passed by Congress and signed into law by the President 0:12:38.800 --> 0:12:42.360 in July, and this, as you know, well as the 0:12:42.360 --> 0:12:47.319 federal framework for regulating stable coin issuers. And so obviously, 0:12:47.480 --> 0:12:50.240 in a normal kind of calendar of regulatory action, you 0:12:50.280 --> 0:12:53.520 have legislation and then the implementing rags and then you 0:12:53.559 --> 0:12:57.680 go live. But interestingly with stable cooins, particularly under this administration, 0:12:58.120 --> 0:13:01.320 you have rapid movement by the regulators to allow a 0:13:01.520 --> 0:13:04.720 use of stable coins for some of the most complicated 0:13:05.200 --> 0:13:10.559 payment activities, even before Genius gets fully implemented. So you 0:13:10.679 --> 0:13:13.520 have Genius getting implemented, but then at the same time 0:13:13.640 --> 0:13:17.200 you have the CFTC, for example, allowing stable coins to 0:13:17.240 --> 0:13:22.560 be used for derivatives trade settlement, right, and that is 0:13:22.720 --> 0:13:26.319 enormously exciting. It's almost like a big sandbox for example, 0:13:26.360 --> 0:13:27.640 that is, you know what they call it in a 0:13:27.679 --> 0:13:32.120 regulatory perspective, where you've got market participants executing on and 0:13:32.240 --> 0:13:35.920 using the innovative technology with the blessing of the regulators, 0:13:36.280 --> 0:13:40.040 even as the actual regulations get you know, bedded down. 0:13:40.600 --> 0:13:43.200 And that's and that's really powerful. 0:13:43.040 --> 0:13:46.080 Right And and Moran Niclbetchy from checkout dot com I 0:13:46.120 --> 0:13:48.760 want to bring back what he said he mentioned earlier 0:13:48.800 --> 0:13:52.080 that as they design their processes, they have to account 0:13:52.080 --> 0:13:55.880 for not just different countries regulations, but even different states 0:13:55.880 --> 0:13:56.959 that have different rules. 0:13:57.480 --> 0:14:00.480 Well, you know, that's the that's the big dilemma I 0:14:00.520 --> 0:14:03.360 think the industry has at the moment. There's certain issues 0:14:03.400 --> 0:14:07.800 about how regulation takes place. So, for example, for exchanges 0:14:07.840 --> 0:14:12.600 who intermediate crypto trades spot market transactions, which are the 0:14:12.600 --> 0:14:15.080 bulk of the crypto trading that you see out there 0:14:16.000 --> 0:14:20.520 at the moment, that is subject to state regulation and 0:14:20.560 --> 0:14:24.480 it's not clear whether there's full federal preemptive authority over 0:14:24.520 --> 0:14:27.600 the states, and so that just creates a chaotic environment 0:14:27.600 --> 0:14:31.040 where you have fifty different regulators across fifty different states. 0:14:31.040 --> 0:14:34.960 Consumers don't know what rules are applied to them depending 0:14:35.000 --> 0:14:37.960 on where they live, and developers have a hard time 0:14:38.280 --> 0:14:42.920 implementing and managing the compliance burden of having fifty different rules, 0:14:43.000 --> 0:14:46.400 each different for each different state. And so there are 0:14:46.480 --> 0:14:50.400 issues like that, But generally speaking, you also have at 0:14:50.440 --> 0:14:53.000 the same time a real willingness on the part of 0:14:53.040 --> 0:14:56.360 the regulators under the Trumpe administration to use every bit 0:14:56.400 --> 0:14:59.560 of the authority that they have to provide the clarity 0:14:59.560 --> 0:15:04.240 that the street is looking for. So there's legislations critical. 0:15:04.320 --> 0:15:08.520 It's our number one objective from a policy perspective. I'm 0:15:08.560 --> 0:15:11.560 confident we're going to get it done, but we are 0:15:11.600 --> 0:15:14.640 at the same time working with the regulators to encourage 0:15:14.640 --> 0:15:18.040 them to provide clear rules. And what I mean by 0:15:18.080 --> 0:15:20.880 that is, for sure, every time you have a change 0:15:20.880 --> 0:15:24.080 in administration, new regulators come in and can change the rules, 0:15:24.640 --> 0:15:27.800 but it's very It's not as easy as it sounds 0:15:27.840 --> 0:15:31.400 for them to do a one eighty if the previous 0:15:31.440 --> 0:15:35.360 administration has finalized the rules and market practice has adapted 0:15:36.080 --> 0:15:39.880 and adopted those rules, because it becomes hard. The courts 0:15:39.880 --> 0:15:43.720 are careful not to allow regulators to engage in activities 0:15:44.360 --> 0:15:46.680 that creates sort of an unfair burden or chaos in 0:15:46.760 --> 0:15:51.280 the markets. And so there is a really interesting effort 0:15:51.320 --> 0:15:55.080 by the Trump administration to get legislation done, but at 0:15:55.080 --> 0:15:58.880 the same time to race ahead with sound regulation that 0:15:58.920 --> 0:16:01.680 they hope to bed down have market practice evolve around. 0:16:02.000 --> 0:16:05.000 So even if legislation doesn't get done, it becomes very 0:16:05.000 --> 0:16:10.480 hard for a future crypto hostile administration to reverse things. 0:16:11.480 --> 0:16:13.400 If I were to ask you to look at the 0:16:13.520 --> 0:16:18.400 Doppler radar of crypto regulatory development, what's the temperature right now, 0:16:18.400 --> 0:16:20.480 what's the weather, what's in the forecast. 0:16:22.400 --> 0:16:25.960 It's a really really interesting time because there's a lot 0:16:26.000 --> 0:16:28.680 of momentum, very fast momentum early in the in the 0:16:28.720 --> 0:16:31.880 Trump administration to make these changes that I was talking about. 0:16:32.400 --> 0:16:35.160 But what really has happened probably since Q three Q 0:16:35.360 --> 0:16:38.520 four of last year, and it's even stronger I would 0:16:38.560 --> 0:16:43.920 say now, is kind of the incumbent financial players have 0:16:44.080 --> 0:16:47.480 woken up and have launched some of the most furious 0:16:47.480 --> 0:16:52.360 attacks on these changes that we're talking about because of 0:16:52.440 --> 0:16:55.880 fears about what it'll do to the economic rents that 0:16:55.920 --> 0:16:59.960 come with you know, their incumbency, and so you see 0:17:00.160 --> 0:17:05.280 all the traditional financial groups kind of jump up and say, 0:17:06.000 --> 0:17:08.240 a wait a minute, we're not against this technology, but 0:17:08.320 --> 0:17:11.440 please not so fast. Do it more slowly, put more 0:17:11.480 --> 0:17:14.920 frictions on it, make it harder. And companies are like ours, 0:17:14.920 --> 0:17:19.520 are trying to be a counterbalance so that resistance. 0:17:26.760 --> 0:17:29.720 What do you think the stickiest issue is right now 0:17:29.760 --> 0:17:35.600 between incumbents and the crypto industry, the digital assets industry, 0:17:35.640 --> 0:17:36.359 the platforms. 0:17:36.600 --> 0:17:39.320 The rewards fight is the most obvious kind of visible 0:17:39.359 --> 0:17:42.359 example that you see written about in the press. But 0:17:42.400 --> 0:17:45.159 the other example is is the fight that's occurring at 0:17:45.160 --> 0:17:49.840 the SEC. The SEC chairman wants to migrate capital markets 0:17:49.880 --> 0:17:53.680 on chain T plus five, T plus six has gone 0:17:53.680 --> 0:17:56.439 down to T plus one plus two or three. We 0:17:56.480 --> 0:18:00.600 can take that down to teas plus zero do instantane settlement. 0:18:01.440 --> 0:18:04.000 But a lot of folks who make their money off 0:18:04.040 --> 0:18:07.200 of that lag don't want that to happen. It's a big, 0:18:07.200 --> 0:18:10.280 big issue because it implicates a lot of financial intermedias 0:18:10.440 --> 0:18:14.520 or huge economic rents by sitting in the middle of transactions. 0:18:14.560 --> 0:18:18.280 But just like you don't need a mailman to send 0:18:18.320 --> 0:18:22.680 an email to someone, you don't need to have necessarily 0:18:22.760 --> 0:18:26.080 have an intermediary to transfer value in the way you 0:18:26.200 --> 0:18:30.119 used to or transfer a stock or or a dollar. 0:18:30.880 --> 0:18:33.480 And the question is will public policy stop that or 0:18:33.560 --> 0:18:34.080 enable that? 0:18:34.400 --> 0:18:36.560 And we've talked a lot about what the US government 0:18:36.600 --> 0:18:37.000 is doing. 0:18:37.240 --> 0:18:41.000 What about internationally, Well, I think of it in two tracks, 0:18:41.480 --> 0:18:44.120 just to oversimplify it. One is the stable coin track, 0:18:44.160 --> 0:18:47.480 and the other is the market structure track. I think 0:18:47.480 --> 0:18:49.720 a lot of other jurisdictions move well before the US 0:18:49.800 --> 0:18:52.960 to establish rules around crypto trading, Europe being a great 0:18:53.000 --> 0:18:56.919 example of MIKA, the market and crypto assets regulation that 0:18:57.000 --> 0:19:02.240 they pass. Where the shoes are reversed is with regard 0:19:02.280 --> 0:19:06.520 to stable coins or digital money. In that other jurisdictions 0:19:06.560 --> 0:19:09.000 have moved much more slowly than the United States. In 0:19:09.040 --> 0:19:12.480 some places like the European Union are let's say, ambivalent 0:19:12.520 --> 0:19:16.160 about stable coins. But what's happened is this genius Act passed, 0:19:16.440 --> 0:19:19.720 You've had massive adoption and all around the world. Now 0:19:20.040 --> 0:19:24.760 there's an enormous concern that because the US has gone 0:19:24.800 --> 0:19:30.480 ahead and adopted so vigorously tokenized dollars, and given the 0:19:30.520 --> 0:19:35.560 insatiable demand the world has for dollars as a sore 0:19:35.600 --> 0:19:40.280 of value and as a transaction currency. That there will 0:19:40.320 --> 0:19:43.880 be enormous pressure on foreign currencies in terms of how 0:19:43.880 --> 0:19:47.400 relevant they can become if the dollar becomes more accessible 0:19:48.200 --> 0:19:51.320 in stable coin form. And so one of the messages 0:19:51.359 --> 0:19:55.280 that we've delivered to other jurisdictions is, whatever you think 0:19:55.320 --> 0:19:58.240 about this technology, the decision has been made. The US 0:19:58.280 --> 0:20:02.720 has moved forward dollars. Stable coins are going to scale dramatically, 0:20:03.440 --> 0:20:08.240 the adoptions happening by across the board, by corporates, financials, everybody. 0:20:08.880 --> 0:20:12.240 And so if you want your currency to remain relevant, 0:20:12.240 --> 0:20:15.160 you have to have a tokenized version of your currency. 0:20:15.640 --> 0:20:17.840 And I think that's why you see more more kind 0:20:17.880 --> 0:20:24.119 of rapid action in Canada the UK to adopt stable 0:20:24.160 --> 0:20:27.520 coin frameworks for their own currency, and we think that's 0:20:27.560 --> 0:20:29.800 actually a good thing. I think the more currencies are 0:20:29.840 --> 0:20:33.760 available in tokenized form, the healthier dynamic you have of 0:20:34.440 --> 0:20:39.280 you know, foreign exchange transactions occurring or transactions occurring in 0:20:39.720 --> 0:20:43.200 you know and settled in different currencies. And so we 0:20:43.359 --> 0:20:44.439 hope that will happen. 0:20:45.080 --> 0:20:48.800 So do you think global players need one harmonized model 0:20:49.320 --> 0:20:53.320 or can the market function with multiple national regulatory regimes. 0:20:53.880 --> 0:20:57.840 You don't have to have harmonization, but I would say 0:20:57.840 --> 0:21:00.800 I would say with stable coins, you know you'll have 0:21:01.119 --> 0:21:03.160 situations like right now in the UK where the Bank 0:21:03.160 --> 0:21:06.960 of England is proposing pretty tight caps on how much 0:21:08.200 --> 0:21:11.919 pound sterling stable coin any individual can hold or use, 0:21:12.840 --> 0:21:14.280 and they're trying to do that because they want to 0:21:14.280 --> 0:21:17.760 be careful about the transition from the analog system to 0:21:17.880 --> 0:21:21.040 a token I system. We think that's a big mistake 0:21:21.119 --> 0:21:23.160 and that they need to do what the US has done, 0:21:23.160 --> 0:21:27.600 which is to adopt it rapidly and integrate it into 0:21:27.640 --> 0:21:32.080 a broad range of institutional and retail use cases, and 0:21:32.119 --> 0:21:36.480 that flywheel of adoption will be healthy for the development 0:21:36.480 --> 0:21:39.600 of the pound sterling. So it's not an imperative that 0:21:39.640 --> 0:21:43.480 there are rules be harmonized, but there's a common sense 0:21:43.560 --> 0:21:46.280 dimension to it that we've sort of support on the 0:21:46.320 --> 0:21:52.320 market regulations. That is a place where having more consistent 0:21:52.400 --> 0:21:55.399 rules makes a lot of sense, because if you're building 0:21:55.440 --> 0:21:58.560 a financial product, or let's say you're building an update 0:21:58.600 --> 0:22:01.560 of a traditional app, you need to have some consistency 0:22:02.080 --> 0:22:05.840 so that that app can be accessed by users around 0:22:05.880 --> 0:22:09.360 the world under the same rules. There are also some 0:22:09.440 --> 0:22:13.720 kind of more esoteric sounding things like, for example, in Coinbase. 0:22:13.760 --> 0:22:15.520 I'll just give you kind of a more practically, very 0:22:15.560 --> 0:22:19.400 practical example. We want customers who want to use coinbase 0:22:19.480 --> 0:22:24.360 to ultimately be able to source the liquidity for their trade. 0:22:24.440 --> 0:22:26.320 So if you wanted to buy a bitcoin or whatever, 0:22:27.280 --> 0:22:30.840 have all of thatquidity as centralized as possible. That's actually 0:22:30.840 --> 0:22:34.920 a good thing because it creates deeper, more robust markets, 0:22:34.960 --> 0:22:41.440 It creates more effective price discovery, deeper larger pools of liquidity, 0:22:41.520 --> 0:22:46.960 or less susceptible to systemic events. But that requires some harmonization. 0:22:47.200 --> 0:22:50.560 But that's where you need a dialogue, and the US 0:22:50.560 --> 0:22:53.240 and UK happen to have a dialogue right now going 0:22:53.240 --> 0:22:58.320 on between the two treasuries coordinating and collaborating on crypto 0:22:58.720 --> 0:23:03.159 and blockchain based tokenization market regulation. This is one of 0:23:03.160 --> 0:23:05.160 those issues that we've verged them to look at, which 0:23:05.200 --> 0:23:08.679 is creating a system in which they recognize each other's 0:23:08.720 --> 0:23:12.560 regulatory system and so UK companies wo want to operate 0:23:12.560 --> 0:23:15.440 in the US can provide US customers access to UK 0:23:15.560 --> 0:23:18.760 liquidity and vice versa, and that requires harmonization. 0:23:20.960 --> 0:23:24.679 That's far our Cherzade, the chief policy officer for Coinbase. 0:23:27.560 --> 0:23:29.760 It's clear that things are trending in the right direction. 0:23:30.000 --> 0:23:32.760 The big questions focus on the pace of regulations and 0:23:32.880 --> 0:23:36.960 whether innovators feel there's enough certainty and stability to build 0:23:36.960 --> 0:23:40.560 products and push them into the market. Checkout dot Com 0:23:40.600 --> 0:23:42.800 certainly feels that way. It's going to be exciting to 0:23:42.840 --> 0:23:45.679 watch as they roll out their new platform. With that 0:23:45.760 --> 0:23:47.880 in mind, I want to go back to Moran Calbetcy 0:23:47.920 --> 0:23:51.040 and ask him if their rollout goes as planned and 0:23:51.119 --> 0:23:54.359 stable coins become more widely used as an easy to move, 0:23:54.720 --> 0:23:58.720 universal currency, how will it change the world. 0:23:59.080 --> 0:23:59.920 If this were to work. 0:24:00.760 --> 0:24:05.879 I think that seeing the ecosystem of money movement move 0:24:06.040 --> 0:24:13.880 towards rails that are digital, and having payments that are 0:24:14.840 --> 0:24:19.200 border less, that are free across borders, that don't suffer 0:24:19.240 --> 0:24:23.040 from the slowness that the existing system currently has, that 0:24:23.600 --> 0:24:27.399 don't suffer from the exchange fees that we're seeing. 0:24:28.119 --> 0:24:29.360 All of that makes for. 0:24:30.520 --> 0:24:33.880 I think, a better consumer experience and a better merchant experience, 0:24:33.880 --> 0:24:36.040 and that's what we as check Out are trying to 0:24:36.040 --> 0:24:38.560 facilitate all the time and trying to find. 0:24:38.320 --> 0:24:39.879 Ways to enable. 0:24:40.000 --> 0:24:43.879 So it's maybe utopic to think about it now, but 0:24:43.960 --> 0:24:46.320 I think that there is a few years down the 0:24:46.320 --> 0:24:49.080 line it could happen so fingers crossed. 0:24:55.720 --> 0:24:58.720 I'm Angie Lao and this is Evolving Money, a co 0:24:58.800 --> 0:25:02.880