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Speaker 1: Let's continue to focus on this here. PayPal has rolled

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Speaker 1: out a stable coin fully backed by US dollar deposits,

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Speaker 1: short term treasuries, and similar cash equivalents issued by Pacso's trust.

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Speaker 1: PayPal USD will be gradually available to customers in the US,

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Speaker 1: according to the firm joining us now for more on

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Speaker 1: this and please just say is PayPal's senior VP of Blockchain,

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Speaker 1: crypto and Digital Currencies, Jose Fernandez de Ponte. Jose, thanks

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Speaker 1: so much for joining us. What do you think about

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Speaker 1: the increasing optimism around I guess crypto versus regulators?

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Speaker 2: Hello mad and hello Kayley, thanks for having us well.

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Speaker 2: I am an optimist. I would maybe qualify with to

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Speaker 2: say I don't.

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Speaker 3: Think this is versus regulators.

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Speaker 2: I think it is important that is clear regulation and

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Speaker 2: we have seen a increased structure.

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Speaker 3: They are not only in the US.

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Speaker 2: I think that the progress in places like Europe and

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Speaker 2: other regency is important. A clear regulation is something that

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Speaker 2: is absolutely that we absolutely need for digital currencies to

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Speaker 2: go mainstream.

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Speaker 3: So super excited to see things moving forward.

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Speaker 4: Well, someone else who was very keyed into the regulation

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Speaker 4: issue and was also excited to see the stable coin

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Speaker 4: announcement from PayPal specifically is the Chair of the House

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Speaker 4: Financial Services Committee, Patrick McHenry. He said that this announcement

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Speaker 4: is a clear signal that stable coins, if issued under

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Speaker 4: clear regulatory framework called Promise. Clear regulations and robust consumer

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Speaker 4: protections are essential to enabling stable coins to achieve their

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Speaker 4: full potential. That was the quote from him. He obviously

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Speaker 4: is trying to get a stable coin measure pushed through

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Speaker 4: the US Congress, but you didn't even wait for that,

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Speaker 4: hose you decided to launch this now. So walk me

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Speaker 4: through the thinking and what the long term goal here

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Speaker 4: is for PayPal. What are you trying to achieve.

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Speaker 2: With this, Yeah, Kelly, we are obviously a payments company,

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Speaker 2: and we are interested in digital currencies because we do

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Speaker 2: believe that they have the potential to transform.

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Speaker 3: The payment ecosystem.

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Speaker 2: If you look at the primitives of the technology in

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Speaker 2: terms of the cost of transactions, in terms of the

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Speaker 2: settlement time, in terms of the programmability of the tokens,

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Speaker 2: there you just can do things that you couldn't do

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Speaker 2: with traditional payment rates.

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Speaker 3: And there's something that is strategic for us and it's

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Speaker 3: something that we want to be a part of.

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Speaker 2: We also think that by the way that the revolution

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Speaker 2: will not happen overnight. If you look at the volume

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Speaker 2: of stable coins today, they around one hundred and twenty

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Speaker 2: eight billion or so.

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Speaker 3: That are out there today.

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Speaker 2: Mostly they are using crypto ecosystems and Web three use cases,

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Speaker 2: and we think that will continue to be the case

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Speaker 2: for some time, with some emergencies in specific verticals in

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Speaker 2: places like remittances or video games. Is absolutely strategic for us.

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Speaker 2: We like the primitives, we like the ability to be

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Speaker 2: able to think that you couldn't do before in payments,

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Speaker 2: and obviously is a strategic technology for us.

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Speaker 4: Okay, so let's talk about where you're going to be

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Speaker 4: able to access it. Obviously you're partnering with Paxos for this.

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Speaker 4: Where is Paxos in conjunction with PayPal planning to actually

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Speaker 4: list this.

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Speaker 2: As of yesterday, we are live on the PayPal wallet

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Speaker 2: and we are ramping up the product now.

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Speaker 3: Over the next days, more and more users.

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Speaker 2: Will be able to see that in the wallets we

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Speaker 2: are going to be as we announced yesterday, we're going

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Speaker 2: to be enabling that in memo. We are super excited

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Speaker 2: about the ability that for the first time you will

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Speaker 2: be able to send value from your Vemo wallet to

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Speaker 2: your friend on PayPal as opposed only vembo to them,

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Speaker 2: Moore PayPal to PayPal, and over time we will definitely

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Speaker 2: open that up to external parties. We build the stable

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Speaker 2: coin to be able to be silly accepted by crypto

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Speaker 2: ex changes and the apps and wallets, and we will

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Speaker 2: see more and more of that adoption going forward. It's

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Speaker 2: one of the reasons why we wanted to build this

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Speaker 2: on open protocols and as a ARC twenty token, so

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Speaker 2: that it is easier to adopt it in a more

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Speaker 2: open ecosystem.

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Speaker 1: I'm just wondering why you would want to be first.

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Speaker 1: Aren't you worried about other regulations and also how do

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Speaker 1: you expect to generate revenue from this?

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Speaker 3: So I don't think that we're worried about going first.

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Speaker 3: We have been. We are a regulated financial institution.

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Speaker 2: We have been a regulated financial institution for twenty five years,

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Speaker 2: and we take our olatory relations and structure very very seriously.

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Speaker 3: We are regulated in multiple geographies. What we are doing here.

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Speaker 2: When we think about the stable coin, we think of

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Speaker 2: that as an extension of the PayPal balance that you

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Speaker 2: have seen over the years.

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Speaker 3: PayPal balance has existed for more than twenty years.

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Speaker 2: What we are doing now is increasing the value proposition

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Speaker 2: of that PayPal balance and making it useful outside.

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Speaker 3: The papal constraints.

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Speaker 2: Let's remember also that there are regulations out there. We

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Speaker 2: think one of the reasons we went to New York

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Speaker 2: is the New York has a very solid and reverse

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Speaker 2: framework for the stable coins, and we think that it's

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Speaker 2: very well suited for the business that we're.

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Speaker 3: Trying to build.

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Speaker 1: In terms of the interest income you'll generate from from

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Speaker 1: the stable coin, how do you split that with paxos,

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Speaker 1: who gets how much?

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Speaker 2: Well the details of the commercial relationship with between packses

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Speaker 2: and US they are obviously private, and we do think

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Speaker 2: historically it has been the waiting which the stable goings

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Speaker 2: get monetized the deal on the reserve assets, and that

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Speaker 2: will continue to be the case and is obviously an

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Speaker 2: interesting aspect of it and is a high margin revenue

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Speaker 2: stream over time. Again, going back to US as a

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Speaker 2: payments company, we are really interested in driving payment flows

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Speaker 2: here that will also be monetized in a number of

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Speaker 2: ways that are beyond just strictly the monetization of the reserve.

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Speaker 4: As we're talking about payment in the way money moves

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Speaker 4: through the world and who it potentially moves to. There

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Speaker 4: is a lot of concern where I am here in Washington,

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Speaker 4: Jose about what stable coins and crypto can enable in

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Speaker 4: terms of money laundering or other a listed activity. Once

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Speaker 4: the token leaves your network, how can you guarantee that

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Speaker 4: doesn't happen on another platform.

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Speaker 3: So let's go to a combination of two different factors there.

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Speaker 2: First, again, our history in terms of being able to

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Speaker 2: handle to manage fraud and prevent illegal activity in the network.

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Speaker 3: We have been doing that.

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Speaker 2: We have thousands of colleagues in the company who are

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Speaker 2: very well reversed in addressing online fraud and being able

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Speaker 2: to identify suspicious behavior. And the other side, again is

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Speaker 2: the regulation. So New York has very strict provisions on

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Speaker 2: what you need to be able to do in terms

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Speaker 2: of KC an AML, and we are compliant with That

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Speaker 2: is one of the aspects if you want to be

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Speaker 2: on the regulated FIAT stable going space, and we will

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Speaker 2: work with regulators and we will work with law enforcement.

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Speaker 4: Hose.

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Speaker 1: I wonder you know about the consumer acceptance of this

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Speaker 1: or consumer demand.

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Speaker 3: Maybe for it.

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Speaker 1: Because it's expected to make remittances cheaper, you'd expect everybody

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Speaker 1: to gravitate towards it.

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Speaker 3: So what's the take up ben.

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Speaker 2: So the rebistianesses is one of the places where we

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Speaker 2: think that you will see initial really acceptance. You see

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Speaker 2: that on remittances and a few others, mostly on fairly

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Speaker 2: specific verticals. We talked about ditael goods, we talked about

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Speaker 2: B to B anchors, bordering commerce. On the remitiance side,

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Speaker 2: one of the things that you need to keep in

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Speaker 2: mind when you're thinking about remittances is that the center,

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Speaker 2: the person in the US who is sending money back home,

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Speaker 2: is acting on behalf of the receiver. So it's important

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Speaker 2: that the experience for the receiver continues to be very simless.

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Speaker 2: There are flows and remittances going two different countries. Now

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Speaker 2: for the more sophisticated users, one of the places where

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Speaker 2: we think we will be differential and where we can

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Speaker 2: add value is that we bring that connectivity to that

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Speaker 2: last mile through the business, through the network that we

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Speaker 2: have built over the years.

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Speaker 3: You might remember we have.

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Speaker 2: We ac quired a few years ago Shoom, which was

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Speaker 2: a pioneer in mobile remittances to many countries, and we

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Speaker 2: can improve that last mile, so the receiving pent in

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Speaker 2: country does not need to be concerned about whether this

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Speaker 2: is a stable going and understand crypto and understand wallets,

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Speaker 2: and they can just do what they did and the

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Speaker 2: post it into a bank account or pick up cash.

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Speaker 2: Solving that last mile problem is one of the places

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Speaker 2: that where we can add value and that will drive

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Speaker 2: adoption in the remittance space.

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Speaker 4: All right, PayPal Jose Fernandez D Ponte, thank you so

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Speaker 4: much for joining us. Really appreciate your time.