1 00:00:10,119 --> 00:00:13,840 Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast. 2 00:00:13,920 --> 00:00:17,960 Speaker 1: I'm Joe Wisenthal and I'm Tracy Halloway. So, Tracy, here's 3 00:00:18,000 --> 00:00:20,239 Speaker 1: the thing that I've been thinking about a lot with 4 00:00:20,280 --> 00:00:22,760 Speaker 1: respect to crypto. You know, in the early days, when 5 00:00:22,800 --> 00:00:25,479 Speaker 1: it was just Bitcoin maybe a few other coins, seem 6 00:00:25,560 --> 00:00:28,160 Speaker 1: like there was this sort of pirate mentality. Cipher Punk 7 00:00:28,400 --> 00:00:30,400 Speaker 1: the Silk Road was one of the first apps where 8 00:00:30,400 --> 00:00:34,159 Speaker 1: people actually used crypto. But it feels like as the 9 00:00:34,200 --> 00:00:37,559 Speaker 1: industry has grown up, the effort to avoid or evade 10 00:00:37,600 --> 00:00:41,840 Speaker 1: the existing regulatory system has really fallen into the background. Yeah, 11 00:00:41,920 --> 00:00:45,240 Speaker 1: I think that's right. I mean, I guess stable coins 12 00:00:45,280 --> 00:00:48,000 Speaker 1: would be the prime example of this, right, And one 13 00:00:48,040 --> 00:00:50,400 Speaker 1: thing about stable coins that makes them really interesting to 14 00:00:50,440 --> 00:00:53,760 Speaker 1: me is that they're basically the way in which crypto, 15 00:00:54,000 --> 00:00:57,320 Speaker 1: or a big chunk of crypto actually interacts with the 16 00:00:57,360 --> 00:01:02,040 Speaker 1: traditional financial system. So a lot of them have financial 17 00:01:02,080 --> 00:01:05,320 Speaker 1: assets that are backing them, so they kind of interact 18 00:01:05,560 --> 00:01:08,840 Speaker 1: with banks through their reserve funds. And then the other 19 00:01:08,920 --> 00:01:12,720 Speaker 1: question I have is if you're going to create a 20 00:01:12,760 --> 00:01:17,280 Speaker 1: stable coin that has a bank charter and that invests 21 00:01:17,319 --> 00:01:20,440 Speaker 1: a lot in you know, traditional financial assets like t 22 00:01:20,600 --> 00:01:24,520 Speaker 1: bills or commercial paper, Then what is the benefit versus 23 00:01:24,959 --> 00:01:27,400 Speaker 1: going into something like a money market fund or just 24 00:01:27,440 --> 00:01:30,120 Speaker 1: a bank deposit. Right, if you're going to interact with 25 00:01:30,200 --> 00:01:33,200 Speaker 1: regulated institutions, which you implicitly are if you buy a 26 00:01:33,240 --> 00:01:36,119 Speaker 1: stable coin and the stable coin issue or hold money 27 00:01:36,240 --> 00:01:38,600 Speaker 1: in a regulated bank, then they're gonna be all kinds 28 00:01:38,640 --> 00:01:41,800 Speaker 1: of rules. If you're going to interface therefore with a 29 00:01:41,880 --> 00:01:46,560 Speaker 1: regulated finance, My question is what is the point of crypto? Yeah, exactly, 30 00:01:46,760 --> 00:01:49,080 Speaker 1: that's exactly it. And the other thing I would say 31 00:01:49,400 --> 00:01:52,080 Speaker 1: is there's been a lot of talk about stable coins 32 00:01:52,280 --> 00:01:55,360 Speaker 1: this year because we had the big crypto crash, and 33 00:01:55,560 --> 00:01:59,440 Speaker 1: whenever that happens, we tend to see some disruptions I 34 00:01:59,480 --> 00:02:02,000 Speaker 1: guess the pegs of a lot of stable coins, And 35 00:02:02,000 --> 00:02:04,680 Speaker 1: of course the famous example this year was while there 36 00:02:04,680 --> 00:02:07,760 Speaker 1: were two but we had the algorithmic stable coin um 37 00:02:07,880 --> 00:02:12,320 Speaker 1: Tera slash Luna, which basically crashed and died. But we 38 00:02:12,400 --> 00:02:15,600 Speaker 1: also had Tether, and there are lots of questions swirling 39 00:02:15,600 --> 00:02:18,400 Speaker 1: around Tether whether or not it can hold its peg. 40 00:02:19,080 --> 00:02:21,880 Speaker 1: But of course those are only two stable coins within 41 00:02:22,000 --> 00:02:25,520 Speaker 1: a very vast ecosystem of stable coins. And today we're 42 00:02:25,520 --> 00:02:28,200 Speaker 1: going to be talking about another one. Yep, we are. 43 00:02:28,320 --> 00:02:31,880 Speaker 1: And so you know, Tether is the biggest stable coin 44 00:02:31,960 --> 00:02:35,720 Speaker 1: that out there, but close on its heels and maybe 45 00:02:35,760 --> 00:02:39,200 Speaker 1: even more important in the world of defy is the 46 00:02:39,320 --> 00:02:43,240 Speaker 1: usd coin us d C, which is issued by the 47 00:02:43,280 --> 00:02:47,680 Speaker 1: company Circle, and it's extremely powerful, it's really big, it's 48 00:02:47,720 --> 00:02:51,320 Speaker 1: growing and influence. It may surpass Tether very soon or 49 00:02:51,480 --> 00:02:54,360 Speaker 1: very plausibly at some point. So I'm very excited to 50 00:02:54,400 --> 00:02:57,680 Speaker 1: say that we have the founder, the co founder and 51 00:02:57,840 --> 00:03:02,040 Speaker 1: CEO of Circle on the on the podcast as our guest, 52 00:03:02,120 --> 00:03:04,880 Speaker 1: Jeremy Hilaria. Thank you so much for joining us. Thank 53 00:03:04,919 --> 00:03:07,680 Speaker 1: you guys. Super excited to be here. I'm really excited 54 00:03:07,680 --> 00:03:09,760 Speaker 1: about this conversation because I just have like there's so 55 00:03:09,800 --> 00:03:13,600 Speaker 1: many questions, so much interested, so much interest in stable coins. 56 00:03:13,600 --> 00:03:16,200 Speaker 1: But to start off, what is Circle and how to 57 00:03:16,320 --> 00:03:19,840 Speaker 1: Circle make money? Yeah, So first of all, just very 58 00:03:19,919 --> 00:03:22,959 Speaker 1: quick backdrop. We started Circle. I co found a Circle 59 00:03:23,040 --> 00:03:28,640 Speaker 1: nine years ago and the basic idea was, and my 60 00:03:28,680 --> 00:03:32,680 Speaker 1: background before Circle was starting internet software platform companies, software 61 00:03:32,680 --> 00:03:36,680 Speaker 1: infrastructure companies working in areas like delivering software on the Internet, 62 00:03:36,720 --> 00:03:39,640 Speaker 1: delivering media on the Internet, delivering communications on the Internet. 63 00:03:39,640 --> 00:03:43,080 Speaker 1: Always interested in how public Internet infrastructure could change the 64 00:03:43,120 --> 00:03:45,840 Speaker 1: way certain things happened, Like now you guys do this 65 00:03:45,880 --> 00:03:49,160 Speaker 1: podcast instead of just writing so UM. I was really 66 00:03:49,240 --> 00:03:52,760 Speaker 1: drawn into crypto technology and and what this was ten 67 00:03:52,840 --> 00:03:55,840 Speaker 1: years ago and then crystallized the ideas behind Circle nine 68 00:03:55,880 --> 00:03:59,279 Speaker 1: years ago. And it's actually interesting hearing your your introductory 69 00:03:59,320 --> 00:04:02,800 Speaker 1: remarks because when we started, it was actually, you know, 70 00:04:03,240 --> 00:04:05,520 Speaker 1: right when the federal government said, hey, if you want 71 00:04:05,520 --> 00:04:08,920 Speaker 1: to interact between the banking system and these virtual assets, 72 00:04:09,000 --> 00:04:12,280 Speaker 1: like you've got to be regulated as a money transmission company. 73 00:04:12,320 --> 00:04:14,720 Speaker 1: And that was the first regulation actually was was then, 74 00:04:15,160 --> 00:04:17,560 Speaker 1: and like that's when Silk Road was taken down. And 75 00:04:18,000 --> 00:04:19,800 Speaker 1: but you know, we we were coming into this with 76 00:04:19,880 --> 00:04:22,880 Speaker 1: this idea, which at the time we called a hybrid 77 00:04:23,279 --> 00:04:27,040 Speaker 1: model of digital currency UM. And the idea was, how 78 00:04:27,080 --> 00:04:29,680 Speaker 1: could we take what we think of as traditional money 79 00:04:29,960 --> 00:04:33,360 Speaker 1: i e. Government debt money and and and sort of 80 00:04:33,400 --> 00:04:37,320 Speaker 1: represent that as a digital currency but operated on these 81 00:04:37,400 --> 00:04:42,320 Speaker 1: new public protocols, on these new public Internet infrastructures. Because 82 00:04:42,320 --> 00:04:46,080 Speaker 1: I had sort of seen these public infrastructures enable free 83 00:04:46,080 --> 00:04:49,800 Speaker 1: global communications and and seamless distribution of software to any 84 00:04:49,800 --> 00:04:53,039 Speaker 1: Internet connected device, and you know, all these transformations have 85 00:04:53,160 --> 00:04:56,719 Speaker 1: happened in data, software, media communications, and I thought, wow, 86 00:04:56,880 --> 00:05:00,800 Speaker 1: if you had public infrastructure that's all built on open 87 00:05:00,839 --> 00:05:03,600 Speaker 1: source and anyone can run the nodes and you could 88 00:05:03,920 --> 00:05:09,280 Speaker 1: have a way to provably represent something and transact it 89 00:05:09,760 --> 00:05:13,240 Speaker 1: directly between nodes on the Internet, that would be really powerful. 90 00:05:13,279 --> 00:05:16,360 Speaker 1: So we got this idea of hybrid model that connected 91 00:05:16,400 --> 00:05:21,080 Speaker 1: the traditional banking system to these new public blockchain rails 92 00:05:21,800 --> 00:05:24,840 Speaker 1: an infrastructure, and so we were always pursuing that um 93 00:05:25,120 --> 00:05:27,520 Speaker 1: first with the consumer app, which tried to do it 94 00:05:27,560 --> 00:05:30,080 Speaker 1: by building on top of the bitcoin network, which was 95 00:05:30,880 --> 00:05:34,640 Speaker 1: not a great idea just because bitcoin Bitcoin didn't evolve 96 00:05:34,720 --> 00:05:38,000 Speaker 1: so back in you know, the idea was, oh, bitcoin's 97 00:05:38,040 --> 00:05:40,920 Speaker 1: first mover, there's a lot of open source developers, there's 98 00:05:40,920 --> 00:05:43,320 Speaker 1: going to add a lot of capabilities. Back then, there 99 00:05:43,400 --> 00:05:45,880 Speaker 1: was this idea of hey, you could issue other assets 100 00:05:45,920 --> 00:05:48,640 Speaker 1: on top of it, and you could extend its programming 101 00:05:48,760 --> 00:05:53,000 Speaker 1: model to support more sophisticated programming, and this idea of 102 00:05:53,000 --> 00:05:56,239 Speaker 1: programm mobile money, which was really a motivation behind Circle, 103 00:05:56,720 --> 00:05:59,000 Speaker 1: but it sort of struggled and and it went a 104 00:05:59,000 --> 00:06:02,800 Speaker 1: different direction based the technology was really you know, there 105 00:06:02,839 --> 00:06:06,640 Speaker 1: was sort of an ideological um uh kind of framing 106 00:06:06,680 --> 00:06:08,800 Speaker 1: of that and then the sort of second generation of 107 00:06:08,800 --> 00:06:12,479 Speaker 1: blockchain technology emerged in the form of ethereum, and that 108 00:06:12,520 --> 00:06:15,279 Speaker 1: actually created the building box where we could actually create 109 00:06:15,640 --> 00:06:18,440 Speaker 1: a protocol for dollars on the Internet, and that gave 110 00:06:18,480 --> 00:06:21,800 Speaker 1: birth to USDC, which you reference but fundamentally circled. Just 111 00:06:21,839 --> 00:06:24,200 Speaker 1: to come back to your core question. You know, we 112 00:06:24,279 --> 00:06:30,120 Speaker 1: are a financial platform company. Were regulated in the United States, 113 00:06:30,120 --> 00:06:32,039 Speaker 1: were regulated in other parts of the world as well, 114 00:06:32,480 --> 00:06:37,080 Speaker 1: and we operate this stable coin market infrastructure known as USDC. 115 00:06:37,320 --> 00:06:40,479 Speaker 1: We also just recently introduced a euro stable coin called 116 00:06:40,800 --> 00:06:45,320 Speaker 1: euro coin or euroc and the stable coin market infrastructure. 117 00:06:45,600 --> 00:06:48,520 Speaker 1: We we sort of face the market on what I'll 118 00:06:48,560 --> 00:06:51,440 Speaker 1: call a wholesale or institutional level, and so lots of 119 00:06:51,440 --> 00:06:53,600 Speaker 1: other companies can connect and build on top of it, 120 00:06:54,080 --> 00:06:57,520 Speaker 1: and we issue and operate this and um. We also 121 00:06:57,680 --> 00:07:01,680 Speaker 1: alongside that run a set of services that are really 122 00:07:01,760 --> 00:07:06,280 Speaker 1: for for businesses, developers, startups, fin techs, others that want 123 00:07:06,279 --> 00:07:09,040 Speaker 1: to really integrate this kind of technology into their own 124 00:07:09,080 --> 00:07:13,440 Speaker 1: operations in different ways. But fundamentally, you know, the billion 125 00:07:13,760 --> 00:07:16,720 Speaker 1: USDC and circulation are close to that today. You know, 126 00:07:16,960 --> 00:07:20,160 Speaker 1: we we generate interesting come from those and so in 127 00:07:20,200 --> 00:07:24,240 Speaker 1: the current rate environment, that's that's significant UM. And and 128 00:07:24,240 --> 00:07:26,720 Speaker 1: then and then we have these other these other kind 129 00:07:26,720 --> 00:07:29,640 Speaker 1: of what we call transaction and treasury services and crypto 130 00:07:29,680 --> 00:07:32,920 Speaker 1: services that are kind of financial infrastructure as a service 131 00:07:33,200 --> 00:07:36,720 Speaker 1: that we also monetize. So you mentioned the idea of 132 00:07:36,760 --> 00:07:41,800 Speaker 1: being able to UM send and verify transactions through the 133 00:07:41,840 --> 00:07:44,920 Speaker 1: through Internet nodes as being very very powerful. Can you 134 00:07:44,960 --> 00:07:48,840 Speaker 1: explain that a little bit more? Because you know, when 135 00:07:48,920 --> 00:07:52,800 Speaker 1: when I look at financial services today, if I want 136 00:07:52,800 --> 00:07:55,000 Speaker 1: to deposit my money, I can do it in a bank, 137 00:07:55,160 --> 00:07:56,960 Speaker 1: I can put it in a money market fund. If 138 00:07:56,960 --> 00:07:59,000 Speaker 1: I want to send money, I can send it through 139 00:07:59,000 --> 00:08:01,240 Speaker 1: a bank, and you know, I think we'd all agree 140 00:08:01,280 --> 00:08:03,880 Speaker 1: that might not be the most efficient way of doing it. 141 00:08:03,920 --> 00:08:07,280 Speaker 1: But I can also send money through something like PayPal. 142 00:08:07,560 --> 00:08:12,200 Speaker 1: So what exactly is the value add here from sending 143 00:08:12,280 --> 00:08:16,560 Speaker 1: money via the blockchain via ethereum in the case of circle, Like, 144 00:08:16,600 --> 00:08:19,040 Speaker 1: what are we adding and how does it differentiate itself 145 00:08:19,040 --> 00:08:23,600 Speaker 1: from traditional financial services? Yeah, so I think kind of 146 00:08:23,640 --> 00:08:27,600 Speaker 1: come back to a few things just that are kind 147 00:08:27,600 --> 00:08:30,960 Speaker 1: of first principles that we've been going after. UM. I 148 00:08:31,000 --> 00:08:36,199 Speaker 1: think the first is the Internet itself is essentially this 149 00:08:36,280 --> 00:08:40,960 Speaker 1: collection of open protocols that anyone can connect to. And 150 00:08:41,040 --> 00:08:44,000 Speaker 1: as long as your computer can speak those protocols, you 151 00:08:44,040 --> 00:08:46,320 Speaker 1: can do a lot of things. You can have direct 152 00:08:46,520 --> 00:08:49,640 Speaker 1: peer to peer communications. You can put a piece of 153 00:08:49,720 --> 00:08:52,080 Speaker 1: software on a on a server and then anyone with 154 00:08:52,120 --> 00:08:54,520 Speaker 1: a browser can connect to that software. So it provides 155 00:08:54,520 --> 00:09:00,360 Speaker 1: software distribution, um, it provides protocols for sending messages, mails, 156 00:09:00,480 --> 00:09:04,520 Speaker 1: text messages, other things. So all these protocols exist and 157 00:09:04,520 --> 00:09:07,280 Speaker 1: and alongside those there's what what is often referred to 158 00:09:07,320 --> 00:09:10,200 Speaker 1: as the payload of those protocols. So there's sort of 159 00:09:10,400 --> 00:09:14,200 Speaker 1: different types of data. So the Internet has basic you know, 160 00:09:14,280 --> 00:09:17,560 Speaker 1: data zeros and ones, and it has more structured standard 161 00:09:17,600 --> 00:09:20,480 Speaker 1: forms of data like uh an MP four audio file 162 00:09:20,920 --> 00:09:25,080 Speaker 1: or a a piece of content on the web or 163 00:09:25,120 --> 00:09:28,440 Speaker 1: all these different types of formats. But the Internet up 164 00:09:28,520 --> 00:09:34,280 Speaker 1: until roughly ten years ago, lacked any protocols that allowed 165 00:09:34,640 --> 00:09:40,640 Speaker 1: you to directly represent value too directly in an open protocol, 166 00:09:41,000 --> 00:09:43,160 Speaker 1: and this is the key concept in using an open 167 00:09:43,200 --> 00:09:46,440 Speaker 1: protocol to exchange that value. There was no built in 168 00:09:46,559 --> 00:09:49,800 Speaker 1: data type on the Internet for money, and so there's 169 00:09:49,840 --> 00:09:54,920 Speaker 1: obviously with the with the advent of cryptographic record keeping 170 00:09:55,520 --> 00:09:59,839 Speaker 1: and and effectively these kind of ledger these kind of 171 00:10:00,040 --> 00:10:04,080 Speaker 1: provable uh distributed ledger systems. You now actually have a 172 00:10:04,120 --> 00:10:07,960 Speaker 1: building block that is on the public Internet that allows 173 00:10:08,000 --> 00:10:14,920 Speaker 1: people to represent incorruptible, in controvertible data. And that's what 174 00:10:15,040 --> 00:10:17,640 Speaker 1: money is. It's a record keeping system and it's a 175 00:10:17,679 --> 00:10:20,600 Speaker 1: way to sort of adjust the entries of that. You've 176 00:10:20,720 --> 00:10:24,920 Speaker 1: never had that on the public Internet. So along time 177 00:10:25,040 --> 00:10:28,679 Speaker 1: something like bitcoin, which is a native form of money 178 00:10:28,679 --> 00:10:31,800 Speaker 1: on the Internet, and so naturally the next kind of 179 00:10:32,200 --> 00:10:35,640 Speaker 1: logical step was, well, what about if we could take 180 00:10:36,160 --> 00:10:41,400 Speaker 1: the fundamental powers of that cryptographic money, which is accessible 181 00:10:41,520 --> 00:10:44,640 Speaker 1: to any Internet connected device that can transact at the 182 00:10:44,640 --> 00:10:48,880 Speaker 1: speed of the Internet, with very high security assurances and 183 00:10:49,000 --> 00:10:54,080 Speaker 1: privacy assurances, with theoretically the ability to over time drive 184 00:10:54,160 --> 00:10:58,959 Speaker 1: the cost of confirming and settling with finality those transactions 185 00:10:58,960 --> 00:11:03,040 Speaker 1: to something approaching zero euro. Well, then that becomes incredibly powerful. 186 00:11:03,440 --> 00:11:06,920 Speaker 1: That becomes as powerful as when you know, software made 187 00:11:07,040 --> 00:11:09,720 Speaker 1: voice communications free on the Internet. So what if you 188 00:11:09,720 --> 00:11:13,320 Speaker 1: could actually have protocols that could represent what we think 189 00:11:13,360 --> 00:11:15,200 Speaker 1: of as a dollar. And we'll come back to that 190 00:11:15,240 --> 00:11:17,200 Speaker 1: because that gets into a lot of like what makes 191 00:11:17,240 --> 00:11:20,400 Speaker 1: us stable? Coin stable? What is money? What are dollars? 192 00:11:20,400 --> 00:11:22,880 Speaker 1: All that fun stuff. But if you could, if you 193 00:11:22,880 --> 00:11:25,120 Speaker 1: could actually have that and have a public protocol like 194 00:11:25,160 --> 00:11:27,559 Speaker 1: we have HTTP for the Web, anyone can connect to it, 195 00:11:27,720 --> 00:11:30,520 Speaker 1: can exchange data. It's given us all the world's knowledge 196 00:11:30,559 --> 00:11:33,240 Speaker 1: instantly at effectively no cost. What if we could have 197 00:11:33,280 --> 00:11:37,480 Speaker 1: a protocol for dollars and euros and pounds and other 198 00:11:37,640 --> 00:11:40,720 Speaker 1: and other currencies. But let's just start with dollars and 199 00:11:40,720 --> 00:11:45,319 Speaker 1: and make that accessible so that any person, any entity, 200 00:11:45,480 --> 00:11:48,840 Speaker 1: and any software developer can directly transact those over the 201 00:11:49,000 --> 00:11:52,320 Speaker 1: over the public Internet, and and doing it with with 202 00:11:52,360 --> 00:11:54,360 Speaker 1: all those kind of built in features. So the way 203 00:11:54,360 --> 00:11:57,640 Speaker 1: I put it is, the existing financial system doesn't have 204 00:11:57,720 --> 00:12:03,280 Speaker 1: Internet superpowers, and now we have, through public blockchain infrastructure 205 00:12:04,040 --> 00:12:06,839 Speaker 1: and and and mechanisms like stable quence, we now actually 206 00:12:06,840 --> 00:12:09,920 Speaker 1: have dollars with Internet superpowers, and and that's really exciting 207 00:12:09,960 --> 00:12:28,240 Speaker 1: for a whole host of reasons. So I want to 208 00:12:28,280 --> 00:12:31,000 Speaker 1: dive into a bunch of those questions and some of 209 00:12:31,040 --> 00:12:33,240 Speaker 1: the opportunities. Before I do, I want to take care 210 00:12:33,240 --> 00:12:36,200 Speaker 1: of like one sort of maybe it's a housekeeping question 211 00:12:36,360 --> 00:12:38,920 Speaker 1: or a sort of nuts and bolt question, but what 212 00:12:39,160 --> 00:12:42,679 Speaker 1: is the status? Are you still going public via cn D? 213 00:12:43,000 --> 00:12:46,880 Speaker 1: Is that still on yes, very much so, so we're 214 00:12:46,880 --> 00:12:51,520 Speaker 1: in registration with the sec UM. We initially announced that 215 00:12:53,040 --> 00:12:58,079 Speaker 1: about a year ago and in February. Because the the 216 00:12:58,440 --> 00:13:01,319 Speaker 1: sort of initially announced deal had a sort of time 217 00:13:01,360 --> 00:13:03,200 Speaker 1: and had to be completed in we were not going 218 00:13:03,280 --> 00:13:06,960 Speaker 1: to hit that exact time, we kind of renegotiated the 219 00:13:07,000 --> 00:13:10,000 Speaker 1: deal and did what I like to call a respect 220 00:13:10,160 --> 00:13:14,640 Speaker 1: so we respect um instead of despact. So we respect 221 00:13:14,720 --> 00:13:17,880 Speaker 1: and I think I'm on a noteworthy basis. The value 222 00:13:18,160 --> 00:13:21,280 Speaker 1: of the company went up by a d percent, which 223 00:13:21,320 --> 00:13:25,040 Speaker 1: is not what you've typically seen in SPAC deals. They've typically, 224 00:13:25,080 --> 00:13:28,080 Speaker 1: in fact, almost universally gone the opposite direction. But that 225 00:13:28,200 --> 00:13:30,480 Speaker 1: was we moved from a four point five billion dollar 226 00:13:30,559 --> 00:13:33,400 Speaker 1: valuation to a nine billion dollar valuation, and our our 227 00:13:33,440 --> 00:13:36,760 Speaker 1: financial outlook, you know, sort of had materially improved, and 228 00:13:36,840 --> 00:13:38,880 Speaker 1: so that that was sort of happening. But we did 229 00:13:38,880 --> 00:13:41,720 Speaker 1: a couple of other things. One was, you know, most 230 00:13:41,720 --> 00:13:44,920 Speaker 1: spacts are also have a fund raise attached to them, 231 00:13:44,960 --> 00:13:47,240 Speaker 1: called a pipe, and we had originally done about a 232 00:13:47,240 --> 00:13:50,760 Speaker 1: four million dollar pipe, and that's a conditional financing. Once 233 00:13:50,840 --> 00:13:53,719 Speaker 1: the transaction completes, then you get the money. We we 234 00:13:53,800 --> 00:13:56,880 Speaker 1: eliminated that. We said there's no cash condition, we're going 235 00:13:56,920 --> 00:14:01,240 Speaker 1: to eliminate the pipe. But instead we wanted the ability 236 00:14:01,320 --> 00:14:04,160 Speaker 1: to raise capital privately because we had a lot of 237 00:14:04,200 --> 00:14:07,360 Speaker 1: interest in the company and so why wait another six 238 00:14:07,480 --> 00:14:10,000 Speaker 1: nine months or whatever it was. And so about a 239 00:14:10,080 --> 00:14:14,040 Speaker 1: month or so after the respect, we announced a four 240 00:14:14,440 --> 00:14:18,000 Speaker 1: million dollar financing with black Rock and Fidelity in Martial Waste, 241 00:14:18,320 --> 00:14:20,640 Speaker 1: and so that was that was a private financing. So 242 00:14:20,720 --> 00:14:23,640 Speaker 1: they purchased equity in the company privately. But we are, 243 00:14:23,840 --> 00:14:27,160 Speaker 1: you know, in our sec comment review cycle and and 244 00:14:27,160 --> 00:14:30,600 Speaker 1: and we anticipate the spacking in Q four. That's the 245 00:14:30,600 --> 00:14:35,320 Speaker 1: current the current thinking right now, given the criticism around 246 00:14:35,440 --> 00:14:37,480 Speaker 1: a lot of SPACs at the moment, do you do 247 00:14:37,520 --> 00:14:41,120 Speaker 1: you kind of wish that maybe you you'd considered another 248 00:14:41,200 --> 00:14:43,520 Speaker 1: venue for raising money or like, how do you feel 249 00:14:43,560 --> 00:14:46,520 Speaker 1: about the process in retrospect? Well, it's interesting is that, 250 00:14:46,640 --> 00:14:49,440 Speaker 1: you know, we we made a decision that we wanted 251 00:14:49,480 --> 00:14:53,440 Speaker 1: to be a publicly listed company. We also, prior to 252 00:14:53,520 --> 00:14:57,760 Speaker 1: doing our our spect transaction, had raised four fifty million 253 00:14:57,760 --> 00:15:00,720 Speaker 1: dollars in a in a private fundrai is and then 254 00:15:00,760 --> 00:15:03,480 Speaker 1: we've now just you know, recently raised this four million 255 00:15:03,960 --> 00:15:07,200 Speaker 1: and we have a kind of robust financial outlook as well, 256 00:15:07,280 --> 00:15:10,040 Speaker 1: So the capital raise wasn't really the essence of it. 257 00:15:10,120 --> 00:15:12,640 Speaker 1: We wanted to become a public company, and at the time, 258 00:15:13,600 --> 00:15:18,120 Speaker 1: the factis fact model seemed like an efficient way to 259 00:15:18,240 --> 00:15:22,840 Speaker 1: become a public company. In retrospect, a crypto company in 260 00:15:22,880 --> 00:15:27,160 Speaker 1: a novel new industry plus a renewed amount of scrutiny 261 00:15:27,200 --> 00:15:30,720 Speaker 1: its facts. Hindsight, you could say, well, maybe that wasn't 262 00:15:30,840 --> 00:15:33,200 Speaker 1: the right thing, but I think no matter what, because 263 00:15:33,240 --> 00:15:37,920 Speaker 1: of the novelty of our business and and the nature 264 00:15:37,960 --> 00:15:40,680 Speaker 1: of our business right it's it's just a longer review 265 00:15:40,760 --> 00:15:43,840 Speaker 1: cycle to kind of become a listed company, which I 266 00:15:43,840 --> 00:15:46,240 Speaker 1: think is totally appropriate because it's a whole bunch of 267 00:15:46,280 --> 00:15:49,720 Speaker 1: different types of accounting issues and risk issues and disclosures 268 00:15:49,720 --> 00:15:52,440 Speaker 1: and the like. And so the bottom line for us 269 00:15:52,480 --> 00:15:54,960 Speaker 1: is we wanted to become a public company. We think 270 00:15:55,440 --> 00:15:59,040 Speaker 1: as a kind of financial infrastructure company that lots of 271 00:15:59,040 --> 00:16:01,120 Speaker 1: other people are building on top top of. It's actually 272 00:16:01,120 --> 00:16:07,280 Speaker 1: really important to have that level of transparency, visibility, assurance, accountability, 273 00:16:07,400 --> 00:16:09,480 Speaker 1: and that's what's really important for us at the end 274 00:16:09,520 --> 00:16:12,160 Speaker 1: of the day. And so we're totally committed to that. 275 00:16:12,280 --> 00:16:14,600 Speaker 1: And and so you know, in a sense because we 276 00:16:14,600 --> 00:16:17,119 Speaker 1: were able to restructure even the deal that we had 277 00:16:17,280 --> 00:16:19,960 Speaker 1: in ways that were I think very favorable for the company. 278 00:16:20,280 --> 00:16:22,360 Speaker 1: We're like, let's just continue down that path and and 279 00:16:22,400 --> 00:16:24,480 Speaker 1: just see it through. There's a lot of flavors of 280 00:16:24,520 --> 00:16:26,360 Speaker 1: stable coins, so I want to get into some of 281 00:16:26,360 --> 00:16:28,120 Speaker 1: the like what even is a stable coin? But does 282 00:16:28,160 --> 00:16:31,080 Speaker 1: Tracy mentioned in the intro this year we've seen the 283 00:16:31,120 --> 00:16:35,520 Speaker 1: collapse of the Terra stable coin. There's always scrutiny about 284 00:16:35,640 --> 00:16:38,520 Speaker 1: tether and but you know, when thinking about how this 285 00:16:38,560 --> 00:16:39,920 Speaker 1: is going to evolve, I have it's sort of a 286 00:16:39,920 --> 00:16:43,040 Speaker 1: two part question on regulation, but a like what is 287 00:16:43,040 --> 00:16:45,560 Speaker 1: a stable coin? Like what is the closest thing some 288 00:16:45,560 --> 00:16:47,760 Speaker 1: people compare them to money market funds? What is a 289 00:16:47,800 --> 00:16:51,440 Speaker 1: stable coin? And then because there are so many flavors, 290 00:16:51,480 --> 00:16:54,160 Speaker 1: and because you know, I could be an anonymous person 291 00:16:54,200 --> 00:16:56,840 Speaker 1: on the Internet based anywhere in the world and create 292 00:16:56,920 --> 00:17:00,360 Speaker 1: some sort of algorithmic based stable coin or D five 293 00:17:00,520 --> 00:17:03,360 Speaker 1: based stable coin where I hold other crypto assets and 294 00:17:03,400 --> 00:17:06,200 Speaker 1: maker and die as an example of that, is there 295 00:17:06,240 --> 00:17:10,960 Speaker 1: any prospect of a unified stable coin regulation that actually 296 00:17:11,240 --> 00:17:15,440 Speaker 1: captures all these definitions? And who should be responsible if 297 00:17:15,440 --> 00:17:18,679 Speaker 1: someone in the US buy goes onto an exchange and 298 00:17:18,760 --> 00:17:22,320 Speaker 1: buy something that's called a stable coin. Who should be 299 00:17:22,359 --> 00:17:26,560 Speaker 1: responsible for ensuring that, well it stays stable? Yeah, there's 300 00:17:26,720 --> 00:17:28,600 Speaker 1: there's a lot of a lot of topics in there. 301 00:17:29,040 --> 00:17:31,800 Speaker 1: So I think, um, and and and I think we'll 302 00:17:31,800 --> 00:17:34,560 Speaker 1: get to the regulatory piece and sort of you know, 303 00:17:34,800 --> 00:17:38,520 Speaker 1: how how you know, the average joe, no pun intended 304 00:17:38,680 --> 00:17:42,680 Speaker 1: can differentiate all these things? Um uh, you know as well? 305 00:17:42,760 --> 00:17:44,960 Speaker 1: And and and how to and how to regulators different 306 00:17:45,480 --> 00:17:47,880 Speaker 1: differentiate these I think the first thing I would say 307 00:17:47,920 --> 00:17:50,520 Speaker 1: is we didn't pick the name stable coin. You know, 308 00:17:50,640 --> 00:17:53,359 Speaker 1: there's that was sort of like the market came up 309 00:17:53,359 --> 00:17:56,320 Speaker 1: with that, that concept. And and what's interesting is if 310 00:17:56,359 --> 00:18:01,000 Speaker 1: you kind of go through circles own you know, marketing 311 00:18:01,040 --> 00:18:03,200 Speaker 1: and how we look at this, we keep talking about 312 00:18:03,400 --> 00:18:08,080 Speaker 1: dollar digital currencies or fiat digital currency as opposed to 313 00:18:08,080 --> 00:18:09,760 Speaker 1: the words stable coin. And I'm not sure if the 314 00:18:09,760 --> 00:18:12,680 Speaker 1: words stable coin will be here forever. Although I didn't 315 00:18:12,720 --> 00:18:15,000 Speaker 1: think the phrase worldwide Web was the best thing to 316 00:18:15,080 --> 00:18:17,679 Speaker 1: describe this great internet thing that we were building, but 317 00:18:17,800 --> 00:18:21,520 Speaker 1: it persisted. So whatever the name, it does then come 318 00:18:21,520 --> 00:18:24,760 Speaker 1: into a well, well what is this and how do 319 00:18:24,760 --> 00:18:27,359 Speaker 1: you differentiate these things? I think The really important thing 320 00:18:27,400 --> 00:18:31,520 Speaker 1: to understand about the approach that we took, which was 321 00:18:32,160 --> 00:18:37,280 Speaker 1: prior to launching USDC, we became broadly regulated in the 322 00:18:37,400 --> 00:18:42,119 Speaker 1: United States as an electronic money transmitter, and that is 323 00:18:42,160 --> 00:18:46,040 Speaker 1: a tried and true framework for payment system innovation in 324 00:18:46,080 --> 00:18:51,600 Speaker 1: the United States. Virtually every contemporary electronic payment system innovation, 325 00:18:52,400 --> 00:18:55,760 Speaker 1: whether that be um you know, things that maybe don't 326 00:18:55,760 --> 00:18:58,959 Speaker 1: feel that innovative now, like you know, prepaid debit cards, 327 00:18:59,040 --> 00:19:04,560 Speaker 1: but then PayPal, cash at Venmo, Apple, pay Stripe itself 328 00:19:04,600 --> 00:19:06,959 Speaker 1: and many of the services it provides all kind of 329 00:19:06,960 --> 00:19:10,760 Speaker 1: fit under this kind of framework. And under that is 330 00:19:11,160 --> 00:19:14,760 Speaker 1: the framework that USDC is regulated. And so you know, 331 00:19:15,119 --> 00:19:18,359 Speaker 1: despite the I think that the representation that these are 332 00:19:18,359 --> 00:19:21,920 Speaker 1: on regulated, it's just not true. We've been regulated since 333 00:19:22,040 --> 00:19:25,639 Speaker 1: day one on this and and money transmission regulation is 334 00:19:25,760 --> 00:19:30,159 Speaker 1: designed to protect individuals. So that and it's the same 335 00:19:30,280 --> 00:19:32,880 Speaker 1: kind of framework, and it's called the money in Europe 336 00:19:33,160 --> 00:19:35,720 Speaker 1: and similar you know kind of regulations in Asia and 337 00:19:35,880 --> 00:19:38,960 Speaker 1: pan and others. But basically, we are required by law 338 00:19:39,560 --> 00:19:45,119 Speaker 1: two hold a one for one reserve against that electronic 339 00:19:45,200 --> 00:19:48,640 Speaker 1: money instrument. We have to do it in segregated accounts 340 00:19:48,640 --> 00:19:51,360 Speaker 1: that are not accessible to the company for its own operations, 341 00:19:51,800 --> 00:19:56,120 Speaker 1: which are segregated in the event of something like an insolvency. 342 00:19:56,280 --> 00:19:59,119 Speaker 1: So there's a framework that's there for for this kind 343 00:19:59,280 --> 00:20:02,560 Speaker 1: of money, and it's used every day. We all use 344 00:20:02,600 --> 00:20:05,399 Speaker 1: it every day, and so that does exist, and that 345 00:20:05,560 --> 00:20:09,159 Speaker 1: is a reasonable framework for these But I think it 346 00:20:09,280 --> 00:20:11,440 Speaker 1: is a new arena and there's a different level of 347 00:20:11,480 --> 00:20:16,160 Speaker 1: transparency that's required. Like, no one's asking PayPal right now, Hey, 348 00:20:16,200 --> 00:20:19,600 Speaker 1: that thirty five billion dollars of balances that hang out 349 00:20:19,640 --> 00:20:22,240 Speaker 1: and PayPal like, what are you invested in? Are you 350 00:20:22,320 --> 00:20:24,920 Speaker 1: taking risks? Are you doing? No one asked that because 351 00:20:25,280 --> 00:20:27,639 Speaker 1: they understand that it's a regulated company that is not 352 00:20:27,720 --> 00:20:30,760 Speaker 1: allowed to do much beyond just like cash and cash 353 00:20:30,760 --> 00:20:33,760 Speaker 1: equivalence and that sort of short term stuff. But because 354 00:20:33,800 --> 00:20:36,800 Speaker 1: this is crypto, and because these are these digital tokens 355 00:20:37,000 --> 00:20:39,800 Speaker 1: that people are holding, and because of the history of 356 00:20:39,960 --> 00:20:42,679 Speaker 1: hacks and thefts and fraud and all the other stuff, 357 00:20:42,840 --> 00:20:45,560 Speaker 1: people are paranoid, justifiably, and so there's just a lot 358 00:20:45,640 --> 00:20:48,600 Speaker 1: more scrutiny on these things, and I think that's appropriate. 359 00:20:48,880 --> 00:20:52,760 Speaker 1: We actually just recently started publishing, and we're doing it monthly, 360 00:20:53,000 --> 00:20:55,680 Speaker 1: and we intend to do it daily. Literally the acquisites 361 00:20:55,760 --> 00:20:58,600 Speaker 1: for the serial numbers of every single three month or 362 00:20:58,680 --> 00:21:02,000 Speaker 1: less Treasury bill that hold. So people literally could see 363 00:21:02,359 --> 00:21:06,040 Speaker 1: what is the risk of this, and so you know, 364 00:21:06,080 --> 00:21:09,000 Speaker 1: that's that's sort of a framework that's there now when 365 00:21:09,000 --> 00:21:10,760 Speaker 1: you zoom out and you say, wow, there's all these 366 00:21:10,760 --> 00:21:14,400 Speaker 1: different things. From a regulatory perspective, there has been an 367 00:21:14,400 --> 00:21:17,120 Speaker 1: attempt and it started a couple of years ago when 368 00:21:17,640 --> 00:21:19,639 Speaker 1: the G seven and then the G twenty and the 369 00:21:19,640 --> 00:21:23,760 Speaker 1: Financial Stability Board, these sort of supernational groups of regulators, 370 00:21:23,760 --> 00:21:26,159 Speaker 1: said hey, we need a framework to regulate what they 371 00:21:26,240 --> 00:21:29,600 Speaker 1: called global stable coins, and and then they kind of 372 00:21:29,640 --> 00:21:32,600 Speaker 1: came up, here's our policy recommendations, and then that kind 373 00:21:32,600 --> 00:21:35,280 Speaker 1: of dropped down to the major G twenty countries, and 374 00:21:35,280 --> 00:21:37,000 Speaker 1: then each country has kind of been working on this, 375 00:21:37,400 --> 00:21:40,280 Speaker 1: and the recommendations in the US came out last fall, 376 00:21:40,840 --> 00:21:43,600 Speaker 1: which was the p w G Report on Stable points, 377 00:21:44,000 --> 00:21:46,520 Speaker 1: and they said, we need to regulate these. You need 378 00:21:46,560 --> 00:21:49,399 Speaker 1: to regulate them within the kind of payment and credential 379 00:21:49,440 --> 00:21:52,800 Speaker 1: supervision standards of the financial system, and we need to 380 00:21:52,800 --> 00:21:55,680 Speaker 1: do that, they said, quote unquote urgently because there's something 381 00:21:55,720 --> 00:21:58,240 Speaker 1: like a run risk that could happen, or theseings could 382 00:21:58,280 --> 00:22:01,520 Speaker 1: get much bigger and get what happened there was a 383 00:22:01,520 --> 00:22:04,400 Speaker 1: collapse of one of these so called stable coins, and 384 00:22:04,840 --> 00:22:08,040 Speaker 1: that you know, emphasize it. Now Congress is really working 385 00:22:08,040 --> 00:22:10,719 Speaker 1: on this very intently, and they were before the Terrort collapse, 386 00:22:10,800 --> 00:22:13,919 Speaker 1: like bipartisan effort in the House and the Senate and 387 00:22:13,920 --> 00:22:17,960 Speaker 1: others working on this. And now there's a definition and 388 00:22:18,080 --> 00:22:20,760 Speaker 1: you know there's a uh, you know, a rumored bill, 389 00:22:21,160 --> 00:22:23,879 Speaker 1: although I think it's pretty confirmed at this point, of 390 00:22:23,960 --> 00:22:29,000 Speaker 1: a Payment Stable Point Act. So it's clearly defining these 391 00:22:29,080 --> 00:22:34,240 Speaker 1: are for payments. They exist under the Payment System Banking 392 00:22:34,240 --> 00:22:40,639 Speaker 1: Credential Supervision framework and you know, issuers of these have 393 00:22:40,760 --> 00:22:44,280 Speaker 1: to sit under we'll have to presumably if these laws 394 00:22:44,320 --> 00:22:47,359 Speaker 1: come into effect, have to sit under that kind of 395 00:22:47,359 --> 00:22:51,800 Speaker 1: registration and supervision um framework. And you're seeing similar things 396 00:22:51,840 --> 00:22:56,520 Speaker 1: emerged in the UK in Singapore have just gone into law. 397 00:22:56,640 --> 00:23:00,399 Speaker 1: In the EU there's a whole framework for stable coins 398 00:23:00,520 --> 00:23:04,400 Speaker 1: which will go into effect, and so kind of the 399 00:23:04,400 --> 00:23:07,960 Speaker 1: the international regulatory community came up with the framework. It's 400 00:23:08,040 --> 00:23:11,160 Speaker 1: kind of finding its way down into parliaments and congresses 401 00:23:11,200 --> 00:23:14,359 Speaker 1: and others, and it's starting to define these things. Now. 402 00:23:14,760 --> 00:23:17,119 Speaker 1: I think what you'll end up with is you're going 403 00:23:17,200 --> 00:23:22,760 Speaker 1: to have you know, very clearly defined you know, payment 404 00:23:23,480 --> 00:23:27,320 Speaker 1: infrastructure type stable coins like USDC I think clearly falls 405 00:23:27,359 --> 00:23:29,560 Speaker 1: in that. And then you're gonna have other things that 406 00:23:29,600 --> 00:23:34,200 Speaker 1: are probably classified in other ways. They might be synthetic derivatives, 407 00:23:34,400 --> 00:23:37,560 Speaker 1: they might be classified as securities depending on what the 408 00:23:37,560 --> 00:23:40,600 Speaker 1: activity is and there and there may be some categories 409 00:23:40,600 --> 00:23:43,119 Speaker 1: which regulators are just still scratching their heads on and 410 00:23:43,119 --> 00:23:46,720 Speaker 1: are not really comfortable regulating, but may put a perimeter 411 00:23:46,960 --> 00:23:50,159 Speaker 1: around their use in markets. And so I would not 412 00:23:50,200 --> 00:23:55,920 Speaker 1: be surprised if, you know, markets regulators in different markets said, 413 00:23:56,440 --> 00:23:58,639 Speaker 1: you know, you can't put an algorithmic stable point on 414 00:23:58,720 --> 00:24:01,879 Speaker 1: your exchange and co mingle that with these other things. 415 00:24:02,280 --> 00:24:05,320 Speaker 1: And the analogy that I like to use is, you know, 416 00:24:05,359 --> 00:24:08,440 Speaker 1: if you go into a supermarket and you go down 417 00:24:08,520 --> 00:24:10,560 Speaker 1: one of the one of the aisles and you've got 418 00:24:10,880 --> 00:24:14,680 Speaker 1: rat poison and baby food next to each other, and 419 00:24:15,160 --> 00:24:18,000 Speaker 1: they're they're kind of positioned similarly. That's a real problem. 420 00:24:18,400 --> 00:24:21,400 Speaker 1: And so market conduct is a real issue, and now 421 00:24:21,440 --> 00:24:23,520 Speaker 1: regulators are focused a lot more on that, and so 422 00:24:23,560 --> 00:24:26,560 Speaker 1: I think you'll see some things emerge which make it 423 00:24:26,640 --> 00:24:29,640 Speaker 1: clear for people. So I think one of the confusing 424 00:24:29,720 --> 00:24:33,520 Speaker 1: things about stable coins um to lots of people is 425 00:24:33,640 --> 00:24:40,480 Speaker 1: it's kind of hard to disaggregate technological innovation from regulatory arbitrage. 426 00:24:41,200 --> 00:24:45,320 Speaker 1: And you talked about, you know, the power of Internet 427 00:24:45,359 --> 00:24:48,199 Speaker 1: powered dollars, So I guess my question is, like, a, 428 00:24:48,520 --> 00:24:53,800 Speaker 1: what changes in the world once we have internet powered 429 00:24:54,080 --> 00:24:58,040 Speaker 1: dollars or feat digital currency, whatever you want to call it, 430 00:24:58,440 --> 00:25:02,359 Speaker 1: and be can you talk little bit more about that 431 00:25:02,480 --> 00:25:06,000 Speaker 1: regulatory arbitrage idea, because I think there is a sense 432 00:25:06,080 --> 00:25:09,359 Speaker 1: that you know, if I send money through a bank, sure, 433 00:25:09,640 --> 00:25:14,320 Speaker 1: the bank probably has creaky infrastructure and is using like 434 00:25:14,600 --> 00:25:18,280 Speaker 1: some old coding language that no one else does anymore, 435 00:25:18,480 --> 00:25:20,840 Speaker 1: and it takes ages to send any money. But on 436 00:25:20,880 --> 00:25:23,200 Speaker 1: the other hand, part of the reason it takes ages 437 00:25:23,240 --> 00:25:25,919 Speaker 1: to send money might also be that they're doing k 438 00:25:26,200 --> 00:25:29,080 Speaker 1: y C on their remittances and they're checking to make 439 00:25:29,119 --> 00:25:32,040 Speaker 1: sure that you're not sending money to a terrorist or 440 00:25:32,119 --> 00:25:35,639 Speaker 1: something like that. So how do you sort of disaggregate 441 00:25:35,960 --> 00:25:42,120 Speaker 1: those two things, that the innovation versus the arbitrage criticism? Yeah, so, 442 00:25:42,280 --> 00:25:44,600 Speaker 1: I mean there are a bunch of pieces to that. 443 00:25:45,240 --> 00:25:47,840 Speaker 1: I think the first is, well, let's just talk about 444 00:25:47,840 --> 00:25:52,160 Speaker 1: the innovation side first, which is the ability to have 445 00:25:53,000 --> 00:25:57,800 Speaker 1: a representation of a dollar that you can directly transact 446 00:25:57,960 --> 00:26:02,679 Speaker 1: with any counterparty in the world at a fraction of 447 00:26:02,720 --> 00:26:07,639 Speaker 1: a second, with settlement finality, with very high security and 448 00:26:07,680 --> 00:26:12,320 Speaker 1: privacy assurances, with significant throughput with a cost that is, 449 00:26:12,800 --> 00:26:15,639 Speaker 1: you know, a nickel down to a tenth of a 450 00:26:15,720 --> 00:26:19,800 Speaker 1: penny is really powerful that does not exist in the 451 00:26:19,920 --> 00:26:24,280 Speaker 1: legacy financial system. And so everything from what we think 452 00:26:24,280 --> 00:26:29,200 Speaker 1: of as remittances, which is you know, beaming value amongst 453 00:26:29,359 --> 00:26:34,000 Speaker 1: businesses or individuals around the world, to the entire industry 454 00:26:34,000 --> 00:26:38,040 Speaker 1: of payments in the world, which is effectively interchange or 455 00:26:38,040 --> 00:26:43,959 Speaker 1: interchange plus, where businesses are paying effectively in many cases 456 00:26:44,000 --> 00:26:46,840 Speaker 1: two or three percent of their gross sales for the 457 00:26:46,960 --> 00:26:50,879 Speaker 1: right to receive a digital payment, to even the behavior 458 00:26:51,000 --> 00:26:56,680 Speaker 1: of markets themselves, so capital markets, the ability for collateral 459 00:26:57,119 --> 00:27:02,640 Speaker 1: to settle, the ability for people to take positions in markets, 460 00:27:02,680 --> 00:27:06,920 Speaker 1: and the ability to kind of move between activities and markets. 461 00:27:07,720 --> 00:27:10,040 Speaker 1: You know, we saw this with various things that happened 462 00:27:10,040 --> 00:27:12,760 Speaker 1: in the plumbing of settlement that we're creating all kinds 463 00:27:12,760 --> 00:27:16,240 Speaker 1: of issues for Robin Hood and other players. One of 464 00:27:16,240 --> 00:27:19,800 Speaker 1: the things that's really interesting about stable coins is that 465 00:27:20,000 --> 00:27:23,879 Speaker 1: the customers who I consider to be the most demanding 466 00:27:23,920 --> 00:27:28,679 Speaker 1: customers in the world for dollar market infrastructure are avid 467 00:27:28,760 --> 00:27:31,359 Speaker 1: users of stable coins, and those are electronic markets firms. 468 00:27:31,520 --> 00:27:38,679 Speaker 1: Electronic markets firms want capital efficiency, speed, settlement assurance, and 469 00:27:38,720 --> 00:27:41,480 Speaker 1: these are like critical to them and how they operate, 470 00:27:41,800 --> 00:27:45,040 Speaker 1: and they love this infrastructure because it's so much superior 471 00:27:45,119 --> 00:27:50,200 Speaker 1: to the existing correspondent banking system. So even in the back, 472 00:27:50,320 --> 00:27:53,000 Speaker 1: in the depths and the bowels of capital markets and 473 00:27:53,040 --> 00:27:56,280 Speaker 1: the functioning of capital markets, I believe stable coins can 474 00:27:56,280 --> 00:27:58,600 Speaker 1: play a really big role. So it touches everything from 475 00:27:58,960 --> 00:28:02,720 Speaker 1: retail payments to business payments, to how cash is managed 476 00:28:02,720 --> 00:28:08,000 Speaker 1: for corporations, to the functioning of markets and capital markets. 477 00:28:08,320 --> 00:28:10,400 Speaker 1: I think it played. It can play a very significant 478 00:28:10,480 --> 00:28:16,359 Speaker 1: role in reducing cost, increasing speed, increasing transparency, auditability because 479 00:28:16,400 --> 00:28:19,320 Speaker 1: of the nature of blockchains. And that's not to even 480 00:28:19,480 --> 00:28:23,159 Speaker 1: begin to talk about what we got me really excited 481 00:28:23,160 --> 00:28:25,240 Speaker 1: about this in the first place, which is this idea 482 00:28:25,359 --> 00:28:30,119 Speaker 1: of having programmable dollars on the Internet or having programmable money. 483 00:28:30,200 --> 00:28:34,439 Speaker 1: There's never been a mechanism where you can write tamper 484 00:28:34,520 --> 00:28:40,200 Speaker 1: resistance software that codifies economic contracts that can execute between 485 00:28:40,240 --> 00:28:42,880 Speaker 1: counterparties on the end directly on the Internet, whether it's 486 00:28:42,880 --> 00:28:46,240 Speaker 1: a business or a labor relationship or other. And we're 487 00:28:46,280 --> 00:28:50,160 Speaker 1: starting to see that as a as a really meaningful 488 00:28:50,160 --> 00:28:52,240 Speaker 1: thing and defies. An example of that we could come 489 00:28:52,240 --> 00:28:54,840 Speaker 1: back to that, which is the power of programmable money 490 00:28:54,880 --> 00:28:58,040 Speaker 1: is when you start to see protocols developed that are 491 00:28:58,720 --> 00:29:00,800 Speaker 1: building blocks and they're kind of like lego bricks that 492 00:29:00,840 --> 00:29:03,480 Speaker 1: people are putting together for the use of money. So 493 00:29:03,560 --> 00:29:06,200 Speaker 1: there's a lot that's there now. The regulatory arbitrage question, 494 00:29:06,240 --> 00:29:09,240 Speaker 1: I think is a great one, and there's always been 495 00:29:09,280 --> 00:29:11,160 Speaker 1: this issue, and I think it's a it's a really 496 00:29:11,240 --> 00:29:14,920 Speaker 1: vexing issue, and I don't think this is just a hey, 497 00:29:14,960 --> 00:29:17,200 Speaker 1: we're just like waving our hands over here so that 498 00:29:17,240 --> 00:29:21,040 Speaker 1: everyone can have, you know, some new ultra libertarian system 499 00:29:21,040 --> 00:29:23,160 Speaker 1: of money. That's I mean, there's certainly are people who 500 00:29:23,160 --> 00:29:27,640 Speaker 1: are doing that, but I think at the core we've 501 00:29:27,680 --> 00:29:32,960 Speaker 1: not dealt with how the implications of money on the 502 00:29:33,000 --> 00:29:36,600 Speaker 1: public Internet and the you know, the the issue from 503 00:29:36,600 --> 00:29:40,200 Speaker 1: a regulatory perspective is, well, governments actually care a lot 504 00:29:40,320 --> 00:29:43,360 Speaker 1: about you know, the safety and soundness of those instruments, 505 00:29:43,360 --> 00:29:45,120 Speaker 1: which we kind of touched on a little bit. They 506 00:29:45,120 --> 00:29:50,400 Speaker 1: also care about Essentially, the social contract that financial intermediaries have, 507 00:29:50,880 --> 00:29:53,840 Speaker 1: and the social contract that they have is that they 508 00:29:53,880 --> 00:29:57,000 Speaker 1: are agents of law enforcement and they have a responsibility 509 00:29:57,040 --> 00:30:00,160 Speaker 1: to police transactions and report them to the government in 510 00:30:00,240 --> 00:30:03,400 Speaker 1: most parts of the world. And so can you do that? 511 00:30:03,560 --> 00:30:07,160 Speaker 1: And the answer is yes, you can. But the answer isn't, well, 512 00:30:07,320 --> 00:30:09,440 Speaker 1: let's just use all the gum and bailing wire of 513 00:30:09,480 --> 00:30:12,000 Speaker 1: the existing financial system. It's actually, how do we actually 514 00:30:12,120 --> 00:30:18,360 Speaker 1: use the building blocks of cryptography to enable identity proofs, 515 00:30:18,400 --> 00:30:23,640 Speaker 1: of identity proofs about individuals and entities on these networks 516 00:30:23,680 --> 00:30:28,520 Speaker 1: and actually improve privacy, improve security, which are important and 517 00:30:28,840 --> 00:30:33,120 Speaker 1: important values that we should uphold, but also ensure that 518 00:30:33,480 --> 00:30:36,000 Speaker 1: these kinds of compliance obligations can be met. And you're 519 00:30:36,000 --> 00:30:40,360 Speaker 1: seeing that already happening today. You're seeing companies that can 520 00:30:40,520 --> 00:30:44,640 Speaker 1: operate with you know, a hundred million plus consumers that 521 00:30:44,720 --> 00:30:49,560 Speaker 1: are on their platforms with very very detailed compliance infrastructure, 522 00:30:49,600 --> 00:30:52,240 Speaker 1: and we certainly do that in an institutional level. So 523 00:30:52,320 --> 00:30:55,120 Speaker 1: I I think it's a kind of false dichotomy in 524 00:30:55,480 --> 00:30:57,240 Speaker 1: a sense. So I want to ask you a question, sorry, 525 00:30:57,680 --> 00:31:02,360 Speaker 1: specifically about that and the idea that it's like, okay, 526 00:31:02,400 --> 00:31:04,360 Speaker 1: you know, and again I sort of mentioned it in 527 00:31:04,400 --> 00:31:07,680 Speaker 1: the intro, some of these getting away from some of 528 00:31:08,400 --> 00:31:11,400 Speaker 1: the sort of pure libertarians, cipher punk roots of crypto. 529 00:31:11,480 --> 00:31:14,320 Speaker 1: But you know, if the government comes to you circle 530 00:31:14,320 --> 00:31:17,720 Speaker 1: and says, you know what it looks like, this person 531 00:31:18,000 --> 00:31:20,760 Speaker 1: who holds a bunch of U S d C is 532 00:31:20,800 --> 00:31:23,520 Speaker 1: a terrorist or a suspected terrorist or a drug deal 533 00:31:23,640 --> 00:31:26,520 Speaker 1: or something like that, I presume, okay, you could freeze 534 00:31:26,520 --> 00:31:29,920 Speaker 1: those coins easily. How do you deal with that internationally? 535 00:31:30,040 --> 00:31:32,360 Speaker 1: You know what if say just and just throwing out, 536 00:31:32,360 --> 00:31:35,480 Speaker 1: you know, the UK government wants you to freeze the 537 00:31:35,480 --> 00:31:38,920 Speaker 1: accounts of someone living in the US, or the Turkish government, 538 00:31:39,240 --> 00:31:43,040 Speaker 1: someone an activist in the US. How do you deal 539 00:31:43,120 --> 00:31:47,440 Speaker 1: with requests to freeze wallets and comply with governments and 540 00:31:47,480 --> 00:31:51,040 Speaker 1: regulatory regimes all over the world. It's a great question, 541 00:31:51,640 --> 00:31:55,920 Speaker 1: and I think many of these scenarios have not been 542 00:31:55,960 --> 00:32:03,160 Speaker 1: pressure tested. So USDC as an industry act and circles obligations. Specifically, 543 00:32:03,880 --> 00:32:07,840 Speaker 1: we have obligations as a regulated financial institution here in 544 00:32:07,880 --> 00:32:10,920 Speaker 1: the United States. We are subject to the laws of 545 00:32:10,920 --> 00:32:14,680 Speaker 1: the United States. Any transactions that we are directly involved 546 00:32:14,680 --> 00:32:19,360 Speaker 1: in where we are in fact intermediating that transaction, we 547 00:32:19,440 --> 00:32:24,560 Speaker 1: have very clear statutory obligations to block, to stop, to report, 548 00:32:24,800 --> 00:32:26,800 Speaker 1: to do all these things. And we have a long 549 00:32:26,840 --> 00:32:30,480 Speaker 1: track record of working constructively with with law enforcement, including 550 00:32:30,520 --> 00:32:33,400 Speaker 1: law enforcement requests from around the world. Now when it 551 00:32:33,440 --> 00:32:39,680 Speaker 1: comes to USDC and circulation, there's a very different bar there, 552 00:32:40,440 --> 00:32:45,320 Speaker 1: and you know, we are not responsible for all the 553 00:32:45,360 --> 00:32:48,800 Speaker 1: activity of someone who is using a digital currency every 554 00:32:48,920 --> 00:32:52,120 Speaker 1: in every corner of the world. There are regulations, however, 555 00:32:52,600 --> 00:32:55,479 Speaker 1: in markets all around the world, and these have been 556 00:32:55,640 --> 00:33:00,280 Speaker 1: established through international anti money laundering and countering term and 557 00:33:00,360 --> 00:33:04,520 Speaker 1: finance standards organizations like fat IF, the Financial Action Task Force. 558 00:33:04,960 --> 00:33:08,360 Speaker 1: There are standards now where if you are in the 559 00:33:08,440 --> 00:33:13,480 Speaker 1: business of intermediating digital asset transactions, you have to register 560 00:33:13,560 --> 00:33:16,800 Speaker 1: in your country, you have to have demonstrated anti money 561 00:33:16,880 --> 00:33:20,680 Speaker 1: laundering and CTF programs, you are under supervision and inspection. 562 00:33:20,840 --> 00:33:23,480 Speaker 1: And that's happening all over the world, and there's sort 563 00:33:23,520 --> 00:33:26,040 Speaker 1: of under fat IF, there's kind of like no place 564 00:33:26,080 --> 00:33:29,840 Speaker 1: to hide, and that is now uniform that's being rolled 565 00:33:29,880 --> 00:33:33,800 Speaker 1: out everywhere. And so as a as an individual, you know, 566 00:33:34,040 --> 00:33:35,960 Speaker 1: if you want to operate in then in this new 567 00:33:36,000 --> 00:33:39,120 Speaker 1: world with digital assets, you're increasingly operating in a world 568 00:33:39,160 --> 00:33:44,240 Speaker 1: where the intermediaries are are having to meet the statutory requirements. 569 00:33:44,440 --> 00:33:47,600 Speaker 1: We do have a certain obligation though, which is we 570 00:33:47,680 --> 00:33:51,200 Speaker 1: have the ability to under a what we would deem 571 00:33:51,320 --> 00:33:55,560 Speaker 1: to be a binding court order from a competent jurisdiction 572 00:33:55,720 --> 00:33:59,480 Speaker 1: in the US, we have the ability to block an 573 00:33:59,480 --> 00:34:04,640 Speaker 1: address and transacting and that has happened I believe, eighteen 574 00:34:04,760 --> 00:34:08,080 Speaker 1: times in the history of U SDC, and the vast 575 00:34:08,120 --> 00:34:10,920 Speaker 1: majority of those, in fact, I think nearly all of 576 00:34:10,920 --> 00:34:16,160 Speaker 1: those are specific addresses that the Office of Foreign Asset 577 00:34:16,200 --> 00:34:20,960 Speaker 1: Control oh FHAK has deemed to be sanctioned addresses on 578 00:34:21,000 --> 00:34:23,960 Speaker 1: the blockchain. And so when the when, when what's called 579 00:34:24,000 --> 00:34:27,879 Speaker 1: the s d N list, the Sanctions Named Entity List 580 00:34:28,200 --> 00:34:30,600 Speaker 1: is updated, we are we get a real time do 581 00:34:30,840 --> 00:34:33,200 Speaker 1: that and if that happens, then there's this we have 582 00:34:33,239 --> 00:34:37,800 Speaker 1: a sort of statutory obligation to prevent transactions from happening 583 00:34:37,800 --> 00:34:40,959 Speaker 1: on that. Now I can imagine, as you just did, 584 00:34:41,320 --> 00:34:43,919 Speaker 1: scenarios in the future which are going to pressure test 585 00:34:43,960 --> 00:34:47,640 Speaker 1: some of this, and I think is it raises very 586 00:34:47,680 --> 00:34:51,040 Speaker 1: complex questions. I think these are questions that are not 587 00:34:51,280 --> 00:34:55,480 Speaker 1: dissimilar from questions raised over should Apple provide governments with 588 00:34:55,760 --> 00:35:00,480 Speaker 1: a backdoor to iPhones. They're they're kind of fundamental kind 589 00:35:00,480 --> 00:35:05,640 Speaker 1: of financial integrity issues and and this is an opportunity 590 00:35:06,560 --> 00:35:11,160 Speaker 1: for policymakers everywhere in the world as regulations come into 591 00:35:11,160 --> 00:35:15,840 Speaker 1: this space to really figure out what are the inherent 592 00:35:15,960 --> 00:35:21,520 Speaker 1: values of internet financial system and what obligations do different 593 00:35:21,640 --> 00:35:25,719 Speaker 1: entities have. And the preservation of security and privacy are 594 00:35:25,840 --> 00:35:29,120 Speaker 1: very important in information and data and communications, but there 595 00:35:29,160 --> 00:35:31,520 Speaker 1: are boundaries to that and what are those boundaries and 596 00:35:31,520 --> 00:35:34,319 Speaker 1: how are there's going to be tested? So it's still 597 00:35:34,320 --> 00:35:37,080 Speaker 1: the early innings on this, to be clear, um, and 598 00:35:37,400 --> 00:35:56,200 Speaker 1: I don't pretend to have all the answers either, So 599 00:35:56,480 --> 00:35:59,960 Speaker 1: setting aside regulation for a second, and I realize that's 600 00:36:00,080 --> 00:36:02,120 Speaker 1: kind of a big thing to set aside. But there 601 00:36:02,239 --> 00:36:07,480 Speaker 1: is the sort of other existential threat hovering over stable coins, 602 00:36:07,480 --> 00:36:11,799 Speaker 1: which is competition from central banks. So central banks considering 603 00:36:11,920 --> 00:36:15,680 Speaker 1: issuing their own digital currencies in one way or another. 604 00:36:16,160 --> 00:36:21,040 Speaker 1: How would the successful launch of a CBDC, How would 605 00:36:21,080 --> 00:36:25,440 Speaker 1: that affect your business? Yeah, I would kind of maybe 606 00:36:25,480 --> 00:36:28,080 Speaker 1: reframe it a bit. And this is certainly a topic 607 00:36:28,160 --> 00:36:32,280 Speaker 1: that falls into the frequently asked questions topics in our world. 608 00:36:32,760 --> 00:36:38,040 Speaker 1: I think today central banks and and the regulators that 609 00:36:38,080 --> 00:36:42,560 Speaker 1: are embedded in central banks. Their highest priority right now 610 00:36:43,040 --> 00:36:47,840 Speaker 1: is putting in place supervisory frameworks for private sector digital 611 00:36:47,840 --> 00:36:51,200 Speaker 1: currency activity and innovation in the form of stable points. 612 00:36:51,560 --> 00:36:54,080 Speaker 1: And I think you've seen this in the testimony of 613 00:36:54,560 --> 00:36:59,800 Speaker 1: Chairman Powell and Secretary Yellen, who said private sector stable 614 00:36:59,840 --> 00:37:01,920 Speaker 1: cooin bring a lot, there's a lot of value. We 615 00:37:01,960 --> 00:37:04,840 Speaker 1: need to have a clear regulatory framework. And I think 616 00:37:04,920 --> 00:37:10,360 Speaker 1: increasingly the view is that private sector innovation is happening now. 617 00:37:11,520 --> 00:37:14,520 Speaker 1: The sort of open internet infrastructure in the form of 618 00:37:14,760 --> 00:37:20,480 Speaker 1: blockchains and digital assets is a very significant, dynamic economic 619 00:37:20,560 --> 00:37:24,760 Speaker 1: sector that is growing and is a source of competitiveness 620 00:37:24,800 --> 00:37:29,000 Speaker 1: increasingly around the world. And the focus is on let's 621 00:37:29,160 --> 00:37:33,800 Speaker 1: let's work with this private sector and public infrastructure model 622 00:37:34,200 --> 00:37:36,719 Speaker 1: and developed that. Now there continues to be what all 623 00:37:36,800 --> 00:37:40,360 Speaker 1: kind of characterizes as as research in the realm of CBDC. 624 00:37:40,920 --> 00:37:46,120 Speaker 1: It's not clear to me that many central banks ultimately 625 00:37:46,160 --> 00:37:49,920 Speaker 1: want to be in the business of providing retail payment systems. 626 00:37:50,160 --> 00:37:54,000 Speaker 1: There It is not a fundamental core competency. And in fact, 627 00:37:54,040 --> 00:37:57,400 Speaker 1: I think one could argue that the vast majority of 628 00:37:57,400 --> 00:38:01,719 Speaker 1: individuals and entities and business is would rather that there 629 00:38:01,800 --> 00:38:05,920 Speaker 1: be an air gap between their wallet or their pocketbook 630 00:38:06,320 --> 00:38:09,600 Speaker 1: and their money and the government. And that is actually 631 00:38:09,600 --> 00:38:14,080 Speaker 1: how money in circulation works today. It's intermediated. And so 632 00:38:14,120 --> 00:38:17,359 Speaker 1: I think that would continue. Now, could there be wholesale 633 00:38:17,680 --> 00:38:23,240 Speaker 1: upgrades to central bank clearing systems that use cryptographic money 634 00:38:23,280 --> 00:38:26,360 Speaker 1: and distributed ledger technology? Yes, you know, as I like 635 00:38:26,440 --> 00:38:30,720 Speaker 1: to say, the dollar is actually a cluster of Oracle 636 00:38:31,040 --> 00:38:34,400 Speaker 1: databases running on on on micro computers. That as actually 637 00:38:34,400 --> 00:38:36,600 Speaker 1: what the architecture of the dollars you could you could 638 00:38:36,640 --> 00:38:39,880 Speaker 1: you could really benefit from upgrading that, Like there's a 639 00:38:40,080 --> 00:38:42,759 Speaker 1: there's a better, maybe wholesale architecture, And in fact, a 640 00:38:42,760 --> 00:38:46,239 Speaker 1: lot of the buzz now is like wholesale CBC, like 641 00:38:46,280 --> 00:38:48,319 Speaker 1: maybe there's a way to do something that could work 642 00:38:48,320 --> 00:38:50,840 Speaker 1: between central banks and so and and and actually, like 643 00:38:50,880 --> 00:38:54,319 Speaker 1: you could make a pretty good argument for like modernizing infrastructure. 644 00:38:54,600 --> 00:38:58,600 Speaker 1: But I think our view, and I'm granted I am 645 00:38:58,600 --> 00:39:02,359 Speaker 1: certainly biased in this, our view is that the velocity 646 00:39:02,400 --> 00:39:06,600 Speaker 1: of technical innovation that's happening right now in blockchain infrastructure 647 00:39:07,040 --> 00:39:10,160 Speaker 1: and in the delivery of this technology out to kind 648 00:39:10,200 --> 00:39:14,200 Speaker 1: of global scale users on the internet and businesses on 649 00:39:14,239 --> 00:39:17,160 Speaker 1: the Internet, that's that's like a here now thing it's happening, 650 00:39:17,200 --> 00:39:19,400 Speaker 1: it's going to scale out in the next few years. 651 00:39:19,400 --> 00:39:22,000 Speaker 1: That's why regulators are so focused in on it, because 652 00:39:22,040 --> 00:39:25,799 Speaker 1: this could become Internet scale in the next few years. 653 00:39:25,880 --> 00:39:28,759 Speaker 1: And that is how the digital currency is going to 654 00:39:28,800 --> 00:39:32,600 Speaker 1: become something that people are using in everyday life. And 655 00:39:32,880 --> 00:39:35,840 Speaker 1: it's interesting, you know, if you look even you know, recently, 656 00:39:35,920 --> 00:39:38,880 Speaker 1: I think there was a report from Japan where the 657 00:39:38,920 --> 00:39:42,440 Speaker 1: Central Bank in Japan basically determined that there's just no 658 00:39:42,560 --> 00:39:45,840 Speaker 1: interest in a CDC from the government. But at the 659 00:39:45,880 --> 00:39:49,760 Speaker 1: same time, many there are startups in the digital assets 660 00:39:49,760 --> 00:39:52,960 Speaker 1: space and certainly other banks that are launching end stable 661 00:39:53,000 --> 00:39:55,640 Speaker 1: point projects. And so I think that this is something 662 00:39:55,680 --> 00:39:58,120 Speaker 1: you're going to see play out more, especially over the 663 00:39:58,160 --> 00:40:01,759 Speaker 1: next year or two, which is private sector activity in 664 00:40:01,760 --> 00:40:05,680 Speaker 1: this space is going to grow. This is you know, um, 665 00:40:05,880 --> 00:40:07,600 Speaker 1: what would you would you like to go back to 666 00:40:07,719 --> 00:40:10,560 Speaker 1: mob bell or do you want you know, Skype and 667 00:40:10,600 --> 00:40:13,120 Speaker 1: signal and and you know kind of software on the 668 00:40:13,120 --> 00:40:16,879 Speaker 1: internet for for how you're doing communications. And I think 669 00:40:16,880 --> 00:40:19,680 Speaker 1: it's similar kind of dynamic that will play out here. Yeah, 670 00:40:19,719 --> 00:40:23,400 Speaker 1: I'm kind of convinced that the whole CBDC conversation is 671 00:40:23,440 --> 00:40:27,240 Speaker 1: just an excuse for regulators and central bankers to sound 672 00:40:27,600 --> 00:40:30,600 Speaker 1: interesting on panels. But anyway, I'm sorry to be so cynical. 673 00:40:30,600 --> 00:40:33,319 Speaker 1: I want to move on. You know, you mentioned that 674 00:40:33,520 --> 00:40:38,000 Speaker 1: in the primary public blockchain over which USDC has traded 675 00:40:38,040 --> 00:40:41,120 Speaker 1: as ethereum, but not just on ethereum, you're actually I 676 00:40:41,160 --> 00:40:45,319 Speaker 1: think I'm looking at website nine chains right now, Algorand 677 00:40:45,440 --> 00:40:47,880 Speaker 1: and Salana and Toronto and some of these other avalanche 678 00:40:48,200 --> 00:40:51,480 Speaker 1: and presumably more. I want to ask, it's been a 679 00:40:51,480 --> 00:40:54,600 Speaker 1: while since there's been a really big contentious chain split 680 00:40:54,640 --> 00:40:57,720 Speaker 1: in the crypto world. And the biggest one that really 681 00:40:57,800 --> 00:41:01,120 Speaker 1: was a big fight was a big win in bitcoin cash. 682 00:41:01,360 --> 00:41:04,080 Speaker 1: There was also Ethereum and a theorem classic that was 683 00:41:04,120 --> 00:41:06,840 Speaker 1: before you came on the scene. What did you What 684 00:41:06,880 --> 00:41:09,719 Speaker 1: would you do if there's another one? And it's possible 685 00:41:09,880 --> 00:41:12,000 Speaker 1: that with the Theeum we could see it, because with 686 00:41:12,040 --> 00:41:15,439 Speaker 1: the merge happening, there could theoretically be new chains where 687 00:41:15,480 --> 00:41:17,200 Speaker 1: the new proof of work of the new proof of 688 00:41:17,239 --> 00:41:20,719 Speaker 1: state chain. You know, if when past forks, maybe not 689 00:41:20,800 --> 00:41:23,799 Speaker 1: a big deal because everyone had the same asset represented 690 00:41:23,880 --> 00:41:26,840 Speaker 1: on both chains, and it doesn't really matter, you know, 691 00:41:27,080 --> 00:41:29,480 Speaker 1: you just see which one wins out. I would assume 692 00:41:29,560 --> 00:41:32,040 Speaker 1: you have to choose, and people have written about this. 693 00:41:32,160 --> 00:41:34,800 Speaker 1: You could be in a position where you circle or 694 00:41:34,840 --> 00:41:39,359 Speaker 1: the kingmaker of a fork, deciding which chain someone's U 695 00:41:39,440 --> 00:41:43,160 Speaker 1: S d C holdings actually have claimed to the dollars 696 00:41:43,200 --> 00:41:47,400 Speaker 1: in your bank account. And so with this ethereum merge 697 00:41:47,440 --> 00:41:49,799 Speaker 1: happening in some of the ambiguity about that and the 698 00:41:49,840 --> 00:41:52,319 Speaker 1: possibility for a contentious split maybe on some of these 699 00:41:52,320 --> 00:41:55,120 Speaker 1: other chains, how do you think of your role as 700 00:41:55,160 --> 00:41:57,680 Speaker 1: a kingmaker and who gets the dollars? It's a very 701 00:41:57,800 --> 00:42:04,680 Speaker 1: nuanced issue in question. Obviously, we look very clearly at 702 00:42:05,520 --> 00:42:10,000 Speaker 1: the broad community and the activity of that community. Where 703 00:42:10,280 --> 00:42:13,240 Speaker 1: is the leadership from a technical perspective in that community, 704 00:42:13,360 --> 00:42:17,160 Speaker 1: Where are the major projects and protocols and applications and 705 00:42:17,200 --> 00:42:20,200 Speaker 1: infrastructure providers and tooling companies and everyone. What are they 706 00:42:20,200 --> 00:42:24,600 Speaker 1: focused on? And we want to be aligned with the 707 00:42:25,000 --> 00:42:29,279 Speaker 1: overwhelming kind of consensus in the community. UM Now, we 708 00:42:29,360 --> 00:42:34,000 Speaker 1: have to make decisions that are rooted in safety, soundness, security, 709 00:42:34,120 --> 00:42:37,719 Speaker 1: So those are like paramount. We can't do anything that 710 00:42:37,719 --> 00:42:43,440 Speaker 1: would jeopardize the safety or or security of the USDC 711 00:42:43,760 --> 00:42:47,640 Speaker 1: as a protocol. And so, for example, if the merge 712 00:42:47,680 --> 00:42:50,560 Speaker 1: went forward and then it failed and it needed to 713 00:42:50,560 --> 00:42:52,480 Speaker 1: be rolled back. Like these are things we have to 714 00:42:52,560 --> 00:42:57,520 Speaker 1: have very very very detailed operational playbooks that are deeply 715 00:42:57,560 --> 00:43:01,120 Speaker 1: aligned and where we're working in concert with all of 716 00:43:01,160 --> 00:43:04,160 Speaker 1: the other actors in the ecosystem during that process. And 717 00:43:04,160 --> 00:43:07,080 Speaker 1: that's exactly what we're doing without getting into all the details. 718 00:43:07,120 --> 00:43:10,719 Speaker 1: So there's a kind of operational risk management piece of this, 719 00:43:11,280 --> 00:43:13,960 Speaker 1: and fundamental safety sound a security piece of this. So 720 00:43:13,960 --> 00:43:17,480 Speaker 1: so those are the most important things, but over overall, 721 00:43:17,640 --> 00:43:23,120 Speaker 1: the focuses on, you know, where where is that community going, 722 00:43:23,640 --> 00:43:26,880 Speaker 1: And in the case of Ethereum, it's it's pretty clear 723 00:43:27,080 --> 00:43:30,360 Speaker 1: where that is um and uh, and it's not possible 724 00:43:30,440 --> 00:43:33,600 Speaker 1: for us to kind of like you said, it's not 725 00:43:33,640 --> 00:43:37,040 Speaker 1: possible for us to have you know, USDC on these 726 00:43:37,560 --> 00:43:40,480 Speaker 1: kind of forked itself. Right, you can't do that. But 727 00:43:40,480 --> 00:43:44,680 Speaker 1: but but if if, for example, there's a large community 728 00:43:45,080 --> 00:43:49,920 Speaker 1: of miners and developers and others that are very committed 729 00:43:49,960 --> 00:43:53,240 Speaker 1: to a proof of work Ethereum and sort of Ethereum 730 00:43:53,239 --> 00:43:56,600 Speaker 1: Classic continues to actually grows and flourishes and so on, 731 00:43:57,000 --> 00:43:59,640 Speaker 1: we would analyze that as a new chain. Is that 732 00:43:59,719 --> 00:44:02,719 Speaker 1: a aim that has a robust developer ecosystem. Is that 733 00:44:02,800 --> 00:44:06,600 Speaker 1: a chain that UM where there's going to be more 734 00:44:06,640 --> 00:44:09,239 Speaker 1: and more people building applications, and we would evaluate that 735 00:44:09,320 --> 00:44:11,480 Speaker 1: against a whole set of criteria that we'd used to 736 00:44:11,480 --> 00:44:15,359 Speaker 1: evaluate any new chain that would be treated completely as 737 00:44:15,360 --> 00:44:18,279 Speaker 1: a new as a new chain UM. So you know, 738 00:44:18,360 --> 00:44:20,839 Speaker 1: we're committed to the merge. We think it's a very 739 00:44:20,920 --> 00:44:25,520 Speaker 1: very important infrastructure UM improvement for ETHERORYUM, but obviously we 740 00:44:25,600 --> 00:44:28,799 Speaker 1: have to look at it first informist from the perspective 741 00:44:28,840 --> 00:44:33,759 Speaker 1: of fundamental safety, sound and security. So since Joe asked 742 00:44:33,800 --> 00:44:36,759 Speaker 1: you a technical question about forks, I'm going to ask 743 00:44:36,800 --> 00:44:40,279 Speaker 1: you a technical question about treasuries. So you know, you 744 00:44:40,280 --> 00:44:44,200 Speaker 1: said earlier in the conversation that Circle is now publishing 745 00:44:44,480 --> 00:44:47,480 Speaker 1: its reserves on a regular basis, and you're doing it 746 00:44:47,520 --> 00:44:51,759 Speaker 1: with a lot of granular detail, including publishing with us UPS, 747 00:44:52,440 --> 00:44:56,040 Speaker 1: and a big portion of your holdings is treasury bonds 748 00:44:56,200 --> 00:44:59,319 Speaker 1: and T bills in particular, And I'm just wondering the 749 00:44:59,440 --> 00:45:03,479 Speaker 1: recent volatility that we've seen in the market for US 750 00:45:03,560 --> 00:45:08,680 Speaker 1: government bonds, the jump and yields, how does that impact 751 00:45:09,320 --> 00:45:12,600 Speaker 1: the backing for USDC and how do you sort of 752 00:45:12,680 --> 00:45:16,600 Speaker 1: manage that type of volatility. So at the at the 753 00:45:16,680 --> 00:45:20,520 Speaker 1: short end, which is basically you know, three months or less. 754 00:45:21,080 --> 00:45:24,920 Speaker 1: It's very very different than you know, two years, five years, 755 00:45:25,000 --> 00:45:29,960 Speaker 1: ten years, etcetera. So obviously we focus on the most liquid, 756 00:45:30,600 --> 00:45:34,360 Speaker 1: the most stable components of that. At the end of 757 00:45:34,360 --> 00:45:38,080 Speaker 1: the day, however, because we are buying short term government 758 00:45:38,080 --> 00:45:43,720 Speaker 1: obligations from the government effectively that are due at face value. 759 00:45:44,360 --> 00:45:48,000 Speaker 1: Unless you believe that the US government itself is not 760 00:45:48,160 --> 00:45:51,560 Speaker 1: going to pay those bonds in the next month or 761 00:45:51,600 --> 00:45:54,440 Speaker 1: two months or three months at the outer limit, you know, 762 00:45:54,800 --> 00:45:57,520 Speaker 1: that's really your fundamental risk, right, that's what you're you're 763 00:45:57,560 --> 00:46:01,560 Speaker 1: testing for. How how something might trade in the market 764 00:46:02,320 --> 00:46:04,480 Speaker 1: is different than when the actual obligation comes due and 765 00:46:04,480 --> 00:46:08,200 Speaker 1: you get paid. You get paid the face value plus interest. 766 00:46:08,480 --> 00:46:10,600 Speaker 1: I mean, that's the way those work. And so we 767 00:46:10,680 --> 00:46:14,560 Speaker 1: are effectively consuming that government obligation risk, that short term 768 00:46:14,600 --> 00:46:17,920 Speaker 1: government obligation risk. We you know, if if the price 769 00:46:17,960 --> 00:46:20,960 Speaker 1: of a three month T bill trades in the market differently, 770 00:46:21,480 --> 00:46:24,680 Speaker 1: I think the question would be, if we were forced 771 00:46:25,040 --> 00:46:29,879 Speaker 1: to redeem a hundred percent of the reserves in a day, 772 00:46:30,000 --> 00:46:32,960 Speaker 1: could we do that? And the answer is yes. With 773 00:46:33,040 --> 00:46:35,800 Speaker 1: the exception of the bank settlement system, itself, which can't 774 00:46:35,800 --> 00:46:38,600 Speaker 1: do that. And so we we do daily stress testing 775 00:46:38,640 --> 00:46:42,239 Speaker 1: to obviously understand what that you know, those anomalies would 776 00:46:42,239 --> 00:46:45,520 Speaker 1: be UM and UM and and we ensure that we 777 00:46:45,640 --> 00:46:49,240 Speaker 1: are able to withstand something like that both with cash 778 00:46:49,360 --> 00:46:51,640 Speaker 1: and with with that with those obligations. But I think 779 00:46:51,680 --> 00:46:55,120 Speaker 1: the the important thing is, you know what the way 780 00:46:55,200 --> 00:47:00,600 Speaker 1: that USDC is structured today as an elect tonic money 781 00:47:00,719 --> 00:47:05,600 Speaker 1: instrument uh in under you know, money transmission statutes, with 782 00:47:05,840 --> 00:47:10,360 Speaker 1: the particular reserve model that the you're you're talking about 783 00:47:10,360 --> 00:47:13,600 Speaker 1: government default risk in a ninety day window. I mean, 784 00:47:13,600 --> 00:47:15,360 Speaker 1: that's really what you're we have to hone in on. 785 00:47:15,400 --> 00:47:17,680 Speaker 1: And if that's the case, we probably have bigger issues 786 00:47:17,680 --> 00:47:21,399 Speaker 1: than whether USDC can can redeem a I have one 787 00:47:21,520 --> 00:47:24,400 Speaker 1: very short question. Are you a customer or sorry, a 788 00:47:24,600 --> 00:47:27,120 Speaker 1: client or trading partner of the primary dealers? Is that 789 00:47:27,160 --> 00:47:31,080 Speaker 1: how you get your paper? So what we have publicly 790 00:47:31,120 --> 00:47:36,719 Speaker 1: disclosed is that black Rock is the asset manager that 791 00:47:37,680 --> 00:47:42,680 Speaker 1: administers the buying and selling of US government treasuries, and 792 00:47:42,760 --> 00:47:46,560 Speaker 1: so black Rock might face the direct treasury auctions or 793 00:47:46,600 --> 00:47:49,879 Speaker 1: the market as a whole um and so black Rock 794 00:47:49,920 --> 00:47:52,520 Speaker 1: access or asset manager and bank of New York Mellon 795 00:47:53,040 --> 00:47:57,040 Speaker 1: is the sole custodian for those securities. One final, like 796 00:47:57,080 --> 00:47:59,480 Speaker 1: sort of broader question is I sort of get I 797 00:47:59,520 --> 00:48:05,000 Speaker 1: get stable coins are attractive, particularly for DeFi type things 798 00:48:05,040 --> 00:48:10,080 Speaker 1: in which the programmability of the economic relationship is distinct, 799 00:48:10,160 --> 00:48:12,160 Speaker 1: and maybe that's hard to do in a sort of 800 00:48:12,200 --> 00:48:15,920 Speaker 1: open permissionless way with a dollar that I might hold 801 00:48:16,040 --> 00:48:19,359 Speaker 1: with PayPal or something like that. I'm curious whether there's 802 00:48:19,480 --> 00:48:25,759 Speaker 1: any organic retail demand actually for stable coins as payments. 803 00:48:26,280 --> 00:48:28,840 Speaker 1: Is this use case that's actually taken off and it 804 00:48:28,880 --> 00:48:31,600 Speaker 1: seems like there's a number of drawbacks with a stable coin. 805 00:48:31,640 --> 00:48:33,680 Speaker 1: You have to buy them. I don't get interest if 806 00:48:33,719 --> 00:48:36,799 Speaker 1: I hold USDC, at least not natively, I might have 807 00:48:36,840 --> 00:48:40,760 Speaker 1: to take some additional risk. And also with like dollar 808 00:48:40,840 --> 00:48:44,560 Speaker 1: payments or traditional fiat payments, I often get rewards and 809 00:48:44,600 --> 00:48:47,160 Speaker 1: people get frequent Flyer miles or cash back or things 810 00:48:47,280 --> 00:48:49,520 Speaker 1: like that, which again I don't think is the case 811 00:48:49,719 --> 00:48:54,000 Speaker 1: with stable coins. What is there a retail proposition or 812 00:48:54,040 --> 00:48:59,960 Speaker 1: is it primarily institutional slash specific programmable things like defile 813 00:49:00,280 --> 00:49:03,000 Speaker 1: in which the growth is going to come. In our experience, 814 00:49:03,239 --> 00:49:07,520 Speaker 1: we're seeing rapidly evolving and expanding use cases. So we're 815 00:49:07,520 --> 00:49:11,879 Speaker 1: seeing use cases in large corporate enterprises that are looking 816 00:49:11,880 --> 00:49:16,759 Speaker 1: at this as a way to make payouts to contractors, suppliers, 817 00:49:16,760 --> 00:49:19,440 Speaker 1: and others internationally because they could do it more efficiently 818 00:49:19,960 --> 00:49:23,000 Speaker 1: and reach more places. We have lots and lots of 819 00:49:23,000 --> 00:49:26,439 Speaker 1: companies in emerging markets that are building kind of neo 820 00:49:26,520 --> 00:49:29,640 Speaker 1: banking like products where they want a fast, cheap dollar 821 00:49:29,680 --> 00:49:32,919 Speaker 1: settlement mechanism that is ultimately liquid to the US dollar 822 00:49:32,960 --> 00:49:36,960 Speaker 1: banking system. We are seeing some of the biggest payments 823 00:49:37,000 --> 00:49:43,239 Speaker 1: companies in the world Visa, MasterCard, Stripe, World pay MoneyGram 824 00:49:43,280 --> 00:49:48,160 Speaker 1: actually embedding and using USDC as a payment settlement mechanism itself. 825 00:49:48,200 --> 00:49:50,839 Speaker 1: So that's more in the in the At a settlement 826 00:49:50,880 --> 00:49:56,800 Speaker 1: infrastructure level, we are absolutely seeing interest from major retail 827 00:49:57,000 --> 00:50:00,600 Speaker 1: type companies, but there's still a lot to pieces that 828 00:50:00,640 --> 00:50:03,840 Speaker 1: are missing for that to really take hold. So my 829 00:50:03,840 --> 00:50:05,640 Speaker 1: my sort of high level of view on this is, 830 00:50:06,200 --> 00:50:08,960 Speaker 1: you know, there's sort of the infrastructure level, meaning we 831 00:50:09,000 --> 00:50:13,879 Speaker 1: need these blockchains to reliably support very high throughput. We're 832 00:50:13,920 --> 00:50:15,799 Speaker 1: actually right on the right on the cusp of that. 833 00:50:15,880 --> 00:50:17,839 Speaker 1: We're seeing, you know, block chains that can do visa 834 00:50:17,880 --> 00:50:20,160 Speaker 1: scale throughput, but we're seeing more and more of that 835 00:50:20,200 --> 00:50:22,439 Speaker 1: infrastructure there. So we need to see that and that's 836 00:50:22,600 --> 00:50:24,480 Speaker 1: sort of a happening now. It's kind of like going 837 00:50:24,480 --> 00:50:26,680 Speaker 1: from dial up to broadband. We're sort of the broadband 838 00:50:26,719 --> 00:50:28,719 Speaker 1: is getting rolled out as we speak, and then the 839 00:50:28,719 --> 00:50:31,160 Speaker 1: applications follow. We also need to solve some of the 840 00:50:31,239 --> 00:50:34,840 Speaker 1: user experience issues, and so the user experience of digital 841 00:50:34,840 --> 00:50:38,120 Speaker 1: wallets that make payments with stable coins. A lot of 842 00:50:38,120 --> 00:50:41,520 Speaker 1: the digital wallets, the orientation of those is still towards 843 00:50:41,640 --> 00:50:44,839 Speaker 1: people who are buying or trading or using defy and 844 00:50:44,960 --> 00:50:47,239 Speaker 1: what we really need are the the wallet apps that 845 00:50:47,280 --> 00:50:49,640 Speaker 1: we all know and love to just allow this as 846 00:50:49,680 --> 00:50:52,759 Speaker 1: a as a payment rail and that will unlock more 847 00:50:52,880 --> 00:50:55,560 Speaker 1: of that consumer piece. But from a business perspective, it's 848 00:50:55,560 --> 00:51:00,799 Speaker 1: really interesting because on the business side, you know big retailers, 849 00:51:01,280 --> 00:51:05,040 Speaker 1: e commerce firms and lots of others. They have a 850 00:51:05,160 --> 00:51:09,080 Speaker 1: very big pain point because you're talking about razor thin 851 00:51:09,840 --> 00:51:13,279 Speaker 1: gross margins in those businesses and you're looking at their 852 00:51:13,360 --> 00:51:17,319 Speaker 1: cost of digital payment acceptance is a huge piece when 853 00:51:17,360 --> 00:51:18,879 Speaker 1: you when you when you look at it, so there's 854 00:51:18,920 --> 00:51:21,920 Speaker 1: a lot of incentive to see something like stable coins 855 00:51:21,960 --> 00:51:25,000 Speaker 1: work at scale, and so I think you'll see more 856 00:51:25,040 --> 00:51:28,080 Speaker 1: of that, and and you have to solve problems like 857 00:51:28,800 --> 00:51:33,720 Speaker 1: the effectively how does affinity and loyalty and rewards work 858 00:51:34,280 --> 00:51:37,680 Speaker 1: with digital wallets, with with crypto native digital wallets. And 859 00:51:37,719 --> 00:51:42,200 Speaker 1: you're starting to see really interesting experimentation with the technology 860 00:51:42,280 --> 00:51:45,160 Speaker 1: known as n f t s, which are a mechanism 861 00:51:45,200 --> 00:51:50,040 Speaker 1: of entitlement and affinity, and that technology combined with stable 862 00:51:50,080 --> 00:51:52,120 Speaker 1: coins actually starts to give you some building blocks to 863 00:51:52,239 --> 00:51:57,320 Speaker 1: really actually innovate in the delivery of very strong consumer 864 00:51:57,360 --> 00:51:59,920 Speaker 1: value propositions. But it's still early, so I don't like 865 00:52:00,040 --> 00:52:02,080 Speaker 1: to oversell on that because I still think we have 866 00:52:02,120 --> 00:52:05,000 Speaker 1: another couple of years before we start to see that 867 00:52:05,080 --> 00:52:08,840 Speaker 1: happening in a large scale way. All right, well, Jeremy Alaire, 868 00:52:09,440 --> 00:52:12,439 Speaker 1: CEO of Circle. You know, I I there's so many 869 00:52:12,600 --> 00:52:16,520 Speaker 1: interesting things that are raised by this conversation. We've gotta 870 00:52:16,560 --> 00:52:20,320 Speaker 1: have you back sometime because it does, uh fascinating conversation 871 00:52:20,400 --> 00:52:25,239 Speaker 1: about how money and finance and payments actually works. So 872 00:52:25,520 --> 00:52:28,680 Speaker 1: I really appreciate you coming on the podcast. My pleasure, 873 00:52:28,760 --> 00:52:31,399 Speaker 1: really enjoyed the conversation. Thanks so much, Jeremy. That was great. 874 00:52:46,880 --> 00:52:52,919 Speaker 1: So I think that at the current trajectory, Tracy, Jeremy 875 00:52:53,000 --> 00:52:56,319 Speaker 1: and circle is clearly on pace to be like one 876 00:52:56,360 --> 00:53:00,080 Speaker 1: of the most important players in crypto. Look at the 877 00:53:00,080 --> 00:53:02,000 Speaker 1: biggest coins right now, and I'm looking at coin get 878 00:53:02,080 --> 00:53:07,200 Speaker 1: Go obviously, Bitcoin, Ethereum, tether, whole sort of separate conversation, 879 00:53:07,280 --> 00:53:10,120 Speaker 1: and then there's usdc coin, and it's the only one 880 00:53:10,239 --> 00:53:15,000 Speaker 1: of those big ones that's like heavily regulated, it's growing rapidly, 881 00:53:15,160 --> 00:53:17,439 Speaker 1: it's at it. It's at the core of sort of 882 00:53:17,680 --> 00:53:20,360 Speaker 1: defy stuff like this is gonna be one way or another. 883 00:53:21,160 --> 00:53:23,239 Speaker 1: This is like a really important player. Well, I think 884 00:53:23,280 --> 00:53:27,920 Speaker 1: it gets back to the technological innovation versus regulatory arbitrage question, 885 00:53:28,000 --> 00:53:32,960 Speaker 1: which is, if the stable coins using blockchain technology are 886 00:53:33,160 --> 00:53:37,719 Speaker 1: genuinely a technological innovation of some sort, then in some 887 00:53:37,800 --> 00:53:42,200 Speaker 1: sense they should welcome regulation, right because it would give 888 00:53:42,239 --> 00:53:45,720 Speaker 1: everyone a lot more comfort. People wouldn't be as worried 889 00:53:45,760 --> 00:53:49,239 Speaker 1: about what's actually backing the stable coins and things like that. 890 00:53:49,360 --> 00:53:52,400 Speaker 1: Although I know you made the point earlier about it 891 00:53:52,840 --> 00:53:57,959 Speaker 1: is a far cry from the origins of cryptocurrency and 892 00:53:58,080 --> 00:54:01,440 Speaker 1: the sort of anti government sentiment a bitcoin, I do 893 00:54:01,560 --> 00:54:05,160 Speaker 1: think that. So it's like, Okay, what are the sort 894 00:54:05,200 --> 00:54:10,279 Speaker 1: of characteristics of crypto that are maintained even in a 895 00:54:10,320 --> 00:54:14,160 Speaker 1: more sort of regulated uh, in a more regulated situation. 896 00:54:14,320 --> 00:54:16,640 Speaker 1: And I think one of the most compelling to me 897 00:54:17,239 --> 00:54:21,480 Speaker 1: is this idea of sort of compose ability and programmability 898 00:54:21,600 --> 00:54:23,880 Speaker 1: and so yes, if you have your money, if you 899 00:54:24,320 --> 00:54:26,960 Speaker 1: enter the crypto space through a stable coin like USDC, 900 00:54:27,560 --> 00:54:30,440 Speaker 1: then there's all sorts of you know, anti money laundering 901 00:54:30,440 --> 00:54:32,320 Speaker 1: hoops that you have to go through, and they verify, 902 00:54:32,600 --> 00:54:35,440 Speaker 1: verify who you are, and theoretically they can freeze your coins. 903 00:54:35,560 --> 00:54:37,760 Speaker 1: So then what do you have? You know, I think 904 00:54:37,840 --> 00:54:40,080 Speaker 1: in theory, it's the idea. You know, it gets back 905 00:54:40,080 --> 00:54:43,000 Speaker 1: to this idea. It's like, well, could someone program a 906 00:54:43,040 --> 00:54:46,520 Speaker 1: bank that exists on ethereum that then anyone can interact 907 00:54:46,520 --> 00:54:49,840 Speaker 1: with once they're in the ecosystem. And of course we 908 00:54:49,920 --> 00:54:52,279 Speaker 1: haven't seen that yet. I mean, as you know, it's 909 00:54:52,320 --> 00:54:53,880 Speaker 1: all we have. We don't have banks yet, we just 910 00:54:53,880 --> 00:54:57,399 Speaker 1: have a we have sam bankman freed boxes. But if 911 00:54:57,480 --> 00:55:02,000 Speaker 1: something like that became an actual sort like useful economic 912 00:55:02,239 --> 00:55:06,560 Speaker 1: enterprise beyond speculation, then the idea of like the stable 913 00:55:06,640 --> 00:55:09,640 Speaker 1: coin issuer as the gateway to that such that the 914 00:55:09,680 --> 00:55:13,120 Speaker 1: bank itself doesn't have to then conduct its own you 915 00:55:13,160 --> 00:55:17,200 Speaker 1: know sort of regulatory um, you know, regulatory rails. Then 916 00:55:17,239 --> 00:55:20,799 Speaker 1: maybe that is the case for crypto in some way, 917 00:55:20,880 --> 00:55:25,160 Speaker 1: it does feel a little bit like circular. Uh again, 918 00:55:25,239 --> 00:55:27,840 Speaker 1: no pun intended to me though, because you know, it 919 00:55:27,920 --> 00:55:30,120 Speaker 1: starts with let's get away from the banks, and then 920 00:55:30,160 --> 00:55:32,960 Speaker 1: it goes back to let's get a bank charter and 921 00:55:33,000 --> 00:55:35,920 Speaker 1: go right back to the banks. Right, So then right exactly, 922 00:55:35,960 --> 00:55:37,960 Speaker 1: it's like we're just back in the banks. It's it's 923 00:55:38,120 --> 00:55:40,560 Speaker 1: US d it's dollar, it's fiat currency, it's held in 924 00:55:40,600 --> 00:55:43,920 Speaker 1: the bank. So then what's left is like theoretically this 925 00:55:44,320 --> 00:55:47,560 Speaker 1: programmability and this idea that maybe because it's on an 926 00:55:47,560 --> 00:55:50,120 Speaker 1: open blockchain and anyone can write a piece of saltware 927 00:55:50,200 --> 00:55:53,200 Speaker 1: that lives on ethereum, then maybe that opens up new 928 00:55:53,280 --> 00:55:57,400 Speaker 1: economic types of relationships that couldn't more easily be done 929 00:55:58,160 --> 00:56:01,960 Speaker 1: via fiat currency on oracle databases. Yeah. But then of 930 00:56:02,000 --> 00:56:04,560 Speaker 1: course the question is why don't the banks just do it? Right? 931 00:56:04,640 --> 00:56:08,200 Speaker 1: Like JP Morgan can start issuing its own stable coin 932 00:56:08,360 --> 00:56:12,480 Speaker 1: on blockchain, yeah, and JP Morgan could theoretically create its 933 00:56:12,560 --> 00:56:16,760 Speaker 1: own um ethereum clones so that someone so that entities 934 00:56:16,800 --> 00:56:19,480 Speaker 1: could write programs because there's lots of you know the 935 00:56:19,480 --> 00:56:22,319 Speaker 1: the Ethereum virtual machine. There are a lot of ethereum 936 00:56:22,400 --> 00:56:26,360 Speaker 1: like chains out there. Why not JP Morgan chain that 937 00:56:26,480 --> 00:56:30,560 Speaker 1: competes with ethereum, which upon which they can run jpm coin. 938 00:56:30,920 --> 00:56:33,440 Speaker 1: It'll be really interesting if this keeps growing. You have 939 00:56:33,480 --> 00:56:35,799 Speaker 1: to imagine the impulse on the banks, like they're going 940 00:56:35,840 --> 00:56:37,520 Speaker 1: to want a piece of that, sort of the layer 941 00:56:37,520 --> 00:56:40,560 Speaker 1: one action, so to speak. Well, anyway, I enjoyed that conversation. 942 00:56:40,600 --> 00:56:42,479 Speaker 1: I think we should do more on stable coins because 943 00:56:42,520 --> 00:56:44,640 Speaker 1: it does throw up a lot of interesting questions, not 944 00:56:44,760 --> 00:56:48,120 Speaker 1: just about the design of the financial system, but basically 945 00:56:48,200 --> 00:56:51,880 Speaker 1: about the way money functions. Right, Yeah, and you know, 946 00:56:51,920 --> 00:56:54,880 Speaker 1: I do think the chain split question and maybe it 947 00:56:54,920 --> 00:56:57,359 Speaker 1: won't be a big deal with the coming Ethereum merged. 948 00:56:57,400 --> 00:57:00,879 Speaker 1: But you know, our friend who we had on after 949 00:57:00,920 --> 00:57:04,680 Speaker 1: the terror Luna collapse, Gaila Capital, has been tweeting a 950 00:57:04,719 --> 00:57:08,680 Speaker 1: lot about he thinks there's more ambiguity with the coming 951 00:57:08,760 --> 00:57:12,520 Speaker 1: Ethereum merged and perhaps the market appreciates and the possibility 952 00:57:12,560 --> 00:57:15,640 Speaker 1: for multiple change, maybe three chains to come out of that. 953 00:57:16,160 --> 00:57:19,120 Speaker 1: And yes, you could say, okay, all the activity is 954 00:57:19,160 --> 00:57:22,520 Speaker 1: here on what vitalit calls the main eight chain, but 955 00:57:22,760 --> 00:57:24,920 Speaker 1: there could be some contention, and it could be interesting. 956 00:57:24,920 --> 00:57:28,400 Speaker 1: You know, USDC would certainly be the kingmaker, so to speak. 957 00:57:29,120 --> 00:57:31,120 Speaker 1: Where they put the money, you know, they're so big. 958 00:57:31,120 --> 00:57:33,400 Speaker 1: Where they put the money is probably going to be 959 00:57:33,480 --> 00:57:37,439 Speaker 1: the chain that unambiguously wins. I sends another episode coming 960 00:57:37,520 --> 00:57:40,880 Speaker 1: up on interchain operability fairly soon as well, and we 961 00:57:40,920 --> 00:57:43,440 Speaker 1: really we got to do something on the merge and 962 00:57:43,640 --> 00:57:47,200 Speaker 1: ethereums uh and the switch to proof of work because 963 00:57:47,200 --> 00:57:49,360 Speaker 1: there's like our sorry, the switch to proof of steak, 964 00:57:49,400 --> 00:57:51,880 Speaker 1: because this is a pretty big, pretty big event that's 965 00:57:51,880 --> 00:57:54,960 Speaker 1: coming up supposedly in September. All right, let's do it. 966 00:57:55,160 --> 00:57:57,920 Speaker 1: Shall we leave it there for now? Let's leave it there. Okay, 967 00:57:58,160 --> 00:58:01,280 Speaker 1: this has been another episode of All Thoughts podcast. I'm 968 00:58:01,320 --> 00:58:04,360 Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy Alloway, 969 00:58:04,520 --> 00:58:06,960 Speaker 1: and I'm Joe Wisn't Though. You can follow me on 970 00:58:07,000 --> 00:58:10,680 Speaker 1: Twitter at the Stalwart. Follow our guest on Twitter, Jeremy Alaire. 971 00:58:10,800 --> 00:58:14,800 Speaker 1: He's at j E. R. Alaire. Follow our producer Carmen 972 00:58:14,920 --> 00:58:18,200 Speaker 1: Rodriguez at Carmen Arman, and check out all of the 973 00:58:18,200 --> 00:58:22,520 Speaker 1: Bloomberg podcasts under the handle at podcasts. Thanks for listening,