FinTech Meets Crypto: The Future of Global Payments

Crypto doesn't really exist in the fintech world, but stable coins are the number one topic. That's the nuance.

Stable coins are the fintech 3.0. If the

beginning of fintech was making better user experiences from crappy user experience, and then the next thing was making better APIs for developers, the third one is making better payments infrastructure.

Welcome to Banklist, where we explore the frontier of fintex crypto transformation. This is Ryan Sean Adams.

transformation. This is Ryan Sean Adams. I'm here with David Hoffman and we're here to help you become more bankless.

We've been exploring this topic of crypto and fintech and how they are converging together and we have probably the best guest on this subject. Simon

Taylor is a fintech guru. He's uh been long into fintech. He has a podcast on the subject. He recently joined the

the subject. He recently joined the fintech payments company and it's a layer 1 tempo that uh Stripe is rolling out. So all of these I think make him

out. So all of these I think make him the perfect guest to explore today's conversation.

>> We talk a lot about the modern conversations floating around the industry at the moment. The the Tempo chain is of course front and center, but like what is a payment chain really? How

does it differ from a public permissionless blockchain that we're used to like Ethereum? What are the different properties? We talk about why

different properties? We talk about why it's all happening. We all kind of know the TRDFI payments world is a mess, but why is it a mess and why are stable coins so much uh different and better to be adopted? and then how Simon thinks

be adopted? and then how Simon thinks that stable coins are actually just the gateway drug for a bunch of more tokenization to show up in the world of fintech. And then we kind of just talk

fintech. And then we kind of just talk about the cultural differences between trady and crypto towards the end. So

you're going to love this conversation.

So let's go here from Simon right now.

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Very excited to introduce you to Simon Taylor. He's a bridger of worlds, both

Taylor. He's a bridger of worlds, both fintech and crypto. He's ex Barclays. Uh

he was the head of crypto R&D there.

He's the author of fintech breakthrough uh brain food, excuse me, which is a fantastic blog that uh I enjoy. And

also, okay, this is bra, this is new. He

just joined the stripe sponsored Tempo payments chain. You guys recall Tempo.

payments chain. You guys recall Tempo.

We were talking about that last week.

Simon, thanks so much for joining us.

Welcome to Bankless.

>> Thank you for having me, guys. I am not kidding you when I say huge, huge fan. I

think you guys do a great job in Choppy Waters. So, I appreciate you. the whole

Waters. So, I appreciate you. the whole

market does.

>> Wow. I don't know if the whole market does, but I I I'm thankful that you appreciate us, Simon, because we also appreciate you. And this episode is very

appreciate you. And this episode is very much I think a little bit of the meeting of the worlds because you have been doing God's work uh covering fintech for

many years almost. I think of like your work at Fintech Brain Brain Food as the the bank list of fintech and also you have a um like more than a foot in the

water of crypto as well. So you're

someone in fintech who can also cogently speak crypto very well. I think we want to bridge these two worlds today as fintech is undergoing this this crypto transformation. Does that sound good?

transformation. Does that sound good?

>> I love that. I will be your TRDFI translator, your TRDFI sherper if I may, your your pens guru. I would love to do that because uh small worlds uh collide.

When I was head of crypto R&D at Barclays, I was also helping the London Ethereum community organize some of its first ever meetups and they used a

Barclay space in London which >> which was just too perfect, wasn't it?

But I was like, I've always been that day walker, you know, by day I wore the suit and by night I was like going to these events. So now I feel like Wall

these events. So now I feel like Wall Street loves Ethereum and loves tokens and has really come around to it.

payments industry was always a little bit more conservative and needs a bit more convincing. So, I'm trying to find

more convincing. So, I'm trying to find like that middle ground between the two and there are things that are features of crypto and there are things that are bugs if you look at it from a payments perspective and then there are things

that are features of the payments industry and there are things that are bugs and it's not all bugs, right? Like

there are some things they do that's really really good. So, yeah, happy to share what I can. Since you're familiar with bankers, you probably know who our audience is composed of. We're all like crypto people who are chronically online

paying attention to crypto drama year in year out. Like every single year 2023

year out. Like every single year 2023 was a specific year in crypto and everyone kind of remembers that and what happened there and 2024 and 2022 it's all kind of the same. What's it like to

be in fintech? Is it kind of similar in the sense that there's like fintech Twitter and there's are themes and metas that people gossip about? Yeah. Tell us

what's that lifestyle like?

>> There's just there's just not nearly as much uh the bags aren't quite as deep.

Yeah.

>> No, there's plenty of crime in in regular fund fight. Um Oh, great. So, uh

I the big drama. So, fintech had its peak in 2021, right? Like one in five VC dollars went into fintech through that 2021 was the peak.

>> Yeah. Oh yeah. Like bang. It was

everywhere. It was everything you know.

This is platform was bought by Visa. Uh

the DOJ says no you can't. That's

antirust. Uh then you get this whole uh thing that happens after it. you get

this fintech winter and there was a whole movement where fintech companies were coming to market but some of them then started to go bankrupt. So you'll

remember the silvergate signature everything that happened there. The

other side of that story was it took down a fintech company called Synapse.

And Synapse was a tech platform that helped a bunch of uh fintech companies do things like manage your savings. And

so that happened in what 2023. It's

middle of 2025. And there are consumers who don't know where their money is and their life savings are.

>> Actually, some of those were crypto banks. Uh I believe um Juno was one of

banks. Uh I believe um Juno was one of them. They use on the back end and uh

them. They use on the back end and uh they were kind of like doing crypto stuff, but unfortunately they were brought down by the Synapse thing.

>> Wow. Well, this is like a parallel story to what we went through as well.

>> It was. And I was kind of living on both, right? cuz I've always been the

both, right? cuz I've always been the day walker. So, and when FTX went down,

day walker. So, and when FTX went down, I wrote a piece like FTX WTF. Like, I

thought you guys were cool. What

happened?

It turns out you really weren't. Oh my

god. Um, and then on the other side, like, yeah, then I had the whole fintech dramas going on and I was like, whoa, this is a bad bad year. So, you when they're both down, it's it's it's really bad. But

bad. But >> and then >> one thing I want to leave you guys with is is like the whole issue that you had on the fintech side though was nobody could figure out where the money was.

>> Like nobody could reconcile. So like the banks didn't know where the money was.

Synapse didn't know where the money was.

The fintech companies didn't know where the money was. And a lot of people in fintech looked at this and kind of went >> maybe some sort of chain of blocks might

help you.

That's great. I guess like that that's kind of the the meeting of the worlds here is we're we're both learning from each other, right? Fintech is learning from crypto and crypto is learning from fintech. It's interesting you say 2021

fintech. It's interesting you say 2021 was the peak because that was also when I felt like Robin Hood was really having a moment and then bam, the whole GME thing happened. Was that in January

thing happened. Was that in January 2021? I mean, kind of align closely with

2021? I mean, kind of align closely with the with the peak of fintech. Um, let's

talk about payments chains first because that seems like a massive intersection point and it all comes by route of this uh crypto innovation that is also

strongly fintech of stable coins and we're going to talk about Tempo a little bit more. You joined the payments uh

bit more. You joined the payments uh chain Tempo, but you also you wrote this post. You called payments chains the AWS

post. You called payments chains the AWS moment for money. And keep in mind everyone, Simon's audience is fintech people. And you were you were calling

people. And you were you were calling you were calling payment chains and stable coins the AWS moment for money.

Translate that for us. What like why this comparison? Why does that resonate?

this comparison? Why does that resonate?

>> Yeah, it's an unhelpful metaphor if you're in crypto, but it's a helpful metaphor if you're in banking. So that's

the caveat there. And also I write headlines and I want people to click.

But TLDDR uh what Amazon did when they enabled other people to use their infrastructure is they pushed down the cost of running

their back office and their middle and back office. They externalized a lot of

back office. They externalized a lot of their costs and turned it into a way to generate revenues. And in banking world

generate revenues. And in banking world we call that market structure. Like we

all agree that we've got this back office operation. We don't profit from

office operation. We don't profit from it. we've all kind of got to do this

it. we've all kind of got to do this ugly, nasty stuff. Why don't we all just get together, form a new company, and it'll take care of it. Well, the AWS side of that was a little different. AWS

was like, well, we've already got all of this technology. The technology already

this technology. The technology already exists. Why don't we just enable more

exists. Why don't we just enable more people to to kind of use it? So that

idea of like how do you think about the business case as a payments company as all payments company not one payments company instead of having to build all

of this complex technology internally somebody went and built it for you but it needs to meet your requirements. It

needs to be extremely fast. You need

fast finality. You need to be backwardly compatible with the law and compliance and all of that sort of stuff. And AWS

has kind of got there. like they they can be used by banks, they can be used by everybody. It's big market structure,

by everybody. It's big market structure, but it needs to do all those things. And

I was speaking to I don't know if you've ever had Mike Hudac from Sling Money on the show.

>> No, >> Mike's an interesting guy. So Mike was head of product for Meta. He ran the ads business. He was then chief product

business. He was then chief product officer at Monzo, which is a neo bank.

Then he went to build Sling Money, which is a remittance app that uses stable coins. And when he looked at stable

coins. And when he looked at stable coins and when he looked at the world of onchain finance, he went, "Somebody took 80% of my cost and complexity and said,

"Hey, this is a utility. You can pay per hour." And that pay per hour utility

hour." And that pay per hour utility thing is exactly the aha moment that bankers get when they see AWS and exactly the moment you get when you see

payments change. You go, "Oh, it's a

payments change. You go, "Oh, it's a utility." you've dramatically re I could

utility." you've dramatically re I could have built all of this myself, but I wouldn't have built it as well as somebody who does nothing but that at massive scale for the whole industry.

>> Okay, so I I see where this analogy is going and it makes sense to me. So AWS

of course is you know the advent of the cloud basically and prior to AWS in the early 2000s in the late 1990s every single company who wanted to spin up

something on the internet or build some software had to essentially either build their own data center or use a colloccated data center space like you know manage the racks manage the

individual servers all of this and then here comes AWS and they say no you just spin up instances of these things spin them up, spin them down on demand. They

turned basically compute infrastructure into a utility and then all of these companies uh SAS companies were built on top of this Spotify.

>> Yeah. And you're saying that's what's happening with payments infrastructure today and that's why payments are and stable coins I I imagine they're interrelated are the AWS moment. I guess

in order to understand that fully though, we need to maybe understand, crypto natives need to understand a bit more about how payments work in Trafi today because I'm not sure that we

understand that.

>> I don't know that.

>> Yeah, that's the wildest wildest thing.

Uh would you think that payments are uh yeah easy but actually it's all edge cases all the way down and

it's built on 1960s infrastructure.

Payments uh typically come in one of two types push payments and pull payments.

So if I'm pushing a payment it's that looks like a crypto transaction. I need

an address, in this case an account routing number. Um, and I enter the

routing number. Um, and I enter the details and I hit send and it goes and hopefully it gets there. What you don't see under the hood are the thousands of

banks and all of the rules they have about what happens if something goes wrong. And that's the hidden cost a lot

wrong. And that's the hidden cost a lot of this time is that they're sending each other messages. They all use different standards. There's all these

different standards. There's all these errors. So what you see a company like

errors. So what you see a company like Stripe does, what AEN does, what Checkout does, what all of these companies do is they build software that

makes payments work the way you think they would if you'd never been exposed to payments before. Because essentially

a payment message looks like an email.

So imagine your mobile app instead of sending a message to the Ethereum network to u move funds from one wallet address to another with a smart contract

was just sending an email to an SFTP server at another financial institution and then its computer had to figure out what to do with that message. It had to

read the email, extract the relevant information and apply the right bank accounts and balances to it. And that's

where loads of stuff can go wrong when a lot of the mainframes that are running inside these institutions were the same ones that NASA was using in the 60s.

Like and the code goes back that long.

But there are literally there's a group called the Cobalt Cowboys.

People in their 70s and 80s that go in and fix mainframes inside legacy organizations that are too critical not to fall over and nobody else knows how these things work.

>> Like it's just wild how bad the tech is.

to have them around forever if they're in their 60s and 70s.

>> It's crazy. It's crazy how expensive that gets and how much of a prisoner you are to that in the financial system. So,

if I go build a a Robin Hood, uh Revolute, uh New Bank or whatever, I can build something really great, something really low cost, I can really make a difference for my customers, but

ultimately I'm a prisoner of the TR five rails. Ultimately, I'm a prisoner of

rails. Ultimately, I'm a prisoner of every other bank and financial institution. So, and then ultimately I'm

institution. So, and then ultimately I'm a prisoner of like all of these payment rails that are 30, 40, 50 years old.

>> And when I say payments rails, kind of a bad metaphor cuz that sounds a little bit like I had some money. I stuck it in a little uh train and it toled along and

then the money got out of the other side. It didn't. All I did was send a

side. It didn't. All I did was send a message to move some money and the banks moved the money, right? It's actually a different thing.

>> So, payments chains have a real opportunity to take all of that complexity and really rebuild it. And

this is why I got excited about Ethereum when I worked at a bank in 134 is I immediately saw like, oh my god, you've solved 80% of the problem here. I don't

have to spend all my time and energy figuring out, do my records match with that other bank down the street who uses this weird system. That's all taken care

of. but also it's kind of slow and

of. but also it's kind of slow and there's a lot of attack surface areas and there's a lot of scams and there's no privacy. So for payments there's a

no privacy. So for payments there's a lot of features that we had where it ran at scale, it was incredibly performant that we need to have

that most of the chains to date or had some variant of and various people were trying. This needed to do one thing

trying. This needed to do one thing extremely well, less of a Swiss Army knife and more of a machete. you know,

just do that thing extremely well.

>> There's been a few times where I have sent a money and because something went wrong in that transfer. Uh, I was actually kind of able to see a little

bit behind the hood. Not directly

because there is no actual thing behind the hood because depending on who your financial institution is or who you're talking to, behind the scenes just looks different for everyone. I I was sending

money in a wire to some uh in some bank account in a foreign country, which is where things get really wonky because the input fields just start to change, right? If you're sending money

right? If you're sending money domestically, at least in the United States, the form factors are about the same, like bank address, um, uh, like zip code, state, and these are things

that I'm all familiar with. But as soon as I send money to like some country in Europe, well, like they don't really have states, they have municipalities or something, and they don't really have zip codes, and their zip codes are

different numbers of digits. And I did something wrong and the money got lost.

And there had to be this this >> the money got lost.

>> The money got lost. And I I started to have to email humans to go track down where the money went. And I realized like, oh, it's because this financial

institution's like website has drop down menus that are of a certain form factor that my bank account or my bank needs to be able to ingest or interpret so they

can match the records. And this is all starting to look much more like I am sending a piece of mail to a address.

Whereas in blockchain, what I'm used to is like if Ryan sends me an Ethereum address for me to send USDC to, I copy and paste that Ethereum address and I know deterministically that it is

showing up at Ryan's address no matter what. I am just not worried about the

what. I am just not worried about the money explorers. You can watch it.

money explorers. You can watch it.

Totally. Yeah. But like if I'm sending a wire, it's much more like I'm putting a piece of mail into the mailing system and then a bunch of human hands kind of

like pass the mail along until it gets to the end address. And there's so many different ways to actually address a piece of mail for it to get to the correct address. And there's also many

correct address. And there's also many many different ways to write a p to address a piece of mail for it to go completely haywire.

>> You know what, David? There's been

actually an inversion for me where like it used to be the case that I was more terrified to send a crypto transaction because it's immutable and you're double checking, you're triple checking and oh my god, there's no one I can call if it

goes wrong.

>> Now it's the case cuz I'm used to that.

>> I get much more nervous when I'm wiring funds.

>> I totally I do not like wiring funds.

>> I can't see it actually settling especially to a new location. I'm just

like, do I have the routing number like with like the address right and then it disappears and it's gone and like I hope somebody's got it.

>> Yeah. Do

>> you know what I worked on um back in my banker days once was just for the UK we were going to do the equivalent of like the WhatsApp telegram double tick. We

were going to do tick one for send, tick two for receive, tick three for, you know, like and then it turns blue for having been read receipt. Like that for money would just be amazing. But it

turns out it's actually incredibly hard to do because you can't guarantee it.

And this is why bankers get like so obsessed with this idea of settlement finality as being this big legal thing because you can't actually always guarantee it. So you like it's a

guarantee it. So you like it's a detective job to figure out where money went. And this gets like this is fine

went. And this gets like this is fine from New York to London. Like you can kind of figure it out. It happens enough times a day that everybody knows what they're doing. But you try and move

they're doing. But you try and move money into Zombia. You try and um be Starlink doing money in the middle of nowhere and collecting those dollars from the middle of nowhere and it

suddenly gets extremely complex. You try

and be a Kenyan oil importer from the UAE and you could be looking at anything from 4 days to 4 weeks for the money to

arrive, a fee between $60 and $600. You

just don't know. And all of that time your oil cargo might be sitting in a port costing you holding fees and you can't get your stuff because you can't figure out where your money is or if

you've really been paid. So actually

standard charted works a lot with um zodia markets if you know these guys and they will use stable coins as sort of the uh instant settlement rail and then

standard charted accepts through zodia custody the stable coin and then does the banking offramp on the other side in both markets. So stable coins are live

both markets. So stable coins are live in production for global trade today running on Ethereum and other networks.

Like it's an upgrade to correspondent banking. And I think that to me as

banking. And I think that to me as somebody who worked in the industry is like insanely exciting. Like oh my god, we can finally fix it. And most of what

web 2 did was just hide the wires and build really great software to handle the edge cases. But what if there was a network that meant you could really focus your software on value ad? Like

wouldn't that be cool? Wouldn't that be much more exciting?

>> I guess this is this brings up a really interesting point, Simon, is like at some level here we are complaining about the existing like payments and financial system and we're I thought we're

supposed to live in kind of the like the place for banking access and capital markets, right? This is supposed to be

markets, right? This is supposed to be the US, Europe. I mean this is supposed to be the Premier Leagues with respect to how good our financial system is. You

gave the example of somebody in Zambia.

Um I mean there's the concept of like food deserts where you live in a location there's just like no access to fresh easy food. Well there's also like finance deserts aren't there? There's

also like money deserts. I mean this really if we have if everybody is on the same payments financial platform, everybody with an internet access has

access to kind of that cloud service of money and finance and payments. I mean

that kind of levels up the entire world, doesn't it? It is that democratization

doesn't it? It is that democratization technology.

>> It's huge. I mean there's better 5G signal in parts in most remote parts of the world than you'll get in major cities like New York or London. It's

it's crazy to me and a lot of that has to do with tall buildings and crowded network traffic but still you can guarantee a good internet connection and all you need is compatible software and

so there's a good friend of mine Guana works at Sling Money she used to work for MTN Africa and she said in in most parts of Subsahara in Africa in Uganda

Tanzania many other countries the person that used to be your mobile money agent your mobile money guy is now your Tetherron And that has just shifted. It's just

shifted.

>> Yeah.

>> Can we speak to the guys at Arteimus, that's the same in Hong Kong as well.

This this other rail is emerging and that's becoming a norm. So the question is like, okay, what usually I look at that and I go the consumer businesses are pulling this to into existence

because global south to global south trade is a thing that people want to do.

They don't want to have to route via New York to get to, you know, their next door neighbor country every single time.

So, if this dollar-based rail does that for them, like that's they're obviously going to want that. They're obviously

going to adopt it. That's huge. And as

you say, all they need is compatible software.

>> Can we talk about what we mean by payments chain? U just so it's clear

payments chain? U just so it's clear definitionally for those listening. So,

at some level level, um people might look at something like Ethereum and say, "Oh, well, Ethereum does USDC. that's

you know payments chain and and they're right it does although I think if you look at Ethereum and what it's optimized for and credible neutrality and permissionlessness and you know has low

transactions per second as a result this is going to be more of a property rights route even if it does expand um it's not going to be able to support the the

payments of um you know the globe essentially and all of the humans on the planet and then all of the AI eyes that might need payments after that. This is

why Ethereum has done things like layer 2 and that kind of thing. But today when we're talking about payments chain and the rise of a new generation of payments chain, you even say you mentioned um

mentioned Tron, right? That's a payments chain effectively that's active and in use today and of course it's more uh centralized than something like Ethereum. Now we're seeing this summer a

Ethereum. Now we're seeing this summer a new crop of quote unquote payments chains rising. So, Circle has their arc

chains rising. So, Circle has their arc chain that they've just released. It's

not in mainet yet, but they've released a white paper and plans and this is going to be a Circle L1. It's EVM,

>> but it's its own separate L1. We also

have um Tether with their plasma chain.

They've invested in this. It's again,

it's an EVM L1 focused on payments. Now,

we also have Tempo from Stripe invested on uh in by Stripe. It's its own separate entity. is building kind of a

separate entity. is building kind of a consortium based approach. Talk to us about payments chain in your mind.

What's the definition of a payments chain? I think a payments chain is one

chain? I think a payments chain is one that solves the problems that payments need to bring the world's volume on it.

You you've kind of said it in the question, right? Like ultimately there

question, right? Like ultimately there are a lot of features of the payments industry. There's a lot of bugs and we

industry. There's a lot of bugs and we talked about them like it taking weeks, like it taking a long time, but still swift on a daily basis clears something like 5 trillion uh 5.4 trillion. Like

it's it's insane. Um and they clear quadrillions in on an annual basis. Like

the scale of the traditional payments infrastructure is enormous. It's all of the money in the world moving around the world multiple times per day. It's

incred It's a marvel of modern technology and it's also incredibly reliable for what it is. Even though

sometimes it's slow, it kind of gets you there in the end. And especially the cards networks, those things just work.

They are unbelievable miracles. So,

there's a lot of that going on and you need that throughput. You cannot walk into a store and your card not work.

It's just got to work. So the payment chains need that instant finality. If

you're waiting for finality, then yeah, 12 minutes is is just it's not necessarily going to work. And I think this is why lots of people are taking lots of different approaches. I'm I'm

quite happy personally to see a lot of those be EVM based. Um it's it's like one big happy family that's hopefully there's a Thanksgiving in the future where we all get together and and make right, you know, like this just let's

just let's figure all that out. But

there's lots of teams trying to figure out what that route to market is. And

then the other thing is distribution, right? Like there's, as I speak to lots

right? Like there's, as I speak to lots of folks in Tradfi, they're trying to figure out where stable coins fit, how they make them compliant. They have lots of worries about where this fits with

their existing business. So actually,

um, Tempo is not a consortium. It's a

business with design partners. So the

logos you see are people trying to help essentially drive the road map of that thing by saying well here's what we're worried about here's what our engineers think of it if we were to put our

payments volume on it this would be our requirements so they're really helping us design the thing to take the volume of tradfi and put them onto stable coin rails. So that's the lesson we're trying

rails. So that's the lesson we're trying to learn in this process because you know Giorgios and Liam and Dan and all of the team you know these folks have been deep in Ethereum for a long time.

They have been trying to build out that ecosystem for a long time. And the

question is how do you make it fast enough for the payments volume? And then

the second question is how do you make that not be fragmented and work with everything else it needs to. Um, and I think a lot of that the bottleneck to my mind is much more on how do you get

today's payments volume on chain rather than how do you get them between chains.

I think that's a much more solvable problem than how do you get that world's volume on in the first place.

>> The idea of uh tempo governance and all of these different parties coming together to like build this thing is definitely something I want to unpack.

Uh first I want to I think the right order of operations though is get diving into a little bit more about how the actual chain is constructed. You talked

about the need for fast finality because we need we have the ability for these things to effectively be instant settlement. And so that's kind of a

settlement. And so that's kind of a requirement for payments if we're going to do a payments chain.

>> And now that but that's something that I think all blockchains more or less are optimizing for like everyone wants fast finality. Salana wants fast finality.

finality. Salana wants fast finality.

Ethereum is going to get fast finality.

And so that's actually not something that I think is going to uniquely separate what is a generalized public blockchain from a specific payments chain.

>> I'm wondering if there are other features that we are going to find in a chain like Tempo, any of these payments chains that we uniquely would not find in a public generalized network. Things

like I I don't know, I was just throwing things out here like transactions reversibility. Like we would never see

reversibility. Like we would never see that in the Ethereum layer 1, but maybe we see that in a tempo chain. I don't

really know. Maybe that actually ruins the whole point of fast idle. fast

finality, but like uh what are some features that you think are >> the key ones for me are um gas paid in regular denominated currencies. Um I

think you know as much as uh financial institutions in particular who you want to bring the ability to offramp instantly if you want to bring that

liquidity in and out of the network. Uh

that's a huge barrier because uh just to bank nerd on you forever for a moment um even though the OC has said financial institutions can custody digital assets

um the Basel committee still says you have to treat that as an RWA a risk weighted asset not real world asset as being an extremely negative thing on your balance sheet you it's very bad for

your lending business if you were to try and hold that stuff so they don't want to touch too much of that if they don't have to. Um, and frankly, most at scale

have to. Um, and frankly, most at scale web 2 companies doing large amounts of payments volume really just want the simplicity of dealing in dollars, right?

They want to think about their treasury in dollars. They want to deal in

in dollars. They want to deal in dollars. So, gas denominated in in

dollars. So, gas denominated in in dollars. Um, Tempo's open to uh is

dollars. Um, Tempo's open to uh is stable coin agnostic. So, it would support any stable coin whatsoever and it would be permissionless in doing that. So anybody could create a stable

that. So anybody could create a stable coin and it would have an enshrined automated market maker in it for stable coins. So that enshrined AMM then gives

coins. So that enshrined AMM then gives you quite a bit of efficiency and that in turn gives you a lot more throughput.

So you start to see the combination of these features looking really really good for the onchain world and the fast finality and then there's some backward compatibility with tradfi quality of

life features like memos like what we're calling compliance hooks uh which I was speaking to a banker would be ISO 2022 wreck fields and uh messaging fields.

This is all of the stuff I need to put into a payment system to make it reconcile so that I can tell my regulator I am a giant bank and I am following the rules as being a giant

bank even though I'm operating on chain.

Those sorts of things baked directly into the chain as features are hugely beneficial because you can get that tradeoff of not writing as a custom

smart contract as a as a something else and as a something else that's not very performant. You can bake this into the

performant. You can bake this into the version of the VM Ref. You can really use uh all of the tools in Georgios' kit that he's been building for the last

what 2 3 years to ensure that every single bit of that is dialed up to be as performant as possible. But this is where you really need those design partners to go okay but what system does it need to feed and how? So there's some

like hardcore engineering going on here for the throughput at the edges of the chain and the through as well as the throughput through it. So, for people who aren't in the weeds with this and some of the names that Simon was

throwing out, people like Georgios, people like um Liam, these are um EVM and Ethereum uh developers who are actually working on the Tempo project.

So, >> I would say it's like top 1% EVM talent.

>> Yeah, they're really good. And so, uh you know, Tempo is a a combination. Matt

Hang from Paradigm is kind of leading it, a lot of the Paradigm team. And so,

some of these folks are like Ref that you mentioned, Simon, that's a an EVM client. It's a high performance EVM

client. It's a high performance EVM client built by the paradigm team. So

>> in RE is for Rust which is very high performance code.

>> So some of these team members really have the kind of juice to squeeze a lot out of the EVM which is pretty interesting. I I want to ask this

interesting. I I want to ask this question. So uh there's a number of

question. So uh there's a number of payments chains that are now rising. I I

already named three of them like circle and tether and tempo and there's like at least a half dozen more. I know that you've seen I've seen some of these too.

>> Oh yeah.

>> Some are some of them in brain food.

Yeah. Yeah.

>> Yeah. Exactly. Some some are layer ones.

So, doesn't this just descend into kind of a a war of all against all like everybody wants their own chain and they're like, "Yeah, everybody come to my chain." And everyone's shouting,

my chain." And everyone's shouting, "Yeah, come to my chain. We're going to be that. We're going to have the network

be that. We're going to have the network effect." Everyone creates their own

effect." Everyone creates their own chain, Simon. Don't we end up kind of

chain, Simon. Don't we end up kind of where we started, which is the fragmented banking system that we're trying to leave?

>> How do we send messages between all the chains?

>> The chain. Yeah. Oh, no. It's classic,

isn't it? Um, no. I look, I I still think we're in an innovation phase and let many flowers bloom and we'll make a meadow and then we'll figure out how to garden the thing later. Like there is so

much to figure out that all of these things need to exist and then power laws will play out like there's always that sort of pull towards I think Ethereum

and to where the gravities are and where the center of gravity is and these things and I haven't spoken to the tempo guys. What I loved is, you know, they're

guys. What I loved is, you know, they're they're writing more EIPs than most people on the planet. This is people that are trying to drive the whole ecosystem forward. And so if you can do

ecosystem forward. And so if you can do that and you can open source a lot of your ideas and everybody can learn from you, but you have this window of opportunity to do something a bit of a

different way than the way the community is doing it and to bring TRFI liquidity on chain. I think that's a net positive.

on chain. I think that's a net positive.

And I'd also say they're all starting in slightly different places, right? If if

I look at what um circles seems to be optimizing for I don't know seems like they're optimizing for capital markets flows which are very different to payments flows >> and so if you're going to bring both of

those on chain your starting position is quite different and actually some of the features you build might be quite different and the lessons you learn might be quite different probably the same for for plasma and stable and those

other things they're looking more at the the global south and what the existing tether user base needs so I I think like this this process of learning is a good thing so long as we can continue to

learn and so long as people continue submitting EIPs and we continue to do it in the open and that we all kind of know that we're trying to make this thing better um and we're trying to avoid

fragmentation. These are non-trivial

fragmentation. These are non-trivial things to do. But I think that I mean look when you listed out that team and and kind of what they were I was excited to learn from all of them but I was also

excited that they are people that contribute back to the ecosystem. And it

was weird for me I had this uncanny valley moment joining Tempo where people thought it was one thing and I saw it as this very different thing cuz to me the mission is how do I bring TRFI liquidity

into a space that is going to get the benefits of going on chain and how does that grow the whole ecosystem. I think

that's my perspective anyway.

>> That's great. I think that's my perspective as well. Although there are elements I I kind of wonder about and this is maybe the you know our cryptonative bet coming from that side rather than tradi. So this is why

there's an important meeting of the mind. So Matt Hang who is uh leading

mind. So Matt Hang who is uh leading this effort at tempo he is the um um from paradigm of course he uh wrote a post over the weekend talking about tempo and there were two words he used

in that post. He said that Tempo was going to emphasize neutrality and permissionlessness, which these are like >> I'm like, hell yeah, that that's why crypto exists, neutrality and

permissionlessness. Then people see kind

permissionlessness. Then people see kind of a a corporate chain launch with a permission validator set and they say, okay, like do you mean the same things we mean when we say, you know,

neutrality and permissionlessness?

Because in crypto, for crypton natives, that's a very high bar. And a little bit >> these words are these words are sacred.

These are sacred sacred words. They have

they have they have a lot of meaning.

And uh some of what I'm reminded of actually is um you you remember 2018 and the whole Libra thing playing out where basically Facebook they wanted to do a

corporate chain. They had all sorts of

corporate chain. They had all sorts of uh partners and sponsors you know and uh they went and you know they asked the US government hey can we launch this thing?

The US government said hell no you can't. Now maybe that was a timing thing

can't. Now maybe that was a timing thing different time and place. We didn't have the Genius Act. we didn't have the current administration. Regulators are

current administration. Regulators are are much more friendly. But I saw a post from uh one of the the uh people who was actually involved in trying to launch Libra at that time, Christian Catalina.

And he basically went through and he said, you know, here's why we failed for Libra. And he was, you know, wondering

Libra. And he was, you know, wondering if the corporate chains were also going to fa fail in a similar way. He said,

the problem with corporate chains like Tempo isn't a matter of code. It's a

matter of incentives. We know the script. A tech player builds a network

script. A tech player builds a network and promises fairness, neutrality, permissionlessness to get everyone on board. But once they have a captive

board. But once they have a captive market, the temptation to tilt the playing field becomes irresistible.

>> Would a sane competitor bet its future on Stripe's promise not to eventually favor its own products? This comes back to neutrality and and permissionlessness. Anyway, how do you

permissionlessness. Anyway, how do you think about these things?

>> Yeah, I I think ultimately it's about walking the walk. um because those are big words and and I think there's a there's a promise to keep and I take that very personally and very seriously

and I think everybody in the the team does and and on the way in you know I'm quite um careful about anytime I go near crypto because I I can still thankfully

walk into most rooms in TRDFI and still have a shred of credibility and still try and convince them that going on chain is is the right idea but do so in a way that's not going to scare the crap out of their regulator or their risk

teams right?

>> And so this is the fundamental tension that you have is that one side needs to hear that you are going uh sort of uh all the way to uh credible neutrality

and I will put my hand on my heart and say that's what I believe that the tempo team is going to do and we'll we'll walk the walk to get there. But

reserve judgment until you see it. I

think that's absolutely fine and you should do that. Uh the other side of that is uh the argument that you then need to make to traditional institutions

which is actually the lack of vendor and platform lockin is a net positive and this comes all the way back to the AWS moment at the beginning which is you can

commoditize your costs but so can quote unquote we separate operating company like it's it's not related to to its parent investor stripe but any payments

company could dramatically commoditize its cost of operations and its complexity. This is something that is a

complexity. This is something that is a net positive and people who are validators on it in an open permissionless governance have an opportunity to profit from it. Sure, but

they're running a utility and we've seen that network model play out um quite a lot in the crypto universe. That

argument is starting to land with corporates in a way that I don't think the market was ready for in 2018. The

market didn't buy that the better performant lack of platform lockin story was something that you could achieve with something that looked a bit like crypto. Most engineers would go no thank

crypto. Most engineers would go no thank you. No. There was actually a lot of FUD

you. No. There was actually a lot of FUD in the engineering communities if you remember it. There's still some hold

remember it. There's still some hold outs who say oh it's all scams. Uh but I think that's changed. The serious heavy engineers now will say, "Well, this is actually more performant than my

existing payment systems in some cases, and it definitely helps me over here."

And it'd be really great if I did wasn't locked into that one provider. Something

to think about as well, every company that does payments will have multiple payments processes as its provider. Once

you reach a certain scale, you never put all of your volume into one payments provider. you always want to spread that

provider. you always want to spread that risk around. So having a network that

risk around. So having a network that does that means one integration and I'm spread my risk around there's multiple validators. That's that's good. That's

validators. That's that's good. That's

the way the market already looks. So to

me it's like less of a religious like oh we intend to do this cuz it's the altruistic thing to do. It's also the rational thing to do. It's the right thing to do from a business standpoint.

I just don't think the market was ready for it in 2018. I definitely think that uh neutrality and permissionlessness can be a good business decision and is. I'd

also contend that like maybe um there's a different zone of meaning with those words when you go to kind of the the cipher punk way of thinking versus when

you go into a tradi boardroom. Okay. So

the the pure kind of uh cryptonative way of thinking about something like neutrality is uh can your enemies and adversaries use the chain in the exact

same way that that you do with the same rights and guarantees? Right? So

something crazy, don't say this in a tradey boardroom, but can Russia oligarchs be on the same chain as people in the US and the US government? Right?

And I don't think that that level of neutrality is going to be in some of these corporate chains. It it can't. So

there's kind of a zone of neutrality, right? It's like uh um you know, you

right? It's like uh um you know, you have Ethereum which is maybe trying to be a world ledger. You have something like Bitcoin which is trying to be a world store of value. In fact,

Bitcoiners talk about Bitcoin is money for enemies, right? Um Ethereum is like kind of a a ledger for enemies, if you will. the entire world can use it

will. the entire world can use it because it's maximally credibly neutral.

I don't think that's going to be the bar for a payments chain, particularly for a dollar payments chain. But you can be

neutral and permissionless within a smaller zone which might be all of the um good acting western you know banking

and fintech uh companies of the world for instance and that's a smaller zone and you could still strive to be maximally neutral and maximally permissionless inside of that zone. you

just I don't see that there's a way for a corporation to like get all the way to Ethereum levels of neutrality and I feel like that's not clear to people so they see it as a threat or something like

that. It's within a different zone.

that. It's within a different zone.

>> I I can completely see that. Look, I

think the zone you're describing is the target zone. Um but it's also anybody

target zone. Um but it's also anybody would be able to create a stable coin.

Anybody would be able to create a wallet on it. uh then anybody would be able to

on it. uh then anybody would be able to write software that says I don't want to touch anything that's not these things as well. So you could create your own

as well. So you could create your own DMZs within it. Um I I view stable coins as the same as cash and the banking system is very familiar with dealing with cash. Uh cash can fall into the

with cash. Uh cash can fall into the wrong hands. It can be transferred

wrong hands. It can be transferred across borders, but when you're moving large amounts of it, it becomes fairly obvious that you're moving large amounts of it. Same is true with stable coins on

of it. Same is true with stable coins on a network. So if if I was speaking to a

a network. So if if I was speaking to a policy person again I would say I really want this to be as maximally used as possible and to have as much economic

activity on it as possible and there's a lot of upside for anybody being able to do that and I think that's a really good thing especially for financial inclusion especially for people being able to

access this stuff. So, you know, like I take your point. It's definitely not the target zone is to like where for enemies. That's not the marketing

enemies. That's not the marketing structure here.

But at the same time, the permissionless is genuine. Like it's it's really there.

is genuine. Like it's it's really there.

There will be uh stuff that's that's anybody can create their own stable coin. Anybody will be able to access it.

coin. Anybody will be able to access it.

So, will they want to? Will they believe it? That's up to them. But, you know,

it? That's up to them. But, you know, like let's let's see if we can sort of do the mission first and build just a really great product that improves people's lives.

>> When it comes to the uh governance structure of Tempo, there's something that you said earlier, Simon, that reminded me of um just a really cool corporate story of uh how Visa came to

be, Visa, the the settlement network.

The genesis of the Visa company is actually really interesting. Uh it

didn't start off as just a normal company. It started off as Bank of

company. It started off as Bank of America's Bank America card like experiment in the 1950s >> and instead of scaling this network alone, Bank of America just licensed

their system to other banks which created the first nationwide multi-bank like credit card network. Uh and then by the late 1960s these banks had formed

this nonprofit membership cooperative to run this network. uh meaning Visa, which is what this network came to be, was effectively like owned and governed collectively by its member banks rather

than any sort of single company or founder. And this cooperative model gave

founder. And this cooperative model gave every participating bank a slice of the Visa pie through transaction fees, governance rights. And then decades

governance rights. And then decades later in 2006, Visa was converted into being a for-profit corporation and then and then went public. And so it started

off as like, yo, there's this standard consortium thing that we should coordinate around and we can all govern how we want it to look together and then we will share some of the revenue and

then later we'll back our way into becoming a for-profit publicly traded company, which I think is a pretty cool story for a how a corporation comes to be. I don't know if that's explicitly

be. I don't know if that's explicitly the plan, implicitly the plan. It seems

like tempo could be in the very beginning stages of following something like that. I don't know if that's even

like that. I don't know if that's even articulated anywhere or I'm just uh here.

>> That's that's um a phenomenal um narrative but I don't think it's the fourth thought or the calculus tempo at all. But your point is a phenomenal one

all. But your point is a phenomenal one because uh if uh there are students of history then the acquired episodes on visa are must listen to like if you want to understand it. So, Dehawk, the

founder of Visa. I mean, look, my co-host on the tokenized podcast is Kai Sheffield from Visa. Like, this is the ultimate student of DeHawk if ever there was one. And Dehawk was a very

was one. And Dehawk was a very interesting character from a small town in Utah. Very softspoken individual who

in Utah. Very softspoken individual who gradually quietly patiently persistently convinced bankers that they should do something that were not in

their short-term self-interests. Wild

idea, I know. Um but then after a while they started to realize that actually no this grows the network. If I accept the cards with my merchants and your customers can use them at my merchants

then this grows the network and I get more transactions and I get more fees and this is this is a really good thing like we want this growth. And what he

coined was this term uh which was uh chaos from orders or chaotic >> chaotic organization. And it's a killer phrase.

>> And um Kai Sheffield uh says that what you know the the I remember talking when Dows were emerging. It was like this is Dehawk's vision coming to reality and

that these chaotic chaotic organizations have just clustered and found each other um and built their own governance models and sort of their learning. I mean you guys made the joke many times

speedrunning learning the financial thousand thousand years of financial history right like uh I think there's also speedrunning the payments history and those chaotic networks uh can

sometimes just really genuinely emerge but there's usually some crazy character in the middle of them. The story of Swift is quite different. Swift is

international wires did not work. So

some banks got together in a room in Brussels in 1973 and came up with a standard to send different types of messages to each other. Story of Swift is a lot more boring. The story of Visa

that chaotic network and the convincing work that had to be done with people who were adversarial is fascinating. But

then that all happened in the '60s. It's

40 years later when DeHawk is long since retired that any other future decisions are made and that that network goes on to become what it is today. I think that

there's still so much room to go um in actually unifying all of these different payments rails. I once described um

payments rails. I once described um stable coins as the rail above rails. Uh

we have lots of existing Tradfi payment networks and there's always some integration issue. If I want to connect

integration issue. If I want to connect Pix in Brazil to UPI in India to Fed now to Visa to something else, each one of those is a point-to-point integration.

Or I could just integrate them all to crypto networks. I could integrate them

crypto networks. I could integrate them all to a payments chain. I could

integrate them all with stable coins.

And that becomes the one universal settlement layer for the internet. And

that's kind of what excites me is this idea that you could have this more global fabric for settlement. And that's

not what Visa was building. Visa is

building the very top bit. It's like I walk into a store and I say, "I'd like to make a payment, please." And then banks, you figure out what happens next.

Well, we've already got a lot of like wallets and we've got lots of card networks and we've got lots of pixas and UPIs and Alibaba and Alip Pay and all of those sorts of things.

they go down to the banking sector and that's when it gets slower. What if I could stick stable coins beneath those and what if I could stick the stable coins beneath the rails between the banks and I think that connective tissue

is really really exciting for me. So yes

to the to the dehawk story but consider where it sits in history. Simon, let's

actually talk more about stable coins and some related ideas because I think you have a a simple way of breaking this down. So, everybody listening knows what

down. So, everybody listening knows what a stable coin is, has probably used a stable coin before. This is the Bankless Podcast after all. I hope you have. Um,

>> there's also something called a tokenized deposit, >> which is a bank um kind of deposit onchain. I we've recently seen a

onchain. I we've recently seen a headline about JP Morgan doing this on the base chain. They've issued a tok they're tokenized deposits on the base chain. People scratch their heads and

chain. People scratch their heads and don't know what that means. And there's

also this concept of a central bank digital currency CDC. Now, we haven't seen that out in the wild, but this is maybe, >> you know, connected in some way to tokenized bank deposits and also stable

coins. You have a way of breaking this

coins. You have a way of breaking this down. you wrote a blog post called every

down. you wrote a blog post called every bank um should tokenize its deposits.

>> Uh tell us about these distinctions. So

what's the difference between a stable coin and a tokenized deposit and a CBDC?

How is this all going to work together as we go through this crypto transformation?

>> The main difference is what's it backed by and what problem does it solve? So, a

stable coin uh under the Genius Act anyway is backed by T bills and overnight repo uh in the United States and USDC, Tether and whatever. They show

up in your wallet and you know those fairly well. Problem they solve for

fairly well. Problem they solve for crypton natives is it's money I get to live every day with it's for trading. Um

but for a lot of the world it's access to dollars, whole dollars yield. We know

that story. Um

what problem does CBDC solve? This is a really interesting one. Kind of like you got to go right to the other end of the spectrum. Well, uh right now uh if I'm a

spectrum. Well, uh right now uh if I'm a bank, I probably have an account with the C the Bank of England and the ECB and all of the European central banks in France and Germany and elsewhere, the

Bunders Bank. And I have a account at

Bunders Bank. And I have a account at the Fed and I have accounts everywhere.

And I have to deal with settlement delays across all of those. I have to trade across all of those. I have to deal with other banks across all of those. And it's incredibly slow and

those. And it's incredibly slow and incredibly painful and a lot of it can go wrong. Central bank digital

go wrong. Central bank digital currencies are like stable coins of central banks. They're instant 24/7 and

central banks. They're instant 24/7 and global. Um but they solve that for the

global. Um but they solve that for the commercial banks. So I'm a commercial

commercial banks. So I'm a commercial bank. I want to move money at the speed

bank. I want to move money at the speed of the internet. Um I want to do that with zero credit risk. The zero credit risk of a central bank is it's the

lender of last resort. So I I don't have to park much collateral there to be able to use this in the first place. If I'm

settling there, it's it's really going to settle. So for the big banks, CBDC's

to settle. So for the big banks, CBDC's solve this wholesale markets problem.

They do not compete with stable coins.

>> And just really quick, when you say C CBDC's, you're saying hypothetically this category because do any CBDC's actually like exist out in the wild at scale?

>> No, not at scale. Hypothetically, there

are some policy objectives, I think, in Europe and the UK to have something that would work like cash and work offline.

So, imagine I have no internet connection and uh I need to pay for something and there's no where there's no ATM for 100 miles. Wouldn't it be

really great if um that vulnerable person could still pay for something?

Like that's the policy objective that is genuine and true uh about some of these CBDC projects. So I think they get

CBDC projects. So I think they get demonized a lot but actually when you look in the whites of the eyes of the people building them they're trying to build something that's useful for good reasons I think. Um so solve different

problems for different people happens to use tokens happens to quite often sit on a blockchain network. Huh interesting

right but just very different universes.

And then you get into the middle which is tokenized deposits. So who uses deposits most today are Fortune 500 companies. They want their money at some

companies. They want their money at some of the biggest banks because they want the lack of credit risk of that big bank going down. And those big banks solve

going down. And those big banks solve all kinds of problems for them. they are

uh if you are trying to get into a hard market like say get oil from Iraq and find a supplier then this is going to be the bank might know that and they've

done it for some of the clients and they might be able to secure you some lending and get you good FX and connect you with some people that can help you along the way. Like banks do so much more for a

way. Like banks do so much more for a Fortune 500 than just move money and just store money. They're a lot more than a wallet. And I think realizing that's a really important thing. Uh

there's a human side to managing complexity. So I want my uh I want my

complexity. So I want my uh I want my credit risk not to exist at Circle or Tether. I want my credit risk to exist

Tether. I want my credit risk to exist at a uh or at Black Rockck for that matter. I want it to exist in a GI bank.

matter. I want it to exist in a GI bank.

And therefore, but the problem with that is unless I use a closed loop like Kexus, which we should talk about by the way, is I think very underrated. Um,

unless I'm just moving money between JP Morgan bank accounts, I'd really like that to be able to move 24/7 instantly and globally. And tokens on a blockchain

and globally. And tokens on a blockchain network are instant 24/7 and global. So,

if the banks could tokenize that deposit and they could be confident that it would meet all of their requirements, they could offer all of their customers instant 24/7 global settlement. And I

can tell you, every single Fortune 500 CFO would jump out of their chair to be able to get that. That would be something that would be unbelievably exciting for them and frankly a lot of

other folks. So, solves a different

other folks. So, solves a different problem for a different persona. So,

where do these three things connect? I

think was your second question, right?

Well, consumers of potentially stable coins of cash tend to buy things from corporations and corporations use banks and banks use CBDC's. So, all of that

stack look exists today. It just has a lot of inefficiencies in it. All of that stack will exist tomorrow. It'll

probably use tokens and it'll probably use blockchain networks. And so, my hypothesis was it's all going on chain.

It's just happening at different speeds and it's happening in different ways.

>> There seems to be an opportunity for the banks with respect to tokenized deposits. Let's say like they can do

deposits. Let's say like they can do that. That's a the service offering that

that. That's a the service offering that they have.

>> Whereas with uh stable coins, it seems like this is a bit of an unbundling uh for banks, if you will. So right now uh in many places banks kind of run the payments network and they do it in a

really janky way and maybe they're limited by their you know 1970s cobalt technology and it's all fragmented and janky. We talked about that. With stable

janky. We talked about that. With stable

coins what you're effectively doing is unbundling the checking account from a bank. At least for me as a retail

bank. At least for me as a retail consumer, why in the world would I keep money in my bank's checking account where they're giving me 0.015%

interest when I can keep it in a stable coin particular even under the Genius Act, that does seem to be a way for me to receive the yield on treasuries for that and I can get my 4% or whatever the

Fed funds rate is at that point in time.

So, and I'm going to move my checking account obviously to the stable coin, right? So, this seems to unbundle the

right? So, this seems to unbundle the banks, I guess. Um, is that a fair way of of looking at this? And is this a net loss for the banks? Do you think the banks are going to fight stable coins?

It felt a little combative in the genius bill, uh, as it is, but are they going to try to >> I think there's a there's a fair fear of deposit flight. I think there is. Um,

deposit flight. I think there is. Um,

and I think it's understandable, right?

Like if if something even if you look at this as um as a big merchant or retailer like instead of holding my money at a bank, I could hold it as a stable coin.

Um let's say I'm doing payouts to um Dashers or Uber drivers or whatever and they've got a wallet and a balance. Why

wouldn't I hold that wallet as a stable coin where I collect the yield instead of the bank collecting the yield on that? So that I think there's a real

that? So that I think there's a real risk of deposit flight that they're uh right to be concerned about. But the

flip side of that is well you can compete in other ways as well. You can

wrap things around the token that you do just as you do today. Uh a financial institution does more than be a wallet.

It wraps financial products together with its balance sheet. it's able to be competitive for its biggest customers uh in a way that I don't think it had been historically for some of its smaller customers, which is all right, you've

got your checking account with us, so we'll give you this better mortgage rate. Like that type of you did one

rate. Like that type of you did one thing, so you do the other thing is what a what a balance sheet allows you to be able to do. Um and I guess it sort of looks like collateralized lending, but

um an even better deal because they can take the risk on some of that stuff because they have a license to print money. they can create net new deposits.

money. they can create net new deposits.

And so that again, I still think of the competitive advantage of a bank as they've got a balance sheet and they've got a license to create deposits. That

to me is something that they could go use and go weaponize. Like why not go compete and and expect that the the innovators in the crypto community in the stable coin world is going to

innovate like heck and they're going to do some incredible things, too. Um, you

know, Etheri and Pyra and all of those products, they're amazing. They're

really, really good. And I hope it makes every financial institution up their game and build new products. I want

that.

>> The the banks definitely cannot sit still. I Another question I have for

still. I Another question I have for you, maybe you have the answer for this or or maybe not, but maybe we'll have to bring on an economist to try to uh answer this question, someone who's stable coin st savvy, right? So just

like in my way of thinking about it, you have the dollar and then you have uh short duration treasuries. And from a crypto perspective, um short duration

treasuries, basically T bills, are essentially a staked dollar. Does that

make sense?

>> I I take my dollar and I wrap it and I stake it, right? I put in a bond. It's

called a T bill. And then I get my staking yield. I get my 4% yield,

staking yield. I get my 4% yield, whatever the fund Fed funds is getting me, right? So this this begs the

me, right? So this this begs the question is if you have access to a liquid treasury and it acts just like dollars, treasuries can be tokenized,

why in the world do we need dollars in the first place? And I got to think some monetary policy people out there are like, well, this is how we've constructed the system and there's a reason for this. But I'm just thinking with the genius,

>> yeah, the idea of the genius bill is you can't spend those things. They would not be stable coins. they would be tokenized treasuries.

>> Effectively, we're kind of getting the same thing if we have our stable coins giving us yield, right? Which it seems like there's plenty of opportunity to get yield from stable coins.

>> That's the legal jiu-jitsu stuff though, isn't it? Your stable coin is not giving

isn't it? Your stable coin is not giving you yield. You see, your stable coin,

you yield. You see, your stable coin, you're getting rewards for holding it.

That is a different thing. Um, so

somebody might be getting yield somewhere. Somebody So, you know, think

somewhere. Somebody So, you know, think about it um as an exchange that's giving you yield for holding the the stable coin. You're not actually getting yield

coin. You're not actually getting yield on the stable coin. The stable coin issuer is giving the exchange a wire transfer. That wire transfer is being

transfer. That wire transfer is being used as a marketing budgets for a rewards function and you're getting those rewards. So, as far as the money

those rewards. So, as far as the money flow has gone, that is not a yield. And

you could spend that stable coin and that marketing dollar that got you to want to spend that stable coin and hold it there is is kind of this different thing. I wonder if that loophole will

thing. I wonder if that loophole will get closed. I genuinely do because it's

get closed. I genuinely do because it's uh it creates a a difficult thing to say no to as a consumer. Um and as possibly, you know, in a in a bit of a gray area.

Um but my understanding of the Genius Act is that uh holding tokenized treasuries uh would not allow you to directly spend them. You'd have to do a conversion

basically right?

>> Yeah. Yeah. Yeah. Exactly. Exactly. And

there might be like a a super transaction you could do where boom and it turns into a stable coin and then you spend that and you know sort of atomic swaps and there'll be all kinds of clever stuff. Never bet against crypto

clever stuff. Never bet against crypto to do all of these things very very quickly. Um I'm sure it'll happen but um

quickly. Um I'm sure it'll happen but um yeah also expect the bank lobby to come back and >> Okay. But so it's but you you're you're

>> Okay. But so it's but you you're you're saying it's the the bank lobby that will close this and maybe the the bank lobby of all bank lobbies which is like the actual you know the the Fed the central banks of the US will kind of block this

but just like fundamentally do you understand the monetary economics behind this like like why can't we just have >> to that's what narrow banking is effectively.

>> Yes. Yeah. and and I think there is a policy position um and again I'm not going to claim to be an econ economist or a policy expert but what I've read is

the explicit statements and the explicit policy are a little bit more narrow banking in the system might be a good thing coming out of the Bessant Treasury and um to create some competition I

think that's one way to react to too big to fail into GIPS um the financial institutions quite rightly in my view would say well we could compete more fairly if we weren't under these massive

capital controls that came out of DoddFrank and we could potentially offer more yield. So, we've got one arm tied

more yield. So, we've got one arm tied behind our back. I don't know who's right in that conversation. Um, but it certainly feels like the risk of going too much towards narrow banking is

everything's private credit and there's there's less obvious protections when it all does go wrong. What happens when there is a great financial crisis and the economy is on its knees? Do we just let it run? Do we just let it all burn

to the ground or do we want somebody to step in? I think that's an interesting

step in? I think that's an interesting governance question for nation states to start to think about because if history's taught us anything, it's like, no, we quite like it when some when mom and dad step in and and like stop the

bleeding. That would be really nice. Um,

bleeding. That would be really nice. Um,

so let's see >> on stable coins. Uh, how do you think this plays out? We're at a period of a lot of innovation. We're at really we're at the we're at the starting line. Okay.

The G gen Genius Bill just happened a couple months ago and so this is the the starting shot of an epic competition that's going to play out. I mean, we're only at, you know, 270 billion in stable coins. We're going to get to many

coins. We're going to get to many trillions. Okay. It's going to eat

trillions. Okay. It's going to eat everything. How do you feel like this

everything. How do you feel like this plays out? I We had Zack Abrams on the

plays out? I We had Zack Abrams on the show, who's the one of the founders of Stripe, uh, excuse me, Bridge, who's acquired by Stripe.

>> Stop confusing these things, man. A

whole different >> There's so many fintech names I'm trying to uh get in my head here. And his his take is there's going to be like five big branded stable coins out there,

right? Like power law winners and they

right? Like power law winners and they all do something, but then there's going to be hundreds of thousands of these abstracted stable coins. Basically,

every bank, every company is going to have their own stable coin. Uh, you

know, gift cards, they become stable coins. All these things become stable

coins. All these things become stable coin. Is that how it's going to play

coin. Is that how it's going to play out? Because there's some confusion in

out? Because there's some confusion in my mind is, and I worry about this. Um,

we we get all of these stable coins.

None of them are fungeible. You have to swap them. It's just bad UX. It becomes

swap them. It's just bad UX. It becomes

fragmented. We have to have some regulation to go fix that. How do you think the stable coin thing plays out with all of these competitors?

>> I actually agree with Zach um on the power law at the top end and then everybody gets their own stable coin, but I think we'll hide the wires a little bit better. Um and I think we'll

what's missing is uh is some sort of um addendum dare I say it to the Genius Act um that that considers the singleness of money and considers uh in Europe we have

something called an electronic money issuer an EMI and all electronic money can be held in a safeguarded account at a a big bank or at a central bank and

that essentially means that it's at held at par to whatever your local currency is the pound, a euro, whatever. So, a

stored value account, a gift card is just a dollar but held in a on a gift card. Like it it just get you just

card. Like it it just get you just simplify the thing quite dramatically.

And so, you don't need a technology solution to a governance problem necessarily in this case. And I suspect that's how it plays out is we we start needing those governance solutions. Let

me tell you, as somebody who's run PE prepaid programs, like if you're going to run gift cards, if you're going to run pre Oh my god, they're so hard to run. They're so expensive. They're

run. They're so expensive. They're

extremely painful. Stable coins are a massive upgrade for users and they will happen. And I suspect what we're just

happen. And I suspect what we're just going to see is that that um AMM style swapping from uh you know, niche stable coin to top five stable coin just

becomes a utility. It just becomes a utility that's always on, always available, like electricity. You just

plug into it and I can swap between these things.

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Pro. Click the link in the description for more information. Simon, are you familiar with the idea of the DeFi mullet?

>> Oh, yeah. I'm actually I have a little WhatsApp group of DeFi mullets. It's

fintech nerds who uh who went deep on crypto early on. Yeah. Know it.

>> Funny funny. Yeah, I saw I saw a tweet uh yesterday. It's coming it came out of

uh yesterday. It's coming it came out of somebody who works at Coinbase. uh they

tweeted out fintech is dead. It's just

crypto or tradi now. And I you know inside of the crypto industry we tend to think that we're the center of the universe. And so when Stripe spins up a

universe. And so when Stripe spins up a payments blockchain that makes Stripe a crypto company, no longer a fintech company just because you know we're the center of the universe here. Uh to what degree do you think that that is

actually that sentiment is true? As in

like if you're in fintech you better be doing something with crypto right now or you're just falling behind. to to what degree is crypto sort of like the main

character in the fintech world or not?

>> Uh crypto doesn't really exist in the fintech world, but stable coins are the number one topic. And I think that nuance is that's the nuance. Stable

coins are the fintech 3.0. like they are uh if if the beginning of fintech was making better user experiences from crappy user experience and then the next thing was making better APIs for

developers the third one is making better payments infrastructure >> wait so for in the from the fintech view of the world is it basically like thank god these crypto people finally made

something useful now get out of the way >> we're going to stable coins aren't crypto is they are just fintech >> correct correct duh like hey what's

wrong with you guys? John Collison had this great quote um that he was talking about. So the big like the Super Bowl

about. So the big like the Super Bowl conference for uh fintech is money 2020 every year in Vegas >> and uh everybody descends on it, you know, a bit like permissionless kind of

thing. It's like you got to be there.

thing. It's like you got to be there.

And so this thing is held in the Venetian in Vegas and there's this like horrible smoke filled atmosphere, slot machines, loud lights and everything and

in the middle of it is like the serious payments conference and the serious payments business. And he said that's

payments business. And he said that's crypto and you got to get through all of the casino crap and then in the middle of it is the serious payments thing. And I was like,

"Oh my god, yes, that is that is exactly what it's like. It's so true." Um, and don't get me wrong, I kind of love crypto as much as I hate it for that stuff. Like, god damn, it's funny. And

stuff. Like, god damn, it's funny. And

the innovation and the soup and the weirdness just creates beautiful things as much as it creates horrible things.

But that was so spot on because I can make a credible argument to any bank CEO about why they need to take stable coins, if not tokenized deposits, extremely seriously. And uh yeah, it's

extremely seriously. And uh yeah, it's it's duh. It's not a crypto thing. It's

it's duh. It's not a crypto thing. It's

nothing to do with meme coins.

>> Okay, but it doesn't end here though because there are legitimate tokenized assets beyond stable coins. There are

tokenized tea bills and so a lot of there's a lot of fintech apps out there that start with payments. This we've

actually seen this in Argentina which has a very like if you go down to Argentina, they are like two to three years ahead of everyone in the crypto space about crypto adoption. And I will

also say similarly with fintech because they need it because they need payments to work.

>> Hyperinflation. Oh my god.

>> Hyperinflation. So they have been like the osmosis pole to get them on on chain and into dollars has been way more way accelerated. Uh and so they all like

accelerated. Uh and so they all like there's so many Argentine fintexs that are all start with payments, but then they're like, okay, but how do we keep money inside of our app? Let's offer our

customers investment opportunities. And

that can start with like% tea bills but then also tokens and there are like token exactly all that kind of stuff.

And so throw me a bone here Simon tell me it doesn't just stop at stable coins.

>> Oh no de no stable coins are the gateway drug for fintech into tokenization. I

mean there's a reason um we called uh the the podcast tokenized is because the revolution will be tokenized. It's a

matter of time till every asset class is a token. Um, it's just you've got to get

a token. Um, it's just you've got to get payments are like the core primitive of finance. Once you get those right, then

finance. Once you get those right, then you can build everything else on top of it. But you have building that sounds

it. But you have building that sounds like a trivial sentence. Building

payments right is incredibly hard cuz payments are easy. Edge cases are hard.

What happens if you buy something and the goods don't show up? What happens if you buy something and you claim the goods didn't show up, but actually you're the fraudster and the merchant is

the good guy? Who makes that right? How

do they make it right? What PKI

signatures need to be and the edge cases go on forever. So just solving that is a hard enough problem and then you can start to get to some of the other tokens. But yes, it you get stable coins

tokens. But yes, it you get stable coins to last mile, then you get T- bills, then you get treasuries uh sorry, then you get uh tokenized stocks. I saw the NASDAQ is now going to tokenize all

stocks from 2026 um on Hyperledger Bezu.

I believe that's coming and there's uh the cap markets world is very very alive to that but also there's just this like

decadel long wait and yearning for the infrastructure to feel like I can really put my volume on here I can re and there's always like nope but I can't because of that and I can't because of that and I can't because of that and

stable coins are one of the first ones where they're like I could kind of if you just d so it's that classic Overton window of like, well, if you're in Argentina with hyperinflation, then the

risk of, you know, sort of a memecoin drop slowing things down are probably a little bit less concerning to you than they are if you're running the payroll for 10% of the population. Like that's

those are two different um risk calculations.

>> But David, you were asking for like Simon to throw you a bone and he threw you the bone of tokenization, but I'm guessing from the fintech perspective, tokenization is also a fintech thing.

>> Okay. It's not a crypto thing.

>> At that point, you know, the Trojan horse through the gates, you know, we we all like um one of my friends, Arjun from Connect, he gave me this line that crypto has always been just plumbing.

Crypto is plumbing. Like there are some apps that are fun that are also the cosmetic layer of crypto like Pump Fun, uh Poly Market. These are like cosmetic emergencies out of crypto, but for the

most part, crypto is just back-end plumbing. And that's what I'm hearing

plumbing. And that's what I'm hearing Simon echo. And as as more of this stuff

Simon echo. And as as more of this stuff comes online and there's more options, then you'll just see that in your fintech front end.

>> What blew my mind uh a couple of weeks ago is I was speaking to Eric from the Canton network. If you've not spoke to

Canton network. If you've not spoke to those guys, that's mind-blowing. He was

saying that uh there are capital markets trades now where Bitcoin is considered a highquality liquid asset >> and and it's and it's building out uh energy infrastructure in parts of the

world. It's collateral for energy

world. It's collateral for energy infrastructure. I mean, this is this is

infrastructure. I mean, this is this is mainstream as it gets. We've already

arrived. It's just an Overton window thing. Different people. It's kind of

thing. Different people. It's kind of like um adoption of AI, right? Like you

probably know people in your personal lives who still don't use AI every day and you're like, why? This is wild to me. And that same Overton window applies

me. And that same Overton window applies to institutions as much as it does as anything. And um there are different

anything. And um there are different folks in Wall Street, there are different folks in banks, and payments are now coming up it. How's this going to shake out in this clash of the civilizations, clash of clash of the

cultures? Uh do you think with So I

cultures? Uh do you think with So I think some cryptonatives are a little bit worried now that now that um Tradfi is here, now that fintech is here, right? And it's this time it's

right? And it's this time it's definitely not the blockchain not Bitcoin thing. The blockchain not

Bitcoin thing. The blockchain not Bitcoin thing. People are getting

Bitcoin thing. People are getting excited about nothing. They didn't have use cases. Now there's actually

use cases. Now there's actually regulatory push for this. And I think this accounts for the the explosion that we've seen with stable coins and tokenization of everything. It's legal

now, guys. Wow, it's legal. And so

fintech's like, okay, if it's legal, let's do it. This does sound great.

Anyway, this this clash of civilizations kind of happening. And from the cryptonative perspective, some of us worry that some of the values and some of the things that we've built over the

last 10 to 15 years are going to start to be eroded as this new like, you know, you know the things you've been here, Simon, forever, and we care a lot about property rights, for instance. those

those words like permissionlessness and credible neutrality that we talked about earlier. We care about that. There's

earlier. We care about that. There's

this cipher punk vision of like owning your own property without any third party intermediaries. And there's

party intermediaries. And there's there's some um shared I think elements here. It's like even in even in Tradfi

here. It's like even in even in Tradfi people worry about um you know uh third party counterparty trust and things like that, right? They understand that that

that, right? They understand that that crypto native assets don't have that.

Anyway, how is this going to resolve? Do

you think is it going to be like a a melting pot of these these different cultures and we all kind of come together or do you think that there will be the cryptonative side that's kind of

a a niche uh and then there's the the the trady kind of blockchain crypto stuff that's its own separate world and we go to separate conferences and we don't talk to one another. H how does

this work?

I mean, I think uh the cypher punk movement will always find the next thing and they'll always find the next thing and they'll keep evolving and they'll keep doing their thing. So, whatever

gets mainstream, they're going to invent the next thing and the next thing. That

is not a static position to to take. I I

also think though you got to recognize that not everybody in the world wants the same thing as you and that a lot of people would quite like it if uh they're

not their own bank. Like being your own bank means dealing with your own bank robbers and that's not a cognitive overhead that the vast majority of the economy wants to take. They want to

outsource that risk. And maybe we can change that by making UX so good that actually it feels like that's happening some other way and they you actually have more sovereignty over your assets.

And that would be amazing. I would love that. But frankly, that's just another

that. But frankly, that's just another way of saying I still want to offload the cognitive effort of uh of being my own bank of managing my own effort uh

things. So you can't want two things at

things. So you can't want two things at the same time. You can't want all of the world to be transformed to your vision and for them, you know, then and for all

of the volume and all of those opinions to come in at the same time. Like you've

got to win their hearts and minds with something that meets them where they are. And I think therefore what you see

are. And I think therefore what you see is like the cypher punk movement will go on and continue to have its corner of the universe where it is pushing for the things it believes in and continues to

pull humanity towards its better demons.

And long may you continue to do that.

Just remember that not everybody's ready for that and we got to find ways and on ramps and easy buttons for some of those people. And I don't think that means

people. And I don't think that means anybody has to give up on their values.

Um but just remember not everybody shares yours, right? like and they they don't have to too. And so what can you bring them and what can you do if you want to make this this world kind of um

something that you want to be I always think that um I mean you guys live this crypto always feels more like a battle of religions and um Tradfi always feels like a battle of frenemies like I go

hard and I compete but I also do business with you and it's just this more grizzled like um you know we're we're fighting like heck one day and then we're shaking hands on a deal the

next day And I wonder if that's a maturity of the industry thing, cuz I grew up in banking and finance where it's really normal to be super competitive with these people, but

they're also my best customer. And these

complex relationships are super super normal in some industries, in some cultures, and they're way less normal in the crypto universe. And I just wonder

like that's a feature of Tradfi I quite like.

I like that many things can be true and the world is messy and complex. Like

isn't that like all great art?

>> One comment on that I I think is like I think your observation is right. It's

like crypto feels very religious, very tribal, very like everyone's an enemy and yet underneath it when you talk about kind of like there is the fact that all boats rise actually together

together even though we'll never admit it online and on Twitter but the fact that Bitcoiners hate Ethereum coal.

>> Yeah. Like I'm going to Bitcoiners hate Ethereum or like Bitcoin maxis do and yet Ethereum has been so good for Bitcoin. Okay, you know even Salana and

Bitcoin. Okay, you know even Salana and Ethereum Salana's also been good for Ethereum. More private keys and more

Ethereum. More private keys and more hands. It increases the value

hands. It increases the value proposition of Ethereum. Like there is an element here even though no one will ever admit it on Twitter that all boats rise like are rising together and like

what's good for what work is good for.

It's not a zero- sum competition which is why I see many of these corporate chains. It's getting money out of Trady

chains. It's getting money out of Trady and it's getting them more adjacent to our cryptonative networks that's going to bleed into our crypto native networks. It's also standardizing the

networks. It's also standardizing the EVM. Like imagine that we're going from

EVM. Like imagine that we're going from Cobalt to the EVM being the standard.

That's incredible. And I think that's very good for, you know, cryptonative Ethereum network effects.

>> I'd like to push back.

>> We opened up this uh podcast talking about all the different like um >> I like this cop by cop thing.

Yeah. Yeah. We just switched. We Yeah.

Ryan was the uh the bad cop earlier and I was good cop and we're talking about tempo governance, but now we're switching around. Um and so like we we

switching around. Um and so like we we open up this podcast talking about uh the just different 10,000 different standards between all the different banks and one bank needs to communicate in this way with that bank and then it

gets even harder to communicate across countries and even harder across continents. And the cool thing about

continents. And the cool thing about crypto is we are massively uh collapsing simply the number of silos that exist. We're going from like 10,000

that exist. We're going from like 10,000 patchwork silos all AC all across uh the world and we're collapsing it down to like the front page of Coin Gecko and really just the top 20 of Coin Gecko,

right? And so we're the number of

right? And so we're the number of financial silos are collapsing down to like 10 to 15 and they're all publicly viewable and auditable. And when finance

coordinates around the same silo and it chooses Bitcoin to coordinate around or it chooses Ethereum to coordinate around, all of a sudden it doesn't get

the stakes become much higher as in the the code that runs these systems, how these systems are constructed, who governs these systems. When the paro

distribution is around the top five most significant financial standards, all of a sudden the the nature of governance and upgradability and how these systems

are maintained and how these systems have uptime and who really has power and control matters much much much more than who's in control of Wells Fargo or who's in control of Goldman Sachs because

there's, you know, there's only one Goldman Sachs, but there's like 5,000 banks across the world that basically do the same functions. Right? And that's

not the same in crypto. So these are supposed to be human scaffolding coordination technologies and they're meant to support the most number of humans possible. And so I'll push back

humans possible. And so I'll push back on the notion that like the religiousness is a weird quirk of crypto and I'll say that like well it actually really matters. The future will be

really matters. The future will be different based on which platform that we coordinate around as a as a as a human human species. Yeah, I I was being uh glib, but I I do love the

anti-fragility nature of crypto and the fact that it has um like uh it its fights in public. Um that anti-fragility

is a really useful thing. Um so um I as you were talking I wrote down um EMV.

EMV stands for Euroard, Mastercard, and Visa. Um you'll see that that is on

Visa. Um you'll see that that is on pretty much every debit and credit card.

There are EMV um spec cards. um that is a very polite argument that happens every 6 or 12 months about how we're going to change how um credit cards work and the the cryptography standards that

exist underneath them. And the level of discourse in that would be right at home um as you would see in you know like listening to people talking about uh

optimistic roll-ups versus zkm versus like it is it's it's but it's just like a more polite version of it. when you're

dealing at that scale, you need to be taking those things seriously and you need the anti-fragility. And I think that's a feature, not a bug. My lesson

from history though is is we we've sort of had uh open public protocols adopted by banking. They use HTTPS today. Um

by banking. They use HTTPS today. Um

quite and the mass it's funny. Um there

is an a story of a bank uh in the UK in the mid '90s that decided that the internet was really interesting. Um and

there was definitely something to this networking idea, but they should build their own network because uh they'll build their own internet because the this one needed to be faster and and cheaper. And so I'm consciously mindful

cheaper. And so I'm consciously mindful of that lesson of history of like >> because I'm guessing.

>> No, it didn't. um in that you've got to find this tension point between like what your requirements are today and what the techn is ready for, but also where the techn is headed. Like consider

its pace of change, consider where the community is going and consider the compounding effect of that over multiple cycles. Uh, and you know, for most banks

cycles. Uh, and you know, for most banks to stay, the annoying thing about crypto cycles is for most banks to stay interested in something, it has to be

the same for about 3 or 4 years. Crypto

has this annoying habit of just going and disappearing for a little while. And

so, just when you spent all of your internal political capital to get something done and to get it ready and to get it over the line, uh, then it disappears and everybody goes, "Nah, don't worry about that. we'll use this budget over here instead >> and

>> and then you have to start all over again in four years.

>> Yeah. So, so that's why I think moving away from the boom and bust um you know like just the noise of crypto can be useful sometimes is if you want to bring

um mass market liquidity in you need to give it a safer space but that safer space needs to be on chain >> and once you get them on chain then you

can build DMZs and you can figure out safe ways to to kind of um take care of all that. I guess that's a good point,

all that. I guess that's a good point, right? The payments chains are pretty

right? The payments chains are pretty immune from our four-year boom bust crypto uh cycles, right? So, you stay flat continue to be building while we're uh maybe that's evidence for the super

cycle. Um

cycle. Um >> Simon, one other question I have for you is just like I felt maybe 24 months ago I was I was like envious of Europe actually because uh it seemed like

>> it seemed like the EU was actually doing something positive with respect to legislation. And they had MA and this

legislation. And they had MA and this again 24 months ago was Gary Gendler regime, Operation Chokepoint. Like they

really were out to get us in the US here, Simon. And now um fast forward to

here, Simon. And now um fast forward to 2025 and I feel like the the US is really leading and it happened so quickly and the Genius Bill kind of further cements that lead. And then if

you look at the stable coin market share, it's 99% dollars even though dollars have been like down 13% on the euro this year. So euro has been a, you

know, better fiat product than than dollars on a yearly basis. But where are the euros? Is Mika like slowing it down

the euros? Is Mika like slowing it down or like what what's happening here? And

>> yeah, um if if you speak to the guys at Circle, it's still tricky um to to operate in Europe. Um Mika, remember, was not a stable coin legislation. It

was a markets legislation. It was

designed to prevent a Terral Luna style collapse. Um and they mirrored banking

collapse. Um and they mirrored banking rags to be able to do that. and they

said, "Okay, you're a bank. You need to park 200 million before you can do anything." And it's like, "Ouch, that's

anything." And it's like, "Ouch, that's quite that's quite painful." So, uh, you've got to consider it that way. This

back then, crypto was for trading, not for payments. Um, whereas the Genius Act

for payments. Um, whereas the Genius Act is for payments, not for trading. So,

they've kind of they come at the market from a from a very different place. But

it my um advice should any European policy maker ask me, is this your opportunity? Um the euro is a more

opportunity? Um the euro is a more stable coin than USD. Surely the market would want that and if you could issue some more European debt and Eurobond's

very difficult to do that's a lowrisk asset that people would like to hold on to like numbers stay flat is a feature not a bug and especially when you're trying to avoid this stuff and

especially with liquidity. So, I know there's work on this uh thing that uh regulators like to call functional equivalence, which is regulatory speak for we're going to go have arguments in

quiet rooms and figure out how we make these things kind of work together. Um I

do think that uh some of the noises and some of the rumors about uh Europe putting its um central bank digital currency on chain um

were possibly overstated um and wouldn't be true, >> but Was that that was the headline that we saw, right? The ECB was considering like public blockchains for its uh

currency in an effort to you know keep up with the genius what the US is doing.

There is within the Bank of England um innovation hub an attempt to look at just a pure experimental basis what would it look like to put central bank money on chain and I think there's a

desire to understand like what would it take could you ever meet our requirements and so what that says is there's a genuine research question happening it's not policy it's not an

objective but it's a genuine genuine research question about what that would look like that's problem though they spend so much time like in the the banking class researching this stuff whereas you know like you some of the

private companies are actually just like building stable coins and making it do things in the here and now >> which you know the ultimate Trojan hulse yeah like this is happening if I'm um a global company why would I not want a

stable coin right now like it it's just why would I not want the yield why would I not want instant $247 when I can and that's what all of my accounting's in and if I'm sitting in Europe I'm thinking what am I going to do to

compete with that on the global stage age. Like I almost want to shake Europe

age. Like I almost want to shake Europe sometimes and be like, "Come on, guys.

You've got all of these strategic advantages. The talent here is

advantages. The talent here is unbelievable. The food's amazing. And my

unbelievable. The food's amazing. And my

god, you should see how walkable this place is. You don't have to take a car

place is. You don't have to take a car anywhere. It's lovely. Come on over,

anywhere. It's lovely. Come on over, guys. We'll we'll host you." But ah the

guys. We'll we'll host you." But ah the policy stuff sometimes.

>> Is that the message for fintexs now? Do

you think they're all going to go through this crypto transformation? If

you're in fintech, pivot to stable coins. Is that a thing that uh fintech

coins. Is that a thing that uh fintech should do?

>> I don't know if it's pivot your whole business to stable coins, but understand where stable coins support your business completely. Like what value do you bring

completely. Like what value do you bring a customer? Do you make their uh lives

a customer? Do you make their uh lives easier for moving money across borders?

Then whoever you are, this is a no-brainer. If you are a neo bank that

no-brainer. If you are a neo bank that just operates in Euro or sterling, little bit harder. But if you wanted to uh expand market presence, go into new

markets, that's something that's a question I've had six or seven times in the past month. Could stable coins help us go into a new market without having to get different licensing? Could stable

coins help us um you know address a new client segment? This is something that I

client segment? This is something that I get asked on a regular basis and corporations ask it too. If if I'm ahead of payments uh and I work in a web two

company, uh anybody that's online, you should be absolutely looking at what stable coins can do for you because the business case is real.

>> Simon, this was a real pleasure, a real treat. You know, as as we end this, um

treat. You know, as as we end this, um actually both David and I before we were crypto nerds, we were actually kind of fintech nerds. Um I haven't even dived

fintech nerds. Um I haven't even dived in dove into this with uh did to David's extent, but remember my early fintech days, I was using like this cool wallet aggregator. I couldn't believe it was so

aggregator. I couldn't believe it was so web 2.0. It was called mint.com and it

web 2.0. It was called mint.com and it would aggregate all my accounts across all of my different banks and you know you erade and all of these things. Um I

don't pay as much attention to fintech now just because there's too much going on in crypto. For those listening who are like me, what's something cool in

fintech that they should go check out that you think is kind of neat for somebody who's in crypto?

>> What toys do you have?

>> Yeah, >> cuz our our toys are name coins and leverage. No, we got cooler stuff than

leverage. No, we got cooler stuff than that. But you know,

that. But you know, >> Aentic Commerce is wild. Aentic commerce

is going to reinvent everything. Jesus.

>> Uh uh essentially you you have a personal shopper or and a personal CFO who just does your finances. It's wild.

Uh so you give them a credit card and you go, "Go figure out my holiday plans." And it just does it and it's

plans." And it just does it and it's live and it's in production now. and it

can go horribly wrong and it can explode everything or it can come back with a new TV for you and it just arrives at your house.

>> Oh my god, it's so cool and it's going to remake everything. It potentially

breaks. Uh Google's monopoly and Meta's monopoly on advertising. Uh it means that maybe Open AI is where I'm going to chat GPT is going to be my new wallet

where I do all of my shopping. Um nobody

knows what this looks like. Everybody's

trying to figure it out. And uh wouldn't it be really cool if there was some way to have cryptographic guarantees of where the money went and some kind of contract maybe we smart that could just

like give this fixed defined window and budget to these agents. And so genuinely AI labs and startups are going like the

stablecoin crossogentic commerce and agentto agent payment space um is probably like the the cool thing within the cool thing. That's if I'm not writing about stable coins then I'm writing about that.

>> I'm probably going to follow up with my what might be the lamest question about that. But if uh I have an agent and I

that. But if uh I have an agent and I wanted to go buy me a vacation package and I maybe I log into chatbt and be like, "Hey, plan a vacation for me in in

South America or something and then I have I authorize it to go spend my money and then it just does something completely different. It buys me a TV

completely different. It buys me a TV instead." Where's the liability? Who

instead." Where's the liability? Who

where's the liability fall on that?

>> Great question. So in the United States, liability lives with the merchant. So

the merchant has to block the transaction if it thinks the agent has messed up. And so the merchants are

messed up. And so the merchants are like, "How the hell do I know if a merchant if this agent is doing what it said?" So Visa comes along and says,

said?" So Visa comes along and says, "Well, what we're going to do is when you, David, give the instruction to your agent. We're going to give a little

agent. We're going to give a little token, completely different kind of token, doesn't live on a blockchain network, only lives in the Visa Rails.

Um, and this payment token is going to travel through the Visa network so that when the agent comes to pay with that card credential and pops up at the online store, it's going to match the

token and to say uh, this agent was only allowed to buy uh, holiday shopping and it's trying to buy a TV. Eh, don't

authorize this transaction. So, the Visa network would would block it. But again,

that's something that you could write as a smart contract. So liability in the Visa card networks uh and most of the card networks in the United States

always lives with the merchant um unless you do some sort of step up security which nobody ever does. Uh in Europe it typically lives with the issuer so the

person that gave you the card because uh they every time you make a transaction online you have to do like a little biometric authentication to allow the transaction to go through. to the

liability shifts. Uh so yeah. Oh my god.

>> So cool.

>> Feels like we should actually do a podcast at that at some point in the future. Uh Simon, thanks so much for

future. Uh Simon, thanks so much for coming on. I I know I'm reminded of one

coming on. I I know I'm reminded of one thing we've we've always said, which is like once DeFi finally goes mainstream.

We won't call it decentralized finance.

It'll just be called finance. I feel

like we're in the midst of that happening is cryptos just becoming finance at this point in time.

>> Oh yeah, >> you are at tempo right now. Best of luck there. keep us updated. I'm sure we'll

there. keep us updated. I'm sure we'll be watching with great interest. The

tokenized podcast, you mentioned that a few times. You're still doing that

few times. You're still doing that though, even even tempo.

>> Okay.

>> Yep. So, tokenized podcast is still happening weekly. Get it wherever you

happening weekly. Get it wherever you get your podcasts. Kai Sheffield and me talking through the weekly news, but trying to unpack it for a more TRFI payments audience. So, if you are TRFI

payments audience. So, if you are TRFI curious, come join us. Come find us. Um,

we we get into >> Never been uttered on this podcast before.

>> I love it though. I do love it.

come hang out. But but like genuinely we get into the weeds more of how payments works and why this is interesting for payments professionals and so like uh a lot of central banks listen to us. A lot

of payments companies listen to us. So

yep, still be doing that. Still blogging

at fintechbrainfood.com as well.

>> Cool. Nerds are also nerds like us.

Okay. So if if you're happy family, man, that's right. There's a lot of nerd

that's right. There's a lot of nerd injury over there. Uh, Simon, thank you so much for bringing it to the Bankless Podcast today. Got to end with this. Of

Podcast today. Got to end with this. Of

course, none of this has been financial advice. Crypto is risky. You can lose

advice. Crypto is risky. You can lose what you put in, but we're headed west.

This is the frontier. Not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

bankless journey. Thanks a lot.