On Ep. 34 of Tokenized, Cuy Sheffield, Head of Crypto @ Visa is joined by Farooq Malik, Co-Founder @ Rain, Gwera Kiwana, Global Expansion @ Sling Money and Kirill Gertman, CEO @ Conduit to discuss Conduit raising $36 million in Series A funding, banks partnering with stablecoin platforms for payments and more!
On Ep. 34 of Tokenized, Cuy Sheffield, Head of Crypto @ Visa is joined by Farooq Malik, Co-Founder @ Rain, Gwera Kiwana, Global Expansion @ Sling Money and Kirill Gertman, CEO @ Conduit to discuss Conduit raising $36 million in Series A funding, banks partnering with stablecoin platforms for payments and more!
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This episode is brought to you by Visa
A world leader in digital payments, Visa is bridging the gap between traditional financial institutions and innovative blockchain networks, helping players in the payments ecosystem navigate the ever-evolving world of tokenized fiat currencies with confidence and ease. Learn more at visa.com/crypto.
Tokenized is also presented by Avalanche.
With Avalanche’s purpose-built Layer 1s, institutions can tailor digital asset strategies to their exact needs—while still tapping into the power of public blockchain innovation, developer communities, and seamless interoperability. Learn more at avax.network
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We’d also like to remind you that the views or opinions of our contributors today are their own and do not necessarily reflect those of the companies they are representing. Nothing we say should be taken as tax, financial, investment or legal advice, do your own research!
Music by Henry McLean
Speaker 1 00:00
This is really the promise of stable coins, like he's able to access stable coins to come in, cop up the count, able to use those stable coins to actually transact using the payment credential that we issue, and able to actually get real world use cases, and the payment happens immediately, right? I mean, that's the magic of the visa network, which is that the payment will authorize immediately, and the settlement can happen in stable coins. So there's a tremendous amount of demand that we're starting to see, both from consumers and businesses all around the world, which is really cool to see.
Cuy Sheffield 00:38
Welcome to tokenized the show focused on stable coins in the institutional adoption of tokenized real world assets. My name is Kai Sheffield, and once again, I'm in the host seat for today, as Simon is at money 2020 Euro. So please bear with me. But joining me on today's show three of my favorite people in the space we've got Fauci Malik, co founder of rain, how are you doing? Farooq, welcome to the show. Doing well. Thank you for having me. And joining us is Guerra Kawana, global expansion at sling money. How are you Guerra
Speaker 2 01:13
doing good? Recovering after a few conferences. So yeah, feeling good.
Cuy Sheffield 01:18
I just saw all three of you in the same place last week at stable con. So it was amazing to get people together in person, and last but by no means least, Kirill gertman, CEO of conduit, welcome Kirill. We have some exciting news to share with you today.
Speaker 3 01:33
Yeah, thank you. I think I have exciting news to share with you, but either way works,
Cuy Sheffield 01:41
and I need to remind everyone that the views or opinions of our contributors today are their own do not necessarily reflect those of the companies they're representing. Nothing we say should be taken as tax financial investment or legal advice. Do your own research. All right, let's jump in. So from everywhere, stablecoin infrastructure, business conduit, raises $36 million it's a series a funding co led by dragonfly and altos ventures to expand its stablecoin powered payment infrastructure. Company has achieved significant growth. Transaction volumes increasing 16x in 2024 so Kirill, amazing to have you on the show. Tell us more about conduit, the round what you all have been up to and the latest momentum that you're
Speaker 3 02:26
seeing. Yeah, thank you so conduit, BDB, cross border payments platform. We help businesses in Latin America, in Africa, in the United States, in Europe, actually as well, and soon, in Asia, transact across borders using stablecoins, faster, cheaper, more level than any traditional means. And so, as you said, we reached a point of growth last year, and we were actually at the decision point where we could have went down the profitable route and say, you know, we're just gonna be making money here. But who does this, right? And so we decided to expand our reach. We decided to double down on growth, because the potential is there, the market is there. The demand that we're seeing is honestly overwhelming. And so we wanted to capitalize on that. And we wanted to be able to, as I mentioned, expand it to Asia, expand our product suite. And so we decided to raise money instead, and that's what we did with dragonfly, without those sound venture commerce ventures, existing events, surf, Helios and Portage participating as well. Really happy to have everybody on the table with us.
Cuy Sheffield 03:30
Congratulations. And just on our last episode, we're talking about B to B as one of the spaces where we're just seeing significant traction on adoption of stablecoins. It's also just amazing to see companies who have been building for years, and then now that stable coins are the hottest topic everyone's talking about, this is where that work is paying off. And so Fauci, you've been in the B to B space for a while. What's your perspective on this opportunity of how businesses are starting to utilize stable coins, particularly in emerging markets. It's been
Speaker 1 04:01
really interesting for us to see, right? I think the first product we launched on top of our blockchain infrastructure in 2022 was a stable coin account focused on businesses. The early users of that were businesses in like the crypto ecosystem, right, that were earning money in on chain assets and had real world spending needs. And now what we see is actually stablecoin accounts are being adopted by people all over the world, like we have end users today, and I think dozens of markets where they're holding stablecoins in their own on chain account, and then they're using that to transact across borders, and I mean within their own countries, a lot of times as well, to buy goods and services, like we have an end user in Bolivia, for example, they're purchasing car parts, and this person's out there using their visa card, buying car parts online and having them shipped out of Bolivia. And we reached out to them, and we learned that even with merchan Acceptance fees, sometimes it's still cheaper than transacting using a bank account. And. And this is really the promise of stable coins, like he's able to access stable coins to come in top up account, able to use those stable coins to actually transact using the payment credential that we issue, and able to actually get real world use cases. And the payment happens immediately, right? I mean, that's the magic of the visa network, which is that the payment will authorize immediately, and the settlement can happen in stable coins. So there's a tremendous amount of demand that we're starting to see, both from consumers and businesses all around the world, which is really cool to see.
Cuy Sheffield 05:27
It's a great example, and it's almost like, I remember when the businesses that were using stable coins were crypto businesses, like they were only using stable coins because they're crypto exchanges, or they're selling to crypto business. It feels like we've gotten to the point where there are just more and more of these stories of companies have nothing to do with crypto, but they're finding value in stable coins. So Guerra, curious your perspective on what have you seen on the ground? You've spent a bunch of time looking at opportunities in a number of emerging markets where stable coins are starting to become used. Like what are some of the examples that have stuck out to you, of ways that businesses use stable coins and what they're trying to do, yeah.
Speaker 2 06:06
So first of all, congrats Kirill and the team. I think conduit has really come a long way since the first time I encountered conduit. I think it's, yeah, I think it's really grown in I'd say, when you ask about, like, how are businesses using stable coins. The most viral adoption I've seen for businesses are businesses that don't have accessibility to the SWIFT network. This is Kirill and Qantas, bread and butter. This is businesses in the Global South. This is PSPs, merchants, exporters, anyone who really needs to move money and they don't have access to the de facto global rails, which is swift. So how are businesses using stable coins? I mean, there's so many. It's not only like you said, there's web three companies, crypto companies that have been adopting stable coins, and then there's like web two slash non crypto companies, non crypto competent companies that are getting crypto competent. And that crypto competency doesn't happen by sitting at token and understanding NPCs and secret keys all this stuff. It happens by someone finding conduit or finding bridge and using them, having them abstract that complexity away. So even at sling, like our users don't know or don't even understand stable coins or don't need to, because what we do is basically using stable coins to power money and money movement cross border. So it's definitely, it's a shift that's happened slowly and now very quickly. I think Simon always says things happen slowly at first, and then all of a sudden, quite fast. So we're in the like things are happening fast phase of stablecoin adoption and raises like this is giving even more fuel to this, this growing industry, in this growing space, I think even the the revenue opportunities for companies that are serving these businesses is not capped. I don't think even you can't really even look historically at like these businesses that want to use stable coins to gage how far the industry will go, because there's new markets appearing every day. So a trader in Bolivia, as Faruq said, an airline company in the UAE trying to repatriate funds from Nigeria, a manufacturing plant in, you know, East Africa that needs to send materials to Latin America. Like these are all new use cases that are coming up, and it's very exciting to see. So yeah,
Cuy Sheffield 08:27
Kirill, can you talk about some of the specific corridors where you're seeing the most demand right now through your platform, and how has that evolved over time since you started the business? Is is it the places that you expected from the beginning? Or what was the journey when you said, Let's build a stablecoin payment infrastructure company to where you are today with this round?
Speaker 3 08:48
Yeah, so I'll actually start kind of with the end, then I'll go back to the corridors, because the thing that we started seeing at first is that kind of like Greer and FERC were actually saying, we realized that there's a lot of both individuals and businesses, and we decided to focus particularly on businesses in a lot of emerging markets, even a couple of years ago, I would say even three years ago, that were looking to stable coins first as a hedge, right? So essentially, what they wanted to do is simply to protect themselves against their local currency devaluation, against inflation, against volatility. And so they wanted to have access to dollars. Usually, in most cases, they would not be able to have easy or cheap or simple access to dollars. And so they turned to stable coins. And that was, to me, right, I think, and to us as conduct, as a company, that was the first step, right? So essentially, you're not even thinking about this is cross border or anything like that. You just want to protect yourself against Naira devaluation, right? Or Colombian PESA or whatever it is. And that's where we started, right? This was our first entry point. We've also very quickly realized after that that once you get in, let's say you have a balance of USDC or USD. T or whatever your preferred stable coin may be, you start running into a bunch of issues. So number one, we've seen cases like CFOs keeping it on their personal wallet, the things like that that was just unsafe, not good practices. But even more importantly, in that what these companies started to realize is that those balances are liquid, right? They cannot actually use those balances in their daily business operations, to pay suppliers, to pay vendors, maybe even pay employees, things like that. And that was the true tipping point for us, where we started growing. You know, like we said, 16x in 2024 something like 800x in 2023 because what we started doing is we enable those businesses to actually transact using that balance, right? So, as Greer was saying, if you're a company in Africa, for example, and you're importing goods from China, from Hong Kong, from India, now what we enable you to do is actually off from from your stablecoin balance. We do a payout with one of our partners, again, whether that's be China, Hong Kong, India, or anywhere else, it's a local payout. So you don't have to go through the SWIFT network, right? So you don't have to go through this pretty cumbersome, pretty expensive, a pretty difficult process of sending money, which is going to be via Swift, which is going to be t plus 345, I've seen as much as t plus seven. So like Kenya to China, t plus seven settlement time, oh, yes, you don't need to do any of that. And so that's where we started really growing once we started enabling those use cases, and in terms of quarters like your first question, most of our customers are import, export businesses, e commerce businesses, right? They're not crypto, they're not exchanges. They're very traditional, manufacturers, importers and so kind of aligned with that. Not surprisingly, the quarters are developing countries into Asia, particularly into China. So like Latin America paying for goods from China, Africa actually, as well, we have a second corridor where we have a lot of customers paying for services and software from the US, right? So essentially, if it's physical, it's coming from China. If it's bits, it's probably coming from the US. And so paying AWS, paying Google Cloud, a lot of our customers are running ads on Instagram, so they have to pay back Facebook, things like that. So those are usually going to the US. And then I would say the third one, the big one that we see is payroll. And that would be out of the US so remote employees, contractors, freelancers, et cetera. We have US employers that want to pay, let's say engineers in Argentina, those engineers want to be paid in USDC and so, like, that's the third kind of big flow, is us to developing markets. I
Cuy Sheffield 12:38
love this progression of it's like the entry point has been just dollar access. Let me hold dollars. Then you get to, okay, now I'm holding dollars. How do I use these dollars to pay for things? Then there's payments, and it feels like there's this next step, which is now credit and Farooq, I've learned a ton from you. We've spent hours of you educating me on how does credit actually work for businesses? Would love to hear your vision on now that you've got dollar access, you've got payments, how does credit end up getting layered on top and like, what are the interesting things that you're seeing around how stablecoins can help businesses get easier access to credit than they have before, with some of the properties that you could build using the programmability that stablecoins have?
Speaker 1 13:22
Yeah, no, I think that's a great question. So expanding on a lot of what's been said already, there's so much activity now that's happening. It's starting to happen faster and faster every month. And there's a variety of use cases that are emerging. Right? There's a lot of these B to B use cases. There's consumer use cases, there's ultimately, people are earning money and then they're holding it and they're spending it just like regular money. Regular money. And one of the things we've learned, which is the true promise of like, stablecoin infrastructure and blockchain technology and the programmability of money, and all of the stuff that has been talked about for the last like decade in crypto, which is creating programmable ultrasound money, et cetera, what we started realizing is, is that there's fundamentally better ways to build or rebuild some of the primitives that have unlocked business and credit, generally around the world for the last decade or several decades. And one of the ways that we're doing that is that we actually partner with on chain lenders, where we can actually provide capital against cash flow based financing, where, because the money is moving on chain, you can actually direct that money to repay lenders, or you can secure a loan that you're making on chain with access to repayments that would otherwise be flowing into a bank account that you don't have control of. And because it's happening on the blockchain, you can actually route that money to be able to reduce the risk for a lender, for example, and you can actually make that money pay the lender off in the event of a default, if you needed to. And so that's been able to unlock a lot of really cool use cases that we're now using. And so many of our programs are being unlocked on the credit rails, where it's essentially asset backed funding, where we either are underwriting a asset balance in a. Customer Self custodial contract or in a institutional custodian. And then on top of that, we're providing access to real world spending capabilities, and we've worked with a number of on chain partners for that. And the best part is that when our customer repays us, they repay the lender on the way. And so that's really created this opportunity to build something that really hasn't been possible before, like we can borrow every swipe we send to the visa network, for example, reducing the cost of what a warehouse facility would generally cost. Then on top of that, we can reduce the risk to the lender by making the repayments automatically flow to the lender. And so we're able to build fundamentally different tools that are performing that same service that a warehouse lender would, or another lender would, or a lending facility would, but do it in a way where the costs are significantly lower, the risk framework is actually significantly lower, and it's significantly more efficient. So for us, the cost of maintaining it is a lot lower. Cost of starting it, doing it and providing those services is a lot lower. So we've actually started converting a lot of off chain use cases to our on chain credit model. And we have a number of clients now that are enabled by us using our smart contract lending capabilities. And what we're seeing is that we're able to actually offer them access to credit a lot cheaper than they would otherwise be able to get and do so in a way where our partners are not necessarily taking that same type of risk as they would be if they were working with a traditional player. And that's the really exciting part about building truly blockchain native payments, which has been our goal from the very beginning, and really about forcing as much of the underlying authorization information settlement on chain, we've been able to just unlock a lot of these really cool, Edge use cases that are eventually gonna have to exist as all money becomes tokenized
Cuy Sheffield 16:49
on chain. Lending and credit, I think, is one of the most fascinating, exciting areas of the space right now, and it's still early. There's so much potential. We're gonna spend a lot more time on this show over coming episodes, unpacking it, they have to move to the next story from Business Insider Santander weighs crypto push with early stage stablecoin plans so Banco Santander mullion expansion into digital assets. Early Stage plans to offer stablecoin As well as access to crypto for retail clients of the digital bank. In addition, the Spanish lenders online banking unit, open bank, has applied for licenses to offer retail crypto services now. Guerra, I hate to say but like I have to start with you as the ex banker here. I know that you don't necessarily subscribe to that, but you are an ex banker. What's your perspective? What do you see when banks are coming into the space? How do you feel about the opportunity for them? Should they be creating a stable coin? Should they start with adding crypto into the product? Like, how would you advise a bank that's seeing all this activity of what they should do?
Speaker 2 17:49
Yeah, and I was advising banks a couple of years ago on this on stable coins, and it was really to their innovation teams who, you know, unfortunately, didn't do much to move the needle back then. But first I'd say is that this podcast might have cyber bullied some of these banks into thinking about stable coins. What is your tagline? Kai, every bank should have a stable COIN strategy.
Cuy Sheffield 18:09
We think that's we think that's obvious. You
Speaker 2 18:12
cyber bullied them. You influenced it so and it's obvious. It really it's very obvious. And it makes sense that it's happening now with stablecoin market cap being at two 50 billion and growing, it still is a drop in the ocean. But banks, as someone who has gone from being like, anti bank and like trying to break banks, to having empathy and like wanting now to work with banks, in my own personal experience, I've gone the full cycle of it, and I believe banks are important for the ecosystem that we exist in of money. And banks have existed for a long time because their processes and their systems work, and they create an environment in which we can exist. Right back to the credit piece, let's just look at what we talked about with credit, right? So I think banks have been failing against private credit or various lending and credit providers globally, not for a lack of liquidity or even just like, you know, sourcing of debt, but for a lack of their systems, because systems break down right so a bank being able to calculate the risk of a lender of a airplane manufacturer in China, maybe a non Chinese bank, they would really break down trying to understand that and trying to, like, figure out how to their systems to, like, create this debt, or to actually issue this debt. Stable coins, on the other hand, and smart contracts and all the programmable systems that come with stable coins really will leapfrog banks abilities to actually compete and maintain their relevancy. It will turn these systems that have existed for hundreds of years on their heads and bring us into an era that is quite unprecedented. So yes, I would say, if I was to advise bank and be like, Yeah, jump in. Like, quickly. Um, the market cap is growing. Of stablecoin news, it's only going to grow. And programmable money is the future of the way that money works. Everything, to quote the folks at m zero, everything is a bank. So what edge do you have now? So it definitely makes sense to see Santander really pushing and others, other names that have come up on this podcast in news, but Fauci you were kind of nodding on the credit piece. Are you? Do you feel threatened by banks? Or do you feel like when banks wading into this phase? No,
Speaker 1 20:28
look, I think ultimately the biggest challenge with on chain credit is lack of institutional knowledge from the cheapest sources of capital. And so because it's on chain, you kind of have to solve for people that already understand what stable coins are. And then, on top of that, because it's on chain, there's unlimited sources of other kind of more D Gen lending capabilities or like destinations that you can put your money right where, if you're chasing just yield and without a nuanced understanding of what the risk differences are between different types of assets, you're going to really have mercenary capital at work. And we started seeing that market start to really professionalize over the last two years. And we think that having banks entering the market, we've been chatting with a couple of banks that have expressed an interest in lending to us on chain. They happen to be in countries where there is some stable coin legislation. But I think as more stable coin legislation comes in, as banks start exploring the space, I think they'll realize that there's an interesting opportunity for them to get significant economies of scale for their existing operations. Like I think it makes a lot of sense for somebody like Santander to be exploring this. Like, Santander has a huge global footprint. They're across LATAM, they're in Europe. They're in the United States. And I imagine that probably just interbank money movement for them is a massive problem. Like just moving settlement flows around is a massive problem. And if you look at the other symptoms of this, like, for example, right? Like, there's a number of payments apps like P to P payments apps like Venmo and PayPal, where I don't even know if you could still send money from Venmo to PayPal without using puisd, right? So I think that there's a humongous opportunity to create stablecoin infrastructure at these large banks to then solve a lot of problems which we probably don't even know the extent of them, right? Because they're probably dealing with significant overhead and antiquated infrastructure and reporting liabilities and all these other things that banks have to deal with, simply because most banks these days are just a conglomeration of acquisitions they've made along the way that have multiple different banking cores and all sorts of other things behind the hood where, you know, just Basic transactions are just not possible to kind of complete.
Cuy Sheffield 22:43
And Kirill, how do you work with banks today, like in the markets that you're in, what are you seeing of banks starting to look at this space? Well, I think that's really
Speaker 3 22:51
interesting, because we work with over 24 right now banks and like financial institutions in 10 countries, and so we have a bit of visibility into that, and we also, at the same time, especially in the last few months, I would say we have been talking to probably over a dozen banks, like some very large US based banks, but also some banks, you know, all the way from Kenya to Brazil to Chile, as examples, that are interested in getting into this space, right? And I think the way that we work with banks today is essentially banks are the last mile for us, right? So when we are all from opinion, a given country, Brazil is one example, we want to be able to do it via text. How do you get access to tax? You have to send it from the from a bank account to another bank account. And that's kind of the model that we follow with the 20 plus other banks everywhere else. However, now there is also the reverse, where banks want to be able to transact with stable coins. And I would say this, like, if you're a bank, and I said this to many banks already, like, if you're a bank, especially in the US. And the way that you're thinking about stable coins is that I'm going to go and compete with, like, better or circle. That's probably not the best idea, right? Essentially, if you're looking to make money on Aom for a couple of reasons, that's probably not going to work out really well. Number one, within the genius act, you have the one to one reserves. So that means you cannot fractionalize the reserves that are backing up your stablecoin, right? You have to keep $1 for one stablecoin, whereas normal deposits, you can lend them out 13 times or something like that, right? So, like, you make a lot more money on this. The second problem that you're going to be facing is distribution. Like banks actually do not have a distribution advantage over tether or even circle, especially in the markets that really, really care about stable coins, right? So again, in Nigeria, nobody's have heard about Bank of America. So they probably are not looking to buy Bank of America coin, right? They already have that, or it's working really well for them. But that doesn't mean that it's useless. It's actually quite the opposite, obviously, I have my perspective, which is cross border payments and kind of like Fauci was saying, actually for banks today, most banks, most banks that are not sitting. Jpm, BNY, right? Maybe the top three in the world are actually making quite a bit of money in cross border. For most banks, it's a cost center. And really the reason most banks are doing this is because customers need it, and so they will go somewhere else if you don't provide the service. But the reality is, for most, especially smaller regional banks, it's not a money making machine, right? But if you think about stable coins as a tool to move money, right, as a tool to move value, as opposed to as a tool to accumulate deposits, that can make a lot of sense. So essentially, using a stable coin to do what we're doing to enable cross border transactions between again, US and Brazil and Chile and Kenya and Nigeria. We'll have some news coming out in, I think, in a couple of weeks about the bank that we're working with in Brazil right now to do exactly that, so that bank is issuing its own stable coin. And then what we do is we help them use that stable coin in cross border transactions elsewhere. So if their customers want to do a payment in us, payment in Europe, we're facilitating that for them, and that's a win for everyone, right? Because the customer benefits from faster settlement times, from cheaper transactions and higher reliability, because it's not going through a network of corresponding banks. It's going from one bank to a stablecoin of ramping to another bank. That's it. The bank benefits because it provides a better service for its customers, and it also is able to then maintain this customer base without them having to turn to someone else for their cross border transactions, right? So essentially, otherwise, they'd be using, again, circle or terror or something else to bypass, if you will, the local bank, and that enables them to actually maintain their customer base. It's obviously a win for us, because we're helping both sides do this transaction, and I think it helps the global economy. I mean, like the more people can transact between each other, the better it is for everybody.
Cuy Sheffield 26:52
It's interesting that one of the ways, when we talk to banks, we like to position like stablecoins are just it's a new form of cross border payment and lending infrastructure. And one of the things that's going to happen is this, infrastructure is globally available. It's modern. It can do things traditional infrastructure can't, and that means there's gonna be a lot more competition, because a lot of companies are building really innovative products on top of it, but there's the opportunity for banks to build innovative products on top of it as well. And so it's not only a non bank infrastructure. When you get regulatory clarity, you can then have banks be able to participate as well. So I think super helpful insights. And I think we have to pause quickly to thank the sponsors who make this show possible. We'll be back with the last story shortly.
Sy Taylor 27:38
This episode, if it's not obvious, is brought to you by our friends at visa, a global leader in payments. Visa's tokenized assets platform vtap uses smart contracts and cryptography to help banks bring fiat currencies on chain. Vtap allows financial institutions to issue Fiat backed tokens, improving financial efficiency and enabling programmable finance. You can check out the links in this episode's description to express your interest in vtap tokenized is also brought to you by avalanche, major banks FinTech challenges and industry leaders are using avalanche to create new business models on a fully customizable blockchain infrastructure. Think of it as more than a blockchain. Think of it as an entire network built for financial institutions to innovate with purpose built layer ones. Institutions can tailor digital asset strategies to their exact needs while still tapping into the power of a public blockchain innovation, developer communities and seamless interoperability join the institutions shaping the future of finance on avalanche, and you can learn more at avax dot network.
Cuy Sheffield 28:59
All right, for our last story, the SEC says many staking services are not securities, and so this guidance provides regulatory clarity for major platforms like Coinbase, Kraken and Lido, which collectively handle billions of dollars in staked assets. SEC concluded the staking service provider simply providing an administrative or ministerial, I can't pronounce that activity rather than an entrepreneurial one. And does it set the rate of return earned by an investor? Guerra is staking going mainstream? Are there going to be consumers where it's just a normal financial product that I stake and earn some yield and it's just something that I do is this gonna stay a niche crypto thing like, how do you think about staking? How should a bank think about staking? It's this, like, weird new thing that's happening. This
Speaker 2 29:49
is quite amazing. I mean, this news is quite wild, and is taking going mainstream. Like, yeah, if companies like ourselves, like sling, have anything to do with it, in that we are abstracting. Take the complexity of blockchain, crypto away for real, retail, regular users. Globally, could we possibly see a world where someone could stake against, say, the Nigerian Naira, which could be possibly the stake deal could be coming from a money market fund. In Nigeria, money market funds are earning, what, 20% annually, which is maybe even more. I think in Uganda, I've seen one that was like 25% outpacing the currency devaluation. Would retail users globally want access to that? Yes, of course. But do retail users want to, where do I sign up? Yeah. Do retail users want to go to Nigeria and get a BVN and, like, you know, get a bank account and then, you know, like, get into the money market fund? No, but if I was just to stake the naira and or whatever, like stake it and abstract it away and say, Don't worry about what this is. Do you want 20% yield? Yes, cool. Anything that really is so incredibly powerful will eventually go mainstream in one way or another, whether used by retail users or businesses, but yeah, it's very exciting that the SEC has said this. I
Cuy Sheffield 31:04
think in some ways, the terminology can be a bit confusing for people, and I see the term staking used to actually apply to many different types of activity that may not be be the same. And so far, maybe you think about this differently, like I've always felt like there is a function of staking that is participating in a blockchain network with the Native Asset of that network helping to secure the network, earning some yield or rewards. And then there is lending or putting funds into a protocol or a pool that sometimes is also colloquially referred to as staking, but it's actually like you're giving your money. Could be giving a stable coin, could be giving some other asset to a protocol or a lender, who's then lending it and earning a return. And so how do you think about is that the right distinction? Do you see these things blurring and like, what's the difference from a risk perspective, whether you're staking on chain as a consumer to a Native Asset on a network, versus whether you're lending and who you're lending to
Speaker 1 32:05
look. I mean, I think this is gonna probably create, you know, regulators have always been really good at creating more questions than answers, and so I think this is probably going to, ultimately, I think this type of decision making is welcome. I think that shows that regulators are, at the very least making up their mind on certain things, which is good. I think that it will probably exactly what you said. Guy like is staking now, the same as lending. Can you stake Naira, because it's a currency, and can you also stake Solana? And if that's a token, that's an open question, right? I think it's going to be interesting to figure out where the lines are going to be. I think it's fundamentally different to be able to say, hey, you know, I'm going to stake a network token with validators to validate network transactions and earn a yield from that. I think that that's completely reasonable to assume that that's not a security because you're just propagating with your assets, you're propagating the functioning of an open, decentralized network. On the other side, if you're staking US Dollars or USDC into a protocol which is then taking that money and putting that money into a money market fund, or whatever it is, or taking advantage of a basis trade, is that really staking, or is that investing in a token that is providing a yield, and I think that that's still very much an open question today, and there's a lot of really smart people and really talented builders in the space building really cool products to provide access to previously inaccessible private capital yield opportunities to retail investors, right? And I think that that's really awesome, like having more democratized access to opportunities to earn yield or earn income from things that were only available to, you know, large institutional investors like Apollo, for example, is actually good for consumers, I think. But at the same time, I'm not sure if these rulings actually apply to any of that stuff in a clear way. I mean, certainly there's gonna be really a lot of people in the legal profession are gonna get paid a lot of money to come come out on one way or the other, on some of these things, which is probably some of the intention of some of the regulation. We have
Cuy Sheffield 34:14
to shout out friend of the show, Chris Brummer, of disclosures, like what the product is like, there need to be disclosures. That is one of the most important things for consumers. Kirill, last thoughts like, how do you think about staking? Is yield going to be a part of our businesses? Going to stake, and this distinction between staking and lending and the different risks? Yeah, I think
Speaker 3 34:39
to some extent they will right, yield will be a part of what we offer is already a part of what other similar companies in the space are offering. Think about this way, right? If you're a CFO of our typical customer or two is just probably a mid market company. You have some cash sitting in there. You want to optimize that as much as possible, right? And so there are different tools that you can be using to optimize that we. On tools again, that's where we're providing the faster, cheaper payments. So maybe you can get out of the kind of net 3060, 90 days, right payments, and you can just have an instant payment instead. And we have seen clients essentially negotiate discounts with their suppliers saying, hey, what if we pay you today? Can you give me 20% off, as opposed to if I pay you net 60? So you have that kind of suite of tools. But then the next, yeah, you have to maintain balances for all kinds of purposes in different currencies, as gware was saying, right? And if you have a balance in in the stable coin, in dollars, maybe in Naira, maybe in other things, you're going to want to optimize that, and you're going to want to earn some return on that, again, both to protect yourself against inflation and also potentially increase your cash. So I think that's going to be interesting to see what the financial specialists that are using like us and other platforms are going to do with that. Our job is to give them the tools, and then, you know, I mean, like their job is to decide how to use those tools and when to use them, and you know, if they want to stake or not, I expect that some of our kind of more crypto forward customers will be more interested in that, and especially if they have assets that are already sitting there in maybe non stable coin type assets, as you said, for maybe this Bitcoin, maybe some other tokens. That's probably going to be the first use case for this. I think the more traditional CFOs, VP finance types we'll probably be a little bit more careful with that, but if we enable multi currency yield things like that, I'm sure we're gonna get some pickup from that. So that's gonna be interesting. And they will ask us, is this legal? How is this legal? What is backing this up? And so to the extent that we can answer with a good answer, I think that will make a big difference to their appetite. It's
Cuy Sheffield 36:40
fascinating as like, the time value of money gets unlocked. If payments can move faster, then what does that mean for what people do with the money at rest that they have? So unfortunately, that's all the time that we have today. Thanks everyone for listening. Fauci, where can people find more about you? And rain cards,
Speaker 1 36:58
yeah. I mean, please check us out at rain, dot XYZ. And yeah, looking forward to helping folks go global. Kirill. What about you? Yep,
Speaker 3 37:06
conduitpay.com, and you can always message me on LinkedIn, on Twitter. X, I'll try my best to answer.
Cuy Sheffield 37:13
Awesome. Congrats on the raise and Guerra, where can people find more about you? And sling?
Speaker 2 37:18
Yeah, sling. Dot money. And I'm also on LinkedIn, guerra kiwana, awesome.
Cuy Sheffield 37:22
Thank you everyone. Thank you everyone for listening. I'm on x at Kai Sheffield and visa comm slash crypto. If you like the show, please leave a review, send us a message, give us some feedback, tell us what we could do better, other than Simon is a much better host than I will ever be. But I appreciate the guests hanging in there with me. So till next time, take care.