What impact will Tether's asset tokenization platform have on stablecoins and the RWA market? On Ep. 12 of Tokenized, Simon Taylor, Head of Content & Strategy @ Sardine, and Cuy Sheffield, Head of Crypto @ Visa, are joined by Ollie Harris, former MD and Head of Digital Assets for the Americas @ Goldman Sachs and Maria Orszag, VP of product @ Xapo to discuss Amazon simulating tokenized seller receivables with stablecoins, StraitsX partnering with Alipay+ & Grab for cross-border settlement and Tether unveiling their new platform Hadron.
What impact will Tether's asset tokenization platform have on stablecoins and the RWA market?
On Ep. 12 of Tokenized, Simon Taylor, Head of Content & Strategy @ Sardine, and Cuy Sheffield, Head of Crypto @ Visa, are joined by Ollie Harris, former MD and Head of Digital Assets for the Americas @ Goldman Sachs and Maria Orszag, VP of product @ Xapo to discuss Amazon simulating tokenized seller receivables with stablecoins, StraitsX partnering with Alipay+ & Grab for cross-border settlement and Tether unveiling their new platform Hadron.
Timestamps:
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
Visa’s Tokenized Asset Platform (VTAP) uses smart contracts and cryptography to help banks bring fiat currencies onchain. VTAP allows financial institutions to issue fiat-backed tokens, improving financial efficiency and enabling programmable finance. Express interest in VTAP at globalclient.visa.com/vtap
This podcast is also supported by Digital Asset.
Digital Asset is excited to launch the Canton Network, a proven, trusted, and scaleable service that provides interoperability between institutional-grade tokenization platforms. The Global Synchronizer is now live, managed by Linux and institutions are actively using Canton Coin to manage the governance. No, the banks haven’t launched a token in the classic sense, this is much more interesting. They’ve done it to make all token networks interoperable. Find out more at canton.network
Unknown Speaker 00:00
Simon,
Sy Taylor 00:10
welcome to tokenized. My name is Simon Taylor, and I am your host for the tokenized podcast, author at FinTech brain food and head of strategy at sardine, and joining me is my co host, my friend Kai Sheffield, the head of crypto at visa Kai. What's getting you excited this week?
Cuy Sheffield 00:29
The world is speeding up. It is hard to keep up. Everything happening with crypto, with stable coins now Bitcoin, AI like it is a fascinating time. Excited to get into the news this week. We
Sy Taylor 00:42
are in the exponential age, and we have an exponentially interesting guest in the one and only, Ollie Harris, who is former MD and head of digital assets for the Americas at Goldman Sachs. How you doing? Ollie? Yeah,
Oli Harris 00:57
doing awesome. And oh, just love your voices. That was great. You're made for podcasts, but yeah, thanks for having me.
Sy Taylor 01:04
You're very welcome. You're very welcome. And joining us on today's episode is Maria orzag, who is VP of product at Zappo. Welcome to the show, Maria.
Maria Orzag 01:16
Thank you for having me. Mia.
Sy Taylor 01:19
No thank you for being with us and audience. Just got to remind you that views and opinions of our contributors today are their own and don't necessarily reflect those of the companies they're representing. Nothing we say should be taken as tax, financial or legal advice. Please do your own research, and with that, we're gonna get on with some news. And my goodness, as Kai said, there is an exponential amount of news. First story comes from ledger insights, and this is about Amazon simulating tokenized Brucella receivables that were settled with, you guessed it, stable coins. So this is a collaboration with straights X and NTT digital. They announced at the Singapore FinTech festival that they're going to expedite payments to Amazon Marketplace sellers who are typically paid every 14 days, but sometimes waiting up to 90 days. The simulation converted seller receivables into tokens on an exchange, allowing lenders to buy them at a discount. Sellers receive payments much faster in straight X, X, SGD, so Singapore dollar stable coins. Everything is stable coins, it seems at the moment, Kai, I'm going to come to you, Mr. Stable coins himself, on this one first, for your immediate reaction, and before we head to our guests. Yeah.
Cuy Sheffield 02:49
So first it's it's interesting. Amazon has been pretty active with AWS, with Amazon, kind of managed blockchain services, doing a lot of things, helping developers. They play a pretty big role with many crypto companies using AWS in some way we haven't seen as much from Amazon the marketplace. So really interesting to see them taking a step experimenting, and not in the consumer facing way of having consumers buy things on Amazon with the stable coin, but looking at some of these use cases focused on sellers, and can they provide an ecosystem where sellers can get lending, which the question is, kind of, is it the stable coin, or is it the smart contract ability to be able to create these new credit facilities that then you can kind of lock up collateral to borrow against, and the stable coin is just facilitating that. So I think we're seeing a lot of interesting experiments, moving from defi that was all like crypto collateralized lending to now these real world assets, like receivables that are tokenized, put in a smart contract as collateral to be able to borrow against, and stable coins facilitating the cash leg of that borrowing. And so really interested to see where this goes. I think it's a use case that makes a lot of sense. But Ollie, would love your take on this as well, on the RWA set. Yeah, perfect.
Oli Harris 04:05
Now I think, obviously, I think it was an amazing pilot, and I'd love to see the path to production. I think the key now is, really, we've all been talking about supply chain finance on chain for many years, and I think it's the fact that now we're getting RWAs on chain with real utility, and I think the ability to have stable coins to provide a seamless back end, it's super exciting. Marketplaces
Sy Taylor 04:29
are interesting because they are. Everybody thinks of Amazon as like, oh, that's where I bought my batteries from. That's where I bought my books from. But actually there are other sellers behind the scenes, and those sellers can only sell if they're getting money coming in the front door to buy more inventory to sell it in the first place. So it's solving real problems for people. Maria, what are your reflections on this as you look at the story? I
Maria Orzag 04:55
actually really like it, and it's just reflecting to what we are doing. And. The State coin side. It's quite similar what we are doing with Visa, how to actually make the merchants much more involved in settlement, or at least utilizing the benefits of settlement stable coin. So we've just very recently changed to the T plus zero settlement in the stable coin settlement program of visa, and how it can make the whole settlement accelerated with the merchant, so they can also start learning about the benefits of accepting payments in the crypto world stable coins, and how those can actually generate immediate benefits for them.
Sy Taylor 05:32
Yeah, I wonder how this will be packaged, because my first thought was actually square one of their big breakthroughs was the merchant cash advance. So I'm a small seller, typically it takes me two to three days to get paid. But what square is going to do is they're going to advance me that cash because they can see all of my payments data. They can see all of my inventory. They've got all of it. Amazon's in kind of a similar place, and it already does some lending to its merchants. So tokenizing that probably just helps them be much more efficient and brings the stable coin right next to to everything else. Kai thoughts, one of
Cuy Sheffield 06:10
the questions is, does tokenizing it bring access to more lenders that can compete and participate? Because you could do this without any type of tokenization, if it's the marketplace themselves. And as you mentioned, like square, you could say, All right, we're gonna offer a cash advanced product, but we're going to be the lender, or we're gonna go out and source a credit facility and have one partner behind the scenes who's lending. I'm really interested in if you're tokenizing it and then putting it into a smart contract, can you create these like permission pools, where you could use something like ave you could still have guard rails around you have to be KYB if you want to be able to participate. But then you could have dozens, maybe hundreds, of different investors that are looking for yield on a certain profile, that are willing to be able to lend with these receivables as the collateral, and if the seller doesn't pay it back, they know they'll be able to get paid directly from Amazon. And so I think the big question is, does tokenization increase access to capital by just bringing more participants, particularly globally, being able to do the lending instead of you could just do this yourself as a marketplace, but with a single lender behind the scenes? Yeah, I
Oli Harris 07:22
was just thinking through that. I think, to me, there's sort of two really interesting angles. One, as you were saying, Kai is the access to crypto native distribution and the ability to do this in a permissionless way. And that's obviously been, you know, a theme over the last year. I think the second, which you can marry super nicely is the embeddable in this case, like lending as a service, and I think stable coins packaged with the right smart contracts, you can then provide next generation lending as a service into established companies like Amazon. And I think there's going to be a huge way of realizing the what we were talking about in FinTech 2.0 with the embeddable banking thesis, but actually making it real in web three,
Sy Taylor 08:07
there's also a cost and efficiency 24/7 benefit, right? If I was going to do a cash advance today, I know how to do that with pieces of paper and building the product. But this is, this is kind of about the box and Maria. There's definitely a real cost conversation to be having with merchants and consumers, to some extent,
Maria Orzag 08:27
absolutely, absolutely, I think, in both sides, whether it's a B to B environment or C to C environment, a combination of the beans and the cost efficiency at the top mentions that matters for the participants again, whenever we are talking about big institutions, or whether we are talking about the end users, the convenience of 24/7 is obviously an add on feature, but the speed in general and the cost are the top tier two mentions when, when we are speaking about either merchants or and consumers needs and why they don't like the few areas of today, what kind of problems they cannot be solved. Indeed,
Sy Taylor 09:04
we're going to see that gain momentum, I'm sure. But there's another story that came out of Singapore FinTech week, about straights X, who are also partnering with Alipay plus and grab for cross border settlement. Talk about regional powerhouses. So the stable coin X SGD, so the Singapore dollar will allow tourists from nine countries to use payments apps from home, like grab pay and Alipay in Singapore. So that gives you instant payments if you're a merchant. So I've got a tourist coming in, they're using their local wallet, and I get instant Singapore Dollars via X SGD, and then I get that cost efficiency. So they're saying they're using the avalanche blockchain to reduce those payments processing costs. And ant International said this partnership give. Their global travelers convenience when paying using their home apps in Singapore. So it's that rail between rails and the cost conversation that sort of keeps coming up to the point Maria was just making open to reflections on this one. The
Maria Orzag 10:16
use case with grab is quite special, and I know that it's quite region specific because it's presented in many countries in Asia Pacific, I personally think that even the previous versions of the grant being downloadable when you visit Singapore, uploading your local domestic card into the app, and just using the app whenever you go buy a taxi or pay a local merchant stores was just very convenient. But this next step is even better, especially around the region where the grab is available. So you don't have to do that extra step. You are just simply using your home apps, as I say, and you're still enjoying the ease of the payment. I think it's really amazing.
Sy Taylor 10:55
It's powerful, isn't it? People forget that grab is like if Uber and Apple wallet had a combination, you know, like some sort of love child. So they do so much for you. Kai, sorry, you were going to jump in. It's interesting
Cuy Sheffield 11:09
that grab seems to be fairly active in the space. I think they've done a number of pilots. They've announced partnerships with circle. There are ways that I think you use triple A to be able to fund a grab wallet in stable coins. When I was in Singapore a few months ago, I was playing around with that, being able to just move funds from Venmo into grab. So they've been pretty active in the space, and not surprised that they're continuing to do more. To my knowledge, this is the first kind of public announcement or initiative where Alipay has interacted with a stable coin on a blockchain. And I think that's a pretty big deal. I mean, Alipay is such a major player in payments in many regions, particularly in Asia Pacific. I think Alipay, plus as a network of wallets, is a major, major player. And I think there has been, historically, people have kind of said, Oh, Alipay, they're in China. And so trying to have with crypto is, can you use crypto? Can use stable coins? So maybe they won't be able to do anything. I think it's clear here that in these cross border use cases that they see value in some form of stable coin settlement behind the scenes to move money. And so this doesn't mean that every Alipay customer is going to have a stable coin wallet, but seeing them take a step into using stable coins to solve complicated cross border settlement challenges between other wallets. It makes a lot of sense, but it's just, it's a big entry of a major player using stable coins for the first time. Yeah, definitely. I
Oli Harris 12:34
would just add, from my side, I think there's three really awesome things. I think one is there's a clear focus on abstracting away stable coins and digital assets for Main Street and typical consumers, and this is a clear example of that. The second thing is, as you said, Kai the cross border element, and there's a ton of companies now trying to solve for this in various different jurisdictions and with various Valley crops. And I think there's going to be a huge explosion there. And then the third thing is the ability to create a closed loop network. And I think that's again, something where, from a merchant perspective, the ability to kind of disintermediate traditional payment providers and networks save on that interchange, and potentially, you know, use those savings to create next generation rewards. I think you start to get that flywheel over time,
Sy Taylor 13:27
you get paid faster and cheaper and culturally to your point, the rewards ecosystem in Singapore especially is massive. It's absolutely everything in terms of your branding and your marketing to be able to offer that And traditionally, a lot of payment rail acceptance could get quite expensive to pay for that reward. So this can do interesting things. And with stable coins, of course, you get a payload of data. So this sort of disappearance into the background, this rail between the rails, this connective tissue that stable coins are playing, seems to be a consistent theme, but Maria, how do we bring this to scale and to production? Because, again, this is another pilot, and this is another thing where there's an opportunity to scale it. The partnership has been announced. What do you expect to see next, and what's going to be the success factors that unlock things like this for businesses and consumers? I
Maria Orzag 14:19
think one of the questions here, whether this new update, or significant improvement, will attract more merchants that were kept away from the previous versions because of the cost or because of the lack of the speed to say in the settlement. I think this is one of the pressures, and the other one whether this new version, this improvement, will also convince the end users that this is the best option, and this is a better option, and it's a safer option for them, if they see the benefits, for example, coming from the extra rewards being generated by the fact that it's a cheaper solution for the merchant, that's definitely one way to convince the customers that if it's worth using it again and. So it's worth using it much more than the other options that they also have for payment. One
Cuy Sheffield 15:04
other takeaway for me on this is we've lived in a world where there are really successful closed loop traditional Fiat wallets in a number of different markets across the world that are starting to get real adoption. They might have started with P to P, then they get into consumer to merchant, they build some direct acceptance network, and olipa and wechat are probably the two largest. But like those type of wallets exist in many markets across the world. However, they don't have great connectivity to each other, and so there haven't really been the ability to do kind of a global wallet network that can move value between closed loop wallets in real time. And so one of the big questions, I think, over the next five years is, how do closed loop wallets become more open loop and connected to each other? And you see, I think Alipay plus is it's a network of wallets and trying to create some of the rules and settlement infrastructure between them, stable coins, if every major wallet ends up adopting stable coins on the back end, even if consumers don't know that they exist. And that's the interesting point that Ollie made. Is like you could just use your traditional closed loop wallet the way that you normally do, but now you could go cross border and scan a QR code and pay and it's a stable coin that's actually moving from your wallet to whoever's wallet operates acceptance point for the merchant, and so closed loop wallets opening up with stable coins at the back end, I think, is one of those interesting trends that we're still in the very early days of starting
Sy Taylor 16:33
to see fascinating All right. Well, let's leave this one there and just thank our sponsors briefly, and we'll come back to some other stories in just a second. 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 back 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. This podcast is also supported by our friends at Digital Asset the creators of the Canton network. Canton is unlocking the utility and liquidity of institutional grade real world assets, with over $3.6 trillion of assets issued or processed on the network today, think of it like defi transactions, but with the privacy and control institutions need digital asset solutions make it easy to tokenize, use or invest in digital assets on the network. Create connected applications or simply get started with a validator node. Visit Canton, dot network, forward, slash, connect to get started. All right. Thank you very much to our sponsors. So the next story we had is from CoinDesk, and this is about tether unveiling a new platform to simplify asset tokenization for businesses and nation states. So the platform called Hadron was designed to simplify the process of converting a wide range of real world assets, including bonds, commodities and stocks or even other stable coins and loyalty points, into digital tokens. The services encompass a full life cycle from tokenization tools for risk management, KYC, AML and market surveillance platform at the beginning, supports Ethereum avalanche and Bitcoin and its scaling network, liquid by block stream. This one's fascinating, Ollie, I just really want to get your views on this, the biggest stable coin issuer just launched a tokenization platform. This is heading towards real world assets. It's heading towards sovereigns. Like, how seriously should we take this?
Oli Harris 19:11
Yeah, I do think this is fascinating. And my view is we've seen the explosion of stable coins. As of today, there's about $186 billion worth of stable coins, however, from a RWA perspective, and as a Trad fi person, sadly, you know, not a huge fan of RWA, but I'll go with real world assets instead of risk weighted assets. But yeah, there's only 13 billion. So I think, over time, I think you're going to see the synergies between stable coins like tether and others with with RWAs. And there's a few different use cases for this. I think one is obviously the collateral mobility piece, and so obviously this is a very sensible play from tether to generate more RWAs to actually. Support the issuance of their own stable coins, that it's like a mutually symbiotic relationship,
Sy Taylor 20:05
hmm, that I hadn't seen that's fascinating. Ollie Maria, what are your thoughts? To be honest with
Maria Orzag 20:11
you, it's just so far from my domain, from my territory, that it's hard to comment. But just listening to you guys and learn from you,
Sy Taylor 20:18
the language gets dense very, very quickly. Can I maybe unpack this one in your understanding, and we can quiz only about it a little,
Cuy Sheffield 20:25
so I don't know anything about this either we like this is for
Maria Orzag 20:30
just me. Okay?
Cuy Sheffield 20:31
My biggest takeaway is it's fascinating to see how quickly tether is shipping. I think for many years of tether that I've kind of followed and understood them. They had one product, and that was usdt. That was one product that was on a few blockchains. Now, in a period of what seems like a few months, they've got this wallet development kit, so this like open source wallet as a service framework. They now have this tokenization platform. They're now settling large kind of oil trades using usdt. They now own a share of an agricultural business like it's just the speed at which they are moving into different areas that, like Ollie mentioned, are adjacent and kind of complimentary to usdt, but actually kind of shipping new products to market instead of just being a stablecoin issuer is pretty remarkable. And so the question is, who's going to use this? And is it government as a client? Are large financial institutions going to use them, and what about some of the kind of reputational aspects of tether issues they've had in the past? And so I think those are like big, open questions, but from just a pure product velocity standpoint, you have to notice and give them some credibility. And respective, they're putting out a number of different products into different spaces at a pretty rapid rate. Yeah, totally. I
Oli Harris 21:52
think it's a standalone product in and of itself, which is awesome, I think. Secondly again, and I'm just this is conjecture and just my thoughts, but maybe if you think about the reserves and the Treasury that they're managing through their own stable coin, this in a way, they're creating new assets that they can then purchase to actually manage on chain, which could bring more of their basically asset side of the stable coin on chain. And again, Tai to your point around transparency, over time, you'd be able to do the asset liability management all on chain. They
Sy Taylor 22:27
are the 18th largest holder of US Treasuries, after all, and so they need to buy more assets from more governments to be on the asset side. So that would make sense. Let me share a use case that I spoke to somebody about sort of a week ago that I thought was fascinating. He gave me the example of an oil importer in an African country who was buying oil from the Middle East and oil going from where it's produced and where it's refined onto the ship. All of that really well known and really well understood. There's really good communication between the buyer and the seller. But then when it comes to actually making the payment, it's going from sort of a market that's not EU or us or a major currency corridor, so the Middle East, and it's going to a market in Africa that's not a major currency corridor. So it's it's in Africa, and for that trade and transaction, he said that the payment to actually get a response on it took about 14 days just using the standard messaging network. And then he found out, after going down a rabbit hole, that sometimes those payments just completely fail, because the route that will take goes via different banks every single time. There's not a direct line of sight between his local bank and the local bank in the Middle East, whereas they're a big buyer of tether and stable coins, because the regulatory regime in the Middle East and the regulatory regime and the African market he had, and the bank he had, and the bank that was in the Middle East were quite open minded and capable of managing some of the risks involved, because it was the same bank, and it was quite a significant bank, you know, it's not some small, tiny, little organization. And so by tokenizing the oil and token with the tether, they had the real world asset, and they had the stable coin, and so they were able to put that into an escrow contract. And so both of those sat in an escrow contract whilst the oil was moving on the ship to Africa, and then when it got there, it unlocked and out of the escrow contract, both agreed that the oil had been delivered. They got confirmation from their shipping company. So this example of like, when are we going to get trade finance? It's live people, it exists, and it's typically global south to global south trade that's doing it. So that's why I find this so interesting, is once you talk about a use case, it goes away from being tether, the bad guy tether, the. Crazy Ones to you know, it's only used for trading. To know, we're starting to see those green shoots of other things happening. But I'm interested, Ollie, in your views on the the El salvadors of the world, who are now sort of building strategic Bitcoin reserves. There's talks in the US now about building those sorts of things. And I know they're, they're somewhat a little bit sensitive. But is there a there? There? Is there a tokenizing of assets? The UK is going to be launching a digital guilt pilot, but it's still attempting to do it. Is there something here for tokenizing sovereign debt that's going to be valuable? And who would it be valuable to? Yeah,
Oli Harris 25:36
it's interesting. I was just thinking through the geopolitical ramifications of that use case? Just to unpack that question a bit, I do think the strategic Bitcoin reserve thesis, and I've seen a number of countries now since the US announced it, and I think that's super interesting and great for Bitcoin. If I was running a central bank, I would be thinking through monetary policy and the ability of stable coins to act as sort of a geopolitical Is it the this, like, what's the initiative, like the Belt and Road Initiative by China? And I feel that there's definitely a US dollar hegemony question here, that if I was not in a major developed country, I would be pushing my businesses and economic activity in my country to function on local stable coins so I can still have some element of control over my monetary policy. So I think you're going to see some tension over the next three to five years as stable coins become widely adopted, even if they're abstracted away from businesses and consumers, you still want to have control over your tax base and your currency
Sy Taylor 26:49
definitely All right. Next story, Zappo, you may have heard of them, are bringing Bitcoin banking to the UK, offering a crypto Fiat product. So Zappo bank is the first licensed bank in the UK to offer a combined interest bearing USD and Bitcoin account, allowing transfers of up to 1 million pounds sterling to UK based wallets and bank accounts 24/7 and the Director and Head of Regulatory Affairs at Zappo bank said the UK is swiftly emerging as a global hub for cryptocurrency innovation, boasting a promising regulatory framework, a dynamic financial ecosystem and a talent rich environment, and given the amount of Brits on this call Maria, I have To say that that was absolutely correct, clearly, but it's right to come to you on this so tell us more. Remind everybody who Zappo is, and tell us about this UK product. Yeah, 100% and
Maria Orzag 27:52
I'll also explain why this whole story for us, that UK is very, very special. So first of all, that Zappo so we are a non traditional bank, definitely not your traditional bank. It's a digital bank, but also a Bitcoin custodian designed for Bitcoin enthusiasts who are actually looking for a solution that can combine the benefits of the both world, the crypto and the traditional Fiat world, obviously looking for the security coming from the Fiat world, probably, or the traditional banking world, but looking for the flexibility and convenience that coming from from the crypto world, what makes up a quite unique is the theme less combination of these two in one single platform. So we actually offer a mobile application which gives you the access to the USD account with the interest bearing deposits international money transfers, including Fiat and stable coins, of course. And even between custody and you can actually do more than just buying and holding your bitcoins with us. You can also translate with us through your Visa card, for example. And obviously, as we are digital, we are operating 24/7 and obviously the stable coins and the cards have a big part in this 24/7 operations, while we are also integrating and integrated with hostile payments in SEPA to emphasize the importance of the speed of the transactions and the cost effectiveness of the transactions. So why UK? And why? There's kind of an interesting thing about the UK. We are based in Gibraltar, and we are licensed by the Gibraltar Financial Services Commission, which is the equivalent of FCA in Gibraltar, and under this regulatory environment, we are operating, and this allows us and this provides compliant digital banking and crypto services, but still aiming to offer our services to our customers globally, we obviously also need to operate under the principle that is acceptable globally, which is the principle of reverse solicitation, meaning that the clients must actively seek out support services rather than being solicited by us. And this approach helps us serve clients worldwide. We are remaining compliant with the local laws regarding financial services, and the only one exception is the UK. So just this August, we received authorization to a break in the UK. It's been a major achievement, especially considering how challenging it's been for other fintechs in the UK to Secure Banking licenses there. So it's a real game changer for us. So you could probably also ask, okay, but why UK? So the quote from Joey Garcia, Head of Public Affairs, also said that the regulatory environment in UK is spectacular. This is definitely a global financial hub with progressive regulations, so it offers a unique opportunity for us to to grow our presence and brand awareness globally. But obviously it's also because of the adoption rate of the crypto and silver coins in the market. Like 13% of the UK population is already owning and transacting with cryptocurrencies. That's That's amazing. That's 1.3 million people already. And according to the projections by 2028 the crypto production market in the UK is projected to grow up to 3.83 point 9, billion pounds. That's something that we don't want to miss, for sure.
Cuy Sheffield 31:10
So we're super excited about our partnership with zapo on the card side with the zapo Visa card, and we think it's a great product. Zappos an amazing kind of legacy and brand and history in the space, really, from the beginning. I think one of the interesting themes here just this concept of Bitcoin banking, which in a kind of environment where people are talking about strategic Bitcoin reserves, and they should say it's like just the term Bitcoin banking doesn't sound nearly as like controversial as what that sounded like five years ago. And so is there going to be this world of there's a segment of the population that wants Fiat checking account and a Bitcoin savings account, and then how do you move between the two? How do stable coins play a role in payments? But you receive a stable coin and have it auto convert back into bitcoin like Ollie, are we going to see more people start to use Bitcoin as a savings account within more of like a day to day financial service, or is Bitcoin going to be more like investment account that you don't touch and you have an ETF, that it's in a separate place from where your day to day spending is in terms of your bank account?
Oli Harris 32:20
Yeah, I'm a big believer in the two accounts. And I do think you're going to see a plethora of competition at the Urban near bank level, where essentially you'll have your current account or your checking account with a stablecoin backend. I think sling money is a good example of a bunch of Monzo folk who are trying to tackle that to create global Venmo. I think on top of it, though, you do want your earn or your boost account. I think Bitcoin is definitely going to be part of that. I also feel tokenized real world assets is also going to be part of that, as well as other cryptocurrencies. But yeah, if I was designing that, I would definitely be having a mixture of different tokenized assets to provide your yield. And and I think on Bitcoin side, I think the lending piece as well, for a consumer experience, you know, if you're if you assume that the bitcoin price is going to tend to infinity, you don't want to be selling that ever so you want to be borrowing against it. And I think you're going to continue to see a lot of solutions to solve that need 100%
Maria Orzag 33:21
it's fair to confirm, and it's fair to say that this is what is happening. You don't really want to touch your Bitcoin, especially if you're a Bitcoin hodler. If you are one of the early adopters, you are still waiting for the price to go up to the 200,000 to the 500,000 Yes, the lending product is something that you're rather looking at instead of just transacting new Bitcoin. So on the transacting side, when it comes to the convenience 24/7, low cost convenience of the cryptos, this is where stable coins will pay, I think, bigger and bigger role, instead of the Bitcoin being used for transactions. It's
Sy Taylor 33:56
interesting to me how Bitcoin has evolved from being sort of the digital gold story to now being much more of an ecosystem with liquid and with lightning and with many other bits of the ecosystem. It's now got its own whole stacks. It has a whole NFT ecosystem. It's really fundamentally a different conversation to where we were five years ago, and carry on kind of reflecting on your point earlier. Of Yes, the recent political events in the US may have changed some, some of the mood and tone, but this was happening for a while that it's not that crazy that institutions would be interested in this as well as consumers. Of course, we still have to remind everybody that some assets are volatile and they can go down as well as up. But when it comes to your save and your yield and your stable coin conversation, it has now become meaningfully different. How is that playing out for you in your day job? Are you seeing that tone shift inside of the institutions and just kind of give me an insight into to what that looks like for you, especially around some of these assets like Bitcoin. That were historically considered quite different.
Speaker 1 35:02
It's interesting going back to 2021, and last cycle, where there was a point that first, if you wanted to buy bitcoin, you had to go to a crypto exchange. That was it like there weren't ETFs. Then it was like the only place to buy bitcoin was a crypto exchange. Then we saw the fintechs. We saw, I think Cash App was the first. Then we saw PayPal, then we saw Revolut, and we saw more and more of these major fintechs add support for Bitcoin. And then, as they added support for Bitcoin, then we started to see large banks come in and say, Wait a minute, should we add support for Bitcoin? I think a lot of them started on the like high net worth asset management side. I believe BBVA in Switzerland. I think we covered, they had announced that there's some of these large banks that are providing access to Bitcoin, but I would say, last cycle, it never kind of fully penetrated and got through, like it got through most of the fintechs. But then by the time a lot of banks got to it, then the market had turned around, and, like, wasn't a priority anymore. And like, a bank adding Bitcoin in a bear market just it was not, not a likely thing to happen. Now we're in this world where things have changed very quickly. I have not seen the same anywhere near what it was like in 2021 of banks saying, hey, we want to add support for Bitcoin, or we want to add Bitcoin rewards. And so part of the question is, like, is it just the market has changed so quickly? And like, that's like that's like six months away that I'll start getting a bunch of calls for banks want to figure out how to add Bitcoin, and they're just not there yet. Or is it just that there are enough places to buy Bitcoin that even if your bank adds Bitcoin tomorrow, if you already have a Bitcoin bank like Zappo, if you already have Revolut, if you already have cash app, that the need is already fulfilled. Is it because the ETFs that now institutional investors could just buy an ETF in their brokerage account, and so they don't necessarily need Bitcoin in their core bank account. And so I think it's an interesting question to just watch out for of like, in the next three years, are we gonna see every major bank, or some major banks actually bring Bitcoin into the core consumer experience, or did they kind of miss that window and the products that consumers demand will be offered by Zappa or offered by Cash App and others that already have that Bitcoin support today, my personal view is there's probably the latter, which is like, there's amazing companies now that have strong balance sheets are regulated and trustful, where you can go and get access to digital assets, and many from a consumer perspective, where you can also get traditional financial products as well, like Robin Hood. So I feel probably they missed the boat, or the way I would say it is like they were forced not to build the boat by the regulators, something I experienced personally. So so I feel it's probably a mixture of the industry now is mature. And actually, I do think on the institutional side and on the high net worth side, the worlds will converge, but I think the most tradfi companies are going to be powered by a coin base or an anchorage behind the scenes. And then on the consumer side, I don't see large traditional retail banks adding Bitcoin anytime soon, but I do think you'll be able to get it in your brokerage account, both as a coin and an ETF, and
Sy Taylor 38:09
especially not in the UK. There's just something about the Big Four UK banks that this just feels so far away from Maria. How are you thinking about what the next 1218, months look like for you at Zappo. That's
Maria Orzag 38:22
a good question. So I would love to see the future like, okay, they miss the boat. They just try to survive without building the boat again. But know that the competition will increase, the competitors will wake up, will also try to look for some solutions that can serve some of their customers needs. I think that we still can grow faster than them, because we are a few ahead of them in terms of the learnings. There are obviously some particularly interesting areas that we have learned a lot, and the new entries will also need to learn. It will not take them one days or two days to figure out on the transaction monitoring side, just to measure one of the sort of the most critical areas, how the crypto activities might be similar in some senses, to the Fiat transactions, but how very different platforms and partnerships you will need to find and implement to make sure that you will still remain compliant and you manage your risk properly. So I think that the competition will grow. I think the people will find more and more solutions according to their needs, whether it's a premium account that we provide or whether it's more a kind of a day to day free of charge account and to pay only after your transactions, kind of a solution that some of the people will find and their banks will be able to offer, but I think that in the next 18 months, we'll see many new entries in that field, and we'll see more and more people offering stable coin accounts or Bitcoin accounts within their services. It's
Sy Taylor 39:56
going to become normal. It feels like I can't be in a conversation at the moment. Without somebody talking about stable coins, it doesn't hurt that the market prices are doing what they're doing in crypto, but that brings attention. But what people see when they look is that crypto has really changed, that the whole industry has matured quite dramatically, that the infrastructure is ready, and that the institutions are here in some places, but most of them are people who've grown up with the industry and become institutions in their own right, and I think that's a fascinating trend to continue to watch that does put us out of time for this recording. So I want to thank everybody for listening. I want to thank everybody for joining me. Ollie, where can people find out more about you and what you're up to, sir,
Oli Harris 40:38
great. Twitter is best at O, L, I, J, Harrison, that's the best place to find me,
Sy Taylor 40:44
fantastic. And Maria, how about you and Zappo, zappo.com and
Maria Orzag 40:48
you will find all the information that you might be interested in and about myself. Find me on LinkedIn
Sy Taylor 40:54
and Kai. How about you on
Cuy Sheffield 40:56
Twitter, at Tai Sheffield and visa.com/crypto
Sy Taylor 41:00
you find me at sy Taylor on Twitter, or FinTech brain food.com or sodium.ai if you have any challenge with fraud and compliance, if you haven't already, you gotta go ahead and subscribe to this podcast. We are just getting rocking. And if you want to other people to find it too, leave us a review. It makes a massive, massive difference to us. That's it. Bye for now.