On Ep. 68 of Tokenized, Simon Taylor, GTM @ Tempo is joined by Bam Azizi, CEO & Founder @ Mesh, Kirill Gertman, CEO @ Conduit and Dogan Alpaslan, Researcher @ cyber•Fund to discuss Mesh raising $75M at $1B valuation, Fidelity launching its own stablecoin (FIDD) and more!
On Ep. 68 of Tokenized, Simon Taylor, GTM @ Tempo is joined by Bam Azizi, CEO & Founder @ Mesh, Kirill Gertman, CEO @ Conduit and Dogan Alpaslan, Researcher @ cyber•Fund to discuss Mesh raising $75M at $1B valuation, Fidelity launching its own stablecoin (FIDD) and more!
Timestamps:
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Music by Henry McLean
Sy Taylor 00:00
Simon, welcome to tokenized. The show focused on stable coins and the institutional adoption of tokenized real world assets. My name is Simon Taylor. I'm your host for today, author of FinTech brain food and head of market dev over at tempo no Kai today, he said he has a day job or something. I'm not really sure. Maybe he's got something busy to do, but joining us is the returning Kiro gertman, who is CEO of conduit. How are you doing? So welcome back
Speaker 1 00:35
doing great. Thank you. It's funny. We've known each other for several years now, but I feel like we only see each other on these podcasts at this point,
Sy Taylor 00:43
podcasts or random dragonfly dinners, one of those two, yeah, something along those lines. Around the conferences making a debut. We have Doan alpason, who is researcher over at cyberfund. Doan, thank you for being with us today. How are you, sir? I'm good, yeah. Thank you. Really appreciate you being on the show. Always good to have a debut on with us, but joining us is, well, the co host in our agentic commerce series. If you've listened to our episode on X 402, or any of those other agentic commerce pieces, it is the CEO and co founder of mesh. Bam as easy. How you doing? Bam, good. Good. Thank you, Simon, for having me. Thanks for being back. And before we get into the show, I've got to remind everybody that views and opinions of our contributors today are their own and might not reflect those of the companies that we represent. Please don't take anything we say as tax legal or financial advice. Always do your own research, folks. And I'm happy to remind you that this podcast is supported by centrifuge. Tokenized is brought to you by our friends at centrifuge. Centrifuge exists to bring institutional grade finance products fully on chain. Centrifuge is a full lifecycle defi platform, from asset creation and structuring to defi integration, and it's cross asset by design. What that means is they work across private credit, ETFs and equities, making your financial products much more accessible and much more efficient. This is the tokenization you keep hearing about, unlocked for all asset classes by centrifuge. Thank you so much to our sponsors. Story number one, well, the biggest story I saw this week, and the one that caught the most WhatsApp groups and telegram groups, was this company called MeSH, raising $75 million at a billion dollar valuation now it was led by dragonfly and Coinbase ventures with paradigm also participating. And this company's customers include people like PayPal, Metamask and Revolut. So bam. Have you heard of this company? Do you know seriously, congratulations. And do you want to tell people what's this funding for and what is mesh? Because I think people still get confused.
Bam Azizi 03:02
Yeah, so very quick, our thesis is fairly simple to understand. We strongly believe that the future of economy will be tokenized, everything from real estate to equity to deposit. And we also strongly believe that this future is going to be heavily fragmented. We will have different wallets, exchanges, different l ones, l twos, stable coins, stable issuers. It's very hard and challenging for businesses and end users to navigate this fragmented maze. And mesh acts as a network of networks abstracts all of this complexity and enables basically one click setup for both customers and also end users, like businesses and end users. Along the way, we work with a lot of companies like conduit, bridge, bnk and others, so we act as a network in connecting all of these nodes and remove complexity across the industry. The reason we raise more money is building network is not easy and it's not cheap. It's not like just run a chat, GPT, prom, like, build a network of the networks, and then you will have it in next second. So it requires a lot of compliance piece, a lot of global expansion. You need to work with different regulators, different frameworks, different businesses across the globe. And I wish I could clone myself, but I can't, so I need to hire the best of the best to be able to do that, achieve that. So that's why we want, again, as a leading company in the industry, to have enough capital to be able to achieve our mission. Indeed.
Sy Taylor 04:24
And I think you mentioned working with folks like conduit Carol, I still get this question a lot. I'm sure you do is, like, there's a lot of stable coin infrastructure companies. You do different things. Do you want to just kind of unpick what you do versus what a mesh does? So people have a good frame of reference?
Speaker 1 04:39
Yeah, absolutely. And I think this is super relevant. I'm sure, by the way, we're going to touch on this several times in this conversation, because there's going to be a couple of things we're going to address, I think later on, that super relevant to this. But I think a very easy heuristic, you know, is mesh is an obstruction layer. They don't touch the money, right? They don't touch the funds. We do. We touch the money, right? And so what BAM was referring to earlier in saying there's going to be a fragmented future, many different stable coins, many different issuers, many different types of tokenized assets, right? Not just stable coins, but stocks, et cetera. One layer of that is essentially the UX layer, your experience layer. So for a customer, whether that's a retail user or merchant or business, whatever they may be, in order to be able to interact with this, they need an easier way to access this difficult and complex ecosystem. And I think so mesh kind of lives a little bit higher in that stack, right closer to their customer. In some sense, what we do is the actual mechanics of moving the money around. So like when you need to convert your py USD into USDC, into MXN, into BRL, right? This is what we're doing. Through our network of partnerships with various banks and financial institutions around the world, we actually facilitate the conversion that happens between a stable coin, a Fiat, another tokenized asset
Sy Taylor 05:58
and so on. I think touches the money versus orchestrates the money are two different things, and people miss what a network is and how hard they are to build and how many relationships and commercial agreements are needed, so even Claude bot can't get that done these days. Don as an investor, you've probably looked at lots of folks in the infrastructure space. What are your thoughts with news like this?
Speaker 2 06:20
Yeah, actually, the stable coin in phrase is very competitive market. But I will just remove my investor hat, and I will just tell my actual experience with mash. I think Ben doesn't know about this, but in my past company, we were building a non chain, Neo bank in Turkey, and it actually late in like after that got acquired by the largest sensors Ad Exchange in of Turkey. And one problem that we faced with the existing on ramp providers was that they were extremely expensive. But if you consider sensors add exchanges, they were like trading at one two bps, and there's a huge gap between two of them, and we couldn't directly inject those center side exchanges into our platform because we didn't have a license. And that's actually one power of building an unchaining event compared to traditional ones. But at the same time, our customers weren't happy, so we just actually did the market research and figured out that mash actually the thing that it provides is the access to binance, access to all the centers and exchanges, so that we could get all of their users into our Neo bank, and we could provide better financial instruments for them that they cannot find on licensed entities. So as like, given this perspective, I think mesh like platforms, first their motives on distribution, and they gain the distribution by like leveraging their own network of supporting different regions, different centers that exchanges, different license financial institutions. And I actually saw a lot of different companies trying to build similar products, but all of them are failing with just like getting the first 10 or 100 customers of new banks, and I see a huge value of the existing players who already has the distribution. So as an investor, I think we already see, I would say, a consolidated market share across the players. But still, I think emerging players are also promising, and they also provide different value propositions.
Sy Taylor 08:29
Yeah, I think that different value proposition thing is quite important, and also geographic distribution is something people really underestimate. Stable coins are global, sure, but off ramps are definitely not, and partnerships with payments companies are definitely not. And I think, bam, you've been saying, I think, in the press release, that one of your big pushes is for that increased geographical sense of partnerships. Can you can you give me a feel as to what the next six to 12 months look like in doing that, and how you're going to get after those different regions? Is there M and A on the horizon? Are you thinking more organic? Is it partnerships?
Bam Azizi 09:03
Where's your priority? Mostly partnership. So if you look at mesh, I wish we were like that genius that we just they want to start like, what measure is today. So we went through, like, an evolution of in the series of changes to get to the place we are now. And the main thing that we did and we achieved was like, We nailed crypto to crypto transfer. Now, when I can expand this horizon to fiat, both from on ramp and off ramp perspective, and you can really build on ramp and off ramp globally yourself, you have to partner with companies like conduit. And also, there are many companies that they're like, focusing US and Europe. But the world is not just US and Europe. There is like Latin there is Asia, there is Middle East. So you want to work with all of these partners and also start inventing places that it doesn't make sense for a standalone company to exist. So we will go and get our license and do the dirty work so our customers don't have to. So on RAM and off ramp global is a pain, and. Typically people are focused on areas that there is not lot of money, and then they will never expand beyond that region. If you look at companies like BB and K and bridge, they're just focused on Europe and US, but big part of the economy is on the Asia side, in the Middle East side. So what about that? So if you really want to onboard the next billion user, you want to bring crypto adoption to the mainstream, you have to offer it globally, and just being in the western part of the world is not enough. So we do that mostly through partnership. And yeah, if needed, we will do acquisition and also getting our own licenses to get things done on the ground.
Sy Taylor 10:38
Different markets are harder in different places on Lake Carol,
Speaker 1 10:41
yeah, no, I was gonna say, look, one thing I always tell my investors and my board is the fact that there's no moat in payments except for the network, right? The network is the only moat, but there could be different networks, again, in different layers, right? And so what BAM has been able to achieve with mesh is a distribution network that is exceptionally strong. We're working on, actually, as BAM referred to, is the on and off from network in 20 plus, or actually more 30 plus countries at this point, within an all firms. So there could be many different networks layered on top of each other, but at the end of the day, that's the only thing that you can achieve as differentiation right to bam's point, like, can we actually onboard users in Brazil? Can we all from into China, Hong Kong, things like that? That's the only thing you could achieve, because the tech is eventually, at the end of the day,
Bam Azizi 11:30
replicatable. If that's a word, no,
Sy Taylor 11:33
it is. I think people forget that the stable coin industry in Asia, Pacific or the Middle East does look extremely different to the stable coin industry in the US or Europe and the licensing regimes do company I invested in Nala, they have their Rafiki product, which is a becoming a popular off ramp. And they've gone into every last last mile country to get licenses. And they've been really grinding it out in places like Tanzania and Uganda, where the licensing regime can be very difficult to do, and you need the local relationships, and it's hard graph to kind of get that stuff done. So you've certainly got your work cut out for you in the near future. Band, but we hope to be on that journey with you many more times. I'm going to move us to the next story, though, and this was fidelity. You may have heard of them. Very large asset manager, I think, about 6.8 trillion assets under management. They're going to launch a stable coin. It's named f, i, d, d, fit. You could also call it there. I was kind of hoping for a better ticker, though. JP Morgan had a really great ticker with M, o, n, y money. Maybe there was something in there. They could have gone for kid. Who knows, but they've been a long time committed company to crypto. I mean, they started mining Bitcoin back in 2018 they've been trying to build in the space since 2014 they've been paying for cafeteria lunches in Bitcoin. They did all of that stuff, and they were first to offer institutional crypto custody back in 2018 they've been doing the hard yards for a long time. So this is a really, I think, interesting moment. What are your thoughts on this, Kiril, as you observe the big asset managers in stable coins versus the banks and the yield debate and everything happening there?
Speaker 1 13:17
Yeah, that's actually what I was referring to earlier when I said we're gonna touch on this same theme from different directions several times during this conversation, right? Essentially, I think every asset manager, probably every large enough Corporation, every e commerce marketplace, certainly every FinTech, will have their own stable coin. There's a lot of incentives, economic incentives for them to do that. That makes a lot of sense. The challenge then becomes fragmentation. That's what Obama, think was referring to earlier as well. And so we may end up in very quickly, actually, in a world where, yes, you have f, i, d, d and money, right? The M O, N, y1, and p, y, USD and USDC and usdt, and again, for each individual institution that's doing that, that makes a lot of sense for me as a user, for, you know, a business, it is extremely complex, and probably will become very confusing and very frustrating very quickly. And so I think the solution is exactly, again, what we're doing with bash here, right? So, like, there's a UX layer on top of that, there's the actual rail or conduit, if you will, to move these funds around. I think you know, one of the things that's interesting about this is the fact that this happened before, right? If you look at the history of US dollar back in the 1800s there were several banks and several institutions issuing different dollars. What was interesting about them is the fact that they were not all one to one. And if you had $1 that was issued in Ohio, and you came to New York City and you wanted to pay for your breakfast in the restaurant, you would not get one to one of Ohio dollar to a New York dollar. And so I think this is going to be a really interesting future that we potentially can get back to the same state where we have multiple versions of essentially the same thing, right? Dollar. Assets or dollar backed assets, but they're not all going to be equal to each other, and I think that's going to be really interesting to see how we all navigate that the
Sy Taylor 15:08
famous bit of history, the Wildcat banking era of the 1850s and of course, this stemmed from solving an original problem, as the US was moving out west, you couldn't physically get gold out to the frontier because nobody had built a railway line to the frontier yet. So how do you have a bank to fund the expansion of the railway without gold? So the states would let people open local banks with golds held in the vault at the state the problem was not all of those banks were scrupulous, and some of them were printing lots of dollars. Wildcat banker, printer, go Burr, I guess would be the issue. And so not only did some of them not trade at par, there were massive bank runs. And this led to the creation of the OCC the Office of the Comptroller of the Currency, so that there would be one national standard for what the US Dollar was. Bam, I want to come to you now, though, because I wonder if this is a consumer payments thing, or is this more on the capital market side of fidelity. They're a major institutional player, and they could potentially be looking at collateral and 24/7, movement of that collateral, not relying on the banks for settlement of those assets. Would would that be more of an area of opportunity for them, or do you see this more on the consumer side,
Bam Azizi 16:26
ideally for both of them? So they're expecting fidd to become the currency of all the fidelity end users, and also they can use that independently to circle and tether so they can basically manage their own treasury, doing their own minting and burning, and own the entire stack and own the profit of it. I think, as Carl mentioned, it is needed internally, but I'm not sure it's perceived as a good thing from consumer standpoint. Eventually, a stable coin, everything will be settled on chain. Every single token will come on chain, and I hope that we don't see that institutions starting owning their own chain or building their own chain as well on top of it. But what my expectation is this competition is good for consumers from fee perspective, but not from UI UX perspective, but UI UX is a simpler problem to solve, generally speaking, and the way it will be solved is, like all of these stable coins will be in par and it will be hidden from users perspective. You're just interacting with us, dollar, and behind the scene, it would be used fi, D, when you're using or interacting with fidelity. App, when you're on Bank of America, you're using Bank of America stable coin, which is, by the way, my initial BA, USD and Morgan Stanley, or JP Morgan, you will use money or Mo and FY, but from end user perspective, you're just sending US dollar. That is my prediction, but you're far, far away from it. So if you will have some pains in the short term, but long term, it would be good for the consumers, because fees goes down, services are going to be better because of the competition, and I'm not worried about the UI UX, let companies like mesh handle that part.
Sy Taylor 18:05
Yeah, no. People forget that mint and burn fees exist unless you're minting and burning on a regular basis, and that can get quite expensive for on and off ramping and people forget that when you're holding those stable coins, unless you have a great deal like Coinbase does, you might not be recognizing any of that yield because the issuer itself can't pay you that yield. And it's not like you're a consumer and Coinbase that's got some other kind of reward. So for your treasury, wouldn't you rather have your own stable coin where you're collecting that yield? But of course, to your point, bam, that then creates the UX UI problem. The other thing I think people forget is that you can wrap stable coins so USDC can be wrapped and branded as something else. And so this is the really sort of gnarly, complex nature of this wall we're in. Of like, you can have a token and wrap it in something else and give it an entirely different brand. And underneath it's USDC, but it looks like, I don't know, Simon coin or whatever else and Doan, how do you think about what the economics of this are going to look like, and how the competing incentives of distribution on one end and consumer recognition versus treasury and yield on the other? How are you thinking about that?
Speaker 2 19:15
I think there will be different networks for solving this abstraction. What I mean by this is basically, right now we already have, actually different federated networks already that works. For example, m zero allows long tail stable coins to join a liquidity network, which is, I think, valuable. And we have agora that is doing exactly what you're describing right now like they are just like wrapping their own stable coin, and they share the yield with you. And there's like a few others, and tempo already has built in features for this as well. And I think in the future, we will also see different type of abstraction layers on top of this. For example, the first bank to issue the. You can own stable coin is fidelity, yes, but I think it's not going to be the last. So I actually even invested in a company that is building exactly this federated network that is gone by banks, and they are issuing the same stable coin with the incentive mechanism. And again, Tai or insight, basically, they're not live yet, but we already have a bet on there. And also there is another company like UBI X, and they are also building a settlement there for different type of stable coins. Yeah. Ubi X, yeah.
Sy Taylor 20:30
Ubix, we've had damn Tony on the show. They're sort of more of a clearing house than many, to many without the UI element of what BAM does, more of the just pure infrastructure level, similar space, but a little bit different in that they make that many to many side work. And good of you to mention as well that tempo does have a stable coin, Dex, baked into it decentralized exchange. So you can hold whatever stable coin you want and send it and the beneficiary will get tether or whatever it is they want to receive. So to your point, I think at the network level, you're also seeing innovation as well, and and those innovations are showing a market that's not static, that a market that is constantly evolving and changing, but with big players now coming into the space in quite a meaningful way. Do I'm sorry I cut across you would please finish your thought?
Speaker 2 21:19
Yeah, I just wanted to say that I think why fidelity is important is they're not like statter or circle. They own the full stack so that they can even be more transparent with their reserves. They can offer better liquidity compared to what circle faced in the past. For example, their banking partner had faced with some liquidity issues. And I assume that we will see some similar ones in the future with the long tail of stable coins that we have today. So I think this is important, but it's not going to be the last bank to issue their own stable coin.
Sy Taylor 21:54
What I think is interesting is, yeah, I'm aware of at least three bank consortia looking at issuing their own stable coin. There's probably a lot more out there. There's also Keith Valley, so that's four just off the top of my head that are looking to do that. There will be many more. But there's also, at the same time, this yield debate that's going on. Of like, the bank lobby doesn't want stable coins to pay yield. The Crypto lobby does. But as that's happening, the banks are having their risk weighting allocations for capital and margin really watered down, I think, by the current US administration, to where they can potentially lend more into the economy for holding the same risk weighted capital and tier one capital ratios. That's fascinating, because they could potentially lend more and compete, but they've been complaining for a long time about the quote, unquote shadow banks, asset managers like Fidelity, those asset managers that don't have FDIC insured charters, but do have Charters of their own for settlement really now, can do a lot of what the banks can between private credit and equity and many other sides of the balance sheet, they are looking like very large, narrow banks. So while the argument is between, sort of the crypto lobby and the banks, the third horse in this race, staying particularly quiet, is the asset managers, who potentially could get to win from the whole thing. But it does feel like a much more competitive and level playing field. So this will be one. I'm sure we come back to many times. I'm going to pause here while we hear from our sponsors, and then we'll go to the next story. This episode, if it's not obvious, is brought to you by our friends at visa, a global leader in payments visas, 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 episode is sponsored by privy a stripe company stable coins. Can move money anywhere, but only with powerful wallets at the core, trusted by more than 100 million accounts across 180 countries. Privy powers secure customizable wallets that enable you to go global from day one, from fintechs to consumer apps, it's the infrastructure making the future of money programmable. Start building with privy. Learn more@privy.io thank you to our sponsors. The next story, speaking of banks, is about UBS, according to Bloomberg, they're planning to let wealthy clients trade Bitcoin and Ethereum. So UBS manages more than 7 trillion in assets for select Private banking clients, and is going to let them trade Bitcoin and Ethereum, starting in Switzerland. And this is driven by demand, and they may expand that to Asia Pacific. I think we. Saw Morgan Stanley announced the same late last year, unsurprising that there is demand for this in the ultra high net worth segment. But also, seemingly there's sort of a drip, drip drip of banks coming into this space. How do you think about the financial institutions coming into this space, especially on their asset management side? Is this something that they should be doing, and how do they do it? Well, like, what should they be looking out for? What are the pitfalls to avoid?
Bam Azizi 25:26
Yeah, I think definitely it's a good news. Like, if you listen to any of my podcasts, my crazy prediction is the crypto market cap goes from 4 trillion to 100 trillion. Not because Bitcoin price is going up. It's because all the real world assets, or Rw is coming on chain. And to do that, you need asset managers and banks and traditional financial institutions to get comfortable bringing those assets and chain. And I often compared that trend with the trend that we had back in 2010 for cloud computing. I couldn't even imagine that one day everything will be run on cloud. But today, like 99% of the stuff that we're doing is on the cloud, but the difference between cloud and blockchain is blockchain is free because you had to pay for it, but still, we did that, so it's just free, faster, cheaper, better, more compliant. The only thing that we didn't have is the regulatory framework that post genius Act and other stuff that's happening on the House and Senate help these banks to build the guardrails and to get more comfortable to be able to get on blockchain. So I think it's a great news for companies like mesh, but generally speaking, it's great news for the entire economy, but also the end users, because at the end of the day, they will get the benefit of the cheaper services and higher quality services from these companies. One thing that I would suggest them to avoid or Pitfall, is not trying to own the entire stack. Banks are not owning swift they're not owning fed wire. They're not owning Ach, don't build your own l1 and l2 please don't do that. Just stick to stable coin or, like, other type of assets, and tokenize assets. Don't fragment the already fragmented market. That's my only suggestion.
Sy Taylor 27:10
So it's the guy building a network of networks. It's kind of interesting
Speaker 3 27:14
that you're like, please. I don't, I don't want this to be out of control.
Sy Taylor 27:17
You don't want the problem running away from you. Yeah.
Speaker 1 27:20
You don't want like, useless components of the network is just there for the sake of being there. Yeah, I agree. Also, by the way, I think there's demand, because you mentioned Simon, like ultra high net worth. I think demand cuts across every possible consumer segment, rights from like the high net worth to middle class to like under banked retail customers in Sub Saharan Africa, everyone wants basically the same things, and I think the demand is still very much unsatisfied, probably at
Sy Taylor 27:48
every level. I would agree with that. I think the appetite will always be ahead of it, but banks eventually have to listen, if enough of their big clients say, do so. I hear a lot from the corporate banking side that they're trying to figure out how to become off ramps, because they have large corporate clients that want them to be their off ramp. They want a big stable off ramp. And so it's unsurprising that you would react to it. But whilst there was, I think it was 1179 the OCC staff reporting paper that essentially said you had to go get a no action letter before you could even onboard a customer, that was such a high bar that coming away some of the other guidance, as well as the genius Act, has created a bit of a different environment where the institutions are slowly doing it, but it's interesting. They're doing this in Switzerland, well away from the US, and dealing with sort of that private high net worth space. Dylan. Thoughts on large institutions their role to play and how to get this right.
Speaker 2 28:45
I think UBS, like big private banks, just increases the pressure for the other private banks to serve crypto to their customers, which is beneficial for all the customers. I think that will be the best thing that users will get and customers will get. And I think UBS is in a strange position today because of the geopolitical reasons, and also, not only geopolitical, but also Switzerland banks in general, they were positioned as one of the safest banks in the world. And somehow the credit, yeah, credit, Suisse, I see you, yeah. And then, like, the merge happened, and 2023 and right now, I think they are, right now in in the phase of trying to be as neutral as possible. But the localization of the world that we are having today is pushing themselves to be more political. And I think crypto can be a way to avoid it. Let me expand it a bit, because, like, I think Ethereum or Bitcoin, they don't have a political power, like sanctioning the person, sanctioning the people. And yes. They don't have a privacy, but they can be anonymous. So I think given that manner moving money can be a bit easier compared to traditional world. This is why I think they can also offer much better features, rather than just custody for their customers. Given the UBS and then similar largest banks,
Sy Taylor 30:20
I think that's so fascinating that people forget the local regulations and your position in it. Switzerland is always seen as the safe haven country and safe haven currency, but that has its problems, and that has its issues, and also the Swiss regulation, for a long time was seen as very, very permissive, but in some ways, because it was so early, a little bit like Mica. It's not always ideal, and there are some real issues on their ability to give yield on a stable coin in Swiss franc, and how in full sight of FSMA, all of this has to be done. So an organization of this size, people forget UBS is the second largest FX brokerage in the world. Should these oil tankers turn around and really start facing this for multiple years at a time. And they really come up the knowledge curve, I think they could do some really interesting things. They don't have to move quickly. They just have to move with direction and consistently. Carol, any more thoughts on this one before we move to the next one.
Speaker 1 31:15
Like bank said, eventually everybody will be in the same boat. To use your analogy, with the tanker is it's got to be the same fleet. It's just that, hopefully they do this in a way that is, as bum said, smart and don't introduce unnecessary complexity where it doesn't need to be.
Sy Taylor 31:31
Yeah, no, there's a lot of nuance. I've seen lots of folks try to figure out all that space that I think that's going on. Every organization needed a stable currency in 2025 now they're trying to figure out how they implement some of that. Implement some of that stuff. And good luck to the wall. The next story was, tether are going to launch USAT, and they are doubling down on gold. So a couple of big stories this week, which was, USAT has launched onshore in the United States. This is their onshore genius compliant issue. There's no such thing as a genie and compliant stable coin, but certainly onshore registered stable coin. And you have quite a market change for tether, who was seen as the usdt, was the dollar of the Global South, but it wasn't as onshore as a circle, which was more cap markets potentially gives them something interesting. And then also linked to this was they bought more gold than the Polish central bank last quarter. They're buying about a billion dollars of gold per month, and they're positioning themselves as a gold central bank in a post dollar world. And if you look at the price of the dollar lately, and the Trump administration's attitude to that suddenly doesn't sound so crazy, does it? Are we looking at the central bank for the Internet or something else? Who wants to go first on that? Dylan? Carol, what are your thoughts on USAT,
Speaker 1 32:53
I have a bunch of thoughts. Actually. I think it'd be quite interesting. I think a lot of people dismiss this as some bit of a nothing burger, because they're saying tether is not actually serious about this. Maybe that is the case, but I actually think there's really interesting opportunities for tether here, because, as you mentioned earlier, Simon, right, there is minting fees. There's on and off from fees. Usdt does not actually trade on par with USD like, in actual reality, you do not get $1 for one usdt, right? It's always a bit off, because there's always liquidity in many different markets and so on so forth. What's interesting about USAT is that two things, number one, what is their kind of mint and burn strategy will be? Are they going to charge fees? Are they going to do it for free? And then secondly, how can it interchange between USAT and usdt, and can you do this on chain? Because, if you can, that solves a really interesting problem for tether. Because, as you said previously, or up until now, it's been the essentially de facto dollar for the Global South had a lot of challenges accessing the US market, or the global north, if you will, right, not just us, but Europe and other other markets where circle dominates today, but out there in the global world, the tether is still larger. It's losing market share, but it's actually still much more widely used, much more liquid than USDC. That can potentially solve this problem for Tera Right? Or they have a regulated USDC equivalent, and they have a little bit less regulated, a little bit more liquid, usdt. And if you can interchange between them, that creates interesting opportunities for actually, maybe off ramping back into US dollars through USAT, or on ramping in the US through USAT, but then actually using usdt in Brazil or in Nigeria or in Philippines, et cetera. I think it's actually potentially a bigger move than I think a lot of people give credit for, whether they're going to take advantage of this opportunity or not. I can't obviously say the gold one is interesting as well, because there's a lot of people who would love to go back to the gold standard, and no one's actually doing it. No. Like this is all very conceptual and ideological. At this point, nobody's practically doing anything about this. Maybe Twitter will be the first one. And again, if it's interchangeable with a regulated dollar coin, and then a less regulated dollar coin, and you have a gold backed coin, you have an interesting portfolio of assets there.
Sy Taylor 35:16
It's certainly going to be fascinating. I do think you're on something with that sort of off ramping. On ramping thing. I also thought about the crypto native institutions that hold a lot of tether, that are domestic, but that want to off ramp into dollars, and having a fairly efficient way to do that. I should point out that just quickly pulled it up. The People's Bank of China has been aggressively accumulating gold for 14 consecutive months, they've bought 74.1 5 million troy ounces, or 2306 tons over the last 14 months, becoming one of the largest buyers. The total value of its reserves are now 319 billion. So they're certainly out buying tether at the moment. And there's a geopolitical aspect to some of this as well. It's the so called sell dollar trade, where people sort of looking away to get off the dollar standard. And it seems, again, from comments recently, that the administration isn't entirely unhappy with that, but it is there to be observed, and when set against that context, what tether is doing, again, doesn't seem that different to what the major central banks are doing in some parts of the world. Your thoughts on tether, I know you've sort of been a veteran of this space. The more I look at them, the more I find them less and less crazy.
Bam Azizi 36:35
Yeah, if I was a traditional financial guy, I would ask this question, if you are building a central bank for the digital or for the Internet, why you're not buying Bitcoin, which is a digital gold, if you really believe bitcoin is going to be the new gold. So I think I would have been happier if tether would have bought more Bitcoin as a reserve versus gold. That said, I think krill is absolutely right. Usdt has an amazing distribution globally, and USAT is going to be the compliant, more US version of usdt. We are working closely with that team, which is Bo Hines and then Jesse and tether, and I think they are solving an amazing problem that basically can connect the global economy, the US economy through the usdt and USAT. And of course, by design, it's going to be one on one par between USD and USAT. So I'm excited to see how they execute, and how the institutions in us would consider USAT or building their own wrap around it and name it whatever XYZ they want to name it. And I think that is something that we have to watch so popcorn is ready. So I'm looking at the execution the next 12 months to see how it works in terms of like buying gold and being the central I think it's inevitable. I don't know if tether really has the intention to do that, but I think it's the right move, and it's going to happen at some point. We need something that is not just relying on one country and one party. We need something bipartisan. We need something that is global, and we need something that is as distributed as internet. And I don't think there is any other way than building something that is on chain. So that's the future. We will have a global central bank, and we'll have something that is not owned by one single country. That's the future, whether we like it or not.
Sy Taylor 38:24
Yeah, and I imagine that at some point, the AI agents are going to want their own central bank, something that's internet native, that's 24/7
Unknown Speaker 38:31
it's scary. Don't say that.
Sy Taylor 38:34
But you know, like it is one of those things where, like, if you just do the thought experiment and wind the clock forward enough years? Is it five? Is it 10? Is it 20? Is it 30? Is it 50? I don't know, but it sort of feels inevitable. The internet will have its own central bank, like the internet is the nation of the future. Like what Balaji has been talking about for a while is probably not wrong, just the time horizon is almost impossible to guess, and there could be all kinds of things that derail us before getting there. John, your thoughts on tether, yeah,
Speaker 2 39:05
so when you go to any country outside of the Western world, you will figure out that in most of the places, they value the usdt and more than $1 The reason is, let's say you have a $100 cash. If you go to any local exchange, they don't give you one on one conversion. But if you go with usdt, they actually give you much better rates than the cash, and this applies to any money in your bank and so on. So the reason is, usdt is super easy to move, and this is why I think the US move is also super important, because in Turkey, in Africa, in Asia, no one uses circle. I can clearly say that everyone uses tether. And if you use tether, you have no access to the US market. And that was one of the biggest issues for the companies that is not located. This in western world, given that, I think this is going to be super important, if they can allow one on one conversion between usdt and us 80 this will be one of the biggest improvements that they made to usdt in last year. And for the gold move, I think it's also the same so in countries where the currency is not trusted, everyone accumulates gold. That's like under the pillow of no one trusts banks, no one trusts any other authority. They just get it and store it on their physical cases. But I see a huge trend of buying from Tai Tai gold, especially in countries like Nigeria, in Turkey, and like similar developing countries, the reason is pretty much simple. It's just because there is no financial asset to access gold exposure directly, except buying gold from the exchanges. And I think this is why tethers gold Mo is super important, and it's much bigger than just tokenizing and accumulating gold. They are basically becoming the way to own the gold in the financial world. And I see a huge value, and like I see tetters gold in almost everywhere, in any exchange of the developing countries,
Sy Taylor 41:22
fascinating insight, especially given your Turkish experience and across different regions, people forget there's another wall down there where, I think it's widely understood, stable coins were wanted by people that wanted to avoid hyper inflation, but so is gold. So why wouldn't the people that gave them the dollars give them the gold too, in a digital way that's just perfectly logical. And if you look at tether based on who their customers are, they seem a lot more rational all of a sudden when they're company serving those customers than when you just see the headlines from the US. They tend to get perceived as that's weird and risky and over there somewhere, versus, I think it was in Bolivia or somewhere, I saw supermarket shelves that were priced in tether. This is a common thing, and unless you see these things and expose them to yourself, then you won't know them. Bunch of stories we didn't have time to cover this week. Apparently, the market cap of tokenized US Treasuries hit more than $10 billion the UK Government has said banks need to stop blocking crypto firms if the UK wants to become a global hub, kind of feels like they should do something about it, rather than just say it. The SEC clarified rules for tokenized stocks. The market cap for Euro C is up by 300% year over year. So it's at 400 million as of January this month, the UAE central bank has approved a US dollar backed stable coin. Morgan Stanley veteran Amy Oldenburg is coming in to lead digital asset strategy on mid of crypto push, and one money is introduced an m zero powered stable coin issuance. Shout out to m zero. They did get a shout out earlier issuance as a service doing a lot more. Krakens launched defi earn offering up to 8% APY via privy shout out to those guys. Friends of the show. Bit wise, has debuted an on chain vault with Morpho and zero. Hash is in talks to raise another $250 million at 1.5 billion after walking away from a master called takeover, according to some reports. We'll have to see how that one plays out. Big numbers indeed, one wonders what the dilution is that was all the time we had for this week. I do want to thank my guests for being on the show. Johan, if people are interested in you or cyber fund. Where do they go to learn a
Speaker 2 43:43
little bit more about you? I'm on mostly on Twitter and X. My account is dog and eat. If you type on the X and about cyber fund, it's just cyber dot fund. You can find a website and Albert failure
Sy Taylor 43:57
and Kiro you and conduit. Yep.
Speaker 1 43:59
Conduit pay.com is the easiest way to find a company. And I'm probably most active on LinkedIn. We just search for my name. I'll be there little bit less than x. It's like you're
Sy Taylor 44:08
trying to sell to businesses. Weird, right? People would think you're a B to B Company. A crazy idea. Man, bam. How about you? Where do they find you? And mesh of them popping champagne after your recent news, sure.
Bam Azizi 44:20
Meshpay.com or mesh pay on Twitter and LinkedIn and bam as easy mesh on telegram and x and on LinkedIn, just search my name. Bam as easy mesh, if you're building a future of economy, we'd love to work with you and just reach out and don't be shy and ask questions. Love to hear from you.
Sy Taylor 44:37
You'll find me at sy Taylor, everywhere you get your socials, at FinTech, brain food.com, screaming into the void, and at tempo, dot XYZ, building the future of the on chain economy. And of course, you will find me once again here the next time you check out this podcast. And I hope when you do find me here, you have told all of your friends that they need to listen to the show. Show and to subscribe and to like and to do all of the things that I'm supposed to ask you at the end of every show. I wish you a good week and bye for now.