On Ep. 74 of Tokenized, Simon Taylor, GTM @ Tempo and Cuy Sheffield, Head of Crypto @ Visa, are joined by Raagulan Pathy, CEO & Co-Founder @ KAST and Homam Maalouf, Co-Founder & Chief Products Officer @ Lead Bank to discuss KAST raise $80m for stablecoin neobank, Lead Bank's role in enabling stablecoin card programs and more!
On Ep. 74 of Tokenized, Simon Taylor, GTM @ Tempo and Cuy Sheffield, Head of Crypto @ Visa, are joined by Raagulan Pathy, CEO & Co-Founder @ KAST and Homam Maalouf, Co-Founder & Chief Products Officer @ Lead Bank to discuss KAST raise $80m for stablecoin neobank, Lead Bank's role in enabling stablecoin card programs and more!
Timestamps:
Tokenized is sponsored 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 presented by Bridge, a Stripe company.
Just like the internet made information global, stablecoins are making money global. And Bridge, a Stripe company, is the infrastructure powering that shift. Built for speed, scale, and simplicity, Bridge helps businesses send, store, convert, and spend stablecoins instantly, all without borders or having to navigate the complexities of crypto. Learn more at bridge.xyz
Tokenized is presented by M0
Stablecoins are becoming global financial infrastructure. It's time for that infrastructure to mature. If you're a brand, you should have your own stablecoin set to the behavior of financial flows moving through your product. If you're an issuer, you want to be the stablecoin partner for the most valuable brands. M0 is the only platform where issuers and brands get together to build digital money products for the world. Learn more at m0.org
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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
Sy Taylor 0:00
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 at FinTech brain food and head of market dev over at tempo, and back as always, with me is Kai Sheffield, head of crypto at visa. How you doing, buddy? How's lobster beach?
Cuy Sheffield 0:27
It's fantastic. Lobster Beach is right across the hall, so we're having a great time. This is a fascinating time in the world of stable coins and AI. And we've got a great guest today bunch to talk about.
Sy Taylor 0:38
Indeed, as corporate jobs go, Kai has the best one in the world. Joining us is rags. PathI, who's the CEO and co founder of cast. How you doing rags? Yeah, great. Great to be on Simon again. Yeah, pretty big week for you. We'll get into that in a second. And thank you for dialing in at 1am local. You hit different for us for doing that. I appreciate you. And joining us for a debut is Hamman Maloof, who is co founder and chief products officer at lead bank. Thanks for being on the show. Thank you for having me. All right, just a quick reminder for everybody that views and opinions of our contributors today are their own and might not reflect those of companies they represent. Please don't take anything we say is tax, legal or financial advice, and let's get to the first story, because, oh my goodness, there was an $80 million series, a round raised by a company called cast at a $600 million valuation. So rags, why don't you tell us about this round and tell everybody who lives under a rock what cast is, if they didn't already know?
Speaker 1 1:39
Yeah, absolutely. Simon, so I found a cast about 19 months ago now, when the round was done around 16 months old. And cast initially started off very simple, the ability to spend stable coins on a Visa card. But really what our mission is to build is a global Neo bank on top of the stable coin layer. And now we integrate many other financial services as well, along with crypto and stable coins, all into a singular wallet that's available globally in other countries.
Sy Taylor 2:08
And I think you sort of created a category. There's a lot of copycats, but you guys have got some pretty impressive metrics in terms of your growth. So tell me everything you're willing to share about customers and markets and kind of where you operate and what you guys did?
Speaker 1 2:21
Yeah, absolutely. So we, a lot of the competitors or others in the space, initially launched in singular markets or singular regions. I think what was different about us is that we went global from day one. It wasn't very popular with VCs in the early stage because they thought it just couldn't be done and it was impossible to actually acquire customers in so many different countries today, we support more than 100 countries, more than 150 actually, and so that's different. Having said that, we have around 10 to 12 countries in Latin America, North America, as well as Middle East and Asia in particular, that make up that 70% of our business. Anyway, there's a natural process of filtration through which and there's certain countries, there's lot more PMF. We have around a million plus users today, and we process around $5 billion in annual volume. Our growth is steady at 15 to 20% month on month and during we actually signed this deal back in October. Took some you know, obviously the usual post closing period, but in that time since October, as we know, we've been in a crypto bear market, and it's got worse and worse, but we as a company have grown well north of 100% during that period, so the growth hasn't slowed down at all. And I think the biggest, most interesting thing for people in our space is that that really shows that stable coin adoption has really broken out from crypto trading, right? That a business like ours, which is focused on payments and utility, just for clarity, you can't buy crypto on our platform, so we're wholly focused on payments and near banking style use cases. So it really shows that stable coins have broken out from that as well. And we do a significant amount of card volume. We don't exactly say the number, but it's very significant. I think we're within the top two or three within the crypto card space. And yeah, we have the other fun stuff for you is that, you know, I think this is a 20th month of operation of February, and we've grown every single month, without fail. It has been a single down month that we've had that wasn't paying attention or anything. It just showed that we had PMF from day one. It's just continue to grow from there through bull markets, bear markets, whatever. Obviously, in bull markets, it grows a little bit better, but every single month, that's great.
Cuy Sheffield 4:27
Yeah, that's amazing. So congrats. I think it's such a great example of this theme of stablecoin native neobanks, and how there's this new generation of FinTech in the velocity at which these companies are able to be created and grow of in 18, said, 19 months, being able to get to 150 countries, be able to scale and grow the way that you are, I think it just speaks to the infrastructure that exists now. With stable coins, with Blockchain networks, enables a new type of Neo bank profit. Product. And so congrats and hats off to you. Were one of the first people that I saw really talking about this of a stablecoin native neobank, and getting to market quickly. And I think speed has been a huge differentiator in the space. And so we're incredibly excited to see all of these new Neo banks popping up all over the world and doing everything we can to support them, and seeing the whole category of stable coin like
Sy Taylor 5:23
cards grow human. Sorry, I was just going to come to human briefly before we go back to you regs, because human people don't know that Lee bank is quietly powering a lot of this revolution. So do you want to explain a little bit about the role you guys play in the ecosystem, just so that people can complete the stack? And I think it's been so powerful seeing businesses like cast start to emerge in the past few years. So what role does a lead play in helping enable some of that?
Speaker 2 5:48
Yeah, definitely. We work in the digital asset space across a variety of use cases, from as basic as digital asset companies or folks in the space need basic banking accounts, et cetera, all the way to powering on and off ramps, the fee outside of the house for all of the money movement related to mint burn, stable coin reserve type offerings to we issue stable coin back card that we partner with bridge visa and stripe on to do that as well. We're now settling with Visa and stable coins directly. So a lot of the under the hood, blurring the lines, if you will, between the two tech stacks, the Fiat side of the world, and then the digital assets out of the world. We play a pretty big role in providing accounts, payment rails, cards, et cetera. So that's kind of we cover the basis, yeah, people
Sy Taylor 6:32
dumb that down to being an off ramp. There's so much more to it. When you're the bank that has the regulatory responsibility, the relationship with Visa and MasterCard, you've got to bring on programs like bridge, but also then ultimately, like cast, to make sure that they've got their compliance act in order, and that they are going to be good, responsible members when they have that card network logo on there. So Rex, I know that's something you take very, very seriously, and I think there's been a lot of Neo banks appear in the last six to 12 months that say stable coins. How do you think about building something to last?
Speaker 1 7:05
Yeah, it's a great question. So the two investors that we brought on board this round were QED and left lane. QED is obviously well known for being early in new bank. Left lane more consumer internet, but I can tell you, they put us through the ringer when it comes to due diligence multiple months across product tech and compliance, and we've been investing very hard on compliance, because for your exact point, we want to be the lasting player, and we take compliance and security super seriously. It's a major part of the use of funds as part of this raise as well. They even go deeper on there. And ultimately, I think so this may sound a little counter to what a lot of people are projecting, because you're seeing so many new near banks of stuff pop up, but I actually believe that eventually you get into a stage where most markets end up as somewhat duopolies, or two very, very strong players, and we're racing to be one of those. And I think how you become lasting is having the best compliance infrastructure and the best security infrastructure, and taking that seriously from day one, a lot of our leadership team have come for places such as Revolut and a wallet and strike, but other places where this is not the first time they're doing it right. They've seen companies scale up. They've seen the challenges that come with it becoming bigger and faster, growing also some of the wrong players will come towards you, and so we're just trying to act in a lot more sophisticated way when it comes to that in short, and that investment is brought across so many different things. But the main thing is, is that we're happy to take losses as a company, because it's not a loss, it's a significant investment. And I think that will become, ultimately a barrier to entry, because a lot of these players will come on and they'll have pretty light compliance. We see it all the time, because we obviously test some of the other products, we actually remove a lot of users who are, I would say, don't meet our bar, and we're not afraid to do that, and we don't want to be seen as like debanking people, but we also don't want to have a certain type of user, and ultimately, I think they end up going to some of these others, right? And so the final point I would say is, like, I always tell my team we can grow faster. You think we're growing faster, 15, 20% month a month, we could grow even faster if we had no compliance. That is the speed at which we're growing. By ensuring that we're super tight on compliance so we're having the right type of user on board.
Cuy Sheffield 9:17
Yeah. So this is the question that I get every day when I talk about stable coin, like cards to people who just aren't close to the space, their first thing is, well, what about compliance? What about AML? And it's really interesting to try and unpack a stable coin wallet. Anyone can spin up a compatible wallet, could be self custodial, could be key stored on their device that could effectively receive a stable coin and send a stable coin, and that's just that's how USDC and USCT and other stable coins operate, that there is no need to get KYC before you could have a compatible wallet. And so in that manner, stable coins function like digital cash. However, when you talk about a stable coin link call. Card. Our argument is to say that While anyone can just set up a stable coin wallet, not anyone can just get a stable coin link card. And so you have to have this gap between this next leveling up of you have a wallet with a stable coin balance. Now you want to connect a card to it. Well, you've got to go through full KYC. We have to ensure that whoever's operating that card has an AML program, and so it's super important, and we think that one of the best outcomes for regulators and policy makers is that a lot of the stable coin ecosystem is actually stable coin linked cards, because then you can have all the controls in place that people are used to, versus if it's just the wild west of everyone having wallets transacting back and forth, it's much harder to manage, but home mom lead does an incredible job, and they have been an amazing partner on the compliance side, I know we've spent a bunch of time together. Can you talk about from your perspective, what are the unique technologies and tools and approaches like, how do you decide and manage that compliance challenge as you work as a partner bank to enable stable coin link cards.
Speaker 2 11:03
Yeah, this is a very important topic for us. We've been involved in this space since before lead bank, obviously, but also as part of lead bank since day one. And that was like, August of 2022 I remember Bitcoin was like at $20,000 we were two thirds of the way through the worst of the bear market at that time, and no one really wanted to kind of touch that space for perceived risk. But our bank is built for purpose. We didn't happen into the space. And so we leverage our own technology. We leverage so I'll give you an example where the traditional bank in the space, I'd say, will rely on testing and monitoring, sampling, some of the traditional ways of risk management, which at the scale that we're operating at, and at the speed as we move it to 24/7 right? You cannot just rely on that. So a lot of our systems have built in checks and balances, anomaly detection, not a cent moves that's unaccounted for, so that then we can all sleep at night knowing that most of the risk is taken care of, and then we'll catch any tail risk through additional measures. The other thing, even though, up until the recent stable coin settlement with Visa lead bank, was not directly interfacing in the digital asset space, we didn't touch stable coins, we would leverage tools like chain analysis and other kind of online blockchain forensics as part of our own internal AML process. So to us, it's all about thinking we are risk managers at the end of the day as part of that side of the house at lead bank, first principles thinking of, what are the risk we're trying to look at, where can we deploy technology, and then how do we approach this and bring along also our regulators to kind of educate them in the fact that this is how it needs to get done in this new world, and some of the old ways of doing risk and compliance, which are perceived as more kind of onerous and limit the growth, if you will, are not applicable. So it's a lot of technology, a lot of subject matter expertise, and a lot of automation so that if and when something looks out of band, we are immediately notified, so we can then take action and then mitigate any residual risk.
Sy Taylor 12:58
I think that's such a missed point Helen, that you make that like, the way you used to do compliance historically, was sampling. So there might be a million transactions, and you go sample 1000 and somebody sits and looks at them, and if they find one in bad in the batch, then they'll, you know, it's kind of like how manufacturing always used to work, batch, sample, quality control, right? Yeah. But like, when there are millions and millions of transactions a day, there's an entire crypto network out there. And we have automation, we have AI, we have technology. You can start to catch even sophisticated stuff with relatively simple automations in a much more sophisticated way. And because a lot of other banks aren't doing that yet, the regulators aren't used to examining that yet. So you, I expect have, therefore, as you said, had to do a lot of education with some of those regulators to help them understand it, too. So really powerful points made.
Speaker 2 13:52
Yeah, and then the other thing I'll add is it's both education, but as well as kind of a full partnership with our counterparts, where we will meet with them as needed. We discuss with them everything we're doing on a periodic basis. There's no because, again, we want the partnership, and want their input to kind of better inform also our program as well. So it's not a I think the average, also typical folks, are kind of afraid of their regulator, if you will. We're not afraid of them because we're we're both aligned to the same objective, which is making this space grow in a safe and sustainable manner, and so we should be aligned there.
Sy Taylor 14:26
Heck, yeah. So Rex, what should we expect from cast in the coming days, weeks and months? And what are you focused on day in, day out? What are you telling the team?
Speaker 1 14:34
It's so funny, because you think these things are momentous, and it is an announcement, but anyone who runs a startup nurse, and it's just straight back to the grind. So things have a Mr. Beat, I sometimes almost worry, actually some of these things, when you get suddenly a lot of money, you can lose that, like hardcore hustle culture that you have. So for us, we're focused on a few things. So firstly is just product velocity, so shipping a lot more product for users. A lot more features, on and off ramps. We work with 20 plus financial services partners. Today, we will be expanding that further as well. So product velocity is super important, I think, in terms of growth for us, as we're seeing a lot more PMF in certain countries, investing in teams and country managers and others in countries as well, to expand that. So that's very important. I did obviously mention the compliance security part, which we've always invested in heavily anyway. But I think even further expanding that, and I think it's pretty well known that we are actually expanding in the US as well, especially our business product as well. And so we're hiring quite heavily in the US for our business product. We have a long waiting list for our business product already. I do think, obviously the US has some great business products, and you know, the ramps and the brexes and others. But the differentiator for us is that if you're a startup in the US, and you start a business today, the great thing is that you could have cast for business, for your business and all of your employees. And like we have employees in 35 different countries, right? That's the nature of startups these days. They could all use cast as well, right? So having a single platform that is both business and consumer, wherever they may operate, is actually we can get big strategic advantage. So that's really where we're going to be investing. We also, I think, will turn up for the dial on the competition a little bit by investing further in terms of incentives, because of the way that we operating the business model, I think is very similar to how most successful fintechs have done it, right? So if you look at like Robin Hood, they obviously came with fee free trading. You know, many others give incentives back, a lot of the cash back in terms of what you make on card interchange, and then you you make your money further along in the future through other products and services that you roll out, whether it's business or whether it's serving payments globally, or many other things, right? And so that we're going to be following that same model, but I think the cash gives us a little bit of a cushion to be able to do that and run, you know, slightly more aggressive losses for some period. And this is the process through which I think there's going to be consolidation within this space. Because if you don't have that the funding, if you don't have that willingness to push really hard in terms of margins, I think it's going to be harder and harder to compete.
Cuy Sheffield 17:17
Yeah, I think we're going to go through a quick break to hear more from our sponsors, and we'll be back shortly.
Sy Taylor 17:25
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 episode is sponsored by stripe. Stable coins are the building block for borderless financial services, making money move around the world as easily as data. With stripe, you can use stable coins and crypto to reach untapped customers, reduce cross border fees and settle payments in minutes instead of days. Best of all, it works the same way other stripe products do buy API or write inside the stripe dashboard, meaning you don't have to worry about the intricacies of which blockchain or what wallet to use, from Shopify to vercel, global businesses trust stripes complete crypto solutions to unlock new markets and reach more customers. Borderless finance built on stripe. Learn more@stripe.com forward slash crypto. This episode is sponsored by m zero. Stable coins are becoming global financial infrastructure. It's time for that infrastructure to mature. If you're a brand, you should have your own stable coin set to the behavior financial flows moving through your product. If you're an issuer, you want to be the stable coin partner for the most valuable brands, m zero is the only platform where issuers and brands get together to build digital money products for the world. M zero. Make your own money. Get started on M zero.org.
Cuy Sheffield 19:18
So for our next story from Reuters and CoinDesk, NASDAQ partners with Kraken to launch tokenized stocks globally. And so NASDAQ announced a partnership with payward, Krakens, parent company, to distribute tokenized versions of publicly traded stocks. This uses X stocks, a tokenization platform allowing one to one tokenized shares. So hammam, maybe starting with you of how are you thinking about the current market for tokenized stocks, tokenized equities? It seems like there are bunch of different players trying to do this in different ways. Like, what was your reaction to this announcement? And like, where do you see that space going?
Speaker 2 19:53
So my perspective, I love what kind of rock said earlier, where he noted, even though we may look like in a bear market from a. Yeah, crypto prices right? I think the underlying tech and its value has diverged from pricing, if you will. And that was kind of our thesis, at least at lead bank when we started from day one is stable coins, the underlying blockchain technology has a lot of value that can be leveraged hand in hand with some of what we do today in traditional finance. And so it is our view, or my view, at least, that these two worlds are going to have to coexist, right? There's money that needs to flow easily in between them. And then we're in 2026 now, and money's still moving kind of at snail pace, whereas we're in a real time world everywhere. Also, that is a natural evolution, in my opinion, where the things you're used to doing Monday to Friday, between nine and five you kind of want to do whenever you need to, and get instant settlement. And there's a lot of risk today in the system, because money doesn't move seamlessly, right? So I think there's a lot of what we're seeing today with some of these launches and developments is trying to kind of get at the heart of that old kind of friction point, if you will, in the traditional system, leveraging new technologies now, as long as again, they're done, as we were talking a bit about it earlier, with the right risk controls in mind, with the right kind of oversight in mind. This is a positive for the entire industry.
Cuy Sheffield 21:09
It's interesting that to me, like a lot of crypto obviously, has been driven by speculation, and the exchanges have built very large, profitable businesses upon speculative cycles of people that want to invest in assets that they think are going to go up. But I think there's been this question of how many crypto assets are going to exist and be valuable long term, and you've had this understanding of, okay, well, there are layer one blockchains that have a token, there's eth, and there's soul, and there's these layer one assets, and like, if the networks are valuable, maybe those tokens are valuable, but then how many of those networks are going to exist? And now that's kind of being tested, of is there going to be 100 or is there going to be three? And there are a lot of coins out there, maybe fewer networks that have adoption. But then you start to fall down and say, Okay, well, they're like, governance tokens. Are those going to be valuable? Then there are meme coins, but those are kind of like, no longer people are trading. And so what do people wanna trade and like, what's the speculative energy and rag? I'm curious what you're seeing. But the friends that I talk to that are, like, actively involved and like to speculate, like to trade. They're buying like silver and like copper, they're buying like, random long tail AI stocks that they're doing, like Robin Hood call options on, like, data centers in space like, they're actually, like, bored with some of the crypto stuff. They're wanting to get more exposure to equities. But they're coming at it saying, Okay, well, I don't want to just trade in market hours, and I want some like leverage on these equities that I can't normally get. And so it feels like there is a world where we could see the crypto exchanges in the crypto market structure and blockchain technology end up just being what's used to trade a bunch of equities, particularly in AI and space and categories that people are excited about. But that doesn't mean that the traditional coins participate in that. So, right, how are you seeing that with your users? And like, how do you think about crypto speculation and assets versus speculative energy towards AI space, other emerging tech and like, how those are coming together?
Speaker 1 23:14
Yeah, I'll be brief on this, but I'll just give the quick setup. I mean, the advantage of being 45 is that I've been around trading, personally things. And I've seen, you know, there's a commodity bull run in the 2000s and then there was interesting, and then it was boring. And so I didn't think there's any surprise that people flip from one market to another to try to find speculative things to trade. I think that's always happened. And so that's all that's happening. I think another macro setup, which is not so well understood is that, you know, if you went back 1520, years, there'll be a lot of stock markets that were active. What's happened is that there's a lot greater concentration in US stock markets in particular. And for you guys, if you're in the US, it's a given, like you're like, I can trade wherever I want, but it's not a given. For most parts of the world, they are looking even foreign assets and foreign companies are coming to the US to list, but then they're not necessarily available to trade for a lot of people. And a lot of these exchanges, you know, like, there's this cracking example, but also, okay, actually, the deal with ice as well. For tokenized stocks, they have 100 and 20 million users around the world, in a lot of countries that we have users as well, right? And those people are looking to trade US stocks, and it's not straightforward to do it. And I think having tokenized stocks is a great option for a lot of these people, right? Definitely, tokenized stocks may be interesting in the US, but as you sort of alluded to Tai like, you probably have access to it through just normal means, in many ways anyway, through Robin Hood and others, right? But I think that's the greatest unlock, is that that friction that crypto has brought, which is like, why don't we take everything 24/7, everything 24/7, why don't we take it global? Is the setup, and then the execution of that is like, capital flows, the US markets. It gets tokenized, and now anyone can trade it.
Cuy Sheffield 24:52
Simon, if you're back, yeah, in back for it with the Wi Fi, how are you thinking about tokenized stocks?
Sy Taylor 24:57
Yeah, indeed, that distribution point you make, right? Is important, especially as somebody who is now looking up Starlink because my Wi Fi in my local area is absolutely terrible, and that's obviously true in lots of other places as well, but that global market is a lot of buyers for these stocks that these marketplaces traditionally couldn't easily access either. So there's upside for the New York Stock Exchange and its parent, ice here, and partnering with ok X and Kraken and some of those other companies. I saw a report by PwC earlier this week that tokenization has grown up, that tokenization is here to stay. You can't dismiss it as some weird, scary, defi thing that is actually institutional, serious, proper subject at this point. And that means that we are going to see, I think, a lot more moves like this in the near future, and it will become a feature that companies like cast can embed. And then we have the classic innovators dilemma of like, is it going to be Kraken, and is it going to be OK X that distribute some of this stuff, they've got a lot of customers, maybe they can, or is it going to be something that looks a little bit more like cast, that's my everyday wallet, and the answer could be some mix of all of those. So it's gonna be fascinating to watch this play out. Kai, can
Cuy Sheffield 26:07
I do my request for a product rag, looking at you, but also her mom and like, anyone that's like listening of like the product that I think needs to exist. And I think I've said this on other shows before, and I'll probably say it five more times, but in the US, any high net worth individual who owns a significant amount of equity can very easily lock up that equity as collateral and be able to get a credit line against it without ever having to sell that equity. That's an amazing financial product that you don't have to pay taxes. You can continue owning equities that you believe in, and you can have cash to do a renovation, or whatever you need to do like that is a killer product, but that is not a very accessible product, that is a pretty expensive product, that's not a very competitive product. What I think should exist is imagine if anyone in any country could own any number of types of assets. There could be tokenized Apple stock or Nvidia. There could be tokenized gold and silver, and there could be Bitcoin in a wallet. And should just be able to cross collateralize that and say, I have a portfolio of $1,000 of assets, I'd like a credit line of $200 that I can go and spend on my card, and then I can maintain holding those assets. And so I think if you could take that concept that has existed for generations, that has only been available for high net worth individuals, and actually make that accessible to anyone with any asset that they have on a visa, credit card, to be able to spend that could actually have a material impact on people's lives, and would be a killer product. And I would love to use that product of being able to cross collateralize assets together. So why does that not exist? And like, Have you built that? Or are you building that? Like, I want to use it.
Speaker 1 27:55
We've already built it, by the way. It's already sitting here now in beta, but we just haven't released it for a number of like regulatory and other considerations that we're just evaluating. But we, one of our teams, has already built it. We actually be using the hyper liquid stack as well as working with some of these other partners that are doing Tai Chi stocks. And then you can borrow against it. So we actually have it as already, but we have such a big opportunity with our main business, so we're just being careful not to get too distracted with it. But I do agree it's a great product. And also, you know what happens when I had no money, I had access to nothing financial services wise, except as you trade on CMC market. So Simon will know if you've been in the UK, but like, once you have more money, you get access to all these products. And I think chi, main point is, like, why doesn't everyone have access to these products, right? Like, why is it for the very few, they're not complex products that need to be gated? And so, yeah, I think we are stepping into that world, in short.
Cuy Sheffield 28:52
Chi, yeah. So if I understand the challenges correctly, and human made me correct me here, of like, the challenge is, well, what's the tokenized equity? And how does that work? Is it a wrapped version? Is an SPV? Is it actually issued? Because, like, it's only as good as can you trust and know that this is real equity that you own. Because what happens if you build that product and it's some wrapped version through multiple SPVs, and then one goes away, and then the liquid, like, there are real risks to that. But as tokenized securities have a real regulatory framework that should become easier. Is that the way you think about it, or like, what has to exist for that product to work
Speaker 2 29:29
them up? So another kind of part of the good news, to some extent, is, at least from our perspective, we have supported something somewhat similar in the past, which was, it wasn't dispersed through a card, but it was a Bitcoin secured loan that we originated, right? So I think the principle we're applying here is to your point. I think, Tai, you were saying, I have a bunch of assets. There were something Why cannot use them as collaterals. That was kind of our first principle as well for BTC, even though it was frowned upon, no one had done it, necessarily through a proper bank or our regulators were not. Super comfortable. But again, the collateral is liquid, has a market value. We can see, settles 24/7, I can liquidate it, etc, etc. As long as those kind of rules apply, then it is a suitable collateral, to some extent. So then that's the first part of your question. What is that basket of collateral? How is it structured? Can I have access to it pretty instantly if I need to liquidate it, et cetera, et cetera, et cetera. That time kind of how solid that collateral is very important. The second potential thing to think about is, because to the second part of your comment is, and it also needs to be affordable, or reasonably cheap, kind of line of credit, if I'm giving it to you, a 25% APR, no one's going to use it, right? This unfortunately gets into that at some point, cost of capital and what opportunity cost people have for the funds? Because if I'm going to give you, even though it's pretty fully secured and you're expecting something, a very cheap APR on it, the issue is not the product itself is not good. It's not as attractive in kind of what Rex is somewhat maybe implying we have other opportunities that may be higher ROI. So that becomes kind of the standard capital markets who's willing to give a line and lock up funds at 4% or whatever you think is attractive. So that becomes the bottleneck there, if that makes sense. But from our perspective, we've supported it. We have a defensible framework. We've been examined on that product. Have no issues as a bank supporting it. It's just the economics need to work as well.
Sy Taylor 31:20
Fascinating point that the economics have to work. I think it's something that gets missed. Regs, right? Like you've got to make the right business decisions whilst you're in hyper growth mode, yeah.
Speaker 1 31:29
And I think the consideration for us is slightly also different. So one thing I can hand in heart and say is that on the current cost platform, it's basically hard to lose money because it's payments platform largely, right? So we're here to be very, very secure for people, where you find safety, as soon as you add trading to that in the views of both regulators as well as users and partners as well, they start thinking about that differently, right? And so I think the debate we obviously built this because we want to see how it works, but the debate internally is whether we actually roll out a trading product and we actually announced it and then took it off beta, or whether we actually just become like the payments platform, for example, extending cast into others who are building trading platforms, but they struggle with on and off ramp and card and all these other things that people need around it and just be the specialist at that. And that's the debate that we're having internally. We've obviously got some young, pretty forward looking guys who are like, yes, we need to build the trading platform. But I'm like, there's a lot of value in just being the gateway to others. And arguably, it's easier than ever to build these trading platforms. A lot of them are building on top of X docs or hyper liquid. And, you know, we're builder code, so it's quite easy to do it, but they still struggle with it on an off road. That's still a very, very difficult part, as well as what to do with
Sy Taylor 32:49
the money afterwards. It's always about your right to win and your path to execution, because you can very quickly become the hamburger button and all of the features that don't get used. I've seen so many of those apps come and go. Not everybody's Revolut. Revolut has blitz scaled just about everything, but they also killed products as well. But when you're getting your initial traction, I think Revolut was basically a wallet in NFX app for the first three or four years of its life, right? People look at it today and they see something very, very different. So you can do that later on. The next set of stories really is a bit of a medley. We'll start with SoFi and MasterCard announcing SoFi USD can now settle payments across MasterCards global network. Hamlin, I want to come to you on this one in particular, because following sort of Visa's lead on this settling with the card networks. Do you see this becoming something that issuers and acquirers are going to be wanting to do, and I know you settle with Visa already, what's been the benefit to you as a bank of doing something like that?
Speaker 2 33:50
Our investment in this space and in that particular kind of launch is driven by, again, we believe that stable coins themselves have a lot of utility for all of the reasons people have talked about. I'm sure you've touched on on this podcast in the past, but a lot of the issues that still plague it is the last mile connectivity and getting true utility out of it's very good to send value instantly from A to B. I can send you $1,000 in USDC today, no issues. But then what do you do with that? Either need to off ramp it or et cetera. So that's where our role was, to kind of work with the folks and enable that same stable coin to go, like close the loop, and go from where it was in the wallet all the way to kind of visa, and we complete our side as the issuer. That then brings us closer to, again, full utility for stable coins, 24/7, money movement, et cetera. So that, then the byproduct of that is today, whenever money doesn't move instantly, there's inefficiencies, there's locked capital, there's pre funded accounts, there's collateral set aside, right, for risk reasons, which all of that eases if and when money moves in a principled manner, real time, right? So there's a lot of, I think, efficiencies and gains that happen if done properly. And so that was kind of our main. Push in the spaces. We need to get some utility through the card settlement directly with Visa. And I can see that happening again, because the main goal is everyone wants now money, or is pushing to get money to move instantly and settle instantly, so that the use cases can be unblocked. And then again, a lot of the inherent inefficiency and friction starts going to melt away.
Sy Taylor 35:19
Kai, how do you think about this? Because I know it's something you've been pretty close to for a while. Is it gaining traction and demand beyond crypto? Is it something that could go broader? Is it? Is it still early days?
Cuy Sheffield 35:30
Yeah, I think just tracing the arc back on stable coin settlement, we did our first test of this in 2021 so that's what, six years ago, five years ago now, and so crypto.com sent us, like, $100 of USDC, and we got it, we sent it back, and we're like, yes, like, we did it. Like, it's possible visa can, like, receive and send USDC. And so that was what it started in 2021 we didn't know, like, how useful is that gonna be, but my early hypothesis, whenever anyone asked me, like, what's the point? Like, why are we doing this? And plenty of people were like, asking me, like, why are we doing this? And I would just say, You know what? Blockchains don't take bank holidays. That's it. Bank holidays are a real challenge. At the time it was 2021 now we're in 2026 and bank holidays are still something that every bank and every payments company has to deal with, and I just don't think that's how it ought to be. So I am on a crusade to end the role of bank holidays, and not to say people shouldn't get a day off work. Like, I'm not taking a position on that, but I don't think that bank technology should get a day off work like, I think that we're at the time where bank technology needs to work seven days a week, and I think the products that we could build in the efficiency and how well our network could operate, improved significantly if we don't have bank holidays. And when you're running a global business, you'd be surprised how many bank holidays there are all over the world. So we are very excited to figure out ways that we could improve settlement, and that's what we saw stable coins doing. So we tested in 2021 we got into the first pilots. In 2023 we expanded to acquires the 2024 it was still very crypto native. And then, you know, late 2025 was the first banks, and so being able to have lead bank using stable coin settlement in the United States is like that's a major milestone. And I think by no means do we want this to just be a visa only or Visa exclusive thing. This is an objectively better way to move money underneath a card network. And I fully expect and hope and appreciate that every card network on the planet should do it. And like, I don't know what everybody's waiting on, it is objectively a good way to move money, and so I'm very excited to see that the early efforts we put in are paying off. The demand is growing. We're continuing to scale it month over month. It's growing, and I hope that every network supports it over time, and I hope that improves the entire ecosystem, and we could say goodbye to bank holidays, yeah.
Sy Taylor 38:00
Rex, your thoughts on this as somebody who's issuing cards to folks as well and operating across lots of borders, do you see the impact of things like this? And can you see the benefit longer term? And I know you have a history with
Speaker 1 38:10
circle as well. Yeah. I mean, I worked at circle for two and a half years, setting up the Asia business before I found the cast. So money is a network effects business, right? So every single FinTech, B to B, company, bank, every single person that supports stable coins will just increase the network of stable coins, right? And we know in the business that a lot of the stable coins get off ramp to dollars, because people need dollars when the banks open. But what happens is that more and more you do this for less and less it gets off Route, right? Because people like, I've got it and I need to send it on somewhere else for something else right now, on a Saturday at 4pm right? So even though it may seem like a trickle today, when you just compounded and compounded, I think within three, four years, it will become very, very significant. And then I think what happens is like with change, especially change in technology or other things, suddenly it will just be really apparent that why we moved money through a bank in the traditional way, when we could just be moving money through stable coins. And then you start thinking about you could do with the stable coins, right? And that becomes,
Sy Taylor 39:17
yes, the joy of programmable money is that it's programmable, and it's programmable, and it's instant that it's 24/7 and you can do lots of other things with it. It's not just cash. I thought the SoFi side of this was fascinating. This is sort of a NEO bank with a capital B, has a full banking charter, FDIC, insured in the United States, issuing a stable coin. I think they're the first to do something of that sort of scale and nature. They have their own card issuer processor in GALILEO that can do interesting things, and they're partnering with the card network to do this, and having spoken to some of the folks over there, they very much view the fact that they are a bank as being maybe a competitive advantage for so far us. USD in this sort of settlement conversation, versus a circle, versus some others, where the banks are wondering, you know, is this my friend? Is this my enemy? Is this somebody I use for now? And that psychology is kind of important. And in the same week, we've seen that Wells Fargo has filed a trademark for WF USD, meaning potentially they're thinking about a stable coin as well, although very large banks file trademarks and patents for things all the time, so we shouldn't read too much into that. But I am interested in this theme. Human of the banks doing their own stable coin. Obviously, you've been at the front line of this for quite some time, and feels like you're taking more of a we're going to enable the ecosystem approach, but, but what are your thoughts on people launching their own stable coins as banks?
Speaker 2 40:46
Yeah, in my mind, there's issuing stable coins for a few different reasons. One is kind of the standard network effect, kind of like the circle approach, where I'm going to be the stable coin that's used by the average person that doesn't want to issue their own, if you will, versus banks issuing their own, or other companies issuing their own, which will, I think, proliferate, right? And I liken it in my mind, like even in the Fiat world, you have some cash. You have some cash maybe in your mattress, under your mattress, maybe not here in the US, but in Lebanon, we do that, or you have some cash in your Venmo account, or you have some cash in your technically, right. Actually, these are kind of like different stable coins, if we were on the blockchain right, because they don't carry the same level of FDIC insurance, they don't carry the same level of consumer protection, et cetera, et cetera. So I think that what we're seeing is the same rough model, kind of migrating over to the blockchain, where we will probably have varied stable coins issued, some for actual network effects to compete against circles, some for their own internal use cases, which is, I think what we're seeing here as well, and that's where then the market gets potentially more fragmented, and then interoperability, which I know, like folks at Temple are working a lot on right to solve that, because, again, We're unopinionated that there'll be one that will be dominant. If so, then that would have to, at some point, become mandated as a government issued coin, which has its own issues. So I do think we'll end up in a situation that will there'll be many, but it's more again, as a digital representation of their network versus something to compete with circle or other stable coins. I don't know if I'm making sense, but like, there will co exist. They'll will co exist, there will be many, I think, that will come out, and some will be used for individual use cases in the network, like, if you're using wells, Fargo, or what have you, you'll, by definition, be using their coin. And in other cases, you can use kind of a payment trail, like a circle,
Sy Taylor 42:36
makes complete sense. I think that many horses for many different courses, you have different reasons for why you're going to want to use different things. Want to use different things. And the nature of the market currently is that we have this power law, we have tether, and we have circle, and then kind of everybody else but the white label coins are coming. Klarna, USD is coming. And as you pointed out, Holman, one of the things we're thinking about at tempo is, how do we make this as interoperable as possible. How do we let you pay gas in any stable coin so that you can have the maximum advantage from the infrastructure yourself? And that I just can't see a world where that goes away, because the incentives to issue you on stable coin is so great, even if it's white label, even if it's wrapped, the idea that you can do that in a post genius act world is really, really fascinating. Kai, I'm interested in your thoughts on some of the banks issuing their own here. Is this still writing the strategy, or is this the beginnings of execution? Especially now we've seen the OCC has published its notice of advanced rulemaking that's coming soon. Are we seeing that clarity starts turn into action, or are we still on the sidelines? What's your view look like?
Cuy Sheffield 43:46
It's still early. I think what's starting to emerge in a lot of discussions with banks is they know that they need to do something. They're starting to distinguish between tokenized deposits and stable coins as somewhat separate products with separate use cases. And so I think some of them say it's like a and we need a tokenized deposit and a stable COIN strategy. And some say we're not ready. We don't really think we need a tokenized deposit, but we need to, like, know what we're doing with stable coins. I think there are fewer that are saying, let's only focus on tokenized deposits and ignore stable coins, given that the traction that stable coins have, they have to have some plan there. But I think there is a lot of hesitancy and anxiety about going at it on your own as even like a decent sized bank, this is new it's a new space. It's new technology. It's new risk, the idea of going out and successfully executing, building a stable coin product and then scaling it in their market or in globally, it's just there's a lot of execution risk. And so I think that there's more of a need and demand to say, what are like industry friendly approaches, what consortiums exist? Here, like kavalis, has clearly been getting traction in Europe. There are two or three other consortiums that are so it's it seems more likely to me that banks will end up, whether or not it's exclusively picking one, joining together and saying, how do we create products that we think will benefit us in the ecosystem, rather than every bank trying to create their own stable coin, which just seems like it's so hard to be able to execute, for most banks to do that on their own. Yeah, I think
Speaker 1 45:27
one thing I would add to that is that this is where the opportunity opens up for products such as ours, right? Because we're building a stable coin, native Neo bank, per se, for users that are like, well further advanced. They might be getting paid in stable coins already, because they work in one country, and you know who they work for is in another country. So as banks sort of like figure it out, there's space for people like us to really move ahead a lot faster. There's also some interesting use cases for users as well, and this is sort of the interest for us in terms of issuing our own stable coin. We obviously accept deposits of USDC and usdt and major high quality ones. And we try to represent that just as $1 and what we actually want to do is that when the state of Queens come in, we want to give them usdk, which we're partnering with m zero and issue in the US on so that they can actually see if my bank balance says $1,000 that I can see on chain that I've got $1,000 right? And this is something quite unique, because in your bank, it's largely through trust. And luckily, with the G sips, you can't trust them, mostly because, guess what, they run great institutions. But at the same time, there's this new wave of people who come from countries where they don't live in a Singapore or the UK or the US they may be from, I think her mom, you're from Lebanon. You hinted I was born in Sri Lanka, where that level of trust is not worth so much with your bank, right? So you really, really want to know that in my wallet, I can see for sure, on chain that I have this money, and I can see attestations as to how that money is held, etc, right? The trust is much lower. So for that global audience, this is very, very attractive as a feature, right? That may not be apparent in the developed world. And I think that for us, is a major reason for issuing our own
Sy Taylor 47:08
step quote. I think rags on that point people forget that most of the growth in the world population is coming outside the developed world. Most of the growth in GDP is probably going to come from the same place too. And so if you're a growth minded business, you've got to be looking at the trends you've outlined there to really take advantage of it. So that brings us to the end of the stories we had this week. We didn't cover MasterCards, new crypto program or Exodus launching EXO cash, which is built on M zero's stable coin platform and issued by Moon pay m zero just on a roll lately with their announcements. So shout out to those guys. Sponsor of the tokenized newsletter, and the Bank of England has signaled openness to revising the Sterling stable coin caps amid industry pushback in a speech from Sarah breed and so exciting times at the Bank of England, fingers crossed, that comes out the right way. Look, I want to thank everybody for watching and listening. But most of all, I want to thank you rags and human for coming on the show. Rags, if people want to find out more about you and cast, where do they go to do that?
Speaker 1 48:13
Yeah, absolutely. Ragoul and Pathy on both x as well as LinkedIn and cast is cast dot, XYZ. So it's K, a s t, dot, x, y z, or cast, K, a s t, X, Y, Z, on x
Sy Taylor 48:27
as well. Humon, how about you?
Speaker 2 48:29
We're at lead bank. Lead dot bank is kind of our website. I'm not as active on social media. They're welcome to find me and then be bored, but otherwise I can be reached out. First name at lead dot bank is my email as well. Happy to kind of chat with folks interested in in what we're doing.
Cuy Sheffield 48:44
Phenomenal chi on exit Kai Sheffield and visa comm slash crypto.
Sy Taylor 48:48
You'll find me at sy Tai on all of the socials, at FinTech, brain food.com screaming into the void and at tempo dot XYZ cooking up the future of on chain finance. And finally, if you haven't already, please go ahead and subscribe. Like us on YouTube, subscribe, hit all of those buttons, and if you enjoyed the show, tell somebody you know about it. It really helps the show grow. We appreciate you, and we'll catch you next time.