On Ep. 98 of Tokenized, Simon Taylor, Head of Market Development @ Tempo and Cuy Sheffield, Head of Crypto @ Visa, are joined by Thomas Cowan, Head of Tokenization @ Bullish and Hannah Arnold, COO @ TurnKey to discuss Revolut launching Euro R stablecoin, Standard Chartered brings regulated Hong Kong dollar stablecoin to institutions, Fasset reaches billion dollar valuation using stablecoins for global settlement and more!
On Ep. 98 of Tokenized, Simon Taylor, Head of Market Development @ Tempo and Cuy Sheffield, Head of Crypto @ Visa, are joined by Thomas Cowan, Head of Tokenization @ Bullish and Hannah Arnold, COO @ TurnKey to discuss Revolut launching Euro R stablecoin, Standard Chartered brings regulated Hong Kong dollar stablecoin to institutions, Fasset reaches billion dollar valuation using stablecoins for global settlement 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 also presented by Fireblocks
With over $100 billion in monthly stablecoin volume, Fireblocks powers stablecoin strategies at scale with infrastructure that enables PSPs, fintechs, remitters and banks to issue, move, hold, and manage stablecoins. And it’s all done securely, at scale, and with built-in compliance. Learn more at fireblocks.com
***
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 0:10
Welcome to Tokenized, the show focused on stablecoins and the institutional adoption of tokenized real-world assets. My name is Simon Taylor. I'm your host, author of FinTech Brain Food, and head of Market Debit Tempo, and I'm joined once again by my co-host, my friend Kai Sheffield, head of crypto at Visa. How you doing, sir?
Cuy Sheffield 0:26
I'm fantastic. Things are moving. We got a lot to catch up on. We've got some great guests. Let's get into it.
Sy Taylor 0:33
Yeah, joining us this week, making a return, but this time from another company is Thomas Cowan, who's now head of tokenization at Bullish. How you doing, Thomas?
Thomas Cowan 0:40
Doing well. Good to be back. Thanks for having me.
Sy Taylor 0:43
See, you can work anywhere in this industry, and tokenized will still have you on board. We we like bringing people back and making a debut is Hannah Arnold, who is COO at Turnkey. How are you doing, Hannah?
Hannah Arnold 0:55
I'm doing great. Thanks for having me.
Sy Taylor 0:56
Really excited to have you on the show. Before we do get into that good stuff. I've got to remind viewers and listeners that opinions of our contributors today are their own and might not reflect those of companies they represent. Please don't take anything we say as tax, legal, or financial advice. And I'm also happy to remind you that this show is sponsored by Fireblocks. Tokenised is also sponsored by Fireblocks. Fireblocks is the stablecoin infrastructure of choice for global businesses from Visa to Wallpay to Bridge to Revolut. With over $100 billion in monthly stablecoin volume, Fireblocks powers stablecoin strategies at scale with infrastructure that enables PSPs, fintechs, remitters, and banks to issue, move, hold, and manage stablecoins. It's all done securely at scale with secure built-in compliance. With Fireblocks, you get complete control to build your own stablecoin orchestration layer, create payment accounts, manage liquidity, and access on and off ramps in over 60 currencies. Makes it easier for you to build and scale and expand your business globally. Learn more at Firebox.com. All right, first story this week: Revolut, one of the world's largest neobanks, who just passed 80 million customers, have launched Euro R, a euro stablecoin issued by the Stripe-owned Bridge and rolling out first in Denmark, Portugal, and Poland. Interestingly, so this is a Euro-pigged e-money token under Mica, the European regulation, and it's issued by Bridge and it works across Revolut's many supported crypto services, its external wallets and all of the chains it supports. Revolut calls the first suite of stablecoins in several currencies. The Euro stablecoin market is worth about $810 million at the moment. It's a bit of a rounding error, and Circle's Euro C is 65% of that, while Dollar stablecoins are about 300 billion with a B. So lots to unpack in this story, Hannah. I know you've probably been looking at various people coming into stablecoins for a while. What did you think when you first saw this story and about Revolut and why they've done this?
Hannah Arnold 3:17
Yeah, it's exciting. I mean, I think we're excited to see anyone come into the stablecoin issuance landscape and add more to the ecosystem in general? I'm curious to see how many people switch over from the consumer side. Obviously, this one is not going to come with yield. It's not going to come with rewards. Mika's pretty strict there. What's exciting about stablecoins is usually what comes next and what the consumer can do with that stablecoin. So we'll be watching really closely to see what else Revolut adds alongside this, and how else they can add other crypto services that consumers can access elsewhere. They go with FX, but definitely one of the things that we thought was cool here, and certainly one of the things that, having been in fintech for a long time, I thought was interesting, is that Revolut did decide to go with a kind of rented stablecoin issuance platform. They spent a decade evolving from a pretty thin interface to a very thick banking stack, and here their distribution is really the big thing that matters. And have decided to go with Bridge for the regulated issuance redemption reserve obligations, and of course, Bridge in turn, you know, uses turnkey under the hood. So nice to see kind of things. What is old is new again. I think as we go into a new stack, people do rely again on kind of getting help from other providers.
Sy Taylor 4:31
Thomas, any thoughts from you on the story?
Thomas Cowan 4:33
Yeah, I mean, I was really excited to see it as well because, as we know, for years the stablecoin market has been dominated by the U.S. dollar, and we've seen you know numerous upstarts, including the All Unity team in in Germany that I was on the on the board with in my previous role, focused on building out the Euro market. And so I'm I'm really excited for a name like this to really help build the market. And and I think it'll be very great to see the FX market actually grow because one of the key use. Is of course for stables is cross border payments, and so if we're really able to diversify the different currencies available, I think it will just unlock a lot of use cases that people are thinking about but haven't quite really executed on. And so this really, to me, is an example of building out that next level of the stack for stables globally.
Cuy Sheffield 5:16
I think first is it's incredible how well Revolut has just executed for years across different markets around the world, and when we talk to banks, Revolut is is top of mind for many banks. It's it's just one of the questions. They're always like, "What what's Revolut doing? Like it's and so anything that they do, it starts to set kind of a standard both of what consumers expect, what other banks look to follow, and they've kind of built this reputation as just being this force. So I think it's a it's a big move for them to be getting their first effectively Revolut branded stablecoin. Makes sense to start with Europe, and as they enter other markets, it'll be interesting to see, you know, do they end up creating stablecoins for every currency and every market that they're in, and they were one of the pioneers of of the multi-currency account and that kind of traveler product of being able to switch between dollars and euros and pounds, and I feel like we're we're just at the cusp of being able to get to a market structure where you can replicate the multi-currency account on chain with reputable stablecoins of each of those currencies, and and we haven't really seen that yet at scale. But like, it would make sense to me that if anyone, the pioneer of who replicate who did the multi-currency off-chain account, ends up kind of moving into multi-currency on-chain accounts.
Sy Taylor 6:43
Yeah, it's so true, Kai. I hear that so often, and I speak to a lot of bankers for my sins. It's not like I'm a Catholic going to church or confession or anything. I just happen to speak to a lot of those bankers, but I get a lot of questions about Revolut. And if you're in the U.S. maybe that's the name that's not as familiar to you, but in Europe, you know, 80 million customers-that's 7 million less consumers than Chase has. And at this growth rate, if they were to keep growing at this sort of speed, I did some napkin math earlier today. They'd be at like 210 million if they can keep anything like this growth going on. And so far, they have like it's actually accelerating. It's kind of wild that we might be on the cusp of seeing the first couple of like hyperscale, truly global consumer brands here. And Revolut's right at the front of that. And this came in the same week they launched a an AI lab based on the back of their own in house foundation model that they trained, and so there's this like consistent theme that like the brands that are pushing the envelope, whether it's Stripe, Robinhood, Ramp, Revolut, Newbank, they all have started to work on their own foundation model, and they're all leaning into tokenization on some way, shape, or form, and I think that's like a trend that you can say. Well, if these are the only indicators, then this probably is going to go through the rest of the market. One other thing I noticed here, Hannah, I don't know if this stood out to you that Denmark, Portugal, and Poland are the first countries. Denmark and Poland are not euro countries, so I imagine for those countries, you might have expats or people who are dealing cross border, dealing in a lot of euros. Something like having this 24/7 money where you don't have access to SEPA domestically could could be really valuable. So is there some sense going on there?
Hannah Arnold 8:38
Absolutely. Yeah, I think the multi-currency account is a great point from Kai too, where you know we often I get pushback sometimes as we talk to folks about you know stablecoins are not interesting if it has to go fiat to stablecoin and stablecoin back to fiat, and the pushback that I often have is well yeah the stablecoin part is interesting when it stays in stablecoin you know when when the dollar stays, or the dollar or the euro, sorry, stays in the playground, as it were, or the digital playground, and there are a lot of things that can trigger movement past that point where things stay there. And one of those things is, you know, you expect the next recipient to receive the stablecoin, so you leave the money in stablecoin. There's a lot of reasons why that may happen. You know, in a treasury use case, that's why I think that's been one of the use cases that's run away quickly because the treasury manager gets to decide that it all stays in stablecoin. But where Revolut maybe has the power here as a large enough platform across enough countries to say we'll push stablecoins and we'll push multi-currencies across many countries is they may actually be able to create that playground across many countries, many currencies to keep the money in the playground to use that terminology. So yes, 24-seven matters, and then also being large enough in terms of distribution. To actually get past that point, to where it makes sense for people to keep keep their money in stablecoins, and then to actually get access to cheaper FX, cheaper transfer fees.
Sy Taylor 10:10
I remember for a long time, a lot of the same people that have objections now about stablecoins were the same people that said Revolut's just a just an app. We could do that, and I think it was Henry from Privy that first used the analogy that like getting into stablecoins is like getting into space. At first, getting in and out is really hard, but once you're there, moving around is is really really easy. And if you could get multiple currencies there, it would be kind of amazing. They're also looking at the FCA's sandbox for sterling, and they're also looking at potentially U.S. issuance when they have a US bank, which they are in the charter application process. So this could be could be really interesting. And Thomas said, "I'm interested in your view more on the institutional side as well about multi-currency stablecoins. Obviously, tokenized stocks are near and dear to your heart, a lot of trade does settle in dollars. Are you hearing things about stablecoins, and are you hearing things about multiple currencies for those stocks?
Thomas Cowan 11:09
Yeah, absolutely. And so, in many ways, the whole stablecoin ecosystem is a few years ahead of the of the tokenized equities ecosystem. In that Tether really built out the you know the market initially, showing what's possible, USCC and other stables have begun to fill in the the institutional use case, and we're getting that same story with with equities, and that people are beginning to see oh this is you know faster, better, cheaper, and so now the question that people are asking is okay, how do we actually adopt it at scale and and go from these overseas use cases that show it's possible to bringing things onshore and in a more regulated manner for institutions to interact with and and use. And a big part of that is what picks and shovels do we need to interact with these tokenized securities? And one of the biggest ones, of course, is the other side of the leg or whatever trade you're doing. And so you know, very often it's it's U.S. dollar stables, but you know the world is obviously global, and one of the best parts about tokenized equities is that they can go anywhere in the world as long as they're they're in you know on the whitelist. And so that means that you know we very much embrace stablecoins in different currencies because it really unlocks so many different use cases that we're excited by. In addition to kind of the 24/7 trading and the and the collateral mobility and and the full transparency that you get with tokenized equities, depending on the different structures that that people select to work with, and and it really is just an example of yet another step we need to build this full ecosystem. And we're really excited by by what's in store.
Cuy Sheffield 12:34
Correct me if I'm wrong, but like I would expect that a use case for stablecoins and particularly non USD stablecoins would be as the cash leg to buy tokenized stocks in real world assets, but I don't think that that's actually really happened at any scale yet. Like I don't think I've I've seen any data or volume of entirely on chain tokenized stock trades that have been meaningful at all, and so is it just like that's that's coming, and is it actually going to be local currencies? Like, if you want to buy tokenized U.S. stocks in Europe, is it the natural thing to do? Is you're going to use a euro stablecoin? Like, how how do you see that playing out, Thomas Snow,
Thomas Cowan 13:21
yeah. I mean, I think the the first part is where is the liquidity and the availability today, and that's in in U.S. dollars. That's most people in USCC or Tether or other stables. And I think as we build out different stablecoins and different currencies, I absolutely see that like shifting to other other currencies. That being said, to your point, Kai, we haven't seen that S part of the S curve for adoption of tokenized equities yet overseas, and when that happens, it'll be it'll be transformative. And right now, the tokenized equity market is really in in three main buckets. The first one with the most product market fit is the overseas wrapper model. The second is that DTC led model, and then the third is the the issuer sponsored token model, which is really where bullish and and equinity focus. You know, as we look to close this transaction in in January to to acquire them. So all three of those models are going to see growth, and all three will very much need you know different currencies on chain to be able to have those legs and have those trades in in a global manner.
Sy Taylor 14:20
So exciting, Hannah! You were about to jump in. Sorry, I was just enjoying the potential in front of us if we can follow that S curve. But is is it realistic, Hannah?
Hannah Arnold 14:30
I yeah, I don't know if I have a ton to add besides to just ponder if it's a chicken or the egg question, and maybe you know as we see more of these tokenized money market fund begs a stablecoin to complete the cash leg. Different markets, the the first thing is different. In payments, stablecoin comes first, and other places, stablecoin comes second to make the tokenization happen.
Thomas Cowan 14:53
I also think it's interesting too because right now, a lot of the time, I know the first wave of post stablecoins was okay. Now that you're holding a. I want to switch into you know a tokenized money market fund, for example, to get the risk free rate whenever I'm sitting. There's no reason why you couldn't, in the longer term, flip into equities as like your you know what what you're holding even even for a short duration of time. So I think we're just going to see all kinds of different portfolios and use cases when we see the cost of trading and the cost of investing really plummet as we've seen with with so many other other technologies, and so I think it'll just transform how payments are used because on the back end you you don't have to put in the risk create. You could really put it into different parts of the stock market even for a few hours if you like to once things really are global.
Sy Taylor 15:35
I've spoken to I think two different payout wallet use case companies this week. People paying out into 1020, 3040, 50 different countries, some even 100 plus countries, and they're lighting up stablecoins in all of those, and they're having active conversations that I'm in about how do we turn on earn, and that starts obviously with the risk-free rate, but then what are the other earn products? Well, you know, Figure has this really interesting HELOC, Figure Prime, and yada yada yada, and then you can start to talk about equities as they come on stream. So, going to be interesting as more currencies come in and more assets come on chain. But the demand is yet to be proven. I do think it's interesting that the demand that came from the long tail with stablecoins legitimized it for capital markets and for enterprise, and then I wonder if we see a similar cycle. But the legitimacy story is one we can follow. The next story is about Standard Chartered. Standard Chartered has become the first bank authorized distributor of HKDAP, Hong Kong's first regulated Hong Kong dollar stablecoin. So it's the HKDEP stands for the Hong Kong dollar at par, and Standard Chartered will distribute it to eligible institutional clients. Anchorpoint, which is a joint venture between Standard Chartered, HKT, and Amicoa Brands, is the issuer that holds an issuer license from the Hong Kong Monetary Authority, and the first use case is tokenized money market funds, which is what we were just talking about. Subscriptions and settlements with asset managers will start in Q4 of 26. The bank plans to use it for its own intra-group settlement first, then offer the same setup to corporate treasury clients, the pitch is to multinational cross-border payments and treasury management 24-seven settlement across corporate structures. Thomas, so much to get into on this one. You know, Hong Kong being sort of the satellite of China, Tether being one of the informal ways to get money in and out of China. This being more institutionally focused, 24/7 focused. Hong Kong being a major money center, Standard Chartered being kind of a forward leaning bank. You know, sort of. What stands out to you about the story?
Thomas Cowan 17:55
I think it's really along the lines of what we're really talking through. Is it's another example of another currency coming on online and really demonstrating what's possible when you can build out that FX ecosystem, but that other part that I'm excited by is the institutional focus here. The fact that these use cases that they're talking about are used by some of the biggest financial institutions in the region there, and that's something that's transformative. And I really look at this as another Lego block for them to be able to use and build something brand new on chain that today they're thinking about, but tomorrow they can really do once this thing really grows. And so you know it's a it's another fantastic step in in the long journey. And just to kick it back to equities again, I feel like we're about maybe four years behind where stablecoins are, and so I know in a few years it'll be these same stories with these large firms, just with equities and other parts of their portfolios, and not just the cash leg. And you know, cash leg comes first, and then everything else falls into place. So we're really excited by by these types of announcements because it just means these institutions are here, they're not going anywhere, and they're going through the regulated first approach.
Cuy Sheffield 18:58
Yeah, I think Standard Charter is arguably the most sophisticated bank in the world when it comes to crypto and stablecoins, and I think the work that they've been doing for probably kind of you know a decade now, I think is just going to continue to compound, and I think that they're they're really going to continue to push the space forward. What what I what I like about the the details in the story is they're going to start using this themselves first for their own kind of intergroup settlement, and then they're going to expand and make it available to their clients. And I think we're going to see that more and more. Of like, it's hard to go out and sell a product to your clients that you haven't actually used that isn't solving a problem for yourself. And it's also it's it's the best way to understand what infrastructure you need to be able to interact with that product, and and I think that many banks and payment companies should go down that path and say, okay, how do we build partner buy the necessary components of of infrastructure to be able. To move on chain, how do we find the lowest risk, easiest to get off the ground use case that that could just be intra bank, could be between a single client, and then how do we how do we scale from there? And and it's also really interesting to see how Standard Charter has done these investments and incubations with Zodia Custody and zodiac markets, and so it's clear that they've taken a real kind of ownership stake in some of the future market infrastructure that's that's being built out. And I think other banks are are going to follow that approach, but it compounds. You know, the the work when you started 10 years ago pays off now, and that's why every year that goes by that a bank hasn't gotten into this, it's going to be harder for them to to catch up. But Hannah, what's your perspective on this
Hannah Arnold 20:45
one? I think it's such a great point. Coming into crypto from outside of crypto, I've been here now for four years, and it's taken me a long time to even understand these primitives and the things that matter. And the security is so scary at first because you can make a very small mistake, and it'd be disastrous. So starting small, starting embryonic, starting to just get your internal operations moving over is a really great. You know, it's something that we've seen some of our partners certainly do. And for me, this story is just-I would echo a lot of what Thomas said. It's just-it's really exciting to see institutions going from, you know, experimenting to actually, this is-it's very real. It's an important shift from kind of should we use stablecoins to how do we build this actually into the infrastructure of our business. And as we talk about stuff internally, we have a lot of people that are very crypto-native and really pilled and and expect the kind of DeFi things, and and some of them look at these changes with skepticism. But I think what we like to talk about on the team is that this is how we get to certainty that we have full mainstream adoption forever. Is is starting to see these types of institutions really take on these changes full time?
Cuy Sheffield 22:00
Simon, I wanted to ask you, like, how do you think about China and Hong Kong right now? Because I feel like it's it's just one of these like huge questions. If you say like 2030, it's hard to imagine that they're not going to be on chain payment flows, but particularly on the B 2b side, that effectively move between China and the rest of the world in some way. Now the question is which chain, which stablecoin, which asset. Like right now, we know there's like an informal market of USDT and Tron, and like, but that is very much not a compliant kind of regulatory approved way to move money. It feels like Hong Kong has played such a critical role. What could that ecosystem look like five years from now? And like, how do you see the opportunity and try it in Hong Kong right now?
Sy Taylor 22:48
Yeah, it's so interesting to me that Hong Kong is like the fiscal firewall to the mainland China. Like, Hong Kong is where you trade with from the outside world into Hong Kong dollar, and then Hong Kong dollar into RMB, but also in the background, RMB clearing is starting to become a major thing that the GSEBs are turning on, and the RMB is a currency. You can't separate that from the geopolitics of what's happening out there in the world right now, and China's role as import export, China's role in the commodities markets, and so where do these large asset managers that want to legitimately buy, sell, and trade do that? They do that today in Hong Kong, but they can't do that 24/7. And Hong Kong could have gone the route that a lot of central banks around the world are going, which is, oh well, we'll do central bank digital currency, and all our banks will do tokenized deposits, but they didn't. And Standard Chartered could have gone the route that all of the other GSEs have gone, which is we'll do tokenized deposits and we'll only do intrabank. But they didn't. They've been sort of figuring out ways to enable this new form of commerce, this more mercantile form of commerce, to happen, but in a way where they can still meet all of their regulatory obligations, and so Hong Kong remains this petri dish for what China might look like in five years, to my mind. And what is this? It's a stablecoin. It's not a tokenized deposit. That is really powerful because stablecoins are 24/7, but they can exist outside of your walls of your institution versus if you look at what Swift's done, the Swift ledger is a way to sort of coordinate all of like HSBC and Citibank's tokenized deposits in in USD. So as as I look out, I sort of see two competing models here. It's like the Swift system with the Swift ledger and tokenized deposits that's potentially at scale, but also questionable in terms of its speed of delivery. Although they have moved very quickly, to be fair to them, and then the Hong Kong model, and to some extent the Singapore model, which is we will embrace innovation. We'll. Try and regulate to limit the blast radius of that as much as possible, and we are the conduits in and out of mainland China. So I don't want to put any firm predictions on which model is the right model or what the volume looks like. But I do think in 2030, it's very likely that if you're trading 24/7 as an asset manager anywhere near Hong Kong, you're going to be preferring these stablecoins. I know HSBC has announced they're looking to do something similar, and so these are like two historically British headquartered banks that operate most of their business out of Hong Kong and mainland China that are supporting this stablecoin. That means big banks have to support stablecoins. To my mind, I think that's your big, big implication here, Thomas. I saw you were sort of nodding along to some of that. Anything resonate there?
Thomas Cowan 25:49
Yeah, I mean, I was just back to the CBDC conversation of about five or six years ago. A little bit of PTSD there because I know there was, you know, this debate of bank deposit tokens, stablecoins, CBDCs, real-time payment systems, how do you move and store the dollar going forward? Do you use blockchains? Do you not? And the CBDC conversation, I know, especially in China, has been something that they really pioneered early on compared to the rest of the market in 2122, and so it's just another example of people focusing and realizing on the utilities of stablecoins specifically, saying okay, this is this is kind of the use case that we think the market is going to go to for now. Not saying that tokenized deposits won't come soon right after, but stablecoins really are that first layer that are kind of the common language for people to be able to move dollars globally.
Cuy Sheffield 26:37
It's interesting, just just that I haven't heard much about the Chinese CBDC in a while, and I feel like we used to hear that a lot. There'd be press releases of digital yuan and kind of the expiration expiring money that they do an airdrop, and then it would you'd have to spend it in a certain period of time. So I just haven't heard much about it, and I would imagine that if it had been, if it's an extraordinary success that's getting a bunch of adoption, then you'd hear about it more. I'm also surprised that there aren't more institutional, kind of wholesale, on chain but sanctioned kind of permissioned type of approaches, and so it feels like it's been relatively quiet from the outside, from very very very far away compared to what it was a few years ago, where the whole CBDC discussion was very much anchored. And look at China, and like you know, China is doing this, and we
Sy Taylor 27:30
better do it because they're going to do it.
Cuy Sheffield 27:31
Yeah, that that was like the the discussion. You don't really hear that anymore.
Sy Taylor 27:36
No, and I think it's so such a lesson for central banks who believe that if you can top down mandate a central bank digital currency onto your population, then it will obviously be more successful than anything from the private sector. If any country in the world can top down mandate something, you have to imagine it's somebody like China, and it is a damp squib. It has not taken off. It has not been successful. China has one of the most vibrant financial services ecosystems on the planet. Like WePay and Alipay are phenomenal products. They run circles around most of what we have in the West, and that private sector innovation is the story often not told about China. And so, this sort of two-speed approach, where you sort of accept enough of the informal economy to learn from it, and then formalize it later. Is is I think something we can learn a lot from, and I think the West is sort of finding its own way there with stablecoins now in in various jurisdictions. Maybe even the digital euro, the noises coming out of the ECB sound very different to two three years ago, where now the digital euro, you know, for consumers is just another option. You know, it might work offline, but it's not there to compete with with stablecoins. And so, I'm quite encouraged when I speak to policymakers and central banks at the moment by how enlightened that discussion has become, and how it's less about fears of either another sovereign like China or less about fears of Meta and what they're going to do, and much more about what can this do for my economy and what can this do for for consumers. Of that, I'm just going to take a quick pause while we hear from our sponsors. Stablecoin operations usually mean a wallet from one vendor and on ramp from another, and then controls stitched together across all of them. Visa's stablecoin platform fixes this fundamentally. You can mint, move, and manage stablecoins across OpenUSD, and you remain your own custodian all in one single environment. Then stablecoin link cards let you spend balances anywhere Visa is accepted. That's Visa, the global leader in payments, and of course, sponsor of this show. You can find out more at visa.com forward slash crypto. This episode is sponsored by Stripe. Here's a problem many businesses are up against. Managing money is pretty painful. With slow apps built by banks on infrastructure from the 70s, designed before the internet was even a concept, it's often slow, cumbersome, and doesn't work well across borders. Stablecoins are changing this. Stablecoins are fundamentally a better way to store, manage, and spend money all around the world. They're offering a borderless alternative for those looking to move money instantly, spend anywhere, and earn on their savings. Stripe helps businesses unlock these benefits to build global by default fintechs designed once to work everywhere. Learn more about how you can use stablecoins at stripe.com/crypto. The next story is about a stablecoin neobank that I'd never heard of before, but it's raised 68 million, led by Japan's SBI at $1 billion valuation. This is called Facet, and it's three months after its last round. So they had a $51 million raise back in May, and it takes the year's total to 119 million. They're based in LA. They process more than 40 billion in volume across 125 countries annually, and revenues up 6x year over year. And apparently, they've been profitable for 12 straight months, the OWN network-it's kind of proprietary layer two on Arbitrum-connects banks, telcos, and payment firms across more than 100 different banking corridors. And their CEO said that stablecoins sit underneath as the settlement layer, even when customers never touch them. Super interesting one, this Hannah, because it sounds to me like company you've never heard of happens to use stablecoins in the background, has done the hard work on distribution and partnership, and and seems to be winning. Had you heard of this company, and and what are your thoughts on them?
Hannah Arnold 31:58
I had heard of them only because they're in our CRM, and I think we'd love to work with them, but I haven't heard of them in the news. And I think the the main thought I would have about them is we're seeing this across the board that financial companies are being built just very differently, and we've seen a lot of customers in our book that similarly get very large very quickly. One of the examples we refer to a lot, Axiom is one of our customers that you know fastest growing YC company ever. They got to 100 million in revenue with I think four people in four months. Really crazy levels of scale, and these are financial companies that are accessing from a non-custodial wallet, kind of non-custodial financial services-they're operating in a little bit of a shadow space in some ways. Moonshot was another example of very quick ascendance to huge scale with very small numbers of people, and I think it's a really interesting trend. And where it goes from here, there's lots of questions you might ask, and I think there's a lot of questions that one should ask, but certainly something that we're seeing more often. Where I think the 2010s version of this was an API on top of financial institutions certainly brought down the level of maybe manpower required to build a financial app somewhat, but you know, bringing blockchain into the mix is just really dramatically bringing that down even further. So stablecoins gives us a shared settlement layer. If you're willing to go as far as accessing DeFi and things of that nature, even further, I see this as definitely another element of that trend. The
Thomas Cowan 33:37
only thing I would add on that is this highlights that we really are on the vertical part of the S curve for stablecoins because you're just seeing this level of speed and this level of adoption that is unparalleled even a year or two ago. That's the first thing. The second thing I found interesting is the fact that they chose to go down the l2 route with Arbitrum. Right, they could have gone to to a bunch of other chains as well. And the focus that that that is the approach that they took is just an interesting go-to-market strategy, and we'll see how that how that continues to grow. But I mean, it's exciting because so many different people are approaching the same problem with different solutions, and this is just another example of that. So it'll it'll be interesting to see how this plays out in the coming year.
Cuy Sheffield 34:14
Yeah, I think the the stablecoin neobank category is fascinating. It's interesting to see the companies that were built maybe two three years ago. You know, if you think about the redop pays and the casts that were like have just grown exponentially and have have become kind of global financial products. You know, for many people, Etherfi, like it's just it's it's a whole new class of global fintech. Now it's like the barrier to entry to launching a stablecoin neobank is just getting lower and lower and lower, and it's great for competition and innovation, but it also the other side of it is like something. If if you have people vibe coding stablecoin neo. Over the weekend, the log like like some of these things. There's a huge difference between one stablecoin neobank and another, and I'm a bit concerned that that we'll see if you live in a world of one person run financial services that it's just it's hard for that to to really turn out well without people ending up losing money and mistakes that are happening, and then I think the other piece is just how does the differentiation happen when it becomes this easy to launch products, and does it end up being brand new companies that are stablecoin neobanks from scratch? Do do they get verticalized where there's a stablecoin neobank for dentists, and there's a stablecoin neobank for like just like any specific vertical that that someone creates, or does it end up becoming the software players, which I think we've seen less of than I would have expected, where global software businesses, the example I always like, Dave, is like an intuit of like how many people across the world use QuickBooks, and what if you had a financial services product embedded inside QuickBooks that could give you $1 account in like cross-border B 2b payments? Like that would be pretty powerful. And so I don't know about you all, but I I feel like I've seen less of the embedded finance payments using stablecoin wallets from global software players, and more of this like next generation of stablecoin neobanks. Some of which have done phenomenally well. Some of which I think will just struggle to differentiate, and some of which, unfortunately, I think it's going to like there will be challenges that happen when you have this low barrier to entry.
Sy Taylor 36:42
If I can pattern match for a little bit, because I'm really old, this is kind of how fintech played out. So we got the fintech consumer neo banks, then we got the B 2b neo banks, and then we got embedded finance, right? And there was a point in 2021 where one in five VC dollars was going into fintech, and everyone and their dog was launching a neobank And I remember sitting there thinking, "Oh, not all of these will be well run. Some of the bigger and better ones hopefully will be. And look, Fasa, it's pretty clear that if they're building their own chain, they're partnering with banks and telcos to get in the door in that case, you've got to have done something pretty special, and differentiation there does come from your ability to solve the bottlenecks that you don't see. Like I can set up a neo bank on stablecoins in what 10 minutes on tempo, less than that. It's insanely easy, but to solve the bottlenecks of distribution in the last mile, that takes proving myself to a financial institution that I need a contract with, so so I think there will be differentiation on quality of management team and experience, as there always is, and then there'll be this curve towards embedding. I think it was only about six, eight months ago, Stripe launched financial accounts product, and a lot of the embedded finance that you see in like Shopify came from Stripe making Stripe products embeddable, right? And and then there are other companies as well that have done similar sorts of things that have kind of unbundled that that Stripe offering. You know, Ramp has a similar solution as well. So you got the embedded finance wave, and you know Uber giving out cards to their drivers, and Shopify doing lending to their stores and accepting payments after you got the neobanks. I think we'll get that in three or four years as well. With these global platforms, they're going to start with payouts because that's the use case that's easiest where it has demand. But I think they'll build on other use cases in in B 2b and embedded finance kind of around it. But you know, look, cross border still has to hit correspondent banks, and you still need to do partnerships. And this this I think is not done. But I just love that there was a nail bank that I never heard of that's worth a billion dollars. Like I I don't know if this is going to be everybody anytime soon, but but but hopefully it is. Thomas, any other thoughts?
Thomas Cowan 39:04
I think it's it's just exciting because it reminds me a little bit of you know the internet era where everyone had their own website for one specific little vertical, and then there was an enormous amount of consolidation. I think we're going to see the same thing here, where people begin to because the barrier to entry is so low, you're going to see people spin up so many of these these different firms, and then over time, as we see the network effect, you know, take off, we'll see that consolidation. And at the end of the day, you know, the services that people get are going to be better, and they're going to be cheaper, and it's just going to be more efficient. But we just have to go through that that similar transition that that you mentioned.
Sy Taylor 39:37
Yeah, Hannah, any closing thoughts on this
Hannah Arnold 39:40
one? I think you're completely right that there will probably be some explosive failures, given how easy it's becoming to kind of participate in this space, and then you know add AI to the mix. The velocity of these things just feels outrageous, astonishing, and the kind of. Headcount to volume ratios are getting really crazy, but we'll all have popcorn and and wait and see how things go. And I think you know maybe this ends up being some place where we see the banks that still exist today end up having a a much larger play than we imagine right now.
Sy Taylor 40:17
I told the story in my newsletter a few weeks ago of every time I see somebody who's a founder of a brand new stablecoin, NeoBank, I put my arms on both shoulders and I say, "Please, please, please hire a head of compliance, or you are going to jail. It's those are your choices: hire a head of compliance or go to jail. Pick one, and I don't say that to be glib. I say that because I lived through the kind of the blowup of an organization called Synapse that went bankrupt, and then multiple neo banks were unable to give customers access to their funds. The underlying banks didn't know where customer funds went, and four years on, three years on, four years on, we still don't know where that money is. There are still customers who've lost their life savings. So when you're dealing with moving money, you're dealing with people's lives, and and I think that's why we we have to take this stuff quite seriously. It's it's all very fun vibe coding a neo bank, but when you lose somebody's life savings, things get a lot less fun very quickly. But to try and bring the mood back around a little bit from being disappointed dad of crypto, Les Zero has announced Atlas. This is a headless exchange on its zero blockchain that collapses matching clearing and settlement into a single stack. Yay for headless exchanges because agents are the future. So Atlas stands for aggregated trading liquidity and settlement. There is no front end. Trading venues plug in and keep their own interface and customers. Lesira claims sub millisecond median latency and 200,000 transactions per second at launch. The initial Open Atlas partners include Bullish, GTE, Defined Fi, and True North. So, Thomas, I guess you can give us a little bit more context on this one.
Thomas Cowan 42:11
Happy to. Really excited to see this announcement get out there, and I think it's a perfect example of another set of picks and shovels that the on-chain equity market really needs to take off because right now everything is is pre funded and there's very little netting and you know that is one of the big benefits that we have of today's settlement infrastructure through the DTC and NSC and so very much so through partnerships and and through initiatives like this one are going to be how we we solve those last large problems on chain to build the full end-to-end on-chain equity ecosystem, and so really excited about what that means. And what it really means is we can shift from building the platform to how we use the platform. And one thing that we're really focused on at Bullish specifically is now that we are, you know, in the process of acquiring Aquinnity, which is the world's second biggest transfer agent. They have about a third of the S and p5 100 and about half of the FTSE. That means that we'll have the distribution, and then we can really focus on the use cases. And the use cases you can think of 24/7 and collateral and and and all of that. The thing that I'm really excited about is what the transparency means, and by that it means that the issuer can actually know who its investors are, each individual person. And so, what does that mean in practice? That means that an airline can create a boarding class for investors. That means that a coffee company can see who's voted and be able to pass on a free coupon to those who voted. There, you have to be careful with that, of course. And then, and then the last one is a good example: is a publicly traded shoe company can pass on coupons on Black Friday to investors. So it blends what it means to be an investor and a customer and puts them together for the first time, which is really exciting. And that's really only possible because you're able to really see that transparency because the equity is finally fully on chain.
Sy Taylor 44:01
And and how would that work in terms of customer identification? Because like I know a lot of customer businesses with CRMs that are questionable, but the how does the on-chain transparency bit of that work? And how do I link the two together?
Thomas Cowan 44:14
Yeah, totally. So this is this is the fun part of building out the full ecosystem is working with brokers directly to be able to still have a seamless experience for the investors, but also leveraging the fact that those brokers would would now be holding the issuer sponsor token that would be the smart contract of which would be managed by Equinity. So then you can actually see who's holding it and be able to pass on dividends and voting rights and all of that directly to the holder.
Sy Taylor 44:40
All right, so you're just dealing with the investor side, right? Yeah, exactly.
Thomas Cowan 44:43
Yeah, yep.
Cuy Sheffield 44:44
Super cool.
Sy Taylor 44:45
Sorry, that took me a second. I know you said a lot of those words, but I just wanted to.
Thomas Cowan 44:49
No, but that's that's the fun part about this is is everyone is still building. There's no one solution that is like, hey, this is how it's done, and so it really, you know, it takes a village to build this entire ecosystem, and it takes. Long time, but we're very excited by what's in store.
Cuy Sheffield 45:03
I think those investor loyalty use cases are super cool. People have been talking about it for a while, but like we just haven't seen anything real come to market and scale. I remember when during the GameStop craze, I think AMC was giving like a free movie to AMC stockholders and like just the mess of like how to redeem it and like prove that you're a stockholder is just like so so hard to do. I think this also just it's been cool to see the the layer zero journey in starting and all about cross chain you know how to enable interoperability between chains, then going into building your own chain, and then now this headless exchange on top of it. And I think it just it also speaks to layer one innovation is just still alive and well. It's just going to continue that that there will be new chains that take different approaches using different technologies, and and that's great. Like that's one of my favorite things about the blockchain ecosystem. It never stops. It's it's open source technology that continues to evolve, and and I think that experimentation benefits everyone. I think the question just comes down to distribution. That every new chain that that's created, every new exchange of okay, how do you get people to use it? And so it's it's great to see institutional partners like you all that are that are involved in this. And I'm excited to see some of the brand new tech. Yeah, we've heard a lot of good things about xero in terms of the the tech design, but like, what are the use cases that end up getting adoption of this high throughput chain?
Sy Taylor 46:40
Hanne, your thoughts on this story?
Hannah Arnold 46:42
I guess a lot of common themes here. You know, infrastructure being common, shared infrastructure being an enabler. Nice to see this again here too. And yeah, echoing the distribution point, spread out not as helpful. Getting it collected in one place, like it'll be nice to see how that all plays out. I also I remember say I don't know if anyone else remember say was initially in this investor transparency play too. I've always wanted to see something like this where you know get better at communicating with shareholders and letting shareholders have a vote. That was kind of the initial view of DAOs I think too. Maybe we'll have some of that come back into the lexicon.
Sy Taylor 47:21
Yes, let's make that cool again, Thomas.
Thomas Cowan 47:23
I mean, I'm in. I'm in. I think the distribution thing is is the key one here because more and more, when we're talking to exchanges and market makers and custodians and brokerages, you know, a common theme that they ask is which chain are you on? We're currently integrated with this chain or with that chain, and so just being able to get everyone on the same page in the same room and say, "Okay, these are the three chains we're going to focus on over the next year, so that we can have that coherent ecosystem from end to end, is something we're we're we're really focused on.
Sy Taylor 47:52
Oh, I can completely imagine that. It's it's something that you can imagine in my day job. I hear a lot about, and this is a difficult market with a lot of fragmentation. Hopefully, we can solve it. There's a bunch of stories we didn't have time to cover this week. Coinbase also launched tokenized stocks on base because another chain. Speaking of which, you know, Robinhood has done something similar. Shinan and Visa teamed up to test stable coin issuance on B 2b settlements in South Korea, do not overlook South Korea. J.P. Morgan weighed a stablecoin launch as Wells Fargo and banks advance a joint venture. A lot of news about this one, and I don't know if that headline really tells the truth in some of this stuff because often we get closer, and it's definitely not a stablecoin. So take that one with a pinch of salt. Japan are going to work on a blockchain-based settlement systems. Details are expected in early 2027. Again, 24/7 trading seems to be what every country is doing, especially in Japanese bonds. That might be exciting and spicy lately. The Ripples RLUSD crossed 2 billion in market cap, and finally, Redop Pay says stablecoin card spending is forecast to hit 50 billion a year by 2028. There's that stablecoin linked cards in hyper growth again, Kai.
Cuy Sheffield 49:14
That's right, and we're seeing it every week. Hyper growth mode. It's amazing.
Sy Taylor 49:18
It's exciting. So I want to thank everybody for watching and listening, Thomas. I want to thank you for being on the show. If people want to learn more about you or bullish, where do they go to do that?
Thomas Cowan 49:25
On Twitter at Thomas Callen 93 and on LinkedIn.
Sy Taylor 49:29
Hannah, same question. If people want to learn about you and Turnkey, where do they go to do that?
Hannah Arnold 49:34
Yeah, we're@turnkey.com and I'm on Twitter at HM underscore Arnold
Sy Taylor 49:38
and Kai
Cuy Sheffield 49:39
on exit Tai Sheffield Visa.com/crypto.
Sy Taylor 49:42
You'll find me screaming into the void at fintechbrainfood.com, and of course at Tempo.xyz and at Sy Taylor on all of the socials. And you'll find a lot more of this show if you subscribe. It means a lot to us, and it's the way you say thank you for folks like Thomas and Hannah who have given their free time to. Educate you about the market, and it'll help us do many, many more shows. So please leave us a review and send it to all of your friends as well. Bye for now.