On Ep. 61 of Tokenized, Simon Taylor, GTM @ Tempo and Cuy Sheffield, Head of Crypto @ Visa, are joined by Joey Isaacson, CEO @ Nook and Alex Gluchowski, Co-Founder & CEO Matter Labs to discuss Tempo Testnet launch, EVM, the race to onchain payments and more!
On Ep. 61 of Tokenized, Simon Taylor, GTM @ Tempo and Cuy Sheffield, Head of Crypto @ Visa, are joined by Joey Isaacson, CEO @ Nook and Alex Gluchowski, Co-Founder & CEO Matter Labs to discuss Tempo Testnet launch, EVM, the race to onchain payments and more!
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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
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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 00:00
Simon, welcome to tokenized. The show focused on stable coins and the institutional adoption of tokenized real world assets. My name is Simon Taylor. I'm your host for today, author of FinTech brain food and head of market dev over at tempo. And joining me once again, is my co host, my colleague, my friend, Kai Sheffield. We had an amazing
Cuy Sheffield 00:30
episode last week. So glad. We got like, two episodes on the bounce together. I'm loving this, man. How are you feeling? Two in a row? We got to keep the streak going. I think we're recording twice again next week. It's great. We got to end the year strong.
Sy Taylor 00:43
We got to end it strong. Speaking of ending it strong, we are joined by Joey Isaacson, who's the CEO of nook. How you doing? Joey? Doing great. Happy to be here. Tell everybody what Nook is briefly. Let's jump in.
Speaker 1 00:55
Yeah. Nook is easiest way to earn so in terms of with all these on chain protocols coming online, we built nook to be the easiest, safest way to earn through an iOS and Android app, because we really were not loving any of the apps that we saw in the existing landscape. So we built nook from the ground up.
Sy Taylor 01:10
Heck, yeah, man. We're also joined by Alex glukkovsky, hope I've said your name right. Co Founder and CEO of MATA labs. Welcome to the show, Alex. Thank you, Sam. And pleasure to be here. And I imagine most people have heard of matter labs, but for those that haven't,
Speaker 2 01:24
we are the creators of ZK sync. We are the pioneers of ZK scaling and privacy on Ethereum. Since eight years we built a very first working ZK roll up, the first ZK VM, and now we're focused on building the incorruptible financial infrastructure for institutions the real world economy based on ZK and Ethereum,
Sy Taylor 01:43
Heck, yeah, and lots of exciting developments coming from you guys recently I've seen as well. So two quick bits before we get into the content, I need to remind everybody that views and opinions of contributors today are their own and might not reflect those of companies they represent. And please don't take anything we say as tax, legal or financial or investment advice, or even just sports advice or fashion advice. Please do your own research, folks. And secondly, a shout out to everybody who has shown us love on their social media. For the Spotify rap, it is surprising and amazing to see how many people's top five podcasts we're in and just some of the things you guys listen to. So thank you so much.
Cuy Sheffield 02:21
So for the first story from tempo, the test net is live. Partners include brex, coastal, Cross River, deal, figure, gusto, MasterCard. Cal she Simon, tell us more about this. Seems like a super exciting milestone for tempo.
Sy Taylor 02:37
Yeah, tempo by name and tempo by nature. A few people have said that happened quick, and yes, it did. But also we've been working a lot behind the scenes to understand how do you make the best chain for payments around the real problems that payments operators have, and there are a lot of features that you can now play with by going to tempo, dot XYZ, checking out the docs and playing with the faucet and using the product for yourself. So super. Huge shout out to the team for getting this live and into production, and some of the features that we talked about when we announced are now there to use. So, for example, dedicated payment lanes. This is the idea that we have guaranteed block space for payments. Why does that matter? Well, some networks have problems with network congestion, and they'll be super fast most of the time, but if there is network congestion from a meme coin launch or something else happening, like a deleveraging event, you still need to make payroll. You still need payments consistency, and I think that's an important thing. We're also have our stable coin native gas, so fees are paid in USD stable coins, and we've got to sub second finality that's deterministic. Couple of really interesting things. Is we're building in pass key authentication with face ID and fingerprint. So we want to start bringing more identity on chain that's decentralized and more private and more secure, so that we can unlock some of those use cases. And then lastly, a couple other easter eggs that we've thrown in there, like the team built their own block explorer in about four days, and it's the fastest, most performant one on the market. But what I'm most proud about the team of delivering here is a the launch went off without a hitch. It really did go well. The docs are beautiful, and people are building on this platform today. So it's exciting to show everybody what's happening. But more than that, it's that partners are coming forward and saying, This product is solving a problem for us, that actually that dedicated block space was a hurdle the ability to do reconciliation with our transfer with memo fields is really, really important. Because if you're coming from tradfi, it's nice to have a payment. It's really great to know what that payment was for, what inventory icing was that payment for. So supporting that on chain is a really surprisingly powerful little feature. And. Another example is native block list, allow list, or native account abstraction, the idea that you have to have some extra software to deal with the fact that I can't send money to Joey if he didn't already have a wallet, that money would disappear unless we had somebody else sponsoring the gas in the middle of it. So it's kind of making a blockchain work for payments like you'd expect a blockchain to work for payments in some weird ways. So huge shout out to the team and Joey. I know you've built a lot of things for consumers interested in your perspective, if you saw the launch and some of the challenges you've had as a builder.
Speaker 1 05:37
Yeah, I definitely saw the launch. I think it's really impressive from the outset. In terms of the design, you picked a few key design partners, like brex, Klarna, kalshi, and we do our treasury banking with brex. They're great for working with smaller companies like us. And so I think from the design, it's really smart to focus on this one problem. I'll be really interested to see with those dedicated block space pieces, how cheap does it get, like, how performant it does get as it does get as it scales. I think it's really promising. The bigger question I have also is, what's the design for this in terms of payments, right? So once the payment is settled and the employee receives the payment, or the vendor is paid, et cetera, do you want those funds leaving tempo? Do you want them off of this chain, onto a new chain, going to a bank? Et cetera? I think when you're building in the consumer space, it has a varying set of requirements, right? There is payments, but there's also accumulating yield and other functions of a bank. It's not just payments. So I'm really excited to see how tempo grows and interacts with other chains, or do they eventually branch out from this initial focus and use case into other functions like yield, et cetera?
Cuy Sheffield 06:40
Yeah, it's awesome to see how quickly you all are shipping. Alex, one thing that I get excited about, and I'm the kind of weird crypto payment nerd here, is test nets are super useful. Like a test net launch is actually like a pretty big milestone towards a new network or a new capability. And for any institution, any tradfi folks out there, there is no excuse why not to get involved in experimenting on a test net. There's no real value. There's no like money you're losing. The bar is so much lower, but it has all the functionality you can really understand what it's like to build on chain. And so as a founder building layer two, building advanced technology like Zk, how do you think about test nets and the role that they play in the development cycle. And then, if you're a large institution that wants to come on chain, how should they look at starting to experiment utilizing test nets in that process on their path to going live?
Speaker 2 07:34
Test nets are extremely important because they give you subtle clues, like I can say this, not just as a founder of a protocol, but also as a developer with 20 years of experience, I remember my first interaction with stripe and how delightful it was to eat the dogs that are just well thought through and properly structured, and you can easily find everything you need. And then you have this subtle delights, like, oh, the dogs are interactive. You just enter the field here with your if you're logged in, your authentication is pre populated, and you can just do things and make payments, and they just work. And I played around with campus test net, and this is exactly what it delivers, like everything you would expect from stripe, but applied to the blockchain world for the first time. This morning, I told my team that Ethereum, for the first time, is in the hands of an adult product team, and we're going to learn a lot from tempo, and we will have to apply a lot of these ideas from the developer experience, things like test nets, but also from the design perspective, like Tai P 20 with the fields for payments. This is something Ethereum can learn from and can also implement. Because it's a application layer. It's not the part of the protocol. So we have to differentiate between what innovation happens at the protocol level, like the short block times, which is hard for Ethereum to replicate with full finality in 500 milliseconds, versus what we can learn from and borrow.
Sy Taylor 09:00
Yeah, yeah. I think tip 20 is something I didn't highlight, but is a really good point. So many listeners will be familiar with ERC 20, which is the standard for most stable coins and transfers of fungible value. Tip 20 is just an extension of that, and absolutely the rest of the ecosystem. There are ideas in there that you should be using in your EVM compatible chains and otherwise, because taking a product centric approach listening to customers, it's something we know that they need. You know, I've spent 20 years in financial services, and payments, memo fields are the obvious thing that you really need, but there's also other bits in there that you can start to build on over time. So super excited for for where this goes. Just want to make sure as well that, like the shout out goes to the team that used to be Ithaca, so that team and George and Liam and the guys they built the docks, it wasn't the stripe Docs team. And their moment of joy was when the stripe Docs team said, Wow, this is really good. So that really. Did feel like a good moment. We do have one bug to fix, though, Kai tempo is still on a dot XYZ domain, so some financial institutions have told me that they can't actually get access to the docs. So we are working on fixing that. Watch this space, and if you're struggling, it's all there on GitHub as well, so you can check it out there.
Speaker 2 10:18
So Samuel, one question I have on the dedicated payment lane. We are we're familiar with this problem. This is why ZK stack, the latest version, the Atlas upgrade, was designed to support over 15,000 TPS, and we measure TPS specifically in payments. We understand that the payments stable coins is going to be the major use case. We don't have a dedicated payment plan yet, but the question to you is, what happens if you have a spike in payments and the entire block space is served to if you have Christmas or the Beijing China, or something happens and everyone just wants to make lots of, lots of payments,
Sy Taylor 10:54
congestion is congestion, and it can happen in anything. But look, this is something that's very, very familiar to payments. So we've just been through bfcm. And if you're not familiar with bfcm, make Tai recognizes it, Black Friday, Cyber Monday. That is a thing in payments. So the last 20 years of my life have been people getting ready for the holidays. Code freezes, no migrations, like really getting ready for those peak loads and traffic. And you'll see that a lot of companies, addion, does this? Stripe, does this? Shopify does this. They publish their stats on Black Friday, Cyber Monday, almost as a Plex to say we are resilient enough to handle this volume. And so people talk about five nines of uptime, 99.999% of uptime is the target and the gold standard. And historically, some incumbent institutions would have this thing called planned outages, which didn't count towards the 99.9999% the modern businesses absolutely allow that, and you've got to believe we're holding ourselves to that standard of institutional resilience. So it's a really, really key, important thing. And actually in that world, decentralization and a varied validator set beyond a one or two is really, really important. And decentralization is a feature, not a bug. If you can get the speed and throughput there, and you can have that sort of variability, because we saw what happened when AWS East one went down and half of the internet kind of went with it. Decentralization is probably something that institutions, especially financial institutions, really want, many of whom removed some workloads to the cloud, but not all of workloads to the cloud. So dedicated payment lanes don't solve for resilience necessarily. They solve for other potential network congestion, and they make payments of first class citizen. There will be other use cases that are in and around it, of course, because payments are always close to yield, they're always close to other products. And treasury management is core for us, but resilience is actually the focus area.
Cuy Sheffield 13:02
One of the interesting things to watch for, that I want to see, is how many institutions will interact with EVM for the first time through tempo. And it seems that tempo has been able to in the list of design partners or companies that, including some that have not done much on chain at all, if anything. And so for their first experience coming on chain to be EVM, I think is really powerful and good for the entire ecosystem of Ethereum based chains. And so, Joey, how do you think about one? What the hell is the EVM? Why does the EVM matter? If you're working at a bank today and you're you're in charge of the stable COIN strategy, like, how should they view the EVM? How do you look at the EVM as a builder versus some of the other operating systems out there?
Speaker 1 13:46
Yeah, absolutely. I think from a startup's perspective, the EVM is the back end of the financial internet, so all of finance can be pointed towards one central ledger for a stable coin startup or for a bank working with a stable coin startup, I think that has a lot of potential in terms of, okay, companies can now plug into this immediate mostly up. I know Simon said There obviously are some congestion periods during drawdowns, et cetera, but pretty much always up financial ledger across the world, and for big companies, large and then small companies as well. So companies, large and small to tap into that and get immediate access to protocols, liquidity, stable coin transfers. I view that as just incredibly powerful. In terms of a big bank will be able to access that without spending too much time. So Klarna, brex, et cetera, they could get this set up within a matter of days tapping into the EVM and tapping into tempo, versus if they were to try and get that access, it would take them years the traditional world so quick access to everything is the way I see it through a centralized ledger comes with pain points, for sure. I think that's why tempo is doing a great job with especially notes. Actually, I'm really excited about but instant access. Very cheap to access the world's financial data is incredibly powerful for a
Cuy Sheffield 15:03
large bank. Alex, is it fair to say that like EVM used to mean Ethereum. They were like, one in the same. It was like, if you're building on Ethereum, you had the EVM, and there was this network effect. And then at some point that decoupled, where you still had Ethereum, but now you could use the EVM, and you could have a layer two that settles Ethereum, or you could have an alternative layer one, like tempo, that still use the EVM. Can you talk a little bit about what does it mean to use the EVM outside of Ethereum? And then for you, my understanding of matter Labs is, even as you've innovated with Zk, one of the really important properties has been maintaining the EVM. Like, why have you gone through all that work to say, like, we have to continue to have the EVM, versus just creating another equivalent or competitor
Speaker 2 15:53
to that's an extremely interesting question. So I think the diversion started three years ago when Vitalik introduced the roadmap. Roll up centric roadmap for the first time, and we started going this direction. And the creation and proliferation of number of L twos on Ethereum has reached a point where Ethereum is L twos and layer one you cannot separate them like now every application has some form of multi chain concept. And of course, now it extends beyond chest l two's, especially with the ease of bridging stable coins, which is a lot easier than traditional assets like if now EVM has undeniable network effects. So what we learned through our journey in the early days of Zk, we could not build fully VM equivalent EVM compatible systems. So we had to experiment with even different languages that were not Turing complete. So we started a language called zinc, which was like rust, but it did not support unbounded loops and conditionals, and we quickly realized it's not going to go anywhere, because people don't want to change the systems. It's hard to hire developers who want to learn something that has a very niche application, unless those are very nerdy people who just like new stuff and they're not going to do anything in production. And then we pivoted, and we built the EVM compatible system, where we had our own compiler. They would compile solidity smart contracts into a separate byte code which was ZK friendly. And then we learned the hard way that even that is not enough. Because even tiny differences in your deployment scripts, testing scripts, execution environment, or even inspection debugging some assembly in lines, they just break the experience. So if you have 1% divergence, that's basically unusable cross chain. This is going to be very, very interesting to observe what happens in this regard, with the divergence that our Tampa has with a different standard for ERC 20, for example. Like, if it's a strict extension, then you're in a good position, probably, because everything that works for AP 20 will work for you, but not the other way around. But yeah, like you need this full compatibility. So luckily, we now finally, in 2025 landed in a place where Z key proofs with the newest proof systems such as air band or basically sync, are so efficient that we can fully prove they completely EVM down to the byte code and and the full execution, and even Ethereum storage, everything. So now narrative big, yeah, we can offer the
Sy Taylor 18:25
full experience. And as I think about the enterprise requirements that you would they I mean, you hear this all the time, I want interoperability, I want privacy, and I want performance, right? And I think where matter Labs has really innovated has been on the privacy side, think interoperability, to the point, has largely been solved if you stay somewhat EVM compatible, and for stable coins, you probably don't even need that like bridging is partially solved.
Speaker 2 18:50
I would disagree here. I don't think it's solved because it might be solved for a very specific niche of use cases. When you have large chains that use very large, well capitalized tokens such as USDC and usdt. Yes, there itself, then you can go to usdt Zero. You can go to circle, CCIP, cctp and centralized Yes, but if you are doing something like tokenized deposits, which is a very, very popular use case that we are working with, with our institutional customers, a number of banks and other fi techs that are building ZK chains on ZK Singh, they need privacy in a fully controlled environment with compliance and verifiable compliance, so selective disclosures backed by ZK privacy that they control. So they need something like SOC, two certifications, sometimes they cannot hold the data on any devices outside of their institution or their jurisdiction and so on. And now they're tokenizing deposits of their customers, essentially creating a bank specific, or sometimes account specific, land specific stablecoin that has a different. Operability thing, exactly 100% and there are so many reasons why Alex that that's an important
Sy Taylor 20:05
topic to get into, and we'll come back to like jurisdictions as well in just a moment, because we do have another story. But I do think that tokenized deposit, one is Kainos, one that's very close and dear to my heart, because a deposit, of course, cannot leave the financial institutions customer base, privacy really, really matters, and it's something that at tempo, we're going to be looking more and more into. So thank you guys for engaging on this one. It always feels weird as the host talking about a thing we're doing, but I do want to talk about another story coming out of the UAE. Since I'm here, since Alex is here, lots of big news this week. Circle got an operational license, so now they can actively provide USDC services from the UAE. Tethers got its own token recognition, and it's now it's other licensed entities in adgm can use usdt, and I think that's going to be very important for import, export, and the fact that tether is quietly becoming like a challenger correspondent banking rail in this region. And then binance's license is by far the most comprehensive. It's a full market infrastructure stack covering exchange clearing and brokerage. So Alex, I know you had your own news this week. Do you want to talk about what that is? And then maybe just zoom out to the UAE role in the market a little bit as well.
Speaker 2 21:29
I think what we see here is UAE is becoming the global leader in adoption of crypto, not just as a speculative asset, but actual payment rails and full stack financial system that will be going into operationalizing finance and connecting into all aspects of economy. And the news I'm really excited about, which was announced at the Abu Dhabi blockchain finance week, was the launch of the Adi chain, powered by zksync, which is the project of IHC, the largest sovereign fund of United Arab Emirates, and it's done in cooperation with first Abu Dhabi bank. And they got the approval by the central bank to bring the first self custodial, regulated Dirham stable coin to the market, which is a massive news so they are extremely ambitious. They are going to bring 1 billion people as a part of their ambition on this chain, and they want to integrate the entire national economy with the Adi chain, directly with Al freeze provisions that are going to be built on top of it. And they also announced several big partnerships, the one with BlackRock, the other one with Franklin Templeton on tokenization, on bringing us securities and tokenizing local securities, all that is really big news for not just UAE, but also the world. And of course, I guess
Sy Taylor 22:51
you think about commodities trading, it's a really big hub for that. But you also think about where is going to be the non US financial center? Historically, you would have to say That's London. But I think the UAE sees an opportunity to be where east meets west, because, frankly, East West trade has been tremendously difficult in recent years for a number of reasons, not just the issues in the financial system, but now, if the future of markets is going on chain, the UAE can position itself. But of course, every country cares about data, residency and jurisdictionality. So I think it's interesting that they went towards this approach from you guys with your all threes to ensure that they had that. Joey, if you had any exposure to the UAE, and how do you view headlines like this from non US jurisdictions as somebody building for consumers and expanding your market and horizons globally.
Speaker 1 23:44
Yeah, I think it's great whenever you have more people jumping to stable coins. That's good. I think the UAE is always punched above its weight in terms of adopting crypto and then, like, as Alex said, moving forward with crypto friendly legislation, so the more people that could get their hands on USDC legally, usdt Adopt stable coins is great. I think there's always gonna be some questions around US dollar dominance, how that works out in financial markets like we've seen. That's not my expertise. But if more people are able to transact in USDC and get access to yield through apps like nook, that's very powerful. I mean, just alone within the United States, we've done over $500 million in transactions. So if you start to bring on other markets, like the UAE, etc, through licensing and through adoption, then you're starting to see people really not just think in terms of crypto and USDC and usdt and stable coins, but think in terms of yield and like, the benefits it brings to them. So I know the UAE is big on trading, but I'm excited to see, like, the actual people, residents of these countries, start to use it as an everyday application, not just for financial speculation. So this is definitely a step in the right direction.
Cuy Sheffield 24:50
Yeah, Joey, can you talk a little bit more about the structure of Nook and like, what it looks like behind the scenes, and we actually have multiple people on my team who are, like, active users. Nook. And love the product. I haven't used it yet. I need to. Is it a US product? Is it a global product? Is the back end on chain? Like, how should we think about what it is, how it works? The back end
Speaker 1 25:11
totally so, by nature and by design, it's a self custodial, decentralized, global product, right? We could launch in every country in the app store tomorrow, if we wanted to. But the reality is that payment rails are still very localized. So we do 85% of our transactions through bridge. So 85% of our transactions are coming through either Apple Pay debit card or an ACH wired transfer in the US. And that doesn't always translate to markets abroad. And so we've been talking about integrating with local payment rails with other countries and other providers in LATAM, in APAC, et cetera. And how do we adapt? But Nook is really built on control of your self custody wallet through privy, in which you can log in with just an email and then direct connection to protocols like Ave and Morpho and so where some apps have created this kind of gray box, or this middle layer with a smart contract vault where your money is put through a middleman. Nuc just connects your USDC directly to those protocols through base. So we're gonna be expanding to more chains and more assets besides just USDC and base, which we're really excited to launch towards the end of the year. But nuc is really just that direct connection, and we do plan to bring it to everyone in the future, but most people still really struggle to get USDC on base, or they still struggle to get any sort of crypto where they are because of those payment rails. So we could launch globally tomorrow, in the UAE, in a pack, et cetera. And I really do want to, but the UX has to be right, because if you download Nook and you can't easily buy crypto with the current experience based on your current payment rails, it's not going to help get the next 100 million people onto defi earnings. So we have to nail that experience across each local region,
Sy Taylor 26:52
local payment methods, lpms, as we say in the payments industry, matter, and they're extremely hard to integrate to one of the conversations I've been speaking to a lot of banks lately is like, what should our stablecoin strategy be? And my answer is always, be the world's best, off ramp and on ramp. Just be the best at that. Just be really great at home. By be the best, I mean, be the highest volume, highest liquidity, most compliant, most secure version of that. Not you're just going way out on the risk curve. I mean the opposite of that. Like to be the best means being the best. I look at JP Morgan and Citibank as being the best in payments because of the scale they operate and and what they do. So who can be that for these assets and across local payments methods? And I think that there could be one in kind of every market. Joey, I think that's a real opportunity,
Speaker 1 27:40
totally, and I think this has been a huge learning curve and a great learning experience for us as a team, just nailing the US experience. And we want to make sure we get it right there before we expand. But there's been so much that we've learned in terms of the ins and outs of payments, and there's so much still to solve just here in the US market before we expand internationally. But we feel like we now have a good handle on it, but it's definitely still the biggest challenge in crypto, in my mind.
Sy Taylor 28:04
So something stuck out to me, if you saw the news, which was Klarna have just announced a partnership with privy to bring stable coins to their users in a decentralized wallet, and how decentralized wallets are just becoming something that you don't think about, and the user experience is becoming so normal, and that's bringing it to 114 million users. And so two weeks ago, when they announced kalana USD with bridge and tempo, everybody wondered, well, what's that for? And then now here's this, and I think that's a real insight moment for a financial institution or for some of the design partners we have at tempo is actually you don't have to build a lot of these puzzle pieces. What you talked about there, Joey, was, you're pulling together lots of pieces, and then what you're focused on is that customer experience and making sure they get what they need.
Cuy Sheffield 28:56
It's interesting that self custodial wallets you could technically roll out everywhere, but you're not, because the experience, like the friction is the on and off rip. That's just like an interesting structure, like you have the option, but being able to localize with the payment Rails is the really, really important part of the experience. And so, like, that's the barrier, that's what's gonna take time.
Speaker 1 29:20
Yeah, we could triple our downloads if we, you know, just say, hey, milk is available everywhere, right? But the goal is not to just hit a number of downloads or just be available everywhere.
Cuy Sheffield 29:29
It's a worst experience if you can't get funds in the platform, you can't get funds out. Yeah, the goal
Speaker 1 29:33
is to get someone to be like, Yes, I love this app, and I was able to earn through my stable coins.
Sy Taylor 29:38
Guys, I gotta pause this here while we take a quick break and hear from our sponsors, so we'll come right back in just a second. This episode, if it's not obvious, is brought to you by our friends at visa, a global leader in payments. Visa's tokenized assets platform vtap, uses smart contracts and cryptography. To help banks bring fiat currencies on chain. Vtap allows financial institutions to issue Fiat back tokens, improving financial efficiency and enabling programmable finance. You can check out the links in this episode's description to express your interest in vtap. This episode is sponsored by stripe. Here's the thing, selling digital goods globally is still far from easy. Many of the people around the world that want your product don't have an easy way to pay you. They simply don't have access to cards or a bank account. Stable coin payments. Change this. They're the first truly global payment method that you can use from anywhere. That's why, for any business with global growth ambitions, accepting stable coin payments is table stakes with stripe, doing so is as easy as flipping a switch from big names like Shopify to fast growing names like shade form. Businesses everywhere trust stripe to accept stable coin payments from everyone everywhere. See what's possible@stripe.com forward slash crypto tokenized is also sponsored by fireblocks. Fireblocks is the stablecoin infrastructure of choice for global businesses, from visa to WorldPay to bridge to Revolut, with over $100 billion in monthly stable coin volume. Fire blocks powers stable coin strategies at scale with infrastructure that enables PSPs, fintechs, remitters and banks to issue, move, hold and manage stable coins. It's all done securely at scale with secure built in compliance with fire blocks, 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@fireblocks.com All right, thank you so much to our sponsors. Next story came from zero hash and Interactive Brokers has just launched instant account funding via stable coins. The idea is to make global funding faster, cheaper and 24/7, so this means that funds would settle instantly, so traders get immediate buying power. So once they've completed a trade, they'd get settled in stable coins. And that can happen 24/7 cross border with less FX friction. And so this stable coin settlement is becoming the alternative payment rail and kind of a foundation layer in the financial stack. And of course, Interactive Brokers always struck me as the prosumer choice, Alex, I don't know if you've ever watched CNBC or Bloomberg, but it's they're always advertising on there because it's that person watching that show that may be on Wall Street bets that is looking for differentiated, better pricing. To me, when they're integrating stable coins, it's because there's a value proposition, not because they can make a quick dollar. So do you see this payouts use case expanding across your client base, and that instant settlement thing being really, really key, Alex, and what are your thoughts on this story?
Speaker 2 33:13
We see the 24/7 as a demand and solving the problem of not being available, 24/7 for payments, across the board, is the number one driver of institutions and individuals. In part, going to crypto, like, maybe less for individuals, but definitely one of the top reasons for institutions. That's a massive value creation lane. The cost of money being idle, even for individuals, is high, and it's even higher if you talk about like large number of people who cannot move capital as fast and deploy it as fast as crypto permits them. And I think what we observe is the consensus is forming that this is what's going to be the future of all finance, for payments and for all sorts of financial activities, like all trades will be settled in stable coins, all forms of like, from tokenized deposits to real world assets to everything else is going to be movable between different users, institutional and individual alike, in seconds, not in days anymore.
Sy Taylor 34:17
I think that instant payout works not just for trades in capital markets. It works in this pro Schumer space, but it also works for merchants, sort of, I've sold some goods visa. Might have authorized the payment immediately, but the banks are now taking days to figure out how to settle that it's going through the correspondent banking system. So if you can just pay out in stable coins, that becomes a huge, huge feature, Joey, is that instant thing, something you see in your own user base? And how often does that come up? Is it a feature of like people sending money across border?
Speaker 1 34:49
Yeah, it comes up every day. So I think in the US, what banks have done is to make up for the three to five delay in ACH transfers from. Our banks to nook or partners, is they will float the money. So we get a lot of requests of like, hey, you know, I deposited money today, but I don't see it in my NOOK account. It's like, well, there's a three or five bank delay that's not controlled by us, but an app like Robin Hood will float you that $5,000 until the ACH clears. And I think in the US financial system, we've become so used to that just happening in the background that people don't even realize it's happening. So we have to take a step back and explain to users, no, we don't have your money yet. The banks still have it, so instant settlement is something that we do not yet have. But are very, very interested, based on just our customers demanding it
Sy Taylor 35:37
every day, and Kai, I know visa directors looking at some stuff like that. Is it something that you see as being a major feature?
Cuy Sheffield 35:43
Yeah, I think this concept of account funding transactions are just super, super important for any wallet, any broker, Jack app like you don't want to have to wait three days for your money to get there. And so we do this with Visa direct today and enabling a customer to use their debit card to load funds, and that performs much better than ACH. It's faster. In Ach, it's more efficient, still not instant from a settlement perspective, but it's also much lower risk. You don't have some of the same issues of fraudsters that initiate ACH and then the ACH never clears. I think that to get to real time settlement. Stable coins are like one part of the puzzle, and like, having blockchain rails are great, but there's a lot of complexity around off versus clearing single message versus dual message transactions. Like I think it could work in some categories and not in others. And so I don't think that in existing payment systems, you're going to see real time settlement in the next year, I think, over the long term, like, that's the direction that's going to go. And I think stable coins, one of the use cases that makes the most sense are particularly like larger value account funding transactions, like anything that you would send a wire from one account to another that you have, because it's over the limit of what you would do with even something like Zell, a stable coin is a million times better than a wire, a million times better than a wire. And so I think that that use case is going to happen more and more of if I've got six different accounts, I've got my prediction market account, my brokerage account, my NOOK account, my Wallet account, like, you have all these different accounts, and consumers have more and more accounts, being able to move money seamlessly between those accounts. And not just, like, up to $1,000 a day, but what if I want to move $10,000 and what if it's a Sunday? Like, I think stable coins solve a real problem there. And, like, that's a really good domestic use case that I think is going to continue to grow at
Sy Taylor 37:41
scale and on international I've been speaking to some folks this week in the property sector. And property brokers are in the UAE, all accept stable coins, or increasingly accepting stable coins, because the global South, new rich, when they're India, is having its great gaps be moment. Asia Pacific has really created a middle class and created wealth over the last couple of decades. And some of these people are looking to emigrate to other parts of the world, maybe to more tax friendly jurisdictions. And when they're doing that, how do they dollarize? Well, actually, the best way to pay is with stable coins. And so there is obviously some former banker scar tissue in me going we might want to just make sure we've got our AML controls right here in some of the places. But for 90 95% 99% of those users, this is a far better way to move money across border make that high value payment. So I don't think it's just domestic Tai but there is a story about a domestic bank that I thought was particularly interesting. So lead bank have acquired loop crypto. So this is the merchant Acceptance Company for stable coins, sort of a payments company. And lead of course, being one of the major on off ramps for the world of stable coins and crypto in the United States, they've probably been the sponsor bank for the industry, and really aggressive in that space. And there was another acquisition as well. Stripe acquired for Laura wallet, and really it was an Acqui hire. So this was the mobile payments product that spun out of Celo labs, and they did really well in the Global South, getting long tail adoption. And so that team is now going to be joining stripe Kai, you pointed out the lead acquisition. Interested in your thoughts on that story?
Cuy Sheffield 39:28
Yeah, well, I think that there's a rush for crypto native talent across the industry. And like, people have been building in stable coins for many years. Like, it's just there are some things just it takes time to really understand and learn. And so it's exciting for me to see many institutions saying, okay, there are great teams out there that are building products that some of the products might be useful to the company that's being acquired, but sometimes it's the team, it's an Acqui hire of like, being able to get really solid crypto native talent into an organization is valuable. I think the. Lead one stood out. One shout out to lead huge fans of theirs. I think they're one of the most innovative banks in the country. And at least to my knowledge, I haven't seen many banks acquiring crypto talent and crypto companies I know jpm, they acquired the quorum blockchain out of consensus like several years ago. I don't even know if they acquired a team, or if it was just the quorum technology, but like, we've seen the stripes done, what three, four of these now, it seems like every week there's like, Stripe acquiring crypto talent or crypto products. And so I think this lead acquisition is the first US bank that is acquiring a crypto company and like, beefing up their crypto talent, and I think that just speaks to like a recognition that banks are going to be able to interact the space and play a big role and lead, once to be on the forefront of it. And now they've got a great team and assets that they can continue to develop. And so I think we'll see a lot more of this over time as banks shift from the strategy to the execution phase, and then they start looking around the infrastructure and at their development teams or their product teams, and say, Whoa, how do we accelerate this? And then I think you'll see a number of teams start to get acquired as part of that. Alex, what are you seeing?
Sy Taylor 41:13
You seeing Acqui hires? Are you seeing? And you sort of talk to both of these walls, right? You've been building in the crypto nation space for a while, but you deeply understand the institutional space, is there a talent more and
Speaker 2 41:24
what's happening with our institutional clients, we see a lot of exploration still happening, and a lot of attempts to build things for the first time. So what I see they're not quite at the stage of doing agri hires yet, because they are just building their first crypto systems. I think this is going to change as we move towards the end of the year, especially with the passing of the clarity Act, which everyone now is hoping that is going to happen soon, because the genius act plus clarity act will really cement the institutional regulatory landscape in the US as kind of irreversibly crypto friendly. I think those are the milestones that
Sy Taylor 42:03
are still expected. So speaking of regulatory clarity, if you saw this week, the CFTC have cleared the path for eth, Bitcoin and USDC to be used as collateral in derivative markets. And of course, collateral mobility has been a major use case for a long time that people have been interested in collateral mobility being, you know, I've got collateral at one venue. Why can't I use it over there? Oh, well, it takes three days to get it there. And so these assets, obviously are capable of doing that so slowly, steadily. Regulatory clarity is coming. Bunch of stories we didn't have time to cover this week. Forecaster has shifted from being a social app to being a pure Wallet. So Joey, looks like more people want to follow your lead and become wallets. Coinbase are reopening in India after a two year hiatus. Could be a signal there that India is slowly opening up to that world. My friends at paradigm have invested in a Brazilian stable coin startup called crown circle attesting a privacy preserving wrapped version of USDC on a Leo and BMW Group is doing some corporate treasury management with programmable FX on chain on Connexus by JP Morgan, oh and shout out to rob leshner as well. Superstate have introduced their direct issuance program. We could talk about all of those stories for about 10 minutes and what they mean for the market. But Alex, briefly, your thoughts on the USDC on Aleo. Do you think privacy preserving wrap tokens are an interesting idea, and what are your thoughts
Speaker 2 43:35
this is going to be really interesting to observe, because coming back to the beginning of our conversation and the dominance of EVM as the standard, what we've seen that alternative systems, alternative developer experience, have a very, very hard time on adoption. So in the lack of alternatives, of course, you will use whatever is available. But as we are now entering the world where EVM privacy solutions become reality with something like zinc pediums, where institutions can just deploy their own chain, have it fully privately isolated, and yet be connected to Ethereum and be connected to all the other chains, to other private chains with private interop and to the public chains with public interop through Ethereum and other bridges, that's going to be a really interesting dynamic to observe. My personal gut feeling is EVM is going to win big deal against any other non EVM approach, because the talent of developers is a very hard market, but the auditor's market is even tighter, is even harder to find or people who understand security of non EVM systems, even some such popular systems as Solana, it's still much, much harder. It's a much more niche market.
Sy Taylor 44:47
You know, it's a great point, Alex, you made me think about quorum from JP Morgan on Connexus. It's EVM compatible. I think city token services, HSBC, many others. They use hyper ledger, best suit, which is EVM. Passable. So a lot of these deposit tokens that are floating around are that way. And there's what 200,000 EVM developers that have that skill and expertise. So not to throw shade on Solano at all, because they really pushed, I think, the whole market, to think about performance, and they're still pushing in it, and they're delivering and coming back the other way for developer experience. So I think it's good to see that kind of conversation continue to emerge. Listen, we could obviously keep talking about this for ages, but we do have to call it a day here. So Alex, if people do want to learn more about you and what you're doing at matter labs, where do they go?
Speaker 2 45:34
They can follow us at easy case sync and myself at GL UK 64 on the X news platform, that's the best source of news about
Sy Taylor 45:43
us. Fantastic. Joey. How about you
Speaker 1 45:45
and everything? Nook, yeah. Nook app dot XYZ has everything. So follow us there, and please reach out to me at Joey at nook app dot XYZ.
Sy Taylor 45:55
Kai on x at Kai Sheffield and visa.com crypto, you'll find me. Sy Taylor on the socials. You'll find me at FinTech, brain food.com, screaming into the void. And you'll also find a lot at tempo dot XYZ. Have a go if you haven't already, connect to the foresight roll, your unstable climb, blue tip 20, and we'll see you soon. And if you haven't already, please remember to subscribe to us on Apple podcasts or Spotify, or wherever you get things hit like buttons on YouTube, it really does help others find the show. Thank you so much, and we'll catch you next time.