On Ep. 27 of Tokenized, Simon Taylor, Head of Content & Strategy @ Sardine, and Cuy Sheffield, Head of Crypto @ Visa, are joined by Ran Goldi, SVP of Payments and Network @ Fireblocks to discuss Fed Chair Jerome Powell on crypto mainstream adoption, the impact of US legislation on stablecoin growth and Standard Chartered predicting $2T stablecoin market.
On Ep. 27 of Tokenized, Simon Taylor, Head of Content & Strategy @ Sardine, and Cuy Sheffield, Head of Crypto @ Visa, are joined by Ran Goldi, SVP of Payments and Network @ Fireblocks to discuss Fed Chair Jerome Powell on crypto mainstream adoption, the impact of US legislation on stablecoin growth and Standard Chartered predicting $2T stablecoin market.
Timestamps:
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Music by Henry McLean
Speaker 1 00:00
It all goes back to the banks they are, whether you like it or not. That is the infrastructure today of how money moves. When they adopt stable coins, when they adopt tokens, deposits, when they adopt digital assets and blockchain, that is where mainstream will see its main adoption curve. And I think we're seeing it right. I can finally honestly say it's there.
Sy Taylor 00:33
Welcome to tokenized the show focused on stable coins and the institutional adoption of real world assets. My name is Simon Taylor. I am your host for today, author of FinTech brain food and head of strategy. So Dean. Joining me is my co host, my friend Kai Sheffield, head of crypto at visa. How you doing, sir?
Cuy Sheffield 00:52
I'm fantastic, excited to get into it. Likewise, man,
Sy Taylor 00:57
there's a lot of stuff to get through this week, and I just want to remind everybody of world that we do now have a tokenized newsletters. Head to tokenized pod.com and get subscribed to that newsletter. Joining Kai and myself today is a genuine Legend of our industry. Ran Goldie. Goldie, who is SVP of payments and network of fireblocks. Goldie, how you doing? My friend? I'm good.
Speaker 1 01:24
Thank you, Simon. Thank you Kai. Thank you both for having me excited to be in this episode. I'm gonna sign up that newsletter right now, by the way, yes,
Sy Taylor 01:31
see, this is why you're the man, the myth, the legend, right there. You know how to promote the stuff. I appreciate you for that. All right, before we get into the show, we just need to remind everybody that this podcast is sponsored by our friends at bvnk. And if you've been listening to this podcast, you've probably heard us say every business needs a stable COIN strategy, and if you're looking for the best place to start, that's bvnk. Bvnk is the leading provider of stable coin payments infrastructure, helping businesses move money faster, settle globally and even launch their own stable coin products, all with licensing and compliance so you can build with confidence. We're proud to partner with bvnk on tokenized To learn more, visit bvnk.com Okay, and now just one last bit before I get into the good, meaty stuff, and then we will get into it, I promise you. I just need to remind viewers and listeners, opinions of contributors today are their own and might not reflect those of the companies they represent. Nothing we say should be taken as tax, financial investment or legal advice. It's not even a tarot card reading, so please do your own research. Folks. All right, the first story this week we had to cover was the Fed chair, Jerome Powell, saying crypto is going mainstream. So he was interviewed in a fireside chat at the Econ club in Chicago, and the quotes are fascinating. We're just going to play a snippet for you now.
Speaker 2 03:09
We worked with Congress to try to get a framework, a legal framework, for stable coins, which would have been a nice place to start. We were not successful. I think that the climate is changing, and you're moving into sort of more mainstreaming of that whole sector. So Congress is again looking at both the Senate and the House are looking at a framework, a legal framework, for stable coins, you know, depending on what's in it, that's a good idea. We need that there isn't one now. And stable coins are a product that digital product that could actually have fairly wide appeal and should contain consumer protections of the typical sorts and transparency, and that's what the Senate and the House are working on. So that's a positive thing. You know, we took a pretty conservative and other other bank regulators took an even more conservative perspective on the guidance and rules we imposed on banks. I think there'll be some loosening of that, and I think we'll try to do it in a way that preserves safety and soundness, but that, you know, permits and fosters appropriate innovation that does so in a way that, again, doesn't, doesn't put consumers at risk in a way they don't understand or or make banks less safe and sound.
Sy Taylor 04:12
So some of the key quotes here are, we're moving to a mainstreaming of that whole sector. He's referencing the on chain sector. Stable coins are a product that should have fairly wide appeal and should have consumer protections. He also mentions that in the past, they took a conservative approach to guidance that they'd imposed on banks. I think there will be a loosening of that. He said, those were his words. So Goldie, give me your reaction to this. And in the broader context of we know there's legislation potentially coming that we know there's other things going on, what do you think the significance of these comments are? I
Speaker 1 04:52
think he's reading the room more than anything else, right? I mean, this administration in the US has really signaled. To the crypto industry, which one might say are a lot of voter promises that were made during the campaign to get here. And there have been signaling all along that in the last at least two, three months, this is changing the climate in which we treat banks they're going to do anything with digital assets is changing dramatically. As you know, there's two bills right now, right the stable and the genius act, and one of them is probably going to Bucha through the summer, we hope. And it changes a lot. And if Kai, I'm sure you agree with me, you probably had a lot of those meetings as well. Over the last three months, we've been meeting with anywhere from G sibs banks, you know, the globally systemically important banks to the let's call that second tier banks, which are huge, right? And all those banks, and you've been preaching about this, they want to start thinking about a right strategy, if they haven't done so before. It doesn't mean it's going to go live tomorrow. It means it's going to probably end up being in their cycle and maybe go live in 26 but I think what we are hearing in his comments is, look, I understand that this is now the new zeitgeist, and you know, we're no longer in proof of concept world where, as an administration, they're pushing that forward. And I'm aligning to that. That's what I'm hearing more than anything else. And I'm sure banks love to hear that.
Cuy Sheffield 06:21
Yeah, I agree with father. I think that there were two key takeaways that I had from it. And first, I think it's a good two minute articulation of all the news that we've been covering on the show for the past six months now that, if you like, just listen to Powell for two minutes. It kind of summarizes all of that. I think it's notable that he's acknowledging that stable coins have potential, and so these are some of the first positive comments I've seen, or I remember from him about stable coins specifically, while also recognizing the importance of consumer protection and acknowledging that there are bills in Congress that are seeking to ensure that that protection is there. So I think it seems to be support from him on the general constructs of the bills that we've been discussing on on this show for several months now. And then, I think the other piece to Goldie's point on he acknowledges that the approach towards bank activity in the space it has been very conservative over the past four years. And now, he says a likely a loosening of some of the guidance, but not compromising wanting banks to ensure that things are done in a safe and sound manner. And I think that's the really key point, that even if you have OCC guidance and FDIC guidance and others that don't require you to seek a non objection to be able to test a use case with a stable coin, it doesn't mean that banks can do whatever they want and they don't have to worry about risk and do things the right way. It just means that we're not going to look at this technology and treat it in a different way than any other technology requiring different standards to be able to work with it. And so I think all of those comments continue to add more support to the people inside banks who've been looking to innovate and looking to use this technology for several years that they're now seeing more and more clarity that will give them the opportunity to
Speaker 1 08:13
do so. Look, I'm not from the US. I'm not 100% on everything that's politics in the US, but I can only think that for PAL, this is like an easy gift for him to give to President Trump, right? They're probably at, you know, at beef on a lot of things right now. There's trade war going on. You know, a lot of the times we think, hey, maybe this is something big for crypto. It's actually just a bigger political play that's going on. And maybe this is his way of saying, Hey, I'm with you on some things, not against everything. Let's align. And I think it's, it might just be an easy gift for him to give away as well.
Sy Taylor 08:47
Yeah, it's low hanging fruit when you're looking like you're very likely to get legislation which makes the independent Federal Reserve governor's job a whole lot easier when Congress acts. There's some separation there. But I love two points you make. Goldie. One, he's raiding the room. And I think the market has shifted. I think it's now generally accepted that stable coins are the first killer app of digital assets and on chain finance. And that was probably not true 18 months ago, two years ago. The second thing is, yes, the administration has changed. So to your point, there are needs to accommodate that, no matter which branch of government you're in. So that's also reading the room, but the removal of the no action letter that Kai mentioned, I just want to underscore that point a couple more times, if you were a bank and you had to go seek a no objection letter before you did anything. That's an incredibly high bar to do anything that going from the OCC from the FDIC, is huge. Now this comment, regulators do a lot of regulating through signals, through what you see in the headlines. And this was an knowing. A comment where it was fairly obvious this was going to make headlines in the crypto press, and therefore the financial press, and therefore bank CEOs were going to see it. So I think, as everything that the chair of the Fed does, there's so much of it that is about quietly, gradually signaling through headlines what the future might be. So from the chair of the Federal Reserve to a bank Far, far away from that Standard Chartered headquartered in the UK, but very large in Asia. Standard Chartered has said that the market for stable coins will be worth $2 trillion by the end of 2028 so for some context today, as we record this, the total market cap of stable coins is around 230 billion. But they believe that the passage of the genius act in the US could lead to a massive jump in stable coin supply, and that has massive implications, in turn, for us, Treasury buying and dollar hedge your money. So a 10x in three years, that's pretty big growth. Goldie, are you seeing things at the front end that say that that's possible? Is this just like wild speculation, or are they even undershooting it? Yeah. So
Speaker 1 11:17
let's unpack this for a second. What does it mean? It will be, it will be 2 trillion, right? We know right now that the cross border market globally, if you try to put a number on that, that's probably 150 trillion a year easily. And we're probably discounting China and a lot of things that we're not seeing, right? So is he saying that the volume will be 2 trillion, or is he saying that the overall market cap of money will be 2 trillion? I think probably both of them are right. Money today is considered to be just money out there. Let's say US Dollars considered to be, I believe, up to $100 trillion right? How much is that is going to become a stable coin? 2 trillion. To me, that sounds like next year's figures. It doesn't sound like this year's figures, right? It sounds like yes, of course, it will be 2 trillion. We're on the verge of, you know, we're, we're probably going to talk about this later. JP, Morgan coin do or their new initiative, and we'll talk about their new name later. Is that considered a stable coin as well? Is that a tokenized deposit? So there's a few things to unpack when he says that, and there are a few things that are hidden there. And I think we need to remember that these banks are not necessarily in favor of stable coins. I'm not saying they're against. I'm saying that they see these stable coins. They understand the value that people are benefiting from them right now, of moving money faster, way more predictable than they could be for cross border payments, more than anything else. But is that the best product that banks want to actually put up there a stable coin that does this allows them for doing fractional reserve. It's a tough question, right? So when he says that, I truly wonder in the back of my mind, as he's setting it up for creating tokenized deposits that could be used between banks, would that be worth 2 trillion so that's what I have in my mind. But when we go back to thinking about the number itself, for me, that's like a 2025, number.
Sy Taylor 13:21
Yeah, this. This is specifically about stable coin supply. So the report from Standard Chartered says stable coin supply was going to 10x over the next three to four years. They also said this is the other interesting stat that that would lead stable coin issuers to buy $1.6 trillion worth of US Treasuries for their reserves. So some some interesting stats in there. But I love the fact that you'll say that this is like a 2025, thing. But yes, we should separate the supply of money from the Velocity of Money, like $1 can move backwards and forwards between people 100 times, but it's still $1 so the supply is not the same as the processed volume, as we'd say in payments land. Tai,
Cuy Sheffield 14:05
yeah, we've been spending a bunch of time on unchained data. And really, we think any discussion around stable coins, it's important to ground it in the data. And it's great that there's a lot of data that's out there that you could see, that, that you can analyze, so you don't have to guess. And I think that the two numbers and metrics that we think are important for everyone to understand is supply is one, how many stable coins exist in terms of the overall value across every stable coin out there? And that's about two, 20 billion right now and then, how much volume is actually moving in terms of transactions going over blockchains. And if you look at the volume number by pretty much any account, it's significantly over 2 trillion today. I think if you look at the raw data on a blockchain, it might be as high as 30 trillion. We've done some adjusted methodologies taking out some of the high frequency trading and automated bots. Yeah, and that brings it down to around 6 trillion, but you're still in the multiples of 2 trillion in the volume. I think what's interesting about this prediction, or this this report, is going from 200 billion. I think a lot of people are surprised even that we're at 200 billion right now. You know, when we talk to banks and we're like, Did you know there's two 20 billion in stablecoin supply? They're like that. That's a lot like it seems, for a new technology that most people aren't really well acquainted with, two 20 billion seems like a decently big number to start to go to 2 trillion by end of 2028. That's pretty quick growth in a market like this. That is a new technology that a lot of banks aren't familiar with. And so I think that we're going to see more and more banks get acquainted with on chain data and start to track this and follow it. And then you got to look at, okay, well, if stable coins monetized based upon interest income, and if interest rates are going to come down, you kind of have to believe that the supply is going to go up if they're going to make money, if supply is going to stay at 200 billion, maybe it goes to 500 billion. How attractive will stablecoin issuer businesses be, versus if you get to 2 trillion or 3 trillion, even if interest rates come down, there's still significant growth in revenue. So I think these are critical metrics for everyone in the space that's coming in to really understand.
Speaker 1 16:19
Let's break this down for a second. You know, Simon, you said he's basically talking about the m2 money supply, right? So that today in the US should be about $20 trillion give or take, I don't know, $23 trillion now he's saying this stable coins will be 10% of that, right? In terms of market cap, if we're thinking of, where is that money really stored today? Right? It's stored in, obviously, various bank accounts of retail of corporates. And then the question comes, we're seeing what's happening in banks, if we believe, and this is, I think we all have signed up for this, if we believe that over the next six months, then 912, 24 months, banks will turn their funds that they're holding into a form of a tokenized deposit or a stable coin. Let's, let's just stay fluid. Maybe on that definition for now, let's say they're the same thing for his definition. Then would that cover 10% and come to trillion? 2 trillion? I think, I think that would be fairly easy, yes, right, but it's again, it all goes back. And I think I've been saying this, you know how you've been hearing this, for me for the last six years. It all goes back to the banks they are, whether you like it or not. That is the infrastructure today of how money moves and if, when they adopt stable coins, when they adopt tokenized deposits, when they adopt digital assets and blockchain, that is where mainstream will see its main adoption curve. And I think we're seeing it right. I can finally honestly say it's there. I
Cuy Sheffield 17:53
think the other point that's important here is when you think about the total addressable market for stable coins, like one easy way to look at it is demand for dollars outside the United States. And so then you say, Okay, well, how much in physical dollar cash is outside the US? I think it's close to a trillion dollars. And you say, Okay, well, like, what's the value of dollar deposits outside the US? I think that's something like 13 or 14 trillion. So you could get to, like, there's 15 to $20 trillion in dollars that are currently held outside the US. And so then if 2 trillion in stable coins, could stable coins end up becoming 10% of dollars held outside the US? I think that seems to be a possible outcome. And like, who knows, but like, I think it's the market is more outside the US. I think if you're talking about if you include tokenized deposits with banks upgrading to blockchain infrastructure representing an existing deposit, then it's a much greater number. But I think specifically to that prediction, if you keep it just to stable coins that are a product separately defined from a deposit, I think you look more at like, what's the dollar demand outside the US versus just all the money into US banks, of like, what percentage gets converted over to a blockchain ledger instead of a core ledger? But I
Sy Taylor 19:11
think that's an interesting view, but it's predicated on the idea that the value proposition remains the dollar outside the USA. And actually the genius actors, I think what they're talking to here as being the inflection point, whether it's banks or not. I think there are several ways you could kind of get to that 2 trillion. Number one is the growth that we're already seeing. And I think we're all in the industry, we see those growth rates. If you were to extrapolate out the current growth in stable coins. Fine, maybe you don't get there. So you do need this legislative inflection point to bring a wave of liquidity in. But what's fascinating is then the domestic use cases start to open up. And the use cases for stable coins already in the crypto markets, in the on chain finance world, run the gamut. You know, they go. From high frequency trading right through to remittances for the unbanked. And we haven't really had a payments rail, a payments type, where that's been true before. And so this is really what makes stable coins the rail above all the rails, it's like the internet for money, genuinely the internet for payments, just as the internet did to networks, you still have internet service providers. You still have like modems and routers and payments networks, but you now have this connective tissue that sits above them that suits many use cases, that becomes a way for the dollar to kind of travel that on a domestic basis, could unlock the replacement to prepaid cards, because the same as cash accounting is different. Unlock the subject near and dear to your heart, Tai, amazing things merchants could do with loyalty and instant redemption and kind of how all of those tokenization stories start to fit together. And if you think about everywhere there's an app like Target red and Starbucks and all of those sorts of things. What would that look like on stable coins? These merchants start to come into the conversation, and the banks want to serve those big merchants. And I think that really does start to change the nature of the discourse. Goldie,
Speaker 1 21:20
I'm curious how you think about that, because I think there is a world of here are the use cases we see product market fit for stable coins in today, and that's like screaming product market fit. And that's cross border payments, dollar access outside the US. Then you have a number of future use cases, some which Simon mentioned around merchant loyalty. What if your Starbucks balance was a stable coin like that may end up being domestic. Are you seeing any of those use cases play out on the merchant side, like do you think there is a domestic loyalty and payments market that is emerging for stable coins that has big upside that just is it here yet? Or do you think it's going to continue to be cross border or dollar outside the US as the main use cases that are driving growth outside of crypto trading? Yeah, that's a good question. I think it's I honestly think that is going to continue be in the back end. And I think that every time we bring blockchain closer to merchants. They are like, Yeah, that's great, but can I still run my store, or I need to take care of my business? And again, because for them, especially now that I really believe we've sort of, like, crossed the chasm, they don't want to talk about these benefits. They don't talk about this blockchain thing. They definitely don't want to talk about, I don't know, Ethereum versus Solana, right? And how these benefits of confidential transfers can assist their business. They do not really care at this point. They're just trying to make their business work. Right now, if you come to them with a solution that's like, great loyalty, you know, and behind the scenes, maybe, yes, great. But to be very, very honest, Kai, we've seen, like the hype of those reward programs on blockchain, and it didn't stick, right? It didn't stick. It was just too complex at this point in time, I think, for now the world of blockchain, specifically, when you get more to the retail side, let's call that or even merchants. It's just still not there in terms of the solutioning around it. It is there, as we all know, for money movement, because it's the payment companies and the banks. Basically, the solutions have been tailored for them up until now, right? If you go to platform companies you go to, like service companies that do payments over blockchain. It's being tailored for money movement, really, and that's the product market fit. I do not see even in 2025 the year of blockchain reward programs being behind the scenes of like large enterprises.
Sy Taylor 23:59
Maybe I want to challenge that on one basis, because I think I may have been misleading. I don't think this should be a blockchain rewards program at all. Stable coins at their best, hide the wires and our money movement, as you rightly say, so what if there's a more efficient, cheaper balance sheet efficient money movement product than a prepaid card than a store value account. And if you have that and it makes sense on a spreadsheet, why wouldn't you use that solution as Starbucks as target, as somebody else instead of the prepaid card, instead of the something else? And I think that an accounting story that I've found fascinating. Maybe we do a deep dive on it at some point, but I just think there's a whole conversation there as
Cuy Sheffield 24:49
a shout out to Alex Johnson. He had a great podcast that talks about some of these use cases and like, how to think about stable coins related to prepaid card. Like, I was gonna say, like, it's almost you. If you zoom all the way back, like high level, there are really just a few different outcomes that can happen if stable coins matter. One is that all stable coins get abstracted away into the background. And, you know, this is just a modern kind of ledger technology that anyone can use behind the scenes. You just see dollars. You don't know what the stable Coin brand is, you don't know what the blockchain brand is, but you've got fintechs that now have these super powered ledgers that are more efficient for storing and moving value, but it's all back end hidden wires behind the scenes. So I think that's one option. The second option is they coexist, where you've got stable coins as a back end technology behind the scenes and a maybe small number of stable coins that are consumer facing, brands that are used today, like USDC and usdt, that become a product that consumers know exist and have some preference for, and they're passing back and forth all over the world. And those are just two different use cases, but both powered by stable coin tech, or the third option is, you just have a handful of consumer facing brands, and the back end infrastructure becomes too complicated and like doesn't really solve enough problems compared to banking as a service and other ledgers today. And so the end state of stable coins is there's a handful of consumer facing brands. Everyone knows what stable coin they're using, rather than stable coins are behind everything. Like, to me, those are the only, like, three options. And like, is it both? Is it just one, or is it just the other? Nobody knows, but like, we'll find out in the next three years, but gold a year. Your thoughts,
Speaker 1 26:33
I gotta say one more thing about this topic. And look, I do agree with you, but I think that you know our challenge as people who are at the front of technology right now in terms of how you can move money in the world, is to understand that we're still a small bunch, right? And I think that blockchain hasn't been even baked enough. You know, even the stable coin ecosystem that's been blowing up. You know, for me, every day right now is like 100x busier than it was last year. I think for you as well, we were talking about this guy, how we're taking now calls with one another as you're, I don't know, brushing your teeth in the morning or something to catch up anymore, but, but I think that even though we feel this explosion, I still go to companies, really huge companies or large banks. And the conversation starts with, can you just tell me five minutes, what's a stable coin? Right? Just explode. Yeah, for me, right? And I think this needs to go through banks. Danny needs to go through service providers that are not just fire blocks like, you know, service providers that have been out there, like SAP and they've been out there like digital agencies, and there needs to be good building to products like SaaS, products like Marketa and other types of companies that are doing all sorts of different products for merchants. Then it will reach those merchants. And I think as much as I would want that to happen. You know, yesterday, I think the futures that you've presented Tai will happen, but there's like a whole stack that needs to be built before a lot of this will materialize.
Sy Taylor 28:13
So my hypothesis is, if you've ever read the book Crossing the Chasm, that we are still on the way up to the chasm, but the velocity of kind of crossing that 13% of innovators, we're now past the early innovators. We're into the early adopters. And the question then is, does it go all the way? If you look at the rollout of cloud, if you look at the rollout of a lot of the technologies like that, still less than 50% of compute workloads, I guess wild to me that there is still probably so much more growth for the cloud service providers ahead of them than there is behind them. So these things do take an awful long time, and yet they can still be utterly massive. What really matters is their growth rate over time, and we are seeing experimentation, and that's part of the part of the fun of this show. I want to bring in another thing that Standard Chartered stone recently, which is they partnered with ok X to enable off exchange collateral from the really big picture stuff to to kind of really small picture stuff, but kind of very in the weeds here. The offering is called mirrored collateral, with assets held in custody by Standard Chartered used as collateral for trading on the ok X exchange and Brevin Howard is one of the first institutions to take part of course, the parent of Elwood, one of the main trading back end platforms. The collateral is a mix of cryptocurrencies and tokenized assets, starting with Franklin Templeton's tokenized money market fund, and the offering is being conducted as a pilot under the supervision of Dubai's vara, the virtual asset registry authority. Lot of names that keep coming up here. Vara, if something new is happening, generally evolved, Franklin, Templeton, breven, Howard, Standard Chartered, we've been speaking a lot about collateral mobility. We've been speaking a lot about that sort of stuff. Goldie, your reactions to to this?
Speaker 1 30:15
You know, you've touched on this when we were talking before everything changed post FTX, right? If we go back in time when FTX collapsed, a lot of the large market makers, a lot of the traders, were trapped, and that created a mass movement by again, those large entities who trade 24/7, who need to hold funds at various exchanges and outlets to actually perform their day to day business. It caused them to take a step back and say, Hey, wait, we want to be risk off, right? And that caused a lot of solutions within this industry. Copper had a solution. Firebox has a solution. Binance created a solution. Everyone, even by the way, the traders themselves were negotiating, I know how much people notice the traders were negotiating directly with changes, and they would have tri party agreements with banks, very ad hoc to say, Hey, I'm going to trade binance, but I have an account here. I'm going to let binance look at this account, because I'm not putting money into binance, right? And that already started three years ago. And what you're seeing right now, I believe, is the two things coming together. On the one hand, again, more and more risk off solutions, as the market's super volatile, people want to trade it, but they want to take a step back. And on the other hand, banks that are coming in, and, you know, they actually want to be part of this ecosystem, and they're scratching their heads. You guys have talked about this a lot. How are we making money with this industry? And I want to unpack one last thing, which is standard chart is not, not a normal bank in the world of crypto, right? They own 50% I think less. I don't want to get them into regulatory trouble, but they own a bit less than 50% from zodia markets in Zodiac custody. You've had Nick Phil, but here in one of your episodes talking about this, he mentioned this, and they've been into crypto. They know what they're doing. So this, this working together with ok x, which is, you know, it's not an entity that's easy to digest globally, by the way, right? Like they're operating out of, I don't know, Washington, DC, so sanitary. Doing this is obviously fascinating. It's exciting because they're doing this, and it's exciting because they're doing this with, you know, some companies that have been around the space that they've been financing over the last few years. It's also not exciting at all, because it's obvious. You know why it's obvious? Because this is how market structure should work. This is how finance has been working for years. There's prime brokers, there's collaterals, there's margins. You don't deposit a billion dollars into a point blank to trade. And for me, the non excitement is exciting because it means we're maturing, right?
Cuy Sheffield 33:08
So that's my take. I like that. I feel like that's a summary of a lot of things we talked about on the show. It's non excitement that is exciting. Making things work as they work. Today is news in the crypto industry. I think that is a segment over and over, and I just echo what you said of standard charter is one of the most sophisticated banks around crypto, and they've been in the space for a long time. They've done a lot in the space. I think zodia Their work with zodiac, Zodiac markets and zodia custody, both of those products, I think, are getting significant traction, and I think we're starting to see, we've said this time and time again, that in the next year, you see the difference between banks who have been investing in this space consistently over long term periods of time with executive sponsorship, with consistent teams in place that are now able to just execute, and they're able to ship and they're able to the things they've worked on are starting to compound, versus if you're scrambling and you haven't been in the space, if you haven't had a team, and now you're trying to stand up your team, and now you're trying to put together your strategy. The time it takes to go from no focus on the space to a strategy to the execution of that strategy is a multi year period inside of a large institution like a bank. And so I think the only way that standard charter can do this announce a ok X collateral solution where they're managing custody of tokenized assets is because they were planning this two years ago, planning this three years ago. They were building the infrastructure to do that. And so I think that's what we're going to see more and more, is this separation between banks who've been in the space for a while, and banks who are coming into the space now, and
Sy Taylor 34:55
because they've been exposed to the Dubai. The Abu Dhabi regulators, because they have major bits of their business that operate out of those financial centers. Same for Singapore, same for Hong Kong, that because they're involved in those trade flows, those money movements, and across intra Africa, that's where Standard Chartered is very large. They've been exposed to the growth in this, and they've benefited from the growth in it with regulators that have been more permissive but also very controlled in how they've moved forward. I challenge anybody to tell me who's dealt with the Monetary Authority of Singapore, ovaro That that was easy. These are thoughtful regulators without question. So the I love that word you used, Kai about compounded return for financial institutions that have been in that space for quite some time. And I love that point you make, Goldie, which is like, this gets fun for me when it gets boring for the like hype crowd, this is when, from first principles. There's a reason some things in finance work the way they do, because it wasn't that the technology was bad. It was that the solution of separation of duties makes sense from a risk management standpoint, and you can make that go faster, you can make it more transparent, you can make it digital. But you don't solve the risk management problem with technology. You solve it through separation of duties and separation of concerns. So the fact that we're replicating that is probably a good thing, and there's room for experimentation. I mean goodness. The Bank of International Settlements is playing with automated market makers, and there will be defi innovations that come into the biggest institutions in the world. So we'll see that in the near future.
Speaker 1 36:36
This is also a big win for okex. People need to understand that post bybit, these exchanges are terrified. This was like, what happened with bybit is a tailored attack of a nation funded organization that's still $1.4 billion okay? X knows they have a target on their back when they can actually tell the top traders, hey, we're not going to hold your money. That's a gift for an exchange, right? So don't look at it only from the banking angle. Think about now the exchange can focus on creating the exchange and trading engines, right? Just to never take
Sy Taylor 37:14
all right? I do just have to pause here to hear from our sponsors, and we'll be right back. 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 brought to you by Canton network. Ever wonder where real tokenized asset volume is going Canton network, the groundbreaking layer one public chain, where traditional finance and crypto are starting to converge. Why? Because Canton is the only public network with privacy, no workarounds, no compromises. This is 24/7 markets on demand, financing with real yield, where value moves as freely as information on the internet. This isn't just another blockchain, no, this is where the serious money is flowing to solve real market demand and risk. Visit count on dot network to learn more. Okay, thank you to our sponsors. The next story is JP. Morgan are launching a Connexus based digital payment in GBP. So this is their internal blockchain bank account service they had supported dollars and euros, and it, of course, supports 24/7 around the clock, FX and payment movement. The first client to use the GBP movement capabilities are the London Stock Exchange group's swap agent and commodities trader traffic guru Connexus has now processed more than $1.5 trillion in cumulative transactions, and averages more than 2 billion a day. So whilst people say there's only so much fun you can have with your own blockchain, talk about compounding Tai earlier, there's definitely something that JP Morgan has been doing here for a little while, just the value proposition of 24/7 alone is kind of huge. Yeah,
Cuy Sheffield 39:45
it seems like jpm coin and this, this connects this product is the best example of the most successful tokenized deposit implementation that we've seen from any bank in terms of volume. And adoption that they've had like, you know, doing a trillion dollars like, it's clearly solving a problem for their clients. And I think we've seen for many years now, one of the use cases that banks have looked at is it is not particularly easy to move money for a large bank between clients of that same bank, if you are global, if you might have multiple core ledger systems, and so blockchains and even permission private blockchains, really, I look at as just it's a new, modern ledger that a bank can create a tokenized digital representation of their deposit and abstract it away from the traditional core ledger, and if they had multiple different, disparate core ledgers, if they issue a representation of that deposit on a single global private blockchain, they could then move that money between their own clients. 24/7, they can have some programmable properties to it. So it seems that it solves a real problem inside large banks like jpm that is getting adoption with clients. I think what's going to be interesting to see is one do we now see other banks go down this path to try and replicate these like intra bank, 24/7 systems using permission blockchains and tokenization. I think jpm standing up and investing in building jpm coin. Now, I don't know how many years it's been, at least four or five years, six years like so they've been in this space for a while. I doubt that was really easy to get going, particularly during periods where there was a lot of regulatory uncertainty. And if you call something a coin, and you're using a blockchain, I would imagine that the scrutiny and kind of what they had to go through with regulators was probably higher than if this was just a core ledger system with no form of tokenization or coin related and so now that there's more regulatory clarity, does this become a use case that more banks look at Standing up 24/7, intra bank settlement systems using tokenized deposits, and will we see this as a broader trend? I think that's one question. The other question is like, how do tokenized deposits relate to stable coins? And for my opinion, it's a separate product with a separate use case, where, here this is intra bank only, stable coins are open loop moving between 1000s of entities. Do we see companies or banks like jpm, who've been successful with interbank tokenized deposits look to expand that in some way outside of the bank? Is that the same product? Is it a different product? Do tokenized deposits directly interact with stablecoins? So I think those are the really interesting questions. Interesting questions going forward, that it's still very unclear. Will these be developed in parallel? Will they intersect, or will they cross over at some point in the future? So, Colby, how do you think about that? We talked about just like, let's assume tokenized deposits and stable coins is the same, but they're different, like the different use cases. Like, what do you see in the distinction between,
Speaker 1 43:01
wow, so much to unpack in this topic. I mean, first of all, to your question, I think the future is in the past, right? I mean, this is again a time where banks have their own money and then they don't, right. Banks had their own money back in 1800 and something. You know, different types of dollar, different types of checks. And then they didn't, because they created clearing houses that made them being able to support one another. And then the Fed came in and and all that system right that came together. I honestly believe that this token as deposit is just the first experiment of many that will happen. You know what? Scratch that word. It's not an experiment. The first product, actually solution. That's happening. Yes, I truly believe there'll be a lot more, I think. And I think the globally systemic, important banks, the large banks of the world, they will build this on their own. Probably the two down, will have to rely on, you know, other tech and companies out there doing that, I'm sure, probably some will knock on your doors as well. Obviously, with Visa operating all those banks, I think what's really important to remember here is that this is a bank that has been around since 1871 I think right. They have 300,000 employees. They're the largest bank in the world in terms of market cap, like six, $50 billion they're the fifth largest in asset management of $4 trillion and they've been doing this since 2019 as you said, writing kudos to that person at JP, Morgan, who never stopped believing and pushing that project up until 2025 and For me, when I see jpm now rebranding, and I see jpm right now in every conference. I've been to Paris last week past blockchain week, they were there on like three different stages, right? I see them in every conference. For me, it means that they've sort of decided internally, all right? This is not a proof of concept. This is a proof of priority, right?