On Ep. 29 of Tokenized, Simon Taylor, Head of Content & Strategy @ Sardine, and Cuy Sheffield, Head of Crypto @ Visa, are joined by Henri Stern, CEO @ Privy and Jelena Djuric, CEO @ Noble to discuss Visa's stablecoin linked cards announcement and a new era of Fintech innovation with stablecoins.
On Ep. 29 of Tokenized, Simon Taylor, Head of Content & Strategy @ Sardine, and Cuy Sheffield, Head of Crypto @ Visa, are joined by Henri Stern, CEO @ Privy and Jelena Djuric, CEO @ Noble to discuss Visa's stablecoin linked cards announcement and a new era of Fintech innovation with stablecoins.
Timestamps:
This episode is brought to you by Visa
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Music by Henry McLean
Cuy Sheffield 00:00
It's like there's this whole new category of innovation that's happening where it's a global technology, you have some of the smartest, most innovative fintechs, many of whom the founders have built the last generation of FinTech that are now building these global products atop a stablecoin. So it's incredibly exciting to us. It's like a whole new era for fintech.
Sy Taylor 00:34
Welcome to tokenized V show focused on stable coins and the institutional adoption of real world assets. I'm Simon Taylor. I'm back in the hosting chair today. Author at FinTech brain food and head of strategy at sardine. Kai. Thank you so much for stepping into the host chair last week. How you doing? My friend?
Cuy Sheffield 00:53
It was not easy. I've got a lot of respect for the way that you steer the ship, and so good to have you back. Simon,
Sy Taylor 01:01
no, it's always fun to hear from you guys. And we have, as always, just some incredible guests joining kind myself today is Henry Stern, who's the CEO of
Speaker 1 01:14
privy, how you doing, Henry? I'm great. Thank you for having me on.
Sy Taylor 01:17
And then we have Jelena. George Rick, I hope I've said your name vaguely Correct. CEO of noble, Hi.
Speaker 2 01:23
Thanks for having me. It's almost correct. It's yellowk, but thanks for the attempt. It's not an easy one. You
Sy Taylor 01:31
know, I am Ron Burgundy, if I see it, I'll try it, but we'll get better every time. All right, before we get into the news, we just have 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 and of course, before we get into the content, I just have to remind everybody, of course, views and opinions of contributors are their own and don't necessarily reflect those of their companies. And please don't take what we say as tax, financial, legal, investment or even sports advice like it's just do your own research out there people all right, there's probably only one place we can start, and this is about visa and bridge and of course, Stripe partnering to launch stable coin linked cards. And I could tell you about this story, but we have somebody who might know a little bit more about it. Tai, why don't you take this away, sir?
Cuy Sheffield 03:04
Yeah, sure. So really exciting week for us, if we take a step all the way back. We believe that visa should be the accepted network for stable coins. We've spent 60 years getting 150 million merchants to have endpoints that accept Visa and as we see new technologies like stable coins emerging, they need acceptance, and we think it's going to be really challenging to go out and build get every new merchant to accept this new payment method. And so we think that the card infrastructure that we've built solves this problem very well in enabling consumers to spend from balance of a stable coin at any merch that accepts visa. But to do that, we need world class, next generation enablers that are specialized to help wallets be able to issue cards connected to stable coin balances. And so we really looked around and we said, Okay, who, who can help us do that? And I think when we look at bridge, I think bridge has really become a leading stable coin orchestration platform. Has played a major role in accelerating the adoption of stable coins across payment use cases, and they've got so many developers that are building on top of them to be able to embed card issuance inside their platform, enable any developer that's using bridge to then be able to consume another API to issue a card connected to their balance, and then to do that in many countries at the same time. We think that is a very big deal. And so we're really excited to try and really create this category of stable coin link cards that we want to scale across the world. And so we announced our partnership with bridge. We also announced that we partnered with banks, a leading enabler for self custodial cards. We are expanding our partnership with rain, another enabler for stable coin link cards. And so we need these next gen enablers, and we think that they're going to play a major role in bringing. Millions of new cards to market, connected to stablecoin wallet. I find
Sy Taylor 05:04
this fascinating, as a FinTech nerd who has witnessed and indeed tried to get card programs live in multiple countries before, and the thing that stood out to me about this is potentially, with one API, you can now launch a card program, I think, in Argentina, Colombia, Ecuador, Mexico, Peru and Chile. That's pretty impressive start. But that's, I think, just the beginning right, like those are the countries that are live today that will eventually be many, many more so stable coins. There's almost this new infrastructure for payments is fascinating. But Jelena, I know you live and breathe in stable coin land. What are your immediate reflections about this news?
Speaker 2 05:50
Yeah, I mean, as a protocol that has been trying to work with various card issuers, it's obviously exciting to have a bit more of a standardized system and integration process to kind of work with, again, protocols such as noble So just very quickly, obviously, no bull is in the business of on chain stable coin issuance. I mean, I know the bridge team, obviously, very well. They've done incredible work around, obviously, the orchestration of stable coin between various protocols, whether you're looking at USDC on Ethereum, and you need to kind of swap on chain to a different stable coin on Solana, you know, they kind of handle that on the back end, and they obviously look at the on and off ramps. We obviously also focus a lot on the issuance piece, again, on chain, but looking at the off chain world, it's been relatively challenging actually, kind of getting the attention of these companies, whether that's a visa or a MasterCard. And so it's just exciting to see that visa plus bridge is going to allow protocols such as noble to be able to kind of expand our reach, again, in the off chain world, right? Kind of on ramping people into crypto. So yeah, immediately, very exciting. Can't wait to see how this works. And it's, yeah, it's all very positive. You have
Sy Taylor 07:05
this term dollar cards, which to a lot of folks in this part of the world. It's not a stable coin wallet, it's not some other crypto thing. This is a way for me to buy, spend and hold dollars, and potentially now for me as a card issuer, or for me as somebody that's a FinTech program, it's a way for me to access customers in all of these different markets through a single API. So I find that market expansion side of it really, really fascinating. Henry, what stands out to you about this announcement in particular and kind of the more broader themes and topics it speaks to, yeah,
Speaker 1 07:44
I think from our standpoint. So we're building a lot of, as it were, call it stable coin accounts, really, from a wallet infrastructure perspective. So the core value we serve as privy is Hold Value for people who don't have access to dollars. Otherwise, it is where we see a lot of interest. And so this question on global expansion is really important. I think the thing that excites me a lot is we're seeing some limitations today in terms of liquidity on off ramps globally, meaning the theory of the stable coin is amazing. The practice of the stable coin, if you're moving real volume, gets tough on long tail geographies, and seeing kind of this, this idea of a multimodal like transport network, you know, if you're trying to move goods across the world, you can, like, use trains and trucks and ships and planes, and you pick the best transport method for the value of the good and like needs that you have around the freight. And this, to me, makes me think of that, which is, we just got a new rail. And basically you can piggyback off of visa network, which is already extraordinarily well implanted globally. And so I think in terms of developers trying to build on these systems, it means one more option for how to route magic internet money globally. So it feels really, really exciting. And I think seeing more and more of those modalities come out is really exciting. And then I think over the next couple of years, understanding how are financial institutions understanding the choices they have with regards to routing assets? Is it via banking partners on the ground? Is it via existing card networks, and how does that work? Is is, I think, going to be a really fascinating question that makes stable coins that much more valuable? So feels really exciting. The
Cuy Sheffield 09:18
other thing that I think it's important to call out here is we've had crypto linked cards in market for many years now, and we've had a number of very large, successful crypto card programs. I think most crypto card programs, it has been a debit or prepaid card connected to a crypto exchange, and consumers would be trading, they could then sell their assets and be able to spend it. I think what we're seeing now are just many new, different types and use cases of cards connected to stable coin wallets, where there might be a stable coin based Neo bank. They have nothing to do with crypto. You can't buy or sell Bitcoin, but you're holding dollars in a market outside the United States. So there are stable coin linked corporate card programs where there are small businesses that are holding stable coin balances. There are self custodial wallets that are doubling down on stable coins to enable payments. There are payout platforms that, once they pay out in a stable coin, like Henry said, there isn't a great off ramp. Well, once you receive that payout, you can then be able to instantly spin up a card to be able to spend there are collateralized credit programs like so it's like there's this whole new category of innovation that's happening where it's a global technology, you have some of the smartest, most innovative fintechs, many of whom the founders have built the last generation of FinTech that are now building these global products on top of stablecoins. So it's incredibly exciting to us. It's like a whole new era for FinTech, and we are going all in and saying, how do we become a partner and help from the very beginning, enable the connection of those new companies that are being built into the existing merchant acceptance that we have? I think that
Sy Taylor 11:01
new era for Fintech is exactly how I see it as well. It's very weird for me Kai, because my crypto world and my FinTech world were very, very separate for a very long time, and this is like right in the middle of both of them crashing together, because it's a new infrastructure for building financial services products. It's a new way to build financial services products that are more global by default. And launching a card program, I'm gonna bring it back up in six markets with one API. Is like, Do you know what you would have to do to do that? Historically, you would have to go find different local bank partners. You would have to deal with different local regulations, different local licensing, different local processes, and whilst visas would be present in all of those markets, all of the rest of the stuff wouldn't, necessarily so the technical details you need to get right to be able to plumb all that together that bridge and visa have been able to bring to bear. I think it's really, really something special, and starts to enable the beginning of maybe a new generation of truly global FinTech businesses, in a way that we have regionalized FinTech businesses or massive domestic players. You know, sort of new bank is very big, it has expanded out of Brazil into Mexico, but it goes market by market. Revolute is very big, but it's expanded outside of Europe, but it's going market by market, and it's still very much a European player in its dominance. This opens the aperture for so many businesses, and I find that exciting. Jelena, what are you seeing in that sort of globalization trend? Is that coming from any particular direction? Yeah.
Speaker 2 12:38
I mean, one thing I want to just touch on just looking at FinTech and crypto. Whenever I try to visualize the overlap, sometimes it looks like a Venn diagram, but sometimes it looks like a an if and like for me, all fintechs will inevitably have to use crypto, but not all crypto will be a FinTech, or even like leverage fintech. What will you think of like FinTech as a category? So I think, like, for me, inevitably, right, as you said, like the more regionalized kind of FinTech businesses that had to kind of go into local markets, get the approvals, work with regulators, work with banks, being able to use crypto, and specifically stable coins, just kind of leapfrogs you into more of, like a global kind of territory, where now you don't have to kind of take into consideration all these, like local challenges. But, yeah, I think, like the next generation, kind of FinTech companies will just be crypto native from day one. I think for us, we're always thinking about where sources of demand are. I mean, it makes sense, obviously, that the initial kind of geography that the visa and anchorage product is looking at is LATAM. We all understand LATAM to obviously be a really important market for like us, dollar adoption. We at Noble are actually looking a lot more in Asia. I think we're going to talk about Korea in a little bit. But a lot of our demand for our own stable coin called noble dollar usdn. It's a yield bearing stable coin. Think of it as it's $1 peg stable coin, collarized by Treasury bills, the yield kind of gets passed on in a specific way. In any case, a lot of that demand is actually East Asia. It's a lot of Japan. It's a lot of Korea, also Southeast Asia, a lot of Vietnam, Hong Kong. So yeah, I think there are pockets of demand in the world that like, depending on what's happening, kind of politically, economically, they will rise or maybe fall a little bit, depending on whether it's inflation, whether it's even geopolitical uncertainty. But right now we're seeing a lot of Korea again, a lot of Japan. And then we can talk about that a little bit if you're interested. But it oscillates like the messages. It oscillates again, I think Latin makes a lot of sense right now for kind of ease and bridge, but I think that'll change over time, right? Like it's not inevitable that these countries will experience the same levels of inflation or the same levels of currency devaluation that we might see right now. And I wonder how much that's the
Sy Taylor 14:56
long term value proposition is that, like the US dollars, stay. Versus the US dollar is global, and that sort of starts to eventually shift from like who it solves problems for, because once it's in, it's entrenched. Henry, the Asia point is a really good one. Are there anything else that you see in this story and things like it that we should be paying attention to about the general direction of travel around stable coins?
Speaker 1 15:20
Yeah, I have two thoughts that are probably a little bit more micro than macro, I guess. But as a side note, the question of, is it the US dollar stable or global? I've been thinking a lot about what you know, the Esperanto coin would look like if you tried to build a global coin. That was a good mix of things. I think sello tried to do this a long time ago. And the issue with it as I understand it, so it's really hard to provide liquidity if you've got a complex basket of goods. That is why, at least adoption of the Esperanto coin, as I'll call it, is hard. But I think it's like very interesting to think through, to give an answer, I think what we've seen, so we've actually seen a lot of stuff in South America and Sub Saharan Africa. And I think where at least our customers have found success is by kind of dangling lines in the water across a number of geographies and then letting recipients choose rather than senders, because ultimately, the sender is, like, fairly unopinionated for somebody at least doing a stable coin sandwich, it's $1 out either way. And so I guess the stable coin to our team, where the recipient can choose to get the open face, which is to say, to receive stables rather than getting Fiat. There's a lot of demand on the recipient side for I would much rather receive USDC call it than Naira, because Naira is valued against $1 very heavily. And so where, at least, we've found some of our customers having really good successes, they'll try a number of geographies where they've got active corridors, where they can kind of figure out, if we offer a stablecoin alternative to our Fiat rails, can we actually make meaningful progress in the adoption of these rails that improve our margins, drive more volume, and then they actually let the recipient opt into receiving stablecoins Rather than receiving native Fiat for them, and that's where we're seeing sort of a lot of the geographic traffic come from, and at least for us, in the data that I see that that's yielded activity in South America and Sub Saharan Africa, but obviously, I would argue that data has been heavily filtered by our own GTM and so on and so forth. So I don't know how much to read into it globally. Yeah,
Sy Taylor 17:18
it does appear to be global south and all corridors that were harder to address historically, there was a good report recently by Citibank. I don't know if you all saw it, that estimated by 2030 stable coins were ballooned from somewhere around two 60 billion in issuance today to around 1.6 trillion as a base case, and 3.2 trillion in a higher and more aggressive case, and 2030 is five years away. Like that's five years time for a 10x in of that. Then you have potentially, I think it was Standard Chartered. Put it somewhere like 2.1 trillion by 2028. Standard Chartered is a bank that operates very, very closely with Zodiac markets and zordia custody. It is in the flow of funds which the other side is a stable coin, so that they're not uneducated on this point. And I think that speaks to the market opportunity here. Kai, where do you see this going? Kind of going forward?
Cuy Sheffield 18:17
Yeah, I think in in general, it's really interesting to see even relatively conservative financial institutions and kind of their research teams putting out projections that to people outside the space seem to be well, trillions of dollars of stable coins like wouldn't that be crazy? But we haven't really seen a historical parallel of a technology that has been very clearly adopted in a bottoms up way that has real product market fit with a new generation of developers who are just building all sorts of things on top of it on day one, that is likely going to have increased, and hopefully At some point, a real regulatory clarity that it is going to be able to be part of the financial system. And so if you get a bill passed, what does that mean for the growth of supply? What does that mean for how the demand so it's like everything that we're at today is still in this very weird early world where it's not really clear who can use these I think there's so many barriers to large institutions if it becomes a regulated payment method, I think that the adoption can grow very, very quickly, which is one of the reasons we've been saying the whole time of you can't really wait until that happens to have a strategy and to start building in the space. And I think that the fintechs have already come here. It's like crypto companies have been here. Crypto companies invented this. FinTech companies are here now. And I think banks are sitting there watching and saying, do we want to wait until this becomes a real, legal way to move money, or are we going to get started? Now into building a strategy and plan so we can meet the market where it is well,
Sy Taylor 20:04
or do we just let it all become more narrow banking and become deposit flight and become something where we could be out competed? And it seems that the Bank of America CEO has been quite vocal in the opposite direction, and indeed is looking for that clarity, but has consistently driven home that theme in numerous interviews now that it would be something they'd look to engage in. Henry, you about to jump in? Yeah,
Speaker 1 20:28
I had a question. I don't know if it's kosher for me to ask, but a question for Kai is like, I'm wondering what the sort of dominoes that have to fall are, because this is a sort of intrinsically global technology. Yet, you know, it seems like there's clearly one or two levies that have to break in order for adoption to continue to grow. And obviously, like legislation in the US is a big one. But, you know, we look at, if you compare, call it Egypt to the UAE, very, very different attitudes towards stable coins and generally capital controls. And I guess I'm just wondering, how do you actually see the spread of the technology globally once these sort of early legislative efforts pay out, like, what are the like key milestones beyond us? Legislation that you know in the eyes of a visa, for example, on block, okay, we can actually start doing this on a global scale, even though there will be sort of regulatory differences between geographies. It's
Cuy Sheffield 21:18
a great question. And I think as we roll out products, we look at every individual market that we're rolling a product in, and we have to understand the unique regulatory environment there, and are we able to offer a certain product? I think what's going to be really interesting to see is in a lot of markets, there's just not really clear rules. I think most markets, it's not illegal to offer a stable coin or to enable a stable coin, but there's not a specific bill. There's not a specific law on the books of what the requirements are if you offer a stable coin product. I think once you get regulatory clarity in the US, it seems likely that many other markets will want to have some clarity of their own, and whether that looks very similar to what it is in the US, or whether that is a different approach, maybe you could even have a more defensive approach. We don't know yet, but I think right now, it's how do you operate within a challenging environment, making sure that in the market that you're in there's not anything that explicitly prevents you from being able to bring a service to market. I hope that we get to the point where point where it's very clear what the rules are for bringing a service to market, and it's tailored towards this new technology, which I do think is fundamentally different from some of the existing ways that value has moved in the past. But it'll be fascinating to see it play out. Yeah,
Sy Taylor 22:37
we saw the UK, the HM Treasury and the Chancellor announced that their upcoming crypto legislation, they've sort of launched a little statement on it, and it looks like they're not necessarily going to follow the mica path of requiring stable coins to have their own liquidity buffer, their own white paper if they are issued elsewhere in the United States, which, when you consider so many stable coins are dollar denominated, essentially makes it far easier for the UK population and for US dollar based stable coins to operate within the UK regulatory perimeter. And so that is kind of interesting, different type of certainty and more US leaning, I
Speaker 2 23:17
think the US being more aggressive, especially under the Trump administration, on providing regulatory clarity on stable coins, whether that's something like the genius Act or the stables Act, or something in between, is just going to force a reaction across actually, countries where US dominance is supreme, so countries like Korea, even countries potentially with currencies that are inflated, like Nigeria, even Benaiah. I understand there's like some stable coin kind of push for legislation. I think there's like a risk with kind of lesser dominant currencies that with more US dominance, they're going to be maybe more kind of at risk. And then on the opposite side is like the Euro and the yen, where you already have the euro and yen as huge parts of the traditional currency markets where they're saying, Okay, let's be as strategic with our kind of regulatory approach so that, again, we don't have this risk of the US kind of, again, like dominating these markets from a stable coin perspective, and making sure, yeah, there's kind of alignment there. So this reactionary element is really interesting to kind of observe in different jurisdictions and in different ways.
Sy Taylor 24:23
Everywhere is different. It's so, so true. So so true, all right. Well, speaking of everywhere being different, there's also world coin, which is attempting to build a single identity network for the world. But it's, of course, founded by and famously linked with the open AI and chatgpt creator Sam Altman. And world coin is best known, of course, for its orb, the iris scanning device, and delivers a proof of human in lieu of some sort of KYC or knowing the customer, designed for a future. In which AI is much more prevalent, but also for parts of the world where traditional KYC or identity might not exist. Now that sounds like something that is entirely long tail market based, but it appears they have now launched in the United States and are now widely becoming available. So Henry, this is your neck of the woods. You know, a little bit about identity and a little bit about wallets. What are your thoughts on this? And what would you add about world coins? Specifically,
Speaker 1 25:29
yeah, interestingly, actually, right before I started privy, I did a little bit of crypto economic research for the world coin team, and so spent some time on the token model, which I'm sure it's changed about 15 times since then, but I think one it's a super thoughtful team. And the assumption, at least, from very early on, and again, I've today speak entirely for myself and have mostly no idea about recent developments, but I will say the assumption early on was like, if you put a piece of hardware out there, it's likely to get hacked within a matter of months after release. And so there was very interesting assumptions around the fencibility of, like civil resistance, and that was at least the angle through which, I think, with a crypto native lens, I saw it, which was the proof of identity, was a way of doing basically fair launches, and something close to UBI with a sort of, like, really strong civil resistance mechanism. So I think there's two questions. I'm sorry I'm answering a little bit vaguely, but there's two things that I find very interesting. The first is, as a pure distribution mechanism, can they basically bootstrap a dominant network on the tails of just having widespread sort of network ground game? And this is kind of what you see with like usdt on Tron is such a popular stable coin mix, because they just did a better job than everyone else distributing it via binance In a period when no one else was doing it. So that's the first question. And then the second is, like the world coin app and a lot of the wild systems that they've built are really, really good and interesting, and they're trying to bootstrap a developer ecosystem on top of it. And so at least that's the second thing I'm watching for, which is how robust are the apps being built on top of, like worldcorn and a network that they've built, and can they actually get organic usage in that way? And I know at least a number of really talented developers who are like, this is an open market in which we can make a real difference, which might be harder in EVM or Solana, and so let's go there. So I think there's, like, quite a number of interesting things, and I think bringing it to the US probably pushes to like the second narrative in a deeper way than the first, in that there's a potentially more built out traditional banking rail in the US than there might be in other countries where world coins really heavily distributed. I don't know if that answers your question. Some some rambling thoughts for you.
Cuy Sheffield 27:41
There are so many layers to world coin that I find, I think it's just one of the most fascinating stories and projects in the space. For anyone who's not familiar with it, the place that I start is the problem that they're trying to solve is a really interesting problem that is not talked about enough. And frankly, I just, I don't see that many companies or teams that are trying to solve and the problem, as I think about it, is, as agents become more and more powerful, how is the interaction with digital services that a consumer has going to evolve? And if you think about traditional services, whether it's a dating app, whether it's a game, like we're accustomed to, you're interacting with other humans, like, that's what it is. And there are mechanisms and CAPTCHAs and things to like try and make sure that it's human. If agents get powerful enough to make it very hard for a CAPTCHA, or select the stop signs or like the trains in the picture, how will a developer of these services be able to enable a authentic human interaction where you know you're actually talking to another human? So I thought it was really interesting the announcement last night, having, I believe match group was involved in it, and so one of the largest dating app conglomerates, and they were like, Yeah, this, this solves a real problem that apparently, people create bots on tanning sites, and it's hard to know, are you talking to a real human or not. So I think that if that becomes a problem, which it's not clear today, to the extent of how big of a problem, or is it a problem, if it becomes a big problem, then having some way and other mechanisms to ensure, or try and get some guarantees, that it's human, does become this interesting intersection between web two and this new kind of crypto native technology that they've been building. I think the other piece of the story that we're really excited about is that we're collaborating with World coin around the world card, which will be a world Visa Card connected to the wallet. This is a bit of a different use case. It's really starting to focus on spending your wld rewards. And so they've got, as Henry mentioned, this like ground game of there'll be orbs in all these different locations that consumers will go to. They will enroll and onboard to. Get a world ID. And so it's like you will have a face to face touch point. Once you get your world ID, you earn some wld Well, you could then spin up a virtual card right there and be able to then go and tap to pay and use your wld rewards to then spend at any merchant. And so I think we haven't really seen that many fintechs that have had this direct to consumer, a physical person talking to them, showing them how to use the app like that could be really effective acquisition channel. So I think it'd be really interesting to see. But Yolanda, I'm curious how you think about world and how you look at the project. Yeah.
Speaker 2 30:37
I mean, it's a fascinating discussion. I can't say I'm nearly as deep into world coin as maybe Henry with his advisory or a guy with kind of the work these is doing. I mean, I will say the digital identity piece. The thing that really makes me nervous in a world where, yes, you have, for all intents and purposes, sentient AI, is actually the governance of these protocols, right? Like, will the governance of even something like Ethereum network, or whether that's Solana or high valued protocols, like, will AI, like, have an influence there, where potentially humans will have less, I guess, like governance power or ability to influence the direction of protocols, whether that's like spending funds, whether that's like software upgrades, whether that's even like token economic parameters. So I guess, like I see, obviously, the importance of, like, verifying humanness, or proof of human in these like systems. I guess, like for me, world coin approach is, yes, it is more bottom up. It is more grassroots. I mean, from what I understand, they made a huge push, again, in like, South America, and like, there was a lot of incentivization of, like, getting people to, like, scan their eyes. And there's like, the token kind of incentive mechanisms you need to kind of bootstrap these systems somehow. But I wonder if there's like, a limit, like, a point where can they actually get every single person in the world to scan their eyeballs, like, I don't know. So maybe there's kind of alternatives for proof of human that we can, like, engage in, right? Like, I actually would love to prove that I'm, like, authenticate. Like, yes, I am a single individual, and there is no way to kind of manipulate that, I guess, like, whether that's on chain, whether that's just on the internet in general, but I don't know if I would want that to be via world coin right now,
Sy Taylor 32:23
not just AI agent commerce, there's also deep fakes. There's also like, Do you believe what your eyes can see, especially when it's behind the screen, there's a massive rise in scams. Phishing emails have become almost impossible to catch because of Gen AI in the fraud world, very near and dear to my heart with the day job at sardine like the spike is unbelievable, and it's across the board like the numbers are up and to the right the best business to be in right now, I'm not saying you should do it is probably fraud, because you can go buy custom fraud as a service, llms that will just sit there, scamming people, generating money for you. It's ridiculous. So how do I as a merchant get confidence that that is my customer? How do I as a merchant get confidence that when a human has pressed a button, it really was a human and not an AI agent pretending to be them, like the problem world coin is trying to solve is a massive one in just that level. And I buy your point, Jelena, that like it's a little bit sci fi and a little bit weird that there's some eyeball scanning, there's a what if it gets compromised, set of questions that I think are very, very valid. There's been some controversies with data privacy, with certain governments that have definitely happened. Maybe there's room for competitors and other approaches. But I think to Kai's point, we do definitely need something that closes this gap as AI becomes exponential. Henry
Cuy Sheffield 33:54
question for you when you spent time with the team is like, how do you see the target market from like, a demographic standpoint, because I think the other interesting lens of this is, if I went to my parents, I was like, hey, I want you to go scan your your eyes at this or, like, it's just like, there's like, a generational thing that you're like, what? But if you go to a 16 year old, or like an 18 year old, and you say, Hey, there's this, like, really cool new online game, but because everyone keeps botting it, the only way to play is, if you have a world ID, would there be that same reaction of like, oh, I don't want to do that. And it feels like there's almost like it's a different value prop, if you're just trying to have someone verify their humanness for the sake of versus if there are applications that it solves a problem that they're only willing to serve you the application if they know that you're human. So how do you see that playing out? Yeah, it's
Speaker 1 34:46
a really good question. And broadly, I would maybe try and divorce the orb and the iris scan from the value of the network, and that I see the orb as being an extraordinarily like other people have done proofs of humanity, there's a ton of proof. Of humanity. Network encrypted have been built. There's a whole host of issues and complex problems to be solved around consensus for how do I prove that Kai is Kai? And, you know, do I have the three of us attest to the fact that we've met him, that he is who he says, and so we can issue him credentials that have whatever Trust has gotten from Simon yelin and myself saying so. And so, instead of seeing it is binary, human, not human. I think it's a question of like, basically identity scoring and risk factors. And I wouldn't be surprised if world coin works broadly, that they would introduce other mechanisms, right? They would say, well, listen, if you don't want to scan your iris, just go through this KYC process, you'll get a call it 60% confidence score versus the iris is 80% confidence score. If you do both, you get 100% confidence percent confidence score. And that maybe changes the type of risk that a merchant is willing to take with you, in terms of what credit they extend to you, or something like that. So I suspect this is the start of an ecosystem. And what's so cool about the orb is it solves just a very complicated consensus problem by saying, Here's a black box. It's kind of akin to, like, secure enclaves and tes in terms of, like computation, here's, like, a hardware solution to this very complex software problem that allows us to bootstrap a network. I think from there, Tai your points, like on the money, in my opinion, which is to say there's stated preference and revealed preference. I'm generally have a complex relationship with biometrics as an authentication method, but you show me a KYC form I have to fill out, and all bets are off. Like I'm very excited to not fill that form out for the 15th time this month. And so I think just in terms of conversion, there might be better reasons to do this rather than something else. And ultimately, what you're getting with World coin is not so much an iris scan, as much as it is a verifiable credential that you can now take with you that says something about who you are. And so I think it's a great question. I generally think I forget what there's this debate around bitcoin is, is the new digital gold, and how do you quantify it? Or how quickly does it take off? And it takes off basically one death at a time, as the generation who used to buy into gold basically dies off and are replaced by folks for whom the digital asset makes more sense. I suspect the same may be true here in terms of basically identity verification. Interesting,
Sy Taylor 37:07
all right, I gotta take a pause here and thank 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 network to learn more. All right, thank you to our sponsors. The other news this week, coming out of Bloomberg is apparently ripple is said to have made us somewhere in the region, a four to $5 billion offer to buy circle, according to Bloomberg, this offer was rejected for being too low, and interest remains. Jelena, your thoughts on this one? I know ripple is a major player in Asia Pacific. Is there some logic there that would make sense?
Speaker 2 39:00
Yeah. I mean, we've been working very closely with circle over the years, so understand that side of the equation probably better than the ripple side of the equation. Obviously, we had the s1 filed by circle indicating their intention to go public. There was a lot of juicy details in that. I'm sure at one point, this podcast covered that s1 and some of those discoveries, let's say around kind of circles. Business model ripple obviously, recently announced they would launch ripple USD, or USD, their kind of own stable coin. I mean, you consider kind of the traction that USDC has, like 50, $60 billion of issued across a wide variety of networks, across a very wide variety of geographies. I mean, it would be pretty simple. I think for you know, it makes sense for why ripple wants to buy circle. I don't think it makes sense for circle to want to sell to ripple necessarily. It's not only necessarily the price that's in consideration. I think it's also like, how will this kind of. A, you know, product be used? Would it be faithfully managed? I know circle has a lot of kind of plans around, like the circle payment network and just around even, like routing protocols. They're kind of native bridge. It's unclear kind of what ripples approaches with their stable coin. It just seems like maybe opportunistic isn't, isn't the right word, but it seems like a easy opportunity if you have a lot of cash to want to buy circle, but here's circle, do you really want to sell necessarily that kind of buyer? It's not just necessarily, but
Sy Taylor 40:31
the money, yeah, and as though they are broader M and a target, and also is circles value proposition almost diminished by going towards ripple versus staying somewhat independent or being seen as independent. Henry, your thoughts, I'm,
Speaker 1 40:44
like, woefully out of my depth here, so I will keep it vague. In general,
Sy Taylor 40:48
I love that. That's how I live my life. So it's
Speaker 1 40:52
a good tool. No, I mean, I think that to Elena's point, the thing I find interesting is this question of, how do you value decentralized networks versus centralized businesses, in a sense. And you can look at this like one two punch of you know, call it a whatever the internet version of brick and mortar business is, and then it's decentralized network equivalent. And there's such a wide gap in the valuation of the two, which creates this interesting sort of m&a dynamic. And so that's something I keep thinking about, which is, as these worlds collide, increasingly, will we see a narrowing of the gap and or as, basically, traditional businesses embrace decentralized rails? Will that drive down the value of decentralized rails? Will it drive it up? How do you do a PNL on a network where so those are the questions that come to me when I look at this. I have no opinions beyond that, if I'm honest. Yeah.
Sy Taylor 41:39
Well, of course, this does follow circle, launching their own sort of correspondent banking network, type of play just last week, which could be fascinating to watch. Kai, do you mind if I bring in the next story? And we can talk more broadly, which is Korean banks are going to launch a joint stable coin. So they've decided to create a joint venture to issue the Korean stablecoin the only large bank not named in reports is Hannah bank. South Korea does not currently have stablecoin regulation, although it is thought to be introducing some later this year, some more regulatory clarity is coming, and an unnamed banking official apparently said to a local newspaper, if banks don't enter the market, the market could be formed around them and different businesses. Jelani, your thoughts on this? Yeah,
Speaker 2 42:29
I came back from Korea, actually, a couple of weeks ago. I make a point of going at least once a year, if not twice a year. The Korean market, like, as a whole for crypto is so fascinating. I don't know how much you guys are kind of familiar with, like, the dynamics, but from what I understand, a ton of global crypto trading volume is actually through Korean exchanges somewhere between a third to a quarter at any given point. And it's a country of only 50 million people. And so you might be thinking like, how is that possible? Like, why are so many people in Korea trading crypto? There's a few reasons. Like one, they don't pay taxes on their crypto gains in Korea, so there's no capital gains on crypto in Korea, unlike stocks, property, etc. And then also, gambling is illegal for Koreans, completely illegal. So if you go to a casino in Seoul, like, you're a foreigner. And so the point being is, there's so much crypto adoption in Korea, and a lot of that trading volume is these, are these stable coins, right as it is in like the rest of the world. And so they're quickly realizing, well, let's make sure that the Korean won obviously isn't compromised in the process. And let's make sure that with the introduction of US dollar stable coins, like usdt, for example, being listed last year on one of the major exchanges, that Koreans can continue to trade kind of against the one, but in a stable coin form. So crypto is just huge in Korea, like, like, absolutely massive and way bigger than I realized. One in two people trade crypto in Korea. So about 25 million people either trade or hold it. And it's like across the board, like all sorts of like, ages, demographics. Actually, the average trader is about 45 plus. So skews much older, meaning they have more capital, meaning they're investing quite a lot in this market, in this market, in this very speculative market. So the Korean won. I mean, yes, it's they want to make a stable coin, because if they don't control it, yeah, obviously that can create opportunities for fraud and kind of high risk stable coin alternatives. Let's also not forget, Tara was a Korean project that a lot of Koreans work from invested in and the UST stable coin, so it just makes a lot of sense that they want to do this. My question is, like, why now? Like, why not like, two years ago, or right after Tai collapsed? I think honestly, kind of going back to my previous point, it's reactionary against, like, the tribe administration movements to create stable coin. And regulatory clarity, right? Like now that the US is, like, actually going to do it, like, for real, and Trump actually put this in his executive order, right? That stable coins are focused now you have, like, the Korean government, like, Okay, well, we need to get like, smart quickly and have a proper kind of framework. Otherwise USD, stable coins will continue to kind of gain a lot of share, and we need people to have a local alternative that's like, safe and like legitimate. So I have a lot of thoughts on Korea and stable coin regulations, but that's kind of like the the TLDR, I guess.
Cuy Sheffield 45:36
So it seems like there are two trends here. One is just the continued growth in new non USD local currency, stable coins that are being created. We tend to believe every major fiat currency is going to come on chain. The question is going to be, who's going to Bring It On chain? And is it going to be an existing crypto provider, an existing stable coin issuer expanding to other markets, which we're seeing a number of times, or is it going to be a bank? And then, if it's going to be a bank, is it going to be one bank, or is it going to be a consortium of banks? And I think that's going to be the really interesting question, and it's going to depend on the market. I think if you have a market that only has a small handful of banks, and I actually don't know the details of Korea, what the distribution is of the largest banks, a consortium could be a viable model. If you have four or five banks getting together, creating a stable coin of the local currency. It's interoperable. I think markets where there are a lot more banks, I think it's it's a challenging coordination problem, I think in the US, like we've seen USDF, we've seen some other attempts, but to create a consortium of a few 1000 banks together in a larger market and be able to get them to agree on the rules and the economics and the go to market and distribution and the tech and there are a bunch of questions that You have to ask when you launch a stable coin, what chain is it going to be on? What are you going to do with the yield? What use cases are you going to support? Like those things that I think if you have to answer by committee, it can be very challenging to do so. I think we'll see a combination of both. I think we will see bank consortium issued stable coins in some markets. We'll see single bank issued stable coins in other markets, and we'll see existing stable coin issuers that are non banks or crypto companies continue to grow their business, and all of those products together will circulate and interact with each other over the next few years.
Sy Taylor 47:34
You know, the Korean banks at least, appear to have a stable COIN strategy, and it's very visible that they're doing it ahead of regulation and concentrated Banking Markets are the norm, not the rarity the likes of the US for 1000s, is actually a lot more surprising than Canada and Japan and the United Kingdom and so many markets where actually maybe this is a model where the big banks figure out how to play in this new technology area in a way that kind of makes sense. The other dynamic that's a little bit different is outside the US, the private credit and the private markets aren't nearly as developed when it comes to lending all the deposit side and the money market fund side. So there's a real risk if you are a domestic bank, that with the rise of dollarization from stable coins, you see deposit flight out of your local currency into dollar stable coins and away from banks entirely. So as banks, how do you counteract that? You have a local currency stable coin, or something along those lines? So I think it's a sensible defensive play that concentrated Banking Markets could do, but banks getting coordinated around things is hard. They have done it a lot in the past. I mean, there's this thing called visa, where BankAmericard turned into this thing where a lot of banks got together and formed a company that went on to do quite well the Swift there's countless other examples along those lines, so they can do it, and it can be very, very successful. That sort of almost closes the time we had for today. I did want to give a shout out to must COVID as well, who had their own news this week. They're able to power stable coins from the wallet all the way through to merchant acceptance with what they're calling 360 degree enablement. This is a partnership they've got with both nuvey and the crypto exchange, OK, x, and I think that is just another brick in the wall of end to end acceptance starting to become a reality regardless of your card scheme, regardless of kind of where you are. I do want to thank everybody for watching. Thank everybody for listening, and I want to thank especially Yelena, so much for letting me butcher your name, but also letting us hear from you this week. If people want to hear more from you or more from what you do at Noble where do they do that?
Speaker 2 49:56
I'm terminally online, just like everyone else. I'm sure so. Twitter or x yellow, underscore noble, or Yeah. I mean, check out our website, noble dot XYZ. Twitter is the best. So yeah, thank you, Simon. Thanks guys for having me, Henry. How
Sy Taylor 50:11
about you? Yeah,
Speaker 1 50:12
we are at Ruby, underscore IO on Twitter, and I am Henry, underscore Stern, fantastic.
Sy Taylor 50:18
And Kai
Cuy Sheffield 50:20
on x at Kai Sheffield and visa.com/crypto
Sy Taylor 50:23
you'll find me at sy Taylor on Twitter, Simon Taylor on LinkedIn, or FinTech, grainfood.com and, of course, sardine.ai if fraud compliance bots, deep fakes or anything like that for a bit of an issue. So if you haven't already, go ahead and subscribe. If you're watching hit those like buttons or reaction buttons or whatever it is that you see beneath you. It really, really does help us out. And you know, maybe this week, tell a friend about the show. Tell us where you like it as well. Thank you so much, and we'll catch you next time.