On Ep. 73 of Tokenized, Simon Taylor, GTM @ Tempo and Cuy Sheffield, Head of Crypto @ Visa, are joined by Tanner Taddeo, CEO & Co-Founder @ Stable Sea and Alfonso Gómez-Jordana, Founder @ Crossmint to discuss stablecoin-linked cards, AI agent exclusive virtual cards, Morgan Stanley applying for national trust charter and more!
On Ep. 73 of Tokenized, Simon Taylor, GTM @ Tempo and Cuy Sheffield, Head of Crypto @ Visa, are joined by Tanner Taddeo, CEO & Co-Founder @ Stable Sea and Alfonso Gómez-Jordana, Founder @ Crossmint to discuss stablecoin-linked cards, AI agent exclusive virtual cards, Morgan Stanley applying for national trust charter and more!
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Tokenized is sponsored by Visa
A world leader in digital payments, Visa is bridging the gap between traditional financial institutions and innovative blockchain networks, helping players in the payments ecosystem navigate the ever-evolving world of tokenized fiat currencies with confidence and ease. Learn more at visa.com/crypto.
Tokenized is presented by Bridge, a Stripe company.
Just like the internet made information global, stablecoins are making money global. And Bridge, a Stripe company, is the infrastructure powering that shift. Built for speed, scale, and simplicity, Bridge helps businesses send, store, convert, and spend stablecoins instantly, all without borders or having to navigate the complexities of crypto. Learn more at bridge.xyz
Tokenized is also presented by Fireblocks
With over $100 billion in monthly stablecoin volume, Fireblocks powers stablecoin strategies at scale with infrastructure that enables PSPs, fintechs, remitters and banks to issue, move, hold, and manage stablecoins. And it’s all done securely, at scale, and with built-in compliance. Learn more at fireblocks.com
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We’d also like to remind you that the views or opinions of our contributors today are their own and do not necessarily reflect those of the companies they are representing. Nothing we say should be taken as tax, financial, investment or legal advice, do your own research!
Music by Henry McLean
Sy Taylor 0:00
Simon, welcome to tokenized these show focused on stable coins and the institutional adoption of tokenized real world assets. My name is Simon Taylor. I'm your host for today, author at FinTech brain food and head of market dev over at tempo, and I'm joined in person by the one and only Tai Sheffield, head of crypto visa. How's it going?
Cuy Sheffield 0:28
Man, it's good to have everyone here in the same place. I think I said it earlier this week, San Francisco is the stable coin capital of the world. I'm sorry, New York, it is. And so we're here in San Francisco in the visa studio. We've got some amazing guests. We've got a lot of news to talk about. Let's get
Sy Taylor 0:42
into Well, speaking of guests yet. Tai na Tadeo, CEO of stable C How you doing? My friend,
Tanner Taddeo 0:48
very good. Excited to be here and excited for the conversation. Thank you, Tai.
Sy Taylor 0:52
And also joining us is Alfonso gomos, co founder of cross mint. How you doing, sir, great.
Alfonso Gómez 0:56
I'm not sure I agree that Sf is stable coin capital of the world just yet, but definitely starting to at least this week. Everyone's in Dallas week, for sure.
Sy Taylor 1:04
This is definitely stable coin week in San Francisco, for sure. Very stable conference. There's all sorts going on. There was frontiers. There's a lot of good stuff. It's been fun to be here. But before we get into the show, got to remind everybody that views and opinions of our contributors today are their own and might not reflect those of companies they represent. Please don't take anything we say is tax, legal or financial advice, and always do your own research, folks and stay safe out there. Well, first story this week, we kind of have to mention your news. Kai, something happened with Visa on bridge? Do you want to tell everybody what it was?
Cuy Sheffield 1:36
Yeah, really excited to be expanding our partnership with bridge, moving into over 100 countries by the end of the year. And the takeaway here is stable coin link cards are in hyper growth mode. This was a concept when we started talking about in the show little over a year ago, we announced, think it was last April that we were starting to work with bridge to issue cards. And we just see incredible demand that it's hard to keep up with all of the companies coming to us that want to issue stable coin, Link cards, but it's great to have partners like bridge that are scaling into new markets, new use cases, and we expect it to continue to grow.
Sy Taylor 2:08
Yeah. As a FinTech nerd, I look at that and I go, people don't realize how hard it was to issue cards in 100 different markets. You had to go get a bank partnership market by market to have one API that can do that is like unbelievable. Tanner, I know you. You came from block originally. You have some experience in this world now with stable. See, you're doing stuff cross border. There's a lot of hidden pain here that people don't see.
Tanner Taddeo 2:31
Yeah, very much. So some of the pain points that we see in terms of our client segments, like we mostly serve the enterprise, and the enterprises typically have subsidiaries around the world, and some of the main pain points that they're trying to solve are mostly around how you circumvent the pre funding times and how you get trapped cash out of emerging markets around the world. So there's a lot of interesting pain points to discover and talk about there. And you know, business use cases, with regards to cards, are certainly an emerging one too. It was
Sy Taylor 2:59
the ultimate state. So they said, like, two fastest growing use cases of B to B and stablecoin linked card. Alfonso, are you seeing stablecoin linked card growth yourself? I know you guys have been involved in supporting a number of those companies.
Alfonso Gómez 3:11
Yeah, certainly, I would say, like half of the customers we work with have a stablecoin like card as well, neobanks, remittance companies, and part of it is to support their use cases. But also it's becoming a pretty good business model taking part of the interchange as well. So for companies that are acquiring users quickly by using stable coin rails, building this kind of new Neo banks, taking money later a little bit on the transactions on the interchange is like one of the most natural things. So that's the main thing we're seeing.
Cuy Sheffield 3:38
I think that's exactly like when we talk to clients, there's both. It's a table stakes feature for your consumers or businesses that if they're holding stable coins, they want as easy of an off ramp as possible. But it's also a business model. But for FinTech, for decades, you've had massive companies that have been able to be built as they've created great experiences and issued cards that the volume on those cards has been a primary revenue driver, and it's always interesting, if you compare it to if you're building a stable coin wallet today, if someone goes and takes your wallet and scans a QR code and pays directly with a merchant, those funds just left your platform and you didn't make any money from it, and it's a worse experience because there are fewer merchants accept it. And so I think it's just become this obvious thing that, why wouldn't you put a card in the wallet, let someone tap to pay, have it work everywhere, and monetize every one of those transactions. And so it's particularly exciting to me, like you mentioned that so much of FinTech has been US and Europe and kind of developed market focus. Stable coins have just inverted that, and now it's like, this is global FinTech, like this is an ecosystem all over the world that people are building new products that they're unable to monetize. It's credible
Sy Taylor 4:45
that default global thing is something that I heard a lot in the early days of stable coins. I even said it a bunch, but it was, it was a promise, not the reality. I think now it is very much the reality. And the bottoms up adoption is huge for that. But then what do people want to do? No matter where they are in the world, they want to buy Netflix and chat GPT and these digital products and services and cards let them do that. It's almost like the great leveler. And what was it chime until quite recently, and I think still today, the vast majority of their revenue comes from cards. It's the card interchange that's kind of doing it. So I think there's another story we should talk about, though, is we're talking about cards, which is cross men have launched AI agent exclusive virtual cards. So this is virtual cards, not physical cards, because an agent wouldn't hold one, I guess. And it's powered by Visa intelligent commerce. The idea being you save a regular card on file, and then the agent requests a virtual card number with a spend limit, and the agent uses the virtual card up to that limit, so a consumer or somebody else can keep earning their credit card points, but the agent spending on your behalf can go do stuff within those limits. So this is kind of super interesting to me, Alfonso, because this is not necessarily a stable coin backed card, is it, if I understand correctly, it's a virtual card for agents for that use case. But you're going that route rather than stable coins.
Alfonso Gómez 6:15
That's right. And we've actually done a lot of integrations with stable coin link cards. However, we're supporting more and more agent users and developers. What we see is first on the terms of use cases, people are starting to use agents for more and more things. Most of them is people coding, or pipe coding, businesses trying to make money with open claw and hitting the limits that they tell openclaw, make me money. Make no mistakes doing it. And he was like, make me a million dollars. Like, make no mistakes, and we joke, but I do think it's something pretty big that's happening. But what we hear from all of them is okay. The moment my open call is trying to send an email or needs to call some inference API needs to do some marketing materials, it hits that credit card payable, and even though the stable coin linked card route works, people want to keep seeing their points. You want to see the balances spend in their credit card balance, all those things. And it turns out that you can directly issue virtual cards for agents with this new technology from visa so that you need to do an extra hop, so if a customer already has a credit card, and they just want to grant it to the agent. You can directly, basically get the virtual cards from it. No, this is not to say I think agents will probably use both. At some point. There will be some agent platforms that maybe have a stable coin balance. There will be others where the primary funding source is a credit card. I think we will see both. However, we see tremendously more demand for virtual cards coming directly from a link card on file, than the other way around. In this market, it's
Sy Taylor 7:44
fascinating to me that so much of the discourse as being around x 402, and stable coins are the answer. But actually, as you speak to agent developers, they're sort of, I don't want to download this new software. I don't want to take on this new complexity in order to make a payment, I have this card, can I just use that thing and to be at? Say, yeah, you can. So you said something interesting, which is you think both will coexist, and Noel Levine, who's now Andreessen used to be at these are really great piece, kind of along those lines, saying that the merchant of tomorrow is maybe somebody who has vibe coded a thing, doesn't necessarily have a business yet, wouldn't pass the basic onboarding as for even for somebody like a stripe or an agent or something like that, but they have their own card, and they want to give that to somebody, and they want to be able to make payments with it. So I think that's a super fascinating space. Kai, where are you? Is it's like cards all the way or are you still stable minded?
Cuy Sheffield 8:44
I think that there's absolutely a role for both. I think the most exciting thing to me is that vibe coding has changed a lot of the conversation about agentic commerce. I feel like even six months ago, the conversation on agentic commerce was, I'm in chatgpt. I'm searching for shoes. Like, can you help me find shoes and buy them? And like, that's still a use case. And like, we're doing a bunch of work in that area. And like, I obviously, is more kind of conversational commerce, and it's, it's like an incremental step of what people do today. Now we're just in this entirely new world where the value prop to the consumer of agentic commerce is less about saving time, and it's more about creating value or creating money. And so personally, like, I think it's a lot more interesting to have an agentic co founder than an agentic shopping assistant. And like being able to say, Okay, can I delegate my card and give you some instructions? Hopefully they're more specific than make a billion dollars, make no mistakes, like you can have like some more specific prompts. But I think we're seeing a whole new class of entrepreneurs that start vibe coding, that they might have never written code before, and now they're like, creating projects, but they run into all of these roadblocks and these bottlenecks. And what I think about is like commerce. Moments where they got to leave the vibe coding experience and then jump out and, like, try and pay and so that's why, like, we're so obsessed with this idea of command line commerce, of how can you just delegate and give a payment method to your agent and then say, Oh, you need to buy a domain name. Great. Here's how you do Oh, you need to buy some data. Great. Here's how you do it, and be able to do that all within that contained environment, and, like, it is so early, but I think there's, like, a massive opportunity for cards to become a default payment method there. I think there's a big opportunity for stable coins to play a role in certain tricks, actually categories. And I think that there's just, it's such a growth area that anytime there's, like, the zero sum thinking of, oh, it's card versus tables. They're like, there's gonna be trillions of dollars of volume going to both. That's like, great for everybody. But I don't know, Tai know, how do you think about agentic? Are you going deep down this rabbit hole? Are you guys at stable C doing anything around it?
Tanner Taddeo 10:52
Yeah, we're, we're experimenting in some beta environments at the moment. I mean, keep in mind, like, stable C, we serve a different audience, so like we go after real economy enterprise companies, right? That have been around for 50 years, 100 years, 150 years, and they have deep supply chains. They have subsidiaries all over the world. And what stable C provisions to them is not just API and stable coin infrastructure, but it's also a stable coin Treasury platform that is like all on web three, right? So what that means is that there's a human that logs into the stable C platform, and they can use it for different use cases, whether it be cross border Treasury movements, access to capital markets products, including tokenized money market funds, and then coming soon, access to on chain lines of working capital for loans. And so one of the things that we're experimenting with, which is by no means in production today, but is how you can have, essentially, like an AI agent that serves as your de facto Chief of Staff to the CFO, like, can it manage your treasury across two or three different subsidiaries where you have free cash flow or Spare idle cash, and like Argentine peso, spare idle cash, and South African rand and US dollar, and you can convert into and out of and then park that in a money market fund and then come back into it. So we're exploring the agentic world, but not as it relates to commerce necessarily. It's more in the secretary
Sy Taylor 12:16
suite is the treasury management. And I think that gets forgot again. We have the stable coin link card and the consumer and the business use case, but you also have the treasury management use case. And it's those are the two big ones that we keep coming back to. There's Sean Neville at Katana Labs is doing a lot of similar things around helping companies with treasury management, but with stable coins and agents. And I think that is going to be a coming trend for sure. Alfonso, I want to come back to you on this point just to explore it a bit more, where specifically would stable coins benefit or have some role in this ecosystem, because I never want to be the show that's like, oh, well, we talk about stable coins. So stable coins are the answer. Like they serve, like a credible
Alfonso Gómez 13:02
case here. So first I want to say, like we started serving the agent tech finance ecosystem a year ago. And at the beginning we started thinking it just will just stable coins for everything. And then we hit, we hit the market with it. We had people, and realized that was not what people were looking for. The way I would, I see your mental model is, is the following, I think first, in agentic finance, there's actually two entities. There's the human, and then the agent that acts on behalf of the human. I think humans as the entry point in places like US Europe, are starting with credit card and will continue to for probably foreseeable future. Maybe it's different in global south or other places. And then second, the agent, really the agent can handle the complexity of on ramping, switching from one or another, as long as it has the tools like virtual cards. And what we see is it depends on what the agent wants to do. We see vast majority of you want to buy a domain, or you want to hire Twilio to send SMS or things like that. Those things naturally, the agent will find a credit card form. And I think in those existing merchants, things are not going to change. However, this new kind of vibe coded microservices built entirely for this vertical, where the people creating these new merchants are not going through the process of creating a startup account and things like that, where stable coin acceptance is starting to become the norm. So I would say the things that I see are AI inference, paying for compute a lot of these, like, basically new agents need. Yeah, it's the new products, the new supply chain thing they need. And I think part of it is very because these people are writing these services, like from the toilet, like by calling with Raja, and you cannot bother with the onboarding process. And also it may be hard to underwrite. How do you underwrite with a stripe or someone like that? I created this API that, like, I don't know if it runs or if it works or not. I want to start accepting payments and all that stuff. It's possible the importing process becomes easier down the line. But today is. Much easier to spin an X Pro two facilitator or other similar standards that are coming out and just start taking like famous
Cuy Sheffield 15:10
it's so important to break it down by like the consumer side and the merchant side. And I think there are like different value props and considerations on each there are a few things that drive me crazier today than when I hear the argument that, oh, AI, agents aren't going to be able to get bank accounts, so they have to use stable quits. And you're like, wait a minute, every agent is created or controlled by some human, and that human probably has a bank account, probably has a card, and that agent is working for the human. And so why can't that human delegate their credential to that agent? And so this idea that agents are this, like, weird new life form that is, like, entirely detached and not connected, like, maybe at some point in the future, but that's a scary world that I don't think most people want to live in. I think you want to have, like, you could point to the person or the developer that is behind that agent. And if that's the case, that developer surely could get a bank account or get a payment credential. So I think that's on the consumer side. On the merchant side, I think there is this really interesting point of the process of creating a merchant has gotten so much easier with Vibe coding that you can go your your line of like someone sitting on the toilet, can launch a service that they want to try and get someone to pay for. And like that is not today what payment card acceptance was designed for, not to say that that couldn't be in the near term. And so it is interesting to see that stable coins have started to play this role that is like the longest tail of the long tail, in some cases, of fastest possible way that you can launch a service and get paid for it. I think the question is, is it just a way that you can test and it's like a niche service that, like you can see if it works, and then you go and open up an account and you accept cards, are there other unique benefits that stable coins can have with smart contracts and things for certain use cases. And so how do you think about that right now? Of like, when it makes sense on the merchant
Sy Taylor 17:05
side, I think it makes sense when the merchant is this type of merchant that doesn't exist yet, and they're trying to sell something new, and the onboarding would be too high. So the metaphor I want to give you is when stripe came along and they were first meeting a bunch of investors. A lot of investors turned them down because stripe would go out, the collisons would say, Yeah, we're building for a customer that doesn't exist yet, and that, what? Why? How am I going to invest in you? It's like when we're not trying to win people over, we think developers will be the next customer of software and creating merchants. And our entire go to market is built around developers. I think there's a new type of developer, which is the vibe coder, and there's also a new type of customer, which is the agent themselves and what they necessarily need to do. And I love the point you made, Alfonso, which is and what they're selling might be different. So the merchant doesn't exist yet. So they don't already have the ability to accept cards. For those merchants accept cards, you might as well continue. They don't exist yet, and the hurdle of becoming somebody who can accept cards today might be a little bit high. So I can start with selling this thing via stable coins, but maybe people want protections when they're buying them, so they might still want to pay for that with cards on the consumer side, which is why I think the acceptance of stable coins is increasing. So I think about it as like, Who's that merch, and what are they selling, and how mature are they? And that kind of gives you a rubric. I also think there's something really nice about the fact that people forget that stable coins sit underneath cards already today. So where stable coins fit is, do you want to get paid out instantly as a merchant? Because you're already doing instant settlement, or same day settlement cross border with Visa direct, with a number of companies? So I'm a merchant, I'm anywhere in the world, and I'm selling widgets, and instead of waiting the weekend to get paid so I can buy more widgets, I can get paid now, and I can have more inventory and I can sell more widgets, that makes the velocity go faster. Now think about tokens or digital resources. I don't know if you guys have looked at your API bills lately.
Alfonso Gómez 19:21
Token bills add up. Like, until you figure out the whole OAuth token thing, like, yeah, it's token bills add up. And so there's a generation of vibe coders figuring out, Oh, crap, I just run out of my entire budget of tokens really, really quickly, because my product took off and was really popular. If I could just get paid faster, then I could have more inventory for tokens, and my product could sell more. So I think we have to collapse this gap between auth and settlement to be near real time in order for these businesses to take off and really, really succeed at the speed of machine commerce. That's kind of how I'm thinking about it. Alfonso, any other thoughts before we move. On to the next story. I just think so. I think this first very interesting, and I wonder, and we'll see how car networks now start updating to embrace, I think this fact that there's these new folks that have that don't want to maybe onboard through the folks or agents that don't want to onboard through the traditional processes, however, consumers may want to have, sometimes the protection or other things that comes with that. And I wonder if in the future, we will see something like an onboarding from something that starts like a vibe coded stable coin thing and then suddenly becomes a node in the network, or something like that. That is, to me, something I think a lot about. Then I expect will happen down the line.
Sy Taylor 20:36
One more question for you, actually, in your own sort of coding workflows, are you sort of using swarms of agents, agents and sub agents? Do you have that sort of setup when you're building products? Is that comma fee? Can you imagine a world where you did have like a Chief of Staff to the CFO, but they also had a financial controller and lots of other employees, and each of those would have different roles and different kind of limits and things they could do. My hypothesis is that there's a limit to how many times you can issue each of them a virtual card without having to build ramp or bricks in order to manage your finances. This is something where I think stable coins could also play quite an interesting role, because they're naturally programmable, they're naturally global. They're naturally 24/7, so thank you for coming to my TED Talk. Whilst we're taking up quick pros. We just want to 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 sponsored by stripe. Here's the thing, selling digital goods globally is still far from easy. Many of the people around the world that want your product don't have an easy way to pay you. They simply don't have access to cards or a bank account. Stable coin payments. Change this. They're the first truly global payment method that you can use from anywhere. That's why, for any business with global growth ambitions, accepting stable coin payments is table stakes with stripe. Doing so is as easy as flipping a switch from big names like Shopify to fast growing names like shade. Form businesses everywhere trust stripe to accept stable coin payments from everyone everywhere. See what's possible@stripe.com forward slash crypto tokenized is also sponsored by fireblocks. Fireblocks is the stablecoin infrastructure of choice for global businesses from visa to world pay to bridge to Revolut with over $100 billion in monthly stable coin volume. Fire blocks powers stable coin strategies at scale with infrastructure that enables PSPs, fintechs, remitters and banks to issue, move, hold and manage stable coins. It's all done securely at scale with secure built in compliance with fireblocks, you get complete control to build your own stablecoin orchestration layer, create payment accounts, manage liquidity and access on and off ramps in over 60 currencies. Makes it easier for you to build and scale and expand your business globally. Learn more@fireblocks.com All right, thank you to our sponsors. The next story this week was about Morgan Stanley. They have applied to be a National Trust Bank, to custody crypto and potentially do all the things that the other folks are doing so. They've applied for this de novo National Trust Charter, the new entity, Morgan Stanley digital trust aims to own custody settlement and fiduciary plumbing for blockchain finance under US bank supervision. They also plan to introduce Bitcoin, ether and Solana trading through E trade in h1 2026, Tai, I'm going to come to you on this. You obviously know Morgan Stanley and their role in financial markets quite well. Why do you think they'd be doing something like this, given what they've been historically? Yeah.
Tanner Taddeo 24:35
I mean, if you look at banks across the board, Morgan Stanley included, you're seeing a lot of them tokenize their RWAs, whether that be their money markets, their treasury bills on chain, private credit is becoming a thing. And then stable coins, you know, a different city has city coin. JP, Morgan has its own coin too. And I think the demand that you're seeing, which prompts banks like Morgan Stanley to jump into this race, is that. But there's a lot of efficiency gains in the treasury space for large merchants, mid market merchants, etc, both on the asset management side, on how you manage your free cash flow, and then on your supplier payments and on your treasury movements, generally speaking, globally. And if you look at like the transaction banks more broadly, like a Goldman or Citi or JP or HSBC, Standard Chartered all these companies, of course, they have their investment banking divisions, but also from a Merchant banking perspective, they have their transaction banking teams, and the Transaction Banking teams is where you have a pretty good margin there, but you are essentially the back office to some of the biggest companies in the world. And you manage with futures and forwards and Swaps and Derivatives. On the capital market side, you manage the Treasury movements around the world. You manage the FX spreads. And I think you're seeing now that you typically needed a lot of humans and infrastructure from the early 2000s to manage a lot of that stuff. And now you're realizing that startups and more tech forward companies can come and provision some of those services. And so the banks are naturally, they have their distribution with their customer set, and they want to make sure that they're offering best in class, you know, financial services up to par.
Sy Taylor 26:07
There fun. So any thoughts on more people applying for Charles says there's been a wave of them recently.
Alfonso Gómez 26:12
I wish I had them, but I'm not that guy asked me about the agents. I have no idea. It's a great part. Any thoughts on this one?
Cuy Sheffield 26:20
Tai, I always like to start from the point of my hypothesis is that over the next decade, every financial institution is going to want to come on chain in some way. And I think it'll be different for different financial institutions in different markets. And it could be capital markets they want to do tokenized securities. It could be B to B. Payments. Could be remit says could be on chain lending. Like, there are all these use cases, but the lowest common denominator is, okay, well, you're using a blockchain ledger, and there's some asset on that ledger, and you're basically offering a wallet capability to customers to interact with that ledger. And so if you work backwards from like, how do we get there? You know, if that's gonna happen over the next decade? I think for this story, it's interesting to see like, where do banks and large FIS and asset managers, where do they invest in building and kind of going on their own to do things in house that they control, and what parts do they outsource? And I think we've seen a trend of PNC, I believe, announced their partnership with Coinbase, using Coinbase sub custody, where they can now offer Bitcoin and other assets to their customers. And we've seen some other banks go down that path as well. And I think when the products were really crypto trading, and you had this rush of banks at FIS saying, how do we help our clients, like buy bitcoin, it seemed like the default instinct was we got to move fast. We got to get to market. We're just going to outsource. We don't have all the necessary licenses like to do it. We don't want to explain to our regulators. We're just going to be an interface, and we're going to let our customers buy bitcoin, and we'll plug somebody else in on the back end. I think what's interesting now is the demand and the use cases that a lot of these larger files are looking at. It's really not just buying Bitcoin anymore. It's tokenizing securities. It's using tokenized assets as collateral. It's on chain lending. It's all these things that are not like a nice to have feature that might be good for a press release. It's actually the core guts of the product that they're in the business of offering. And so what I really wonder is, if you're a large fi and you're trying to figure out, how do I make, like, a long term strategic plan, how do you balance speed to market, where it's likely faster, because a lot of these FIS don't actually have the right licensing and approach to offer some of these assets to do sub custody relationships, outsource, versus where do you say, You know What, we're gonna have to apply to get a charter. And a lot of people are like, Wait, Morgan Stanley, like they're already like a regulated financial institution, but it seems like they didn't have whatever the necessary licensing was to offer the products that they wanted. And so now you have large FIS applying for new charters. And then you can say the same thing about, okay, well, what do they do about custody tech? What do they do about nodes? What do we do about all these areas? What do you build? What do you apply and go get versus what do you outsource? And I think that's like the discussion happening in boardrooms of many large financial institutions.
Sy Taylor 29:10
I don't know how many times you get asked that in a weekly basis, but it's pretty much the dominant conversation I have with financial institutions. Is Simon. Who should we work with? But also, I kind of want to build it myself one day. So how do I do something now so I don't miss the market and I can meet the moment. But also, how do I get closer to the metal over time? What's my journey and my guide path look like? And I'm like, Well, I've drawn you lots of slides. Here you go. But then, really, what you have to do is educate people on who all the players of the ecosystem are, and then what they all do and how that's different, to tradify, and then they go meet some of the vendors, and the vendors are all at different levels of maturity, and not necessarily the maturity a bank would expect. I mean, Tai Na, you must come across this all the time, like enterprises expect a certain level of diligence from an organization and the crypto ecosystem. System's just not
Tanner Taddeo 30:00
ready for that. Yeah, that's about right? I mean, the interesting part is that with enterprises, well, I think just to cap that point off, on the financial institution, point is that the longer term trend that we're seeing is that, right now, a lot of the tech companies, they have some sort of regulatory arbitrage. They were first to market. Regulation hasn't caught up yet. Therefore, they're capturing this ARB on whatever web three product that they're provisioning, right? But you're seeing now the bank say, Okay, this is going to be a thing in the next 510, 15 years. I need to set up my licensing structure in a way, and then bring this stuff in house. And so it's a really interesting signal for the market, because it's being institutionalized by the largest financial institutions in the world, and they might start off with a partner or buy strategy, and then they might build it themselves over time. But the one signal that is emerging that is absolutely clear is that on chain web, three financial services are here to stay, and all the banks and Neo banks are posturing for the right regulatory status so that they can crush the ARB in the next 357, years. So that's a really interesting signal to pay attention to.
Sy Taylor 31:06
Well related story is Kraken received word from the Kansas fed that they will be the first to get a payments master account. So obviously that gives them access to fed wire and fed ACH and all of those underlying systems, and it does so with meaningfully different unit economics than they would have otherwise had, and whether you believe in debanking or not, or de risking, it also means that as a Wyoming Special Purpose depository institution, they're in a position where their payments will still work, So long as the regulator allows that to happen, so meaningfully different on that point. Tai Nan Alfonso, interested in your views on Kraken and the consumer perception of safety of some of these things and how wallets are sort of changing shape over time. Kraken has done crack the consumer wallet. They're institutional. Do you think these exchanges are going to be the next big institutions, and do you
Alfonso Gómez 32:06
think consumers will like it? I think it's all a matter of, how do they earn user trust? And part of this is, for example, potentially looking more or actually being more like a bank. But there's a lot of other things on on the branding side that they may need to cover. This is a bit of an aside, but for example, something that I hear anecdotally sometimes is that some new banks, for example, integrating maybe some UI that look, puts Coinbase somewhere, things like this. And even though, for us here, that looks like a great brand, they see, oh, this is crypto and kind of scare out. And so I think for Kraken to do this, I think the other thing is, like, they need probably a pretty different brand, probably something that feels indefensible. It depends on who they're targeting, but if they are trying to expand the pie from who they were targeting before to and this is important, but the most important thing is like, how do you how do you convince my mother that this is a safe place to put money on, and a lot of it is on thinking harder than how to change the user interface on the products that you're creating and how to the value proposition you have for those folks that really don't care if there's crypto or not on their own.
Cuy Sheffield 33:04
It's really interesting to me the story of just how the starting assumptions of the FinTech landscape in the US have shifted so quickly over the past few years. Five years ago, if you were building a FinTech, there were like, two pretty strong assumptions that, like, if you were trying to raise money, it's like, you could not say, like, Oh, we're gonna, like, go against these. And that was one, if you're a FinTech, there's this, like, binary, if you're either a FinTech and you're a tech company or you're a fully Chartered Bank, and there's nothing in between. There wasn't like, a oh, there's this special purpose charter that lets you do some things, but not other. It was like, You're a FinTech, or you're like a full bank, and are you building a full bank? You're not okay, then you're a fintech. Like there was nothing in between. And then it was, don't even think about getting a master's account. Like, that's not gonna happen. That's never happened before. Like that got shut down. And so those are just two operating assumptions that every FinTech entrepreneur had to just live with and there was really nothing they could do now, regardless of whether you agree or it's right or wrong, and banks have strong views versus fintechs, the reality is the assumptions now have changed, and the world that we live in, there's another option. There are charters that are being given to fintechs that are getting some of the access and regulation of banks, but our special purpose that are not full deposit taking banks. And now with this story, there's a path to get a master account. Now it might be a skinny master account, like, not full Med, but like that didn't exist before, yeah. And so I think it's really interesting when those, like, big plates shift. That change the market structure of fintech. What does that mean for the new products that are built and like, once that door opens up, it's not like, oh, there's like, one or two charters. It's like, every week, it's like, another charter hours
Sy Taylor 34:54
and ripple and but new bank and Revolut filed for a charter. I mean. The market is going to look so different in a couple of years time. And new bank and revolu have both been doing crypto for a long time for their core customer bases in other markets with charters, new banks, core business is lending. This is fundamentally a deposit taking institution that lends so Tai, you're probably familiar with the whole history of the rent a charter model and kind of everything that went wrong in the banking as a service universe way back when, is there some element of these companies as well being in control of their own destiny, because being on top of somebody else's charter is actually a risk to your own business.
Tanner Taddeo 35:34
Yes, I think that that's the case, and that's why we're seeing a lot of Neo banks and fintech start to apply for their own charters. The interesting thing too, is that, historically, if you were a FinTech and you wanted to offer financial services, you go to one of the sponsor banks right down there, and the sponsor banks were clear that, like, you're either a crypto institution or you're not right, and like, they had to categorize you in a certain kind of subset. And I was having a conversation with a few of them a few months ago, and you know, we were just sitting around having a coffee, talking about how the lines are becoming blurred. Like, what is a crypto company? Right? Like, when JP Morgan has a stable coin, are they a crypto company? Well, no, they're a bank, and they're using an analogical paradigm, right? And like, if you look at ramp or bricks or any of these companies, they're not crypto, but they're now adding stable coins, and a lot of the sponsor banks, even, or their core customers are coming and saying, Hey, we want to accept stable coin as a settlement layer, or we want to provision stable coin X, Y and Z, product and service. Does that mean that they have to move them into a high risk category and so like, it's all being morphed into one today.
Sy Taylor 36:35
I think that forcing of the risk appetite window shifting is such a brilliant observation, because just earlier today, I had somebody say to me who works in a technology company that you know serves the crypto industry, say, oh, we can't send international wires because our FinTech, Neo bank, uses this other cross border FinTech who uses this sponsor bank who flagged it As crypto, even though we're a software company, and there are so many banks out there that wrote their policies for the reality of a few years ago, and the reality has really shifted. So now it's a case of, you can't have that binary, oh, it's crypto. It's banned. Oh, it's not it's fine. That sort of binary risk appetite, you have to get nuanced and new risk appetite
Cuy Sheffield 37:21
in I think what's really interesting about that is part of this was a function of the speculative hype cycles of crypto. People forget that the times when a lot of things happened that institutions had to deal with crypto, crypto risk was it wasn't like they had years to figure it out. It was like 2017 Whoa. Like, everyone's buying crypto. It's like happened all of a sudden, like, what do we do? Don't worry about Yes, 2021, whoa. Everyone's like, buying crypto. Like, what do we do? And so I think that what happened was, in a lot of cases, there was this, like, very quick reactionary, like, this is scary, this is risky. We have to do something. And then you had, crypto became a category, literally, just crypto. And then crypto became a restricted category. And so for a lot of institutions, we've seen this firsthand many times, you would have companies who, when you go and create a bank account, and you and you go and, like, apply for licenses, you talk about, like, what do you serve? And and you would have crypto show up as a restricted category. And so you'd have companies say, we do not do crypto. And if you said we do not do crypto, there wasn't really a like, legal definition of what is crypto like? Does this company use a database that happens to have a chain of blocks? Like, without like, there's no definition. It was just a scary thing that happened very quickly, and I think now fortunately and like, this takes a lot longer to unwind than it took to create now people are going back and saying, all right, when we said we don't do crypto, what does that mean? Here are all these companies that actually are our own customers who are now adding stable coins. Do we have to off board some of our largest customers today because they now use a blockchain database? I don't think we want to do that. No. And so let's go and like, add some nuance and say, Well, what does crypto mean? What are the risks? How is it different? And so I think a lot of that work is happening inside a lot of financial institutions and with a lot of regulators. And I think that's a very positive, productive thing, because if you look back and you say, crypto as one monolithic category is not that useful of a real approach for like, risk based decisions, given that it's so broad, and whether someone's dealing with meme coin trading or whether someone is using a tokenized deposit like are like very, very different activities that both could arguably be bucket under crypto. So I'm excited for that to get unwound into like, more
Sy Taylor 39:40
rational saying you use crypto technology these days is a little bit like saying you use the internet, like, who doesn't? It's such a difficult thing to bifate conscious of the time. So I'm going to do some quick fire stories. We didn't have time to cover the Bank of England stable coin regime was criticized by innovate finance to chill the UK market. Kit do as a UK citizen, have some sympathy for that view, but we'll have some folks on from the Bank of England soon to talk about some other stuff they're doing. So shout out to those guys. They are doing some interesting things. Circle launched nano payments and test net gas free USDC micro transfers for AI agents. Don't if you saw this one. Alfonso, any any thoughts on that. I haven't played with the APIs yet. However, it all seems on the direction of we're talking earlier, for micro payments, for meter services. There seems to be a battle for standards now, like x 402, with different versions of it, a few other companies launching their own. And I do think right now, we haven't seen a standard that has strong enough, that has taken off. I think a few companies are trying to take a stab at it. Yeah, let's see, watch this face. So we also saw Moon pay m zero and PayPal launch p, y, USD, x, which is a branded stable coin framework backed by PayPal. USD. So this wrapping of stable coins is becoming really interesting. Shout out to m zero, quietly doing lots of interesting things. Northern Trust launched tokenized Treasury money market funds on the BNY liquidity direct. Do you know what that is? Tai, I didn't follow this story. No. And then zero hash Not to be left out of seeking a National Trust charter from the OCC as well. And the story that just took me by surprise was the New York Stock Exchange parent company, ice has invested in crypto exchange, OK, x at a $25 billion valuation. Could you imagine that a couple of years ago?
Cuy Sheffield 41:32
I mean, they invested in it, or created backed. So there was, like a bitcoin exchange, that New York Stock Exchange parent company was a tune. And I don't know what the status of backed is now, but does it seem like that played out in the way? Played out in the way that they were hoping? And so looks like they're taking another shot at it, and then they did poly market before. So I think it makes sense. It's clear that the large exchanges, OK, X, being kind of one of the larger ones, are still very valuable trading businesses. And anyone who's in the business of an exchange needs some type of crypto strategy, of like, what's going to be your your bet? So I'm not that surprised to see Yeah,
Sy Taylor 42:05
we're doing also, I think the theme of today is everybody having to adjust to the new reality in so many ways. Well, look, that's all the stories we had for this week. I want to thank everybody for watching and listening. I want to remind you all to like and subscribe and do all of those things, spam all of your friends to find the show. We grow organically. We grow because of you. So please help us out. Tai Na, if people want to find out more about you and stable C, where do they go to do that?
Tanner Taddeo 42:29
Stable c.com, and or find us on LinkedIn and Twitter and all the normal places.
Alfonso Gómez 42:34
Alfonso, how about you probably search us on Twitter. Cross mint, we'll have a lot of things coming out in a few days.
Speaker 1 42:39
Ooh, foreshadowing, foreshadowing. I like the sound of that. Kai. How about you?
Cuy Sheffield 42:43
You guys are shipping like shout out to the CrossFit folks on x at Kai Sheffield and visa Comm, slash crypto.
Sy Taylor 42:49
You'll find me at S y Tai L on all the social screaming into the void at FinTech, brain food.com and, of course, at tempo dot XYZ. And thank you so much to everybody. We'll catch you next time.