Black October and Unpacking Commanding Heights

Sy Taylor  0:10  
Welcome to Tokenized, the show focused on stablecoins and the institutional adoption of tokenized real-world assets. My name is Simon Taylor. I am head of market there at Tempo and author at Brain Food, and I'm joined once again by Kai Sheffield, head of crypto at Visa. How are you doing, Kai?

Cuy Sheffield  0:25  
I'm just trying to keep up. You know, the the world is moving fast, but it's I enjoy this time to try and unpack what's going

Sy Taylor  0:31  
on. Yeah, no, that's why we bring on guests. They're here to help us. And speaking of making a debut is Pedro Arndt, who's the CEO of D Local. How are you doing, Pedro?

Pedro Arnt  0:39  
Doing well. Thanks for having me. This is super, super fun.

Sy Taylor  0:43  
Yeah, excited. If you're listening to this, you probably can't see Pedro's background, but it looks absolutely incredible there, where you're in Uruguay in your head office. So, thank you for showing me sunshine. I don't get a lot of that in London this time of year. Before we drop into the show, I just got to remind viewers and listeners 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 as tax, legal, or financial advice. Got to remind you that this podcast is sponsored by Fireblocks. And P.S. Come to my event, NerdCon. It's only a couple of weeks away. It's in San Diego, and you can get 20% off using Tokenized 20 for all you tokenized fans. Tokenized is sponsored by Fireblocks. Fireblocks is the stablecoin infrastructure of choice for global businesses, from Visa to Wallpay to Bridge to Revolut. With over $100 billion in monthly stablecoin volume, Fireblocks powers stablecoin strategies at scale with infrastructure that enables PSPs, fintechs, remitters, and banks to issue, move, hold, and manage stablecoins. It's all done securely at scale with secure built-in compliance. With Fireblocks, you get complete control to build your own stablecoin orchestration layer, create payment accounts, manage liquidity, and access on and off ramps in over 60 currencies. Makes it easier for you to build and scale and expand your business globally. Learn more at Fireblocks.com. All right, first story this week: Binance has lost around $6.3 billion in the largest crypto hack on record by some margin. The attacker moved that 6.3 billion out of Binance wallets across 10 blockchains, most of it in about 20 minutes. TRM and Chainalysis both named Trader Traitor, the North Korean unit behind the 1.5 billion Bybit hack last year as the culprit, and Binance's post-mortem traces it to a fake job interview in September 2026, where a Binance software engineer downloading a coding assignment with malware that endpoint security missed. Then in October of 2026, the attacker used an internal AI tool to take over two wallet engineers' machines, and one of which held a container deployment token. Binance says its wallet team had already exposed in June 2026, where a DevOps engineer downloaded a tampered homebrew installer. So this is multiple points of entry here that had happened to Binance, but it does say it detected and stopped 57 suspected North Korean-linked attacks in 2026. So this is the one that got through, and about 2.85 billion has been frozen or intercepted, including 1.77 billion of USDT by Tether and 823 million by Circle. This is an enormous, enormous hack. The attacker still holds over 420,000 ETH, 18,270 Bitcoin. That's money that can't be frozen. Pedro, what are your reactions when you see headlines like this? I know you've been quite forward-leaning into stablecoins and the revolution it can mean for your business and your customers. Have you had to take any phone calls with customers worried about their funds, or have you had that worry yourself?

Pedro Arnt  4:16  
So we've obviously had to stay very much abreast of the situation, Chainalysis is a supplier in the way we run a lot of our controls, indirect. But the other big news during the week, we actually took many precautionary notes Friday evening when the Binance situation was evolving. So because we do flows in crypto on behalf of our merchants. This is very much something that we are accompanying and reacting to. I would say in real time. If I take a step away from just my day-to-day operations, I actually think that the way crypto today has. Evolved in emerging worlds will make this more of an interesting data point along a continuous road of adoption. And the reason I say that is that I still think in my markets, at a consumer level and institutional level, there's kind of a binary segmentation of the market. You have the people and the institutions that are heavily into using crypto to move money around, but I would characterize them as sophisticated, well versed. These are the people for whom traditional rails have failed. So sometimes they have a geographic concentration in Argentina, Venezuela, but they know the risks involved. They're fairly well versed, and I don't think this comes as a surprise to them. And then the mass market simply isn't there yet for the vast majority of emerging market consumers. A credit card or a debit card or just financial inclusion is really the new, new thing. And so I think when we look back in many years, I don't think I'd call this a watershed moment. Most people aren't even interested, and those that are aren't surprised, right? I do think it's a warning sign for us as an industry, right? What failed here isn't stablecoin or crypto. What failed here is an exchange's security, as anyone's can. Important to point out, but let's not go and question the technology. I don't think that's what we should be doing. I do think it sheds light on how important it'll be for Real institutional-grade security, segregation of accounts, proof of reserves. We need to really make sure that the level of security involved in the exchanges and the custodians that will take off across the emerging world is as good as it can be. Because just wrapping up in this binary world of mine, the consumers who we've potentially affected this time around are the ones who I think will be able to handle this. But if we want to reach the next 100 million or 300 emerging market consumers, they won't be forgiving if this happens to them in the future, and so as an industry, I think I take this as a very large warning sign that we really need to make sure we get our act together quickly. I don't think what failed is blockchain or stablecoin, and I don't think because of the timing of adoption throughout the region that this one in any way will have a significant impact on slowing down adoption.

Cuy Sheffield  7:47  
Black October, man, like being in crypto for a decade, it requires this like constant fear and paranoia, and you just kind of you you have to be. And I feel like the fear and paranoia meter is just like it's off the charts right now. The last data I saw, it's like over 160 exploits in October, like overall, like not just crypto. 25 to 30 would be some of the biggest exploits of the year, and so I think it's just it is a scary time that we live in right now. And I think one of my initial reactions from this specific hack is, it's in some ways a success case for stablecoins being able to very quickly respond and freeze, and having both USDT and USDC take quick action to freeze these funds. And I believe, as far as I could tell, that none of the USDT or USDC was able to be converted, or anything happened to it. I know Circle's gotten some criticism of kind of being slow to freeze in the past. Yeah, they froze very quickly, and so it kind of shows the separation of you've got one type of asset in the stablecoin that can be immediately frozen upon the hack, and then you have another asset, ETH, and the other crypto assets that now are out circulating, and so then it creates this knock-on effect where every other exchange has to say, "Whoa, how do we make sure that we're not used as the off-ramp for this?" And then you have the attacker that's basically doing agentic money laundering that is just sending funds back and forth between these wallets, and so whatever systems you have to detect an inbound transfer of ETH or a crypto asset need to make sure that like you're ready for it's not oh was the address that was coming from a direct address in the hack it's like those funds could have moved through 100 other addresses before they got to yours within a matter of minutes and so being able to track that I think that's you know really important and I think the other takeaway is there's this kind of broad spectrum of security where a lot of the focus and attention, at least for the the month of October, were on all these exploits that were being discovered by these advanced models as as the capabilities improve. But this seems like, from what Binance said, it kind of started with. Social engineering, and so it's not just that models are making it easier to discover and take advantage of exploits. It's models plus techniques of being able to socially engineer individuals inside an organization of a fake job application or job post that someone then downloads as a interview project, and so you really have to think about that whole spectrum of security, and I was having this conversation the other day of like security teams for product teams. You kind of have to think about it like your offensive line. You know, they're like up front, like in the trenches. They're blocking, like they're working hard. And I think a lot of times in the past, product teams just kind of take it for granted. They're like, oh yeah, of course. Like they're they're gonna block. All it takes is a few sacks where you're like, whoa! Like I gotta treat my offensive line and make sure they're eating. They have the resources. You know that they're able to. Their job is more important than ever in this environment because the attackers just got so much better. So I think we're only gonna see more of these. And respect to how Binance kind of the transparency, how they've responded, but I think this is a really, really big deal.

Sy Taylor  11:05  
The elephant in the room on all of this is AI, right? Like, how many Linux kernel exploits and core bits of internet infrastructure have been exploited in the past couple of months? And if that's happening, then what chance does the rest of us have? And if you are a centralized exchange in crypto, you are a giant target. I think credit to the folks at Coinbase and some of the other exchanges who have obviously like person works hard and nothing went wrong. Very rarely gets a round of applause. But can we just give a round of applause to all of the people who haven't had those emergencies on a regular basis, and everybody who works in finance generally, because that is an incredibly hard thing to do. And the amount of emergencies they've prevented, or near misses that you don't hear about. Believe me, I've worked in the back end of a bank for long enough to know that this this stuff very nearly goes very wrong quite often. So let's give all those folks their flowers, but also recognize their job just got so much harder, as you were saying, Kai, because of AI. I think it did, and you've got a giant target on your back if you're in crypto right now. And so, if nothing else, I agree with Pedro's point here that hey, perhaps this raises the game for everybody, and it forces us all to up a game. And it's a good reminder that you know, good enough is not good enough. We we really have to get this right, and sometimes it's at the expense of user experience. I remember I used to when I was working at Sardine, one of the things they built was the ability to do deep fake detection baked into every Zoom and Teams call, because there were so many deep fake job interviews. There's an absolute epidemic of them going on right now, and it's such a good entry point into a company because I can send you a CV, I can send you a bit of working code to prove you know something on a on a GitHub repo, and then boom, the exploits in. It's such a clever entry point. So you've got to be super mindful of your hiring process, and that's normally not where you think security historically. I'm just mindful of the time. I'm going to move us to the next story because AI is kind of related to a lot of this stuff. There was a big essay, probably what some 10 15,000 words, called "The Commanding Heights," 145 pages, and it's an essay on who wins from AI. It says a stablecoin neo dollar will be America's greatest power, and that the dollar will be used by models because essentially, as much as China can create new models, its currency doesn't float. The dollar does float. That the core value today is where the bottleneck is, and value is accruing to memory and to chips and to all of those sorts of things. But the commanding height says they actually move elsewhere. In the early days of the railroad, it was the people who built the railroads, but later it actually became Standard Oil, and they're arguing that it will move somewhere else in the AI era as well, and they give an example of Melina, an Argentine designer who's paid in USDT, who loses her clients to the next model trained on her work. It is an incredible piece of work. I had my own opinions about it, but Pedro, since it argues so much about the impact on emerging markets first and foremost. What was your take?

Pedro Arnt  14:25  
Yeah, so I think there's two layers here of my thinking. There's a selfish one when I look at this from a delocal perspective, and I think of this concept of a neo stable dollar. My initial reaction, first of all, on that piece of the story was to say, in a way, if this is the world where I think part of the essay also refers to that, everyone's simply carrying around this neo stable dollar not only because it is the currency of trade for tokens, but simply because it protects against inflationary local currencies and whatnot. Then the value of my. Service, I would say, dissipate significantly. Right, you don't have a need for FX. You don't have really a need to move money from one place to the other. That that preoccupation didn't last very long. I think there are regulatory concerns. There are payment sovereignty concerns. There are a million reasons where I think this kind of a future is actually quite beneficial to us because I do agree that that stable neo dollar will be the currency of trade for the AI economy, much as it is today for the global economy. But you will still then need to translate that back into Melina's Argentine pesos or Juan's Brazilian rays or Sandeep's, you know, Indian rupees, for regulatory reasons, and also just for local customs and local consumption. And so, the explosion of digital payments around the consumption of tokens, I think, vastly expands my addressable market. So that's sort of my delocal emerging markets FX. I think all of these markets will deepen and grow significantly as a consequence of token consumption in U.S. dollars. Now, I think the other part of the work, I think the principalities and powers and the concentration of AI capacity, primarily in the U.S. and to a lesser degree in China, is the part that looking at it from the global south worries me. Right, because something else I think the essay covers is also what happens to labor, and so I think from an emerging world perspective, although AI in absolute terms, I think will make our economies better. In relative terms, I think the size of the digital gap between the global South and the developed world, and especially Latin in Africa, Southeast Asia, which is my third region, maybe a little bit less. That gap probably widens, and the consequences of that do concern me, and then the second piece is, I think our economies are more labor intensive, and therefore the displacement of labor or or a bleak labor future, I think hurts emerging economies even more. And I don't see our governments or our regulatory environments prepared to deal with rising unemployment, et cetera, et cetera, as a consequence of all this. That part is the one that sometimes leads me to fear a little bit more about a somewhat dystopian future as all this happens. So selfishly, I think this will make my company stronger and bigger. I think there are some more important societal level concerns that we really need to make sure that we address across the global south.

Cuy Sheffield  17:56  
Yeah, I think these are some of the most important questions over the next decade. And so, you know, shout out to to Will Mandis and and Joe Roberts, like the authors of the of this paper. In my opinion, this is a must read for anyone who listens to the show. You know, who's interested in like the impact of stablecoins, intersection between AI, stablecoins, geopolitics. Like, yeah, it is a very well done paper. Whether or not you agree, you know, with all of it, you can also listen to it. You know, I like the format of like you can listen or read or listen and read at at the same time, so so you can get through it. And I think we we need more work like this. We need more like long form, deep thinking around. There are so many emerging technologies in the world today that are all being developed and growing in parallel. And so you really have to start looking at like what are the connections and intersections between them, and instead of just saying okay, what's going to happen with stablecoins? Well, what's going to happen with how agents change kind of labor in the economy, and then where do stablecoins you know fit into that? How do they accelerate it? You know, what are the implications of that? I think these are just you know critical questions. The other thing I really liked about it is the format of it kind of tells these fictional stories of people. There's kind of Ravi, I think, in in India, and then the the woman in in Argentina. And I think that type of writing of like the science fiction trying to write a day in the life of an individual in a certain place at a certain time is a great forcing function to just think about like how all these forces come together, and to go from this kind of macro impact of what's happening with AI to like what does it mean for an individual in one of these places. And so I thought they did a really good job of that format. Now what I disagreed with, and maybe this is just my own like view as a delusional optimist, I thought it was dystopian and like way too pessimistic. And I think like we all kind of have some agency in kind of choosing how we want the world to play out. And so I think that the very specific take, which might be too in the weeds if if people haven't read it, but they basically assume that you have this large outsourced labor economy in emerging markets with people. Working at these kind of IT agencies, and they're doing a bunch of work. They're replacing employees with agents, and then one day, even the manager who is managing the agents gets replaced by the model. I think over time, I would love to imagine that there's a world where it's not everyone is working for one model. It's Ravi fine tunes his own model that he's using, and he's owning his data and his information, and then he's able to run his own agency where it's not that like all of the work that he's doing is training someone else who captures the value, and so I think we need this kind of more distributed, self sovereign AI being able to own the fruits of kind of the intelligence and the unique taste that you have, and so I am mega bullish on the growth of a freelancer economy. I just think it might be these one-person companies, these one-person freelance shops, rather than these kind of massive outsourced many 1000-person company shops that are then managing individuals. But you know, nobody knows. I think it takes kind of work like this that's thought provoking that really kind of causes people to think about these connections. And so, would love to see more like it.

Sy Taylor  21:09  
Yeah, the freelancer economy is a thing.

Pedro Arnt  21:11  
And and my my apologies to the fictional Ravi, who's already having a hard time getting fired by the AI agents, and who I called Sandeep. So sorry to him.

Sy Taylor  21:22  
Yeah, apologies, Ravi, as well for being the subject of such a dystopian thing. I had exactly the same response that Kai did. Although when Kai says, you know, self sovereignty, I just worry about the the forces of capitalism and the the inability to create that sovereignty, I fear in every time we've tried to create self-sovereignty with decentralized anything, somebody comes along and centralizes it, and the user experience is a lot better. It's a lot more successful, and people will happily give up freedom in return for convenience. Apple does a good job of finding that line where it's freedom and privacy, but really profitable in terms of the business model. The interesting challenge for us as a society is what checks and balances do we want to create in the the short term and in the longer term? What is the story we can tell ourselves that is Ravi becomes a freelancer and starts to create art and around the world, human-created art starts to take on more value. What is the story in which humans figure out, just as we did post the railway, post the steam engine, post electricity, entirely new industries and new areas of endeavor that created economic value? That okay, the robots can do the lifting, and the the AIs can do the thinking. But what can't they do? They can't make connection. They can't build relationships. And so, what are these areas of uniqueness, and what stories could we tell ourselves? And I'm interested in Pedro and your views as well. Like, how many of your merchants are serving the the existing freelancer economy, because there's the freelancer economy of the upwardly mobile global south, and then there's the gig economy, and those are two different things with two very different connotations.

Pedro Arnt  23:11  
And I think we see in different verticals within our business both of those. We see a lot of the gig economy work. We serve a lot of the world's largest ride-hailing companies, food delivery companies, and if you will, that's maybe that's unfair because they've generated employments for millions of people. I think there's some really interesting debates right now around you know what's their label relationship to the employer. I think when you look at the unit economics of my clients, they are much more appealing to them if they don't treat those gig economy workers as direct employers with social security benefits, etc. That's allowed them to employ millions of people who otherwise would potentially be jobless. If you want to take the glass half empty view on that, you'd say, well, they should treat them as full time employees. That's not even an emerging world debate. That's a European debate as well, right? But we also see, I think, because we service a lot of these global payroll companies, who actually, when you look at what they've built, they've built these phenomenal models that allow other global businesses to scale very quickly with feet on the ground through using these hiring and payment platforms, not gig at all. In many cases, these are sophisticated service professionals and whatnot that are finding ways to be directly employed by overseas employers doing very challenging work, being paid many times, you know, through digitized assets and foreign currencies, and that's also a very interesting part of growth and and interesting employment opportunities across the global south. In that location becomes, I think, less and. Less a barrier to employment and to be able to grab interesting job opportunities as these clients of ours, merchants of ours that handle the contracting, the labor laws, and payment, partner with us who can actually move the money around and generate what is truly a global marketplace for talent.

Cuy Sheffield  25:22  
One one of the things I I've been thinking about a lot that I'd love your both your views on is really how how do AI and stablecoins change the scope of the freelancer economy? And my initial hypothesis here is that outsourcing work to a freelancer pre AI, there's a real cost of coordination. It requires a lot of work. You got to write a brief. You got to put the brief up on a marketplace. You got to find recruit the right freelancer for it. You got to onboard them. You got to get them up to speed. Like there, there's a lot of work. And then if the task or the work that you need done is only worth $1, one, it's not worth that time. The cost of coordination is too high. And then, two, most traditional freelancer platforms. There's no way you could pay $1, you know, from the U.S. to Argentina. Like that just wouldn't be an economical transaction to make. And so, it kind of sets this lower limit bar where the only time it makes sense to outsource something to a freelancer is if it's over $10, maybe over $15. Now, if you have agents start to to reduce that coordination cost, where I can easily inside my agent write a brief, you know, for a freelancer of a task that that agent needs done, and then if the freelancer has an agent that can you know get that brief and be able to onboard them, is there a world where one like there are tasks that weren't economical to outsource before that now are, and then two, if you have stablecoins, well, maybe that task is you know 10 cents or $1, but you can pay them across the world, and so it feels like there's this like expanding of the addressable market of if you think about Upwork and Fiverr and kind of what these companies have been, that they could be so much greater, and that an individual freelancer could be empowered using an agent to scale their businesses and become more like a agency instead of just an individual. But how do you both think about that? And like, is am I too delusionally optimistic on on that view?

Pedro Arnt  27:14  
So I think we've established the roles. You you get to be the optimist. I get to be the somewhat more cautious one. I think it bifurcates, right? I think absolutely there will be corners of the market where that vision you've just outlined will absolutely crystallize. I'm going to state the obvious here, right? The other corner of the market is the one where it'll be even easier to just build an agent that actually can carry out in a highly efficient fashion the work that you were outsourcing to the global south because the cost of labor is cheaper or whatnot, and I think that's going to be the recurring theme, right? Winners, losers, dislocation of where value is created, dislocation of where profit pools are. In a way, I'm glad I don't know exactly what those dislocations look like because then I'd be doubly anxious. Right now, it's just wait and see. Value will be, I think, created. Markets will be expanded in some corners of the economy, and in others, for better or worse, I think they will be agentified. Right, and so it will no longer be a human behind that.

Sy Taylor  28:17  
I'm generally dubious of micro payments as a business model, and I say that as somebody who's indexed towards that being a success, right? Like in theory, stablecoins should be better, faster, cheaper. Your AI agent should be able to go buy lots of things from everywhere. But as of right now, it's a hammer looking for a nail. Like if I want to buy inference on demand, I can buy inference on demand with a card. If I want to buy tokens on demand, I can buy tokens on demand. Like none of these are particularly difficult in terms of labor. I I think that the distinction Pedro is making is an interesting one. I can go to Global South labor for quality or just for the task being done, and that bifurcation of just the task being done increasingly just goes to an agent. But the labor where taste, quality, experience matters, maybe that labor now has an agent, and maybe has 100 agents, and those agents are being bought and paid for using a stablecoin-linked card, or micro payments, or something of that nature. The pragmatist in me senses that the stablecoin linked card, the stablecoin in the back end, the your local currency on the front end, or embedded wallets, anything that takes the friction away and makes the stablecoin disappear, just feels like a better experience than the stablecoin at the front, you know, like it's a stablecoin mullet of sort. Like it should feel like you're using the product, and the stablecoin gets out of the way.

Cuy Sheffield  29:50  
And so, based on your your comment on taste, and I know we got to move on to the next story of it. Like we could spend hours on this topic. My hypothesis, and and you know, we come back and check this year. From now, is the market and demand for design would grow exponentially? Because I don't know about you, but like I try and get my agents to to do design tasks. It just slop. It's it's terrible. And so like I think anyone you could have a 16 year old in Bangladesh who knows all the latest AI video models that like will master that in a way that I could never figure out just me in front of my Claude, and so design I think has more of a premium. I think development and engineering outsourced development. You don't need somebody to write code for you anymore. And I think a lot of the outsourcing market was just someone writing code for you. That I'm not an engineer, and my agents can write code for me, but I'm not a designer. My agents can't design for me, and so I think you could kind of see this shift from kind of the mechanical, let me write the code, to the kind of things that have taste and design. So nobody knows, and it'll be fascinating to to see. But that that would be my my prediction.

Sy Taylor  30:52  
Yeah, anything that you can create a consistent benchmark for, you can hill climb. But creating benchmarks for taste has been so far quite elusive. So, but maybe that's because all the people building those benchmarks are in Silicon Valley and engineers by trade. Who knows? The designers are hiding away from that. So it's a fun conversation. But we will definitely come back to it, I'm sure. But before we do, we've just got to hear quickly from our sponsors. Stablecoin operations usually mean a wallet from one vendor and on ramp from another, and then controls stitched together across all of them. Visa's stablecoin platform fixes this fundamentally. You can mint, move, and manage stablecoins across OpenUSD, and you remain your own custodian, all in one single environment. Then stablecoin linked cards let you spend balances anywhere Visa is accepted. That's Visa, the global leader in payments, and of course sponsor of this show. You can find out more at visa.com forward slash crypto. This episode is brought to you by Bridge, a Stripe company. Businesses need easier global money movement. Bridge is the stablecoin orchestration platform that makes it simple to receive, store, issue, and spend using stablecoins. Companies like X and Shopify and ATM already use Bridge to lower their costs, simplify global treasury operations, and expand their global reach. Learn how you can grow your business with instant global money movement using stablecoins at Bridge XYZ. Thank you to our sponsors. Next story this week is about Yellow Card buying Go Money to set up direct operations in Brazil, where crypto activity hit 252.5 billion dollars on an annualized basis. Go Money stays a wholly owned subsidiary run by its founders, and they didn't disclose the price. They were founded in 2018 and have built out stablecoin cross-border payments in Brazil. It's operating under Brazil's transnational regime, while the central bank reviews the application for full VASP authorization, and Yellow Card clients get collections and payouts in Brazilian rails, including through PICs with settlement in stablecoins. Chanalysis says stablecoin activity in Brazil grew 495% over the last two years, and Yellowcard raised 40 million back in August 2026, including from investors like Standard Chartered and Sony. Very, very well placed, interesting little company. We've had Chris on the show before. Interested in your takes on on this move, Pedro and Brazil in particular. I know the central bankers and the IMF have had some concerns about stablecoins and potential illegitimate activity, avoiding currency controls. How do you think about all those tensions?

Pedro Arnt  33:48  
Yeah. So first of all, shout out to the team over there. I think they're building something interesting. They have some great XD local employees there. So congrats on the acquisition. This this is a great one, I think, and I see it as validation of a lot of the trends on which we're building our company strategy. Right, the first one I think it shows that even in a world of increasingly, I don't love the word seamless because payments are still not seamless, but increasingly seamless ability to move money around; these local legs are still critical. Whether it's because of the regulatory complexity, the fragmentation of those last mile payments, understanding consumer behavior, and so here, what they're doing really in large part is they're buying both integrations, technology access, but also licenses and also local know-how to then begin to stitch together what is an increasingly fast, 24-seven, efficient global, you know, money movement rails, which is exactly what we're building. And I think Brazil is a fantastic place to start. Because Brazil begins to have the characteristics that I'd like most of the emerging world to begin to follow, which is one a clear regulatory framework around digital assets and digital currencies that allow us all to build very comfortably, and that also generates sufficient oversight on those that are operating in digital assets, so that consumers are taken care of and consumer confidence grows. Second, a real-time network, which is extremely cost-efficient, picks right, and so it's a very easy, I think, cognitive jump to see where this is all going. I think this is what we're all trying to build towards. So going back to our friend Ravi, who I miscalled. Ravi initiates a payment through UPI in India, zero cost, instant. Somewhere on chain, he can probably do FX and the middle mile, and then all of a sudden, his money is now landing in Brazil and doing the off ramping and the last mile through picks, both ends regulated, safe, and we moved money at literally no cost in seconds. Right, that is the ultimate promise that we're all striving for. And to get there, you need to have those local pieces, and blockchain will do the middle mile. I really believe that's the future of money. That's what we're building, and it's great to see other companies validating that vision through their M and A activity.

Cuy Sheffield  36:29  
Yeah, and shout out to to Chris and the Elkhart team. But it's it's something the vision you you laid out, Pedro's. I feel like we've been talking about on the show, Simon, for years, and starting with this this idea of RTP networks like Pix and UPI are extremely efficient, you know, low cost and work really really well domestically, but they don't work cross border. And you've had this dream, and and there have been kind of approaches of the BIS and others to say how do you kind of interlink RTP networks, you know, together, and there's some corridors where there's been progress, you know, happening there. But it it feels like the thesis in you know Pedro is much closer to like how far it's progressed. Of stablecoins are the closest thing we have to a path to link together RTP networks, and being able to do that stablecoin sandwich flow where it's RTP domestic stablecoin cross border convert to RTP, I think that that makes a ton of sense. And so we've we've talked about that for a while. We've kind of the amount of decks I've like put on paper, kind of what what that that looks like. You know we've seen it in the wild, but there are these barriers of, like Pedro said, licensing and FX, and I feel like those have been the sticking points of why that hasn't scaled to be the kind of majority of of cross border flows. And so I'm really interested to see how those you know become overcome, and and also just like how regulators you know think about the role of stablecoins there, if you're Brazil, if it can scale picks internationally, should be incredibly positive. But then on the other hand, if stablecoins are coming in and they're not being converted in runover picks, then it's kind of potential dollarization. And so there's this kind of trade-off of you know how do you balance as a regular, the the potential to grow your RTP system versus kind of protecting kind of your monetary sovereignty, which it seems like that's still something that hasn't kind of fully been adjudicated.

Sy Taylor  38:31  
But Brazil has been remarkably effective at protecting its payment sovereignty to some extent. Several times, the mighty Meta has been switched off from Pix because it didn't play by the rules effectively enough through through WhatsApp, and WhatsApp was having too many scams and things of that nature. So, as as a policy instrument, a really effective, really cheap RTP system is probably one of the most best things you can do. And we see Colombia and many other countries now looking to follow that lead, so I expect to see this a lot, lot more in those markets. Brazil's central bank, however, did finalize a rule in August 2026 requiring VASPs to hold crypto and stablecoin transfers above $10,000 for up to 24 hours, and when you're dealing with merchants and cross-border flows like Pedro, I imagine you are. That's a bit of a stick in the mud, right? Like I can see the risk here. I can absolutely see the risk because the you know the former transaction banker in me, you know, I spent too many years at Cybos with the FX team at Barclays, and you know they would complain about you know the non bank financial institutions linking RTP systems, and like they're not running necessarily all of the same checks that the banks are when they're using SWIFT. And you know, it doesn't look like an international payment to most people. It looks like a domestic payment. If you're only seeing the PIX transaction coming into the bank, you don't see that there was a stablecoin. And then there was a UPI transaction on the other side, so I I think that the the regulators have a legitimate concern here, and and I wonder how we can get better at this without it sucking the life out of the opportunity. How how do you think about that, Pedro?

Pedro Arnt  40:17  
Yeah, so I think that this is exactly the reason why, sometimes anathema to many of my colleagues, I've actually been favorable to regulation, especially when you're dealing with regulators. I think the Brazilian Central Bank, by and large, has done a good job in general of understanding the fine line between regulation that stifles innovation, and regulation that's necessary to protect an orderly build out of new technologies of the fintech ecosystem, and I think the reason is important. You you you laid it out right. I think left completely unchecked, me and my colleagues can generate a bit of a wild west, which is short term will boost adoption certainly quicker, but long term probably doesn't scale this out to its full potential because of unintended consequences, and so I think you know having this requirement of having a VASP license, but in the meantime, they've allowed you to grandfather yourself to continue operating until licenses are granted, if you were already operating in digital assets prior to the regulatory note. So, so that kind of industry collaborating with the regulator to do this the right way, I think, is the direction we need to go in. Right? If we have a 24, it's

Sy Taylor  41:47  
very pragmatic, isn't it?

Pedro Arnt  41:48  
Indeed.

Cuy Sheffield  41:49  
I just wanted to emphasize, kind of Simon, what you were saying earlier. It's a fascinating state of like without kind of more rules here. You have the situation that RTP networks are being used for cross-border transactions, but not every party in the chain knows that it's cross-border, and so you see. And I actually noticed this a few years ago that there were some on-chain transactions on Tron that were USDT transactions on Tron that actually, if you looked, had Pix keys in the memo field, and we're like, "What?" Like, so someone was sending money on Trot and USDT along with a Pix key that it was destined to be converted and sent to, and we're like, "Okay, that that's not you know that's not a good way to like transmit a a Pix key." So, I think being able to identify when it's cross-border, last leg, first leg, versus when it's only domestic seems like a very logical, pragmatic thing that any government running an RTP network should want to have.

Sy Taylor  42:52  
It's so easy to do. Send an ISO message. ISO 20022 has all of the data I need to know its cross-border payment, know what the sending currency was, what the receiving currency is, what the payment rail was, what it's for. All of that was agreed in ISO 20022. The standard exists. I don't get why every blockchain doesn't support this out of the box. Of course, Tempo does. I work there. I'm a payments nerd and banker. I had to make it work. But then, of course, we want to shield that, right? Like, if your ISO messages as a bank aren't sitting out in the public internet, like that would be a very bad thing for your clients. So we've got to get privacy right as well. I think we are just in the teething phase of grown-up international payments on stablecoins, and I love Brazil's approach here of grandfathering people into the regulation. It's very Brazilian, very pragmatic, dealing with the realities. I think global regulators can learn a lot by watching Brazil and how it's conducted itself with things like stablecoins. I do want to move us to the last story because we are running out of time. This is about Morgan Stanley saying they are among the first banks tokenizing U.S. stocks and treasuries through the DTCC's new services, which have 20 firms signed up. So shout out to the DTCC. Their tokenization service went live in October of 2026. I know that was a lot of hard work. To shout out Dan and Nadine. Nadine's been on this show before. It means holders can swap between the original and tokenized form and send the tokens to their own wallets. It runs on Canton and the DTCC's private Besu network, with more chains planned in 2027. The SEC cleared it in December 2025 with a no-action letter covering the top Russell 1,000 stocks, J.P. Morgan, Citi, Bank of America, Fidelity, and Citadel are also signed up. Tai, I think we've been talking about tokenized stocks on almost every single episode recently. I know ICE and OKX have had more than 50 objections to their flavor that they're doing. But this is the DTCC. Like, there's no opt out of this thing from the the Russell 1000. But it's Canton and Besu. Like, I guess it's going to be a while till we see this really widely adopted.

Cuy Sheffield  45:12  
Yeah, and I know there's there's a ton of anticipation across the industry for this specific product to go live, and and I think DTCC plays such a critical role. I'm excited to see how it scales. You know how much adoption it gets, and and like an ecosystem being built around it. I think the other interesting thing is you know built on Canton with the the privacy component. It's not as simple as just you know looking at a block explorer to to be able to measure the adoption. But I think this is a a major major launch, and I hope that you know this goes not just as like a a pilot that's very limited, but they they find a way to scale this product across the the ecosystem, and I think that it'll create opportunities for a lot of companies to be able to engage alongside it.

Sy Taylor  45:57  
Pedro, I'm interested in your view on tokenized stocks for your merchants as well, and how they're thinking about their treasuries is this something that you've considered? I'm guessing earn and yield are probably further up the priority list for you. But how far have you got down that road?

Pedro Arnt  46:13  
But I think they're related in a way, right? I think until we get to that holy grail we're striving towards, which is the instantaneous moving of money around. The reality is that cross-border companies like ourselves, a lot of the way that we secure speed is by having liquidity available across all the corridors we need to serve. That gets incredibly inefficient from a yield perspective, because lots of times you're either having to pay hedges because you're needing to hold things in local currency. The classical you have to pre-fund on a Friday because unbelievably so in 2026, many many exchange and forex markets don't work over the weekend, let alone late night, and so there is so much leakage of value that when we begin to move towards a world of tokenized yield-bearing instruments, you begin to solve right because if I can somehow quickly go into a tokenized T bill and start earning yield even before the expatriation occurs physically back to the U.S., or a lot of our business sometimes require the posting of collateral, which becomes non-yield bearing and slow and difficult. So I think these are all great news in terms of the way we manage our treasury, and and therefore also the way our merchants can now manage their treasury, because it starts giving you tokenized assets that are earning yield as they're moving around the globe, and with a much faster conversion in and out of the yield-bearing asset. And then a small note on the other thing, and I I don't really know if this is a regulatory requirement, but as a Nasdaq listed company, we have had to over the last four weeks start working with our legal team to basically determine whether we will allow a tokenized version of our stock to be available or not. And I'm assuming this is happening to all public companies where there's literally a a a decision that needs to be made to either opt out or opt into the tokenization of your equity, potentially through DTC. So this is one to stay close to because I think adoption may actually end up being a lot faster than than one thinks it may be on the equity side of things.

Sy Taylor  48:40  
Yeah, I understood the opt-outs to only be related to the Nasdaq OKEX, but I could be wrong on that. So listeners, viewers respond to us. I'm sure there's a legal eagle listing that we'll we'll reach out and we'll correct it on the next show. But I fear that if every company can opt out, it sort of breaks it a little bit. We want 24/7 global. We want users to be able to get more involved in AGMs and be voting rather than it all happening by proxy. And so I think that growing of the TAM is interesting. I could imagine there are a lot of downsides people haven't figured out yet. But you know, if you're involved with the DTCC, then you'd hope they've they've thought about it, so tons of stories we didn't have time to cover this week. SBI invested $100 million in Palmer Luckey's Araba, of course the new bank that is fully FDIC insured but fully accepts stablecoins. Schroders is bringing its emerging market bond fund to Solana. Very interesting. T Zero is going to go public through a $350 million SPAC deal. Of course, one of the pioneers in on-chain real-world assets, and the New York Stock Exchange adds Broadridge, Computer Share, Equinity, and Superstate to as tokenized securities transfer agents. Transfer agents are sexy once again, and if you don't know what that is, I I would recommend you get with your favorite chat or agent and and go deep on it because it's going to be very important. All right, thank you very much, everybody, for watching, listening, Pedro. If people want to learn more about you, where do they go to find out more?

Pedro Arnt  50:18  
Ask your chat agent or who you follow, or if you want to learn more about the company, dlocal.com.

Sy Taylor  50:25  
Kai, how about you?

Cuy Sheffield  50:26  
On X at Kai Sheffield and Visa.com/crypto.

Sy Taylor  50:29  
You'll find me at sy Taylor on all of the socials at Brainfood.xyz, screaming into the void, and at Tempo.xyz, where we just launched credit with some amazing earned products for receivables financing. If you're in that world, then we got some stuff for you, and you'll find a lot more of this show if you go ahead and hit the subscribe button, leave us a review, leave a comment, hit all of the buttons, and tell all your friends too. And we'll catch you next time.