Every Correspondent Bank Will Support Stablecoins

Sy Taylor  0:10  

Welcome to Tokenized, the show focused on stablecoins and the institutional adoption of tokenized real-world assets. My name's Simon Taylor. I'm your host, author at FinTech Brain Food and head of Mark Dev over at Tempo, and joining me once again is Kai Sheffield, head of crypto visa. How are you doing? How's life? Life is good. It's good to have you in the bay. Yeah, you got to be out here more often. It's it's a great time every time Simon's in the bay. Well, I promise it won't be the last time. Making a debut is Ferdy Debitz, who's the co-founder and CEO at Augustus. How are you doing, Ferdy?

Ferdinand Dabitz  0:41  

I'm great. Thanks for having me, guys.

Sy Taylor  0:43  

Thanks for being on the show, man. Super excited by what you're building at Augustus, and also joining us today, making a welcome return to the show, is Anna Valeska, who is Chief Business Officer at Danari. How are you doing?

Anna Wroblewska  0:54  

I'm great. Thank you so much for having me, Simon. It's great to be here.

Sy Taylor  0:57  

Before we get into all the good content today, I've just got to remind viewers and listeners, that opinions of our contributors today are their own and might not reflect those of the companies they represent. Please don't take anything we say as tax, legal, or financial advice, and always do your own research. And of course, I'm happy to remind you that this episode is sponsored by Modern Treasury, who we had a great dinner with a couple of nights ago. This episode is sponsored by Modern Treasury. Stablecoins are here, and so are checks and ACH. They're not going away. RTP and Fed now and new types of payments rails are emerging all the time. The challenge now is integrating all of these without slowing down. Modern Treasury offers one single API for fiat and stablecoins, helping teams launch payments products in days, enter new markets, and serve more customers. Trusted by companies like Procore and Navan and Morse, and backed by over $600 billion in payments history, learn how to adapt to changing payments rails with scale and confidence at moderntreasury.com. All right, story number one this week could only be one story. Stripes leaked investor letter confirmed all kinds of details about the company as well as its acquisition of OpenRooter, which Axios reports is for over $8 billion. For those of you that don't know, OpenRooter is one single API that lets clients access over 400 different AI models and potentially route tasks to a cheaper AI model. If the Frontier Labs are getting a bit expensive, Stripe also mentioned that their first half revenue rose 41% year over year. Free cash flow rose 43% and of course their last year payment volume was $1.9 trillion. Absolutely massive, and this is following Stripe being valued at more than $159 billion in February, and they're alleged to also be putting an offer together for PayPal alongside private equity firms. Absolutely massive. The Stripe boys say the singularity has begun, and they are benefiting from that tailwind. Ferdy, what do you think about when you when you see this scale of news coming from a company the size of Stripe.

Ferdinand Dabitz  3:23  

Yeah, it's interesting. I mean, when I first heard about the rumors, I actually thought it was a bit far off for them to do the acquisition because it's a non-trivial acquisition. It's like five percentage points of dilution for them. But I do think it's impressive with how much conviction they're kind of like leaning into this AI thing, right? I think you really have got to hand it to Collison Brothers. I think it's one of these things where you just notice it's a founder-led business through the kind of like conviction and size of the bets that they can take, which outside in seem far off from the core business. But I think they've they've understood the singularity has begun and they're and they're executing accordingly. Right?

Sy Taylor  4:00  

Yeah, I saw WildStat floating by Kai on on X, which was Stripe today through its metronome business that they also acquired for about a billion dollars. Is doing most of the billing for tokens, and that billing gives them about a two and a half percent take rate on you know sort of AI tokens that have been sold. But if you think about what OpenRouter does, is it routes you to a different model that might be lower cost, but it's taking a 5% markup over the inference. So if you put the inference together with the 2.5% 5% plus two and a half, they've now got a seven and a half percent take rate on the AI economy, and I thought that was that was a fascinating idea. But Kai, what what are your thoughts on this story?

Cuy Sheffield  4:48  

So many thoughts. I I think to to your point, like intelligence is becoming a new merchant category where people are. Purchasing intelligence at scale-it's one of the fastest-growing merchant categories in the world, and and Open Router is I think about almost like the Amazon of intelligence. They're the marketplace that you can then buy any of these models. So congratulations to Alex, the team. I think they've built an incredible product. I've been a user of Open Router for a while. I find it to just be a really good developer experience. I think this is one of the biggest stories of the year that sits at this intersection of fintech, AI, a little bit of crypto, and I talk about some of the crypto aspects and stablecoin aspects in a moment. And I think it could have a similar effect to the same way that the bridge acquisition seemingly came out of nowhere. Like I think for a lot of people, there was skepticism around stablecoins, and it was yeah, like they're interesting. And then when Stripe kind of made this high conviction founder led bet to say oh we're we're going to acquire bridge, it really jump started the category of stablecoin orchestration. Led a bunch of other companies to say, wait a minute, like you know, should we be doing this? Yeah, how does this work? A bunch of new companies were founded, and now it's almost like it's the same thing for model orchestration, where people are starting to realize maybe we don't all just want to use one or two models. Maybe we're going to be in a world with many different models, and we're going to need infrastructure to be able to to route between those models. and And I think there's going to be this whole ecosystem and economy of companies built around how can you purchase intelligence in an efficient way across many models, across many payment methods with the right billing, the right. And so we're just now getting started, but I think we'll talk more and more about this on the show, and it'll be a major theme going into to 2027.

Sy Taylor  6:43  

I'm convinced it's the theme of the next decade of financial services is like how do we finance intelligence? And I don't know if you saw 30 that Ramp announced Reuter.com. This is their competitor. Yeah, I wanted to say say that yeah, you you tell everybody what a cheeky

Ferdinand Dabitz  7:03  

no no what a cheeky move right you got like Eric coming out hey we've just bought rotor.com it's the cooler domain and we by the way we also have this business I thought it was good stuff as well

Sy Taylor  7:15  

if you can think about two companies that are perfectly positioned to finance the intelligence economy to bill for it, and Ramp is all about will help you save money. They're really good at like how are we going to squeeze cost out of your business versus Stripe, that's kind of more on the will help you put together your entire stack. Two of the most innovative and fastest growing companies in financial services at scale have both independently come to the same conclusion that financing AI is the crossover of the next decade, if not century, and it all those AI tokens all need a way to get financed. Anna would love your perspectives on the Stripe Open Route story, if you have any.

Anna Wroblewska  8:00  

I think it's. I mean, it's the the first step in in probably a very interesting next few years. I come from traditional finance. We think about this from the perspective of financial markets, and so you know the thing that it makes me think about is how is this going to affect the development of agentic finance, and if you have access to many different options. My question is always like, how much do they start to diverge from each other, and in what ways, and how can you capitalize on that, or what risks come out of that? So, thinking kind of a few years, or maybe 12 months, or maybe six months, depending on how fast things go down the line. I think it's a kind of a fascinating development and a story that I think we've all been following quite keenly for some time now.

Cuy Sheffield  8:46  

Can we talk about two crypto intersections of this story that I haven't seen? Why not?

Sy Taylor  8:51  

It has something to do with the show. Why not? This

Cuy Sheffield  8:54  

show is called Tokenize. There are many different types of tokens that that are now floating around in in the world, but I think the first one is I saw the other day publicly. I think the shout out to the Merit Systems guys posted. Open Router has been testing in endpoints on MPP using MPP Tempo, the machine payments protocol to enable stablecoin payments, pay as you go to be able to buy inference on Open Router, and I think inferences is one of the most interesting categories as we see x4 102 at MPP, where if agents have wallets, for them to be able to purchase inference from any model, pay as they go instead of having to pay up front and then draw down against it. And so I could see Open Router potentially becoming one of the largest or fastest growing merchant endpoints, which I think we need more high quality merchant endpoints in the MPP and x4 102 ecosystem. It's also for all the stablecoin nerds that, as we've talked about for years, marketplace payouts are a great use case. And so, if you think about what does Open Router do, well, you pay Open Router; they're the merchant of record. And then they go pay dozens of infrastructure providers that are actually serving that inference, and so they have a more complex operational task if you're paying them in fiat, and then they're trying to collect and aggregate, and then say, okay, how much fiat do they owe to these different providers, and then pay out those providers. Those providers have GPU costs, they've got energy costs, bills to pay. I'm really excited for a world where you could imagine an agent buying inference on demand through MPP. The moment that that inference gets paid to Open Router, they could use a smart contract to automatically route it to the infrastructure provider, and so the infrastructure provider can get paid from this marketplace in near real time instead of having to get paid a few days, you know, after funds settled of a payment that Open Router accepted, and so we've been talking about marketplace payouts, and like here we have like the ultimate marketplace for intelligence potentially being one of the early adopters of cross-border stablecoin marketplace payouts, which I think will be a really big deal.

Sy Taylor  11:00  

Did you see that Brex put out a study of the fastest growing spend category for startups and growth companies? And Together AI was actually the fastest growing. And Together AI is a service that lets you rent inference. And the median time for a startup to go from signing its first contract with a Frontier Lab for tokens for intelligence to renting its own inference has dropped from 24 months about a year ago to five months today, and so we're really seeing people kind of run down the stack of Frontier model. Oops, this is too expensive. I need to route between different AI models. Oops, this is still expensive. I'd like to rent my own inference. And OpenRotor plus MPP is perfectly positioned. Then for the neo clouds underneath that to all get paid a lot sooner. So how we bill and pay for all of that stack is kind of one revolution. But the other revolution that you probably didn't escape here was your BlackRock, KKL, Blackstone, Nvidia, really trying to figure out how the heck you finance this AI boom and compute build out, and they seem to the amount of private credit and debt issuance at the moment seems to be driving up treasuries themselves. You know, if you can get a corporate bond at 7.5% for data center infrastructure and Treasuries at 5.3. That the whole capital market side of this is changing as well.

Anna Wroblewska  12:27  

It's a fascinating area. I'm very curious how how the financing piece plays out over the next year. It's one of those things I wish I had spent was thinking about this few years ago. Wish I'd spent more time on it like five six years ago,

Sy Taylor  12:41  

you can't be ahead on everything. You can be ahead on tokenized stocks, but but but not absolutely everything. The one last thing from the investor letter I saw was that compared to 2023, even post this acquisition, they've actually managed to buy in more stock and are less diluted than they were three years ago, which is exceptional cap table management by those guys. I'm going to move us to the next story. I don't know if you guys saw that Rain put out a very simple article on the anatomy of a stablecoin card swipe, and it drew quite a lot of pushback on X, and there's a lot of discourse around it. So the core claim was essentially the pre-funding and settlement over ACH or using the correspondent banking network runs on banking hours. So if I'm a card issuer, potentially I will be obligated to set aside three or four days worth of outflows of capital just to cover a weekend. So, if I'm a card program like Cast or Dollar or any of those sorts of things, and I settled, say, a million dollars a day to cover a bank holiday weekend, I need to set aside $4 million, and that $4 million, or at least the $3 million, is not being used for advertising or business. But there were some who said this is inaccurate or almost misleading, citing that capped interchange markets like the EU work fine, and big issuers tend to scale from the Federal Reserve earning 3.6% and netting improves capital efficiency. So why is everybody so worried about stablecoin settlement? So Kai, why is everybody so worried about stablecoin settlement? Is are not all issuers absolutely fine?

Cuy Sheffield  14:26  

I love to see more public discussion and debate and understanding of the back end of card settlement and just getting deep into the the weeds. I think the there were a bunch of different concepts and points throughout this, but I think that the biggest takeaway is that if you are a large bank in the U.S. settlement isn't really a big problem for you. It works well today. They don't really have a huge incentive to change how they settle their card programs. They're investment grade, very low risk. They like holding on to money as as long as they possibly can. They don't have to put up a bunch of collateral. It's it's it's not a problem. I think that the opportunity for stablecoin settlement is lowering the barrier to entry to launch and scale card programs, and it's smaller bin sponsors, fintechs, enablers-it's just a-it's a new class of issuers who are higher risk, who don't have some of the same benefits that large banks have today. And so, I think what we've seen is that's where the demand comes from, and being able to have a fast-moving stablecoin-native neo bank or fintech settle with us more frequently, which reduces the need for them to put up the same collateral that they would have before, is a really good thing for the ecosystem. So I think this is one of these areas where, on the different points, multiple people can be right. It just it depends which which part of the market that you're looking at, and I think we see a huge opportunity for stablecoin settlement for kind of mid to long tail, which is really important to drive more competition and in cards getting to market. And I think that over time there'll be banks, and particularly banks outside the United States, that that leverage it. But it's it's not solving a problem for Jason Bank of America, and that's okay.

Sy Taylor  16:20  

That's yeah, that's okay. Not all issuers are the same size, but Ferdi, there are still a lot of challenges with cross border for different companies of different sizes and money movers. Who would you say has the the cross border money movement settlement challenge today, and and who are you hearing from in your business?

Ferdinand Dabitz  16:38  

So first of all, I think the trap liquidity issue is real, and I don't think that's fake news, right? I've seen it with cards. I've seen program managers of cards as well. I've been sponsors have to like deposit these reserves due to like weekend settlement delays. So I think like even up to like a certain scale, I do think that's real true, and I think can be addressed with stablecoins. I think then Simon, to your question, the further away from America you go, the harder it gets to move money fast, right? And I think if you look at like adoption cycles of stablecoins, it has been like it has been emerging market story first and foremost. And I think there's just deep truth to the stable accountability to both improve the customer experience, right? Like access dollars, and then access dollars that can be moved very fast across borders, as well as improve the economics of the underlying fintechs, right? So, for example, even if you leverage traditional correspondent banking, which Gusta's is doing, right? Like Augustus, in many ways, is a modern correspondent bank, right? But still, we're a bank, and we're not like like we're not in l1 or rethinking kind of global money movement from first principles. It's a modern correspondent bank, but one of the most expensive things a corresponding bank is, and has always been, trapped liquidity, right, in these nostro vostro accounts, because you have to hold these balances in different geographies to facilitate the corresponding flows, and once again, I think that's a very real, non-fake news way that efficiency can be improved by programmatically rebalancing that in real time through stablecoins. So I do think that the emerging markets will continue to dominate for some time in the stablecoin world, but I do think they're like very real efficiency gains.

Sy Taylor  18:25  

Anna, I know you've done a lot with cross-border users. Your thoughts on on sort of some of the economics involved for different geographies?

Anna Wroblewska  18:32  

Yeah, I mean, look at the heart, and I think you know both you guys alluded to this. At the heart of it, when money is in flight, it's not being productive, right? You're not earning yield on it, it's not being used for anything. So I, you know, there is this international story that I, I think is very significant, and especially, I mean, even within companies, moving money can be hugely annoying. I don't come from the payment space, but we certainly hear about it in terms of the usefulness of stablecoins for other things like investing. There we see a lot of interest in adoption, and I mean any any type of payment is only useful in so far as it it gets you the thing that you ultimately want, whether that's earning some yield on your cash balances or getting access to something. So, I mean, where we've seen a lot of adoption, and and just for context, NARI distributes primarily through regulated channels into markets in Asia, Latin America, but we're-I mean-we have D shares in in 85 countries, including the U.S. now, and there is very much this international growth story of having access to dollar-denominated stablecoins. I mean, that's a whole separate story that we could kind of go down the rabbit hole on. But in all of these regions, there is a major utility to having both the dollar-denominated piece of it, but also the speed piece of it, right? You kind of want what you want right now. The analogy that I often use here is that like nobody demanded overnight shipping until we all had Amazon Prime, and then suddenly we became accustomed to it, and then that's kind of like your default, right? That becomes your baseline of what is acceptable in terms of waiting. Waiting for something, and and I do think I suspect we will see more and more of that. Even in from a consumer's perspective, even in markets where this type of thing isn't a huge problem right now,

Cuy Sheffield  20:11  

I think it's a great analogy, and it fits what we've been saying of like just expectations are changing, and now that you have a form of money that moves 24/7, I think that that could go across many different types of use cases. Ferdy, I want to hear more about your view on correspondent banking and the state of it. How you're using stablecoins within it? Because you say you're not trying to completely disintermediate and have a different system. It sounds like you're you're trying to use stablecoins to optimize how efficiently you could manage correspondent accounts. Can you say more about your approach there?

Ferdinand Dabitz  20:44  

Yeah, I think correspondent banking, or also dollar clearing in general, is this fascinating business, right? It's such a weird one. I think where if you look at something like a Citi TTS, Citi Services business, with Citi probably being one of the most iconic dollar clearers out there, it's incredible, right? Like it's on one hand side, obviously built on decades-old technology, it's part of this like massive institution that just like intuitively cannot move fast, and then the same time it's printing cash, right? The CDTT has on track to do 12 billion net income this year, and so you really have to like think really harder, like how can that be? Where every other part of the bank stack that was remotely relevant got challenged over the last 20 years, right? We've had like the the retail challenge with Revoluter, brokerage with Robinhood, commercial with Mercury, but corresponding banking, you know, Dollar Clear never got their challenger, and I think like part of the answer is this whole thing around de novo banks that we're seeing, right? Where it was just impossible to get these real bank charters for a long time, and now we have the small peer group of de novo, fully chartered national banks that can like go bare metal on the dollar clearing side through their own master account, and I think that that's like a really important factor. And then the other aspect of that is, in my opinion, that we have these new technologies at hand that seem to enable a challenger to like really make a dent on the customer experience efficiency of these businesses. And do think stablecoin stablecoins play a part in that, right? Both in terms of like as just another payment rail that is advantageous for certain routes and certain corridors, as like the market has shown, but as as well as like just like make the bank's back office more efficient in terms of rebalancing global liquidity pools. And so I think the ability to just like unlock that trap capital within a global balance sheet of a correspondent bank. I think improve can improve quite valuable in making the correspondent bank model much more efficient. And so I think like this is where stablecoins can then really shine in the context of these regulated banks and and wholesale dollar sharing.

Sy Taylor  22:37  

It's so fascinating to me that the nuts and bolts of global cash management and correspondent banking are now like the hottest thing in fintech since you know what you're building, Ferdy. And 10 years ago, I was working in global cash management at a bank, and this was not something you would discuss in fintech circles. Neo banks were fun apps that the banks sort of looked down on because they knew where the real money was made, and now the bit that makes the real money, those the franchises, the cross border bit, and that wins by being at scale. It fundamentally wins by having massive, massive scale. But there are a segment of customers who don't win from that setup, and I think being able to serve them is really, really important. So I think this is one of those two things can be true, like the X discourse is talking about large banks who have great scale who don't have an economics problem in their scale, but the Rain article was talking about customers for whom they get left behind by that model, and those customers are looking for new solutions who they do have trapped liquidity, they do want instant 24/7 cross border. They want higher yielding opportunities, and the large banks just didn't see them as profitable or a priority before, and so new people can come and attack that. Thank you for for kind of unpacking that, Ferdie. We're just going to take a quick pause here while we hear from our sponsors, and we'll be right back. 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 sponsored by Privy, a Stripe company. Stablecoins can move money anywhere, but only with powerful wallets at the core. Trusted by more than 100 million accounts across 180 countries, Privy powers secure, customizable wallets that enable you to go global from day one. From. FinTechs to consumer apps-it's the infrastructure making the future of money programmable. Start building with Privy. Learn more at Privy.io. All right, next story is the Robinhood CEO Vlad Tenev, who is urging the U.S. to clear a path for tokenized stocks as overseas markets are starting to advance, he called this the early stage of the global tokenization supercycle, which is interesting. Robinhood already gives users in more than 120 countries exposure to 190 tokenized U.S. stocks with dividends, and of course, these tokens are backed one to one with underlying shares, but holders don't directly own them. His settlement case leans on GameStop in 21, when clearinghouse collateral demands forced Robinhood to restrict buying. FinTech nerds like me remember that one well. That was a big, big issue. But he expects tokenized equities to carry traditional shareholder rights if regulation allows, and with private companies and real estate to follow, tokenized stock market share of all real-world assets on chain has now grown to 15% since the launch of the Robinhood chain, with a total market cap of around 2.8 billion. Anna, this is Denari's business, so obviously I'm coming to you first on this. Your thoughts on this story?

Anna Wroblewska  26:24  

Yeah, so the U.S. already has a path for tokenized stocks to exist in the U.S. Denari was the first to enact that. We've been live in the U.S. We actually announced this maybe two and a half weeks ago. I think the important thing here is that there is a a critical difference that has to be drawn between the different models of tokenization. And Simon, you alluded to this, right? When the in the Robinhood model, there is an SPV that holds the securities that back these tokens, and the token holder doesn't have any rights onto that security. Denari pioneered what the SEC refers to as the custodial model, where the token holder has ownership claim on the security that backs that token, and then all the kind of important stuff that goes along with that corporate actions, dividends, which others pay through to their synthetic token holders, and so on. So, I mean, we see this news, and we're kind of like, oh, that's interesting. You know we're already doing this, and there there is a path for it. I can only assume that what Vlad is referring to is a clear path for synthetic tokens in the U.S. But important thing is that that's a different financial instrument, right? You're you're not buying the security in that case. You're buying a different instrument that represents the price of that security, and then certain benefits that go along with it. So different financial instrument, different risks and benefits that go along with that. We we always love when anyone talks about tokenization, especially of securities. That's as you point out, it's our bread and butter. That's what we do. So we we love all the attention that people draw to that subject. But I would say the the markets moved far ahead of what I think a lot of people perceive, especially in the on-chain world, where there is a focus on these synthetic instruments that are useful for different types of purposes.

Cuy Sheffield  28:08  

Yeah, I I think first the the reaction I have is Robinhood, in particularly Vlad, they're just incredible communicators. Like if you look at the content that they put out, yeah, the marketing content, just you know, Vlad's like position. It's it's so good, and I think a lot of companies can just learn from like how they communicate a vision, the events that they do. It's just they they execute you know very very well. And to Anna's point, it's like their ability to accelerate attention and interest in expanding a market of tokenized stocks, I think they they can do in a way that that nobody else can. There are a ton of questions around the details of how these products are structured, how they should be structured, and and I'm I'm optimistic. I'm I'm not the securities expert that that's that's going to be sorted out over time, but it feels like you're starting to see the beginnings of a retail-facing tokenized RWA market, and for the past few years, and even like a year ago, most of the discussion around tokenized RWAs was very much wholesale tokenized treasuries, tokenized money market funds. Not really like retail oriented, and it feels like every every week, every month going forward, there are more products that are focused on how do we enable the potential benefits of tokenization to go to products that consumers, retail investors interact with, and they understand like stocks. I think it's interesting to see like what the end value propositions end up being. I know we've debated on the show of like, is it 24/7? How much does that matter? Is it collateral mobility? Now you've got Robinhood chain. Can you be able to lock up a tokenized stock and be able to borrow against it? And how is that going to work? But I think it's just it's very hard for anyone in the asset man. Management business that cares about the future, next generation, millennial kind of Gen Z customers to not watch Robin and say, okay, they're they're moving the space in a certain direction. What is your plan of if tokenized stocks you know become a thing? If people could access them there, and you know they're accessing traditional equities through your brokerage. Like, how are you going to adapt to those technologies? And I think it's going to lead to a lot of innovation in the space.

Anna Wroblewska  30:29  

Totally, like the the attention is always great. I think the the thoughtfulness about what comes next is important. You know, we put in the we put in the rails, and then you you start to bring in the more interesting stuff, right? So, 24/7. I think that's the thing that people care about. It enables certain other functionalities like lending markets, which I think we're all looking at. You can start to build utility on top of these things in a way that you can't with traditional rails. I think that's just a factual statement. The asset management industry gets super interesting. We enabled 24/7 already. I think you know that's obviously in DeFi markets on synthetics you have 24/7 markets. That's super interesting. We did an index with S and P last year. That's a multi asset index. This is something that's very difficult to deploy as an ETF, for example. So in this case, this is a mix of equities and crypto majors, and an end user buys a single token, and then with that token they're direct indexing into the constituents of that index. Right, this is not something that is easy to do in a traditional setting, but once you kind of start to put all these securities on a blockchain, then you get into these interesting asset management products that you can start to deploy, and I think we'll see a lot more than that. My my long term expectation is that this it benefits retail, but not in the way that like most customers are going to know. Oh yes, I am buying a tokenized stock, unless they're explicitly seeking out a synthetic token. I think we're we're gonna really see something interesting is when, and we see this with our customers, our you know our neobank end users, they don't they don't think about this in terms of tokenized versus non tokenized. They think I get access to something at the same trade execution and the same benefits as I would if I was sitting in the U.S. Right. What I expect is that we will have a huge class of consumers that are getting to make their savings and their investments more productive, without ever having to understand the nuts and bolts of how that works. Just like most people right now, don't have a clear understanding of how securities clearing and settlement works right. Like we don't really like the most most people don't really want to know. Maybe present company excluded. Present company excluded. People to know how the sausage is made, right? They want to know that it's that it's safe, that they get what they think they're getting, that they have you know certain expectations of the regulatory framework or you know compliance, or is it insured, and all this type of stuff. But you know we want to we want to help them make their portfolios more productive. I think that's the ultimate long term play here.

Sy Taylor  33:10  

There's a couple of points that stand out to me here, which is one: the large financial institutions rarely move until a market gets big, which is a giant opportunity for disruptors. But it's often folks like Robinhood that make the market big in in the first place. So getting into stablecoins, getting into whatever the early product was, maybe it was no fee stock trading. You see the incumbent start to copy paste the innovation five to 10 years later when the market's already big. By which point, Robinhood has captured a meaningful portion, kind of of that market share. The other side of it is, I've spoken to three neobanks this week who all said we're looking at stablecoins and tokenization as a different way of going cross-border. So, if I'm a domestic U.S. business primarily, and that is my focus, suddenly I have an international expansion possibility that just wasn't there before. And if you look at the nature of where Robinhood is positioning its tokenization platform, a lot of it is about that international expansion. So, with their 27 million customers, the vast majority of those are domestic to the U.S. but they are now growing in market share in the U.K. and pushing throughout Europe and throughout the world, and so that default global possibility for U.S. capital markets and for U.S. businesses, I think, is is such an interesting trend. So we'll we'll keep paying attention to this one for sure. The last story I'm going to cover this week is the SEC proposing new crypto offering rules. So this regulation for crypto assets, will we call it Reg CA, is a tailored offering regime with a 60-day comment period in front of us. So we'll see what it looks like after comment. The idea here is that startups can raise 5 million exempt from Securities Act registration for four years. And larger razors get up to $75 million for one year. And the key part is this: Safe Harbor lets a digital asset stop being a security once the issuer has ceased on managerial assets. Unpacked, I could do an ICO. I could launch a decentralized network. Then, when the network is running fully decentralized, and I've completely stepped away. The token stops being a security, and so this is an interim step for like token launches, as we don't yet have the Clarity Act approved. This also came just a day before there was a big sort of White House press session with CFTC Chair Michael Selig talking about looking to bring hyperliquid to the US, and we'll see kind of kind of a lot more happening there. Anna, your thoughts on this and and on securities offerings for small cap here? It seems a little bit like reggae to me. If if you're familiar with that one,

Anna Wroblewska  35:58  

yeah, yeah, I I think that's an appropriate analogy to draw. It's it's interesting. I I see the logic for it. I see you know it's nice that such a thing exists. What I'm very curious to see is what the uptake is for something like this. You know, I've had conversations in the past of people ask me like, well, why why aren't people just doing a token IPO or like right, like an ICO instead of doing an equity, a traditional markets equity IPO. And I'm not a public company, but you go where the liquidity is, right? Like the way these markets work, right? You, it's like you know we're we're going to the biggest pool of water that we can find, right? So I'm very curious how what the uptake is and what that looks like going forward. Our industry moves very quickly, as we I think all have experienced over the last several years. I could I guess I could comment more on the policy side, but my curiosity is what impact does it actually have on companies in the industry, and how does that affect company structures? How does it affect liquidity for the the tokens or you know the de facto equity of of newer companies, and whether it makes meaningful changes in innovation or not. That's kind of my interest area in in this particular piece of news.

Ferdinand Dabitz  37:12  

I think the the team at Figure had tried this, and at least Mike Cagney has talked about this again and again, right? But I I do think liquidity has always been the issue, and even in the earlier as well as the later stages, I think they've been playing around with it on figure stock now. Now that they're public,

Cuy Sheffield  37:29  

is it the idea? Correct me if I'm mistaken. This that you could launch a token that wouldn't be a security, or it's you. It would start as a security, and that would not it would migrate to not being a security over time. And so it feels like the the biggest need is to have it be able to be in the crypto ecosystem, be traded on Uniswap, like in the earlier days, and that's where like most people have gone down the route of these governance tokens, which I think we've seen for years in crypto because people didn't want to have something that was a security, they'd have to try and construct a token that didn't actually add that much value of what you could do and let you do

Sy Taylor  38:11  

anything.

Cuy Sheffield  38:12  

So it'd be great if there was some way to have a token that benefited from the liquidity in the crypto ecosystem that also had some way to legally issue it with some rights and guarantees to a holder, but it's a super hard problem to solve. So I'm really interested of how the combination of clarity, what happens there with rulemaking, will play out, and if it's possible to to find that that balance.

Sy Taylor  38:36  

Foddy, I also think about the push for for 24/7 here with tokens. You probably I don't know if you were following yesterday the the press with the CFTC and the Trump administration and kind of some of the crypto CEOs. What are your thoughts on kind of the broader moves for this push towards tokenization enabling 24/7? And how do you think about that as somebody with sort of Fed master access, but also a global perspective.

Ferdinand Dabitz  39:06  

Of course, I agree with all of this. I think the only an obvious point I can make is that sometimes I do think we understate the capabilities of the existing rails a bit, right? So, for example, like like now we've been building this bank and looking at some of the rails, like even something like like Fedwire, right? Like Fedwire clears 22 hours a day. It's like pretty pretty good. Like usually when you have these like crazy bank cutoff times at 3p.m. and afterwards you have to wait the next day that pain people like usually that that's not the rail itself, not infrastructure itself, but kind of like the correspondent banking stack that's that's wrapped around it, and so sometimes I I do feel that we have to like be a bit more intellectually honest. Like, what is actually like a technology limitation, infrastructure limitation that can be solved by a blockchain, right, or any like frontier technology effort, and what is actually like like a social organizational limitation. That we've been building around, because like I think without that analysis, like we'll be running towards the wrong solutions. And all of that being said, like for example, February doesn't clear on the weekends, and so there's still things to be done here for sure, even on an infra and technology point of view. But I think that's sometimes like a bit of intrusive thought I have, like that where the analysis at times like lacks a bit, I think.

Sy Taylor  40:22  

No, it's fair. I've seen a number of smaller and mid-sized financial institutions looking at how they can deploy either a private blockchain or a privacy zone on Tempo or something like that. We've had numerous conversations of like, this is a subledger to your GL. It just happens to operate 24/7, and it could handle your tokenized deposits. It could handle your stablecoins. It makes you sort of operate 24/7. You then need a 24/7 operating model. You then need to manage compliance and risk 24/7. So again, even when you move inside the organization and you solve the technology bottleneck, there's a whole other of non-technology bottlenecks that that start to emerge, and so building an organization that's capable of that is is also another thing.

Ferdinand Dabitz  41:08  

But I think my contractive thought here is that I do think that intelligence makes a difference here, right? And I do think that AI can enable organizations to be more 24/7, even from an organizational point of view, right? Like let's say once the technology and the infra is fixed, I do think AI gives us a much better shot at then like pulling back also the organizational layer where things can run around the clock without humans have to having to run around all the time as well, right? And so I think there are new avenues to this on both these dimensions, but I do think it cannot only be the the infrastructure layer which is like solved by the stablecoin. So interested in that.

Cuy Sheffield  41:43  

It's it's initially part of like what are ways that banks can use AI safely and securely, but to enable them to operate on a more 24/7 manner. But then there's also the question of if you believe we'll be in a world where there will be intelligent agents that are making decisions around how money moves in future. It's hard to imagine that that's going to work on infrastructure that isn't 24/7. And so, if you're building for agents and you want to have a bank stack that is future proof for the next five to 10 years, it feels like that's just like another pull to say, like it's got to be more flexible. It's got to work more often than than what the current stack does right now. And nobody knows exactly when and how that that's going to play out. But it's I think that's another forcing function for this era of 24/7 money.

Sy Taylor  42:37  

You kind of need to become more multi rail, don't you? You like you need to support a little bit of everything. I guess that's what you're doing, Freddy.

Ferdinand Dabitz  42:44  

Yeah, I do think like that. 10 years from now, every major correspondent bank or clearing bank will support stablecoin rails, right? Maybe even five years from now. And I also think it's not the case today. So someone like Augustus can lead the market by being both a bank and stablecoin native. But I think like in five to 10 years, these things will absolutely converge, right? And will just be another rail. I do think also like that kind of is like I think there's like a heretic thought somewhere they would like separate instant Europe is like 24/7, right? Like what what does that do to our heads? And like like I tend to like at this point believe it's more the operational side that limits like round the clock up round the clock availability than it actually is like the payment infrastructure.

Sy Taylor  43:23  

Usually the case. Stablecoins are a useful stalking horse for a lot of this stuff, but but but it's interesting. And Anna, any final thoughts on on this story or our stories today?

Anna Wroblewska  43:33  

Yeah, no. Just to your point, we deal with a lot of institutions as well. You know, everyone. I kind of as you might imagine, everybody's interested in tokenization and stablecoins. People are trying to figure out what to do with it. I think the thing that we see is that it's much easier to adopt when it is something that works either alongside or on top of, kind of layered onto your existing infrastructure. I think there's this maybe sometimes it's just like, of course, it's like hype and whatever. You know, this idea that you just have to like throw everything out and put it on a blockchain. You don't have to throw out all of your infrastructure in order to capitalize on technological advancements. You know, you can layer it on top. That's that's how we've built our business. Is you know you can be a broker dealer or a neobank or you know any kind of fintech, and you can just layer this on top of your you know existing operations, and it'll work alongside that, and it'll work nicely with that. In our experience, if you kind of put those two things together, there is a lot more willingness to adopt and to view it as complementary expansion of your business, as opposed to a a frightening thing that you have to throw out all your existing infrastructure for.

Sy Taylor  44:41  

I'm going to call this last segment "Intellectual Honesty Corner, and I really dig it. I think that's what we try and do at Tokenized: is we try and get to the the most reasoned truth we possibly can. There's a bunch of stories we didn't have time to cover this week, so Rain launched their Agentic Payments Alliance. So be interested to see what. With that one, and Kraken are bringing U.S. stock trading to the European Economic Area customers, very near and dear to your heart at Denori, I'm sure. I want to thank everybody for watching and listening. Really, really appreciate it. If you want to learn more about tokenizing stocks, we did have a great interview with Johan Kabrat, the head of crypto at Robinhood, a few weeks back. So search for that on the podcast players or on YouTube to get the inside track on what Robinhood's doing on chain. And Anna, if people are interested in Denari and they want to learn more, how how do they get hold of you and how do they do that?

Anna Wroblewska  45:32  

Yeah, follow us on X. We're at Denari Global. Check out our website denari.com. I know that's a very web two way of thinking about things, but we have a lot of people looking at that, and follow along with what we're doing. DM us. We're always very keen to make new connections, meet new people, answer questions. I think this is people are onboarding a lot of information very quickly on tokenization, but I think this is an area where there are still a lot of questions about how it works, what it means, what the different models are, and we're very happy to engage with those.

Sy Taylor  46:03  

100% 30.

Ferdinand Dabitz  46:05  

Yeah, no, awesome. Thanks for listening, guys. If you're like an international fintech, international bank that wants to access direct dollar clearing, you can find us at augustas.com.

Sy Taylor  46:15  

Kai

Cuy Sheffield  46:15  

on X at Kai Sheffield, Visa.com/crypto.

Sy Taylor  46:18  

You'll find me and all the socials at Sy Taylor screaming into the void at fintechbrainfood.com, and of course at tempo.xyz. And you'll find a lot more of this show if you like, subscribe, leave reviews. I'm always going to say this to you because it's the way you thank us. It's the way if you've enjoyed any of the content, you thank us by just leaving that review. And if you do, you'll hear a lot more from us. Take care, and we'll catch you next time.