The First Bank Issued Stablecoin

Speaker 1  0:09  

Simon,

Sy Taylor  0:10  

welcome to Tokenized, the show focused on stablecoins and the institutional adoption of tokenized real-world assets. I'm your host, Simon Taiyor, author at Fintech Brain Food and head of market dev over at Tempo, and joining me back in the saddle is the one and only Kai Sheffield. How the heck are you, sir? Good to have you back. Yeah, same. I missed you, man. It's been too long. We got a lot to cover. I missed show. You missed a couple back in the saddle. And joining us is Rene Reinsburg, who is the co-founder of Cello. How you doing, Renee?

Speaker 2  0:39  

Great, good to be on the show.

Sy Taylor  0:41  

Good to have you with us. We'll be hearing a lot more of your takes on the news in a little while, but also joining us is Charles Hamel, who is the head of product for Mini Pay at Opera. How you doing, Charles?

Speaker 3  0:52  

Great, thanks for having me.

Sy Taylor  0:53  

Thank you so much for being here. All-Star Cast, let's get into it, but before I do, of course, I gotta remind everybody that views and opinions of contributors today are their own and might not reflect those of companies they represent, and as always, please don't take anything we say as tax, legal, or financial advice. Before we get to the first story, Kai, you got a little bit of news of your own this week? Do you want to talk us about what you just launched, half the press?

Speaker 4  1:16  

Yeah, so as I've talked about on the show, I am obsessed with vibe coding, I believe it's going to be one of the most important trends that's going to drive positive economic growth across the world. When not just that existing engineers could become more productive, it's everyone can now write code. I think that is such a game changer. And so we've been very focused on really looking at vibe coders as a customer segment and saying, how can we support them and enable them and provide more payment capabilities, and, and really meet them where they are, and so I've been super heads down building Visa CLI as a card experience to put a card on file with Cloud Code or Codex, and be able to spend on anything that you need as you build, and so we've got an amazing small team that has been building that product, and what we announced today is two things: one, we're starting to onboard merchants, and so we're seeing this growing ecosystem of x4 two and MPP merchant endpoints, we want to bring them into Visa CLI and help drive distribution and discovery for them, and then two, we're starting to roll out Visa CLI to a number of customers in the US, and if you're interested in testing it out, experimenting, making your first objective payments, send me a DM on X, and, and would love to. I've got a bunch of invites that I can send out over the next week, and I think it's so early, but it's such an exciting time, and I think that vibe coding is really ground zero for the future of objective payments, and I know, Simon, you guys have been working incredibly hard at Tempo, and I think the whole industry is kind of coming together, starting to accelerate in that direction.

Sy Taylor  2:48  

Kudos to you, Kai Charles Renee, you vibe coders, are you using Clog Code? Are you going to check out the Visa CLI? Your thoughts?

Speaker 2  2:55  

Look, I actually, I'll admit, I at this point I don't even feel comfortable saying vibe coding anymore, you know, like six nine months ago, yeah, some of the stuff was kind of like, okay, you know, I can show to some friends, but you know, we're able at this point to one shot production ready code, right? So I think we, in a way, we've upgraded, right, it's like everybody can sort of launch a company, and of course there's extra steps to take kind of down the road, but to me it's kind of like the vibe coding almost belittles it a little bit, and in terms of like what's possible, right, like the tools have gotten so good and get better every day, that Kai totally agrees, a absolutely incredibly exciting time for anyone to be able to build things, and love seeing what you guys are putting out, I do think on the commerce side we're still super early, right? I think there's maybe a kind of growing appreciation for some of the infrastructure that crypto folks have, you know, built over the last few years that can now be leveraged by sort of the general public. So, you know, being in San Francisco, I certainly have friends that have never had exposure to crypto, I've never cared about it, right, that I've been sort of in the AI lane, reach out and ask about, hey, what's what's this X 402 thing, you know, like what you know, can you explain this to me? So I think that's a really strong signal that, yeah, probably not too distant of a future, I could imagine a lot of AI application actually leveraging crypto under the hood for exactly for sort of the use case we all kind of saw coming, maybe not in this way, but it's a super exciting time, so love seeing you guys lean into that and make it super easy for enabling some of this across sort of a set of different standards, and I'm kind of curious to see how this all shakes out, and MPP is super interesting too. So, from a seller perspective, we're kind of more neutral, we're like, hey, we'll, we'll adopt sort of all the standards that kind of pop up and that people want to use, and it's kind of exciting to see what people are building in the past to kind of getting something out there, it's just. Gotten so quick, so that's that's exciting.

Sy Taylor  5:02  

Charles, any thoughts

Speaker 3  5:03  

to your point on standards? Opera was always at the forefront of web standards back in html5 days, and we were always looking to be on the edge of innovation with regards to new emerging standards, and you know, we're following everything that Visa and others are doing on the agentic commerce side, so we can really be at the edge of browser innovation. There

Sy Taylor  5:25  

now, there's so much happening, as you guys say, we don't know how it's going to shake out, but there's more news every single second. And speaking of news, well, Cash App, it seems like hell is frozen over, because Cash App now supports stable coins. They've introduced fee-free USDC stablecoin transactions across Ethereum, Solana, Polygon, and Arbitrum. Although the fee, I think, will be introduced later on in the T's and T's. Unlike Venmo, Cash App automatically converts incoming stablecoins into standard USD balances. The blog post said that the service will not refund losses to wallet addresses that are on unsupported networks, or to payments sent under false pretenses, so all payments are irrevocable. And one nugget from the blog post, as well, that I thought was quite interesting, Block announced this was onboarding people to the decentralized finance vision, and therefore to Bitcoin in the long run, which I thought was fascinating, Renee, your thoughts on this?

Speaker 2  6:25  

So, I have a bit of a personal perspective on that. So, Jack Dorsey actually was a seed investor in Celo, and this is like back in 2017 2018 when we started working on Cello. I met up with them, and I was like, "Hey, are you just only bullish on Bitcoin, or do you see sort of a broader world? And here's what we're building, and he was like, "Yeah, I'm open to all things. So, I think he sometimes gets sort of mistakenly put as sort of just sort of like an ultra bitcoin maximalist, and I think even in the context of this announcement, I saw some kind of commentary that said that he was kind of against it. I think he's sort of more, he has a more balanced view than maybe sometimes get represented, of course. He's a big fan of Bitcoin, and has done a lot to create awareness for it, but I think this is just a clear sign that I think even more people and companies, organizations are recognizing that stable coins are here to stay. You know, this is what consumers want. People want to use stable coins for payments, right? I think that's like the message.

Speaker 4  7:24  

Yeah, I think, in my opinion, like this is one of the biggest stories of the year so far, in that you just have to respect that Cash App has been on the forefront of just one of the best user experiences for mainstream consumers in a super simple, easy to use financial product, and they've just done incredibly well, and now what I'm excited to see is, like, how can stable coins supercharge the Cash App product and enable more features for them? I found it really interesting, they talked about they see stable coins as kind of upgraded fiat 1.0 and then Bitcoin is, is kind of money 2.0 and I think that the question I'm really curious to see how it plays out is, is there a world where stable coins end up driving more demand for Bitcoin, where if you have Cash App like products and you're bringing more people on chain through dollars, then Bitcoin becomes this like savings account to stable coins that are the checking account, and like, how do they interact together? Because it's definitely Cash App is like giving up on Bitcoin. They have a long-term vision that they continue to push forward there, but like, how this becomes complementary to that will be interesting to see. But Charles, your thoughts on this?

Speaker 3  8:33  

Yeah, I think Cash App and Block in general is incredible product culture, so seeing them make a move after so many years of Bitcoin only product work is really is a strong signal. It means that they see the use case and they see the demand. So hopefully this also means interoperability with a product like ours will be much easier. And I think it's it's interesting on the on the safety aspect, right? The fact that they make a point of saying, like, transfers to sort of erroneous addresses will not be refunded. I think it's a, it shows the one of the big risks that users are exposed to when they touch the blockchain, so to say. And it's one of those problems that we've, we've set out to solve right from day one with Mini Pay by using phone numbers instead of wallet addresses, so that you always know where you're sending the money. So, I think that's super important when you make the blockchain nature at the surface, so that users can interact safely with them.

Sy Taylor  9:32  

The surface level side of it is now in Venmo, it's in PayPal, it's in lots of different places, and it's kind of becoming a default. I'm going to move us to the next story here, because I think it sort of ties to it quite a bit, which is SoFi USD is now the first stablecoin issued by a nationally chartered US bank to launch directly on the banking platform, so all 15 million or. Roughly 15 million members of SoFi will have access to stable coins directly in their banking app, not white labeled from somebody else, but really integrated to the core of what they offer, and its users will obviously be able to buy, sell, hold SoFi USD, but again, redeemable one to one for US dollars. The CEO said, so far we believe we can combine the speed and versatility of a blockchain with the trust of a bank to improve how money moves around the world. I mean, Renee, I know, again, just coming to you, you've been trying to make money move around the world better for quite some time, especially into places it's hard to get to. Your thoughts on a bank like this, quite an innovative bank leaning into that model.

Speaker 2  10:43  

Yeah, absolutely. Yeah, it's interesting. I think for a while, I think in this industry we've had this thesis that there likely will be lots of stable coins, right? And I think there's now evidence, yeah, that that's happening, right? Like big companies launching their own stable coins, and we have some experience with that on Seller, we were one of the first to have, I think, still to this day, from one of the few chains that have native USDC, USDT, and have some kind of special infrastructure, right, to facilitate going between multiple stable coins, and obviously we also have, like, the long tail of non-USD stable coins, which are still totally underemphasized, I think, relative to sort of the role they could play, particularly for lending. So, I think it's so early days. I think with Swiss, when I see these headlines, my first question is, like, okay, what does this do for or SoFi, but also for their users, right? That existing stable coins can't do, and I'll be honest, from the release I didn't really get a good sense for, I mean, I'm curious to hear you guys' view. I didn't see them give interest to their users or do something special here. So, is it marketing? Do they just want to kind of fern on sort of the float, right, that they have? Like, what's what's the story here that's driving this? Is it experimentation right? Like, I'm, I'm kind of curious to hear you guys's view. I'm not as deep in the story yet, so I'm sure there's other aspects to it. I'm not surprised, but I also, I didn't see something in the announcement where it was like, oh, that's an interesting angle.

Speaker 4  12:13  

And my, my understanding, based on what would have just read publicly on this, is it is that the way SoFi USD is is designed, is it's not a tokenized deposit, so it's a bank issuer, which is compliant. Banks can issue under the Genius Act. It's a stable coin, not a tokenized deposit, doesn't pay interest, but it's backed one to one by reserves in their Fed master account, and I think that's the first time that we've seen a product with that structure, and so it's just really interesting. It's just like that there isn't another stable coin that has those properties. I think one question that comes to mind is, if you're a bank and you have the ability to hold deposits and you can be able to lend those deposits, is it in your interest to switch your own customers over and tell them you know what, hold our stable coin instead of our deposit, like most banks that we talk to are like we don't want to encourage customers on the platform to hold the stable coin, it

Speaker 2  13:12  

messes with fair capital ratios, right? Like, so I, yeah, we

Speaker 4  13:16  

want them to hold the deposit, so that's what's really interesting, of is the motivation to switch customers on platform over, or is it more for off platform? But if it's off platform, then you got to go and get adoption of a bunch of other people using SoFi USD, and will competitive banks or fintechs be willing to support that? And so I think it's gonna be really interesting to see how this plays out, but I think Simon, Charles, your thought,

Sy Taylor  13:39  

yeah, so the one to one conversion is the clue here, and the fact that SoFi also has a tokenized deposit. So, if you think about how these two things coexist, there's a lot of financial institutions saying obviously tokenized deposits are better because they're better for the balance sheet, exactly the point Rene was just making. But the problem with a tokenized deposit is it's stuck inside the four walls of the financial institution, it can't go to any compatible wallet, it tends not to be 24/7 and so a stablecoin can go instantly globally 24/7 anywhere it needs to go. So now, as a SoFi customer, I have the best of both worlds, I have something that's one to one backed at the Federal Reserve, far lower credit risk than any of the other stable coins out there, frankly. And counterparty risk, that's like the lowest risk stable coin on the market. I think that's a killer app in its own right, especially for a certain type of customer. Two, it's redeemable at par, so unlike Tether and USD, if I'm moving a large amount, where I could, the volatility could bother me. That's never going to be an issue with this SoFi USD, and I think, yes, they've rolled it out to their members, but frankly, the fact that it can sit there as a tokenized deposit, be swapped into a stablecoin, and then go around the world, and on the way back in, come in as a stablecoin balance, or ideally swapped back into a tokenized deposit gives. Them a flexibility as a bank that others haven't thought about, and I've been doing a lot of thinking on this one, Kai, which is there are payments products that are extremely profitable that potentially do drain some deposits out of your institution, but if you look at the core franchise and what's really driving the revenue at Citi, at JP Morgan at Fifth Third, or any bank that's really, really growing, it's often their payments division that's the jewel in the crown. And so, as a payments product, stablecoins bring an awful lot of value, and I think we've turned the deposit flight conversation into something that is very binary, whereas I think SoFi, from what I understand here, in doing a tokenized deposit and doing a stable coin, is trying to win both ways. They've done a pretty good job of attracting deposits and offering yield on it and building a lending book, so they're absolutely intending to do that, but they also want their customers to be able to move money 24/7 So, I think it's kind of a nuanced point there. Interested in other perspectives, Kai or Charles, any of the things that you saw in the story.

Speaker 3  16:06  

Well, I think the interoperability piece will be crucial, like the more coins, the more chains, the more fragmentation risk there is. So, I think it, it brings value to the idea that perhaps there needs to be kind of stable coin clearing houses that make sure that all of these things can interoperate one to one. It's one of the big challenges when introducing new new assets to a product, is that $1 needs to be $1 and the intricacies of how these things are built, how the liquidity structure, how the redemption works makes this hard, as we all know in this group, but so I'm hoping that this will also lead to more people solving that problem and make those dollars really interoperate as they should.

Speaker 4  16:49  

The only other thing I'd add is, so Sofa is clearly like forward thinking, kind of a leader and innovator on many fronts among banks, but I think that the general direction of travel in discussions that I've been having with banks, is it seems like there's less enthusiasm for every bank issuing their own stablecoin or truckorientized deposit than there was maybe six to nine months ago when we were on the show, like there was an argument to say, oh, genius act pass that opens the door for banks, now every bank is going to issue a stable coin, and then you've got a bunch of teams that get spun up, they do the analysis. Okay, what are the use cases? What are the challenges? And I think that the distribution and the interoperability challenges have been just very real, and a lot of banks have kind of sobered on that idea of, like, well, it sounds great to have your own branded coin. How are we actually going to get people to use that outside of us? And if it's just our customers, then maybe it is a tokenized deposit, and how much value does that add? So I think we're seeing more of a approach towards what are industry-led solutions of bank consortiums popping up across the world, rather than individual banks trying to compete with each other, going by one, and, and I think it'll be interesting, of like, can any individual bank really eat into the market share that USDT and USDC have, or is it going to take kind of an aggregation and consortiums of banks in different markets coming together to be able to compete?

Sy Taylor  18:20  

A fascinating question, and honestly, don't know the answer. I do find it interesting that as you get further into capital markets and as you get further into corporate treasury, what would make you want to hold a stable coin? The calculus really changes, because if you're in the crypto capital markets, or generally using crypto today, liquidity is everything. USDC and USDT are the only games in town, and why would you touch anything else? Your best bet is even to build a derivative on top of them if you have some other currency. I saw an argument this weekend that if you were going to build local stablecoins, why don't you just build them as a synthetic local currency on top of USDC, for instance. And so, because they have that liquidity, and I sort of have some sympathy for that argument, I really do, but if I'm corporate treasury, or if I'm on Wall Street, and I'm moving billions and trillions of notional value on a daily basis, then I suddenly really care about the reserves a whole lot more, and I wonder if the longer term for SoFi is as much about being a bank for other banks and other institutions and a tech provider to the banks that are trying to figure this stuff out and really trying to become more of an infrastructure player. They own Galileo, which is a large issuer processor. They have a lot of an infrastructure business behind the scenes, and so Kai, I sort of think that there's not like necessarily a competitive angle, even though it looks like that on the surface. Under the surface, it could be more of an infrastructure play, and it's gonna be interesting to watch that one play out. If there's no more thoughts on this story, though, I will take a quick pause here whilst we hear from our sponsors, I. This episode, if it's not obvious, is brought to you by our friends at Visa, a global leader in payments. Visa's tokenized assets platform, VTAP, uses smart contracts and cryptography to help banks bring fiat currencies on chain. VTAP allows financial institutions to issue fiat-backed tokens, improving financial efficiency and enabling programmable finance. You can check out the links in this episode's description to express your interest in VTAP. This episode is sponsored by Stripe. Internet commerce is evolving pretty rapidly, and agents are now becoming economic actors. They're managing spend and transacting autonomously, and stablecoins are becoming the default for them to do so, thanks to their programmable, instant, global, and low-cost nature. With Stripe, your business is ready for this new agentic economy. Accept stablecoin payments from agents, equip your agents with wallets, and issue stablecoin back cards, so they can spend all through a single integration from Shopify to RAM businesses. Trust Stripe to get ready for agentic commerce. Learn more@stripe.com forward slash crypto. Tokenized is also sponsored by Fireblocks. Fireblocks is the stablecoin infrastructure of choice for global businesses, from Visa to WorldPay 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@fireblocks.com Thank you to our sponsors, we appreciate you. The next story was, well, actually a double header, so Mastercard got a New York state Bit license, and Ave Labs secured an FCA registration, so the license will allow Mastercard to conduct digital asset activities in one of the toughest crypto regulatory regimes in the United States, New York. You see a lot of things launch, for example, Cash App, their new stablecoin service launched everywhere except for customers in New York, so interesting that they have it, and for Aave it means they can now pair FCA registration with their existing EMI authorization, and so that means they control the fiat issuance rail and the digital asset exchange rail, they can offer like zero fee on off ramping services into and out of DeFi for British citizens, and I think the UK, as somebody in the UK, has been sort of seeming a little behind on some of this stuff. So, these are two tough jurisdictions with really interesting movement. That was the theme I saw. But, Charles, you have users all over the world. What do you think about when you see these regulatory pieces? Are they still more of a burden to you or an opportunity,

Speaker 3  23:23  

I think the what you see with Avi getting the EMI license and the the authorization and this new FCA approval is really this the merge of of crypto infrastructure with fiat infrastructure, and that's where you can actually build experiences that meet users' expectations, so being able to come in and out from fiat dollars into on-chain dollars is super important, and it's hard to do that, especially in a non-custodial way, because then you don't typically touch the rails. So it's very interesting to see Ave really at the forefront of both DeFi innovation and kind of fiat connectivity innovation to have a very vertical stack that's integrated around the protocol at the base layer with the blockchain, and then on top of that having this this connectivity that makes their product ultimately easier to use and easier to to access by with that's this capital that can come in more easily, so I think you're going to see more and more of that thesis play out of crypto native players going up the stack to get that connectivity and have more control over that.

Sy Taylor  24:34  

Renee, you're a veteran of DeFi, your thoughts?

Speaker 2  24:37  

I mean, look, I generally agree, but you can all agree here, and then it's more boring, so I'm going to take a different view. So I think it's kind of like just, are we just showing you know something else at the wall to see what sticks. I come more from sort of the philosophy of, you know, pick your lane, right? You're either providing a certain number of infrastructure, right, but here you're. So you're starting to sort of compete with like the ecosystem you've been looking to attract, and maybe that hasn't worked for them as well. They've been sort of left a little bit out of some of the payment narrative, so that's maybe an attempt to get back at it. So I don't know, that's a more spicy take, but I don't know. I just feel like you see these things, and like the jury is going to be out right, let's see in a year if it's actually led to some more significant consumer adoption around payment use cases, and I wouldn't take this as like a strong side, I think the overall narrative is right, I think there's more we're seeing more and more sort of like defi and tradify sort of converge right, but I also think it's not necessarily a step that from a seller perspective I would would urge us to take a look at, right. We have our lane that's going really well, and I much rather partner with companies that are experts in that, right. And, and kind of together create sort of that experience than try to compete with my ecosystem.

Speaker 4  26:01  

Yeah, I think the real crypto and stable coin bull market, it's really legal fees for money transmission council in just like the amount of complexity, and I think it's always interesting, as like crypto people come in, you just realize how much complexity exists with money transmission and licensing trying to operate on a global basis, and so I think it's really interesting to see the different approaches of companies that are just purely tech, purely infrastructure, self-custodial, trying to kind of scale globally as possible, but then the trade off is dependency on partners, and you can't control every part of the stack, and you have to outsource to other licensed entities and go and partner there. I think there are a lot of stablecoin orchestration businesses that, as the space has gotten more crowded, licensing is becoming like the differentiator, and like, are you built on top of somebody else who's built on top of somebody else, or like getting as close to the regulatory metal is a value prop, and so I think you'll, you'll see more of that, but it's, it's fascinating to me that there's just, there are so few companies that really have a global licensing footprint, just because it's so hard to do, and so it feels like for most, as long as you have stable coins moving back and forth between stable coins and fiat, it's very hard for any single individual entity to just enable off ramps everywhere across the world entirely vertically integrated themselves, and companies like Wise, yeah, I think, have done a really good job, and like they're probably one of the widest kind of licensed money transmitters out there, but there's still a bunch of markets that they don't operate in, and so I think at the end of the day, there's there's likely always going to be some hybrid of markets that companies have licenses in versus markets that they partner with regional and local license players, and then it's just this moving chessboard of well, if there's enough demand and growth in a market, then they might go from partnering with somebody to then going and getting a license there, and so I think that's the phase of the stablecoin market that we're in, where it's just really it's in the lawyers hands of like playing a big part of the strategy, the differentiation at a lot of these companies,

Sy Taylor  28:20  

I often describe the payments industry as being like Russian dolls, you sort of open one and there's another payments company inside it, and then you open the next and there's another payments company inside it, and it's the licensing that makes that the case. There's never one payments company to roll them all, even the biggest banks tend to be directly licensed in about 60 or so markets, and very rarely beyond that, but then stable coins represent this interesting sort of and also piece where they become this open loop network, so maybe you as an orchestrator, you as a business plug into those 60 markets, like a lot of the banks have done, so that you can off ramp and on ramp into them, but then the local providers in those local markets can do that too, and I think that open loop nature of stable coins is really underpriced. Still, it was Henry at Privy who once described stablecoins as a little bit like trying to get into orbit - it's really hard to get there, but once you're there, you can move around really, really quickly, and then getting back down kind of sucks as well, and we're still in that phase, and you know somebody who's going to build a Falcon nine and make it easier and lower cost over time, but actually the question I have is, do we reach a point where everybody just stays up there or more commerce stays in stablecoin land because it's so much easier to transact with each other once we're stablecoin native, Renee, I don't know if you have views on that or if you're seeing that in your network.

Speaker 2  29:44  

No, I mean, this is, I think, this is exactly kind of my point, right? It's like what keeps me up at night is like figuring out more of that connectivity, right. And so, I mean, with Seller, we were like five, six years ago, we started investing in local markets, in sort of finding these, and sometimes even. Seeding and incubating these kind of licensed on and off ramp companies, right, to create this kind of global coverage, right, because it's clear that sort of overnight there's not just going to be one player, right, or even for like us to kind of go out and get all these licenses, right, would have not ever been a path, right, and so I think that comes with challenges for sure, right, because you know you have to coordinate, and, like, you know things happen, right? Like, but I think in the long run that is still the winning proposition, right, versus one or two players capturing sort of the market, right. And, and so, still to this day, a lot of our effort goes into finding and supporting these kind of local partners and doing our part to kind of work on infrastructure pieces that can kind of create that connectivity, and I mean, actually, Charles was Mini Pay has been also heavily driving that forward, right? I think some of the infrastructure you guys have built into Mini Pay is probably in many markets creating the most seamless on-off ramping experience where you're leveraging kind of a local partner, and that's that's really beautiful to see, and I think that's sort of in many ways also the spirit, kind of the original spirit of web three, right? And I kind of agree with that, sort of like, you know, once we get there, it's going to be a beautiful world, right? It's a little messy until we get there, but you know, we're getting closer every day, but yeah, Charles, I think you have sort of some special insight that too.

Speaker 3  31:24  

Absolutely, so much effort goes into the fiat connectivity part. It's really the, I would say, the dominant theme when even building a product like Mini Pay, because there is no single partner, there is no one size fits all solution. It's really about piecing together and orchestrating in a way that makes that last mile connectivity possible. So, we, when we started two, three years ago, like the term, well, banks certainly didn't want to touch stable coins. There was no such thing as banks issuing their own stable coin, just as we saw earlier. Now we live in the future. Things have changed, but there is still no one size fits all, and it's all about finding the right set of partners to build a global product that can work both in orbit but also on the ground.

Speaker 2  32:15  

Maybe we should just ask Elon to come in and like figure

Speaker 1  32:18  

it out.

Speaker 5  32:18  

Who's who's Elon of Stables? That's

Speaker 4  32:23  

Charles. I was gonna ask, like, for people not as familiar with Mini Pay, and particularly people, some of our listeners, like in the US, like, how have you seen the navigating being a self-custodial product, and like, what the benefits and the flexibility of things? Like, I feel like a lot of times when people hear self-custodial, they think like crypto wallets, they think Metamask, like Fanta, like those are the first ones that come to mind. And so, what were some of those pieces of being able to create a self-custodial product, the benefits that you got from it, but then making it not feel like it's a crypto product, given that you serve customers who are not necessarily crypto traders, they're just looking for dollar access.

Speaker 3  33:03  

Yeah, so when we set out to build Mini Pay over two years ago, and where the name comes from, ultimately, is Mini Pay started as a, as a global dollar wallet embedded in Opera Mini, which is Opera's most popular browser in the global south, and we really set out to build a an experience that was centered around pp payments with dollars with an abstracting the blockchain complexity away and a big part of that and why we built on Cello was being able to pay fees to the network in stable coins which Shello pioneered back in the 2019 when from day one, so being able to have $1 only experience on a public blockchain with your own keys, that's only possible when you have either very complex account obstruction, and or have have that at a protocol level like Cello, and also with self custody comes keeping a secret safe, right? So, having this automatic backup was key, and ultimately being able to transact with phone numbers, right, which is replicating a lot of the successful UX of mobile money systems. Those three things together - automatic backup, phone numbers, and $1-focused experience - really means that we can package something that's extremely simple that normal humans can use, but that brings all the power of having this global dollar that can be in orbit and be in Lagos in one second and be in San Francisco the other, but it's been extremely challenging to really keep that simplicity and have this wide coverage and I'd say a lot of the work when, when building custodial products, is you have to work hard to enable new markets, whereas non-custodial products you have to work hard to to disable some markets, and you have to find the right partners to plug into your infrastructure, so. It all works

Sy Taylor  35:01  

interesting tension in new markets versus old, and I think the security side of it, when you've got distribution and user trust, is always going to be a critical thing, and it kind of made me think of this story that closes it out this week, which is the Open Zeppelin founder says that all DeFi is now unsafe, and we have seen plenty of hacks over the past 1218 months, some very noticeable, very large ones, but now I think what triggered this is in the age of mythos from anthropic and the largest financial institutions in the world being called together by their central banks and governments to go have you hardened yourself, if they're worried about it, then surely DeFi is low hanging fruit here. I don't know if Charles, you have thoughts on that. Do you agree with this perspective that DeFi is just a sitting duck right now, or are you thinking about it a bit differently?

Speaker 3  35:54  

Well, I certainly think the current environment has heightened the risk you see with everything that's happening, AI being able to augment bad actors is certainly a growing threat. I think one of the key elements in building a product, not built for speculation, is the safety aspect, is super important. So, we, we are very conservative, certainly in the world of crypto products, to on that side, so we, our exposure to DeFi is extremely curated, and we take a very conservative look at every new kind of DeFi integration

Speaker 6  36:30  

to make sure that users are safe when they use that.

Sy Taylor  36:35  

Renee, your thoughts, given you were veteran from the space as well?

Speaker 2  36:39  

Yeah, look, I think some of the headlines maybe are overblown. I don't think DeFi is that. I think it's here to stay, and in fact, it's gonna become in many ways DeFi is more secure. I mean, I'm more worried. Okay, like trying to find the right intro into this. I'm more worried about maybe some bank, you know, I have that doesn't even like have two factor, like serious two factor on me logging in, right, and like the damage SMS

Sy Taylor  37:06  

is two factors, surely

Speaker 2  37:08  

you know, versus like you know some some DeFi protocol, like you know some critical buck with my thus getting sort of exploited, so I mean it's always it's always been an arms race, so right there's always been sort of the attackers kind of ramping up and like spending more resources as sort of the stakes and sort of the TVL has grown right and on the same side the protocols right also kind of gearing up and figuring out what to do to to prevent that right and we're still I think this is people forget this right despite the amounts that have flown into DeFi is still early days right we're still sort of in the first 10 years of this entire space, right. And leave Bitcoin out for a second, right. Bitcoin, no means not DeFi, you know, like the BFI we're talking about here, right? Like for consumers, right, getting sort of like yield on, like a sort of dollar deposit, for example, that kind of stuff, right. That's sort of being talked about here, that's all still super young, right? And so, do I think that will come up and harden the protos protocols as necessary to prevent the most crazy attacks? Yes, I absolutely think so. And there's already all these discussions on kind of things that can be, you know, time locks and other things that can be sort of done right to prevent that things from happening, and in obviously there's some of these stories, but in most kind of the day to day sort of exposure I have, when it's like a friend's wallets getting drained, right, or something happens, usually it's actually it's not sort of like some some bug in the protocol, it's user error, right, because the tools are still shitty, right, people still give unlimited permissions, you know, and forget about it, right? And dangerously

Sy Taylor  38:44  

skip permissions is how we live,

Speaker 2  38:48  

living on the edge, right? Just for that 20% yield on a coin that we've never heard before, but, but now look, it's I think this is what Charles, I mean, is I think underselling here a little bit, Mini Pay has done such a fine job, and protecting the user, right, and creating sort of like, in a way, like human approachable kind of way to look at everything that's possible, and it's starting to show up in the metrics, right. I think there's means Cello as a chain has risen to become like the second most used chain for our W A's, right, and it's in a large part driven people holding tokenized gold on Mini Pay, and that to me is also DeFi, and that's freaking exciting, right? Because there are a lot of people in the world that can just lock into E-Trade and buy an ETF, right? And so for them to be able to do that now through Mini Pay, through a safe experience, that's what we would be giving up right if we say DeFi is that, and so I think that's kind of a fight worth fighting for, and I do think there's a lot more that can be done in terms of protocol safety, and it's something also at Celo Core Company, where we're spending a lot of time on as we look at the ecosystem, as we think about, okay, from a protocol perspective, what. Is we can support the protocols that are really should be focused on like the best product experience, right? And may early on not have all the resources around security either. So that's I think that's kind of as important as ever. But I'm personally, I remain bullish. I, you know, I agree there's, yeah, lot more risk kind of with AI, but also you can use the AI to to write build better to solve better tools, right. So it's, it's, it's both sides, right. So I think we, we just have to look at this more balanced.

Speaker 4  40:32  

I, I expect, like, over time we're gonna see more of this like bifurcation between, like, DeFi. When most people think about DeFi, it is like 100% permissionless public permissionless blockchain, public permissionless asset token on top of it, permissionless protocol, like it's just in there. Well, like there's no question, there are major kind of benefits and innovations that have kind of come from the ecosystem. If something goes wrong, the eth is gone, like there's just like that's there's nothing you could do, and so I think that the risk is higher, and there's not a lot of recourse. It's hard to build in recourse and insurance into like permissionless bear assets. I think as we see the market move more towards stable coins and RWAs, most RWAs, there's an issuer, there's some level of controls that you can have, and I've been surprised that we haven't seen stablecoins becoming more optimized for on-chain lending and DeFi, in the sense of if there was a smart contract bug or hack, and if the stable coin that was used in the protocol was like intimately part of the protocol experience, you could immediately freeze that stable coin and reissue, and so, like, you have the actual controls at the smart contract layers, not to say like nothing could happen, but you have ways that you can have recourse and remediate things that happen. It's not that it's just, you know, one bug leads to the money is gone. So, I think we'll see more ways that the kind of institutional on-chain credit kind of defi with a suit on, like, has different protections and guardrails in place, but still uses a lot of the same infrastructure and technology that was built out, but when you're dealing with assets that ultimately have some connection back to the real world, you should be able to have more guardrails in place than if you're doing, dealing with bare assets that can just be stolen and not recovered.

Sy Taylor  42:35  

Yeah, I think Circle came under quite a bit of criticism during the Kelp DAO layer zero hack for not actually freezing those assets when they could have done, and instead following sort of a more traditional tradfi compliance process of waiting for law enforcement to want them to do it, which in their defense that's kind of standard operating procedure for any regulated entity, but to your point, Kai, we have the tools, we can do things to protect users in interesting ways. We might need to, as we go more into DeFi. The other thing I thought about for DeFi is, hey, it's you can upgrade this stuff pretty quickly in most cases, with the possible exception of Ethereum. Therefore, you can probably get a new version of a smart contract up and running at scale really quickly with some of these tools, exactly to Rene's point. Conscious of the time, bunch of stories we didn't have time to cover this week. Aztec Labs acquired ZK Passport, some interesting things in identity. Circle partnered with Neom to connect USD settlement to their global payout rails. So interesting again there that going global, and Neo has been a big player in that space for a while. Coinbase are working with Standard Chartered to expand multi currency funding for institutional clients. Standard Chartered always there behind the scenes if anything's happening in DeFi or stable coins as the off ramp of choice, and the DTCC plans to bring tokenized assets to Stella in the latest Wall Street blockchain push as part of their goal to be multi chain and support lots of chains, and I suspect they'll continue to do that. And finally, Base rolled out an MCP gateway for AI interfaces. Thank you so much, everybody, for being on the show, everybody for listening. If people want to find out more about Mini Pay and everything you're doing at Opera Schultz. What are they good to do that

Speaker 3  44:24  

at Mini Pay on X and Mini pay.to

Sy Taylor  44:27  

Renee? Anything for Cello and yourself?

Speaker 2  44:30  

Yeah, I mean at Celo, and then I'm region Renee on X, and you can also follow Self XYZ, which is the project I run, which is around identity at the intersection of agentic and crypto, so

Sy Taylor  44:43  

very cool, exciting. Kai

Speaker 4  44:45  

on X at Tai Sheffield in visa.com/crypto as well as Visa cli.sh Check it out, send me a DM if you want an invite.

Sy Taylor  44:53  

Visa cli.sh check it out, folks, you'll find me at Sy Taylor on all of the socials, screaming into. Avoid at Fintech brainfood.com and of course at Tempo dot xyz, and you'll find a lot more of this show if you go ahead and subscribe if you haven't already, and please tell friends to check it out too. Leave us a review, all of those things really help the show. I have to do the host thing, it genuinely helps the show. That's how you spread the word, that's how you say thank you. And thank you for listening and watching, we'll catch you next time.