The Fintech OG's from TWIF
00:32:47 路 Jack Zhang
[00:32:47] S1: I I I think we we definitely hedging our bats, and I could possibly get entirely wrong, and it does take three to 12 months instead of three to five years, right? So I'm not suggesting I'm 100% right all the time, and I'm I'm just saying that's my prediction. And obviously, there's use cases of dollar addition, there's use cases of moving money in those global south countries. Like people need to sending money to Africa countries or Latin America countries, where SpaceX or other sort of American corporations need to start linked that need to collecting the revenue from these emerging markets where they do not do not have a very effective way of moving the money back to the United States, but now they can net it off with the remittance providers. But the the challenge is like, how do we know the remittance providers from these crypto exchanges the money is clean? I don't really know how they solve this issue, but today I couldn't solve it. And the the there's still, and obviously now we have Genius Act Pass and we have regulatory clarity now, which is which is great. And that doesn't build the entire ecosystem in one day. That you still need time for adoption, which is similar to how mobile internet or AI get adopted. The other big use case is dollar redation, but that doesn't that to me is more of a regulatory object file, right? You regulate in the United States, but you're offering a financial service product which is dollar bagged in Argentina. The Argentina central bank definitely not gonna be happy about that. But that's just how the world rolls right now. And as a global payments entity, we are regulating a lot of the art in our country like Mexico and Brazil. So we're definitely not gonna do that because the central bank will shut our core business down if we do that. But for startups that have nothing to lose, that might be okay. And they might never need to do business in Argentina, which they would take the risk to offer the product without regulating Argentina, which is which is totally fine, right? And if they want to take the risk, that's that's that's entirely their core. But from Airwallet's point of view, compliance is the number one thing that we need to think about, not just in the United States, but globally.
00:34:55 路 Jack Zhang
And I think on the other topic on AI, I think unlike stablecoin, there's still a lot of uncertainties on the future of the building the native internet native ecosystem. AI is changing the how humanities live on this planet and operating and then live their lives, right? So I think ChatGBT or OpenAI have already had over a billion dollars, a billion DEUs already. So that's clearly shaping our industry. If you're looking at how banking or financial services is done in the last 30, 40, 50 years, and it's really focused on regulatory infrastructure and then financial product. And in the last sort of decade or slightly longer, there's a lot of fintechs like Revolut and Stripes and Robin Food, et cetera, that they they try to build a better UI on top of the existing financial infrastructure so that to provide customers a better experience that's significantly better experience to help the customer to do payments or trading or moving money, whatever. But what hasn't been done is really moving to that kind of agentic AI world where the bank almost already lost the race right now by this point. Because to building AI application, organic finance, organic payment, you need that operating system, that kind of application layer, that business operating system, business operating system beyond on top of this financial service product. If you don't have the application layer, there's no way you can use AI to trigger the financial instrument or the trigger the financial instrument through the workflows through the operating system. Because the cycle innovation is getting smaller and smaller over the last decades. Whether if you think about internet, mobile internet, cloud, and now AI, it's just getting taken shorter and shorter so that the incumbents just have less and less time to catch up. And they haven't really catched up the application layer and or they haven't done anything in the application layer, the business operating system layer. They haven't really moved everything to the cloud. They haven't catched up on that yet. Just no way for them to catch up on the AI race.
00:36:53 路 Julie VerHage-Greenberg, Jack Zhang
[00:36:53] S0: At this point, it's going so fast it's hard for even startups to keep up, let alone the incumbents to keep up with that. [00:36:59] S1: Correct. I mean, that I I I was talking to to live a couple of weeks ago. I have a lot of anxiety in the last two years, simply because I I just couldn't keep up on how fast AI is racing right now. And and just think about how the incumbent is gonna be building with dealing with that, right? So I think by this time, I think it's more of a fintech race. It's no longer a race between the incumbents. [00:37:20] S0: Totally. Like, let's close it out with you talking about tokenized assets. I feel like that's a good way to wrap this up since we're coming up on time too.
00:37:30 路 Leif Abraham
[00:37:30] S2: The TLDR is, I think this version of tokenization is being discussed right now is regulatory arbitrage. It's not actually innovation. And it's easy to say, hey, if you tokenize a private company or a public stock and you put it into other countries and jurisdictions through, for example, crypto regulation, but not through the actual regular securities regulation and so on, that that is democratization and giving people more access. But if you're really honest, that is just regulatory arbitrage. And that creates risks in terms of investor protection. That creates and at the end of the day, it's also just piggybacking on the back of actually traditional finance and regulation. Like if you have a tokenized stock, for example, that stock, the act, there's still a real stock behind it, right? Behind that token. And that is still custodied by the broker or by the custodian in that moment. That and that lives off the regulation and the security that, you know, in whatever jurisdiction that lives in, called in the US, that the SEC and FINRWA have created, and that security they've created, because it's still living there, and you don't actually own that stock. You are essentially just owning a derivative of that stock, and that for example. And the same thing for private assets. You are not owning the stock, you are owning a derivative of that piece. And you could be like, that doesn't matter, I can still trade it, etc. etc. And it'll be like, yeah, sure, that's true, but what is your benefit? Like you as an end user now, like what is your benefit? And the sense of tokenized public stocks, I would say the benefit is non-existent, to be honest. I do not see the real benefit for you as a user. I only see downsides right now because there's all protection that's missing and uh a bunch of other things. And then in terms of private companies, there's the issue of float, proper market pricing, and so on. And to give you an example, we as public used to offer private assets through a regulatory framework in the US called Reggae Plus.
00:39:29 路 Leif Abraham, Julie VerHage-Greenberg
And you can think of it as like you can take a private asset, take a piece of art, or we had like music royalties, or it could be also shares of private companies, and you would run it through this regulatory framework called Reggae Plus, it turns it into a tradable security, and now you have shares of that security that in the end of the day is like a shell around this private asset that exists somewhere in real life. And what happened was that because these assets have so little float, and so there's so little amounts of market cap that's actually tradable, off the market's actually tradable, that if the demand in any way exceeds that, you're just pumping the price up. And so it becomes speculative assets super damn quickly because it detaches itself of the real lives value, like of the real market valuation. [00:40:17] S0: It's like a beef stock right away.
00:40:19 路 Leif Abraham
[00:40:19] S2: Yeah, exactly. So like if you tokenize 0.01% of open AI and you put that on the chain, every crypto bro will celebrate it because there's another because there's another point that you can celebrate the amazingness of crypto. But in true reality, what is happening right now is that you're creating a super low float float asset without any without any true ownership of that actual stock. And if the demand in any way exceeds the amount of float that's out there, you're just gonna pump that price up, and suddenly the paper valuation of OpenAI is not a hundred billion anymore, whatever it is right now, it's suddenly gonna be like five trillion or something because the low float just pumped that stock up. And then it's literally the cliche thing of what happened to like a GameStop or whatever. When the float is very low, a little bit of trading volume can pump the price up very easily, and those and and those things can just happen super damn easily. So it turns these assets into these speculative assets really, really quickly, and the market valuation of the shares that someone owns might be completely detached of the real valuation of that asset. And and I'll be like, again, like I don't call that innovation. That is not something that is like brand new or something. Like tokenized private assets have existed in many forms in different stages from different companies for a long time. There have been companies doing it with treasuries, there are companies doing it with art and whatnot, or royalties or whatever. That is not necessarily new, but also it has not really found its footing yet because it doesn't actually work well. And so and so it's a great PR thing. We did it ourselves as well. It was great for PR, great music, like great. If you Google it right now, you'll find amazing press stories for public launching music royalties. We shut it down on the end because at the end of the day, it's not actually a healthy market. It's not actually something that other than speculating on something, someone can really like see as a serious piece of their portfolio. And I think therefore it's still very early. And I think the current iteration at least of that tokenization is just not really what it is.