00:07:03 · Neil C. Hughes, Shah Ramezani
[00:07:03] S0: Yeah. It really does. And I suspect that we will have a few critics, and we always will. And some will argue that stable coins can actually add another layer of risk rather than remove friction. And how much of that is exaggerated, and how many of those concerns do you think are are genuinely justified? [00:07:19] S1: Yeah. A lot of these concerns come from back in the days, I guess, crypto and blockchain digital assets in early days. It was the wild wild west. But as you can see, you have now regulation in place outlining the... That how stablecoins are ought to be regulated. You have that in The US. You have that in Europe. You have in many, many jurisdictions. That should give more comfort to users because those products are not regulated in a in a... Like a banking grade way. So if you look at under the hood, they are very, very rigorous. You have to have certificates, audits on reserves, and there is a number of liquidity each issuer should, should basically have just in case there's a lot of redemption, then a lot of the assets are held in short term treasury bonds, which are able to be liquidated actually in a very short period of time. So I would say a lot of that has been already now thought through and with the Genius Act in The US and many other regulatory clarities in in other markets, you have that very much pretty much derisked, I would say.
00:07:19 · Shah Ramezani, Neil C. Hughes
[00:07:19] S1: Yeah. A lot of these concerns come from back in the days, I guess, crypto and blockchain digital assets in early days. It was the wild wild west. But as you can see, you have now regulation in place outlining the... That how stablecoins are ought to be regulated. You have that in The US. You have that in Europe. You have in many, many jurisdictions. That should give more comfort to users because those products are not regulated in a in a... Like a banking grade way. So if you look at under the hood, they are very, very rigorous. You have to have certificates, audits on reserves, and there is a number of liquidity each issuer should, should basically have just in case there's a lot of redemption, then a lot of the assets are held in short term treasury bonds, which are able to be liquidated actually in a very short period of time. So I would say a lot of that has been already now thought through and with the Genius Act in The US and many other regulatory clarities in in other markets, you have that very much pretty much derisked, I would say. [00:08:20] S0: Yeah. Completely agree. And I'm curious for for people that are listening here and fairly new to this space, How should they decide when a transaction would remain on traditional rails and and when that stablecoin route offers a much better outcome?
00:08:20 · Neil C. Hughes, Shah Ramezani
[00:08:20] S0: Yeah. Completely agree. And I'm curious for for people that are listening here and fairly new to this space, How should they decide when a transaction would remain on traditional rails and and when that stablecoin route offers a much better outcome? [00:08:35] S1: I would say there's two components to it. One is the clients interacting with Stablecoin. I think that's one use case. I think there is a growing use case for that. Like, many, many new users are very Stablecoin native. They understand, why it's beneficial, why it's frictionless. But, of course, you know, some of the people who have been used to older ways of doing payments are not willing to adapt to that fast enough because it's a bit of a friction. They have to learn a new way of moving money. But then the second point is, let's say the point actually happens behind the scene without the user actually noticing. And I think that is obviously much more a growing big trend. So I think a lot of users will soon interact with a lot of payment systems that actually have stablecoins in one one form or another involved without actually, you know, noticing. It's basically like just one behind the scene as a more efficient settlement layer. [00:09:27] S0: And for people listening in heavily regulated industry, what are the hardest compliance and identity problems when one product serves users across so many different jurisdictions. Any challenges there they should be aware of?
00:09:40 · Shah Ramezani
[00:09:40] S1: Yeah. Massive challenges. I think it's it's super challenging because you are serving a pretty wide market, so we're live in over 140 countries. We have different reporting obligation. We have different types of users in every market, you know, and and they have their own, issues in terms of what they can provide or what they can't provide. Then we have different fraud vectors in every market because in subhumans and markets, you just experience more fraud. So all of those things have to be taken into consideration. Then all of that has to be done in a very UX friendly way because the users today are extremely demanding. They want everything instant and fast. So you have to find the right tools and technology to make sure that you are very rigorous and thorough whilst also keeping the best user experience at all times. So that's kind of a very challenging space, then you work with regulators, and you wanna make sure that you align with them. A lot of their concerns are super valid. I think, we got told at the center, but I think it's always like, hey. You know, sometimes we... There needs some alignment in terms of how the market is moving and and and the innovation is moving, and they're... They need to also make sure that, you know, obviously, we're still aligned with some of the principles of why they have put these regulatory bodies in place, what they wanna protect. So it's super challenging because the space is moving fast. And and for a company like us to be able to win and and grow is just to constantly innovate, part of that is also making sure we make things better. And and today, we have so many tools like AI that actually have an impact in how we used to do things.
00:11:04 · Neil C. Hughes
[00:11:04] S0: And you... Right in the heart of this space, so having so many different conversations with businesses of all sizes, I'm curious, where do stablecoin businesses still depend on banks and other established institutions despite the language of replacing financial infrastructure and being all in unstable coins. Do you see much there?
00:11:22 · Shah Ramezani
[00:11:22] S1: Yeah. So I think banks will never cease to exist. I think that concept was was a a wrong one. Yeah. But I think they will be reorganized in the way what role they play. So let me clarify this. Like, banks used to control, more and more of the financial system. Let's say the top five banks in The US are pretty much involved in every money, sis... Basic payment system. The big... You know, there are basically big nodes of the dollar payment system. Every corresponding bank, payment will go through them, and they make a decision whether they like it or not. So I think that role is getting a bit less. But, you know, you also see the trend of, like, now new bank charters being granted where banks are built from a totally new foundation. Some of them have actually blockchain ledgers, stablecoin first, AI first. So what is really a bank? A bank is like a because it's government allowance for be... Acting on behalf of the Federal Reserve because you are basically giving dollars and managing that that basic currency in a in in a in more, like, regulated way. But I think the role... The the the kind of the use case and the role is changing and is forming, and I think that is, I think, most exciting. Banks will always play a role because the... Again, they are maintaining a subledger of the Federal Reserve, and that has a certain regulatory burden. But to what extent they will be involved in pay... In every payment transaction is is probably, gonna change.