Why Robinhood Are Going All in on Tokenized Stocks and Prediction Markets

[0:00] For monthly trades, I like two times net revenue. And you know, it's a billion dollars of revenue and it's a two billion dollar company. And and they very clearly have figured out that for to be a higher they need to be a higher margin business. They need to be a business that does more things with their customers. They need to be able to have better retention, which means not just, you know, fighting over the FX fees and fighting over the costs, but also fighting over other parts of the wallet. And to be able to do all of that, to be able to trade better, to be able to accrue more value, the easiest way to do it globally is stablecoins. Like that is to the point we talked
[0:30] about earlier, Ethan going global is you know, cross-border and stablecoins is growing very quickly. And now with the card products, you know, the reins and and and the stripes doing this, like that has become much much easier for people. And so I I expect that that continues to grow for all types of, you know, financial products and financial companies, whether they're neo banks or not, because everyone wants to become the bank and it's easier than ever, it seems, [music] to be a neo bank. >> Welcome to Token Eyes, the show focused on stablecoins and the institutional
[1:00] adoption of tokenized real-world assets. My name's Simon Taylor. I'm your host, author at Fintech Brainfood and head of market dev at [music] Tempo. No Kai this week, but thankfully stepping back in for me is a is a wonderful co-host, the one and only Rob Hadick, GP at Dragonfly. How you doing, Rob? >> I'm doing good and I'm glad to be on this side of the camera this time where I'm the, you know, sort of co-hosting and I don't have to have all the hot takes. So I'm excited to see what Steven and Ethan say. >> Yeah, no, it was well, speaking of which, yeah, speaking of hot takes, if you could have heard before we hit
[1:30] record, it would have been amazing, but we're hoping the show brings that energy and I think it will because making a debut is Steven Sykes, who's COO at Public. How you doing, Steven? >> I'm doing great. Thanks for having me. >> Thank you for being on the show. And also returning is Ethan Chan, co-founder and CEO at Allium. >> Thank you for having me, Simon. Nice to be back in the show. >> All right, before we get on with the show, just a couple of quick notices for everybody. The views and opinions of our contributors today are their own and might not reflect those of the companies they represent. And please don't take
[2:00] anything we say as tax, legal, or financial advice. Always do your own research, especially for this one cuz I think we're going to get some hot takes. But let's start off Let's warm up with an easy one, guys. This is about the Kraken parent Payward acquiring Magic Labs embedded wallet business. So, they acquired it in an asset sale announced on the 27th of July. Price was undisclosed. Magic has created more than 60 million wallets for over 200,000 developers since 2018.
[2:32] Um and it's rebranding as Newton Labs to focus on the Newton protocol. I didn't know this. Um and the deal extends Payward's uh acquisition run. They've been on a real run lately. Um they acquired Ninja Trader for 1.5 billion in 2025, Bitstamp in May 2026 for 550 million, Reap for 600 million. Oh my goodness. But um I I think I should start with Ethan on this. You know, like seems like anybody who's doing embedded wallets, whether it's Dynamic or Privy, is getting acquired at the moment. What
[3:03] Why is this stuff happening? What are you seeing in the data? >> So, I I think for for us uh quite a few of them are our customers, actually. Um so, I think in terms of the data for why why we think they're getting um acquired is I I think uh a lot of these solutions belong in a in a broader platform and suite, right? And like I think the consolidation um Fireblocks acquiring Dynamic is is part of that. Stripe acquiring Privy, to me it just makes sense that they live together. I I think um living by itself it's it's hard and it being an independent company is always difficult, especially in this
[3:34] market. So, I think it's a combination of the macro and and the fact that it's just it's better as as part of a whole platform versus standalone. >> Yeah, I I I guess it does make sense as a bigger piece. Uh Stephen, have you been looking at embedded wallets? Is it part of the public platform? >> We don't have embedded wallets today, but I think as we look at sort of crypto um sort of like self-custody versus centralized and custodial business like obviously has a ton of advantages particularly in the US where it is an approach to avoiding some of the
[4:04] ambiguous regulation and maybe even onerous regulation. And so I think like, you know, as we've seen adoption of sort of these self-custody wallets, I think it's mostly in service of delivering a very similar service model but probably with a lighter touch the regulatory aspect, right? Like Um you can make a, you know, clear argument that you are a technology provider facilitating access to, you know, you know, decentralized finance assets and the customer and and the customer is the one who's conducting all of those
[4:35] transactions, all of those decisions on their own self-custody wallet. Like, I don't know, we've seen an explosion in that sort of model. Again, it also gives you sort of turnkey globalization, internationalization of a US-based product, right? It makes it easier for you to move abroad and not have to think about sort of how do you port it across regulatory regimes. So, it's something we've looked at in the context of like those sorts of opportunities, not something we've prioritized to date, but you know, I think as we see DeFi continue to grow and more use cases where people actually want to use crypto as a currency rather than as an asset
[5:05] class, you know, I think that becomes a really a really obvious approach. >> Steven, maybe I'd be interested in following up here a little bit on on the one point which is a lot of the conversation and I as from the VC side, I see this a lot, which has been that the embedded wallet providers are building incredible technology, but they're been struggling to monetize at times. It hasn't necessarily been the best place of the stack to be able to accrue value. And Magic specifically, I mean, they were sort of a high flyer back especially in late '21, '22. I
[5:36] think they raised at the max at close to a $500 million valuation. I believe still they have Polymarket as a as a customer, but I think that might still be the only big customer. But like, how do you think about this M&A transaction with regards to the rest of the embedded wallet space, with regards to where how value accrues, and maybe how public should think about building, you know, their business for, um, you know, maximizing value around the space? >> Yeah, I mean, uh, I think you hit the nail on the head. I think in any category of consumer finance or consumer
[6:06] fintech or, I mean, arguably in most consumer businesses, value is going to accrue to the, firm that owns the customer and the relationship, right? Um, and I think as you look at businesses that are sort of providing services at the infrastructure layer, um, you know, those can have tremendous economies of scale and, uh, you know, great margin profiles, but I think you're right, like how do you mon- And then you mean then you like apply that to DeFi specifically, like what is the monetization scheme? How are you charging, right? Like you're sort of on
[6:36] this like, you know, I don't know if you're like cents per wallet per quarter paid by the provider, like, you know, and you just start to slice that onion really >> thin and like, I don't know. Which by the way, would you even would you even pay that? Would you pay cents per transaction? >> you even need to, right? Like again, how, you know, in the effectively like, one, there's a lot of competition and platforms you can use from you know, self-custody NBC wallet provider. Uh, and like listen, there could be various differentiation levels of differentiation, levels of service
[7:06] model, helping, managing, staking and a you know, there's a bunch of stuff you can bundle in there that it does bring economic value, but like your best alternative is like turning your engineering team towards building a a top a top sort of the natural DeFi primitives and doing it a little yourself. Um, and like as long as your best alternative is like a quarter of a team of a dev team's effort, like it's really going to keep a cap on what you're willing to spend for any vendor driven infrastructure. Um, and I think, you know, that's sort of again, I don't know
[7:37] the magic story all that well, but I think that's sort of what we're seeing come to bear here. Um, it it can make sense as a part of a broader platform like Kraken and Payward, right? Like it fits very nicely, especially if they're thinking about wanting this technology to to move abroad to bring more of their disparate services together in a self-custody model. Like that all makes perfect sense. But I think as an independent business, really tough. >> And Stephen, actually I'm kind of kind of curious since you're you're back on on in fintech as well. Like what is
[8:08] Plaid You said that consumer companies uh in fin in fintech need to own the the the customer, right? Where does Plaid fit in that from your >> So, I mean like think about it this way. Again, what I was what I was positing earlier was like the the your best alternative as a platform like us is like to build it yourself. Rebuilding Plaid is more than one team, one quarter sort of effort. Like Plaid has invested an enormous amount of time in integrating across thousands of
[8:38] financial institutions and dealing with all of their various APIs, data schemas. Some of them they still scrape from the front end. Like it's wild. And then like not only that, like there's a major investment in doing those integrations, but like the maintenance of those integrations and connections over time is like non-trivial. And like I do think it's actually like probably 3 years ago I would have said it was inconceivable to think somebody would rebuild Plaid. Now I'm like, you know, Claude's making it a little easier to do some of this stuff, but like just the breadth of of
[9:09] integrations required just puts it beyond what any In my opinion, any rational sort of middle >> Cuz a lot of these embedded wallets, they also infinite integrations as well, right? That's why I'm just kind of >> Maybe on the better wallet side though, the thing that is happening is that yes, they they talk about how they have, you know, infinite integrations, but they're those are actually like them piecing together a bunch of service providers, too. And so we're still seeing, you know, like like our friends of the pod, Mash, so they're a big part of that and like, you know, a number of others, right? And so it is still this case
[9:40] where I think in crypto and for anything that's happening on chain, it's much more disaggregated than like Plaid has made it. And so maybe somebody can rebuild a Plaid for crypto and I I know that's what Bam is trying to do at Mesh and a few others, but it is um it is not yet like one solution. But and I think that's also why Kraken bought Magic, right? And that's also why you know, Stripe bought Privy, which was this idea that you can build a more consolidated solution that you can then go and sell to an end customer that has more value and is synergistic relative to just
[10:11] selling the embedded wallet itself. >> Makes sense. >> And you can go further down the stack. And and I think that vertical integration for these things is is really really hard to do consistently. And I'm I mean, imagine a Stephen in your business, you've had to look at where do you vertically integrate and which bits of the licensing do you want to take on? And that's harder when you're an embedded wallet business with less margin and less revenue, no matter how many things you've integrated to. And and a lot of this as well is a is kind of as I think about Paywith's business, they're increasingly as Paywith going B2B. Like
[10:42] so they've done all their consumer stuff with Kraken, but so much of what they're doing is like helping other people launch wallets and helping other people get into stablecoin acceptance. A little bit like MoonPay, like they're all trying to become these everything infrastructure companies in a in a really fascinating way. >> Yeah, and I think the thing I would add that's a little different between sort of crypto and Plaid and and traditional financial services and crypto here is like the for a platform like ours and I think you could take even the Robinhood example, you know, with their sort of Morfo integration on top of USDG,
[11:13] I think the point is like as you build out a self-custody wallet, the number of features and services you need to provide to really get the vast majority of the value for your customers is pretty small in my opinion, right? Like you need a DEX, you need, you know, a yield generation, you know, platform and like you can get most of that I mean like I think five to 10 integrations and you can get the vast majority of the value that you would ultimately do and you're sort of you're limited by shelf space anyway. Whereas on the other side when you're talking about plaid like I need you know, I need to be able to
[11:43] serve customers that bank across all 3,000 of those institutions, right? It's such a long tail and like for our business like every customer whose bank you don't serve like you lose as an opportunity and like you know, that's a meaningful that's a meaningful revenue driver. >> I do think that the the difference there or maybe the the one core layer that I think that's a little bit closer is that be your you need less integrations into the service provider. So you know, Robinhood has lighter and Uniswap and Morpheus and Athena and like few people, right? Yeah, but but then what they have
[12:13] is beyond that they have people who potentially want to on ramp from you know, maybe a thousand different sources because they're banked in a thousand different places, right? And they're banked and I I use the term banking here but to mean hey, I I Binance versus Kraken versus Coinbase versus you know, name me all you know, all of your different on ramps. >> I have my USDC on ETH but now I need to go to crack. Yeah, exactly. >> And so that's where I think maybe the integration ends up being a little bit more cumbersome than for the applications themselves. >> I can certainly see that too as well.
[12:44] The the DeFi ecosystem does introduce you some new product applications even as you sort of alluding to like I think what Robinhood is trying to do with the X stock side is really really interesting where you can use sort of tokenized stocks as collateral to borrow against to do other things. Now, you know, does a consumer want to be doing that? Is is that the right thing to do? Separate set of questions, but this design space that opens up when you have this additional composability that comes in DeFi is kind
[13:15] of interesting. So I can see why you know, PayWith as a service provider here want wants to get into that. I mean, what would you be thinking about as you look at PayWith and MoonPay and Stripe and all of those guys and they're all probably like swarming around you at the moment. What is it What is somebody good look like when they're coming at you? What do they need to demonstrate? Because you're quite a bit different business to Robinhood in a lot of ways, but I imagine there's a few other things they need to get right. >> Yeah, I mean, it's a pretty It's a pretty simple Yeah, it's a pretty simple conversation for us, right? I think as
[13:45] we think about um on-ramp payments, bringing money into the platform, it's very much like a I mean, there are two major things, right? There's like one conversion level, like, "Hey, how how broad and what kind of adoption are we going to get from a given user base trying to convert like um I think like the corollary is the number of pitches I get to do stablecoin funding for US brokerage accounts, right?" And that's become a really hot conversation, but like we've asked you know, our customers many times, how many of them would prefer that versus a bank link to their core bank. I'm like,
[14:17] almost none. And then we ask them like, "Hey, for the people that do, hey, what percentage of your assets are in USDC that you would move over versus in your checking account or savings account?" And it's a small portion. And you're just sort of like, where is the sort of you know, where is the the natural adopt you know, stablecoin adopter in the US market, right? I mean, outside the US, if you're talking about crossing borders, the the opportunity is more obvious. Um in the US, I think we we have not Again, every time we've asked, and we've done it a few times because it keeps
[14:48] coming up. Uh every time we've asked, it's like, "This isn't really going to add incremental value in terms of bringing new customers on and allowing them to convert, you know, their dollars into their brokerage account more easily." Um so, it's uh it's that and like it's that level of adoption, and then it's like, "Hey, what's the cost to do that, right?" I think I've seen stablecoin funding pitches from five bips up to 50 bips. And it's like, you know, when you're talking about things in you know, half a percent fee to move US dollars,
[15:18] you're like, "That's That's like Now we're in like debit card and which is like a really inefficient way to move substantial dollars around the economy. Um and so like, you know, that's the other that's the other piece is like, you're competing with fundamentally ACH, which is effective I mean, it rounds to free in most in most businesses like ours. >> Yeah, at the scale you're operating. Ethan, one last question for you though is like, do you see any domestic users of stable coins? And is there a possibility that they're just not in the in Steven's customer portfolio base?
[15:49] Like are there are there domestic users out there that you can see? >> So So actually today we're going to publish a report about cross-border payments. So it's quite timely. I think for most of the stablecoin usage right now is more for like outside of the US today, right? And then I think anything that's used within domestically in the US will be more B2B B2B use cases between institutions. I don't have the numbers at the top of my head, but that's that's like what my my intuition tells me.
[16:19] >> So it's a good summary and I think probably pretty validating. It's It's also kind of an interesting segue to somebody who does have their own stablecoin who has been pushing their customers and has their own chain. This is of course Robinhood. Their real-world assets have jumped fivefold as tokenized stocks take the world by storm was the headline from CoinDesk. Not one to miss a bit of hyperbole, but their real-world assets hit roughly 70 million in volume
[16:50] and under two weeks, which is not nothing. GameStop, wonderful stock, leads daily volume at 26.6 million and ahead of Nvidia and SpaceX. The total value locked on the chain has tripled since mid-July to 312 million with over 600 million in daily DEX volume. Of course this went public on the 1st of July, so Um, been pushing it pretty hard. And and of course a cheeky plug, uh, check out our exclusive interview with Robinhood's, uh, Johan
[17:22] Cabrera on the 7% earn product on our YouTube. Uh, it's a YouTube exclusive, so you can go check that out. I'd be foolish if I didn't say, "Steven, what do you think about this?" Um, That's Let's just stop there. >> Um, I have a few thoughts. The I mean, I think like the numbers are small right now, right? The you know, we're talking about a platform, the you know, Robinhood last night, uh, just published their earnings, right? I think call it $370 billion.
[17:53] So, the moment we're talking about there's 70 million on chain in the sort of tokenized assets offshore. Again, even though it's been a few only a few weeks, that's still it's still quite small, right? >> But and I think, sorry to interrupt, Steven, but I I think what's so interesting how like the the X and the crypto press is like, "Oh my god, it's up fivefold." And I'm like, "Yeah, you just launched it and you have 28 million customers and you've been pushing it at them, so of course."
[18:24] >> Yeah, and that's the thing is like I actually think they're, you know, they're, you know, most of their distribution, their 28 million customers, the vast, vast, vast, vast, vast majority of those are US customers. Um, who don't have access to these products, right? So, I'm not I'm not surprised, frankly, but I do think that's the frame and the lens through which to look is like how does this represent Robinhood's up grow, you know, internationalization, their >> Yeah. >> wholly at non-US customers, building their brand outside of the US, and accessibility of their sort of features
[18:55] and products outside of the US. And like, you know, it's a challenge for any financial services brand to move around the world. Every individual country has their own securities and financial regulators, and they're all a little different, and like genuinely like you can't I you know, I I'm going to This is maybe a take, but like as a firm even even with the resource of Robinhood, we can't justify running separate businesses in 180 markets in the world. It just doesn't make sense. Most of those markets are not big enough to justify your time to
[19:25] spend, you know, your team's time and the resources required to go in and engage at an individual level and so we see platforms like this going and finding ways to sort of globalize without having to do that on the ground engage with every regulator and it's like a little bit of its own regulatory arbitrage. It's you know, it's somewhat rational in its own in its own right but like uh you know, it is what it is and it's well, it's understandable. We shouldn't you know, we shouldn't be bold over by the numbers
[19:55] in the short run because they represent sort of again a large portion of the XUS opportunity and right now you know, it's pretty small. They did Robinhood did almost a trillion dollars, 956 billion dollars in equities trading last quarter. Right? And so we're talking you know, and then when you when you put that within context of like all right, what are we seeing from the real world of asset the tokenized stock trading on the chain? I mean it's you know, again it rounds rounds to zero. >> Oh no, yeah. I think 70 million. I think I think the total tokenized equities
[20:25] supply market cap now is about 2.6 billion. So it's about 2 to 3% of the all the tokenized equities today. Yeah, just to give you a scale. Yeah. >> Maybe Steven, I I want to I want to ask a a question cuz your tone to me strikes it as like very bearish maybe longer run as well cuz you're talking about where they are today but you know, obviously this is the start like we had just said it you know, we're 4 weeks into it. So can you talk a little bit about like what you think this means for the future of Robinhood but maybe also for future of public and other fintechs who are
[20:55] going more global and like how would you think about that? >> Sorry, I guess what I'm saying is like I'm not bearish at all on the long run. I think this is part this is an objectively objectively correct and very understandable approach to XUS growth for them. And I think that's a large I mean as they reached pretty high penetration in the US and business continues to grow really well in the US. I do think you know, a big part of their growth story and Vlad has said it many times over the next you know, 5 years is going to be X-US and they do want to be the largest global fintech brand. I
[21:25] can't I can't remember exactly what his words are but like that's one of his three big priorities that they talk about every quarter and I do think this is like an understandable and really rational way to approach that X-US growth. Now, and again, I can see the use case for things like tokenized securities outside the US. Again, accessing accessing the US market for people that don't live in the US is quite challenging. It's quite expensive. It's you know, gate kept and and that's that's a terrible shame. It's bad for the US. It's bad for those
[21:55] markets. Um and I'm excited to see people trying to push on it. Now, that's I need to you know, also say I don't see a strong use case for tokenized stocks for US investors where we have an amazing equities market, the best in the world, the best it's ever been, continuing to get better in its own right without having to go down these like sort of pseudo synthetic tokenized routes. >> I I think that's the interesting thing is this like global by default if that is what you're going for and you're trying to expand internationally, then
[22:25] this is a great use case for you. If your growth is primarily domestic in the near term, then it's a it's a different conversation quite quite entirely. But like I'm also interested in like some of the tokenized stocks in particular that are performing. Like I see GameStop and I have 2021 flashbacks. Like this is this is obviously skewing very, very retail here. What is what is your take overall on tokenized stocks
[22:56] outside of the US market? Like the if you were to steelman that argument about who's who's going to buy these things, who's going to get access against them, and then um uh sort of strawman it, and where do you where do you net out on those two positions? >> I think right now, like, you know, I think I would expect adoption of tokenized stocks outside the US to heavily intersect with, you know, international crypto users, right? And so, I think you're going to see a lot of the same behaviors,
[23:27] you know, a lot of the same sort of proclivities >> crazy. Yolo. >> the XUS crypto uh trader and investor you're going to see porting over, right? This has not, you know, these opportunities they have not crossed the chasm into, you know, institutional and high net worth and, you know, genuine long-term investors outside of the US. Um now, I think over time, that's the goal, right? But I think in the short run, like, hey, it can, you know, imagining a, you know,
[23:58] a hyper-liquid ask tokenized stock market um outside the US is like sort of the dream, I think, if you probably uh ask Johan to to to really to really try and, you know, pin down what the XUS dream would look like, I think it would be something along those lines for the tokenized stock market, and like, that's the path. But I think it's Again, it's just the two user bases are, you know, >> wildly different. Yeah. Rob I'm interested in your views on this cuz I don't know I've certainly spoken to some very large financial market infrastructures in in the past couple of months, and uh you know, Stephen
[24:29] mentioned hyper-liquid there, and it feels to me like that's put the cat amongst the pigeons, especially with the volatility of the weekends that we've had from the the geopolitics, and been having very interesting conversations with clearing teams about well, how would we do off-hours cash with tokenized money market funds, and uh what does off-hours cash look like, and how can I get my banks to to settle this stuff? And this is this feels like it's it's at a different gear on the institutional side. I Does Does resonate for you that that that like in more on the institutional side there's an
[24:59] onshore case? >> Yeah, I I I think there very clearly is. It's you know, I understand Steven's point around okay, well, there's not necessarily a domestic use case today for because especially with the products we have the X docs of the world and uh you know, there's a a few others which are sort of like wrappers on wrappers of things in different locations and you can't you still can't you know, actually buy the underlying during those off hours you have to have someone to hold risk, you know, over the weekend to you know, etc. Those products are really tough and what you need is you need the infrastructure to change. And that's
[25:30] what you're talking about here which is okay, well, like do we like do the actual um you know, maybe the clearing houses do the uh you know, potentially you know, some of these um how do we think through what happens on is it derivatives versus spot? How do we think through you know, potentially what's going to be um a collapsing of the DCOs, the DCMs, the FCMs, right? Versus you know, having this disaggregated uh you know, type of type of market structure. And so that's happening right now. It's very clear to
[26:00] me that the makers want there to be a 24/7 trading because they're going to make more money. And they're you know, Citadel is probably the single best US lobbyist in the world. And then you have the the the takers who the a lot of the their their infrastructure from an accounting perspective, you know, still in Cobalt so like you know, maybe they don't know why they can't settle on Saturday. It's been there like that for like 40 plus years. Uh and so they're are starting to figure it out right now as well. But the the market participants want it
[26:30] in mass because it is just better. It's GDP enhancing and GDP enhancing means somebody's going to figure out a way to do it. And right now, at least from my perspective and from a lot of people I talk to, there is no way to manage risk on the weekend without a tokenized asset which includes a tokenized uh you know, like a stablecoin and then you know, those assets themselves being tokenized because you have to be able able collateral. The overnight you're people are trying to figure it out like dirty hedging and moving with the sun and all these types of things. During the weekend, I think like we almost certainly have to go to that direction.
[27:00] >> Yeah, I know, it's fascinating. I think the only exception I can think about is off-hours clearing and derivatives in LCH in the in the UK does use money market funds and's been doing that for for a little while in the European market. And so, there is a precedent here for using money market funds as cash off hours. Like, I don't think it's beyond the realm of what a man um thank you for my little segue into capital markets land, Rob. I'm going to take a quick pause here while we hear from our sponsors and we're going to come back to the next story. This episode, if it isn't already obvious, is sponsored by our friends at
[27:32] Visa, the leader in digital payments. Visa's tokenized asset platform, or VATP, uses smart contracts and cryptography to help banks bring fiat currencies on chain. Whether it's launching a stable coin or deposit tokens or something else. VATP allows financial institutions to issue fiat-backed tokens, improving financial efficiency and enabling programmable finance. Check out the links in this episode's description to express your
[28:03] interest in VATP. I've worked in payments for more than 20 years. You can probably tell by the gray hair if you're watching. But, the thing with payments is people think that they're easy. It's kind of under the hood a little bit like sending an email. But, the problem is there's thousands of things that can go wrong. Things like fraud, things like chargebacks, things like dealing with compliance or reconciliations. And stablecoins fix a lot, but they don't necessarily fix those particular problems.
[28:33] That's one of the reasons I joined Tempo is because they thought about things like reconciliation and compliance and they've aimed to fix those hundreds of little papercuts that developers have to deal with when trying to go on chain. Tempo has things like native account abstraction, block lists or allow lists, and fast, predictable fees. And that really matters if you're sending large volumes of payments or you're dealing with payday. You really want those fees to be predictable. You can't have them changing on you during peak volume. So,
[29:03] that's one of the major reasons enterprises choose Tempo, and it's why I did, too. You can find out more at tempo.xyz. This episode is sponsored by M Zero. Launching a stablecoin used to mean accepting somebody else's technology stack. One fixed provider, bundled layers, no flexibility when your business changes or the market moves. M Zero is Modulus stablecoin infrastructure that keeps every single layer independent. You can choose your
[29:34] own regulated issuer, design how your stablecoin behaves, and even tap into shared liquidity from across the network. Your [snorts] stablecoin becomes built around your business, and it's configurable, so you can optimize the tech as you grow. >> [snorts] >> Make your own money. Get started at m0.org. All right, next story is Remitly launching their global card, which is apparently one account to get paid, spend, save, borrow, and send across borders. Eligible customers can hold
[30:05] balances in US dollars or USDC, and pay via Apple Pay and Google Pay, and receive funds directly into the cards. There's no FX fees, no fee everyday spending. You can do the direct deposit and instant transfer between all those cardholders worldwide. And it's an open-end credit line with no credit history required, quite brave. Phase rollout starts on the 30th of July, with expansion planned into the UK, Europe, and 10 more markets,
[30:35] including Pakistan, Philippines, and across Africa. CEO said they want the card to disappear into everyday lives. Uh Rob, I think uh you and I have batted back payments about and if Kai were here, he's been talking for a while about uh you know, remittance companies couldn't monetize the beneficiary before, but Remitly's quite different to MoneyGram and Western Union and that this is a business that's been kind of growing in its core business versus those other two that that you know, kind of were seen as they're struggling in their core
[31:05] business adopting stable coins. So, in that context, how do you see Remitly versus the neo banks adopting stable coins versus the remitters and and the opportunity for them? >> Yeah, I think for Remitly I I mean, to your point, we've talked about this with Western Union and MoneyGram who, you know, they are also launching things like this where it's hey, we we currently monetize the sender, but we don't monetize the receiver. So, let's put a a wallet and a card at the receiver and we can become their neo bank. Remitly has has a better
[31:36] relationship with their a lot of their customers both on the sending and receiving side than um MoneyGram and Western Union have in in the past, but it's very clear that and I think some of this is really driven by the public markets. Remitly trades at like two times net revenue and you know, it's a billion dollars of revenue and it's a two billion dollar company and and they very clearly have figured out that for to be a higher they need to be a higher margin business. They need to be a business that does more things with their customers. They need to be able to have better retention, which means not
[32:06] just, you know, fighting over the effects fees and fighting over the costs, but also fighting over other parts of the wallet and to be able to do all of that, to be able to trade better, to be able to accrue more value, the easiest way to do it globally is stable coins. Like that is to the point we talked about earlier, Ethan mentioned it, going global is uh you know, cross-border and stable coins is growing very quickly and now with the card products, you know, the Reigns and and and the Stripes doing this, like that has become much, much easier for people. And so, I I expect that that continues to grow for all
[32:37] types of, you know, financial products and financial companies, whether they're neo banks or not, cuz everyone wants to become the bank, and it's easier than ever, it seems, to be a neo bank. >> Yeah, no, certainly. And if you compare this to Wise, I I I I saw that it was interesting as a comp set, right? Wise does a lot, lot more. They're somewhere in the four, four and a half X, and they, you know, versus Remitly started in a very similar place. It was that consumer direct, and I think Remitly is now trying to get into SMB and the B2B flows, and some of that sort
[33:09] of stuff. So, and then interested in your views on, like, you've just looked at cross-border, you've probably looked at remittance. Like, where are the promising opportunities in stable coins for a business like that? >> Yeah, so while B2B payments accounts accounts for 79% of all cross-border payments using fiat rails, it accounts only for 49% of the money using stable coins. So, about 0.6 X of the share, about 60% of the share. And then for C2C payments, where the stable coins see the most outside adoption
[33:39] relative to the value over a overall share of the market, it accounting for 15% of all stablecoin volume compared to 5% of fiat, and over index of about 3 X, right? So, this is a chart that shows that in terms of, like, so stablecoins are more consumer tilted for fiat for cross-border flows versus fiat. So, that's that's one of the the insights that we just did together of FXC Intel, right? And and there's a whole entire deep dive into into how we how we got that um that result. So,
[34:09] >> I was going to say it it I guess it's led by consumers in the smaller dollar amounts, whereas cross-border, you know, you really are skewed in fiat by some of the institutional movements between banks and whatnot that are, you know, really, really dragging that up. If you think about what City or JP Morgan's book looks like and the size and scale of some of those transactions, that's going to drive drag the the averages up a a bunch. Uh Stephen, interested in your view on this if you have any on on payments companies doing more with stable coins. Do you think they're the natural early adopter?
[34:40] >> I mean, we talked earlier about the the cross-border benefits of sort of taking a stable coins reducing sort of um you know, again that that affects you even making it actually simpler to move money across borders. Um I actually think the most interesting thing here is just thinking about Remitly as a you know, consumer fintech company thinking about the monetization problem that Rob mentioned earlier, which is like you know, they've got you know, two customers in every transaction. They're monetizing one side. Per dollar, I think they're probably you know, my guess would be it's somewhere in the tens of basis
[35:10] points of monetization per dollar that moves. And so, if you're running that business and you're thinking, "Hey, how do I increase that most linearly with the minimum amount of friction with the highest conversion and adoption?" It's like putting a spend card on the other side, right? I think you said earlier, a lot of these are small dollar consumer remittances. The receiver, again, the underlying assumption is that money is to be spent, right? If you can then monetize that on the card side and again, internationally the interchange rates vary widely, but let's say it's something again, another tens of basis
[35:41] points. Like you have an opportunity to meaningfully change the unit economics on every dollar transferred. And like again, you're doing that without you know, without having to go far afield of the core platform that you're building, right? You're going you're adding a card to uh you know, to a store of value you have on the other side. And like again, you're capturing up to double the economics of what you saw on the initial transaction. So, like that's sort of like you know, I think the business opportunity there is is obvious. And like you know, we do see Wises and some
[36:12] of those going into things like investing and competing with folks like us. And it's like, "Well, that's like now you're getting a little far away from the point, right?" The point of remittance platforms is to move money across borders, you know, in relatively small amounts for the purpose of spending in the in the receiving country. and like the cost of you know, somebody else is monetizing that spend on a corridor or a portion of it and you might as well be in that flow. >> I wonder about these businesses as distribution for somebody like a publican, somebody else that does US stocks and because like you're going to
[36:42] potentially have what, 30 million customers there or wallets at the recipient end and that's a that's a whole chunk of people that aren't currently accessing the US stock market looking at a Remitly mobile app that could be accessing that stock market. Sorry Rob, I could have crossed you, you're about to jump in. >> Steve, I actually just wanted to to kind of pull on that thread a little bit, which is that you know, somebody like a Remitly who has this relationship is now you know, trying to monetize the international relationship as well as the domestic with you know, stablecoins.
[37:13] And you know, as you think about your business, which as I understand is primarily domestic today, and what or how does public and whatever you're able to say think about that international opportunity and how does that relate to stablecoins? Because when I see it from our relationship with Rain, the pipeline has gone from you know, very cryptonative to you know, many of the most traditional and biggest fintechs in the world and technology companies in the world and it seems like that is a topic of conversation everybody is having. So how does public
[37:44] think about it? >> Yeah, I mean I think like you know, again to answer a little bit of Simon's question too, I think as as we think about like these investing businesses, they're one thing we've learned is their definition you know, best viewed as like disposable income, right? Excess surplus savings, right? After you've gone through all of your tax advantages in the US or in your home country, right? Like you're sort of like getting to a you know, top half, top quartile of the you of of the sort of of any individual customer base, of
[38:14] any individual country base where you like ultimately want to be serving and where you can have sustained positive unit economics. As you start to dip a little too deep, it becomes really difficult to sustain the service model, um, you know, without without having to charge meaningful fees or really being, uh, regressive in the sort of platform design. Um, so again, that's sort of where we've arrived in the US. I think as we look abroad, I think the same story is likely to be true. Um, and it's a little bit of like what I was saying earlier about
[38:44] about the sort of Robinhood and the the, you know, tokenized stock-based opportunity. Each and you know, as you get the US is the largest market for investing in the world. Um, as you get further down the stack of other markets, it becomes harder and harder to justify the expense of localization and and serving those customers. It's like, again, it's localization. Localization goes all the way down to the metal. It also goes to customer support and translation and like, there's quite a lot of overhead in making that work. And so it's, um, it's one of those things that we
[39:15] have, you know, in our long-term plans, but I wouldn't say we see it as being as attractive as the US market. Now, a big part of the challenge of moving abroad is, again, we've talked about regulatory already, but the the payments rails is a huge part of it. And I think this is the strongest case for stablecoin adoption, um, and the FX flows. I think it can meaningfully bring down, you know, the cost to serve from a payments perspective, uh, you
[39:46] know, through international expansion. And like, importantly, I think you can do it with stablecoins in a way that actually still preserves some of the FX revenue that is really important to serving sort of international markets as a domestic company. Like, you do kind of need, you know, to justify It's all some revenue for for anybody playing in that space. And and so, you know, as a as a UK-based person with a UK-based app, like that FX stuff always bothers me. I know that there's stuff hiding in the margin versus what I see on the ticker coming from the exchange versus what I'm going to pay, but you haven't told me what the fee is or the spread is here.
[40:17] That's that's silently hurting people across borders all the time. >> And the reality is like that's, you know, I don't know. The best rate, I don't know. I I I haven't looked at this in a in a in a couple years, but like hey, if you're paying less than 25 basis points to change between pounds and dollars, you're doing really well. And if you're a brokerage platform earning 25 basis points on an equities trade is incredibly lucrative. >> Oh, yeah. >> That is amazing revenue generation opportunity, right? Like like, you know, again, it's it's all of a sudden you're like that's kind of >> And that potentially goes away if
[40:47] everything's dollarized, right? Like it that goes away if everything's dollarized in stablecoins. So, yeah, it it's about the revenue opportunity. It's about going into the new markets. Um I know a lot of folks as as I'm a fintech nerd have tried to come into the UK, got so far, and then there's the culture difference as well. Uh people just don't invest as much naturally. They're not as invested in the stock market anywhere near as much as the folks in the US, anywhere else in the world. So, big big big changes. I got to move us to the next story. >> So, they they might >> Maybe in Korea.
[41:17] >> These days I think like again, China, Korea, Japan is I think where we see >> SK Hynix, um Samsung. Um that's that's all I'm going to say. And we'll leave that one there. That's for sure. That's for sure. Um all right. I got to move us to the last story though cuz this this could be a could be a fun one. Um so, Robinhood and Crypto.com are exploring a prediction markets deal that would allow customers to trade yes or no events contracts from Crypto.com prediction markets without leaving Robinhood per the Wall Street Journal exclusive. Uh
[41:48] today Robinhood sources contracts from Kalshi, Interactive Brokers, um Forecast X, and of course Rudder, which is the exchange it backed alongside Susquehanna in 2025. And I think a lot of their volume now goes through that platform um rather than to Kalshi. Um Kalshi's CEO Tarek Mansour called Robinhood its leading competitor recently. And uh I think Ethan, what does the data look like in this space?
[42:18] Because prediction markets data and crypto data, they're all kind of coming together. How should seriously should people listening to tokenized be taking prediction markets? >> So I I think we covered in on this podcast earlier that that one of the one of the biggest use cases for prediction markets data, it's it's like price discovery and also finding key events on on like events like events on a weekend, right? I think that's the use case that I I care about, right? I I think we can talk about sports and all that later, right?
[42:49] And in terms of like volumes in the month of July, the notional volume is about 50 billion across most of the venues we're tracking, Kalshi, Polymarket Crypto, Polymarket US, of which about I think right now about 30 I think 39 billion of that came from Kalshi. I think they grew about 53x year-on-year. And then Polymarket grew about 6x year-on-year. So our other Polymarket US has launched. So the the growth is humongous and it's undeniable that almost every single I think that the interesting thing about prediction markets for me is that
[43:19] most of our new customers coming to the space, they they never cared about crypto before, right? And prediction markets is drawing them to say, "Hey, I need to start looking at this more." Especially because Trump does things only on the weekends as well, right? So that that has like kind of caused this this like >> Oh yeah, there's that. Sorry, then I didn't mean to cut across you, but um Stephen, before we were talking, uh you we've obviously mentioned 24/7 a bunch this week, but we uh I was looking at the Robinhood Q2 results and earnings that that came out recently and uh there was
[43:49] quite an interesting stat in there. >> Yeah, I mean I think what we're seeing, I mean I have many takes on on the prediction market business, but I think interestingly last night we we did get the update from Robinhood's quarterly. Um you know, prediction markets for them are massively larger than their crypto business and they're you know, sort of very close if not equivalent in size to the peak of Robinhood's crypto business, right? So you're very very close if you look at sort of like, you know, extrapolate out where the prediction markets business is for them and I mean if you if you project any growth, it is
[44:20] far more important for them than what we what they what what crypto ever meant uh from just a revenue uh perspective. Um which is saying a lot. Like I think if we remember a couple years ago as Robinhood went public like crypto was an enormous part of that story and you've seen a lot of investments they've made across crypto um on the back of that. Now if like prediction markets are larger and are growing faster and appear to be more persistent and a little less volatile
[44:50] from a quarter to quarter revenue perspective, like I think we see the big opportunity. I think if you follow that through like for them as a business operator um in this crypto.com opportunity, I think it makes perfect sense for them to view themselves as a broker for their customers and you know, we at Public are looking at the prediction markets uh business. We expect to launch it, you know, sometime in the next few months. We will be, you know, sort of single exchange to start, but we recognize the right model
[45:21] as the broker in the relationship owner in the long run is to have sort of multiple partners um because like it's a really fragmented market. There are many different varieties of contracts. There are different you know, resolution criteria of very similar sounding contracts across multiple platforms and you can see there might be meaningful differences in how you might want to play the, you know, XYZ contract on Polymarket versus XYZ contract on Kalshi versus the one that they can build themselves on Rhombus and like, you
[45:52] know, follow that through to you know, sort of all of them. I I I expect to see a sort of you know, one to many market and that'd be the optimal model. Now Robinhood has built their own uh you said earlier about the DCO DCM you know confluence and FCMs all moving together like you know they are playing both sides right they're both operating as a broker and the exchange for you know about 20% of the contracts last quarter. It'll be interesting to see how that evolves and how the market structure evolves but my my guess is we will see that sort of one to many.
[46:23] The last thing I'll say you know this is all sports volume. It's all sports betting. We at public have been pretty clear like gambling does not belong in an investment account and we're not going to do the gambling stuff but we do see really interesting markets and capital markets linked markets in the sort of prediction and event contract world. And so like I was really excited earlier this week to see pretty substantial volumes on the Fed decision on Kalshi right? I think they hit somewhere in the $80 million range in terms of total
[46:54] volume like for one Fed meeting like that's you know for one market on one Fed meeting that's a pretty substantial business there on its own and like right now I think if you look at the sort of Kalshi volume I think it's about 90% sports still and again I think I would assume you know Robinhood doesn't publish that exactly but I would assume it's basically the same. Like to us like that's that's not optimal it's not great it's gambling it doesn't belong within an investing portfolio but the other 10% is really exciting and like I think over time like
[47:25] we've seen we've just scratched the surface on interesting economic and capital markets linked markets and again I think like you know we're hoping the SEC and the CFTC actually continue to work together and you know start to roll out some opportunities to do prediction markets on things that are tied to securities like quarterly earnings and like that's where we see real opportunity. And again I would expect I would expect your you know something similar from the Robinhood team and like that's part of the rationale for having multiple partners is like as the SEC and CFTC roll out new guidance on some of these
[47:55] cross markets across the securities and the predictions of event contract world. Um You know, we don't know which which exchange is going to be the the fastest mover there and have the best versions of those contracts. >> Yeah, I I have so many and very complicated thoughts on this. So I'll try to keep it not not too long, but listen, I think I think there's a point uh on just the story in general, which is okay, well, Robinhood is a broker and yes, they are, you know, going full stack with their own exchange with Roth Era. They moved a lot of the
[48:25] volume from Roth Era, but they still want to have best execution. To Steven's point, these contracts are not commoditized, right? They are not the same across all the these different exchanges. So you have to be able to to to work with everybody. And I expect that they will be doing that as well and I expect, you know, Steven kind of alluded to it. I expect public will do that as well as they think through this. It is also true that it is mostly sports today. I think it's very clear that like sports was an easy first kind of growth engine, but it is actually not if you think about the
[48:55] history of of prediction markets. It is not a sports story until now. It was a it was a politics story. And so, you know, the you know, why did Polymarket become you know, the brand that it did was because they had, you know, at the time, which was the biggest one that ever in prediction markets, $5 of traded contracts on on the 2024 election. And you know, every single contract, you know, had the right outcome by the end, right? And which was better than polling. And you know, now these guys are doing 5 billion a week or or more, but they're, you know, that was that was the story at the time. And then
[49:26] sports grew because people saw the opportunity and you know, obviously, you know, Cash App has a lot of parlays as well. And the World Cup just happened. And so of course, the World Cup is the biggest sport event in the world and so people want to trade it. I get it. I do expect, to Steven's point, that these markets are going to change very quickly. Both the consumer and on the on the institutional side. The consumer side I actually think is probably less obvious. You know, I know Steven talked about these other markets, but like I don't know. From my seat as a VC, I see the
[49:57] consumer behavior changing a lot, which is that they want props, they want prediction markets, they want sports gambling. DraftKings just said that they're doing a thing with I think United Airlines or American Airlines to allow DraftKings in the air like while you're while you're flying, right? Like the world is changing. I mean, we're talking about what happens in SK-II next, we're talking about Micron. Micron is a trillion-dollar company that's has a 120 vol on the stock. Like, you know, that the world is really changing the way people interact with the the capital markets. And so, I don't actually know if the consumers will these other
[50:28] markets will take over, you know, these you know, sports and you know, some in politics and some of these other things on the consumer side. But I do think all of it will grow. And I think prediction markets is just going to be, you know, 10, 30, 40 times bigger over the next couple of years. The institutional side is a different story. Like the things I am hearing happening on the institutional side right now at both Polymarket and Kalshi is incredibly interesting around, you know, I I heard about a trade that happened with with with with a Polymarket with a broker where there was an e-commerce
[50:59] company that wanted to put on, you know, we're talking about a trade in the hundreds of millions of dollars, a hedge against inventory risk for a local Latin American, you know, soccer team by putting money on the other side of the World Cup, right? And that looks like sports volume, but that is a hedge and there's real economic activity on that, right? And then we're talking about things where you're being compute forwards, you're talking about things that are happening on you know, the equity linked side, you're talking about things that are happening. I'm hearing a lot of interesting
[51:30] conversation around the sort of tax credits related to the who's in charge and how those tax credits might go away or may not go away for people who want to put cap backs into new energy, right? Like these types of the possibilities are endless and on the institutional side and I think that it's going to just going to get so so much bigger. >> I mean I think the obvious I mean the obvious one and and like both for our customers again we serve again a relatively serious investor and trader right we we we view ourselves as as
[52:00] standing for you know working with those those folks and sophisticated people that care about having good outcomes but I think what we're hearing from them in prediction markets is actually that there's like you know again it's the opportunity to hedge more discreetly right without basis risk hey I I have a point of view on what the Fed's going to do uh I don't want to I don't want to go and you know make a play on TLT which has basis risk relative to the ultimate Fed decision I just want to make a play on the the Fed decision or you know again I've heard this on the institutional side too especially like you know a lot of the the hedge fund
[52:30] world um you know our traders hedge fund traders have points of view on basically every meaningful metric every quarter for every company they follow and they get to conviction on oh I might have conviction on Tesla's revenue but actually I'm not really sure on guidance so how do I play that that's really challenging and like you know the prediction market again if we get to this world where we do see coordination with the SEC and CFTC a prediction market on Tesla's quarterly revenue creates a way for institutional traders
[53:01] and and retail traders the more sophisticated and to actually monetize the research that they've done and the conviction and the points of view that they've built which is exciting I think that's societally useful in a way that's very different from >> you know >> Yeah but and I don't mean to imply that I don't think those markets for for retail are going to get you know very big as well it's just not clear to me that you know we'd also don't just still see growth in in you know things like sports and and other things and so but market share will change it won't always be 90 but I
[53:31] just think this type of option contract is just in the way it's presented is just an incredibly good product and it's going to grow by a lot in all of these markets. >> I am a little again I like I sort of alluded to it with Robinhood's results and I said, you know, we've seen a more persistent growth curve with their prediction markets business than the you know, where the where the crypto business was and I think that's interesting. It's certainly less volatile from a as a revenue stream, which is interesting. I agree I think the mix will change. The one big
[54:01] question is like the regulatory risk. It's funny cuz it's the same question we had in crypto but like now it's ported over to future markets, which is like do we see a backslash if there is uh you know, if there are major changes that come out of the midterms, if there is a major change in the next presidential administration, like does that change any of the treatment or the opportunity within this business? The reality is like I hope not. I think we've actually created a really great new market structure for a very specific type of information and point of view,
[54:31] even to include sports, right? Like I think it's the objectively lower cost better model for taking a point of view on a >> 100% >> what's you know, than than a sports >> By the way, I don't know if you saw it, but CME came out yesterday and said, "Hey, we actually might do sports-linked futures and options." Right? And this is the CME. >> Hey, if there's a train leaving the station and it's got money on it, why wouldn't you jump on that train? I I do The only thing I worry about is consumer harm in all of this, right? Like we we got to a point with regulation with some of these products where you're taking a
[55:01] point of view on things and we say, "Actually, this can be advertised in such a predatory way that people just end up in a hole and do things that are not good for themselves." And I would love to see some thoughtfulness about where the boundaries of consumer harm are here and I I respect what Steven's saying there about well, we we want to play over here where two things can be true. And I think this conversation often gets locked into like oh, it's it's all gambling therefore it's all bad. And like no, obviously,
[55:31] this is a very efficient hedging instrument and might be one of the most efficient financial market products that we've ever seen and it's fascinating and we should encourage that but where's the consumer home conversation in all of that and that's obviously when you're making a lot of money it's not the first thing you want to do is turn away the consumers trying to give you money but I do think that's that's probably the one thing we could we could benefit from a little bit more. Guys, we are flat out of time. I could do imagine just like we should get you guys back and do a whole show on just this because it's a debate
[56:03] we should have and think it's it's it's a fascinating one and getting into the nuances about like how efficient it is as a hedging product versus the other traditional hedging products. That's a conversation nobody's having and yet I bump into people from markets and they're like this is wildly more efficient than anything I had on traditional exchanges. So we will make a promise right here right now to do that special at some point maybe for the holidays >> planning it but the purpose is well cuz now most of our customers they need to blend the prediction market outcomes with the perpetual prices as well.
[56:34] That's it's like unifying both into the same feed. >> Foreshadowing is what we're doing right here. A couple of stories we didn't have time to cover Binance US is going to apply for a CFTC license in August for its own prediction markets. Whoo. BNY targets an 8.6 trillion dollar transfer agency market on blockchain rails. BNY don't bet against them. Ondo Finance are weighing an acquisition for crypto infrastructure according to sources. Go go you guys and Brail launched their
[57:06] ion interoperability protocol to solve the stablecoin industries liquidity problem. That is all we had time for this week. Thank you so much guys for for everybody for watching and listening but Stephen if people want to learn more about you and public and everything you're doing where do they go to do that? >> Hit up public.com and you can find us you can find me on Twitter sykes_ or on Reddit we have our own subreddit r/publicapp. I spend a lot of time in both those places, so try to be an easy guy to reach. Feel free to hit me up.
[57:36] >> Heck yeah. Ethan, how about you? >> Yeah, just come to aliyun.so. You can find me on Twitter as well, Ethanish, yish. Y I S H. So, nice to meet all of you. >> Rob? >> Yep, you can find me on Twitter at @haddekin or LinkedIn and dragonfly.xyz. >> You'll find me at all the socials and SY Taylor screaming into the void at fintechbrainfood.com and of course at tempo.xyz. You'll find a lot more of this show if you subscribe. Hosts always bug you about this for a reason. It helps the show. So, if you've enjoyed
[58:07] this conversation half as much as I have, hit the subscribe button and leave us a review. I think these guests deserve [music] it. Thank you and we'll catch you next time.