Big Bank Stablecoin – Can It Compete?

[0:00] It's the battle of the bank stable coin consortiums. Uh and I I think one takeaway is you're not seeing many banks on their own wanting to go out and create a stable coin. And I think that was something you a year ago, year and a half, you'd have some banks saying, "Oh, may maybe we we should create a stable coin." Occasionally there's a headline. Yeah, I think banks are creating tokenized deposits on their own. uh but very few maybe exception of SoFi and and and some of the what ones that are very much on the forefront like Revolute uh
[0:30] and so I think that there's there's safety in numbers of saying you know let's work together as part of a consortium and let's kind of instead of fragmenting try and kind of you know bootstrap something um but I think it comes down to like you need a vision you need use cases and you need the right team and talent you know to be able to execute it um and what is going to start the initial flywheel and I think we'll see 2027 is going to be an incredibly exciting year with you a number of new
[1:01] bank stable coin consortium products that will likely get off the ground both in the US and across the world. Welcome to Tokenized the show focused on stable coins and the institutional adoption of tokenized real world assets. [music] My name is Simon Taylor. I'm your host, author of Fent Brain Food and head of market dev at Tempo. And joining me back once again is Kai Sheffield, head of crypto at Visa. How you doing, Kai? I'm fantastic. It's a exciting week. A lot going on. It's great to have a return guest you back to break it down. You know, we got to get into it. Joining us
[1:31] this week is Ada Vaughn, who is the head of DeFi at the Stellar Development Foundation. How you doing, Ada? >> Great. Thanks so much for having me, Simon. It's been too long. >> Let's go. Making a return is Darko Haduk, uh, who's head of securities digitization at the London Stock Exchange Group, or Else as the cool kids call it. How you doing, Darko? >> I'm doing very well, thanks. Super excited to be here. >> Oh, so excited to have you back because we've got one heck of a story which we'll get on to in just a second. But
[2:01] before we do, I need to remind viewers and listeners that views and opinions of our contributors today are their own and might not reflect those of companies they represent. Please don't take anything we say as tax, legal, or financial advice. I'm still not as quick as the guys in the radio ads, but I'm really trying. And also, I'm going to remind you that this episode is sponsored by our friends at Modern Treasury. This episode is sponsored by Modern Treasury. Stable coins are here and so are checks and a they're not going away. RTP and Fed now and new
[2:31] types of payments rails are emerging all the time. The challenge now is integrating all of these without slowing down. Modern Treasury offers one single API for fiat and stable coins, helping teams launch payments products in days, enter new markets, and serve more customers. Trusted by companies like Procore, Navan, and Morse, and backed by over $600 billion in payments history. Learn how to adapt to changing payments rails with scale and confidence at
[3:02] modern treasury.com. All right, story number one. The London Stock Exchange Group will put its 100 largest stocks on chain as X stocks partners uh with Kraken's parent uh Paywood and plans to trade them on its new 24-hour venue LSE 24. So, I could stop reading all of the bullet points on this story, but Darker, why don't you tell us about this partnership and XStocks and firstly what it is, what people will be able to do
[3:33] and and sort of what the journey looks like. >> Great. So, we're very excited about this partnership. It's a collaboration between assets and paywood as you said. Um, and it's it's a very complimentary collaboration. On one side, uh, Paywood and Kraken are bringing their digitally native distribution. Uh on the other side you have London Stock Exchange that has has a trusted market infrastructure and it is uh subject to regulatory approval. I always have to stress that subject to regulatory approval XT stocks
[4:03] will um be listed on the LSC 24 and you remember LC 24 this is when I was here last time we talked about this a little bit where uh we will use the uh London stock exchange in extended trading for ETP. So this is a very much a natural evolution. now thinking about also uh trading the the stocks in in X stocks form. But can I also say that we are that there are many ways to digitize uh and tokenize um equities. Xtox is
[4:35] certainly one and there are many other similar ways of doing that. I would also want to say that as part of the efforts that we that we are doing in the digital securities depository if you remember I was talking about that as well. We are also exploring uh solutions where we create tokens that are rights preserving that are giving all of those benefits that are associated with the public public um uh equity uh trading. So we are we are building on that we are building on that separately and we will
[5:05] be talking to the market uh in due course as these things uh develop. But can I just sort of take one step back and look at the future here? Really what XTOX is showing and and and not just EXO but others as well. I have to always say there's there other products there. What they're really showing is that there is definitely appetite in a digitally native community to consume the products financial products that exist in more traditional uh world. And this is a great opportunity, a very broad
[5:35] opportunity for us to uh make public markets more accessible uh without really compromising the features that give investors and issuers confidence in those public markets. And really I think when we talk about and I hear you a lot I'm a great fan of your show and I hear you a lot talk about different use cases and every week there is something new coming to the market and that's absolutely right and each one of those use cases will have its own um business case and they will be solving some real real life problems but I think it's also
[6:07] important for us to look at the big picture where is this whole train going in in in in in real world assets and you can see from the announcements that we're making that we're making a lot of announcements recently. We're certainly seeing a future where an investor in the future, a market player in the future, not just investor but a border market player in the future can consume these uh products, financial products in a digital form, but also in a traditional form and they can choose what they want and they can choose how they want to trade them and what benefits they want to get from one or the other. And um
[6:39] they should be able to do that across different asset classes and across different jurisdictions. And I think that through what we are building, you can kind of see that future taking a little bit of shape, especially in the announcements. And um I'm I'm I'm I'm hoping and I'm pretty sure this is not my last uh appearance here. There will be more things to come. >> K, you were saying before the show um your entire X feed is like uh something uh something to do with stock tokens at the moment and stocks and stock trading. Uh you kind of your thoughts on this
[7:09] one? Yeah, I I don't know if you all have been been following the the Robin Hood chain and and kind of Robin Hood season, but it it feels like just in the past week, the growth in excitement and interest in the concept of stock tokens, you know, has has really accelerated. I think the big question that I have is it's like you have a a segment of very early adopting crypto trader speculators that are now interacting with stock
[7:39] tokens for the first time. And there are all sorts of weird experiments that are starting to happen around them. Uh some of which I I think are really interesting and novel, some of which are like pretty scary and people are likely to to lose money. And so I'm most interested in this question of like what happens after stocks go on chain and is it like that's the end point that you the stock is there and now yes someone could just hold it or trade it but it feels like what Robin Hood is showing is
[8:11] when you put stocks on chain if they're in this format at least that that the Robin and tokens are in it's then starting to merge into DeFi and then you have you know people building and using these stock tokens in all sorts of ways. And you know I I saw on my feed the other days someone built a game that you know involves stock tokens and so it's like you're playing a game and then you're like earning stock to like something I never would have imagined and there's so many questions from a regulatory perspective from investor
[8:41] protection. Uh and so that's that's kind of the question I'm interested in all of you of like is the end just you put it on chain and you buy and hold it or is part of the expectation that there will be experimentation of new products that are built around these stock tokens. >> Where we are really here uh is providing access. So this is about access. This is not about people's behavior. People will behave in the way that is that they want to behave and that is most appropriate for them. So you know K to your point this is not about us now uh choosing the
[9:14] investment strategy it is about access people today access equities they access fixed income they access all sorts of instruments it is just making that access uh easier now is it possible to develop future products um on uh onchain that you can't do currently is possible I mean you can also create products on today's um um uh today's financial products and people do that. So as far as we're concerned from uh from from the exchange from traditional exchange
[9:44] perspective is we seeing this demand and it's un it's without doubt there's a demand for greater flexibility for access people want to access securities in a in a in a in a different way in a more flexible way maybe you know certainly for extended hours. So we are therefore going to be meeting our clients demand. How they access how they choose their investments that's that's not that's not for us. >> I do think about the the the difference role that an exchange plays versus the
[10:16] distributor plays. Uh to your point there Darko that many different people in the market have many different roles to play. Um but I also think about the nature of the UK stock market. you know, as an observer and a market commentator, I think many would agree that the UK uh equities market is is pretty good value, arguably um underweight and underpriced in global portfolios. Um the UK hasn't necessarily had that many blockbuster IPOs lately. Um but it's not like that
[10:46] the London Stock Exchange has been sleeping on its hands um when it comes to tokenization. This this model is a little bit different to what the DTCC is doing. This is talking about bringing stocks natively on chain rather than uh sort of letting them sit offchain and having a token that sort of represents that stock claim move around on chain. How do you think about the difference to to those two things and and how do you think about the difference and what might make that more attractive to somebody who's issuing stock to potentially do so in in LC as a venue?
[11:16] We see a world where tokenized stock and and traditional stock whatever whatever we want to call it um is going to coexist and I think we need to find ways and mechanisms of um as I often say toggling between one and the other and that is to meet the investor uh investor appetite and how they want to hold and what they want to do with that stock eventually. So we need to be able to to enable investors to do that. um that's going to make the whole UK financial markets more attractive uh more accessible um and we can do that without
[11:49] compromising any of the current protections that are inbuilt in the system and I can talk about a little bit later how we think about those those protections so we I can't sort of comment on the valuations I'm going to have have to call whatever you say beginning Simon we are not giving investment advice here uh but certainly there are some really um uh uh interesting opportunities. Um this is about making people access those opportunities in the way that they want to in a way that is um that that works
[12:20] for them in the best possible way and that's what we are we are enabling our clients to to come to the market access that market and um develop some benefits in the in the future from that different access. Ada, how do you think about like the intersection of stock tokens and DeFi? And you know, we were starting to talk about that earlier of like how do these worlds come together once you have a stock token that's running on a public chain? What do you think people are going to start to do with it? And how do you, you know, see that playing out? >> I think the initial promise for the the
[12:51] equities markets and bringing stocks on chain is really about additional distribution. like this is we talk about this I think across many areas of public blockchains is expanding financial access. So um it seems like the most obvious use case right is like giving someone who is in an emerging market for example access to US equities um through a tokenized instrument. Super interesting like making these um kinds of levels of permission go away so that KYC users all over the world can access
[13:22] US equities. Um, so that's kind of the first layer, but I also think about DeFi in general being an expansion of the financial the financial system and ways that go beyond what Tradfi can do. And um, so some of the things you were mentioning about, you know, gamifying stocks or making them um, you know, used as a reward or um, an incentive to do something else like bringing people exposure to new instruments is is a pretty interesting and fun space. Um but
[13:52] more so I think about the repetition of what we have that works well in works well in trady but it's not accessible and in that case you know what you're describing earlier Kai is something like a margin account right like you have a certain amount of value on a as on a stock exchange on a on an e trade or a fidelity account or or one of these platforms that you know most people in the US use um they don't have those platforms um in Latin America or in subsaharan Africa places where they might want to um start
[14:24] to preserve wealth or or build wealth in small ways and they can't they can't get anything less than you know a full share of a stock from a a registered broker which has a lot of gatekeeping um and a lot of barriers to entry. So those are the things that I that I think are super exciting and then this idea of margin bringing um I do see some experimentation already with bringing equities as collateral into DeFi. Um it is fraught. um it is is not an easy thing um operation to operationalize um
[14:55] because of the volatility and because of the the liquidity that's needed to support liquidations etc. Um but it's starting to happen and and I think anything that um that is a real world asset representation has the opportunity to be presented in into DeFi in new ways. Um so that's that's kind of what we're tracking and and you know trying to facilitate on public chains. the composability is is the unknown. Um it's still early days, but it's obviously exciting bit. But do what should we look forward to uh over the coming weeks and
[15:26] months um from this partnership and and what are you focused on uh as we round this story out? >> Look, we are we are going to be looking as said we're going to be looking at subject to regulatory approval listing um uh X stocks. We are obviously looking at this market very carefully, listing them on LC24, I should say. Um we are um also looking at those other uh solutions. Um just just to be clear on the LST24 that is being uh launched in
[15:56] um using traditional technology. So that is not uh that is not yet uh done in a in a tokenized form. We are certainly looking at uh LSC DSD digital security depository and what role it can play in that space. uh but there are a number of technical solutions that need to be resolved in order to um to have that handover between traditional and digital. That is actually really interesting and exciting thing to to to look at and see how those two uh uh two infrastructures coexist and that is that
[16:27] that we will be uh we'll be looking looking to do. But this is definitely we are looking uh as all the market players we're looking at this new demand from the market that demand from traditional exchanges from current scale digital uh players and that is all about greater flexibility as you said broader distribution how do we make everything more efficient and so we will definitely be looking at that and um yeah stay tuned >> indeed indeed well um Paywood has also been a been a big part of this and seems
[16:58] to be doing quite well with their X stock solution very different business to what they were some time ago. And speaking of tokenized stocks and and that whole story, the New York Stock Exchange's owner, ICE, has invested in T0 and names it the second digital transfer agent for its tokenized securities venue, the digital trading platform. And uh ICE joins uh the latest funding round um and gets a license to its patent portfolio, the T0 patent portfolio. They've got 23 patent
[17:29] families with 103 patents covering compliance aware transfers upgradeable smart contracts very interesting and corporate actions and the two will look at using T0 tokenized assets as collateral at ISA's clearing houses as you were just sort of talking about securitize was the first digital transfer agent um back in March 2026 this is now the the the second and uh this summer T0 sent puritize a cease and
[17:59] desist over two products. They had a patent on how interesting and how curious ISIS seemingly playing matchmaker here. Uh very very interesting indeed. Um, and of course just uh just yesterday as we were writing this, the SEC actually proposed changes to its transfer agent rules which haven't been upgraded significantly since the 1970s and sort of required a very specific type of ledger and wouldn't have allowed tokenization to happen. So these little
[18:29] details changes that are coming from the SEC are really seem to be enabling things even if we've not got the Clarity Act. It any any thoughts on this particular story? I think it is um signs of a sea change right like we've seen this with DTCC um coming into the stellar ecosystem um and leveraging other public blockchains it's a very interesting space and I think um because the base layer is about to go on chain and become much more efficient it's
[18:59] going to pull everyone along with it right so I'm not sure um I'm not a patent attorney so I can't um I can't necessarily comment on the the value of the IP that's in play here. Um, but I can say that the these movements in the regulatory I would say uh sentiment and kind of attitude and and a willingness to move forward and somewhat keep pace with the technology that can really help market efficiency is super encouraging. um you know we've seen a lot of movement
[19:29] and uh have had a lot of conversations since the DTCC announcement um which have driven just a lot more value to come on chain um we're seeing you know on stellar there's over 4 billion in RWAS issued on chain now um across a variety of assets a variety of issuers so it's become less concentrated right like more people are experimenting more people are issuing on chain and finding utility and once the it's kind of this barbell, right? Like you have the the
[19:59] issuers and even at retail like the use of blockchain at the end at the at the delivery end um and then you have it at the base layer and I think what we see is this kind of filling in and meeting in the middle over the next say year to three years where there becomes the the entire value chain of the markets you know all the capital markets onchain promise will come to fruition. It's fascinating to me that, you know, T0 was started in 2014. Uh, so I think it's what 12 years old if if if I if I recall
[20:32] and like the whole story of Overstock.com, you know, being a a first mover, you accepting Bitcoin, you at the checkout kind of, you know, their their CEO being a big proponent of of crypto and then spinning out this this T0 tokenized security space. And >> what a throwback, man. They completely forgot about Overstock. >> They were like 10 years too early. Like I think they're wrong about the Bitcoin at checkout piece, but like they're right about tokenized securities. They were just so early in the space. And um
[21:02] I'm interested in in kind of what type of technology innovation is going to have to happen across the stack to support these types of products. And you think about enabling smart contracts, you know, that can support, you know, dividend payments and, you know, just the the the ways that that stocks have to be managed over time and are are different than a traditional, you know, crypto token. Uh, and so I think that there's, you know, going to be a role and seems like increasing competition around technology and IP, you know, for
[21:34] how to to best represent, you know, stocks on chain. But, you know, shout out to them for just sticking it out like to to start with the vision in 2014 to be right today is is cool. >> There were tokenized stocks on Stellar 6 and a half, seven years ago. There were several projects that came in and were offer you know trying to offer a stock like you know something a tokenized instrument that married with married with a stock in the it completely fell apart. You it just did not work. There was no regulatory framework for it. there was no way to
[22:04] make it legal and and the projects just you know just floundered um because of the lack of regulatory framework or clarity. Um so I mean it's a different world today now there are like you know going concerns there are actually um programs that are working and running and and delivering. So, um, you're right, timing is everything. >> Post Robin Hood, post figure, different US administration, uh, kind of just sometimes timing is is everything, Darko. But I also think about the the demand side of the
[22:35] equation, right? Like um the distribution side of the equation. Uh, can you get stocks to more global markets? We we had um Steven Sykes from public.com on the uh podcast a few weeks ago and one of the things that was attractive to him about tokenization was the ability to go into multiple geographies um much much simply than you ever did before with self-custody wallets and and the nature of that and you know those um those sort of global sale nations uh may start to have some
[23:05] regulatory push back and not everybody has the appetite for doing that sort of thing. uh one person's financial inclusion is another person's regulatory arbitrage and that's always a difficult line for for for different businesses to to kind of cross but the potential there is is really really huge and we're in such a fascinating time. Do your thoughts on this story and as a as a market observer um the different approaches people are taking uh around the world. >> You know how I said that there are technical solutions that need to be resolved especially when it comes to the handover between traditional and and
[23:37] digital u markets. I suspect that this story is one of one of the technical solutions that need to be put in place. Um but what what has what is really exciting about tokenization and I was really demonstrated um is that there is a demand for wallet based solutions. There is something in the wallet that attracts demand and attracts that that flexibility that easiness of access and ability to do to do things within the wallet that is that is very um exciting
[24:08] but also ability to put in the wallet different types of securities and that's you know we have been last time I spoke here we were talking about fixed income now we're talking about equity so you kind of see where where we are going with this right you want to consume in a in a particular way now of course wallets have been a very much a retail product so another big handover that is kind of coming on the horizon is um is a handover between retail and institution or a handshake if you want between between the two and how institutions uh react and how will they start to um to
[24:38] access the the products. So when we look at the um the things that we in a traditional sense bring to the to to the equation when you look at the regulated price formation market governance but then you and established participant networks but then you also look at the distribution uh channels that the digital uh players bring that is where that complimentarity uh between the traditional and digital can really sort of create benefits. 1 plus 1 equals three rather than than than two. And
[25:09] success ultimately will not be measured by their who announces the first or who does the longest hours or or whatever. The the the success will be based on that sustained liquidity, who can bring that to the table, who can preserve investor protections. Let's also not forget who can preserve issuer protections and who can preserve and who can even enhance issuer experience in this uh space and and who can improve the end to end market process whilst
[25:40] creating new benefits for clients and they can be a number of different things and to be honest they can also be be things that we haven't even thought about right now um as as they should and as the markets involved and the regulatory frameworks uh evolve we shouldn't forget that DOT and especially when you comes to real world assets. The DT shouldn't just be let's replicate the existing process just use um a slightly new um way of doing it. I mean nobody really is going to adopt that. What really we need to think um and you
[26:11] mentioned this before how are the how is the new technology going to make everyone better off in in in the system and when I say everyone I don't just mean an investor but investors and market participants and regulators as well we should they can also benefit from uh from these uh from these networks and the new ways of doing things. So that's that that's kind of the way we approach this is that there are traditional players that are bringing something to the table that are digital and then the combination of the two can really be powerful. >> You know that's such a great point. The
[26:42] hardest thing to change sometimes is the way you do things. You can have a new technology but if you try and use your old processes on top of that technology you're not going to get any of the benefit. And I think so many times uh the way we did things solved some problems. So we think ah I should do this because the the reason I did it solved a problem and that problem still exists. Maybe it's investor protection, maybe it's market manipulation. There are lots of good reasons we do things in trifly but there might be a better way to do them with a different technology and that's sometimes the the hardest gap
[27:14] to to kind of cross and I think it's a really good point docker >> and there is also some things that traditional finance still does better than digital. uh we can talk about a number of things that that are actually very very efficient and >> oh yeah >> very good to to do in a traditional way. So it's not like now there's going to be systemic change everything moves moves into the new world there will be that's why I keep talking about handshakes and handovers there's going to be between the two we just be careful that we don't keep adding cost in both in both senses so it needs to be done in very sensibly.
[27:46] Oh, absolutely. I I wrote a piece recently, netting is all you need because um I'm I'm not a believer in preunding everything 100% which is the way most stable coins work today. And absolutely, there are uh lessons to be learned on all sides. And there are also ads to be served to you, my dear watchers and listeners. So, we're just going to take a quick pause here while we hear from our sponsors. Stable coin operations usually mean a wallet from one vendor, an on-ramp from another, and then your controls are stitched together across both of them. The Visa stable
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[28:47] visa.com/crypto. If your finance team is interested in stable coins but doesn't know where to start, then Tempo has a stablecoin advisory team. Uh this is like payments nerds just like me, including me some of the time. Uh to work alongside your team, figure out the right use case and actually build it all the way to production. You can talk to an adviser by getting in touch at tempo.xyz/advisory. All right, story number three this week.
[29:17] Uh Athena, makers of USDE, has launched Athena Pay, a self-custodial neo bank app built on Avalanche and it's paying up to 6% on dollar savings with up to 5% card cash back and it's like cash bank cash back and it's live today in 48 countries. And so the cash back runs four, four and a half and 5% by tier. Um and there are different tiers based on on the fees that you pay. USD, Euro, and
[29:48] GBP transfers are free. Other currencies cost between five basis points and 10. And the app pairs a fiat IBAN with a self-custodial account. This is a very complete NEO bank from what I thought of as being a a stable coin. The beta covers 48 countries including Brazil, Mexico, Kenya, the Philippines, Singapore, Japan, UAE, Australia, with the US and EU left out for now. Although Guy did reach out to me on X and say
[30:19] they'll be coming in the not too distant future. Now USD, as many of you will know, is the stable coin of sorts, but it's not necessarily a stable coin in the Genius Act. It's uh it's uses a delta neutral hedge to maintain its its uh peg rather than uh rather than treasury yield. Uh Kai, as our president payments guy, um stablecoin linked cards are in hyperrowth mode, man. Like this is this is just another example. >> Every week, every week there are new
[30:50] global stablecoin neo banks, you know, coming online that are, you know, have more and more complete features. uh if you're launching a global neo bank and you don't have localized off-ramps in the countries that you're in, you know, at a low cost that support many different payment methods, it's it's hard to it's hard to compete. And so I love to see it. I think it's amazing for consumers. Uh I think it just increases the competition and raises the bar. And and the question is how do these
[31:21] companies you differentiate uh and try and you innovate in creative ways? You know, I love seeing, you know, more creative card art. I love seeing different rewards value propositions. Um and and I think Athena has like a really good brand in the crypto ecosystem of many crypto traders who are familiar with the mechanism you know that they use you know behind the the core product and you know have used it on on exchanges and in a number of trading scenarios. It it's interesting to see
[31:52] this seems like a a push to make it more of a mainstream consumer product uh where you don't have to you know understand the trading mechanism. Now I think there's a question of okay what about you know disclosures and what's the the risk and where's the yield coming from you know every time you see kind of 6% yield then you know the natural next question is okay exactly where and how and does the consumer understand where and how uh that yield happens uh I think the self-custodial you know trend you know continues that
[32:22] you know more and more neo banks are are going live as self-custodial you know wallets first where you manage your own keys and so I I think this is one of the biggest mega trends that it it feels like we're there's still a lot of room to grow, but there's just going to be vicious competition, you know, between these different providers and and I think that that's that's a good outcome to just move financial services forward with more products for consumers. >> I think a lot of these markets really like uh home markets for for for Stella.
[32:52] Your thoughts on stable coin linked uh neo banks? you know, this country list couldn't uh couldn't be more diverse. Uh when I think about the typical user that they might acquire in Kenya, for example, I just actually just returned uh from a trip to Nairobi last month. Um and the user in Brazil, for example, they they absolutely could not be more different um in terms of their usage of of basic financial services. Um you know, in Kenya, the card penetration is
[33:22] very low. Um even banking penetration is very low. um and they use EMPA for absolutely everything. So the success of a product like this in Kenya could hinge entirely on whether they're well integrated with EMPA for example. Um in Brazil, you know, do they have picks? Is it easy to get value in and out of the card? So this is um this is quite a um a colleague of mine used to say this is a big hairy meatball um that they have tackled in terms of this this country list. Uh I I think that the I I would
[33:54] agree. I see a proliferation of of card products and um I think this one is interesting um in terms of the landscape because you do see a lot of um you know the the card issuers and program managers of the world have made it much easier for an app that has a whole bunch of users to like expand their product range by bolting on a card. Um, and so you see these companies that um, come into the crypto space and they're kind of courting the same few hundred thousand um, you know, very mobile,
[34:26] financially welloff um, users that'll kind of jump to a card, get the rewards, see what it's like, jump in, jump out. Um, but I think that Athena Pay, what Athena Pay has going for it in terms of this product is that it's very integrated to their core value proposition as an asset, right? Like if you look at the underlying and it's all public on their website. If you look at the underlying um reserve of Athena, what started as a you know ETH BTC um kind of delta neutral patch uh strategy
[34:59] has completely changed. I think ETH and BTC holdings are you know in the single digit percent like way less than 10% of the reserve. Now they're holding all these RWAs. Um, and so it's a pretty interesting uh reserve strategy shift and so it's a lot less it's a lot less of a crypto native strategy and more RWA based. Still very much on the tokenized side though. So I think Athena is really interesting. They're definitely evolving. Um, and I think this card um
[35:30] has, you know, a a reasonable value proposition based on a brand um that has stood the test of time in terms of their product. So all in all, I think I, you know, I give them like this is a this is a good positioning, but I think every single company, you know, and I think Kai is probably the expert on this, underestimates how difficult it is to change consumer behavior, you know, to acquire a card customer, one card customer. It is hard. It's expensive.
[36:00] So, you know, if they can if they can keep their customer acquisition cost low um and get some good value from these users, go for it. Well, and they've got some interesting levers for the marketing budget as you say and uh thank you for telling me that. I wasn't aware that they'd shifted their their backing. I I was aware that the yield had come down, but of course I guess if they switched strategies that would explain why the yield's come down, but the the yield on USD is running around 4% I believe at the moment. >> Yeah, I think I looked last week it was
[36:30] about 5%. But yeah, in that range >> it's in that ballpark. So they they have a little bit more that they can work with from an incentive standpoint. They also did this with Avac and uh if you look at it their cash back is paid in Avac which makes me hm incentives like everybody plays the incentive game in L1. It wouldn't be surprising if AVAC is is helping with some marketing budget there and and then the uh ENA token which is another part of this because you know circle and tether don't have
[37:00] like this separate other token that that um USDE does. They have their ENA token uh that is almost like a loyalty scheme of sorts like you can earn this other currency thing. So Kai interested in how that tickles your loyalty bone from your old trial paydays. That's a that's a throwback for people who remember that one. >> There's a lot of experimentation happening and and I think that's that's a good thing. We don't know you what's going to work. I I think it is interesting that you know the competition there's competition at the
[37:31] neo bank layer the stable coin wallet neo bankank layer and then there's a ton of competition at the chain layer that every chain you know wants to be the default that stable coins are transferred on that you know get into these consumer products and so it makes a lot of sense that you know a lot of the chains are are looking to do incentive programs uh and it's you know a AVAC has a a card as my understanding they have their own direct to consumer card program in a self-custodial wallet. But it almost feels like these are these
[38:01] are new types of like co-brand partnerships where Athena's, you know, really the one leading here with their community and their brand. Uh but, you know, it's built on top of AVAC and AVAC is is funding the rewards. And I think we'll just see more of these, you know, combination of a chain and a wallet trying to work together, you know, leverage the economics, the incentives that they have, you know, to drive adoption. And um it's just it's only going to get more comp competitive going forward. >> So these are you know really what you're
[38:32] talking about that retail retail usage. So maybe I can I can take a different lens and put more of a how do I see it from a perspective of some of the of the real world asset tokenization. So it's not about when it comes to RWA and and and how this being used. It's not just about another stable coin. Um it is it is really what the test here really is is the stable coin that is being used is it removing the friction from the re from the from the workflow. So what do I mean by that? Um
[39:04] does asset and a cash leg go together seamlessly? Uh is the is there a reduction in segment exposure? Is there avoiding separate reconciliations um across multiple networks? So I think that the question remains is the stable coin the right thing to do that is tokenized deposit is it a combination of of all of them. It would also be remiss and for me not to mention our own solution here and uh sorry for the plug but we also have a something which we refer to as digital sacment house uh
[39:35] which is a um open access platform that um that uh enables um instantaneous and programmable uh settlement between independent payment networks. Um so that's it's called Dish digital settlements house. So that that's also another way of orchestrating uh payments that that you need uh on chain but absolutely two critical tests when it comes to stable coins or other payment mechanism is as you said Kai interoperability. So is this going to be
[40:06] localized in a in a chain or in a bank or it can travel around? we talked about before and uh you mentioned it also Adah um how do you how do how do you move things across the borders? How do you move it across chains across organizations? So we really need to think about that. But also when you think about governance and redemptions that those things matter and they matter especially in times of market stress uh is there going to be confidence that that those um uh that those payments will be will be made and
[40:37] that there will be access to to uh to the underlying. So at the end of the day the winning solution or winning combination of solutions here will be the one that get repeated institutional usage people institutions become confident in using them some credible across multiple platforms and evidence that is actually improved u economics as I said we shouldn't be thinking about DT as adding cost is this actually helping us achieve better outcome for our clients I think we should that those are the things that we will be that we will
[41:07] be looking at >> so interesting to watch development because the uh it's just another example where uh the regulators space the the multiple geographies are going to be key to watch. I did see um just as as one last final thought on this one uh that the uh the mobile app looks pretty slick like um something that you thought of as being uh primarily like a stable coin has seemingly executed a pretty decent app. Can you get users? Can you get
[41:38] distribution? you're certainly paying for them. Uh you're in a lot of markets. Uh it's a very big switch from capital markets, onchain, defy to consumer distribution. But why not pivot? Um good for guy and good for the team. Uh all right, the last story this week is about 21 global financial institutions including Goldman City, Bank of America, Deutsche Bank, and UBS are forming a joint stable coin company and they're targeting a dollar stable coin in it one of 2027. The company not yet named got
[42:08] uh aims to get set up by the end of this year. This initiative apparently started in October 25 as 10 banks and has now been joined by folks like Fidelity, Wisdom Tree and Capital One. And the uh markets media reports that uh the pitch is a bankra compliance, governance and distribution institutional riskmanagement uh infrastructure aimed at wholesale institutional and retail use. So it it's going to be used for basically everything. Um, but it's going to be by the banks for the banks. Uh,
[42:39] I'm I'm confused on this one looking at that list of names of of banks. Uh, you know, TD Banks, Scosia, Deutsche, Lloyds, Rabbo Banks, Standard Bank, BFA, Wells. What unifies all of these banks? What what use case kind of kind of brings them together? I don't know if uh anybody has a view on what that might be, Ada, um, Darko, or is this more of a defensive play? What were your thoughts when you saw this story? >> I definitely had the my first thought was that they can't stand to see private
[43:12] companies who are not banks running away with the stable coin business and so this is a sort of a counter measure. I feel like when I um when I speak with institutions in a um you know in a in a a friendly environment and ask them you know someone that we're not partnered with a new bank or um or financial institution and I asked them like I ran into this woman at a at a party who was um the head of innovation for a midsize regional bank. I was like oh you're doing innovative things. What's you know what's that all about? And it turns out
[43:42] that the head of innovation at a midsize regional bank is really there just to manage risk. Just the risk of losing business to another bank in a significant way is the only thing that causes innovation in her space. And um and I I really took that to heart. This was a couple of years ago, but I think that um financial institutions have, you know, a real obligation obviously um to their customers and and the institutions that they serve um to manage risk. And so I think until something is really
[44:12] hurting them, innovation is very very difficult. Um and maybe that's a contrarian view, but um banks struggle uh to innovate. And so when I see this and it and like you said, it's like everything but the kitchen sink, a dollar stable coin that doesn't seem to have a clear use case, but just is designed for everything. It's like is this is this cryptozel? Is that is that what we're seeing? Like you know, what does this look like um to all of you? I I'm I'm struggling to see the um the utility. >> Well, Zel, I think is cryptozel because
[44:43] they're doing their own stable coin, aren't they? >> Oh, yeah. They don't need that cuz Zel is doing Cryptozel. [laughter] >> It's the battle of the bank stable coin consortiums. Uh and I I think one takeaway is you're not seeing many banks on their own wanting to go out and create a stable coin. And I think that was something you a year ago, a year and a half, you'd have some banks saying, "Oh, may maybe we we should create a stable coin." Occasionally, there's a headline. Yeah, I think banks are creating tokenized deposits on their own. U but very few maybe exception of
[45:15] SoFi and and and some of the what ones that are very much on the forefront like Revolute. uh and so I think that there's there's safety in numbers of saying you know let's work together as part of a consortium and let's kind of instead of fragmenting try and kind of you know bootstrap something um but I think it comes down to like you need a vision you need use cases and you need the right team and talent you know to be able to execute it um and what is going to start the initial flywheel and I think we'll
[45:45] see 2027 is going to be an incredibly exciting year with you know a number of new bank stable coin consortium products that will likely get off the ground both in the US and across the world with you know kavalis and and others and I don't think you know we know yet like you have big banks as part of it but what is going to be the use case driver you know how much are they going to commit you to driving adoption of it versus just kind of riding riding along and um we're
[46:15] excited to see we're excited to to work with them and and I think you know for my perspective with with open standard like we're spending our time on how do you actually get this thing in circulation and what can we uniquely do as Visa you know to be able to to drive a flywheel and an adoption of it uh and so we're very focused on that but I I think that you know you'll see banks take many different approaches some will join multiple consortiums uh and there'll be some consolidation of of a winning approach at the end >> yeah it's it's going to be fascinating
[46:45] delo your thoughts >> so kind of what I've said you previous answer, but I I think when it comes to stable coins and and in general, we really need to think about the the cash the cash leg of of of transactions and and and payments and how is that going to be done because that is one of the points where it really important especially and S I'm with you in terms of prepayment. Not everything has to be prepaid. Not everyone wants everything prepaid, but we need to think about that programmable uh programmable uh payments and programmable settlement. That and that's that's the real value here. It's
[47:15] not necessarily atomic, but it's programmable payments. And you really need cash like for that. Somebody yesterday I was um yesterday I was on a panel at a at a big event and somebody said u oh 12 months is a long a long time in in this industry and I was like yes it is but I look at my road map I'm thinking can we just kind of squeeze more in this 12 months is a lot of things is going to have to happen in next 12 months and it's super exciting. >> Oh absolutely. I I love uh that uh bringing us back to the cash because I
[47:46] think different institutions look at uh a stable coin and see different use cases for it and for tokenized deposits. Frankly, um the clearing house sees tokenized deposit clearing as being a major benefit if you want 24/7 capability. Zel sees and stablecoin is an offshore dollar that they can use to potentially expand their network so people can remit zel out to other markets to send money back home. And so there's a bit of that sort of uh uh
[48:16] what's the observer bias. What a stable coin can do depends very much on my perspective of what I want and what business objective I have. And I think that's the the art and the science of consorcia here is like you kind of hope they got to want the same things. Um, I've been speaking a lot to the Kalis team lately, and I think they're zeroing in on a couple of, uh, use cases because they've clustered around some, um, midsized European banks who are looking to do a Euro stable coin for some very specific use cases and there's like two
[48:46] primary ones that are that are leading the front and that uh, kind of gradually moving people forward is is really really difficult. So is this as you say do is this about the cash leg transaction the programmable cash leg transaction and can stable coins enable off hours cash collateral mobility that is programmable and things that were difficult in in traditional markets but with sort of the benefits of traditional markets. I've still got margining, but now I'm doing cross margining, maybe across multiple venues. That would be amazing for a stable coin because uh
[49:18] there might not be a deposit or central bank money available in in both markets at a certain time of day. A stable coin fits that really really nicely. And you know, with my tempo hat on, that's something we're spending a lot of time looking at as a material use case for some clearing banks. But then on the other side of it, uh you know, thinking about just defensiveness. Oh, what if stable coins drain my deposits? um I need to do a thing. This is a thing. Therefore, I will do this. I do think that there are uh inevitably in all consortia some banks that are along
[49:49] those lines. And and uh these things are really hard to pull off. Really, really hard. As Kai said, uh you know, they're not easy. We shouldn't pretend they're easy. Uh but success will be measured in the ones that can uh cluster around a few use cases with traction, deliver value, and then all of the hangers on and the observers and the passengers will then get on board once once we've kind of uh delivered delivered something there. So very conscious of the time. Few stories we didn't have time to cover this week. Revolute received their
[50:19] conditional OC approval. Holy crap. Uh, Revlu, if you're in the US, you might not have heard of, but if you're in Europe, everyone's heard of them. They're massive. They're a monster. Uh, watch out America because they have launched their own stable coin recently. Um, and this is going to be really interesting. So, and Paywood have partnered to connect banking and digital asset markets. And Hargreaves Lands Down, good old British story, has opened their uh Bitcoin and Ether ETNs to 2 million clients. Hallelujah. Um, all
[50:49] right. That's all we have time for this week. If people want to learn more about you and Stella, where do they go to? Ada, >> find me on LinkedIn. Adah von Orx >> Darko. How about you and the Else? >> I'm on LinkedIn. I'm pretty searchable with my name and surname. Easy to find. Um, but we're also on uh on Els is also on X and Instagram and LinkedIn. >> Heck yeah. All right, go on Els. Um, and how about you, Kai? >> X Kai Sheffield, visa.com/crypto. You'll find me at sytail on all of the
[51:21] socials. Uh, screaming into the void atfintbrainfood.com and of course at tempo.xyz. And if you haven't already, you'll find a lot more of this podcast if you push those subscribe buttons. This is where I bug you to do it because it helps us. And if you really enjoyed this conversation anywhere near as much as I did, I hope you'll leave a review. That's all we have time for. We'll catch you next time. [music]