Deel Goes Live With Stablecoin Wallet in 80 Markets

[0:01] [music] The blockchain and the non-custodial the non-custodial environment is kind of similar [music] to space exists around the earth and everybody can access it but nobody can claim it. >> Yeah, that 24/7 money movement plus AI's ability to not sleep is kind of fascinating to [music] watch and 24/7 is becoming the default. It's becoming the norm. It's becoming the expectation. So all of a sudden you have, you know, one or two additional revenue lines for those users that are coming to you as a
[0:31] payroll provider, but now there's a a float involved. Now there's an exchange. All these things that allow you to then if you increase your lifetime value, the thing is that you can go increase your CAC, you can go get more distribution, grow your business. >> You know, you have massive success stories with major merchants partnering with banks, whether it's Amazon or United. You know, airlines, you know, tend to make more money from their co-brand, you know, cards and loyalty programs than they do from from flying the the planes. >> Welcome to T tokenized, the show focused on stable coins and the institutional
[1:01] adoption of tokenized real world assets. My name is [music] Simon Taylor, head of market at Teo and author of Fintech Brain Food. And joining me as always, uh, well, not as always, but occasionally, uh, is my co-host, uh, Kai Sheffield, head of crypto at Visa. How you doing, man? Usually, we we've had a few weeks in a row. Uh, it was a good streak. It's great to have you in the Bay Area. It's gonna be fun to hang out later. Uh, this is gonna be a great show. We've got some amazing guests we got to jump into. >> Oh, wow. Yeah, what a pair of guests we have. Yeah. Joining us this week, making a long awaited debut, is the one and
[1:32] only Luca Prospera, co-founder and CEO M0, and of course, author of the Dirt Roads Substack, possibly still, yeah, my favorite newsletter on the internet. Luca, how are you doing, sir? >> I'm I'm great, Simon. Thanks for the kind words as usual. >> Always happy to help. And making a debut is Ryan Buzzorth, who's the co-founder and CEO at Dakota, taking the world by storm, one podcast at a time. How you doing, Ryan? >> I'm great, thanks. >> Thanks for being on the show. Before we do jump into the stories, I got to
[2:03] remind viewers uh that opinions of our contributors today are their own and might not reflect those of companies they represent. And please never take anything we say as tax, legal, financial, or investment advice. Always do your own research. And with that, story number one is about Rain acquiring Answer to put branded stored value wallets on stable coin rails. For those who don't know, Answer builds branded stored value closed loop payments so that any merchant can have like a Starbucks style wallet. So think about
[2:35] your rewards in that wallet to buy things and if you use the wallet, you get more loyalty. um answer founder and CEO Sophia Goldberg was previously senior at Aden and she also is the author of the field guide to global payments proper payments nerd. Um she joins Rain as head of payments. Um and of course this follows Rain series C in January at a 1.95 billion valuation. and and answer has this really interesting arrangement with Mastercard that lets
[3:06] stored balances spend in store on merchants existing terminals. Rain also acquired a company called Uptop uh an onchain rewards company in November 2025. So now they have um load hold earn and spend rewards points. Kai, I'm I'm going to have to come to you first on this because I know you've spent a lot of time in the trenches on the loyalty side. interested in your views on we've not seen a lot of stable coin loyalty stuff. Are we are we starting to see that or are we are we never going to get there?
[3:37] >> I think we talked about this in in one of the predictions you for the year at the beginning of the year of you know I've been really interested in in the potential of tokenized loyalty points and how you can reimagine some of the closed loop kind of merchant stored value use cases. We haven't really seen any of it scale yet, but I think there's there is still this interesting opportunity where, you know, today most loyalty point programs, you know, the the points are issued on, you know, really siloed databases that don't really talk to each other. You know,
[4:07] they're hard to convert, you know, back and forth. And you can imagine a world where a merchant can issue points that are on chain. Uh, and those points can then be liquid and be convertible with stable coins and then can effectively be spent anywhere on the equivalent of a stable coin like card. And so I love to see Rain, you know, moving in this direction of I think there's just, you know, a lot of opportunities to differentiate card programs with with next generation loyalty. And then I think one of the reasons Rain has been successful is, you know, they've been payment nerds. You know, we we love that
[4:38] on the show. Like they they leaned into how do you merge these two systems together? and and I think having Sophia as, you know, the author of a a payments book, like just getting more of this kind of payments DNA inside the company, you seems like a smart move. >> Ryan, bit of a payments nerd yourself. Your thoughts on this story? >> Yeah, 100% on the idea of liquidity and then also there's this concept of interoperability that comes with this that is really interesting. So, for a long time, we've talked about examples where you walk into a stadium and maybe
[5:08] you get the ability to have, you know, $25 that you can put towards concessions or that you can have a set of awards that are tied to things that are nearby you. And those are all very compelling on their own, right? But I think what's interesting here is the ability to kind of build a network around these. You take these points and you say based on what you're doing for a certain demographic, you can start to either kind of prioritize a certain experience for a user to kind of work them down or through a channel or you can say you can kind of potentially trade or give back some of these points in favor of
[5:39] something else at another merchant. And so you start to build these really interesting systems and networks um that are really rooted in this idea of they have to be liquid and they have to be interoperable. And I think stable coins as technology is very good at that. >> Yeah. um your target uh rewards are not exchangeable for Starbucks today, but like smaller merchants in um longer tail markets might be might be more possible. Luka, interesting your thoughts here cuz my understanding is um Rain is primarily uh sort of winning in non US markets,
[6:10] right, where people are doing um stable coin backed cards type of products bit like uh you have with uh contribute to with moneygram and many other places. So uh you know it is loyalty something that can work in more of a hyper local context do you think and it and underdone? >> Well I mean stepping back one second I think that I always believe that we always me refer to stable coins as programmable money. So it's uh value with features uh that you can program
[6:41] right and loyalty point is a money uh with features and I think there are features that are specific to like a a context ecosystem where they are used so I think that the idea of loyalt tokenized loyalty points or branded version of of money branded stable coins I think that the line there is blurred I think it's a money liquid with the liquidity and the store of value um characteristics of money uh with additional features that are context specific whether it's sealed or whether
[7:12] it's additional rewards that incentivize certain behaviors or whether limitations and where you can spend it or not. Um I think this is a this is a trend we will see where we are still wrapping old concept uh on new technology but I think all these things will blur and I I've known the the rain team for a long time and the guys are awesome. I think that uh what I I believe I cannot talk for them because obviously I'm sure they they they are keeping keeping their strategy pretty tight but I would assume that they are trying to expand their platform to allow any corporate to do
[7:44] many many things on tokenized rails right originally was stable coin back credit cards like launched very easily across the world but I I believe that now they have it has been a great product uh a great money maker uh that has helped them scale but I'm I assume now they're their ambitions are way are much wider than that in the stable coin or to tokenized money infrastructure space. Ryan, I'm curious how how you see kind of the current state of stable coin link cards because it it feels like, you
[8:14] know, a few years ago, you know, there just weren't many of them out there. And so launching a stable coin link card and, you know, it started on the consumer side, you know, that that was the product, that was the value. And if you had one, you know, you had demand and, you know, people were were using it. Now it's becoming like a table stakes feature that, you know, anyone building a stablecoin neo bank needs a stable coin link card. Um, and then it feels like it's going from consumer to now you've got stablecoin based business neo banks like as there are more out
[8:44] there. What do you think is is going to be the driver of you know differentiation and and how do you look at it at Dakota of features beyond just you know the core card and ability to spend. >> Yeah 100%. I think whenever you have an early market it generally capabilities will like win the market that like if it's a zero to one problem to say I have the ability to span down on a stable coin back card but as the market matures we start to see those points of difference change quite a bit and so right now I think this story among others that we see in the market is really a story about collapsing kind of
[9:14] the stored value stack and so you start to see loyalty come into play you see acceptance you see programmable money all these things become a layer on top of that core capability that make it more interesting, more differentiated. And so, you know, a classic example of this might be the ability to have, you know, issuance or ability to earn rewards on that balance of that card. And so, you start to see people start to put together either internally or with partners a kind of stack that allows them to kind of really collapse that stored value kind of moniker into something that is increasingly more
[9:44] straightforward, but has more points of difference at the same time. >> Yeah. you either kind of got these giant stored value programs like a Starbucks or you had airline rewards cards and it was only the global corporates that really had that capability and access and scale probably to be worthwhile. There's a there's a little piece of me that loves the democratizing the size of merchants this goes to. I think Anso was always a really nice business doing that, but it is hard to go merchant to merchant without a lot of distribution. And I wonder if Rain buys them a bit of
[10:16] distribution. And I also think it's fascinating how the this changes what you do with the U marketing budget. I was speaking to former CEO, CMO of like pretty much every about five or six different Fortune 500 companies about a similar topic a few months ago and she was like I I stable coin cards loyalty. This would be a far better way to you like immediately got this would be a far better way to use um my my marketing budget. Luca interested in your views on the stable coin linked card space as
[10:47] well. Same question Kai gave. How are you thinking about that? Yeah, I mean I'm there are not I mean there are a few things I I I cannot I I I cannot say I I sit on the board of Cast. Cast is one of the largest clients of Rain. I think one of the most successful stable coin list linked Neo Bank with with Real Pay and uh dollar app now Arc and a few others. I mean it's uh I first of all I I I absolutely agree with what Ryan has said. I think that we are we're just collapsing a lot of features now on a new stack. And you
[11:18] mentioned earn, you mentioned loyalty, but I mean why not credit, right? You know, I I always I've always been convinced that stable coins are is going to be the the the the tool through which BNPL really becomes real. But um so I think in general it is a great acquisition tool for a specific market and then you can you can expand the platform. I mean I I as you know Simon like you I lived in London for many years and I I was there when when Nick launched the Revolute card actually at the Google the Google campus and it was like an FX card for like experts and
[11:50] nomads that wanted to pay less fees right like two years later it was table stakes anybody had it even HSBC but at that point they were building something different they were being building a platform that was around the needs of this new of this new group of people and I believe I I believe those platforms like are doing the same I think that uh even Cass itself like you know many things have been public like going into the business banking side as well etc. Now I think the question will be for
[12:20] Rain to convince these guys to remain on their stack and not go vertical not verticalize and go independent because at some point if you're getting large enough then you obviously have the incentive to develop your own stack and connect directly with the with a with with the credit card circuits. But I'm not I'm not a I mean I'm a money nerd. I'm a partially a payment nerd. So I'm I'm really I'm not too much into the weeds of how much that would take. Yeah, I think it'd be kind of challenging. Becoming a Visa Principal member is no joke. Kai, I I was say I I think there's
[12:51] just this fascinating design space of what's the future of co-brand cards. And if you think about, you know, co-brand cards right now, you know, you have massive success stories with major merchants partnering with banks, but they tend to be on a very kind of local basis. And most of them are in the US and you know there are a few other markets across the world that have successful whether it's Amazon or United you know airlines you know tend to make more money from their co-brand you know cards and loyalty programs than they do from from flying the the planes. And so
[13:23] you kind of start to ask this question of what would global co-brands look like? And you know if you are a a global brand and you have customers all over the world and your co-brand has has been you know a a major revenue driver as well as a loyalty driver together you know how can you use some of the new infrastructure and stablecoin rails to be able to scale and offer that co-brand to markets that you couldn't before and I don't think we've seen that yet uh but when you think about like what what's the next wave of stable coin link cards
[13:54] like where does this go you know it's like one path is you like Lucas said credit like how does onchain credit become combined with you know card rails and I think there a bunch of interesting early experiments happening there and then the other is loyalty and I think the co-brand direction you know I I think it's a matter of time before we see the the first large programs go down that path >> yeah I think maybe to add to that like I think it's a really interesting era that's ahead of us that allows us to take these things to start to think about users talk about personalization for a very long time but that's been a
[14:25] pretty kind of binary set of things you belong in cohort one or cohort two. Um I think when you have more programmable money, a more efficient way of offering these things, more operability, you start to see a world in which you can offer a kind of type of user a set of like linked experiences that they might actually participate in them and actually enjoy. So aside of having a relationship with a single brand or maybe a very small subset of brands, you start to have a network of these things that say these types of users tend to enjoy these attributes. they tend to enjoy going out to these places and
[14:56] visiting these things and therefore I can start to kind of build all the programs that uh traverse multiple brands in a way that kind of makes sense for everybody settles instantaneously the way that they can up the points and for the user it's a far better experience you're not stuck with you know endless cards in your wallet you're kind of given something that is more personalized to you or a group of people that kind of look like you >> yeah and I think the the last thing I wanted to add on this because it's so interesting is that because we have seen a lot of experiments uh even a couple of since like in the last few years but it's very early is you can have like a
[15:26] plastic that is holding different version of co-branded money right for example that you can use uh seamlessly but I think we haven't seen anything I I I agree with with Kai I think we haven't seen anything here yet because the only market that this these products have have marketed into so far is the market of the emerging market of offshore dollar users that is a market and that market as there is a global there is a global user base with a global product and you're building tool like products around this as stable coins or dollar
[15:58] based stable coins are coming on shore as better rails we will start seeing a lot of those experiments I I mean I've been advocating we have been advocating this at M0 with with guys like ME with guys like bridge for a long time um and I think we haven't seen anything yet people have been obsessed themselves on the yield kickback but the yield kickback is just a very small portion of it I agree with >> the prepaid card space in the domestic US market is very painful to deal with. You've got things like achievement laws and just a whole bunch of complexities there that make them not very profitable
[16:29] and quite expensive. But actually issuing a virtual card to somebody that's got a stored value on it that has a bunch of loyalty features becomes almost a better alternative to the traditional prepaid card. It's a really simple product. you know, the compliance burden on stored value is way different to say credit, but you're you're earning revenue from it on the interchange and you're potentially getting getting kind of a new way to engage customers, taking what was marketing budget and turning it into revenue. So, really really fascinating to see. I'm I'm going to
[16:59] move us to the next story. Um, this is Brazil finalizing a 24-hour delay on large crypto and stable coin transfers to fight fraud. Uh the rule came out from the central bank on the 7th of August, requiring virtual asset service providers to hold crypto and stable coin transfers for up to 24 hours. The hold applies to anything above $10,000 in a single transfer or aggregate. The central bank says the hold is not a freeze. The funds can be released before that 24 hours once risk checks are
[17:29] complete. Um and Vasps must keep uh records of fraud, incidents, and attempted fraud. Uh the central bank cited fraudsters using virtual assets and stable coins to move stolen funds offshore or into self-hosted wallets faster than they can be recovered. Uh Luca, I know you know Brazil inside out and backwards. I know there's been a lot of challenges with um picks and and criminality um sort of more broadly and scams. What do you think about this move from the the central bank of Brazil
[17:59] here? Yeah, this was I mean I'm not Brazilian but part of my family is and I spend quite a lot of time there and I'm very close to some of the builders in the stable coin space in Brazil both like USD denominated and Brazilian realized denominated this they had seen this coming for a long time I think fraud is just part of the reason the main reason is as usual capital control I mean Brazil is not Argentina Brazil is one of the largest economies in the world they always had uh currency stability issues that is impacting in
[18:30] their main expert which is commodities. they have uh now even more issues because they're running a budget deficit significantly over the last four or five years and they they need to control uh money outflows and they've been trying to do it with t with taxes the IO tax that has been increased that they've been trying to increase for a few times and since until now stable coins was a were a niche loophole for corporates and very large investors and family offices to move money in and out
[19:00] of the country and obviously a country that is tightly controlling their currency base doesn't like that. So yes, fraud might be part of the reason but I in my opinion is a capital control story and we we will see more of those stories ac around the board when stable coins are starting to have macroeconomic impact on treasuries. Yeah, I recall uh in July the IMF warned the central bank of Brazil that crossber stable coin flows are growing faster than traditional capital. Uh about two to 3x more sensitive to global economic shocks
[19:31] shocks and conventional portfolio investment. I mean that's that wasn't subtle. Um I I think that Ry Ryan your thoughts on this one? >> Yeah, I think very similar to what Lucas said. I think you have a country like Brazil which like aggressively has rolled out and used regulation to uh guarantee access things like picks and so they've kind of used and have not been afraid I think to lean into using regulation to require the largest banks the FIS to participate in programs like this and so you see something like stable coins come along and it does feel like at least part of the story has to
[20:01] be around aside from potentially fraud prevention is that kind of rebuilding the ability to kind of have that regulatory perimeter that stable coins to I think the point making here has made a little bit more porous and so using mechanisms like this to do that I think is something that it has to be taken with alongside the story as a a way for them to kind of enforce that that border they have. >> I think for for me like like Lucas said I think we're going to see places where stable coins have been a
[20:32] loophole and used at scale. They're not going to be a loophole anymore. Like I think it's just it's it's a matter of time that every government and regulator has to figure out how how do we deal with this and and it's just you can't be in in a loophole forever. Uh and so I think we're going to see a bunch of experimentation of regulators taking different approaches trying to figure out what can they do to balance the clear demand and need that you know particularly I think businesses have in these markets you know with their
[21:02] objectives whether it's capital controls and u you know the other things they're trying to accomplish. I I think the thing that I wonder on this is you know this is targeted at you know it's it's a rule for VASPs the the kind of registered you know digital asset you know service providers. If you make it really difficult or more difficult for VASPs to enable these flows. It feels like one side effect and outcome of that is people use more self-custodial wallets. And so the fact
[21:33] that stable coins work at selfcustodial wallets, there's always this kind of weird counterbalance of, you know, you could have a business that manages keys themselves that has a self-custodial wallet and they could send and receive payments in and out of Brazil to other self-custodial wallets. And it it sounds like based upon, you know, the high level of this that this is the plan is that it's the VASP that's enforcing, you know, this rule. And so I think you are always are going to have to balance this trade-off as a regulator that you know arguably it's better for stable coin
[22:04] flows to go through regulated entities that you have control over that you can supervise that you can enforce you know the rules that you want to enforce but the more rules that you enforce it then drives more demand for people to say well self-custodial experiences are getting better and better and if I can make a crossber payment to a supplier instantly um and you know they have a self-custodial wallet or even self-custodial in Brazil to VAS outside of Brazil, then are you just going to inadvertedly drive more people, you
[22:34] know, into being their own bank rather than using a service provider? But I don't know how, Luca, how do you think about that? Like, is is that the right trade-off? And are you think that's going to happen? >> I I agree. Uh because ultimately, if people don't want to keep money in in in a country, they will not keep money in the country. Uh period. I think that the the problem is is trying to the issue should be that of fixing macroeconomic stability rather rather than trying to block ways to get out of to get the money out of the country. I mean Brazil
[23:05] I I always struggle when people bundle Latin America as a whole like you know Brazil is not Argentina is not Venezuela. Brazil is a massive market. These are not flows of a parallel economy that doesn't want to get exposed to local economy. These are flows that are coming from domestic businesses to the outside. But I agree with you. I mean I think that if you're trying to limit uh the regulated space the the money will flow through unregulated space. I I also I mean this is a guess so please do not quote me but I would be surprised if 100% of the dollars uh that are originated in the Brazil to China
[23:36] soy market actually goes back to Brazil. I would be pretty actually uh not surprised if they get if they stay out of the country never come back into the country. Right. So, I think I think it's uh I I totally agree with you, but I I I think in general uh the country in Brazil has been relatively shortsighted in trying to protect the perception of the market and the currency that their current budget deficit is sustainable. They are running a massive budget deficit. Still, their GDP their debt over GDP ratio is much lower than
[24:06] emerging than thanmer like emerged economies, developed economies. So they have some some space to run, but at the end you need to fix the original problem. You need to convince businesses to keep money exposed to your currency and your sovereign debt. And if you're trying to limit the way they can get out, they will try ways that you cannot control. So I I absolutely I absolutely agree with you. I think that most of the businesses the the on and off ramp the orchestrators moved through VASP recently in Brazil because the regulatory burden was much smaller and
[24:36] now they might well move through exchanges and non-custodial non-custodial rails or through the network of brokers that is very developed in the country and non-custodial rails and there is no way you could see that. I I absolutely agree with you. Yeah, it's difficult because you can't uninvent tether and you can't uninvent self-custodial and we had this um this long time where u regulation is jurisdictional and like one country sets its own regulations. Regulatory harmony doesn't really happen. I mean the G20 and um FATF F and BIS and ISCO they try
[25:09] but I mean at best you get something called functional equivalence which if you look at Mika and you look at uh what clarity was going to be they they end up miles apart realistically. The only good examples I've seen where things have happened cross borders is probably the FX code. Uh Luca, you're probably familiar with that. Um which was the uh initiative by the industry itself to set up a code of conduct for how foreign exchange flows would work. Um I believe it was following the Libore scandal if
[25:39] my history um is correct. And maybe that's more something you could do here is like can you create um a high watermark of behavior among self-s sovereign wallets um that is designed to be somewhat mindful to the uh the needs of local governments. But uh but yeah, I mean you're fighting physics um and fighting gravity if if you think currency controls are going to stop self-custody wallets. >> Yeah. And and also like an interesting uh anecdote connected to this is I mean
[26:09] I've seen that Coinbase this year this this week announced that they will start tokenizing assets from I think from the from the UAE from Abu Dhabi. Uh and obviously there is a there is a clear fine print that says that those products should not be purchased are not going to be distributed in the US market. Yes, of course. But the point is that you're using you're using a jurisdiction that is a neutral jurisdiction to tokenize assets and launch them into the stratosphere where it's very difficult to control uh the geographical boundaries and then you know it's uh I
[26:40] think Elon Musk has been master in dominating dominating environments where regulation couldn't couldn't couldn't reach right before regulation got there right uh superchargers and space and I think the the the blockchain and the non-custodial the non-custodial environment is kind of similar to space exists around the Earth and everybody can access it, but nobody can claim it. >> Yeah. And you can launch from anywhere. Uh I think that's uh that's kind of the the other problem. Ryan, any final thoughts on this one?
[27:10] >> On the space piece, there's always like the analogy of uh things that hop into space have to come down and land somewhere. And so you have this idea of like there's these like regatory perimeters that sit at these like call like space stations and those are the areas that are end up being regulated. And depending on how you set those up and where you set them up and how the regulation unfolds is kind of defines how we will watch the market unfolds. But then you're right like once you get out of the atmosphere, you have a lot of things that are governed by more technology properties than anything else. They're, you know, fast >> and how long can you stay up there? I think the next story speaks to that. But
[27:41] before we get to it, I'm going to have to just 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 coin platform fixes this handily. You can mint, move, and manage stable coins, access Open USD, and remain your own custodian all in one single shared environment. Then, stable coin linked cards let you spend balances anywhere
[28:12] Visa is accepted. And we know stable kind linked cards are in hyperrowth as our good friend Kai likes to say that is Visa of course the global leader in payments and of course sponsor of this show. You can find out more at visa.com/crypto. This episode is sponsored by Bridge a Stripe company. Just as the internet made information global stable coins are making money global. Bridge, a Stripe company, is the infrastructure powering
[28:42] that shift. It's built for speed, scale, and simplicity. Bridge helps businesses send, store, and accept stable coin payments instantly. You can serve global customers without navigating the complexities of setting up those crypto rails. It's how companies like X, Shopify, and ATM unlock new markets, reduce their FX costs, and move money at internet speed. Explore the future of global financial infrastructure at
[29:12] bridge.xyz. Tokenized is also sponsored by Fireblocks. Fireblocks is the stablecoin infrastructure of choice for global businesses from Visa to Walpay to Bridge to Revolute. With over a hundred billion dollars in monthly stable coin volume, Fireblocks powers stablecoin strategies at scale with infrastructure that enables PSPs, fintexs, remitters, and banks to issue, move, hold, and manage stable coins. It's all done securely at
[29:44] scale with secure built-in compliance. With Fireblocks, you get complete control to build your own stable coin orchestration layer, create payment accounts, manage liquidity, and access on and off ramps in over 60 currencies. Makes it easier for you to build and scale and expand your business globally. Learn more at fireblocks.com. Okay, thank you to our sponsors. And uh the next story is about Deal, the payroll company launching their stable
[30:15] coin in 80 different markets and adding an earn product on Tempo. Uh so the deal wallet launched back in June and they had early access to contractors in Argentina. They're now rolling it out to 80 different countries across Latin America, APAC, Middle East, and Africa. They use their own stable coin DLUSD on Tempo to hold earnings in that stable coin and the earn functionality. They've given us some statistics here um where 74% of payout recipients deposited into
[30:48] earn uh with an 85% 30-day retention rate of of those uh deposits. Um and about 60% of eligible users are now actively earning. Um, and it's kind of interesting. This product roots DLUSD into a Morpho vault um on Tempo where borrowers post CBTC as collateral and the vault is curated by uh Centur. It's a real mix of things that happen under the hood here in these sorts of uh products. Uh Ryan, I know
[31:20] you've probably done a lot helping people make payouts and payroll around the world given you do infrastructure. Your your thoughts on this story? Yeah, I think as part of this much larger trend we see around marketplaces and payroll companies that already have distribution finding opportunities in ways in which they can improve their own kind of efficient payouts, global payments, things along those lines. Um, but also it's a uh for some of these companies a potential revenue driver. So we have the ability to kind of monetize a float for the card programs they can earn on interchange. And so you look at
[31:51] these companies and when you talk to them, they're talking a lot about both the things they can do from the user experience and be able to speed up a global payout, for example, but also the ability to think of their users and increase the lifetime value of those users. So all of a sudden you have, you know, one or two additional revenue lines for those users that are coming to you as a payroll provider, but now there's a a float involved. Now there's an exchange. Uh there is a uh interchange. all these things that allow you to then, you know, if you increase your lifetime value, the thing is that you can go increase your CAC, you can go
[32:21] get more distribution, go grow your business. And so we see a lot of folks that are both optimizing for their own customer experience and their own uh payouts and distribution they already have, but because they already have the distribution and this is a far more kind of efficient way of incorporating, you know, things like float and cards and have been in the past, it becomes a way for the business to actually grow its revenue as well. It seems to me on this there there's a lot of demand for these earn features uh and for like this this
[32:51] concept of vaults uh which I still don't feel like is is very well understood in Tradfi uh in terms of the just the term and the concept of you know offering a a vault that someone deposits into. And I know crypto we always just make up make up new terms to describe things that are similar to to what exists today. >> [snorts] >> I think that the big question is how you scale the actual collateral forms and the ways that these vaults function over time. Uh and it it feels like a lot of
[33:21] the the the early iteration of what's behind these earn products and vault products. It's basically CBBTC. It's Coinbase's, you know, Bitcoin, you know, as collateral. And so it is this this interesting element of we know that consumers want to deposit payroll that they can immediately receive into some higher yielding account. Uh it's not clear how much they know care you big question like how the disclosures and and what the rules are around how the
[33:51] these vaults you function. But it doesn't feel like this is super scalable if it's all dependent upon Bitcoin or CBDC like versions of Bitcoin as the collateral for the vault. And so I think we need to have a lot more diversity of other forms of you know real world assets and and collateral that can then compose these vaults both for them to be lower risk and yeah I think easier to explain to consumers that it's not just dependent upon you
[34:21] know the Bitcoin ecosystem. So, I'm excited about the vault product, but like I think we've got to figure out more forms of of collateral. And Luca, you know this stuff a million times better than I do. Like, how do you think about >> Yeah, I mean I I I spent some time writing on my dirt roads blog that I where I don't write so often anymore about lending markets and vaults. I think I I released a piece on vaults this week and one about the markets which is like the the
[34:52] basic primitive underneath the vault like a few months back. And disclaimer, I know and do business with a lot of the people involved and I've known the Moro team since the very beginning. I'm an indirect investor through a fund that that I advise in the Moro team who's like one of the best teams in DeFi. But I am very I I am I'm not very relaxed when I see this phenomenon for a few reasons. I think first of all even the super safe version and we had I had open debate with the the some of the curators about this which is ultimately providing
[35:24] u say like an overcolateralized margin loan against CBTC the riskreward is not there if you look at the vaults that are C uh Coinbase Bitcoin backed so to say they yield less than risk-f free now I would pretty much uh to your point Kai that the the depositors maybe they haven't done the math is we can argue, but I'm pretty sure that if you could choose, are you going to give money directly to the government for 3% or are you going to invest in in a permissionless overcolateralized BTC
[35:56] margin lending vault uh curated by an an unknown entity for the same amount? What would you do? Right? So, I think obviously it's uh the the riskreward is not there. And I I wrote I wrote about even for for in my opinion even for blue sheep products. I wrote about this the week before a blew up and you know a was uh I mean didn't blow up let's say like some of the assets underneath a blew up and it was like a massive hit for the protocol and the people who were exposed to that structured credit uh they were
[36:27] still getting only risk-f free then you're going back to your point about expanding the uh the asset pool yes I agree but uh and two buts the first one is you need very good primitives because otherwise you're giving a liquid repo uh against illquid credit and we know what happens when when this this is done you know when the the cycle turns the margins is very slim everybody runs runs for the door and the depostors get screwed and the other one is what is the
[36:59] regulatory perimeter around it because if you are a curator that is just doing parametrical checks about a protocol is one thing if you're a curator who's actually doing risk assessment of risk real world asset credits and doing rebalancing of that you are a fund manager. So you should be regulated as a fund manager and your product should be a fund and I think that I I really hope that uh clarity or the SEC will just provide some uh provide some guidance about this because we have been here before we got burned and as a sector in
[37:31] crypto we went back two three years because of Celsius because of FTX because of everything we know already that I would actually not love to go back to. So I'm pretty I'm I'm pretty surprised actually that some of those very large uh fintech companies with massive distribution they offer those products but probably because they have done the math they are comfortable that something happens that will make all their depositors to your point that this stuff is probably not very scalable but this is not the end state of this and I really hope that we we reach a more
[38:01] mature state before the things become too big. Yeah, I think it's definitely not the end state and um I do think a company of that size has done the the math on on this sort of stuff. They have to that their their business is knowing local laws and local regulations in order to make uh payments out. Um and I've spoken to several other companies in the past week who um love the product but want to understand what the curator does and they want to understand where the collateral comes from. So there is good due diligence going on and I think people are are wrestling with that. But
[38:31] to Ka's overall point, I don't think the market understands what these products are in general. Um, what I thought was an interesting development is that um we're starting to see uh was it uh Bailey Gford um issuing directly uh themselves onto I think it was Ethereum uh some of their fund products. And when you get that, it's it's a little bit clearer that a fund manager has issued a fund product as a token. And you can probably start to think, well, I I know
[39:01] Bailey Gford and they've been around and we can see their their track record. HSBC and the London Stock Exchange. I think HSBC issued Digit, which was a UK government guilt. uh so government debt that is direct issuance that I think is is kind of coming and you you sort of know what that product is and we are getting to a place where you know maybe the direct product itself wouldn't be holdable by a consumer but a fintech might be able to get more access to that. So this is definitely not the end
[39:31] state. Uh we've also seen some of these vaults have had some time in market grant and and a bit of a bare market really in the last 6 months. So the you'd imagine that the the tests are are being done. None of that disqualifies anything you've said, Luca. I I broadly agree with you, but I'm I'm sort of also crypto's disappointed, Dad. You know, sort of like it lets you down, but I'm always hopeful for its future. The the thing I did want to point out here, Ryan, though, was these these attach rates on a consumer product um are off
[40:03] the charts and sort of the demand for consumers to go from like I can hold my stable coins to I can earn on them. And the ability of brands then to have something that they can go ahead and monetize really strikes me as something that if we can get the the due diligence right is going to be going to be pretty special. >> Yeah. And I think one of the pieces that we've kind of started to bring up here is I think one of the ways in which we do that is you have more options available in the market. So this is obviously a very early market. Uh I think when you have a very early market
[40:33] you have a mismatch of like kind of demand and supply and therefore you have you know these things like rates or uh different kind of like outputs of that. But as you think about being able to bring more assets that are being tokenized from uh more traditional funds, equities, etc., bonds, you start to allow the market to kind of find the right risk profile and find the right kind of uh risk trade-off because there is quite a bit of risk with smart contract risk obviously very alluded to here. Um but you allow that mechanism to start to work. And so I do think one of the kind of like underlying functions
[41:04] here is that as you bring more of this available, more supply, you start to have a demand that starts to meet it. Um but right now but 100% I think when there is such limited supply um it becomes very easy for rates to become higher than what might the the typical like risk ratio would suggest. I think it's it's interesting to just take a step back and say you stable coins are being distributed to users all over the world and so there are more and more wallets that people have access to that now a stable coin is falling into
[41:35] whether it's a payout or payroll or you know and now what what do they want to do with it and I think a natural thing is okay how do I earn yield on that and you know one way is okay well how does the market of you know revenue share kind of yield share from the underlying issuer work passing through to the distributor and then can they pass it through to the end customer and you know we'll see you know how things continue to evolve and play out. So that's like door one. Door two is you know these vault you earn
[42:05] products of you know someone has the the stable coin. It's not the issuer that's that's paying yield but it's you know you have a vault that they can choose to deposit into you know that is then collateralized by some other asset that they're actually lending the stable coin out itself. uh and then how does that market evolve? What are the rules and the disclosures? And it seems like one of the benefits of that is that it's today less regulated uh and that you can do that globally uh in ways that you perhaps can't on you know the issuer passing yield back to end consumers. But
[42:37] then the third is you actually convert the stable coin into a tokenized money market fund uh or a tokenized treasury. And so you're going from receiving and holding a stable coin to actually holding government debt or or a fund that then pays yield. Uh but traditionally those funds, you know, they have to you KYC or KYB and it's harder to get access to them and then you can't necessarily do 24/7, you know, conversions between stable coins those funds. Um and so it's it's like to me
[43:07] those are like the three doors. If if we assume that every stable coin wallet three 3 to 5 years from now there will be some yield option like it's it's hard to imagine that there that there's just not going to be any way that anybody can earn yield uh and then you're like okay well of those three which is going to be the most effective per use case per type of client like is that is that the right framework or am I missing any other options of like how people can can get yield once they have these ws Yeah, I I
[43:38] I I I I want to try to give an answer given that I was the most bearish. Uh, you know, first of all, I'm a DeFi fanatic. You know, I I gave my life to DeFi a while back. So, obviously, I always try to criticize to get better. That's the spirit. And I know some of the teams involved here and they're very very high quality teams. But I think the point is exactly as you you said Kaid that a lot more and more liquidity will res I always believe that stable coins in the stable coin sandwich this transient nature of money where you go from fiat
[44:10] to stable to fiat is a bit like the era of scanners and printers in digital photography I think that more and more we go forward we were going to stay digital on digital so people will have digital money and they will need to do something with digital money natively whether it's spending swiping your card or investing or storing value or purchasing other things. I I 100% agree. But a question is going to be I think what type of primitives will need to evolve in order to satisfy each use case
[44:40] and how regulation evolves in order to protect the consumer not to get exposed to things that do not they do not understand. And I think in those two situations uh we're still behind because I think we are using primitives to do things that like lending markets are great for commodity digital commodities like Bitcoin and ETH. Uh they are great for loopers that are specialized investment firms that are using it for hyper leverage. They're probably not great for 70% of the market where you need different primitives or you need
[45:11] evolved vaults. Uh and the teams like morph are also working on that. But I think this yoloing into vaults now is mainly due to regul to regulatory arbitrage and you see some of those vaults actually are heavily incentivized by the platform and the platform is making money on the other side on the float because they cannot share the float. So I think that uh going back to the point of regulation you were making about Brazil. I think that regulation needs to get smarter so that can truly protect the user instead of channeling risk appetite in different way in
[45:42] different through different pipes that they they cannot control. I I I think this is part of the evolution. We will see permission vaults. We will see regulated vaults. Uh we will see like native native natively issued uh investment products that can be acquired by everyone. We can see commodities that are levered and we we will see a bit of everything. uh nothing is panacea and not even a vault like it's the vaults today are much better than the vaults 3 years ago and the vaults in 3 years is going to be are going to be much better as well but we need to be careful when
[46:12] we connect the consumer especially the unsophisticated consumer especially when incentivized behind the brand that is highly trusted that's the only thing I'm saying >> yeah and I think one thing to add is like the amount of complexity when you get into the vaults is quite different than the other two options we're talking about talk about stable coins and even tokenized uh government bonds and T bills things like that you know, liquidity, all those pieces are much much more straightforward. You know, Genius does a great job of saying like here is the kind of duration that you're allowed. Um, and so we think about cash, you think about tokenized T bills, um,
[46:44] you have a kind of set of constraints that are quite straightforward. Um, once you kind of get to that third bucket and you start to talk about things that are now going to be, uh, like little more risk on, a little more kind of risk management, there's some really big questions around liquidity like we're bringing up. there's questions around discretion, who's making decisions, things like that. And I think I don't want to underestimate that kind of like step level change and complexity that comes with it. I think that's made a piece that um if it's worth keeping an eye on is making sure that like as we go through that process as an industry that we are keeping an eye and be able to
[47:15] kind of understand these pieces, communicate these pieces and of course adapt as you know regular uh frameworks come in place. >> Yeah, I think there's a handful of companies in the world really engaging to try and do that. Um but the risk is that uh people people follow and and fools rush in. Uh doing this slowly gradually and rolling it out and and sort of really engaging with the local regulation is going to be key. And to the point Luca made, I don't know that local regulators um in a lot of markets have really got their head around this yet either. So they don't know what to to regulate and this kind of historical standing rules. Uh one last story this
[47:47] week uh is NASDAQ are requiring level markets. Um they're the third largest alternative trading system in the United States with 2500 institutional clients and this is part of their push to be uh 24/7 for always on market. They're also establishing something called the digital liquidity networks which is aimed to bring together the uh company's expertise in digital assets and market modernization kind of in one place which I found really really interesting. So
[48:19] they're seeing this as part of the broader transformation of the architecture of capital markets themselves um and sort of assem assembling a whole stack here. Uh Luca, I know you're our resident capital markets guy today. uh do you see the push from 24/7 coming in and and this convergence thing that NASDAQ seems to be building towards as as kind of an inevitable path or you know are there going to be speed bumps along the way and and what do you think the benefits are to NASDAQ to acquiring this ATS?
[48:49] >> Yeah, I mean I think both like I think it's inev inevitable and there will be speed bumps. I I think there will be attempts to just to control the evolution and just control the settlement layer which might not be possible but I I mean I'm not surprised. We we we have seen uh ICE moving into the market aggressively with the investment in poly market which is a retail oriented 24/7 uh agnostic market. We have seen Canton uh emerging and people might criticize the fact that Canton is a blockchain is not a blockchain is transparent or not but I
[49:19] think there is clear desire uh from the institutions to actually enter a world of global 24/7 settlement among themselves and I think like the smart smart guys uh in the capital market are realizing that they need to get smarter otherwise they will be they will be uh disintermediated. I think the blockchains are clearly sending the signal that the settlement layer is going to be new. So if you cannot control the settlement layer because
[49:49] settlement layer is a blockchain where is Ethereum or tempo for payments or or or another side chains then you need to ask yourself actually what what type of value you're creating given that you get this settlement layer almost for free and you know liquidity provision compliance market matching and uh the creation of new primitives it is in my opinion going to be the battlefield. So we will see more markets actually be ready to come direct uh uh with issuance that doesn't depend on the legacy rails
[50:19] and legacy companies need to ask themselves what they're going to do in this space right because they they are not going to be the monopoly monopoly holders of settlement let's see what the risk appetite is actually going to be to operate in open networks uh because we have we have seen attempts going back to go back to like permission closed network which ultimately are g glorified databases that we can we can opine how decentralized is a network. I think that early day crypto people were a bit more obsessed about it. I agree with with uh with people in that are more pragmatic
[50:49] that for certain use cases like for example fast payments, you don't need you don't need uh aggressive decentralization in the same way you need it for bitcoin of the network. Uh but the settlement layer needs to be open. So I'm very curious how this how this these companies will evolve in the next 5 to 10 years in this new paradigm. Yeah, Kai was seen a lot from the DTCC trying to um bring things onto public chains, but slowly slowly gradually gradually um this stuff's this stuff's kind of rolling out. Your thoughts on this story? Yeah, I'm I'm just trying to
[51:20] learn. Like I I think that there's like it's fascinating to me that the the whole blockchain, you know, ecosystem and and just the the innovation that's happening, you know, could end up having, you know, bigger impacts in capital markets than just in payments. And so like I'm I'm a payments nerd. I I spend my time thinking about payments, but there are just these intersections between payments and capital markets that you kind of have to try and understand, you know, what's going on on the other side. And and I think we're seeing for the for the first time that
[51:51] there's just more collaboration in you sharing and discussion between capital markets people and payments people. Uh and and traditionally like you might have the the same institution. You might have a bank uh they've got an asset management you know arm and team. They've got a payments team. Uh but they don't really talk to each other that much. You know they run on on different infrastructure. Uh like at Visa we we don't really engage with the asset management side. We're starting to get a bunch of questions from the asset management uh folks at banks that are, you know, trying to figure out, you know, how to think about custody, you
[52:22] know, infrastructure and, you know, how to use stable coins for settlement. And so I think these these worlds are starting to to come together. And and I'm most excited about the intersection in the context of of B2B payments. And I I continue to believe that working capital should you know be significantly reduced for most businesses across the world over the next 5 years. Um and it feels like if you give a business an
[52:52] option of do you want to hold a you know deposit you know in their local bank u that's not going to pay much interest or do you want to hold you know government debt you know paying the risk-free rate uh with lower you know counterparty risk. they would rather, you know, hold the government debt. But the issue was always, well, it's not liquid enough and if payments come up, you know, they they have to keep, you know, cash on hand inside of a bank. And depending upon the business, they might have to keep a lot of cash on hand uh so that they can make
[53:22] those payments. And so I think they're going to be, you know, really interesting, you know, nextgen B2B payment solutions that basically help businesses be able to optimize their treasuries, you know, to earn the maximum amount of yield on safe, you know, government, whether it's tokenized treasuries directly at the DTCC, whether it's money market funds, but then the moment that you have to make a payment, be able to swap out of that and be able to make a stable coin payment. So that's one of the things I'm most excited to to see that I think to happen requires
[53:54] innovation all across the stack between capital markets and payments and and I just like to see that the two sides talking to each other more. >> Ryan, have you had any uh conversations with folks either in the corporate treasury space and I know B2B was kind of where you guys got started as well. >> Yeah, [snorts] 100%. And so I think one thing that we see if we take a step back even from this story we look at you know it wasn't that long ago that even the kind of like payments and custody side of the house wasn't really obvious that that was going to be kind of a replatforming of money and I think these
[54:24] days it is um you know a foretold conclusion and it feels like capital markets are kind of going through that in real time that maybe over the last kind of you know 12 months and kind of approaching forward here it looks like capital markets are kind of starting to kind of replplatform in a lot of ways um and you see that these two things have the ability to reinforce one another. And so one thing as we look up at to say we have, you know, these these new regulated forms in which you can have access, you know, broader liquidity networks, things along those lines, but they're going to settle into, you know,
[54:54] most likely things like stable coins. You start to see a world in which these things really start to work well together that the liquidity from one side can helps feed into the other and create more interesting use cases. And then when it comes to things like you know uh treasuries and be able to kind of an individual uh and businesses really start to take advantage of that uh you see a world where there is these treasuries that have a global kind of impact in the sense that there are you know entities all around the world that for a single corporation that can now manage that treasury uh and be able to
[55:26] earn uh liquidity and earn uh rewards and interest in different ways whether it's access to T bills outside of the United States or it's access to reward mechanisms like we were talking about earlier and be able to get quite a bit more sophisticated with that treasury and you see where things like potentially in the future agents can start to inform uh and add some reasoning to some of those decisions as well and it gets very interesting very quickly. >> Yeah, that 24/7 money movement plus AI's ability to not sleep uh is is kind of
[55:58] fascinating to watch and uh 24/7 is becoming the default. It's becoming the norm. It's becoming the expectation. And if you can't do that, uh, then and you're on Wall Street and you're an FMI or you're a large asset manager, your clients are looking at hyperlquid and they're looking at geopolitical volatility over a weekend going, "Help me settle." Like, you need to do this now. And so, whenever bankers and uh, capital markets guys hear client demand, I think they rationally respond to that. And I think that's what we're seeing is quite a rational response as well as
[56:29] some increased regulatory clarity. Few stories we didn't have time to cover this week. Goldman Sachs has acquired a company called NEOS uh to gain uh Bitcoin and Ethereum income ETFs. Uh the transaction said to be uh or the value set to be up to uh 2.25 billion in the uh underlying assets. The SEC has cleared Franklin Templeton funds to use the onchain Benji system for cash management. Really interesting for followers of the Fory Act fund, what's
[56:59] gone on there um and how that's uh been allowed. Uh and the UK's FCA is exploring tokenizing gold as collateral for wholesale markets, which if sovereign debt starts to look a bit risky, then why not? Um and of course, London is very central to the global gold markets. Um that is all we had time for this week. I want to thank everybody for watching and listening. And uh Luca, I want to thank you for making a debut and for writing Dirt Roads and just being yourself. Uh if people want to learn more about M0, where do they go to
[57:29] do that? >> They can find me and the company on Axe, I think, uh at Luca Prosper is my handle and M0 is Mzeros or Mzero.org on the web. >> And Ryan, if people need help with stable client infrastructure, where do they go for Dakota and yourself? or myself. You can find me on X at Ryan Bozart and the company uh theod.xyz and >> Kai on X at Kai Shechffield visa.com/crypto and you'll find me at sytail on all the
[58:00] socials screaming into the void at fintechbrainfood.com and of course at tempo.xyz and you'll find a lot more of this show if you subscribe. Uh it's as simple as that really and leave us a review. I think this conversation depth and intellectual honesty absolutely warrant a review. So go ahead and do that now and we'll catch you next time. [music] >> [music]