Revolut Launched a Stablecoin. Are Big Banks Next?

[0:00] where Revolute maybe has the power here as a large enough platform across enough countries to say we will push uh we'll push stable coins and we'll push multicurrencies across many countries is they may actually be able to create that playground across many countries many currencies to keep the money in in the playground to use that terminology. Um, so yes, 247 matters and then also being large enough in terms of distribution um to actually get past that point uh to
[0:31] where it makes sense for [music] people to keep keep their money in stable coins um and then actually get access to cheaper cheaper FX cheaper [music] transfer fees. >> Welcome to tokenized the show focused on stable coins and the institutional adoption of tokenized real world assets. My name is Simon Taylor. I'm your host, author at Fentch Brain Food and head of market dev at Tempo. And I'm joined once again by my co-host, my friend Kai Sheffield, head of crypto at Visa. How are you doing, sir? >> I'm fantastic. Things are moving. Well, we got a lot to to catch up on. We've got some great guests. Let's get into
[1:01] it. >> Yeah. Joining us this week making a return, but this time from another company is Thomas Cowan, who's now head of tokenization at Bullish. How you doing, Thomas? >> Doing well. Good to be back. Thanks for having me. >> It's See, you can work anywhere in this industry and tokenized'll still have you on board. Uh we we we like bringing people back and making a debut is Hannah Arnold who is COO at Turnkey. How are you doing Hannah? >> I'm doing great. Thanks for having me. >> Really excited to have you on the show. Um before we do get into that good stuff, I've got to remind viewers and
[1:31] listeners that 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. And I'm also happy to remind you that this show is 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 stable coin strategies at scale with infrastructure that enables PSPs, fintexs, remitters,
[2:04] and banks to issue, move, hold, and manage stable coins. It's all done securely at 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. All right, first story this week. Uh,
[2:35] Revolute, one of the world's largest neo banks who just passed 80 million customers, have launched Euro R, a Euro stable coin issued by the Stripe owned bridge and rolling out first in Denmark, Portugal, and Poland. Interestingly, so this is a europiged e- money token uh under mika, the uh European regulation uh and it's issued by bridge and it works across Revolute's many supported crypto services, its external wallets and all of the chains it supports. Uh
[3:06] Revolute calls the first suite of stable coins in several currencies. Uh the Euro stable coin market is worth about $810 million at the moment. It's a bit of a rounding error. um and circles euro C is 65% of that while dollar stable coins are about 300 billion with a B. Um so lots to unpack in this story. Um Hannah, I know you've probably been looking at various people coming into stable coins for a while. What what did you think when you first uh saw this story and
[3:37] about Revolute and and why they've done this? >> Yeah, it's exciting. I mean, I I think we're excited to see anyone come into the stable coin uh issuance landscape and add more to the ecosystem in general. I'm curious to see how many people switch over from the consumer side. Obviously, this one, it's not going to come with yield. It's not going to come with rewards. Mika's pretty strict there. Um, what's exciting about stable coins is usually what comes next and what the consumer can do with that stable coin. So, we'll be watching really closely to see what else Revolute
[4:07] adds alongside this and how else they can add other crypto services that consumers can access. Elsewhere, they go with FX. Um, but definitely one of the things that we thought was cool here and certainly one of the things that having been in fintech for a long time, I thought was interesting is that Revolute did decide to go with a kind of rented stable coin issuance platform. They spent a decade um evolving from a pretty thin interface to a very thick banking stack and here their distribution is really the big thing that matters and
[4:38] have decided to go with bridge for the regulated issuance redemption reserve obligations and of course bridge in turn you know uses turnkey on on under the hood. So nice to see kind of things what is old is new again. Um I think as we go into a new stack people do rely again on kind of um getting help from from other providers. Thomas, any thoughts from you on the story? >> Yeah, I mean I was really excited to see it as well because as we know for years the stable coin market has been dominated by the US dollar. Uh and we've seen, you know, numerous upstarts
[5:08] including um the all unity team in in Germany that I was on the on the board with in my previous role focused on building out the euro market. And so I'm I'm really excited for a name like this to really help build the market and and I think it'll be you know you know very great to see the FX market actually grow because one of the key use cases of course for stables is crossber payments and so if we're really able to diversify the different currencies available I think it will just unlock a lot of use cases that people are thinking about but haven't quite really executed on and so this really to me is an example of of
[5:39] building out that next level of the stack for stables globally. It's incredible how well Revolute has just executed for years across you know different markets uh around the world and uh when we talk to banks you Revolute is is top of mind for many banks you know it's it's just one of the questions they're always like what what what's Revolute doing like it and so anything that they do it starts to set kind of a standard both of what consumers expect what other banks look
[6:11] to follow and they've kind of built this reputation as just you know being this force. Uh so I I think it's a it's a big move for you know them to be you know getting their first you know effect effectively revolute you know branded stable coin you make sense to to start with with Europe and you know as they enter other markets it'll be interesting to see you know do they end up you know creating stable coins for every currency and every market that they're in and you know they were one of the pioneers of of the multicurrency account uh and that
[6:41] kind of traveler uh product of you know being able to switch between dollars and euros and and pounds. Uh, and I feel like we're we're just at the cusp of being able to get to a market structure where you can replicate the multicurrency account on chain with reputable stable coins of each of those currencies. And and we haven't really seen that yet at scale, but like it would make sense to me that if anyone, you know, the pioneer of who replicate who did the multicurrency off-chain account ends up kind of moving into to
[7:12] multicurrency onchain accounts. Yeah, it's so true, Kai. I I hear that so often. I speak to a lot of bankers um for my sins. Um it's not like I'm a Catholic going to church or confession or anything. I just happen to speak to a lot of those bankers, but um they I get a lot of questions about Revolute. Um and if you're in the US, maybe that's the name that's not as familiar to you, but in Europe, you know, 80 million customers, that's 7 million less consumers than Chase has. Um, and at this growth rate, if they were to keep
[7:42] growing at this sort of speed, I did some napkin math earlier today, they'd be at like 210 million if they can keep anything like this growth going on. And so far, they have. Like, it's actually accelerating. It's kind of wild that we might be on the cusp of seeing the first couple of like hypers scale truly global consumer brands here. And Revolute's right at the front of that. And this came in the same week they launched um a an AI lab based on the back of their own in-house foundation model that they
[8:13] trained. And so there's this like consistent theme that like the brands that are pushing the envelope uh whether it's Stripe, Robin Hood, RAMP, uh Revolute, New Bank, they all have started to work on their own foundation model and they're all leaning into tokenization on some way, shape or form. And I think that's like a a trend that you can say, well, if these are the early indicators, then this probably is going to go through the rest of the market. One other thing I noticed here, Hannah, I don't know if if if this stood
[8:44] out to you, that Denmark, Portugal, and Poland are the first countries. Denmark and Poland are not Euro countries. So I imagine for those countries, you might have expats or people who are dealing crossber, dealing in a lot of euros. something like having this 24/7 money where you don't have access to SEPA domestically could could be really valuable. So is there some some sense going on there? The multicurrency account is a great point from Kai too where um you know we often I get push
[9:16] back sometimes as we talk to folks about uh you know stable coins are not interesting if it has to go fiat to stablecoin and stable coin back to fiat and the push back that I often have is well yeah the stable coin part is interesting when it stays in stable coin you know when it when the dollar stays or the dollar or the euro sorry [snorts] um stays in the playground as it were or the digital playground ground and there are a lot of things that can trigger movement in uh past that point where
[9:46] things stay there and one of those things is you know you expect the next recipient to receive the stable coin so you leave the money in stable coin um there's a lot of reasons why that may happen for you know in a treasury use case that's why I think that's been one of the use cases that's run away quickly because treasury manager gets to decide that it all stays in stable coin but where Revolute maybe has the power here as a large enough platform across enough countries to say we will push
[10:17] >> [snorts] >> uh we'll push stable coins and we'll push multicurrencies across many countries is they may actually be able to create that playground across many countries many currencies to keep the money in in the playground to use that terminology. Um, so yes, 247 matters and then also being large enough in terms of distribution um to actually get past that point uh to where it makes sense for people to keep keep their money in stable coins um and then actually get access to cheaper cheaper FX, cheaper transfer fees.
[10:47] >> I remember um for a long time pe a lot of the same people that have objections now about stable coins uh were the same people that said uh Revolute's just a just an app. We could do that. Um, and quite often uh I think it was Henry uh from uh from Privy that first uh used the analogy that like getting into stable coins is like getting into space. At first getting in and out is really hard, but once you're there, moving around is is really really easy. And if you could get multiple currencies there, it would be kind of amazing. Um they're
[11:18] also looking at the FCA's um sandbox for sterling. Um, and they're also looking at potentially US issuance when they have uh a US bank, which they are in the charter application process. So, this could be could be really interesting. And and someone said, I'm interested in your view more on the institutional side as well about multicurrency stable coins. Obviously, tokenized stocks are near and dear to to your heart. Um, a lot of trade does settle in dollars. Are you hearing things about stable coins and are you hearing things about
[11:48] multiple currencies for those stocks? >> Yeah, absolutely. And so in many ways the whole stable coin ecosystem is a few years ahead of the of the tokenized equities ecosystem in that you know Tether really built out the the um you know the market initially showing what's possible. USC and other stables have begun to fill in the the institutional use case and we're beginning that same story with with equities and the people are beginning to see oh this is you know faster better cheaper and so now the question that people are asking is okay how do we actually adopt it at scale and
[12:19] and go from these overseas use cases that show what's possible to bringing things on shore in a more regulated manner for institutions to interact with and and use and a big part of that is what picks and shovels do we need to interact with these with these tokens securities and one of the biggest ones of course is the other side of the leg or whatever trade you're doing and so you know ve very often it's it's US dollar stables but you know the world is obviously global and one of the best parts about tokenized equities is that they can go anywhere in the world as long as they're they're in you know in
[12:49] um on on the on the white list and so that means that you know we very much embrace um you know stable coins in different um in different currencies because it really unlocks so many different use cases that we're excited by um in addition to kind of the 247 trading and the and the collateral mobility and and the full transparency that you get with with tokenized equities depending on the different structures that that people select to work with and and it really is um kind of just an example of yet another step we need to build this full ecosystem and
[13:19] we're we're really excited by by what's in store. Correct me if I'm wrong, but like I would expect that a use case for stable coins and particularly non USD stable coins would be as the cash leg to buy tokenized stocks in real world assets. But I don't think that that's actually really happened at any scale yet. Like I I don't think I've I've seen any data or volume of, you know, entirely onchain, you know, tokenized, you know, stock, you know, trades that
[13:50] have been been meaningful at all. So, is it just like that's that's coming? Um, and is it actually going to be local currencies? Like, if you want to buy, you know, tokenized US stocks uh in Europe, you know, is it the natural thing to do is you're going to use a a Euro stable coin? Uh, like how how do you see that that playing out, Thomas N? >> Yeah, I mean, I think the the first part is, you know, where is where is the liquidity and the availability today? And that's in in US dollars. that's most people in USC or Tether or other
[14:20] stables. And I think as we build out, you know, different different um stable coins and different currencies, I absolutely see that leg shifting to to other other um other currencies. That being said, to your point, Kai, we haven't seen that S S part of the S-curve for adoption of tokenized equities yet overseas. Um and when that happens, it'll be it'll be transformative. And right now, the um you know, tokenized equity market is really in in three main buckets. The first one with the most product market fit is the overseas uh is the overseas
[14:50] rapper model. The second is that DTCled um model and then the third is the the issue responsored token model which is really where bullish and and aquinity focus um as as the you know as we look to close this transaction in in January to to um to to acquire them. And so all three of those models are going to see growth and all three will very much need, you know, different different currencies on chain to be able to have those legs and have those trades in in a global manner. >> So exciting. Hannah, you were about to jump in. Sorry, I was just enjoying the
[15:21] potential in front of us if we can follow that scurve, but um is is it realistic, Hannah? Yeah, I don't know if I have a ton to add besides to just ponder if it's a chicken or the egg question and maybe, you know, as we see more of these, you know, a a tokenized money market fund begs a a stable coin to complete the cash leg. Um, different markets requ different markets that the first thing is different in payments. Stable coin comes first. In other places, stable coin comes second to make the make this make the tokenization
[15:52] happen. I also think it's interesting too because right now a lot of the time I know the first wave of post stable coins was okay. Now that you're holding a stable I want to switch into you know a tokenized money market fund for example to get the risk-free rate whenever I'm whenever I'm sitting. There's no reason why you couldn't in the in the longer term flip into equities as like your you know what what you're holding even even for a short duration of time. So, I think we're just going to see all kinds of different portfolios and use cases when we see the cost of trading and the cost of investing really plummet as we've seen
[16:22] with with so many other other technologies. And so, I think it'll just transform kind of how payments are used because on the back end, you you don't have to put in there. You could really put it into different parts of the stock market even for a few hours if you'd like to once things really are global. I've spoken to I think two different um payout wallet use cases, you know, companies this week. people paying out into 10, 20, 30, 40, 50 different countries, some even 100 plus countries. Uh, and they're lighting up stable coins in all of those and they're having active conversations that I'm in about
[16:54] how do we turn on earn and that starts obviously with the risk-free rate, but then what are the other earn products? Well, you know, figure has this really interesting heliloc figure prime and yada yada yada. And then you can start to talk about equities as they come on stream. So going to be interesting as more currencies come in and more uh assets come on chain but uh the demand is yet to be proven. I do think it's interesting that the demand that came from the long tale with stable
[17:24] coins legitimized it for capital markets and for enterprise and then I wonder if we see a a similar cycle but the legitimacy story is one we can follow. The next story is um about Standard Charted. Uh, Standard Charted has become the first bank authorized distributor of HKDAP, Hong Kong's first regulated Hong Kong dollar stable coin. So, it's the HKDAP stands for the Hong Kong dollar at PAR and Standard Chartered will distribute it to eligible institutional clients.
[17:56] Uh, Anchor Point, which is a joint venture between Standard Chartered, HKT and AMOA brands, uh, is the issuer that holds an issue license from, uh, the Hong Kong Monetary Authority. And the first use case is tokenized money market funds, which is what we were just talking about. Um, subscriptions and settlements with asset managers will start in Q4 of 26. The bank plans to use it for its own intragroup settlement first, then offer the same setup to corporate treasury clients. The pitch is to multinational crossber payments uh
[18:28] and treasury management 24/7 uh settlement across corporate structures. Thomas, so much to get into on this one. Uh you know, Hong Kong being sort of the satellite of China. Uh Tether being one of the informal ways to get money in and out of China. and this being more institutionally focused, 24/7 focused, Hong Kong being a major money center, Standard Chartered being kind of a forward-leaning bank, you know, sort of uh what stands out to you about the story? >> I think it's really along the lines of
[18:59] what we were really talking through is it's another example of, you know, another currency coming on online and and really demonstrating what's possible when you can build out that FX ecosystem. Um, but that other part that I'm excited by is the institutional focus here. the fact that these use cases that they're talking about are are used by some of the biggest financial institutions in the region there and that's something that's transformative and I really look at this as another Lego block for them to be able to use and build something brand new on chain that today they're thinking about but
[19:29] tomorrow they can really do once this once this thing really grows and so you know it's a it's another fantastic step in in the long journey um and you know just to kick it back to equities again I feel like we're about maybe four years behind where stable coins are and so I know in a few years it'll be these same stories with these large firms just with equities and other parts of their portfolios and not just the cash leg and you know cash lake comes first and then everything else falls into place. So we're really excited by by these types of announcements because it just means these institutions are here. They're not going anywhere and they're going through
[19:59] the regulated first um approach. Standard Charter is arguably the most sophisticated bank in the world when it comes to to crypto and and stable coins and and I think like the work that they've been doing for probably come near a decade now I think is just going to continue to to compound. Um and I think that they're they're really going to continue to push the space forward. But what I what I like about the the details in in the story is, you know, they're going to start using this themselves first for
[20:29] their own kind of intergroup settlement and then they're going to expand and make it available to their clients. Uh and I think we're going to see that, you know, more and more of like it it's hard to go out and sell a product, you know, to your clients that you haven't actually used that isn't solving a problem for yourself. uh and it's also it's it's the best way to understand what infrastructure you need you know to be able to interact with that that product and and I think that like many banks and payment companies should go
[20:59] down that path uh and say okay how do we you know build partner buy the necessary components of of infrastructure to be able to to move on chain how do we find the lowest risk easiest to get off the ground use case that that could just in intra bank could be you know between a single client and then how do we how do we scale from there and and it's also really interesting to see how standard charter has done these investments and incubations with you know zodiac custody
[21:29] and zodia markets uh and so it's clear that they've taken a a real kind of ownership stake you know in some of the future market infrastructure that's that's being built out um and I think other banks are are are going to to follow that approach but it it compounds you know the work when you started 10 years ago go, you know, pays off now. And that's why every year that goes by that a bank hasn't, you know, gotten into this, it's going to be harder for them to to catch up. But Hannah, what what's your perspective on this one? >> I think it's such a great point. I, you know, I coming into crypto from outside
[22:00] of crypto, I've been here now for four years, and it's taken me a long time to even understand these primitives and the things that matter. And the security is so scary at first because you can make a very small mistake and um it be disastrous. So starting small, starting embriionic, starting to just get your internal operations moving over is a really great, you know, it's something that we've seen some of our partners certainly do. Um, and for me, this story is just I I would echo a lot of what Thomas said. Um, it's just it's really
[22:30] exciting to see institutions going from, you know, experimenting um to actually this is it's very real. Um it's an important shift from kind of should we use stable coins to how do we build this actually into the infrastructure of our business. And as we talk about stuff internally we have a lot of people that are very crypto native and really um pled uh and and expect the kind of DeFi things and and some of them look at these changes with skepticism. But I think what we like to talk about on the team is that this is,
[23:01] you know, this is how we get to um certainty that we have um full mainstream adoption for ever is is starting to see these types of uh institutions really take on um these changes full-time. >> Simon, I want to ask ask you like how do you think about China and Hong Kong right now? I feel like it's it's just one of these like huge questions of if you say like 2030 like it's it's hard to imagine that they're not going to be
[23:32] onchain payment flows but particularly on the B2B side that effectively move between China and the rest of the world in some way. Now the question is which chain which stable coin which asset like right now we know there's like an informal market of USDT and Tron and like but that is very much not you know uh not a compliant kind of regulatory approved way to move money. It feels like Hong Kong has played such a critical role like what could that
[24:03] ecosystem look like 5 years from now and like how do you see the opportunity in China and Hong Kong right now? It's so interesting to me that um Hong Kong is like the fiscal firewall to the mainland China. Like Hong Kong is where you trade with uh from the outside world into Hong Kong dollar and then Hong Kong dollar into REMI. But also uh in the background clearing is starting to become a major thing that the GIBs are turning on and the RAMI as a currency. You can't separate that from the geopolitics of of what's happening out there in the world
[24:33] right now and and China's role as import export China's role in the commodities markets. And so where do these large asset managers that want to, you know, legitimately buy, sell, and trade do that? They do that today in Hong Kong, but they can't do that 24/7. And Hong Kong could have gone the route that uh a lot of central banks around the world are going, which is, oh well, we'll do central bank digital currency and all our banks will do tokenized deposits, but they didn't. Um, and Standard
[25:03] Chartered could have gone the route that uh all of the other GIBs have gone, which is we'll do tokenized deposits and we'll only do intra, but they didn't. they've been sort of figuring out ways to enable this new form of commerce, these uh this more mercantile form of commerce to to happen, but in a way where they can still meet all of their regulatory obligations. And so Hong Kong remains this petri dish for what China might look like in 5 years to my mind. And what is this? It's a stable coin.
[25:34] It's not a tokenized deposit. That is really powerful because stable coins are 24/7, but they can exist outside of your walls of your institution versus if you look at what Swift's done, the Swift ledger is a way to sort of coordinate all of like HSBC and City Bank's tokenized deposits in in USD. So as I look out, I sort of see two competing models here. Is like the Swift system with the Swift ledger and tokenized deposits that's uh potentially at scale
[26:06] but also questionable in terms of its speed of delivery. Um although they have moved very quickly to be fair to them. And then the Hong Kong model and to some extent the Singapore model which is we will embrace innovation. Uh we'll try and regulate to limit the blast radius of that as much as possible and we are the conduits in and out of mainland China. So, I don't want to put any firm predictions on which model is the right model um or what the volume looks like,
[26:37] but I do think in 2030 it's very likely that if you're trading 24/7 as an asset manager anywhere near Hong Kong, you're going to be preferring these stable coins. I know HSBC has announced they're looking to do something similar. And so these are like two historically British headquartered banks that operate most of their business out of Hong Kong and mainland China that are supporting this stable coin. That means big banks have to support stable coins to my mind. I think that's your big big implication here.
[27:08] Thomas, I saw you were sort of nodding along to some of that. Anything resonate there? >> Yeah, I mean I was just back to the CBDC conversation of about five or six years ago. a little little bit a little bit of PTSD there because I know there was there was you know this debate of bank deposit tokens, stable coins, CBDC's, real-time payment systems. How do you move and store the dollar going forward? Do you use blockchains? Do you not? And you know the CBDC conversation I know especially in China has been you know something that they really pioneered early on compared to the rest of the
[27:39] market in 2122. Um and so it's just another example of people focusing and realizing on the utilities of stable coins specifically saying okay this is this is kind of the use case that we think the market is going to go to for now. Not saying that tokenized deposits won't you know come soon come soon right after but stable coins really are that first layer that are kind of the common language for people to be able to move dollars globally. It's interesting just just to that I haven't heard much about the Chinese CBDC in a while and I feel like
[28:10] we used to hear that a lot. There'd be press releases of digital yuan and kind of the expiration expiring money that they do an airdrop and then it would you'd have to spend it in a certain period of time. Uh, so I I just haven't heard much about it and I I would imagine that if it had been if it's an extraordinary success, you know, that's that's getting a bunch of adoption, uh, then you'd hear about it more. Um, I'm also surprised that there aren't more institutional kind of wholesale onchain but sanctioned kind of permissioned type
[28:42] of approaches. And so it it feels like it's been relatively quiet from the outside from very very very far away compared to what it was a few years ago where you know the whole CBDC discussion was very much anchored and look at China and like you know China's doing this and you know ch it's going to leave China the rest of the world. Yeah that that was like the the the discussion. You don't really hear that anymore. No, and I think it's so such a lesson for uh central banks who believe that if you can top down uh mandate a central bank
[29:13] digital currency onto your population uh then it will obviously be more successful than anything from the private sector. If any country in the world can top down mandate something, you have to imagine it's somebody like China. And it is a damp squib. It has not taken off. It has not been successful. China has one of the most vibrant financial services ecosystems on the planet. like Weepay and uh Alipay are phenomenal products. They run circles around most of what we have in the west and that private sector innovation is the story often not told
[29:43] about China. And so this sort of uh twospeed approach where you sort of accept enough of the informal economy uh to learn from it and then formalize it later is is I think something we can learn a lot from and I think the West is sort of finding its own way there with stable coins now in in various jurisdictions. Maybe uh even the digital euro the noises coming out of the ECB sound very different to 2 three years ago where now the digital euro you know for consumers is just another option. you know, might work offline, but it's
[30:14] not there to compete with with stable coins. And so, I'm quite encouraged when I speak to policy makers and central banks at the moment by how enlightened that discussion has become and how it's less about fears of either another sovereign like China or less about fears of Meta and what they're going to do and much more about what can this do for my economy and what can this do for for consumers. Um, of that I'm just going to take a quick pause while we while we hear from our sponsors. Stable coin operations usually mean a wallet from
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[32:15] The next story is uh about a stable coin Neo Bank that I'd never heard of before, but it's raised 68 million led by Japan's SBI at $1 billion valuation. This is called Facet. Um and it's 3 months after its last round. Um so they had a $51 million raise back in May and it takes the year's total to 119 million. They're based in LA. uh they process more than 40 billion in um to in volume across uh 125 countries annually
[32:46] and revenues up 6x year-over-year. Uh and apparently they've been profitable for 12 straight months. Uh their uh OWN network, it's uh kind of proprietary layer 2 on arbitum connects banks, telos, and payment firms across more than 100 different banking corridors. uh and their CEO uh said that stable coins sit underneath as the settlement layer even when customers never touch them. Super interesting one this Hannah because it sounds to me like um company
[33:17] you've never heard of happens to use stable coins in the background has done the hard work on distribution and partnership and and seems to be winning. Had you heard of this company and and what are your thoughts on them? I had heard of them only because they're in our CRM and I think we'd love to work with them, but um I hadn't heard of them in the news and I think the the main thought I would have about them is um you know we're seeing this across the board that financial companies are being built just very differently and we've seen a lot of customers in our book that
[33:48] similarly get very large very quickly. One of the examples we refer to a lot Axiom is one of our customers that you know fastest growing YC company ever. They got to 100 million in revenue with I think four people in four months. Um really crazy levels of scale. Um and these are financial companies that are um accessing from a non-custodial wallet kind of non-custodial financial services that are operating in a little bit of a shadow space in some ways. Um Moonshot was another example. Very quick uh
[34:19] ascendance to huge scale with very small numbers of people. Um, and I I think it's a really interesting trend and where it goes from here. There's lots of questions you might ask and I think there's a lot of questions that one should ask. Um, but uh certainly something that we're seeing more often where I think the you know 2010's version of this was an API on top of financial institutions certainly brought down the level of maybe [snorts] manpower required to build a financial
[34:50] app somewhat. But, you know, bringing blockchain into the mix is just really dramatically bringing that down even further. So, stable coins gives us this shared settlement layer. If you're [snorts] willing to go as far as accessing DeFi and things of that nature, even further. Um, I see this as definitely another element of that of that trend. The only thing I would add um on on that is you know this highlights that we really are on the vertical part of the scurve for stable coins because you're just seeing this level of speed and this level of
[35:20] adoption that is unparalleled even a year or two ago. That's the first thing. The second thing I found interesting is the fact that they choose chose to go down the L2 route um with with Arbiter, right? They could have gone to to a bunch of other bunch of other um chains as well and the focus that that that is the approach that they took. It's just an interesting go to market strategy and we'll see how that how that continues to grow. Um but I mean it's exciting because so many different people are approaching the same problem with different solutions and this is just another example of that. So it it'll be interesting to see how this how this plays out in the coming year. Yeah, I I
[35:50] think the the stablecoin neo bankank category is is fascinating. Um it's interesting to see that the companies that were built what two maybe two three years ago you know if you think about the read pays and the casts were like have just grown exponentially uh and have have become kind of global uh financial products you know for for many people. Ether 5. Like it it's just it's it's a whole new class of of global fintech.
[36:20] Now it's like the the barrier to entry to launching a stable coin neo bank is just getting lower and lower and lower. Um, and I think that that's it's great for competition and innovation, but it also the other side of it is like something if if you have people vibe coding stable coin neo banks over the weekend and launch like like some of these things there there's a huge difference between one stable coin neo bank and another. And like I I'm a I'm a
[36:52] bit concerned that that we'll see, you know, if if you live in kind of a world of one person run financial services that it just it's it's hard for that to to really, you know, turn out well without, you know, people ending up, you know, losing money and and mistakes that are are happening. And then I think the other piece is just how how does the differentiation, you know, happen, you know, when it becomes this easy to to launch products and does it end up being brand new companies that are stable
[37:22] cocoin neo banks from scratch? Do do they get verticalized where there's a stablecoin neo bank for dentist and there's a stablecoin neo for like just like any specific vertical that that someone creates? uh or does it end up becoming the software players which I think we've seen less of than I would have expected where you know global software businesses you know the example I always like to give is like an intuit of like you know how many people across the world use QuickBooks and what if you had a you know financial services
[37:53] product embedded inside you know QuickBooks that could give you a dollar account in like crossber B2B payments like that would be pretty powerful and so I don't know about you all but I I feel like I've seen less of the embedded finance payments using stablecoin wallets from global software players and more of this like next generation of stablecoin neo banks. Some of which have done phenomenally well, some of which I think will just struggle to differentiate and some of which unfortunately I think it's going to like
[38:24] there will be challenges that happen when you have this this low of a barrier to entry. >> If I can patent match for a little bit cuz I'm really old. Um I this is kind of how fintech played out. Um so we got the fintech consumer neo banks, then we got the B2B neo bankanks and then we got embedded finance, right? And uh there was a point in 2021 where one in five VC dollars was going into fintech and uh everyone and their dog was launching a neo bank. And I remember sitting there thinking, ooh um not all of these will
[38:54] be wellrun. Um some of the bigger and better ones hopefully will be. And look, Facet, it's pretty clear that if they're building their own chain, they're partnering with banks and telos. To get in the door, in that case, you've got to have done something pretty special. And differentiation there does come from your ability to solve the bottlenecks that you don't see. Like I can set up a NEO bank on stable coins in what 10 minutes on Tempo? Less than that. It's insanely easy. but to solve the bottlenecks of distribution in the last
[39:24] mile. That takes proving myself to a financial institution that I need a contract with. So, so I think there will be differentiation on quality of management team and experience as there always is. Um, and then there'll be uh kind of this this uh curve towards embedding. I think it was only about 6 8 months ago Stripe launched their financial accounts product. Um, and a lot of the embedded finance that you see in like Shopify came from Stripe making Stripe products embeddible, right? And
[39:55] and then there are other companies as well that have done similar sorts of things that have kind of unbundled that that Stripe offering. Uh, you know, Ramp has a similar solution as well. So you got the embedded finance wave and you know Uber giving out cards to their drivers and Shopify doing lending to their stores and accepting payments after you got the neo banks. I think we'll get that in three or four years as well with these global platforms. They're going to start with payouts because that's the use case that's
[40:25] easiest where it has demand but I think they'll build on other use cases in in B2B and embedded finance kind of around it. But, you know, look, Crossber still has to hit correspondent banks and you still need to do partnerships and uh it's this this I think is not done. But I just love that there was a nail bank that I never heard of that's worth a billion dollars. Like I I don't know if this is going to be everybody anytime soon, but but but hopefully it is. Uh Thomas, any other thoughts? >> No, I think it's it's just exciting because it reminds me a little bit of,
[40:55] you know, the internet era where everyone had their own website for one specific little vertical and then there was an enormous amount of consolidation. I think we're going to see the same thing here where people begin to because the barrier to entry is so low, you're going to see people spin up so many of these these different firms and then over times over time as we see the network effect, you know, take off, we'll see that consolidation and at the end of the day, you know, the services that that people get are going to be better and they're going and they're going to be cheaper and it's just going to be more efficient. But we just have to go through that that similar that
[41:25] similar um transition that that you mentioned. you're completely right that um there will probably be some some explosive failures um given how easy it's becoming to kind of participate in this space and then you know add AI to the mix the velocity of these things just feels outrageous astonishing and the kind of you know headcount to headcount to volume ratios are getting really crazy. Um, but we'll all have popcorn and and wait
[41:56] and see how things go. And I think, you know, maybe this ends up being someplace where the, you know, we see the banks that still exist today end up having a a much larger play than than we imagine right now. I told this story in my newsletter a few weeks ago of um every time I see uh somebody who's a founder of a brand new stable coin NEO bank, I put my arms on both shoulders and I say please please hire a head of compliance or you are going to jail. Um it it's
[42:27] those are your choices. Hire ahead of compliance or go to jail. Pick one. Um and I I don't say that to be glib. I say that because I lived through um the the kind of the blow up of an organization called Synapse that went bankrupt. Um and then uh multiple NEO banks were unable to uh give customers access to their funds. The underlying banks didn't know where customer funds went and four years on, 3 years on, four years on, we still don't know where that money is. There are still customers who've lost
[42:57] their life savings. So when you're dealing with moving money, you're dealing with people's lives. And and I think that's why we we have to take this stuff quite seriously. It's it's all very fun vibe coding a neo bank, but when you lose somebody's life savings, things get a lot less fun very quickly. But to try and bring the mood back around a little bit from uh being disappointed dad of crypto, um Le Zero has announced Atlas. Um this is a headless exchange on its zero blockchain
[43:28] that collapses matching clearing and settlement into a single stack. Yay for headless uh exchanges because agents are the future. Um so Atlas stands for aggregated trading liquidity and settlement. There is no front end. Uh trading venues plug in and keep their own interface and customers. Les zero claims submillisecond median latency and 200,000 transactions per second at launch. Um the initial uh open atlas partners include bullish um
[44:00] GTE defined fi and true north. So Thomas I guess you can give us a little bit more context on this one. >> Happy to really excited to see this announcement get out there. Um, and I think it's a perfect example of, you know, another set of picks and shovels that the onchain equity market really needs to to take off because right now everything is is prefunded and there's very little netting. And, you know, that is one of the big benefits that we have of today's of today's settlement infrastructure through the DTC and NSC. And so very much so through through
[44:30] partnerships and and through um initiatives like this one are going to be how we we solve those last large problems on chain to build the full you know end to end you know onchain equity ecosystem. And so really excited about what that means and what it really means is we can shift from the uh building the platform to how we use the platform. And one thing that we're really focused on at Bullish specifically is now that we are, you know, in the process of acquiring Aquinity, which is the world's second biggest transfer agent. They have about a third of the S&P 500 and about
[45:01] half of the Footsie. That means that we'll have the distribution and then we can really focus on the use cases. And you know, the use cases, you can think of 24/7 and and collateral and and and all that. The thing that that um I'm I'm really excited about is what the transparency means. And by that it means that the issuer can actually know who's it who its investors are, each individual person. And so what does that mean in practice? That means that an airline can create a boarding class for investors. That means that a coffee
[45:32] company can see who's voted and be able to pass on a free coupon to those who voted there. You have to be careful with that, of course. And then and then the last one is a good example is a publicly traded shoe company can pass on coupons on Black Friday to investors. So it blends what it means to be an investor and a customer and puts them together for the first time which is really exciting and that's really only possible because you're able to really see that transparency because the equity is finally fully onchain. >> And how would that work in terms of customer identification? because like I
[46:03] know a lot of customers uh businesses with CRM that are questionable but the how does the onchain transparency bit of that work and how do I link the two together? >> Yeah, totally. So this is this is the fun part of building out the full ecosystem is working with brokers directly to be able to still have a seamless experience for the investors but also leveraging the fact that those brokers would would now be holding the issue sponsored token that would be the smart contract which would be managed by a quintity. So then you can actually see who's holding it and be able to pass on
[46:34] dividends and and voting rights and all of that. >> All right. So you're just dealing with the investor side, right? Yeah, I get it. Yeah. Sorry that took me a second. I know you said a lot of those words, but I I just wanted to >> No, but that's that's the fun part about this is is everyone is still building. There's no one solution that is like, hey, this is how it's done. And so it really, you know, it takes a village to build this entire ecosystem. It'll take a long time, but we're very excited about by about by about what's in store. I think those investor loyalty use cases are super cool. Um, people have been
[47:05] talking about it for a while, but like we just haven't seen anything real come to market and and scale. I remember when was it the during the GameStop craze? I think AMC was giving like, you know, a free movie to AMC stockholders and like just the mess of like how to redeem it and like prove that you're stockholders just like so so hard to do. Uh I think this also just it's been cool to see the the layer zero journey in starting in you know all about crosschain you know
[47:37] how to enable interoperability between chains then going into building your own chain and then now you know this this headless exchange on top of it and I I think it just it also speaks to layer one innovation is just still alive and well like it's just going to continue that that there will be new chains that take different approaches using different technologies and and that's great. Like that's one of my favorite things about the blockchain ecosystem is it just never it never stops. It's it's
[48:07] open- source technology that continues to to evolve and and I think that experimentation, you know, benefits everyone. I think the question just comes down to distribution that every new chain that that's created, every new exchange of okay, how how do you get people to to use it? Uh and so it's it's great to see you institutional partners like like you all that are um that are involved in this and uh I'm excited to see some of the the kind of brand new tech you know we've heard a lot of good things about zero uh in terms of the the
[48:38] tech design but like you know what are the use cases that end up you know getting adoption of this you know high throughput chain >> I guess a lot of common themes here you know infrastructure being uh common shared infrastructure being an enabler nice to see this again here too. Um, and yeah, echoing the distribution point it spread out not as helpful getting it getting it collected in one place like it'll be nice to see how that all plays out. I also I remember say I don't know if anyone else remember say was initially in this um investor
[49:10] transparency play too. Um I've always wanted to see something like this where you know get better at communicating with shareholders and letting shareholders have a vote. That was kind of the initial view of Dows, I think, too. Maybe we'll have some of that come back into into the lexicon. >> Let's make that cool again, Thomas. >> I mean, I'm in. I'm in. I think the distribution thing is is the key one here because more and more and when we're talking to exchanges and and um and market makers and custodians and brokerages, you know, a common theme
[49:41] that they ask is which chain are you on? We're currently integrated with this chain or with that chain. And so just being able to get everyone on the same page in the same room and say, "Okay, these are the three chains we're going to focus on over the next year so we can have that coherent, you know, ecosystem from end to end is something we're we're we're really focused on." >> I can completely imagine that. It's it's something that you can imagine in my day job, uh, I hear a lot about and, uh, this is a this is a difficult market with a lot of fragmentation. Hopefully, we can solve it. There's a a bunch of stories we didn't have time to cover
[50:11] this week. Um, Coinbase also launched tokenized stocks on base because another chain. Um, speaking of which, you know, Robin Hood has done something similar. Um, Shannan and Visa teamed up to test stable coin issuance on B2B settlements in South Korea. Do not overlook South Korea. Uh, JP Morgan weighed a stable coin launch um as Wells Fargo um and banks advance a joint venture. lot of news about this one and uh I don't know
[50:41] if that headline really tells the truth in some of this stuff cuz often we get closer and it's definitely not a stable coin. So uh take that one with a pinch of salt. Uh Japan are going to work on a blockchain based settlement systems. Um details are expected in early 2027. Again 247 trading seems to be what every country is doing. Um especially in Japanese bonds that might be uh that might be exciting and spicy lately. Uh the Ripple's RLUSD crossed two billion in market cap. And finally, Red. Pay
[51:12] says stable coin card spending is forecast to hit 50 billion a year by 2028. There's that. Stable coin linked cards in hyperrowth again. Kai, >> that's right. And we're seeing it every week. Hyperrowth mode. It's amazing. >> It's exciting. So, I want to thank everybody for watching and listening. Thomas, I want to thank you for being on the show. If people want to learn more about you or bullish, where do they go to do that? on Twitter at thomascowan93 and on LinkedIn. >> Hannah, same question. If people want to learn you about you and turnkey, where do they go to do that?
[51:42] >> We're at turnkey.com and I'm on Twitter at hm_nold. >> And Kai on kai sheffield visa.com/crypto. >> You'll find me screaming into the void at fintechbrainfood.com and of course at tempo.xyz and sytail on all of the socials. And you'll find a lot more of this show if you subscribe. It means a lot to us and it's the way you say thank you for folks like Thomas and Hannah who have given their free time to uh educate you about the market and it'll help us do many many more shows. So please leave us a
[52:13] review and uh send it to all of your friends as well. Bye for now.