Latest / Masters in Business / Evolving Money: Stablecoins in Practice and Policy (Sponsored Content)

Transcript

Evolving Money: Stablecoins in Practice and Policy (Sponsored Content) · Masters in Business

• 0:00
  Speaker 1: Since you're a subscriber to this Bloomberg podcast, we thought
• 0:03
  Speaker 1: you'd be interested in a sponsored podcast called Evolving Money,
• 0:07
  Speaker 1: produced by Coinbase and Bloomberg Media Studios. It explains how
• 0:11
  Speaker 1: institutional investors are adopting the world's newest asset class, crypto.
• 0:17
  Speaker 1: Here's a recent episode.
• 0:22
  Speaker 2: You had the government sending a message to innovators and
• 0:26
  Speaker 2: developers that they should basically take any ideas that they
• 0:29
  Speaker 2: may have and take them overseas or put them in
• 0:32
  Speaker 2: a drawer somewhere and just abandon them.
• 0:35
  Speaker 3: That's forr. Shuerzode, the chief policy officer of Coinbase, talking
• 0:38
  Speaker 3: about the way things used to be with stable coins.
• 0:42
  Speaker 3: But the message from Washington has changed in the last year.
• 0:46
  Speaker 2: And so what you're seeing now with this sea change
• 0:48
  Speaker 2: in governmental attitude is it's actually a permission structure around
• 0:53
  Speaker 2: developers and innovators who want to think creatively about different
• 0:56
  Speaker 2: payment solutions that could be executed on with the use
• 0:59
  Speaker 2: of stable coins.
• 1:01
  Speaker 3: That unleashed creativity is powering a movement amongst major financial
• 1:05
  Speaker 3: services companies who are now integrating crypto into their operations.
• 1:09
  Speaker 3: In many cases, they're starting with stable coins. There are
• 1:13
  Speaker 3: a number of reasons for that including the ability to
• 1:16
  Speaker 3: move money more cheaply and efficiently.
• 1:19
  Speaker 2: By our account, there's about two hundred and fifty different
• 1:21
  Speaker 2: projects have been announced by any number of financial players
• 1:25
  Speaker 2: and developers, So the biggest banks, the payment processors, the
• 1:29
  Speaker 2: credit card companies, corporates and others to integrate, and I
• 1:33
  Speaker 2: think we're just at the tip of the iceberg.
• 1:38
  Speaker 3: I'll talk more with Fayr about policy trends in a
• 1:40
  Speaker 3: couple of minutes, but first I want to give you
• 1:43
  Speaker 3: a peek into one of those two hundred and fifty
• 1:45
  Speaker 3: different projects he referred to check out dot Com. It's
• 1:48
  Speaker 3: an example of a major financial player investing in stable
• 1:52
  Speaker 3: coin infrastructure right now. They are a PSP that's a
• 1:58
  Speaker 3: payment service provider, visible intermediary working behind the scenes when
• 2:03
  Speaker 3: you buy something online. Checkout dot Com started out processing
• 2:07
  Speaker 3: credit cards, then moved into debit cards, and because they're global,
• 2:11
  Speaker 3: they also facilitate currency exchange. Now they're deploying a major
• 2:16
  Speaker 3: upgrade to their platform that will allow consumers to shop
• 2:20
  Speaker 3: using stable coins and vendors to get paid in stable coins.
• 2:24
  Speaker 3: That's what we're going to explore today. Stable coins in
• 2:28
  Speaker 3: practice and in policy. This is evolving money and I'm
• 2:33
  Speaker 3: your host, Angie Lao. The show is co produced by Coinbase,
• 2:37
  Speaker 3: one of the largest cryptocurrency platforms in the world, and
• 2:39
  Speaker 3: Bloomberg Media Studios. Now in the series, we are exploring
• 2:43
  Speaker 3: how crypto is being adopted by traditional financial institutions as
• 2:48
  Speaker 3: the next logical evolution of the monetary system. And this
• 2:52
  Speaker 3: episode is all about stable coins, which are cryptocurrencies designed
• 2:57
  Speaker 3: to maintain a stable value because they're to a fiat
• 3:00
  Speaker 3: currency like the US dollar, so the price is fixed,
• 3:04
  Speaker 3: but the currency is highly liquid, and because it can
• 3:07
  Speaker 3: be moved on crypto rails, it's faster and cheaper to
• 3:10
  Speaker 3: transact compared to legacy banking systems. According to a report
• 3:15
  Speaker 3: in Forbes, stable coins were used in more than thirty
• 3:18
  Speaker 3: trillion dollars worth of transactions last year. To give you
• 3:21
  Speaker 3: a sense of scale, that is more than Visa and
• 3:24
  Speaker 3: MasterCard combined. Now, to be clear, the majority of those
• 3:28
  Speaker 3: transactions were trading in cryptocurrencies, but other use cases are
• 3:32
  Speaker 3: growing fast. Payroll, international purchasing, even retail shopping is all
• 3:38
  Speaker 3: increasingly being done with stable coins. My first guest today
• 3:45
  Speaker 3: is checkout dot COM's chief product officer, Moron Kilbeggi. I
• 3:49
  Speaker 3: started our conversation by asking him to walk me through
• 3:51
  Speaker 3: the firm's five year relationship with stable coins.
• 3:56
  Speaker 4: Back in twenty twenty one, we were one of the
• 3:58
  Speaker 4: first payment service provider to offer stable coins settlement to
• 4:03
  Speaker 4: our merchants, and so this is already a very long
• 4:06
  Speaker 4: time ago in crypto world, or in digital crypto years.
• 4:10
  Speaker 5: In crypto years exactly.
• 4:12
  Speaker 4: We offered a service that unfortunately we had to wind
• 4:15
  Speaker 4: down because the regulatory framework was just not there and
• 4:18
  Speaker 4: we were not able to find the right partners in
• 4:22
  Speaker 4: banks and so forth in order to offer that service.
• 4:25
  Speaker 4: But this is something that we are in the process
• 4:29
  Speaker 4: of re launching as we speak. And essentially it's merchants
• 4:35
  Speaker 4: that are acquiring funds with us want to get settled
• 4:39
  Speaker 4: with stable coins. What does that mean. It means that
• 4:43
  Speaker 4: they can settle. They can get settled twenty four by seven,
• 4:47
  Speaker 4: which is one of the big advantages. The settlement is immediate,
• 4:51
  Speaker 4: you're not dependent on the bank hours and so on
• 4:55
  Speaker 4: and so forth, and you're not dependent on the bank rails,
• 4:58
  Speaker 4: and the merchant will be able to you to choose
• 5:01
  Speaker 4: how they get settled, whether they get settled with regular
• 5:04
  Speaker 4: fiat or whether they get settled directly into their wallet
• 5:07
  Speaker 4: will be up to them.
• 5:08
  Speaker 3: What are the markets that you're focusing on and how
• 5:12
  Speaker 3: is it all going to roll out?
• 5:13
  Speaker 5: In your mind, we are an enterprise shop, right like,
• 5:16
  Speaker 5: we support enterprise merchants that almost uniformly are international, like
• 5:25
  Speaker 5: they operate in multiple markets all time, and this is
• 5:28
  Speaker 5: part of what we abstract away that complexity.
• 5:31
  Speaker 4: You know, we give them the ability to accept payments
• 5:34
  Speaker 4: with one global API that they can just integrate and
• 5:39
  Speaker 4: accept payment across the world. And so for sure international
• 5:43
  Speaker 4: is a big part of this. You know, in terms
• 5:45
  Speaker 4: of rollout, we're going to start rolling out something which
• 5:49
  Speaker 4: is pretty unique for US because we're a europe based company,
• 5:52
  Speaker 4: where a UK based company, But we're going to start
• 5:54
  Speaker 4: with the US and we're going to roll out from there.
• 5:58
  Speaker 3: Is the marketplace in the United States already asking for this,
• 6:03
  Speaker 3: demanding it.
• 6:04
  Speaker 4: So it's a very good question, and the honest answer
• 6:07
  Speaker 4: is that I don't know. You know, we believe in
• 6:12
  Speaker 4: the theology and the philosophy behind stable coins. We think
• 6:16
  Speaker 4: that there's a future world where stable coins sit along
• 6:20
  Speaker 4: other type of currency and enable cross border like borderless
• 6:25
  Speaker 4: payments across the board. We look at this as an
• 6:27
  Speaker 4: experiment as something that could potentially.
• 6:30
  Speaker 5: Do good in the world.
• 6:32
  Speaker 4: We want to put this out there, we want to
• 6:33
  Speaker 4: see how people react to it. And the interesting bit
• 6:36
  Speaker 4: is that in some of the big merchants in the
• 6:38
  Speaker 4: world are interested and curious because they have customers that
• 6:41
  Speaker 4: are cross border, that they have customers that have wallets
• 6:45
  Speaker 4: with stable coins that they're currently not doing anything with
• 6:47
  Speaker 4: except for buying other forms of crypto, and so using
• 6:50
  Speaker 4: it for retail is a logical next step for them
• 6:54
  Speaker 4: as well. And so I think that it's a it's
• 6:57
  Speaker 4: kind of an experiment within the ecoss them where there's
• 7:01
  Speaker 4: a merchant making it available for the consumer and seeing
• 7:05
  Speaker 4: what the consumer adopts and chooses at that point in time.
• 7:10
  Speaker 3: Checkout dot Com is upgrading their platform to handle a
• 7:13
  Speaker 3: payment system that currently handles relatively speaking, little volume, but
• 7:17
  Speaker 3: the word relatively is doing some pretty heavy lifting there.
• 7:20
  Speaker 3: As I mentioned off the top, stable coins were used
• 7:23
  Speaker 3: to settle more than thirty trillion US dollars in transactions
• 7:26
  Speaker 3: in twenty twenty five, and thirty trillion is a number
• 7:29
  Speaker 3: that has even the most traditional financial services companies asking themselves, Hey,
• 7:35
  Speaker 3: how can we get involved. Morn says they see this
• 7:38
  Speaker 3: as a market with substantial growth potential around the world,
• 7:42
  Speaker 3: especially in developing economies.
• 7:46
  Speaker 4: If you're living in in an economy that has a
• 7:49
  Speaker 4: very high inflation rate and a very unstable currency, getting
• 7:55
  Speaker 4: exposed to an equivalent of a US dollar is something
• 7:58
  Speaker 4: that is good for you. You want to buy cross
• 8:02
  Speaker 4: border and obviously not pay cross border fees and FX
• 8:08
  Speaker 4: fees and so on and so forth, then there is
• 8:10
  Speaker 4: another benefit for you. And you know, frankly, like in
• 8:15
  Speaker 4: many countries, access to debit and credit card is not ubiquitous,
• 8:20
  Speaker 4: and this is an alternative form of payment that has
• 8:23
  Speaker 4: potentially a lower barrier of entry in multiple geographies. So
• 8:27
  Speaker 4: I can definitely see a very good use case for
• 8:33
  Speaker 4: cross border payments for cross border retail and for developing markets.
• 8:38
  Speaker 3: But what about larger, more established markets.
• 8:42
  Speaker 4: For developed markets like the US and Europe. I think
• 8:46
  Speaker 4: a lot of this is going to come down to preference,
• 8:50
  Speaker 4: and people sort of preferring stable coins because you know,
• 8:55
  Speaker 4: they've they've traded to for other crypto and they have
• 8:58
  Speaker 4: liquidity in their in their wallets, and you know, rather
• 9:01
  Speaker 4: than trading again to a fiat currency, they just want
• 9:05
  Speaker 4: to use it right there. And the convenience actually of
• 9:09
  Speaker 4: paying with a stable coin through this experience that we're
• 9:12
  Speaker 4: building is actually, it's going to be pretty convenient. It's
• 9:14
  Speaker 4: going to be pretty good, and so I think consumer
• 9:17
  Speaker 4: preference is probably going to drive that usage and utility.
• 9:22
  Speaker 4: And if I switch over to the merchant side, it's
• 9:25
  Speaker 4: all about liquidity and availability of funds. And the more
• 9:30
  Speaker 4: the ecosystem builds itself out where vendor to vendor payments
• 9:35
  Speaker 4: can happen on stable coins, where cross border payments can
• 9:38
  Speaker 4: happen on stable coin, then there becomes a flywheel where
• 9:41
  Speaker 4: it starts making more and more sense for merchants to
• 9:44
  Speaker 4: do this. And then down the line, I think that
• 9:49
  Speaker 4: some treasury teams are starting to think about, you know,
• 9:53
  Speaker 4: managing their own treasury completely on stable coins and not
• 9:57
  Speaker 4: having to deal with you know, cross entity settlement between
• 10:02
  Speaker 4: multiple entities within one company. You can run it on
• 10:06
  Speaker 4: a ledger internally, and so that sort of plugs into
• 10:09
  Speaker 4: this settlement and acceptance page.
• 10:11
  Speaker 5: If you look at it down the line.
• 10:13
  Speaker 3: When you are getting ready to roll out in the US,
• 10:17
  Speaker 3: what is the biggest current constraint that you're experiencing right now?
• 10:20
  Speaker 3: Is it regulation? Is it consumer wallet adoption? Run't it readiness?
• 10:26
  Speaker 3: Operational complexity? Which is it?
• 10:29
  Speaker 4: Despite the fact that stable coins have been around for
• 10:33
  Speaker 4: a number of years for US as a fiat based business,
• 10:37
  Speaker 4: there are still a lot of stakeholders that you need
• 10:40
  Speaker 4: to make sure that they're comfortable, and there are some
• 10:45
  Speaker 4: operationalization hoops that you need to go through. It's about
• 10:49
  Speaker 4: ensuring that our regulators know what we're doing and are
• 10:53
  Speaker 4: happy with it and don't have concerns with it. It's
• 10:56
  Speaker 4: getting the contracts in order and in place. Nothing is
• 11:01
  Speaker 4: a blocker, but there are challenges, right like, even in
• 11:05
  Speaker 4: the US, they are in different regimes, right Like there's
• 11:08
  Speaker 4: New York which has its own license versus other states.
• 11:13
  Speaker 4: There's complexity there and how you operate and where your
• 11:16
  Speaker 4: entity is, and all of those things influence the timeline
• 11:20
  Speaker 4: and the implementation path. The technological build is actually the
• 11:25
  Speaker 4: easiest part, right everything around it is complexity.
• 11:33
  Speaker 3: Complexity is the focus for my next guest, fiarshire Zod,
• 11:37
  Speaker 3: because if the technological build is the easy part and
• 11:41
  Speaker 3: everything around it is complex well, Farrier's goal is to
• 11:44
  Speaker 3: make sense out of the complexity. He is the chief
• 11:48
  Speaker 3: policy officer at coinbase, and his job is to work
• 11:52
  Speaker 3: with governments and establish the regulatory framework that will let
• 11:56
  Speaker 3: people like Moron launch their technical solutions. You're starting to
• 12:03
  Speaker 3: see the enterprise and a lot more institutional players coming
• 12:08
  Speaker 3: into the space. But where are we right now in
• 12:10
  Speaker 3: terms of regulations? What is allowed right now? And where
• 12:17
  Speaker 3: will we be allowed to go? What is the trajectory?
• 12:20
  Speaker 2: It's a good question. It's also a very sophisticated question
• 12:23
  Speaker 2: because you have two things happening simultaneously that are happy
• 12:28
  Speaker 2: somewhat in parallel, but they will converge down the road.
• 12:31
  Speaker 2: And that is you have the Genius Law having been
• 12:35
  Speaker 2: passed by Congress and signed into law by the President
• 12:38
  Speaker 2: in July, and this, as you know, well as the
• 12:42
  Speaker 2: federal framework for regulating stable coin issuers. And so obviously,
• 12:47
  Speaker 2: in a normal kind of calendar of regulatory action, you
• 12:50
  Speaker 2: have legislation and then the implementing rags and then you
• 12:53
  Speaker 2: go live. But interestingly with stable cooins, particularly under this administration,
• 12:58
  Speaker 2: you have rapid movement by the regulators to allow a
• 13:01
  Speaker 2: use of stable coins for some of the most complicated
• 13:05
  Speaker 2: payment activities, even before Genius gets fully implemented. So you
• 13:10
  Speaker 2: have Genius getting implemented, but then at the same time
• 13:13
  Speaker 2: you have the CFTC, for example, allowing stable coins to
• 13:17
  Speaker 2: be used for derivatives trade settlement, right, and that is
• 13:22
  Speaker 2: enormously exciting. It's almost like a big sandbox for example,
• 13:26
  Speaker 2: that is, you know what they call it in a
• 13:27
  Speaker 2: regulatory perspective, where you've got market participants executing on and
• 13:32
  Speaker 2: using the innovative technology with the blessing of the regulators,
• 13:36
  Speaker 2: even as the actual regulations get you know, bedded down.
• 13:40
  Speaker 2: And that's and that's really powerful.
• 13:43
  Speaker 3: Right And and Moran Niclbetchy from checkout dot com I
• 13:46
  Speaker 3: want to bring back what he said he mentioned earlier
• 13:48
  Speaker 3: that as they design their processes, they have to account
• 13:52
  Speaker 3: for not just different countries regulations, but even different states
• 13:55
  Speaker 3: that have different rules.
• 13:57
  Speaker 2: Well, you know, that's the that's the big dilemma I
• 14:00
  Speaker 2: think the industry has at the moment. There's certain issues
• 14:03
  Speaker 2: about how regulation takes place. So, for example, for exchanges
• 14:07
  Speaker 2: who intermediate crypto trades spot market transactions, which are the
• 14:12
  Speaker 2: bulk of the crypto trading that you see out there
• 14:16
  Speaker 2: at the moment, that is subject to state regulation and
• 14:20
  Speaker 2: it's not clear whether there's full federal preemptive authority over
• 14:24
  Speaker 2: the states, and so that just creates a chaotic environment
• 14:27
  Speaker 2: where you have fifty different regulators across fifty different states.
• 14:31
  Speaker 2: Consumers don't know what rules are applied to them depending
• 14:35
  Speaker 2: on where they live, and developers have a hard time
• 14:38
  Speaker 2: implementing and managing the compliance burden of having fifty different rules,
• 14:43
  Speaker 2: each different for each different state. And so there are
• 14:46
  Speaker 2: issues like that, But generally speaking, you also have at
• 14:50
  Speaker 2: the same time a real willingness on the part of
• 14:53
  Speaker 2: the regulators under the Trumpe administration to use every bit
• 14:56
  Speaker 2: of the authority that they have to provide the clarity
• 14:59
  Speaker 2: that the street is looking for. So there's legislations critical.
• 15:04
  Speaker 2: It's our number one objective from a policy perspective. I'm
• 15:08
  Speaker 2: confident we're going to get it done, but we are
• 15:11
  Speaker 2: at the same time working with the regulators to encourage
• 15:14
  Speaker 2: them to provide clear rules. And what I mean by
• 15:18
  Speaker 2: that is, for sure, every time you have a change
• 15:20
  Speaker 2: in administration, new regulators come in and can change the rules,
• 15:24
  Speaker 2: but it's very It's not as easy as it sounds
• 15:27
  Speaker 2: for them to do a one eighty if the previous
• 15:31
  Speaker 2: administration has finalized the rules and market practice has adapted
• 15:36
  Speaker 2: and adopted those rules, because it becomes hard. The courts
• 15:39
  Speaker 2: are careful not to allow regulators to engage in activities
• 15:44
  Speaker 2: that creates sort of an unfair burden or chaos in
• 15:46
  Speaker 2: the markets. And so there is a really interesting effort
• 15:51
  Speaker 2: by the Trump administration to get legislation done, but at
• 15:55
  Speaker 2: the same time to race ahead with sound regulation that
• 15:58
  Speaker 2: they hope to bed down have market practice evolve around.
• 16:02
  Speaker 2: So even if legislation doesn't get done, it becomes very
• 16:05
  Speaker 2: hard for a future crypto hostile administration to reverse things.
• 16:11
  Speaker 3: If I were to ask you to look at the
• 16:13
  Speaker 3: Doppler radar of crypto regulatory development, what's the temperature right now,
• 16:18
  Speaker 3: what's the weather, what's in the forecast.
• 16:22
  Speaker 2: It's a really really interesting time because there's a lot
• 16:26
  Speaker 2: of momentum, very fast momentum early in the in the
• 16:28
  Speaker 2: Trump administration to make these changes that I was talking about.
• 16:32
  Speaker 2: But what really has happened probably since Q three Q
• 16:35
  Speaker 2: four of last year, and it's even stronger I would
• 16:38
  Speaker 2: say now, is kind of the incumbent financial players have
• 16:44
  Speaker 2: woken up and have launched some of the most furious
• 16:47
  Speaker 2: attacks on these changes that we're talking about because of
• 16:52
  Speaker 2: fears about what it'll do to the economic rents that
• 16:55
  Speaker 2: come with you know, their incumbency, and so you see
• 17:00
  Speaker 2: all the traditional financial groups kind of jump up and say,
• 17:06
  Speaker 2: a wait a minute, we're not against this technology, but
• 17:08
  Speaker 2: please not so fast. Do it more slowly, put more
• 17:11
  Speaker 2: frictions on it, make it harder. And companies are like ours,
• 17:14
  Speaker 2: are trying to be a counterbalance so that resistance.
• 17:26
  Speaker 3: What do you think the stickiest issue is right now
• 17:29
  Speaker 3: between incumbents and the crypto industry, the digital assets industry,
• 17:35
  Speaker 3: the platforms.
• 17:36
  Speaker 2: The rewards fight is the most obvious kind of visible
• 17:39
  Speaker 2: example that you see written about in the press. But
• 17:42
  Speaker 2: the other example is is the fight that's occurring at
• 17:45
  Speaker 2: the SEC. The SEC chairman wants to migrate capital markets
• 17:49
  Speaker 2: on chain T plus five, T plus six has gone
• 17:53
  Speaker 2: down to T plus one plus two or three. We
• 17:56
  Speaker 2: can take that down to teas plus zero do instantane settlement.
• 18:01
  Speaker 2: But a lot of folks who make their money off
• 18:04
  Speaker 2: of that lag don't want that to happen. It's a big,
• 18:07
  Speaker 2: big issue because it implicates a lot of financial intermedias
• 18:10
  Speaker 2: or huge economic rents by sitting in the middle of transactions.
• 18:14
  Speaker 2: But just like you don't need a mailman to send
• 18:18
  Speaker 2: an email to someone, you don't need to have necessarily
• 18:22
  Speaker 2: have an intermediary to transfer value in the way you
• 18:26
  Speaker 2: used to or transfer a stock or or a dollar.
• 18:30
  Speaker 2: And the question is will public policy stop that or
• 18:33
  Speaker 2: enable that?
• 18:34
  Speaker 3: And we've talked a lot about what the US government
• 18:36
  Speaker 3: is doing.
• 18:37
  Speaker 2: What about internationally, Well, I think of it in two tracks,
• 18:41
  Speaker 2: just to oversimplify it. One is the stable coin track,
• 18:44
  Speaker 2: and the other is the market structure track. I think
• 18:47
  Speaker 2: a lot of other jurisdictions move well before the US
• 18:49
  Speaker 2: to establish rules around crypto trading, Europe being a great
• 18:53
  Speaker 2: example of MIKA, the market and crypto assets regulation that
• 18:57
  Speaker 2: they pass. Where the shoes are reversed is with regard
• 19:02
  Speaker 2: to stable coins or digital money. In that other jurisdictions
• 19:06
  Speaker 2: have moved much more slowly than the United States. In
• 19:09
  Speaker 2: some places like the European Union are let's say, ambivalent
• 19:12
  Speaker 2: about stable coins. But what's happened is this genius Act passed,
• 19:16
  Speaker 2: You've had massive adoption and all around the world. Now
• 19:20
  Speaker 2: there's an enormous concern that because the US has gone
• 19:24
  Speaker 2: ahead and adopted so vigorously tokenized dollars, and given the
• 19:30
  Speaker 2: insatiable demand the world has for dollars as a sore
• 19:35
  Speaker 2: of value and as a transaction currency. That there will
• 19:40
  Speaker 2: be enormous pressure on foreign currencies in terms of how
• 19:43
  Speaker 2: relevant they can become if the dollar becomes more accessible
• 19:48
  Speaker 2: in stable coin form. And so one of the messages
• 19:51
  Speaker 2: that we've delivered to other jurisdictions is, whatever you think
• 19:55
  Speaker 2: about this technology, the decision has been made. The US
• 19:58
  Speaker 2: has moved forward dollars. Stable coins are going to scale dramatically,
• 20:03
  Speaker 2: the adoptions happening by across the board, by corporates, financials, everybody.
• 20:08
  Speaker 2: And so if you want your currency to remain relevant,
• 20:12
  Speaker 2: you have to have a tokenized version of your currency.
• 20:15
  Speaker 2: And I think that's why you see more more kind
• 20:17
  Speaker 2: of rapid action in Canada the UK to adopt stable
• 20:24
  Speaker 2: coin frameworks for their own currency, and we think that's
• 20:27
  Speaker 2: actually a good thing. I think the more currencies are
• 20:29
  Speaker 2: available in tokenized form, the healthier dynamic you have of
• 20:34
  Speaker 2: you know, foreign exchange transactions occurring or transactions occurring in
• 20:39
  Speaker 2: you know and settled in different currencies. And so we
• 20:43
  Speaker 2: hope that will happen.
• 20:45
  Speaker 3: So do you think global players need one harmonized model
• 20:49
  Speaker 3: or can the market function with multiple national regulatory regimes.
• 20:53
  Speaker 2: You don't have to have harmonization, but I would say
• 20:57
  Speaker 2: I would say with stable coins, you know you'll have
• 21:01
  Speaker 2: situations like right now in the UK where the Bank
• 21:03
  Speaker 2: of England is proposing pretty tight caps on how much
• 21:08
  Speaker 2: pound sterling stable coin any individual can hold or use,
• 21:12
  Speaker 2: and they're trying to do that because they want to
• 21:14
  Speaker 2: be careful about the transition from the analog system to
• 21:17
  Speaker 2: a token I system. We think that's a big mistake
• 21:21
  Speaker 2: and that they need to do what the US has done,
• 21:23
  Speaker 2: which is to adopt it rapidly and integrate it into
• 21:27
  Speaker 2: a broad range of institutional and retail use cases, and
• 21:32
  Speaker 2: that flywheel of adoption will be healthy for the development
• 21:36
  Speaker 2: of the pound sterling. So it's not an imperative that
• 21:39
  Speaker 2: there are rules be harmonized, but there's a common sense
• 21:43
  Speaker 2: dimension to it that we've sort of support on the
• 21:46
  Speaker 2: market regulations. That is a place where having more consistent
• 21:52
  Speaker 2: rules makes a lot of sense, because if you're building
• 21:55
  Speaker 2: a financial product, or let's say you're building an update
• 21:58
  Speaker 2: of a traditional app, you need to have some consistency
• 22:02
  Speaker 2: so that that app can be accessed by users around
• 22:05
  Speaker 2: the world under the same rules. There are also some
• 22:09
  Speaker 2: kind of more esoteric sounding things like, for example, in Coinbase.
• 22:13
  Speaker 2: I'll just give you kind of a more practically, very
• 22:15
  Speaker 2: practical example. We want customers who want to use coinbase
• 22:19
  Speaker 2: to ultimately be able to source the liquidity for their trade.
• 22:24
  Speaker 2: So if you wanted to buy a bitcoin or whatever,
• 22:27
  Speaker 2: have all of thatquidity as centralized as possible. That's actually
• 22:30
  Speaker 2: a good thing because it creates deeper, more robust markets,
• 22:34
  Speaker 2: It creates more effective price discovery, deeper larger pools of liquidity,
• 22:41
  Speaker 2: or less susceptible to systemic events. But that requires some harmonization.
• 22:47
  Speaker 2: But that's where you need a dialogue, and the US
• 22:50
  Speaker 2: and UK happen to have a dialogue right now going
• 22:53
  Speaker 2: on between the two treasuries coordinating and collaborating on crypto
• 22:58
  Speaker 2: and blockchain based tokenization market regulation. This is one of
• 23:03
  Speaker 2: those issues that we've verged them to look at, which
• 23:05
  Speaker 2: is creating a system in which they recognize each other's
• 23:08
  Speaker 2: regulatory system and so UK companies wo want to operate
• 23:12
  Speaker 2: in the US can provide US customers access to UK
• 23:15
  Speaker 2: liquidity and vice versa, and that requires harmonization.
• 23:20
  Speaker 3: That's far our Cherzade, the chief policy officer for Coinbase.
• 23:27
  Speaker 3: It's clear that things are trending in the right direction.
• 23:30
  Speaker 3: The big questions focus on the pace of regulations and
• 23:32
  Speaker 3: whether innovators feel there's enough certainty and stability to build
• 23:36
  Speaker 3: products and push them into the market. Checkout dot Com
• 23:40
  Speaker 3: certainly feels that way. It's going to be exciting to
• 23:42
  Speaker 3: watch as they roll out their new platform. With that
• 23:45
  Speaker 3: in mind, I want to go back to Moran Calbetcy
• 23:47
  Speaker 3: and ask him if their rollout goes as planned and
• 23:51
  Speaker 3: stable coins become more widely used as an easy to move,
• 23:54
  Speaker 3: universal currency, how will it change the world.
• 23:59
  Speaker 5: If this were to work.
• 24:00
  Speaker 4: I think that seeing the ecosystem of money movement move
• 24:06
  Speaker 4: towards rails that are digital, and having payments that are
• 24:14
  Speaker 4: border less, that are free across borders, that don't suffer
• 24:19
  Speaker 4: from the slowness that the existing system currently has, that
• 24:23
  Speaker 4: don't suffer from the exchange fees that we're seeing.
• 24:28
  Speaker 5: All of that makes for.
• 24:30
  Speaker 4: I think, a better consumer experience and a better merchant experience,
• 24:33
  Speaker 4: and that's what we as check Out are trying to
• 24:36
  Speaker 4: facilitate all the time and trying to find.
• 24:38
  Speaker 5: Ways to enable.
• 24:40
  Speaker 4: So it's maybe utopic to think about it now, but
• 24:43
  Speaker 4: I think that there is a few years down the
• 24:46
  Speaker 4: line it could happen so fingers crossed.
• 24:55
  Speaker 3: I'm Angie Lao and this is Evolving Money, a co
• 24:58
  Speaker 3: production between Coinba and Bloomberg Media Studios. Thanks for listening.
• 25:03
  Speaker 3: There are more than a dozen other conversations in our
• 25:05
  Speaker 3: feed for you to check out, so don't hesitate to
• 25:08
  Speaker 3: scroll back in time and listen to some of those
• 25:10
  Speaker 3: today