Latest / The Stable Pulse / Seismic on What It Really Takes to Scale Stablecoin Payments

Transcript

Seismic on What It Really Takes to Scale Stablecoin Payments · The Stable Pulse

• 0:00
  Intro: The passage of the stablecoin legislation drafted by the Senate, dubbed the Genius Act, because analysts say a wave of competition can complicate things.
• 0:08
  Intro: Stablecoin is your debut right here at the NASDAQ today.
• 0:14
  Dante Reminick: People often refer to building out a stablecoin strategy as if stable coins are a singular product that is to be used ubiquitously.
• 0:22
  Dante Reminick: But for those who actually know the technology well, you know that there are multiple layers of infrastructure that need to be amalgamated in order to implement stablecoins.
• 0:31
  Dante Reminick: So today we're talking with Lyron, who is the CEO and founder of Seismic, who's building out a foundational layer for stablecoin settlement, aka a blockchain.
• 0:40
  Dante Reminick: And he's doing so in a rather unique way.
• 0:43
  Dante Reminick: So we're gonna get started here, but I wanna try something new on this podcast, which is to open it up with a segment that we like to call braggadocious, which is Lyron, first of all, welcome to the show.
• 0:55
  Dante Reminick: But I want you to just brag about yourself.
• 0:56
  Dante Reminick: I want you to brag about yourself, I want you to brag about seismic.
• 0:59
  Dante Reminick: I think that people bury the lead too much, too far into these types of shows.
• 1:03
  Dante Reminick: So as an intro for everyone, I want you to eat your humility as much as you possibly can.
• 1:08
  Dante Reminick: Tell us about yourself and be incredibly braggadocious with all things seismic.
• 1:14
  Lyron Co Ting Keh: Oh, absolutely.
• 1:15
  Lyron Co Ting Keh: Don't worry, there's not a lot of humility to eat in this case.
• 1:19
  Lyron Co Ting Keh: So seismic, thank you for that intro there.
• 1:23
  Lyron Co Ting Keh: As Dante mentioned, seismic is a blockchain, it's an L1 blockchain.
• 1:27
  Lyron Co Ting Keh: You can think about us like Ethereum, but we're private.
• 1:30
  Lyron Co Ting Keh: And the main point of our product that we focus on for our customers is the private stablecoin account.
• 1:37
  Lyron Co Ting Keh: Uh, this private stablecoin account is uh is a wallet that you can put stable coins in, and the balances are private, the transfers that come in and out of it are private.
• 1:45
  Lyron Co Ting Keh: And uh we do quite a bit of the amalgamation that Dante mentioned.
• 1:49
  Lyron Co Ting Keh: So there are all these pieces of infrastructure that you need to do to make the account actually useful.
• 1:54
  Lyron Co Ting Keh: So we don't just serve up the account itself to our customers.
• 1:58
  Lyron Co Ting Keh: We also do things like we facilitate fiat on and off ramping into it so you can actually get money in and out of the account.
• 2:04
  Lyron Co Ting Keh: Uh, once the money is in the account, we do things like offer yield-bearing products so that idle balances on in the account can earn yield.
• 2:11
  Lyron Co Ting Keh: Uh from there, we also do things like KYT and uh card and spending against cards.
• 2:17
  Lyron Co Ting Keh: So we have a bit of a full stack solution against what uh uh uh around the the private stablecoin uh deposit accounts.
• 2:25
  Lyron Co Ting Keh: And uh for all of this, it's been working very well so far for the bragging section of it.
• 2:30
  Lyron Co Ting Keh: Uh we are backed by 20 million bucks from A16, uh led by A16Z.
• 2:35
  Lyron Co Ting Keh: Uh we have about uh we have about 30 customers on the platform, where a large majority of them are neo banks, some of them are payment service providers, uh, most of them are tech companies, a few of them are regulated institutions, and then like banks, and a few of them still are uh local governments, which is the highest in the stack.
• 2:55
  Lyron Co Ting Keh: And we have to get compliance uh really pat down to get those.
• 2:59
  Lyron Co Ting Keh: And so very proud, the number one thing that I'm most proud about is our customer list.
• 3:02
  Lyron Co Ting Keh: Uh we've co-built our product with a lot uh with a lot of folks that are in very specific customer segments, and then uh when we started distributing it out to folks, it started working well with landing a lot of bigger players.
• 3:15
  Lyron Co Ting Keh: So that's the biggest thing about us.
• 3:18
  Dante Reminick: I love it.
• 3:19
  Dante Reminick: I love it.
• 3:19
  Dante Reminick: There's a lot to break down in that, and we're gonna get to all of that, but I appreciate you bragging.
• 3:24
  Dante Reminick: I wanna rewind a lot.
• 3:26
  Dante Reminick: You mentioned that you guys are a blockchain for stablecoins.
• 3:29
  Dante Reminick: You said, hey, you're like Ethereum, but better.
• 3:31
  Dante Reminick: Walk me through why the hell we need new blockchains for stable coins, anyways.
• 3:36
  Dante Reminick: It feels like today there's a million blockchains that are out there, all of them want to do stable coins in one way or another.
• 3:42
  Dante Reminick: Why even build a new blockchain for stable coins?
• 3:46
  Speaker: Great question.
• 3:47
  Speaker: Uh the biggest point is that we wanted the customizability that owning all the layers of the stack could could do.
• 3:54
  Speaker: So uh we see our product as uh the blockchain is really the big flagship because everything goes through those rails, but the having the on and off ramps on top and the yield on top is just as important as a just as important part of a product.
• 4:06
  Speaker: And so when we were talking to a lot of our earlier design partners, and these were neo banks and PSPs, because we are are very narrowly focused on these segments, uh, they would bring up a lot of needs that needed customizability at a lot of parts of the stack.
• 4:20
  Speaker: One of the big ones was the blockchain piece, and that's where privacy came in.
• 4:24
  Speaker: We serve a number of neo banks that are primarily uh B2B, where they serve other businesses that uh that they serve uh accounts to these other businesses.
• 4:34
  Speaker: And one of the big things that uh come up when you're serving business accounts is hey, if um I'm serving trade finance businesses, then I have a lot of financial flow that carries sensitive information that uh I can't just put on a publicly readable blockchain.
• 4:49
  Speaker: Uh for example, you you have contract, you have contract details, you have supplier payments, uh, you have whether or not different campaigns are doing well.
• 4:57
  Speaker: For all of these points, having privacy is a core, uh core differentiator in how helping our customers close customers, and because of that, it helps us close our customers.
• 5:07
  Speaker: And having control of the blockchain layers, a big, a big component of this, because if we were just doing it on existing blockchains, we wouldn't get a lot of the properties that we want.
• 5:18
  Dante Reminick: Interesting.
• 5:18
  Dante Reminick: So to I want to push a little bit deeper on that.
• 5:21
  Dante Reminick: Like, what do you think the difference is between building a chain for stables, right?
• 5:27
  Dante Reminick: Being stable first and having a chain that can also have stables run on it, right?
• 5:33
  Dante Reminick: What's the difference between being stable first and building on any other blockchain if you can do stable coins on both of those blockchains?
• 5:40
  Speaker: Oh, yeah, absolutely.
• 5:42
  Speaker: Uh you're you're absolutely correct.
• 5:44
  Speaker: Like most blockchains can do stable coins, doing them well into the quality that you can uh you can have a product that serves traditional fintech companies and regulated institutions is a whole different ballgame.
• 5:55
  Speaker: Uh a couple of the big things that the that that come up.
• 5:58
  Speaker: Uh one of them is if you want to serve a lot of the bigger institutions that uh are people that have bigger institutions as clients, uh, you need privacy.
• 6:07
  Speaker: Uh there are other things that you need where you need deep, uh deep fiat liquidity.
• 6:11
  Speaker: So uh all the local currencies that you have around the world, you need deep liquidity between that and uh whatever stable coins you have on your chain.
• 6:19
  Speaker: Uh other than that, you need compliance that's built in at every layer of the stack.
• 6:22
  Speaker: So for us, uh, because we control our blockchain, we can do things like have screening policies that happen at the validator level.
• 6:31
  Speaker: This means that uh if you have a transaction that's happening on Ethereum, there's no screening that really happens there.
• 6:36
  Speaker: Nothing that the app, nothing outside of what uh applications can enforce.
• 6:41
  Speaker: But for us, if you use Rchain, uh we have screening policies that are built directly into uh into transaction inclusion.
• 6:48
  Speaker: So there's no transaction that actually goes through an R chain that is that fails compliance checks.
• 6:54
  Speaker: And so compliance, privacy, uh uh deep liquidity are a couple of the big a couple of the bigger pieces that differentiate a uh uh a blockchain for stable coins and a block versus a blockchain that has stable coins.
• 7:07
  Speaker: Interesting.
• 7:09
  Dante Reminick: So let's zoom out for a second.
• 7:12
  Dante Reminick: Stable coins are cryptocurrencies that are pegged to a fiat currency, oftentimes a dollar.
• 7:18
  Dante Reminick: These stable coins use blockchains as a ledger to run on so that they can keep track of who has what asset at what time and where those assets are moving to.
• 7:30
  Dante Reminick: Now, you've mentioned the word privacy half a dozen times, and we've been recording for five minutes.
• 7:36
  Dante Reminick: So let's dive into this uh a little bit more.
• 7:40
  Dante Reminick: Oftentimes when people talk about blockchains, they're talking about a public visible blockchain.
• 7:46
  Dante Reminick: Why doesn't that work when we talk about you know moving money around the world?
• 7:51
  Dante Reminick: And what have you guys done to solve for that?
• 7:55
  Speaker: Oh, yeah.
• 7:56
  Speaker: For uh the the the big piece on why it doesn't work is uh it's very simple to grok if you are an end user that's uh that's uh thinking about this issue.
• 8:07
  Speaker: Because one of the big shifts that are happening with stable coins right now is that uh a lot of these companies that are building on stable coins are starting to develop primary financial relationships with their users.
• 8:19
  Speaker: This means they're in the consumer context, uh they are creating accounts that people have their direct deposit go into and that most of their expenses, like rent and credit card payments, are going out of.
• 8:29
  Speaker: Uh in that case, we all have this primary depository account.
• 8:33
  Speaker: Like uh you might have Chase, you might have Bank of America.
• 8:36
  Speaker: And so the easy litmus test of uh whether or not uh privacy matters to the uh the neo banks that we're serving is ask, ask yourself, would you be happy if your bank statements from Bank of America start getting published at every minute of every day?
• 8:55
  Speaker: And that's the consumer point and consumer and the consumer use case for privacy is already strong as it is.
• 9:01
  Speaker: Like you can, we can like you and I as individuals can relate to it.
• 9:04
  Speaker: And if you take that number and you dial it up by five, then you get the business use case for this.
• 9:08
  Speaker: Because suddenly it's not just, oh hey, it's weird to have my bank account on chain and uh have it be public.
• 9:14
  Speaker: It's weird to have my rent payment and my salary payment out there.
• 9:18
  Speaker: Like that one, it's like it's it's it's bad.
• 9:20
  Speaker: It's like socially uncomfortable.
• 9:21
  Speaker: Like in a lot of cases, like you might have these edge cases where your employer like sees how much you're getting paid.
• 9:26
  Speaker: And so if a different person that's trying to poach you sees your salary, like there are all these cases that it's like kind of bad for consumers.
• 9:33
  Speaker: If you take that and dial it up, then you get you have businesses.
• 9:35
  Speaker: You have businesses that have bespoke pricing for every single counterparty that they have.
• 9:39
  Speaker: You have businesses that have supplier payments and competitors that are breathing down their neck.
• 9:42
  Speaker: You have some businesses still that uh can't even have transactions that are public because they agree to with their customers that they don't publish it anywhere.
• 9:51
  Speaker: And uh it would be a compliance violation if they did do it.
• 9:54
  Speaker: A lot of our customers that are more in the banking space and in the local government space care about that one the most.
• 10:03
  Dante Reminick: Interesting.
• 10:04
  Dante Reminick: So I you you bring up a good point, which is sort of the balance between privacy and compliance, right?
• 10:10
  Dante Reminick: You've seen a lot in the news when things are very decentralized and very private.
• 10:15
  Dante Reminick: The government doesn't like that, right?
• 10:18
  Dante Reminick: That they they claim that that in itself is a compliance issue.
• 10:22
  Dante Reminick: But what you're saying is, hey, there are times where to be compliant, you actually have to be private.
• 10:28
  Dante Reminick: Can you talk a little bit about the relationship between private stable coins and compliance, when people need to see things, when people don't need to see things, all of that?
• 10:38
  Speaker: Oh, 100%.
• 10:39
  Speaker: Uh the line we draw at the company is is is fairly clear here.
• 10:44
  Speaker: Where we're not the maximally private, decentralized solutions that exactly that you mentioned for exactly the reason that you uh you you you stated.
• 10:53
  Speaker: Like if you're too private, you are like no no one can could no one can use you because you have uh uh because you commingle with all of these funds that are uh not funds that you want to commingle with.
• 11:03
  Speaker: Uh the way that we draw the line here is that uh I view privacy in is in two stages.
• 11:10
  Speaker: There is private from the world and then private from the operators.
• 11:13
  Speaker: Uh seismic very clearly is uh private from the world, but not private from the operators.
• 11:18
  Speaker: We very explicitly in our terms and conditions, and whenever we are on sales calls and we're integrating with people, we let them know that uh we have AML, we have AML monitoring just as directly on the chain.
• 11:30
  Speaker: Uh, we have blockchain intelligence providers that are plugged straight in.
• 11:32
  Speaker: Our on and off ramp product is going to be doing real-time analysis and, if needed, investigations on any uh on any transactions that uh come that come through that don't look that don't look don't look good.
• 11:46
  Speaker: And so uh in in a lot of the more blockchain native world, uh we're we're very disliked for that for that fact.
• 11:53
  Speaker: But in the in the in the fintech and the banking and regulated finance world, uh that is one of our core core selling points.
• 12:00
  Speaker: And so that's how we draw the line in the in the tension uh here.
• 12:04
  Dante Reminick: Interesting.
• 12:05
  Dante Reminick: So would it be fair to say that it's not necessarily that you are privacy first, but that you are compliance first, and by way of being compliance first, you have to have a really strong focus on privacy.
• 12:18
  Speaker: Yep, absolutely.
• 12:19
  Speaker: That's I think it's a good way to put it.
• 12:21
  Speaker: Oh, absolutely, pretty fair.
• 12:22
  Speaker: If if people describe that as us, like we'd be fairly happy.
• 12:28
  Dante Reminick: Good.
• 12:29
  Dante Reminick: I'm glad.
• 12:29
  Dante Reminick: So I think that brings us to the fact that for the people who are looking into stable coins, they're probably realizing that there are a number of different blockchains that stable coins can run on.
• 12:39
  Dante Reminick: You hear about this stablecoin on this chain and that stablecoin on that chain.
• 12:43
  Dante Reminick: Most of these chains are not as focused on privacy as you are, but there's still billions and billions and billions of dollars of stablecoin volume.
• 12:52
  Dante Reminick: You know, you see stable coins that volume increasing every single day.
• 12:56
  Dante Reminick: Why do you think that is?
• 12:58
  Dante Reminick: Like, why do you think that there are chains that are not private, that are very blatantly public, where you see stablecoin volumes moving?
• 13:06
  Dante Reminick: And what is your prediction for how that pattern is going to change?
• 13:10
  Speaker: Oh, yeah, absolutely.
• 13:12
  Speaker: Uh for uh for a lot of the stablecoin flow right now, a lot of them don't come in and out of primary depository accounts.
• 13:19
  Speaker: Like uh, like they they are uh they're more one off, like one-off transfers that people do.
• 13:25
  Speaker: Like there are a lot, there's a lot there's a ton in B2B payments, there's a ton of consumer payments.
• 13:28
  Speaker: And these all these these all indeed are places where uh people are making compromises right now.
• 13:35
  Speaker: And uh the way that we view uh getting these some of these folks to come work with us instead of uh a lot a lot of our uh like competitors is a weird word, but like competitors in this case, uh, is that privacy becomes a good uh a good selling point for us.
• 13:53
  Speaker: Like talking about us as a business, like in most situations, we are a better choice for folks, even without privacy in the picture.
• 14:03
  Speaker: And this sounds weird given that we like that that this is our main wedge, but it's primarily because we're very focused on on two customer segments.
• 14:10
  Speaker: While most blockchains do things like trading and all these like random like social use cases and gaming use cases, like we just have two customer segments.
• 14:19
  Speaker: So even without including privacy in the picture, uh we just understand people's problems more because we deal with it every day.
• 14:25
  Speaker: And then on top of that, you throw in, hey, we also have privacy, and it's everyone has it on their roadmap at some point.
• 14:32
  Speaker: Like to your point, a lot of them aren't uh gonna not launch their app because of privacy.
• 14:36
  Speaker: And that's totally okay.
• 14:37
  Speaker: Like they they they to they should.
• 14:39
  Speaker: Because in most cases, like uh a lot of the the reality is uh a lot of people's customers, like if you're a fintech, uh your customers aren't gonna know their transactions that are public for a long time, depending on your customer segment.
• 14:52
  Speaker: Like if your customer segment is like really does not bother to look for a long time, then you're gonna have no business impact.
• 14:58
  Speaker: So for our for us, when we're making the sell of privacy in those cases, it's hey, we are all we already understand your problem better and we have privacy.
• 15:07
  Speaker: We know you're thinking about it, but because you're a business, you need you have all these priorities, uh, all these priorities on your plate.
• 15:14
  Speaker: You can't actually not launch your product because of it.
• 15:17
  Speaker: But because we're neck and neck with someone else and we have privacy, we win the deal there.
• 15:21
  Speaker: And so that that that's really what privacy means to us.
• 15:24
  Speaker: And I don't mean to minimize the the role of it.
• 15:26
  Speaker: I just mean that uh privacy is uh is one of our core wedges that we put in.
• 15:31
  Speaker: But really the core thing about seismic that helps us win is that we have a strong focus on these customer segments.
• 15:39
  Dante Reminick: Yeah.
• 15:39
  Dante Reminick: Maybe I want to revise my past statement and say that you're not even necessarily compliance first, but you are you know fintech first, which means you have to be compliance first, which means that you have to be first.
• 15:49
  Dante Reminick: Oh, yes, yes, yes.
• 15:50
  Dante Reminick: Yes.
• 15:51
  Dante Reminick: And you mentioned you have a killer list of customers.
• 15:55
  Dante Reminick: You mentioned that you're customer first.
• 15:57
  Dante Reminick: Tell us more about who is building on seismic and what they're doing.
• 16:01
  Speaker: Oh, absolutely.
• 16:02
  Speaker: Our our biggest customer segment by far is is Neobanks.
• 16:05
  Speaker: And these are neobanks of all different flavors.
• 16:08
  Speaker: And the in the B2B.
• 16:09
  Speaker: Wait, wait, wait, rewind.
• 16:10
  Speaker: What's a neobank?
• 16:12
  Speaker: Very very good question.
• 16:14
  Speaker: Uh the definition is nebulous.
• 16:17
  Speaker: A lot of people will say different pieces.
• 16:19
  Speaker: Uh, my definition of Neo Bank is a uh a bank that has either a that is either built around stable coins or has a different sponsor bank as the source of its deposits.
• 16:33
  Speaker: But it's primarily a tech-based version of a bank that competes on things like distribution and UX rather than the old guard of banks that that compete on, say, uh say just very different things where distribution and UX just isn't as good.
• 16:51
  Speaker: So uh old banks I'll classify like Chase Bank and B of A bank.
• 16:56
  Speaker: A neo bank I'd put the uh for folks in the audience, I'd put something like a Mercury or a Meow in there.
• 17:02
  Speaker: And uh they're not necessarily uh full stack banks where they they have their own charters, but they have sponsor banks in the back, or even a lot of them that are even newer.
• 17:11
  Speaker: We're starting to see stable coin neo banks where you don't even have a Stomonster bank in the bank, in the back.
• 17:16
  Speaker: All of your deposits are just in stable coins on a on a blockchain.
• 17:22
  Dante Reminick: Why why would people do that?
• 17:23
  Dante Reminick: Like what benefit do you think that these neo banks have over Chase, B of A, you know, the the traditional banks?
• 17:34
  Speaker: Oh, great question.
• 17:35
  Speaker: So they uh these neo banks uh neo banks neo banking as a core category is uh is absolutely exploding.
• 17:43
  Speaker: And the biggest reason because of uh of that is because they but they get to focus solely on the customer segments that they focus on.
• 17:56
  Speaker: So you might have uh a neo bank that is specifically for trade finance companies, or a neobank for 20 to 35-year-old high earners in the US and EU.
• 18:05
  Speaker: And this is the level of focus that uh the big banks just cannot do.
• 18:09
  Speaker: And so these neo banks uh in the traditional sponsored banking world could uh are an extension of these neo of these banks, of these bigger banks that are vertical specific.
• 18:20
  Speaker: And then in the in the stablecoin world, uh, there are just freestanding neo banks of themselves that aren't even attached to a JP Morgan or a citi bank and uh are purely competing on distribution in their vertical.
• 18:34
  Dante Reminick: Yeah, it's uh it's the classic innovators' dilemma, right?
• 18:38
  Dante Reminick: These these bigger banks are getting pushed out by people who you know specialize and offer those very, very specific services.
• 18:44
  Dante Reminick: Uh that's that's really interesting.
• 18:47
  Dante Reminick: You guys are built for stable coins, right?
• 18:50
  Dante Reminick: But unlike other blockchains, one of the things that I love about seismic the most is that you don't just advertise seismic the blockchain.
• 18:58
  Dante Reminick: Like when you're go out going out there and talking to customers, you advertise on and off ramps, you advertise virtual accounts, you advertise all of these other sort of verticalized layers of the financial technology stack, which I haven't seen any other specific chain do.
• 19:12
  Dante Reminick: Tell me a little bit more about why you guys are doing that, A.
• 19:16
  Dante Reminick: And then B, how you guys are doing it.
• 19:19
  Speaker: Thank you.
• 19:20
  Speaker: Thank you.
• 19:20
  Speaker: I really appreciate these.
• 19:21
  Speaker: Uh, we we we care a lot about this go-to-market, so uh the kind words here are truly just appreciated.
• 19:28
  Speaker: Uh the so this didn't come in as a master plan from the team at all.
• 19:34
  Speaker: It came in during sales calls.
• 19:35
  Speaker: So, what would happen is that we would go on a sales call and talk to a neobank, and then we would start pitching properties of our blockchain.
• 19:41
  Speaker: Hey, you should go with us because uh we're really fast, we're really cheap, we have privacy, we have uh we have all these great wallets that are on us.
• 19:50
  Speaker: And then the a lot of the the the neobanks were just like, how they why do we care?
• 19:54
  Speaker: How does this solve any of our problems?
• 19:56
  Speaker: Like uh a big thing in blockchain land is TPS, like uh how quickly can you go?
• 20:01
  Speaker: It's transactions per second.
• 20:02
  Speaker: You tell a neobank TPS, and they're like, What can I do?
• 20:05
  Speaker: Like, is TPS gonna feed my family?
• 20:06
  Speaker: And the answer is just no.
• 20:08
  Speaker: And so what we found is that uh what these neobanks instead want is they don't want uh they don't want they don't need TPS.
• 20:16
  Speaker: They need they need a virtual account in in the in Europe.
• 20:19
  Speaker: Uh they don't need things, uh they they they don't need things like like like uh atomic settlement.
• 20:26
  Speaker: What they do need is uh really cheap cross-border transfers between the Brazil to America corridor.
• 20:34
  Speaker: And uh that's why we started going up to offer these services that more directly uh service people's needs.
• 20:40
  Speaker: And the good thing about what happened when we started doing this is because we got to piece together all these different uh different typically segregated layers of the stack, the economics for a lot of the folks that we worked with ended up getting much better.
• 20:54
  Speaker: Because if we are the chain, the the yield provider, the on and off ramp, we don't for for each customer, we don't really need to make money in all of them.
• 21:02
  Speaker: Like if you had three different vendors for these, like they need they need to they need to make their money in all three of the slices.
• 21:08
  Speaker: For us, we could lose money on two and make money on one, and we're still very happy to serve folks.
• 21:14
  Speaker: And so the economics overall end up being better.
• 21:17
  Dante Reminick: Yeah, and I think that this is the way that a lot of the most popular or I guess most successful companies in the stablecoin space are doing it, much like you know the fintech giants and the traditional financial stack did before it, where they're just verticalizing everything, right?
• 21:34
  Dante Reminick: You see people like Bridge, you see people like Anchorage, they might have started doing cross-border payments or custody, but now they're doing cards, they're doing issuance, they're doing you know, XYZ, and they're trying to own that entire vertical.
• 21:45
  Dante Reminick: Because the reality is, like I said at the very beginning, every single stablecoin implementation involves nine different infrastructure providers.
• 21:53
  Dante Reminick: And in the past, you used to have to pick and choose this, that, and the other thing.
• 21:56
  Dante Reminick: But the people like yourselves and like a lot of the most successful companies.
• 21:59
  Dante Reminick: In the space, what they're doing now is they're saying, hey, we can offer you one solution where you're getting all of that.
• 22:05
  Dante Reminick: You don't need to make nine decisions.
• 22:07
  Dante Reminick: You need to make one decision and we'll handle the rest.
• 22:10
  Dante Reminick: And so I think that's really uh a good way to go about it, in my opinion.
• 22:14
  Dante Reminick: That being said, what is seismic working on every single day?
• 22:18
  Dante Reminick: Like when you get into the office and you shut your office door, what are what are you guys obsessing over?
• 22:26
  Speaker: Ooh, I guess this this changes uh ever every quarter.
• 22:30
  Speaker: This quarter, it is getting on and off ramp coverage to be broader.
• 22:35
  Speaker: Right now we do fairly well in the in a lot of the bigger in the lot of the bigger currencies and countries.
• 22:41
  Speaker: So uh USD, Euro, uh BRL, JPY, even uh, and INR are all a lot of the bigger currencies that we that we do well in.
• 22:52
  Speaker: But what we find is that because uh a lot of neo banks these days, especially the neo banks that are considering stable coins, are highly, highly global, the needs of them are expand much faster than traditional neo banks, where it might be one country for one year and then two years later that then they're then they want another currency.
• 23:12
  Speaker: Uh for us, like we would serve a neo bank uh on one month, and then one month later they ask for six more countries because truly like uh it it is it is core to their use case that they that they are very global.
• 23:23
  Speaker: And so for us, every day this, every day this the the this entire month was hey, hey, how do how do we how do you onboard more currencies?
• 23:30
  Speaker: How do we do it faster?
• 23:31
  Speaker: How do we make failure rates go down?
• 23:33
  Speaker: So getting our on-and-ramp to work very well is is is a big piece right now.
• 23:38
  Dante Reminick: I love that.
• 23:38
  Dante Reminick: We just had uh Dan and Dimitri from Modern Treasury on who you know, and we had a long conversation about what it means to be global by default and how stable coins are the closest that we have come to being global by default.
• 23:51
  Dante Reminick: Uh, but we also talked about how it's very rarely a fully stablecoin stack, and so oftentimes you do need that expansive ramp coverage.
• 23:58
  Dante Reminick: And you know, for you, I imagine that's just going and talking to as many people and trying to patch together uh as many ramps into your system.
• 24:05
  Dante Reminick: I have a question for you on you know, when it comes to expanding into Indonesia with the INR or whatever it might be, oftentimes you see these like local currency stable coins coming into the fold.
• 24:18
  Dante Reminick: And just for our audience members, throughout the entire show, when we refer to stable coins, we're often referring to dollar-backed stable coins, right?
• 24:27
  Dante Reminick: USDT, USDC, things that are pegged to the US dollar.
• 24:31
  Dante Reminick: There are also stable coins that are starting to pop up that are not pegged to the dollar, that are actually pegged to other global currencies.
• 24:38
  Dante Reminick: Um the use cases are similar.
• 24:41
  Dante Reminick: Um, but Lyron, for you, I'm curious what your thoughts on these non-dollar denominated stable coins are.
• 24:47
  Dante Reminick: If you see demand for them, if you see use cases for them, how you guys are thinking about that at seismic.
• 24:53
  Speaker: Oh yeah.
• 24:54
  Speaker: So uh in a quarter, I would I would say uh we are going to shift a lot of deposits over to Euro stablecoin.
• 25:03
  Speaker: So uh right now it's uh it's it's so it it is so far all just USD because all people have asked for, but we get the Euro ask a lot.
• 25:11
  Speaker: Uh outside of that, we actually don't get too many asks outside of uh two use cases that are butting.
• 25:20
  Speaker: So uh as as of today, it's just euro and dollars are clearly the the two big ones that everyone needs to support.
• 25:27
  Speaker: Uh what I would predict the biggest uh upcoming use case for stable co uh for local stable coins is is for cheaper on and off ramps in a lot of these different places.
• 25:40
  Speaker: Uh and in a lot of places, getting under 10, 15 bips is really only possible when you're not doing a currency conversion.
• 25:50
  Speaker: So if you're doing something from BRL to BRL stablecoin and then using on-chain liquidity to go from BRL stablecoin to USDC or just uh keeping funds in BRL stablecoin is a big uh, is I think a big next step for local currency stable coins.
• 26:06
  Speaker: Because eventually it's easy for a lot of people to come on the show and say, in four years, we're going to have every local currency stable coin uh on a blockchain.
• 26:17
  Speaker: And there's gonna be such deep liquidity that uh the the rates that you're gonna get for FX on-chain is going to rival or even be cheaper than the rates off-chain.
• 26:26
  Speaker: But that's that that's like an easy statement to say because obviously it's trending that way.
• 26:31
  Speaker: I think it's much harder to say what are the different forcing functions that are actually gonna get these local currency stable coins to go in.
• 26:39
  Speaker: Because really, it's a lot of folks, it's not gonna be deposits, right?
• 26:42
  Speaker: Like uh a lot for a lot of folks, using stable coins in general is so that you don't have to hold your local currency.
• 26:48
  Speaker: So it's not that.
• 26:49
  Speaker: And there's really only a short list of reasons why local stable coin local currency stable coins should should exist.
• 26:55
  Speaker: And I'm hoping, because it's it's better for me and the Mardins of all of our customers that local currency stable coins dupe duco do uh do very well because FX gets way cheaper.
• 27:06
  Speaker: But uh, and so I see the first big one being uh being this as an on and off ramp tool.
• 27:13
  Speaker: Because right now, if you are in, if you have this like long tail stablecoin, let's say uh this long tail currency like JPY, if you're on ramping, you have to do a forced conversion into USD.
• 27:23
  Speaker: Like you at the time of even touching crypto, you already have to do FX.
• 27:28
  Speaker: And uh a lot of businesses have made very, very uh a lot of other people have made very, very large businesses precisely on being able to control when you do FX.
• 27:37
  Speaker: Like Airwalls is a massive, massive company.
• 27:40
  Speaker: And one of their main value propositions is that you don't have to immediately just turn into USD whenever your funds, when they hit your account, don't immediately just have to turn USD.
• 27:49
  Speaker: You can control when you do FX and how you want to do it.
• 27:52
  Speaker: And so right now you don't have this control, but if we had local stable coins, then you would have some more control over this.
• 27:58
  Speaker: And this is a tried and true use case that I I could really see local stablecoins doing well in.
• 28:05
  Dante Reminick: What do you think the forcing functions are for stable coins at large?
• 28:09
  Dante Reminick: Like when you see traditional companies that are coming to seismic and saying, hey, I want to try this stablecoin thing, why are they doing that?
• 28:18
  Speaker: There are only a couple buckets here.
• 28:20
  Speaker: It's it's very nice how uh repeatable a lot of the broad trends are where it's uh so it's it's it's it's very predictable what what people want.
• 28:30
  Speaker: And then when you get down to the details, that's really where the nuances and the pain points come in.
• 28:34
  Speaker: So broad strokes first.
• 28:36
  Speaker: Uh the big two reasons to have uh the big the let's say the big three.
• 28:42
  Speaker: Big three reasons for local companies, for for uh traditional companies to adopt stable coins are A, there are a lot of corridors where stable coins are are way cheaper than the alternative.
• 28:51
  Speaker: That's the that's the uh cross-border payments use case that everyone talks about.
• 28:55
  Speaker: Uh B, there's uh there are a lot of countries where it's much easier to uh expand and provide deposit accounts in that country if you do it with stable coins.
• 29:05
  Speaker: And then C, it is if you are uh operating in one country, getting local account details in in other countries is also another big forcing function for us.
• 29:16
  Speaker: And so with these three, all of the, these are the three big uh branches at the at the top, and then it it it branches into a number of more nuanced use cases here.
• 29:27
  Speaker: And one of the reasons that I'm very excited about this uh the the this this focus of a lot of folks into stable coins right now is that when you get down to the nitty-gritty details of it, the reasons that people want to integrate stable coins, like if you uh it always falls uh falls under like one of those three themes, or maybe five themes, maybe I forgot two, but it always falls under the big themes.
• 29:48
  Speaker: But when you get down to it, uh it's it's actually very different.
• 29:52
  Speaker: Like, for example, if you are a uh one thing that I I I I say often is that a a Neo bank or or let's say a PSP because I've been talking a lot about neo banks, uh here, let's just let's say neobanks.
• 30:08
  Speaker: Uh and a fintech who is in the exact same who is in one customer segment, or two fintechs that are in the same segment, like they're in the same category, like they're both neobanks for blah, blah, blah.
• 30:20
  Speaker: And they're serving the exact same customer segment and they want the exact same feature.
• 30:24
  Speaker: Could want that feature for two completely different reasons.
• 30:28
  Speaker: So, for example, if you are a neo bank that is focused on trade finance companies and you want virtual accounts.
• 30:36
  Speaker: Virtual accounts are these accounts where uh you have are given fiat banking details.
• 30:41
  Speaker: You can send fiat in, you can get stable coins to a stablecoin wallet.
• 30:45
  Speaker: It's one of the big one of the big drivers of stablecoin adoption today.
• 30:50
  Speaker: Uh you can be a trade finance company, focused neobank that is once virtual accounts, you want them for two completely different reasons.
• 30:58
  Speaker: Like one of them could be uh if you want to uh a company A could be, I want to expand to this new region and expand my accounts to these new regions.
• 31:06
  Speaker: And the cheapest way to do this is using stable coins because the local banking providers in this region are tough to work with and they have long timelines.
• 31:15
  Speaker: Another one could say, hey, we have no reason at all to expand to different regions.
• 31:20
  Speaker: We want to stay in our current region, but we want to give local account details to our customers who often have counterparties in this other region.
• 31:27
  Speaker: So if you're if you're if you're a uh if you're a European bank but you deal a lot with businesses, uh your customers deal often deal with businesses in Kenya, then you might want to give your customers local Kenya bank account details because that opens up the number of counterparties they they can work with.
• 31:43
  Speaker: And that's what I mean when I say uh if you look at it, if you look at these two companies, like broad strokes, they probably want stable coins for kind of the same reason.
• 31:53
  Speaker: But if you really get down to it, the reason is actually completely different.
• 31:55
  Speaker: And I think that's uh a very exciting thing that's happening more more recently where the uh nuanced use cases for these uh big features in stable coins are are coming out.
• 32:06
  Dante Reminick: I love that.
• 32:07
  Dante Reminick: And I love when we talk use cases because my hope is that for our listeners that are thinking about implementing stable coins in one way or another, that the little light bulb goes off into their head and they're like, oh, I need local account information for XYZ or whatever it might be.
• 32:22
  Dante Reminick: And you know, that sort of helps them with the mental model of how they can think about stable coins.
• 32:28
  Dante Reminick: Another really interesting offering that Seismic has is yield.
• 32:33
  Dante Reminick: And I want to talk a little bit more about that because oftentimes I think people talk about the benefits of stablecoin in terms of monetary acceleration, right?
• 32:43
  Dante Reminick: How fast can I get money from A to B?
• 32:46
  Dante Reminick: But I also think that there's a lot of benefits of stablecoins when we talk about monetary accumulation.
• 32:51
  Dante Reminick: Uh and so I want to hear how seismic thinks about yield and and sort of that monetary accumulation element, because I know that you're doing a lot there.
• 33:01
  Speaker: Oh yes.
• 33:02
  Speaker: Uh yield, I I didn't, I never thought it would be a big uh ask from a lot of our customers, but uh the the one of the biggest the the one of the biggest uh changes in my opinion just happened in the last couple months where just every single customer, once they uh got up and running, they got their they got their uh corridors up and running, they got their deposit, multi-currency deposit accounts up and running.
• 33:24
  Speaker: Uh, every single one wants to earn earn on IELT balances.
• 33:27
  Speaker: And looking back, it's it's kind of obvious, but it uh it it was never something that early, early people mentioned because it was uh people had these burning pain points like I need to get money over there, I need my customer to have a deposit account there.
• 33:41
  Speaker: Uh no one uh no one uh early on said I need my customer to be able to earn yield.
• 33:45
  Speaker: But the the nice thing is once you have these first order needs down, uh the next, the next very obvious thing is uh I my customers want yield, I want to give it to them as a retention strategy, or I want to keep some spread for myself and and make a business out of that that as well.
• 34:01
  Speaker: And uh that that always just come comes in a form of yield.
• 34:05
  Speaker: And so I'll talk a bit about what we do for yield, and then I'll talk about some surprising things that people in the audience might uh uh might might find interesting and could have this light bulb moment that you mentioned.
• 34:17
  Speaker: Uh so what we do for yield is we have uh we let neo banks and PSBs uh curate their own yield baskets and then have their customer funds be allocated to these baskets where uh there are a number of different instruments that are available to them.
• 34:36
  Speaker: These instruments are T-bills, dollar bonds, uh D in DeFi, DeFi vaults, and then uh private credit.
• 34:46
  Speaker: And you have a mix and match according to you can you can mix and match according to the uh what your customers want, what risk profile they they they want to adopt, uh what you want to be able to say on your website, uh all of these.
• 34:57
  Speaker: And the the yield product is very is is fairly uh fairly simple to grok.
• 35:02
  Speaker: Like it's uh something that you design that allocates into all these different assets, you put money in, and then you you you take money out, and you take a little bit more money out than you put in.
• 35:11
  Speaker: And it's uh magically it just creates money because you get uh it's better it's more efficient, it's more of an efficient allocation of capital.
• 35:18
  Speaker: Uh, some of the interesting things, which I think you might like, is that uh when you are talking to folks that uh are traditional fintech companies that uh in my mental model do get access to yield because banks, banks, banks can do this, local asset managers can do this.
• 35:37
  Speaker: Uh in a lot of cases, I I uh when I first started selling this product to a lot of folks, I'm like, what like why would you even need yield?
• 35:44
  Speaker: What's surprising is that it the number of large countries where if you look at the local banks, uh none of them pass on yield at all to the local fintechs is is actually astounding.
• 36:00
  Speaker: Like they're huge uh there are huge countries that uh it's just not the culture.
• 36:04
  Speaker: It's just not even a it's not even a regul regulation piece.
• 36:08
  Speaker: It's uh like all of these banks are just used to never ever handing out yield.
• 36:12
  Speaker: And uh people are missing out on on like 3% T bill yields where or and they don't have to.
• 36:20
  Speaker: And so for a lot of the times where yield is uh is something that we're leading with, a wedge for us, it's people that are in these countries that say, like, yeah, the local bank, and none of the local banks will just pass it.
• 36:32
  Speaker: And like that, that's crazy to me, because uh if in the in the in the US and in in in so I like seismic is based in the US, uh, we also have uh a traditionally blockchain background.
• 36:44
  Speaker: Uh this yield pass-along game is something that's like fully saturated.
• 36:48
  Speaker: Like everyone gives pretty much everything out because everyone else is giving things out.
• 36:52
  Speaker: But in many, many regions across the world, uh this type of eating away at at bank margins uh for the benefit of end customers is at stage zero.
• 37:05
  Dante Reminick: Yeah, yeah.
• 37:06
  Dante Reminick: And this is something I've experienced firsthand.
• 37:08
  Dante Reminick: It's very interesting for me to be able to see the very stark comparisons between the exact same financial institutions in different parts of the world, right?
• 37:21
  Dante Reminick: Like we could have a bank in the US, they pass yield, their corresponding bank in Uganda does not, or whatever it might be.
• 37:30
  Dante Reminick: Not a dime.
• 37:32
  Dante Reminick: I also think though that what we've started to see is that especially if we're just talking about you know the equivalent of a checking account, just hey, I'm storing my money here for a little bit, or even a savings account, the margins that stable coins are able to offer, or the APYs, are a lot higher than what banks are able to offer.
• 37:50
  Dante Reminick: My question to you is if you could break down a how stable coins offer yield.
• 37:56
  Dante Reminick: How can I just hold a stable coin and get money out of that?
• 38:00
  Dante Reminick: And then two, and this is a a particularly interesting one at this point in time when we're recording, but sort of the compliance around yield as well.
• 38:11
  Speaker: Yeah, uh no, uh 100%.
• 38:13
  Speaker: The uh it it it just to say your second question is uh is so timely because the compliance around yield just changes so often.
• 38:22
  Speaker: So the mechanics, the the mechanics of yield is that uh if you are doing, let's say the simplest form of yield is uh it's T-bills.
• 38:32
  Speaker: Like if you put if you put a dollar in, it is, it goes into short short-term governments, short-term government securities that are issued by the US Treasury.
• 38:40
  Speaker: Uh the way that this ends up for the uh ends up being serviced to the end customer is is this.
• 38:48
  Speaker: Uh there is a stablecoin issuer, like like a circle or a bridge or a moon pay that goes in and says, I'm going to hold uh a large number of these of these T-bills in some asset manager, and then I'm gonna partner with some bank, and then I'm going to use the combination of the two to hold T-bills and then offer and issue a stable coin for each dollar that uh uh I hold.
• 39:12
  Speaker: And so if you hold uh a million bucks in T-bills, you can usually uh you can usually issue close to a million bucks in in US dollars.
• 39:21
  Speaker: And the nice thing about that is every dollar, every stable coin on chain is backed by not just a good liquid asset, uh hard liquid asset, but also a yield-bearing asset.
• 39:32
  Speaker: So then what this these issuers say is, hey, I uh I'm I have all these T-bills and people are using these dollars that I'm that I'm creating on the other side that are on a blockchain.
• 39:43
  Speaker: Uh, I'm getting all this yield from it.
• 39:45
  Speaker: I should pass on a large part part of it to uh to the fintechs that are holding it because they're the ones that are bringing me business, that are bringing my stablecoin, all of this AUM.
• 39:55
  Speaker: And so they take this yield, they pass it on to the fintech.
• 39:58
  Speaker: And then now, optionally, uh the fintech can take the yield that the issuer generates on all of the deposits that are on their platform and pass it on to their user.
• 40:08
  Speaker: And now that is the flow today.
• 40:10
  Speaker: Uh, the reason that it uh that is uh particularly timely uh point, as Dante mentioned, is that uh this third-party flow, there's there's there's a good chance that it might be broken at some point.
• 40:22
  Speaker: Like there's a lot of legislate legislation out there that says if you are a fintech that is getting yield from these issuers, you can't just pass it on to your users.
• 40:29
  Speaker: You have to do all of these things like uh you can pass on rewards to your users if they're they do something active.
• 40:34
  Speaker: So they can't just hold a dollar in your account and get money, they need to spend that dollar and they get need to get rewards.
• 40:39
  Speaker: And it's uh uh a lot of a lot of in the people in the stablecoin space are fighting against this because this is uh this is something that uh a lot of regulated institutions in the traditional world can do, but uh and it makes not as much sense that we can't.
• 40:54
  Speaker: And so that's a lot of the revolving compliance, uh uh compliance around it.
• 41:00
  Speaker: That's how the yield mechanics.
• 41:01
  Speaker: Uh there's an interesting, there are an interesting uh set of points on compliance in non-US countries about yield that uh I'm very happy to mention too.
• 41:12
  Speaker: Uh as again, like I want to just maximize the amount of hooks that people are like, oh, I didn't know that.
• 41:16
  Speaker: Like this is kind of cool.
• 41:18
  Speaker: Uh the some interesting thing that we've uh we've run into recently is that uh for a lot of the bigger, more regulated fintechs in countries that are not in the US or EU, uh, they are heavily against uh exporting their yield.
• 41:36
  Speaker: Saying uh if you are a if you're a company, if you're a fintech company, like say in Egypt and you have all these deposits, if you take all of your deposits and buy US government bonds in it, that is bad, that is bad for you.
• 41:50
  Speaker: Uh what you'd rather do is be able to do things like allocate it into local dollar bond yields.
• 41:55
  Speaker: And uh if you are doing local dollar bonds, then it's it it uh your your regulators are happy because you're uh you are keeping money in, you're keeping money in the country, and what's more, you're also loaning it to your local government, and your user is still happy because it's they're they're dollar bonds, they're USD denominated, it's not your it's not your local uh volatile currency.
• 42:15
  Speaker: And so that's an interesting piece where uh that is a much bigger role than uh what I thought it would play uh uh recently.
• 42:24
  Speaker: Uh there are a lot of companies that do this, like like Hamilton, where the uh they they specialize in doing setups like this, where it's it's a much bigger deal than I originally thought.
• 42:34
  Speaker: And I think in the next few months, dollar bond yield is starting is going to be a big yield source.
• 42:39
  Speaker: And that's a uh a lot because of regulation and a lot because it's it's it's actually a decent yield source for risk-adjusted returns.
• 42:47
  Dante Reminick: Yeah, 100%.
• 42:48
  Dante Reminick: I think that when we talk about stablecoin use around the world and we talk about forcing functions, I think that there's gonna be a really, really large forcing function for other countries to get involved with local currency stable coins or to get their economies involved in dollar-backed stable coins, because if they do not, they are risking complete dollarization of their economy.
• 43:11
  Dante Reminick: So at this point, as we see the volume of stable coins and the total market cap of stable coins go really aggressively up and to the right, a lot of these local governments are going to have to make a decision on hey, how can we keep value in our own economy?
• 43:26
  Dante Reminick: How can we keep our monetary system functioning uh in codependence with these stable coins?
• 43:33
  Dante Reminick: And that's gonna be really, really interesting for me personally to see.
• 43:37
  Dante Reminick: Um very excited about that.
• 43:39
  Dante Reminick: Tell me a little bit more about what people can expect out of seismic in the next you know six months or a year.
• 43:47
  Dante Reminick: Because I know you, I know your team, you're working ferociously on 900 different things.
• 43:52
  Dante Reminick: What what can people expect?
• 43:54
  Dante Reminick: Thank you, thank you, Matt.
• 43:56
  Speaker: Thank you.
• 43:56
  Speaker: Uh the biggest thing From our end, is I'll say what to expect and then what not to expect too.
• 44:07
  Speaker: For us, the biggest thing to expect is that we keep expanding into deeper offerings on all of the parts of the stack that we want to go into.
• 44:16
  Speaker: So with on and off ramp coverage, our coverage is going to get better, our liquidities or prices are going to go down.
• 44:21
  Speaker: For yield, we're going to have more yield sources, and we're going to be able to take less spread on it as we go.
• 44:28
  Speaker: And we develop better relationships with the asset issuers.
• 44:31
  Speaker: We're also going to get into cards.
• 44:34
  Speaker: Right now we are, we refer to a lot of card partnerships that we that we have, and we're very happy with the folks that we work with.
• 44:42
  Speaker: But uh for a lot of it is we want more control over that part of the stack too.
• 44:45
  Speaker: We want to be able to prioritize and give good customer support to our users.
• 44:48
  Speaker: So we're going to get into that too.
• 44:50
  Speaker: We're looking at card uh card program management just for is it'll be for corporates first, and then it'll be for uh for individuals soon after as a far fast follow.
• 44:59
  Speaker: And then from the chain, the big things that you can expect is uh hopefully you you never hear about it, is the big thing.
• 45:05
  Speaker: Like it's it's fast, it's snappy, it has privacy, and uh for and uh it it never comes up on your radar because it's just one of these uh rails in the back, like ACH that you hopefully use, but don't curse as much as uh ACH or Swift.
• 45:22
  Speaker: But it that's what that's what we're going for at all parts of the all parts of the stack.
• 45:27
  Speaker: Uh what you wouldn't expect from us in the next bit is uh a lot of these companies in in the blockchain space and the crypto space broadly uh play a lot of uh more like short shorter term games where you're going for the fast for the fast growth, you give out a lot of incentives, you're put you like you're paying money to make money, and all of these points which don't aren't really conducive to a good long-term product experience.
• 45:53
  Speaker: Uh the like like the launching a token is just like one of the one of the big points there.
• 45:57
  Speaker: Uh like we're just not doing that for the foreseeable future.
• 46:01
  Speaker: And so uh really just consistent month-over-month volume growth is what we're what we're looking to do because we know that uh as volume grows, we can we can offer a better product experience because uh we can do better uh on our end to serve users.
• 46:18
  Dante Reminick: Love it.
• 46:18
  Dante Reminick: Lyron, you're awesome.
• 46:20
  Dante Reminick: Thank you so much for taking the time to chat today.
• 46:22
  Dante Reminick: Uh for our audience members, I hope that you enjoyed the conversation and and grew your brain at least a little.
• 46:27
  Dante Reminick: Please don't forget to follow our show on whatever platform you're listening on.
• 46:31
  Dante Reminick: And as always, stay stable.
• 46:33
  Dante Reminick: Stay stable.