🚨LIVE: Federal Reserve PUMPING CRYPTO, BITCOIN & DEFI
147
Companies
288
Key Quotes
3
Topics
4
Insights
🎯 Summary
Comprehensive Summary of Podcast Episode: 🚨LIVE: Federal Reserve PUMPING CRYPTO, BITCOIN & DEFI
This 159-minute live broadcast centered on the critical intersection of traditional finance (TradFi), digital assets, and decentralized finance (DeFi), featuring speakers from major financial infrastructure providers and blockchain technology leaders, broadcasting from an event involving Federal Reserve governors. The core narrative focused on the necessity of interoperability between legacy systems and emerging blockchain technology to unlock efficiency, security, and financial inclusion.
1. Focus Area
The primary focus was the integration of digital assets and DeFi protocols with regulated financial institutions (TradFi). Key themes included:
- Interoperability: Connecting existing systems (like SWIFT) with various blockchain networks (Ethereum, Solana, etc.).
- Infrastructure Modernization: Discussing the technological and procedural changes required within banks to handle real-time, data-rich digital asset transactions.
- Custody and Wallet Technology: Contrasting traditional custody models with blockchain-native solutions like MPC/threshold signatures.
- Regulatory Compliance: Addressing the challenges of applying existing compliance, accounting, and record-keeping requirements to decentralized systems.
2. Key Technical Insights
- Two Dimensions of Interoperability: The discussion highlighted the need to synchronize (1) existing systems (data, backends, messaging standards like SWIFT) with chains, and (2) fragmented Layer 1 chains with each other via standardized protocols.
- Blockchain as Native Books & Records: Unlike traditional finance where custody involves storing physical assets or managing centralized ledgers, in crypto, the Layer 1 blockchain is the books and records; custody providers focus on securely managing the private keys/passwords that authorize movement.
- Enhanced Security via MPC/Threshold Signatures: Modern digital asset custody utilizes multi-signature or threshold signature schemes (often via Multi-Party Computation) to distribute key ownership, significantly increasing resiliency against cybersecurity and counterparty risks compared to single-key systems.
3. Market/Investment Angle
- Coexistence, Not Replacement: The immediate future is not blockchain replacing traditional systems, but rather the two coexisting and interconnecting, layering digital asset innovation onto proven financial rails.
- Institutional DeFi Appetite: Significant appetite for integrating DeFi is emerging from large FinTechs (like Stripe, Revolut) that already manage millions of crypto users and seek to leverage DeFi protocols (like Aave, Uniswap) for better client returns via secure APIs.
- FedNow vs. Digital Rails: Traditional systems like FedNow offer 24/7/365 real-time payments today, creating a competitive debate for large institutions on which rail (TradFi or digital asset infrastructure) offers superior cost and speed advantages.
4. Notable Companies/People
- Chainlink (Sergey): Highlighted their role in building the Cross-Chain Interoperability Protocol (CCIP), essential for synchronizing existing systems with chains and connecting fragmented blockchains.
- BNY Mellon (Jennifer Barker): Representing a major infrastructure bank, she emphasized their commitment to modernizing treasury services, investing in AI for fraud control, and integrating digital asset custody with traditional rails.
- Fireblocks (Michael): Discussed the evolution of custody technology, focusing on the shift to MPC/threshold signatures and the complexity of integrating these new security models into legacy bank IT systems built in the 70s/80s/90s.
- SWIFT, DTCC, Ava Labs (Ava Arc): Mentioned as key players in existing infrastructure or early institutional DeFi integration efforts.
5. Regulatory/Policy Discussion
- Need for Clear Frameworks: Speakers expressed enthusiasm for the SEC and CFTC moving toward clearer regulatory directions, which will simplify the complex “hybrid system” required over the next 2-5 years.
- Compliance is the Hurdle: The biggest challenge in bridging DeFi and TradFi is ensuring that cross-chain or on-chain transactions meet stringent requirements for accounting, books and records, and KYC/AML compliance.
- Global Standards: The importance of global standards like ISO 20022 was stressed for ensuring data richness and consistency across disparate payment systems.
6. Future Implications
The industry is moving toward a phase where digital asset innovation is embedded within regulated frameworks. This requires massive IT process overhauls within banks—moving away from batch processing to near-instantaneous change management (e.g., handling Ethereum forks within 60 minutes). The next 2-5 years will be defined by creating these compliant, interoperable hybrid systems.
7. Target Audience
This discussion is most valuable for Financial Technology Professionals, Institutional Investors, Compliance Officers, Bank IT/Strategy Leaders, and Blockchain Architects focused on enterprise adoption and regulatory compliance within the digital asset space.
🏢 Companies Mentioned
Avay
✅
defi
Euler
✅
defi
Dollar App
✅
web3/consumer product
MBNA
✅
institution (analogy)
Zell
✅
infrastructure (payment analogy)
NBSA
✅
institution
Sergei
✅
Infrastructure (Person/Project Lead)
Draft Kings
✅
Traditional (Client Context)
Giddo labs
✅
Web3/Crypto Native
KTA
✅
Project/Entity
MIX
✅
Project/Entity
MXY finance
✅
Project/Entity
Goldman Sachs
✅
institution
chain
✅
layer_1
BlackRock
✅
Institution (Adopting Crypto)
💬 Key Insights
"the underlying problem is that the Federal Reserve is stealing the average person's future away from them by irresponsible monetary policy and printing what's coming over the next 10 years is going to dwarf what we saw in flu season."
"the macro for this industry for this space has never been better the risk reward for coming into Bitcoin for coming into DeFi for coming into real world assets has never been better when it comes to what's happening around the world with trade wars with the lack of counter party trust."
"nothing has shaken my resolve in chain link whatsoever so if the price goes down it's a buying opportunity same goes for Bitcoin nothing has shaken my resolve and the fact that Bitcoin will be over a million dollars in the near future and over ten million dollars in the not too distant future that will happen."
"if your investment thesis doesn't change then why are you changing your actions."
"OCC chief pack about the material deposit impact for stablecoins would not happen in an unnoticed fashion would not happen overnight and they're talking about essentially top banking regulators being afraid of digital assets enticing people into crypto stablecoins rather than putting their money into banks for basically no yield."
"the deal intention behind the law was to prevent stablecoins from earning interest it's not clear to me based on the behavior in the market that everybody intends to abide by those rules and if stablecoins are allowed to pay interest they pose a threat that is equivalent to but potentially far greater than money market mutual funds did when they were introduced many many years ago and that would have a direct impact on uh the ability you know on credit formation."
📊 Topics
#artificialintelligence
282
#investment
13
#startup
13
🧠 Key Takeaways
for us the guys what are the top two bottlenecks at the perimeter so things like KYC AML while UX things of that nature what are the two biggest bottlenecks and then what's fixed and what do you think is going to change in the next couple quarters yeah I understand yeah sure I feel like we should give you a chance to talk all right well my wife doesn't always to say that so look at a high level when I think about frictions and sort of what are the things that are barriers to stablecoin use case right we're just using stablecoins I'd say there are really two big buckets two meta buckets the first is is the thing trusted trusted compliant and transparent in other words do I need the Thompson's banknote guide or something like it to know whether or not I'm actually going to get my dollar back right I think the genius act largely solves that problem particularly as it's implemented because all stablecoins aren't equal and all stablecoins aren't stable so I think making sure that we have payment stablecoins that actually are held to very high standards is job number one good news is is this country's made a very important decision on a broad bipartisan basis and I feel like where that problem is being solved second aspect though is is does assuming dollar solid the stablecoin is solid is it actually useful does it have utility does it have liquidity one one example I like to give is suppose at the end of this conference the federal reserve board says good news we're going to give each everybody money to buy your dinner at Reagan Airport but we're not going to give you a federal reserve note we're going to give you 50 euros would you be able to actually buy your dinner at Reagan with euros it's a perfectly solid currency it's an outstanding one it's it holds its value but it's not necessarily have utility in certain settings and so two big barriers to utility and liquidity are number one and this was mentioned earlier the banking rails making sure that you can move in and out of fiat currency back into something like a USDC or a Paxo stablecoin as as quickly and seamlessly as possible so circle for example has spent years building out this network of reserve banks and and partner banks for customers in fact were pleased that fifth third is is is a part of that is a part of that network so that's the first thing and then the second thing for barriers would be the blockchains themselves USDC is natively on 28 different blockchains but it's very difficult to move currencies among blockchains we have something called the cross chain transfer protocol but again if you're if your stablecoin only works on one or two blockchains again that's another barrier point and maybe what I'll add is I'm maybe breaking into two categories one is some of the fresh in the stablecoin world is how do you get back off out of the stablecoin world and he's describing a lot of those especially when you live in a world where you have to move money 24 seven and so this adds quite a bit of complexity if you think about well someone shows up with a stablecoin they want dollars and it's you know 11 30 on a Friday how do you make that possible and there are plenty of examples of that and then on the other hand it could be you know I'm in Asia and I'm putting money to work and I want to make sure that I'm able to get a stablecoin and you know you're tied to us making hours and so there's many different types of complexities around interacting with the traditional financial system while being able to have an effective stablecoin product that works the second component is exactly what Kyle was describing which is I'd say DeFi and crypto is still not abstracted away enough where it's solving just the problem as opposed to requiring you to actually understand the underlying mechanics to date myself I kind of think back to trying to go on the internet and it was like trying to get on when there was a thing called free net and you know you had to like dial up and you put this like receiver on a thing and you know like you got some weird noises and you could get like a little line of text that would come down by the way like as absurd as that sounds that's actually not that unusual when you kind of go through the DeFi ecosystem you know and it really shouldn't be that way or frankly just crypto in general I think that'll all get abstracted away with great consumer products that allow you to solve a problem just like you know you don't know how the phone works really almost nobody does but yet everyone knows how to use it crypto blockchain DeFi stablecoins need to be just like that which is I think what dollar app is for instance doing which is just making it so I can solve my problem is I want to be able to move dollars I want to be able to hold dollars I want to be able to have it happen instantaneously and needs to be that simple at all times there are so many different complexities depending on exactly what your use case is for stablecoins still and so I think those things are all problems that can be easily solved people working really hard at solving them and I think that they will absolutely get there there are large firms like a PayPal which launched a stablecoin several years ago and they were one of the first to come out and say they want to launch it at being a scaled financial institution we don't want to call the ask you welcome and and add only we come trapped by their real fintech company really huge in terms of their scale and they launched a stablecoin and that's an example of someone being able to take this technology and be able to they don't want to be called tradify on the traditional system and be able to try to solve problems in a way that you couldn't know that word that's how I look at what it can happen here nobody knows next a going key to you got a solo one what are some programmable future features maybe things like allowless conditional transfers and others that are going to make stables invisible in workflows in the next six to twelve months hopefully we can overcome some of these challenges yeah the the whole goal I was thinking about this the other day and I remember about 20 years ago you would talk to someone a family member and you'd say well up we should go out we get we should buy this thing and someone would say well I'm going to go on the internet and buy it right we don't say that anymore we just buy it it's just assumed and so we're going to get to a point where stablecoins themselves are just floating around like any other form of electronic money like credit cards debit cards some most of which are by the way are not legal tender and so what are some of the programmable use cases that sort of we're thinking about you know circle is focused on all use cases but particularly thinking about enterprises right and so I'm often overseas I'm talking to let's just say a Korean manufacturer who wants to sell goods overseas to Latin America it takes five days for the money to move and sometimes takes it you know is extremely costly so you can imagine a scenario where all of this is built in and the moment the goods leave the factory floor through smart contract technology and program ability the money is automatically sent or when it's received on the other end so a trade finance and just trade in general is something that could be supercharged through stablecoins and the program program the program ability that that it offers another thing we're we're seeing is treasury functions right and even for scale financial institutions we have a large scale financial institution that is actually using USDC for example to move money inside the institution across borders I'm not up to kill this again a lot of 90% and the fee to say that in some ways we need more than just programmable money we all feel good rails to be enterprise grade so one of the things that that circle is doing is we're reading the CPMI IOSCO paper we're reading stuff from the BIS and we're saying what are the barriers to large enterprise use of of blockchains saying that we can actually make program ability really effective and so we're developing something called ARC which is sort of an enterprise grates L1 blockchain that has you know sub-second deterministic finality that that makes it very you know you send the money boom it's done you don't have to wait there's no probability there's no 51 percent attack concern using something that's very stable like a USDC as gas and other features as well including privacy layers so it's just very important to say you you got to combine the programmability with the with the underlying infrastructure as well to really unlock these use cases the I can just jump in on that one I think there's a lot to be done here I think one point of encouragement for anybody who is building like we have a fairly sizable business essentially selling software like subscription software to corporates to automate payment workflows about a third of the total revenue the bank does annually now is attached to people who utilize software to eliminate some manual staff whether it's recon or payment scheduling otherwise there's a lot you can do with programmability that is technically better than people using bill pay services to schedule a payment right but it has to be much better in order for people to change the behavior like the law of good enough works against any new technology because if the existing method works well and it doesn't cost much and especially on the consumer side of the equation most payment initiation is free in the US you have to be able to demonstrate some significantly better value so demonstrating programmability showing people hey you can program the payments so that it moves consistent with you know your payment contract is not meaningfully better than just pre-programming you know you're whatever sourcing software you're using to initiate an ACH instruction at the point in time when you've hit the date that payment is due you have to actually focus on the integration right that is the place where you can improve a step so instead of having to pass contracts and have somebody sitting you know in a bullpen somewhere work in a P file that there are agreements that are standardized at the time of the procurement that then pass straight through to the financial institution or the wallet provider that then automated just that's the step we're going to have to take here because just because we can doesn't mean anybody will so just saying is there's a change that I think we have a follow on here for you um what's actually production already now for enterprises and specifically around things like illicit activity attention and where false positives are going to buy this yeah so so the whole area of making sure you're on something that's trusted right is just is many ways critical for enterprise adoption right and enterprise is going to feel is is going to be extremely hesitant to risk its reputation to go on a blockchain where potentially North Korea is a validator right and so there are a number of like that that we're taking into account so for example arc the blockchain that we're creating will actually have permission validators so everyone will be better than in advance and and also making sure that that the institution that you're getting the digital assets from has an AML CTF program it's compliant with the Patriot Act all of those things matter the good old Patriot Act are going to interoperability and orchestration this one's for all of y'all so if you'll feel free to jump in keep a clean out there boys and where is interop already good enough and where is it brittle what orchestration layer or layers are going to enable a truly tech agnostic experience actually I can get started from the consumer standpoint at in this it's not so expensive to maintain some liquidity buffers to orchestrate because even today like it's it's still pretty aggregated like the question is what happens if we end up in one of these like ridiculous situations where it's so atomized know that that but right now my you know from the consumer standpoint I would say we don't see that being a big issue you need to hold some liquidity buffers but but again no like you don't we have effects exposure you have some credit risk that need to manage but we have an encounter that being a big problem okay can you just see like on the on the scale side how do you guys perceive you know that but on our end it has made a big deal I given the interest that we expressed on cross-border payments it's the on-ramps and the off-ramps it's the point you made earlier about the need to cobble together your own ecosystem if you want to move money utilizing stablecoins today the actual use of the rail is much easier than getting money in and then getting it out in another jurisdiction ensuring that the person that you're paying is the ability to accept it and to convert it back to fiat and I my big fear like I think there are lots of really interesting things that can be done with tokenized deposits but that's the place where I think the interoperability issues the biggest if we can land on a handful of call it standard stable coin payment rails I don't know that interoperability some problems so much as it is just getting to a point where the adoption on both sides of the network on the send and the receive side are native supposed to through a third party and then a transfer we're a bit of a strange inner regnum where the genus act has passed but and you can be a forward looking genius compliant but you aren't genius compliant today and and so that's actually create a huge proliferation of stablecoin issuers from a white label side and otherwise and so I actually think if you had a moment of risk where something could go wrong it's probably now between now and 18 months from now because you have so many different firms that are operating in ways that may or may not end up looking like they've aged well but I do think that once genius comes into effect when the rules are put into place and everyone is I have to follow them which I guess gets you all the way to three years from when it passed you're going to have a clear set of rules and that should create a level of fungibility that can be relied upon as long as you know the standards are widely enforced and I think also adopted in a number of different international jurisdictions so that you create this capacity where it is truly cash and cash equivalents and I think that's where we'll go and so between blockchain and standards you do create a capacity to have interoperability in a forward looking basis you don't today because stablecoins still have counterparty rest of them depending on exactly how they're constructed most of them still do and certainly a lot of the new ones also do as well and so that's where there's a real interesting dynamic that exists right now I think that also and this is really I think Tim's point there is a lot of complexity around having to be able to manage that liquidity because those are not the same liabilities they're almost in some ways akin though not the exact same thing as a deposit because you know you have the counterparty risk related to them I think that'll all get worked out over time and you know we'll get to that end state where I think that will lessen maybe either the capital they might have to hold against a stablecoins the amount of risk limits that you would have to put into place the counterparty capital charges that you might need to carry but I don't think we're there yet so we're getting there but there's a lot more work to be done yet maybe you asked about orchestration I think and this goes to sort of Tim's point about sort of not not unsolving problems that have been solved you know a lot of the domestic payment system works rather well there there are obviously improvements that can be made but once you step outside you as borders it becomes a lot more complex so one example of orchestration is something we've created called the circle payments network where we have institutions on various sides that orchestrating effects flows using what governor waller has called the stablecoin sandwich but right now to send money to to Brazil from the United States or from the European Union of the United States it can take up to 72 hours going through various correspondent bank accounts we've been able to get that down to 72 seconds using basically fiat on either end and then the stablecoin rails in between so it's a great example of where orchestration as you as you ask the question actually can make a difference to solve a problem that is a real barrier to use case the other point I just want to think about is tokenized deposits we've mentioned it a couple of times there's a couple lines in the genius act that just gives a scant reference to it but this country has never really thought about tokenized deposits and the potential impact on the banking system and as a former regulator myself I'd ask the question I think you used the term it used 490 in 996 banks in the United States yeah if in fact 5,000 banks in the United States many of which are communities smaller banks immediately overnight tokenized their deposits they moved at the speed of the internet 24-7 as a bank regulator I might be a little concerned about that right and so I think if we are going to go down the road of tokenized deposits unlike stablecoins that are back one to one with very high quality liquid assets if we're using the fractional reserve banking system which is subject to deposit insurance the discount window and essentially a government intervention model and we're going to tokenize that and move it quickly through blockchains I think more public policy work should be done
have come moving the room to answer some of these questions
give you a chance to talk all right well my wife doesn't always to say that so look at a high level when I think about frictions and sort of what are the things that are barriers to stablecoin use case right we're just using stablecoins I'd say there are really two big buckets two meta buckets the first is is the thing trusted trusted compliant and transparent in other words do I need the Thompson's banknote guide or something like it to know whether or not I'm actually going to get my dollar back right I think the genius act largely solves that problem particularly as it's implemented because all stablecoins aren't equal and all stablecoins aren't stable so I think making sure that we have payment stablecoins that actually are held to very high standards is job number one good news is is this country's made a very important decision on a broad bipartisan basis and I feel like where that problem is being solved second aspect though is is does assuming dollar solid the stablecoin is solid is it actually useful does it have utility does it have liquidity one one example I like to give is suppose at the end of this conference the federal reserve board says good news we're going to give each everybody money to buy your dinner at Reagan Airport but we're not going to give you a federal reserve note we're going to give you 50 euros would you be able to actually buy your dinner at Reagan with euros it's a perfectly solid currency it's an outstanding one it's it holds its value but it's not necessarily have utility in certain settings and so two big barriers to utility and liquidity are number one and this was mentioned earlier the banking rails making sure that you can move in and out of fiat currency back into something like a USDC or a Paxo stablecoin as as quickly and seamlessly as possible so circle for example has spent years building out this network of reserve banks and and partner banks for customers in fact were pleased that fifth third is is is a part of that is a part of that network so that's the first thing and then the second thing for barriers would be the blockchains themselves USDC is natively on 28 different blockchains but it's very difficult to move currencies among blockchains we have something called the cross chain transfer protocol but again if you're if your stablecoin only works on one or two blockchains again that's another barrier point and maybe what I'll add is I'm maybe breaking into two categories one is some of the fresh in the stablecoin world is how do you get back off out of the stablecoin world and he's describing a lot of those especially when you live in a world where you have to move money 24 seven and so this adds quite a bit of complexity if you think about well someone shows up with a stablecoin they want dollars and it's you know 11 30 on a Friday how do you make that possible and there are plenty of examples of that and then on the other hand it could be you know I'm in Asia and I'm putting money to work and I want to make sure that I'm able to get a stablecoin and you know you're tied to us making hours and so there's many different types of complexities around interacting with the traditional financial system while being able to have an effective stablecoin product that works the second component is exactly what Kyle was describing which is I'd say DeFi and crypto is still not abstracted away enough where it's solving just the problem as opposed to requiring you to actually understand the underlying mechanics to date myself I kind of think back to trying to go on the internet and it was like trying to get on when there was a thing called free net and you know you had to like dial up and you put this like receiver on a thing and you know like you got some weird noises and you could get like a little line of text that would come down by the way like as absurd as that sounds that's actually not that unusual when you kind of go through the DeFi ecosystem you know and it really shouldn't be that way or frankly just crypto in general I think that'll all get abstracted away with great consumer products that allow you to solve a problem just like you know you don't know how the phone works really almost nobody does but yet everyone knows how to use it crypto blockchain DeFi stablecoins need to be just like that which is I think what dollar app is for instance doing which is just making it so I can solve my problem is I want to be able to move dollars I want to be able to hold dollars I want to be able to have it happen instantaneously and needs to be that simple at all times there are so many different complexities depending on exactly what your use case is for stablecoins still and so I think those things are all problems that can be easily solved people working really hard at solving them and I think that they will absolutely get there there are large firms like a PayPal which launched a stablecoin several years ago and they were one of the first to come out and say they want to launch it at being a scaled financial institution we don't want to call the ask you welcome and and add only we come trapped by their real fintech company really huge in terms of their scale and they launched a stablecoin and that's an example of someone being able to take this technology and be able to they don't want to be called tradify on the traditional system and be able to try to solve problems in a way that you couldn't know that word that's how I look at what it can happen here nobody knows next a going key to you got a solo one what are some programmable future features maybe things like allowless conditional transfers and others that are going to make stables invisible in workflows in the next six to twelve months hopefully we can overcome some of these challenges yeah the the whole goal I was thinking about this the other day and I remember about 20 years ago you would talk to someone a family member and you'd say well up we should go out we get we should buy this thing and someone would say well I'm going to go on the internet and buy it right we don't say that anymore we just buy it it's just assumed and so we're going to get to a point where stablecoins themselves are just floating around like any other form of electronic money like credit cards debit cards some most of which are by the way are not legal tender and so what are some of the programmable use cases that sort of we're thinking about you know circle is focused on all use cases but particularly thinking about enterprises right and so I'm often overseas I'm talking to let's just say a Korean manufacturer who wants to sell goods overseas to Latin America it takes five days for the money to move and sometimes takes it you know is extremely costly so you can imagine a scenario where all of this is built in and the moment the goods leave the factory floor through smart contract technology and program ability the money is automatically sent or when it's received on the other end so a trade finance and just trade in general is something that could be supercharged through stablecoins and the program program the program ability that that it offers another thing we're we're seeing is treasury functions right and even for scale financial institutions we have a large scale financial institution that is actually using USDC for example to move money inside the institution across borders I'm not up to kill this again a lot of 90% and the fee to say that in some ways we need more than just programmable money we all feel good rails to be enterprise grade so one of the things that that circle is doing is we're reading the CPMI IOSCO paper we're reading stuff from the BIS and we're saying what are the barriers to large enterprise use of of blockchains saying that we can actually make program ability really effective and so we're developing something called ARC which is sort of an enterprise grates L1 blockchain that has you know sub-second deterministic finality that that makes it very you know you send the money boom it's done you don't have to wait there's no probability there's no 51 percent attack concern using something that's very stable like a USDC as gas and other features as well including privacy layers so it's just very important to say you you got to combine the programmability with the with the underlying infrastructure as well to really unlock these use cases the I can just jump in on that one I think there's a lot to be done here I think one point of encouragement for anybody who is building like we have a fairly sizable business essentially selling software like subscription software to corporates to automate payment workflows about a third of the total revenue the bank does annually now is attached to people who utilize software to eliminate some manual staff whether it's recon or payment scheduling otherwise there's a lot you can do with programmability that is technically better than people using bill pay services to schedule a payment right but it has to be much better in order for people to change the behavior like the law of good enough works against any new technology because if the existing method works well and it doesn't cost much and especially on the consumer side of the equation most payment initiation is free in the US you have to be able to demonstrate some significantly better value so demonstrating programmability showing people hey you can program the payments so that it moves consistent with you know your payment contract is not meaningfully better than just pre-programming you know you're whatever sourcing software you're using to initiate an ACH instruction at the point in time when you've hit the date that payment is due you have to actually focus on the integration right that is the place where you can improve a step so instead of having to pass contracts and have somebody sitting you know in a bullpen somewhere work in a P file that there are agreements that are standardized at the time of the procurement that then pass straight through to the financial institution or the wallet provider that then automated just that's the step we're going to have to take here because just because we can doesn't mean anybody will so just saying is there's a change that I think we have a follow on here for you um what's actually production already now for enterprises and specifically around things like illicit activity attention and where false positives are going to buy this yeah so so the whole area of making sure you're on something that's trusted right is just is many ways critical for enterprise adoption right and enterprise is going to feel is is going to be extremely hesitant to risk its reputation to go on a blockchain where potentially North Korea is a validator right and so there are a number of like that that we're taking into account so for example arc the blockchain that we're creating will actually have permission validators so everyone will be better than in advance and and also making sure that that the institution that you're getting the digital assets from has an AML CTF program it's compliant with the Patriot Act all of those things matter the good old Patriot Act are going to interoperability and orchestration this one's for all of y'all so if you'll feel free to jump in keep a clean out there boys and where is interop already good enough and where is it brittle what orchestration layer or layers are going to enable a truly tech agnostic experience actually I can get started from the consumer standpoint at in this it's not so expensive to maintain some liquidity buffers to orchestrate because even today like it's it's still pretty aggregated like the question is what happens if we end up in one of these like ridiculous situations where it's so atomized know that that but right now my you know from the consumer standpoint I would say we don't see that being a big issue you need to hold some liquidity buffers but but again no like you don't we have effects exposure you have some credit risk that need to manage but we have an encounter that being a big problem okay can you just see like on the on the scale side how do you guys perceive you know that but on our end it has made a big deal I given the interest that we expressed on cross-border payments it's the on-ramps and the off-ramps it's the point you made earlier about the need to cobble together your own ecosystem if you want to move money utilizing stablecoins today the actual use of the rail is much easier than getting money in and then getting it out in another jurisdiction ensuring that the person that you're paying is the ability to accept it and to convert it back to fiat and I my big fear like I think there are lots of really interesting things that can be done with tokenized deposits but that's the place where I think the interoperability issues the biggest if we can land on a handful of call it standard stable coin payment rails I don't know that interoperability some problems so much as it is just getting to a point where the adoption on both sides of the network on the send and the receive side are native supposed to through a third party and then a transfer we're a bit of a strange inner regnum where the genus act has passed but and you can be a forward looking genius compliant but you aren't genius compliant today and and so that's actually create a huge proliferation of stablecoin issuers from a white label side and otherwise and so I actually think if you had a moment of risk where something could go wrong it's probably now between now and 18 months from now because you have so many different firms that are operating in ways that may or may not end up looking like they've aged well but I do think that once genius comes into effect when the rules are put into place and everyone is I have to follow them which I guess gets you all the way to three years from when it passed you're going to have a clear set of rules and that should create a level of fungibility that can be relied upon as long as you know the standards are widely enforced and I think also adopted in a number of different international jurisdictions so that you create this capacity where it is truly cash and cash equivalents and I think that's where we'll go and so between blockchain and standards you do create a capacity to have interoperability in a forward looking basis you don't today because stablecoins still have counterparty rest of them depending on exactly how they're constructed most of them still do and certainly a lot of the new ones also do as well and so that's where there's a real interesting dynamic that exists right now I think that also and this is really I think Tim's point there is a lot of complexity around having to be able to manage that liquidity because those are not the same liabilities they're almost in some ways akin though not the exact same thing as a deposit because you know you have the counterparty risk related to them I think that'll all get worked out over time and you know we'll get to that end state where I think that will lessen maybe either the capital they might have to hold against a stablecoins the amount of risk limits that you would have to put into place the counterparty capital charges that you might need to carry but I don't think we're there yet so we're getting there but there's a lot more work to be done yet maybe you asked about orchestration I think and this goes to sort of Tim's point about sort of not not unsolving problems that have been solved you know a lot of the domestic payment system works rather well there there are obviously improvements that can be made but once you step outside you as borders it becomes a lot more complex so one example of orchestration is something we've created called the circle payments network where we have institutions on various sides that orchestrating effects flows using what governor waller has called the stablecoin sandwich but right now to send money to to Brazil from the United States or from the European Union of the United States it can take up to 72 hours going through various correspondent bank accounts we've been able to get that down to 72 seconds using basically fiat on either end and then the stablecoin rails in between so it's a great example of where orchestration as you as you ask the question actually can make a difference to solve a problem that is a real barrier to use case the other point I just want to think about is tokenized deposits we've mentioned it a couple of times there's a couple lines in the genius act that just gives a scant reference to it but this country has never really thought about tokenized deposits and the potential impact on the banking system and as a former regulator myself I'd ask the question I think you used the term it used 490 in 996 banks in the United States yeah if in fact 5,000 banks in the United States many of which are communities smaller banks immediately overnight tokenized their deposits they moved at the speed of the internet 24-7 as a bank regulator I might be a little concerned about that right and so I think if we are going to go down the road of tokenized deposits unlike stablecoins that are back one to one with very high quality liquid assets if we're using the fractional reserve banking system which is subject to deposit insurance the discount window and essentially a government intervention model and we're going to tokenize that and move it quickly through blockchains I think more public policy work should be done
just get about prohibiting people from paying interest whether they call it rewards uh or anything else right all right speaking of yield-bearing stablecoins heath this one's for you but another seal for to jump in uh why should or shouldn't we have regulated yield-bearing stablecoins in the United States well the answer is we do they're called tokenized money market funds and so uh that's the circle position is that a stable coin is the effect of the the the equivalent of cash uh we think the genius act got it right um back one for one anytime you're you're you're paying out and it's uh paying out interest that obviously introduces more risk but that said we do think there's a need obviously for interest bearing uh interest in interest bearing digital collateral and so we've created it's not available in the United States but something called USYC which does precisely that but circles always take in the position that it's a security it's a tokenized money market fund and so I think those distinctions make a great deal of sense and they're consistent with current law including the Genius Act great answer we already have it so you close my long I think we've actually made it through all of the questions uh I think we're probably coming in on time as well so 200 things that we landed at the plane successfully gentlemen thank you all 222 percent thanks to Kyle and all the panelists 22 uh so yes brought us in uh right on time and actually just a minute early for lunch um and I all right they're going to lunch all right we can pull down pull up the pull up the Bitcoin chart everybody's wanting us to see the big word trade smash the likes if you love the Federal Reserve pump on our bags I just it's just crazy to me to think that the Federal Reserve is hosting this thing uh and they're literally out there dunking on banks talking about DeFi asking them why we need them to exist at all shout out to Kyle at first I was a little bored until he started hitting those singers man that was awesome and shout out to Drew by the way 222 percent on a long during that process I love that feels good felt good I got stopped out last night you know and then I went on the Twitter space with James went and argued with him that we're going to go up today and he was like looking for heinous downside I still want to have him on the show you know you called it you called it in the discord last night if you guys aren't in there I mean obviously we've got a lot of very active traders in their drew you do a really good job uh John Dalton really if you just get in there and follow John Dalton's trade he's an incredible trader not just on Bitcoin he trades all coins he trades metals he's been crushing it we've got some good stock stuff so if you want to follow along with those trades the link is in the description get in and check that out it's free to join but yeah super bullish I mean Bitcoin at 1