Building a Stablecoin Payments Ecosystem - TOKEN2049 Singapore 2024

all right thanks so much everyone for coming here uh I'm not going to be selling you know Bastion on stage the goal is really establishing today kind of like the list of challenges that are ahead of us uh as part of building a stable coin payment ecosystem I'm going to be defining what are um the entities that are part of the the ecosystem I'm going to go through the main challenges and what we see as kind of the the main ways to really um you know get past those mitigate essentially those risks and really opening the doors to create really um the future of money um with programmable money so um let's start with setting the bestas line something that I think I'm I'm hearing very often especially at uh conferences is the fact that people are pushing for decentralization and and self sovereignty a lot of things and the reality is that the vast majority of the the people or the businesses uh really just don't care about it they care about having money that is accessible that just works that is uh cheap to transfer that allows them to connect very broadly with people in other businesses and that's that's what we should be focusing on and I think that um so long as we start from this principle um a lot of roadblocks will actually be um a lot easier to get past whether that's on the regular atory side on the baking relationships and and many other Integrations um you know throughout kind of all the all the things that uh stable coin touches as part of the the ecosystem so um let's kick it up with just kind of like setting the best line in terms of you know the the the evolution I would say of money um money supply her really evolve over time starting with just uh paper money and and and and coins and especially held by uh banking uh institutions um then evolved uh and we call it m0 it's the most liquid form of money then evolved towards M1 uh sometimes referred to as uh narom so it's a little bit uh less liquid but still uh pretty liquid including um you know deposits uh held at Banks and um uh including kind of like commercial Banks not just central banks and others uh and then M2 is kind of an expansion around that then includes uh you know less liquid uh less liquid money and that includes saving accounts uh short-term uh deposits uh and Retail uh money market funds and what we're seeing is that there's a huge demand essentially to have the structure of the global money supply to evolve and to include actually different types of assets that can actually be uh structured as uh collateral or backing for money so that it can be transferred faster and cheaper around the world and having the type of interactions that you can have with the money really be programmable for different use cases right and this is why I think everyone is so excited about the the future of stable coins is that it doesn't really need to replace a lot of the things that are out there it just needs to improve them to make them more modular uh and to make them more programmable um we just kind of like providing some some uh context on basion so we are um a regulated wallet infrastructure provider and a lot of our customers are actually companies that build uh stable coin uh related use cases uh really moving money whether that's domestically or uh globally uh for faster and cheaper than the alternative rails and the three thing I would say that we see the most uh focus on and the most work on is uh first B2B payments and remittance so really just replacing very uh very expensive and slow uh money corridors uh whether that's from business to business or whether that's from person to person separately we see a lot of businesses that are actually pretty excited about increasing the uh the types of assets that they accept as forms of payment we actually saw earlier today Louisiana being the first state in the US accepting crypto as a way for um you know people resident in uh Louisiana to pay for government services in stable coins which is extremely uh encouraging for us I would say um but yeah so check out and payment acceptance from um from Merchant uh and we're seeing a lot of increase around that very excited and then finally Global payroll providers um not sure if anyone here has been using uh deal or you know deal for just an example um but they're uh seeing an immense amount of growth just because they support businesses to higher globally right whether that's for contractors whether that's for employees and payroll is actually extremely expensive to do uh globally and there's a lot of interest for much cheaper uh essentially money movements around those uh salaries for uh contractors and and employees globally so that the employee can actually has an additional you know 3% 4% sometimes 5% uh globally so those are kind of like the three things that that we see the the most work on but it is extremely hard and part of it is due to the the the the size of the touch points the amount of touch points that uh stable coins have so everything that you see here is actually not not even an exhaustive list there actually a lot more entities part parties that are um that are actually working uh to make stable coins payments work uh so some more than others you may notice uh you know central banks that might not see always kind of like stable coins in in the best regard but um all of them are included as part of this uh effort whether it's um parties that we that are actively working on or that we are helping understand the value and and include essentially um processes and and and and laws and and and regulations and um and sometimes you know uh it goes as low level as having accounting teams and accounting firms that can actually support businesses who want to accept crypto who might have to pay taxes on on on stable coins so you can see essentially that it renes from infrastructure providers lawmakers um you know the issuers uh might be the on and off Rams that might be the companies um that provide ledgering as a service of chain um there's obviously onchain infrastructure uh a lot of a lot of different partners uh you know working together to to make this a reality and at the core of it St coin payments you know really fall into two buckets the first one is let's call it wallet to wallet crypto to crypto so wallet on one end sending to wallet on the other end Wallets on both sides can be uh institutional they can be custodial for retail they can be custodial for businesses they can be self custodial as well uh there's a pre broad range obviously of types of wallets and we're seeing it kind of like expand over time something that is also uh obviously pretty relevant is getting Fiat into stable coins and getting stable coins into Fiat right commonly called onramp and and off- ramping and the sources or the destinations on the Fiat side are actually pretty broad right different types of banks uh and and Bing Partners uh that can be also different types of cards we are seeing a lot of uh Evolution towards prepaid cards as well not just credit and debit and so that's something that um you know can can increasing complexity but at the end of the day really falls into these two buckets so let's dive you know in order to understand a little bit more about the challenges that we face it's pretty important to understand the anatomy of these two flows focusing on the first one so you would have a person or a business that would be uh leveraging either directly or via a service provider um as I mentioned a self custodial wallet uh an Institutional uh custodian wallet or an embedded wallet that it's going sometimes referred to as wallet as a service and then same thing on the other side whether as a recipient or as a sender on the other side the way Fiat to crypto and crypto to Fiat works is more complex right so we have a person and a business uh or a person and or a business that want to uh essentially send to potentially themselves or someone else person or business and on the crypto side obviously it's kind of the same setup there's still someone that has a wallet and that will interface with the unring um provider the onramp will have its own wallet interact essentially with exchanges and stable coins that can either provide liquidity and convert uh back and forth or Main and redeem and on the Fiat side um the onrun provider will actually have a banking partner and the way this is this relationship is actually set up at least in the US is um called an FBO account for benefits of the onramp will actually have a special type of account that is actually used um dedicated essentially for uh the the the holding assets on behalf of other businesses on behalf of other people uh this is uh required to actually separate and Silo the assets of the users uh of the service and the assets of the uh on-ramp provider the own company right and that is often time required for regulatory reasons and protection of of customers and the onramp is generally facing some type of um some type of fintech some type of bank and sending essentially those assets whether that's through a sepa Swift and so on uh and potentially also having um you know those assets sent to a credit card or a debit card um owner so now that we've mapped this out we need to generally understand why is it so hard to build why aren't we seeing more growth why are we seeing on- ramping and off ramping that is still so expensive and the reality is that you know just for the wallet to wallet flow which is a lot simpler there are uh a lot of things to take into account the first one is ux I believe that the the speaker right before me was also building just like us a wallet solution that need to take into account ux right you need to make it um you really want to make wallets feel like the modern internet I don't think that anyone likes to to to collect a bunch of different different popups and uh you know see uh different uh gas fees and and data essentially that might be Associated to uh more complex systems right than my family member uh would be used to so we we think about ux first second we think about security obviously everyone wants to be safe no one wants to have to think about whether their money is still going to be there tomorrow and then finally Regulatory Compliance right that generally doesn't apply to the self custodia wallets but definitely does apply to embedded wallet solution and institutional custodian and so in this setup the part that is actually pretty important is having uh a path to uh be regulated as an institution and we can see that in the case of on and off ramps it's actually much worse you can see that all the parties essentially that are part of the flow both on the Fiat side and on the crypto side are actually all uh regulated they all need money transmitter licensing they need banking licensing that might require broker dealer licensing and all forms of trading activity licenses um to be able essentially to support this type of flow and obviously the bank being at the core of it so we can see that there's a lot of complexity across the board both from a security standpoint and a Regulatory Compliance standpoint very hard to get access uh to FBO accounts which I'm going to touch it in in a second and it actually goes very very very deep and there are a lot of issues that are happening right now that very few people are aware of the first one is that regulations uh are extremely complex and fragmented like I just show here four different ones whether that's Europe us Singapore Japan with four different completely different Frameworks all different right so if you want to be just like us a regulated wallet provider you need to go talk to every single one of these um Regulators even in the US you have to register with every 50 state Regulators independently very complex secondly there is something that is actually happening in the banking as a service nothing to do with crypto just on the Fiat side uh that is pretty uh that is extremely impactful and we'll redefine how finex actually interact with banks when I mentioned FBO accounts this setup is changing dramatically and today only one US Bank actually accepts to onboard um fintex for FBO accounts it's extremely hard essentially to to onboard third we're seeing essentially a lot of complexity around yield bearing stable coins as Securities the problem here is that yield bearing stable coins have a tremendous amount of create a tremendous amount of incentives for businesses who want to um you know receive yield on all the stable coins that they hold right to share a little bit of the money that the reserve holder might make but obviously it is deemed security at least in the US and under the the EU rules and so both of them are actually making it illegal for the vast majority of typical regulated wallets to hold those assets generally in the US you need a completely different type of Licensing whether that's a bank Charter or whether that's a broker dealer license which is extremely hard and everyone knows that the SEC is uh pretty complex to work with these days on the crypto side so last slide just wanted to to go over what I think um you know and what I see as kind of like a path forward to tackle those those three things the first one is let's start small let's start small let get adoption prove value essentially to a lot of these businesses really show that we are reducing the fees for massive transactions globally and then use that as a proof point to have larger companies leverage stable coins we're seeing that with PayPal we're seeing that with stripe we're seeing that with many other companies second we want to make sure that we focus and as I mentioned you know starting small we want to be very focused on the global corridors that are actually the most expensive and the slowest right this is where we will bring the most value and we're seeing that mostly between us and Lam us and uh the EU and us and Africa tremendous amount of B2B uh activity tremendous amount of PDP activity and there's a huge Market need for it so so let's focus on that and let's have proof points and finally let's ensure that we have Regulatory Compliance to increase the comfort from regulators and banking Partners it's extremely important FTX unfortunately and Prime trust have hurt the industry tremendously and now regulators and baking Partners we actually are going over a lot of the due diligence you know with some of the Regulators it's extremely hard and it takes you know sometimes three four five months of due diligence from those part parties so really I think that if we have you know those three things are are the most important for us to remember uh start small let's get ad option let's focus on where we bring the most value and third let's build a safe ecosystem that will make regulators and banking Partners more comfortable so that we can be more connected to the Fiat ecosystem thank you so much everyone