Is Generative Finance Next? Why Diogo Monica is Betting Big on AI and Stablecoins at KBW2025

Hello everyone. Happy Wednesday. Pretty sure it's Wednesday.

I lose track of time out here. I'm excited to sit down with you today Diogo. You have a lot of titles. You are the GP at Han, the executive chairman of Anchorage, also the founder of Anchorage, and the chairman of the Near Foundation. You wear a lot of hats as many people in crypto do.

I would love to start with kind of getting your vantage point on how you see like the biggest gaps or disconnects between Web3 today and how you kind of see that flywheel connecting through all of your different entities. I think we were talking about this off stage. But I think the crowd deserves to hear it as well. Yeah, absolutely. So, hi everyone.

One of the coolest things about having multiple hats is that they actually all all feed each other. People come to Anchorage to have their token be supported because it's one of the biggest, if not the biggest, institutional custodian in the United States. And then I have a checkbook that I can invest into. And so these things are kind of like feed off of each other. From a reputational perspective, being the chairman of a foundation means that you have a lot of credibility with founders.

And then obviously they take your checks because that's what a venture investor is supposed to do, write checks. One of the things that is interesting still in crypto is that we have this constant narrative of like we want new product market fits that are not trading related. And I think this is one of the things that we keep trying to find. Think we found multiple of them. We keep not getting credit for them.

Every time something works, people carve it out and they call it not crypto, like stablecoins. It works and now it's not crypto. That's just fintech, which I think is unfair, but it is the current reality. And I think more more things like that are happening. And so this is still the the narrative of crypto and what's continuing to happen is this constant search for new product market fit outside of trading.

Would you say stablecoins is the hottest narrative and topic right now as an investor? I would say yes, but it's quickly shifting for the next hop after stablecoins. One way to look at a stablecoin is it is a tokenized dollar. And these tokenized dollars actually have made all of these crypto companies create tokenization infrastructure. Ultimately, it's what's underneath the hood to move stablecoin around.

And if you're tokenizing dollars, now it's actually extremely easy for you to tokenize the next thing. So, what I would say is right now the ascendancy of tokenization, stock tokenization, you know, on-chain IPOs, on-chain capital markets, which is a Solana tagline. That one is the one that's kind of like rising the fastest from a smaller baseline. Stablecoins still dominates because that's where the large acquisitions are. And just today, as you saw the rumors of Tether raising a 15 to 20 billion dollars on a 500 billion dollar valuation, which is absolutely AI level type valuation, obviously reignites these conversations in the traditional finance because there's not many private companies in the world that are worth 500 billion dollars.

In fact, they may be the largest one. You investing in Tether? I am not an investor in Tether. That is a business that I've missed. I was not an investor when they were around as a seed round.

So, I would have loved I would have loved to do that.

Yeah. You also wrote an article with the American Banker and I want to talk to you more about that on the front of stablecoins. You talked about the adoption today. You also just brought up IPOs, which we could go into as well. But how do you kind of see where it stands in the broader market cuz I think it's still in the early innings on that front.

Obviously, the infrastructure is being made or is made depending on who you ask. But then when it comes to actual adoption from like mainstream audiences, I don't think we're actually there yet. So, I think I would take the other side of that argument saying that the second largest reason why stablecoins are popular is actually holding dollars. Primarily, the global south wanting to escape their local hyper inflating currencies. And so if you think about that, the numbers of people are definitely in the millions.

So, we can debate whether it's low single digit millions or where it's closely approaching double digit millions, but it's already in the millions. So, that's a clear product market fit for stablecoins outside of trading. And I would say that that means that we've had we have global adoption. I think from the United States point of view, it's extremely hard to understand why it's hard for somebody to hold a dollar because obviously we have these things called bank accounts and ours are denominated in dollars. So, it's very hard for us to to relate and empathize.

But if you go to an Argentina, you immediately see just a different fervor altogether. And in some countries, they don't even call it stablecoins, they call it Tether. And there's massive massive adoption in in a lot of these countries. So, I think that is I I think fair to say that at this point it is a global technology. But what is happening in stables and what's working?

So, obviously like as a trading pair for crypto, that's always been number one. It's why stablecoins were created, why Tether was created in the first place so that you didn't have to go back to fiat and it was fast for you to trade between stables obviously and their counterparts like Bitcoin. Then the second use case has been holding dollars. But now we have a massive massive growth in terms of enterprise adoption. Particularly, anything that touches a border.

If your money needs to cross a border, turns out there's lots of people in between the origin and the destination of the money. All of them want to charge money for it. There's lots of counterparties. That's there's an outdated system and stablecoins just insert themselves as an actual better rail. And so if it touches a border, it's likely that there is some stablecoin way for you to actually have a better transaction, cheaper transaction, faster transaction, or just some other types of guarantees that are successful.

So, remittances, pay-ins, pay-outs, treasury management, these would be the types of use cases that are extremely popular right now for enterprises on stablecoins. We got the Genius Act approved in the US, which has obviously accelerated the adoption timeline for stablecoins. And I think it has also opened up kind of the floodgates on a global perspective. But what would you say are still some of like the key friction points that are kind of preventing mass adoption from really happening? So, I would say that in the United States, of course, one of the largest and a country where people look up to the regulation of the United States, having Genius Act is clearly huge for our industry.

But it actually comes in a reverse order than what should have happened. We should have had Infrastructure and Clarity Act, which is something that's going through the regulatory apparatus or the lawmaking apparatus in the United States to be more precise, which defines whether something is a crypto security or a crypto commodity and who the regulator is. That should have come first. That actually never came. And so as a contrarian take actually, I still believe that Clarity Act gets passed this year, which is not a popular opinion amongst my peers.

You want to bet on it?

Yeah, well, I will take a bet that it passes this year. I don't know. It depends on the odds that you give me. And I see I see a Seba over there shaking his head. So, he'll take he'll take the other side of the bet.

Yeah. Okay, I also want to talk to you about tokenization and the whole on-chain IPO situation that we kind of see a rise in a narrative right now. How do you think about that? Beyond, you know, we talked about stablecoins, payments, etc. But then the idea of tokenization, bringing things on-chain, tokenizing assets.

I'm of the camp that not everything needs to be tokenized. People can go ahead and do it if they want to. But I'm curious your perspective given kind of that you have your hand in like three different entities and you have different point of view from probably a lot of people. So, how do you think about that? So, one of the coolest things about crypto is that there's the meme of Bitcoin fixes this.

Whatever that this is, Bitcoin fixes it. Doesn't matter what it is. Could be a social problem, could be an economic problem. Just Bitcoin fixes it. I love that meme.

In this particular case, I actually think the meme is real. Not Bitcoin itself. But let me actually say something. For a long time, we've had Bitcoin not blockchain narrative. Then it inverted for a while where it was blockchain not Bitcoin.

Then it inverted again, which was Bitcoin not blockchain. And I think we're finally at the stage where it's actually Bitcoin and blockchain. And what I mean by this is that there are companies right now, Figure being the best example of this, a publicly traded company that was very successful IPO, showing you that you can actually use blockchain for efficiencies such that you actually have a much better business in credit, which is what they do, that you could have had before. So, if you're looking from the outside, I incentivize you to go look at their business and realize that blockchain is the thing that is actually being used there successfully for their business to actually have major advantages, be cheaper, operational efficiencies. All of these components we've been talking for a long time, but we haven't seen and we haven't had.

I think now is the moment of Bitcoin and blockchain. And I think this is the answer to your question around IPOs. I do think that blockchain may be able to fix it or at least maybe able to improve it. What's the it that it will improve? Well, private companies are getting larger and larger.

They're staying private for longer. Companies like Tether, 500 billion dollars. Companies like OpenAI. The public markets don't have access to these companies on their earliest years where you have the largest possibility of them actually being outlier companies and generating money for all of you instead of generating money only for the private investors. And I think it is extremely obvious to see that we can actually reduce the bar for the operational complexity, automate a lot of the the processes, not reduce the bar for quality of companies, but reduce the bar for revenue that a company needs to actually go public.

And I think blockchain specifically and on-chain IPOs are one of the ways that we can do it. And that would mean that instead of you only seeing companies that IPO in the United States market at 500 million dollars run rate plus, you may be seeing companies that are going on-chain IPO first at 50 million dollars plus and then have a path to then go public later on after a few years of actually being on the on-chain markets. So, the way that I see this is the on-chain markets might be IPO entry points onto the largest markets later on. And I do think blockchain fixes this. Are you seeing that with founders that you've invested in?

That's right. So, I uh backed Superstate's Robert Leshner, which was the co-founder of Compound, in his company. Uh they're some of the people doing this. They've also just tokenized the first real equity, the first real stock from Galaxy on chain with all of the rights that an on-chain stock should have in governance rights. So, they have their own ATS.

So, they actually track this. This is not a wrapped token. It's not an SPV that has some tokens of Galaxy. No, this is actual Galaxy stock that is publicly listed and traded, also trading on chain with a direct equivalent uh from the point of view of the regulators. So, that's actually pretty exciting because that was the first one that has happened and that happened just a few weeks ago.

So, we're at the early innings, but I think this is one of the most exciting narratives here. And then what are some other pathways you see for this global capital formation uh beyond kind of, you know, tokenization, these on-chain IPOs, et cetera? Are there other like pockets or areas that you're most interested in? I think there's a lot of impact of something that I call crypto neo banks. So, whether you like it or not, stablecoins were and still are a regulatory arbitrage that got encoded into law.

Genius Act to a large extent encoded into law a type of technology that actually has a different type of um interaction in a different type of uh compliance requirements and a different type of ability of people interacting with it. And what I mean by it is if you have self-custody, there it's much easier for a developer and for a founder to build a product on top of it because the licenses that they require are no longer the same licenses that they would require to do the exact same type of business without the ability of doing self-custody. So, what are you're seeing is this massive growth of what do I call crypto neo banks, which are banks that offer you the equivalent services of a bank, checking accounts, saving accounts, spending accounts, um investment accounts, stocks, um credit, all of these different things, but at no point do they actually touch fiat. You see a dollar, but it's actually not a dollar. It is a stable dollar.

And now with regulated stable dollars, consumers can actually trust that there's backing from them. And so, you have a developer that in 15 minutes now can build an application that uses a dollar. Whereas before, I had to wait 12 months for an integration with a partner that had to on-ramp me, charge me funds. And so, I would take 12 months to 18 months to get to market with just a balance, just for a dollar balance. And now I can do it in 15 minutes.

I think this is actually the game-changing nature and the outcome of the programmability of the dollars. Stablecoins are programmable dollars. And I think the most exciting portion of it, there's lots of characteristics that they have that are exciting, but the most exciting portion is what entrepreneurs can do with them in 15 minutes now that they can actually use self-custody to build their business faster. So, I call them crypto neo banks. This is something that I spend a lot of time thinking about.

So, with that kind of speed in mind that developers can now move at such a faster pace, what are some of the emerging technologies that you think are going to come as a result of that, whether it's on the front of like re-staking, liquid staking, composability, modular blockchains, or even AI? Um I mean, there's a bajillion categories on this front, but where do you see the most potential? So, I will take the AI bait. Um AI in crypto very uh very interesting.

bait. Yeah.

[laughter]

I will take the AI bait and say that personally lots of the AI intersections with blockchain right now are not real. They're they're not really solving real problems or they're bolting on crypto in places where they shouldn't be bolted on. Uh you know, a GPU marketplace is fine. It does not need crypto, you know, maybe crypto for payments on the stablecoin side, but there's a lot of reasons why I don't think this actually is something that actually crypto is uniquely enabling, which is as an investor what I'm looking for. It's some technology, some product, some company that crypto uniquely enables because that is actually going to be transformative.

But one place in which I think is actually very real, in which I'm personally very excited, is something that I call generative finance. What is generative finance? So, the logic is very easy to follow. LLMs have allowed us to very easily turn language into code. And DeFi has allowed us to very easily turn code into financial instruments.

So, you link one and the other and now you have is you have the ability to turn language into financial instruments. And I think this is actually one of the intersections of AI and crypto that make the most sense. And I call it generative finance. Why is this revolutionary, I think? Well, because for the longest time, financial institution financial institutions sell you not the products you want, but the products they have.

They have a menu of products for you as a wealth manager and they're selling you those products. What if instead of them selling you products that are coming off of a set menu, what if they could generate just in time a product for you? So, instead of me having one product that gets used by millions of clients, I as the wealth advisor can have a million products automatically generated through generative finance that take your personal um net worth, location, um how much debt you have, take all of that into account in a product that is specifically tailored for you. This has never existed. It's never been possible.

Right now, the only people that have access to this type of thing are extremely large institutions that can go to a Goldman Sachs or a JP Morgan Chase and they can actually create tailored financial products for them. But this generative finance brings the tailoring of financial products to the masses. All of you will be able to have a product that is specifically tailored for you, an investment product, a retirement product. This has never been possible before. And this is something that is uniquely possible because of crypto.

Because without the building blocks of DeFi allowing you to build a financial instruments and allowing code into financial instruments, this what just wasn't possible before. So, this is actually the element in the crossover of AI and crypto that I'm most excited about. And you're seeing that being built today? No, not yet. And so, you're a founder

building that. Yeah. If you're a founder in the audience and you're building an intersection of AI and building on generative finance, then absolutely I would love to talk to you because I think there's a lot of potential here. There's people, you know, biting at the edges of this and but but no one has quite figured it out yet and I would love to invest. Yeah.

All right, well, there you go. There's a a check waiting for you. Um I was going to ask the timeline on that, but I guess the timeline is unknown until actually someone starts building it. So, the interesting thing though is that but it could be built so quickly, essentially.

That's exactly right. And I think what's happening is that crypto is showing you and with artificial intelligence that the cycles are iterating much faster. And in fact, it's great that we have Genius Act and that I bet that clarity will pass this year, hopefully, knock on wood. Um however, I think the regulators are not ready about about for for how fast this is about to change. Once you can build a financial product in a few seconds, how do you regulate that product?

How do you know this product is actually good fit for the consumer? How do you actually know that it has enough liquidity to come to market? There's just so many issues that they haven't even started to think of imagining um that that they're going to have to deal with. And this is coming now. This is coming now.

Remember, with self-custody and DeFi, I can build a product and I can have consumers opt in into this product without the regulatory approval for this particular product. And so, this is going to happen whether we like it or not and regulators just not ready to deal with what it looks like to regulate this new world of a million, tens of millions, hundreds of millions of financial products versus a small set of financial products that get sold to hundreds of millions of users. It just inverts the inverts the cost and increases the cost of regulators. And so, this is going to be coming much, much faster uh towards them than they think. So, how would you advise founders then to kind of navigate that uncertain regulatory area if they are just going so fast that it might not actually fit the parameters that exist today?

So, as a as a founder, I have taken a little bit of a different path than is popular in crypto. Um founders in crypto traditionally ask for forgiveness, not for permission.

the regulated route. I went the regulated route. I actually was one of the few people that has been insane enough to create a federal bank in the United States. Anchorage Digital, the company that I'm the co-founder and executive chairman of, is still the only bank in the US to have a federal license like JP Morgan Chase. So, we're regulated bank.

And that's extremely hard and extremely costly and a majority of I mean, nobody else did it. That's only we were crazy enough to actually go do it. I think it has a lot of value, of course, and it's a big moat, but it's extremely hard to go down the path of regulation. What I see founders do it right now is they engage with regulators early, they follow the rules of the road, um and they talk to lawyers about the places where the rules are not clear, and they innovate in a way that actually keeps the spirit of the law in mind, and then they wait for the regulation to catch up. And that happened with civilcoins.

We built something and then the regulation caught caught up. It is happening with Clarity Act where we built these um tokens and um now the regulation is going to catch up. And it has been catching up at different speeds all over the world, but that seems to be the default uh mode of operandi of crypto and I have no reason to believe that that's not going to be the case because the hardest thing for a founder in the audience is product market fit and finding something that works. And so, you need to follow the rules of the law, but then you also need product market fit and then hopefully your engagements with the regulators will be fruitful and by telling them what you're going to do, they're going to support you in some of these sandboxes and seeing ahead of the curves. Okay, Diego, we talked about stablecoins, tokenization, AI.

Uh what was that financial term you just said?

Generative finance.

Generative finance. Out of all those categories, where would you make the biggest bet on which one will be the most successful in the next mm 18 months? So, I think stablecoins will continue their crazy growth and will definitely be the most impactful one right now that you'll see in the next 12 to 18 months. After that, you'll see the wave of uh tokenization in RWAs catch up and finally like increase cuz if we think about it, global south wants access to dollars, but after they have access to dollars, what do they want? Access to investments.

The people that want an access to a dollar will also want to invest in Nvidia, will also want to invest in Tesla, and have access to the United States market. Investment is orders of magnitude larger than money supply. And so naturally, that's going to be the next tendency. And then finally, we're going to see in the general finance. I think that's the sequence.

We tokenize dollars, then we tokenize um equities and make them programmable, and then we have um millions of products and products tailored for you in general finance. All right, I guess we'll have to do a follow-up conversation to see if you're right, Diogo.

it. Thank you so much, and thank you to everyone for listening in.

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