Fireside Chat: Jeremy Allaire - TOKEN2049 Singapore 2023

thank you hello good to see you again to see you stable coins they say accept to revolutionize the future of Finance maybe but one thing is for sure it is they are gaining Traction in fact uh when you take a look at transactions just last year they amount to about seven trillion dollars outpacing I think PayPal as well as MasterCard and if you believe the estimates out there they're likely to exceed all of the four major cards this year so great potential but the issue really is regulation not all stable coins are made the same let's get insights perspective Jeremy Lair behind uh Circle which is the largest second largest issuer of civil coins Jeremy good to have you with us I guess a good starting point is this grayscale verdict I mean what do you take away from that the sense is that there has been an overreach regulating where are we right now well I think um you know all around the world we're seeing um National governments prioritizing establishing regulatory Frameworks around crypto and and really that falls into two big categories markets and sort of how do you regulate the trading and and and kind of Market related activity and stable coins and in the U.S um you know you have uh you know a more complicated uh you know process for sort of regulatory Clarity you have uh enforcement actions uh from I think very active Regulatory Agencies you also have legislative initiatives which are making their way through Congress trying to put in place comprehensive new laws um and then you have the courts and you know the the third branch of government and the courts are adjudicating um you know different uh you know kind of different cases that are coming in front of them including the grayscale case I think one of the really interesting things about what's happening in the kind of uh policy process in the U.S is that um over and over the courts are sort of saying there's a process by which we decide how to regulate these things and that's the process of new legislation and I think that's significant and now that there is Meaningful new legislation on these topics the courts are basically saying hey you know let's let's give time to let that process take place and so in the area of stable coins for example there's huge momentum now around payment the payment stablecoin act um and and that's making you know its way through the U.S Congress and meanwhile of course uh in major financial markets all around the world stablecoin rules are coming into place and so to your lead-in I think we're entering a period where we're going to have legal certainty for stable coins as an integrated part of the Global Financial system which is going to lead it from say doing seven trillion of transactions to potentially hundreds of trillions of dollars of transactions and become the predominant medium of exchange on the internet so you're saying it is a race to the top and not the race to the bottom and chances are countries like the us but take a leave from perhaps Asia which is giving greater Clarity Singapore occasion Point Hong Kong another case in point in Korea as well yeah and Japan has put in place uh stablecoin rules uh obviously the the EU was the first major jurisdiction to pass stablecoin laws which going to affect next year and I think you know this is just um it's a really good thing which is that if we want stable coins to be something that your average household or Corporation would would hold on their balance sheet and know how to account for it or financial institution is going to use it as collateral use it in a financial service you need that legal and Regulatory certainty and once you have that then these types of digital currencies can truly go mainstream and if you don't have that they may be more limited in the markets that they can serve but once you do have that the total addressable Market becomes the total size of the electronic money market which is you know over 100 trillion dollars and so um again you know I'm not so sure it's uh Asia versus the us or the West situation I think we're seeing progress happening simultaneously all around the world but you're leading towards Singapore as well as the Asia pack region as far as your strategy is concerned right circles for instance I mean why why is that well I mean the the market in Asia is itself just you know in the aggregate uh the most dynamic and fast-growing Market in the world uh and so that's independent of crypto or independent of fintech or anything like that it's just an incredible and dynamic Market um and then obviously in terms of you know leading the adoption of web3 Technologies you know companies startups Builders uh all around the region extraordinary amount of activity here and then obviously you know even demand for digital dollars remains widespread throughout Asia and and the Asia region and so for us this is just uh really critical uh area and and so we have um you know in terms of our International expansion Investments by far Asia is the largest you talk about Hong Kong Singapore Korea and you're thinking thinking of of wilcoin in Japan as well so we haven't you know announced anything specifically would you be announcing it today uh we're not going to announce that today but uh we did have an announcement earlier today which I'm happy to chat about uh in a moment um but um I think our our view is we want to make sure that um you know dollar stable coins are uh are are well regulated and the use of dollar stable coins are well um you know defined by different Regulators around the world so Japan for example is one of the first Frameworks where foreign stable coins have a specific treatment under their stablecoin regulation so there's a model for say a foreign issued stable coin like usdc to come come through there here in Singapore for example we're a major payment institution and have uh also regulation under the digital payment token licenses and so usdc is being distributed through our Singapore entity you know through that uh through that framework but in terms of issuing um other stable coins the only other stable coin we've started issuing is the eurc the the Euro based stable coin in addition to the dollar oh saying that adoption is gaining traction but there is no Mass adoption yet what would it take yeah I think it's it's interesting I mean um I've been through multiple uh generations of Internet Technologies and you know there's sort of these you know kind of Curves of adoption that take place and you know right now you know the number of of users in the world um that are actively you know connecting to blockchains and transacting and so on you know there's different estimates but it's you know maybe 100 to 200 million users and how many are really really active is much much smaller than that so um clearly um we're not anywhere close to mess adoption right now um but I think there's three things I think and and I think they're all happening right now which is really exciting so one is what we just talked about which is legal certainty um households and firms and financial institutions need to know that these digital currencies are in fact defined parts of the financial system that's happening and by the middle of next year in almost every Major Market we're going to have legal certainty on well-run compliant regulated stable coins that's going to be a very big deal I'm a product guy by background and a technologist and so I actually think the most important thing here is solving the technology problems and there I think there's a reason for incredible optimism what we're seeing right now is a progression of blockchain infrastructure in a number of areas the first is just you know scalable cost efficient more accessible kind of blockchain layers that are out there and there's just a lot of innovation that's happening there with with ZK Roll-Ups and and Innovations in in layer one blockchains that's key because we just need to be able to support you know applications that scale to hundreds of millions or billions of users so that's I think in front of us solving the user experience problem to me is is sort of the most Paramount thing for the average person to onboard into this world they shouldn't need to know about private Keys seed phrases they shouldn't be afraid of of losing their device and losing their money um so sort of social onboarding recoverability models that are simpler are made possible by new standards that have emerged similarly users should not need to go buy a crypto commodity token and to pay gas fees or even know what gas fees are these are not normal things for for people so I've said for a while the crypto needs to go into the background and uh and and the money into the foreground and the ux into the foreground and I think when I look at the technical innovations that are coming from things like uh gasless transactions smart account wallets the user interface abstractions are going to make this totally seamless for people and and I think what you're starting to see now is leading web 2 companies that have hundreds of millions of users are actually kind of wiring up to web3 infrastructure but doing it with a user experience that's really straightforward easy but also safe and still natively integrated to blockchains and so that that user experience paradigm shift and web 2 companies coming on board with that as well that's going to be a breakthrough and so all those things coming together are going to make I think you know 2024 an extraordinary year for growth in the utility of this technology and and I think we're going to see significant scaling out in terms of the number of users but not yet Mass adoption in 2024. you see I think well it depends on your definition of mass adoption I think we're going to see dramatic growth um in in 2024 um a lot of the things that are lining up in terms of um the infrastructure the usability the standards like there are just thousands of teams that are building on top of these things right now um and so I'm I'm more optimistic than I've ever been about the technology progress and what we're going to see in terms of user experience so when you get that combined the ux the infrastructure and the legal Clarity that is the makings for tremendous uh tremendous growth coin how about non-dollar stable coin where are we with that so in the existing digital asset markets dollar stable coins remain 99 or whatever some significant like that percent um I think that in some ways underscores the fact that markets broadly are dollar priced Capital markets and and I think um there is you know a kind of power law curve to currencies and there's power law curves to currencies on the internet and so I do think you're going to continue to see um uh the prevalence of of dollar digital dollars uh as the preferred medium of exchange on the internet but you're also going to see I think proliferation in more um stable coins in other currencies and we're very interested in seeing that happen um we believe that as the utility of crypto moves into um you know cross-border transactions uh Commerce transactions cross-border Finance the the need for having robust well-run um compliant stable coins grows we're building Partnerships with stablecoin issuers around the world and we're trying to activate that and we're very big Believers in on-chain FX markets which then becomes a kind of composable service that can be used by so many other services commercially oriented services financial services and other things so I think that um you know those things developing um are key and they're part of you know kind of leaving behind the speculative value phase of crypto and and moving into this more decisive and much larger opportunity of the utility value phase we know that there's been great traction when it comes adoption and Emerging Markets what would it take to see an explosion of that growth well I think it's a lot of the things that we've talked about right we need the user experience and access to be simpler um we need the legal what use cases would drive that yeah I mean I'll give you a couple of like great examples so um just a couple weeks ago we announced a partnership with Mercado Libre Mercado Libre is the Amazon of Latin America and their Mercado Pogo subsidiaries the largest fintech in Latin America as a payment technology and they're embedding and integrating usdc into their products in the major markets that they serve that's really powerful what's the use case Latin Americans want digital dollars and so this is a huge company with hundreds of millions of users that's trying to make digital dollars available now once you have access to those digital dollars and you can start to transact with that directly with people on the internet at the speed of the internet with virtually no you know no fees then the value exchange part of this starts to really take hold as well so remittance is an interesting use case cross-border SME activity is an area where we see a lot of growth happening another example uh you know from this morning we announced a partnership with grab here in Singapore who implemented circles web 3 Services stack our wallet as a service infrastructure to launch their own web3 wallet experience and the first phase of that is is piloted here with the F1 using nfts as a way to store value and and and and spend and spend value as well but the user experience for that if you haven't tried it if you go to the grab app and you load the web 3 wallet it's so seamless to set up it's actually a direct self-custody experience uh but uh without some of the you know user experience hurdles that get in the way of a lot of average users onboarding into this technology and so there again while this is initially piloted here in Singapore a company that reaches hundreds of millions of users bringing those users into the web 3 ecosystem more and more Partnerships like that are coming and so I think it's going to be very easy for us to imagine a world next year where we can say hey there's a billion users that have access to web3 and and and therefore have access to transacting stable coins and that's going to be a breakthrough uh I think for the whole industry you talked about more Partnerships are coming give us a sense of what you're looking at where you're looking at I mean we're we're focused on you know working with um established consumer internet companies established payment companies uh digital wallet companies um Commerce companies so you're going to see Partnerships with a lot of different firms like that that we continue to roll out and and I I think it just is an indicator that this has arrived this isn't just about people setting up trading sites for buying and trading Bitcoin in ethereum this is about people who are connecting this up to you know much more significant parts of the internet and internet experiences we're even seeing you know global payment powerhouses like Visa that's one of the largest you know payments companies in the world last week announced that they've added Merchant settlement using usdc using the Solana blockchain which was a really really powerful statement about a giant payments Powerhouse embracing this for merchant settlement which is which is really exciting as well again not a trading and markets use case more of a fundamental how do you more efficiently move value around uh between people and businesses not surprising that Center banks around the world in fact more than 90 percent of Center banks around the world are looking at their own digital currency right they don't want to be left behind they want to continue to innovate when we get those digital currencies issued by the central banks how do you see stable coins having to adapt or evolve or respond to that because after all the idea of a stable coin is to address the sluggishness and perhaps the outdated banking system yeah I mean I think if you asked the average person in China if they choose the ecny or Ali pay or WeChat pay I think you'd get a pretty clear answer and I think the answer is going to be consistent around the world which is that people want an air gap between the government and their pocketbooks and they want that because they're accustomed to the velocity of innovation that comes out of the private sector and in particular when you look at the internet and the way that the internet has delivered these massive scale utilities for people it's extraordinary and the pace of change in terms of continuous Improvement in open software open networks and um and and the kind of constant obsolescence of Technology that's only something that the private sector is is is capable of of sort of delivering on and so while there may be upgrades to the core systems that central banks use I think almost all of the innovation in terms of the way this is actually delivered and and intermediated and and the way that developers and Builders sort of integrate to this is going to be through a well-regulated stable coins a minute to go we've been talking about how you're pretty upbeat about the Outlook what keeps you up at night when you think about the Outlook and the future of stable coins yeah I mean I think um like like I said I'm actually pretty optimistic right now I think um you know the the key thing for me is I really want to see more developers more startups um working on on the utility value aspect of this so there's lots of you know new takes on D5 or new takes on trading and swapping and you know all this sort of speculative activity stuff which is you know has some utility um we really need to be solving problems for households solving problems for firms for corporations for people who are trying to make use of the financial system and so you know in some ways what keeps me up at night is really just I want to see more output um you know from the developer Community that's that's focused on these uh really important tasks and how do we use this technology to kind of improve global economic prosperity and not just focus on the the sort of investing side of this okay like call to action wraps up our conversation Jeremy Lair we thank you for your time today thank you [Applause]