The Quest to Design Stability for Digital Money

[Music] good morning everyone first of all I would like to welcome all of you today we have some really interesting topics to discuss in the blockchain ecosystem so let's talk about money first um money has always been an important part of our life and the shape of money has changed quite a lot in the last few decades especially with the emergence of new technology now we have access to digital money and with that the there has been some issues with the stability of money so how to counter those issues we have someone who has extensive experience in the world of blockchain and Technology we have Jeremy aair who is the Chief Executive Officer of circle the company behind usdc and one of the most prominent names in the blockchain ecosystem so welcome Jeremy thank you great to be here so Jeremy let's let's discuss I mean you are a person who has nearly three decades of experience in the technology world you saw the dotom crash you saw the financial crisis but eventually in 2013 you decided to establish a blockchain focus firm so my question would be why did you feel that blockchain is the technology that has the potential to transform the digital money sure you know I I think just by way of background um in the prior 20 years to founding Circle I was always interested in how open networks open-source protocols and distributed and decentralized Computing models could change the world and you know during the web 1.0 era was focused on Building Technology to enable the use of the web as a a communications platform as a platform for software and data distribution um in the Web 2.0 era I focused on open infrastructure for How You Move video and audio and Communications at scale everywhere in the world and what was clear to me was was that there was a missing layer on the internet and that missing layer was a layer for Value exchange and in 2012 when I became really interested in in crypto um as a technologist what I saw was and this was really just in in the technology of Bitcoin at the time what I saw was an emerging um set of open protocols similar to the open protocols that we have for how we move data and information and Communications freely in the world that a a a similar set of protocols would emerge around the storage of value the exchange of value and the intermediation of value um there were a lot of ideas in 2013 being put forward about how you could scale these networks uh how you could issue other types of assets so you didn't just have Bitcoin you could issue something for example that referenced a dollar um and that you'd have Smart contracts that was really idea on napkins uh back then and so it was very clear that it was going to become possible to build a protocol for dollars on the internet and that within five or 10 years you would be able to exchange value directly from any person to any person any machine to any machine at the speed of the internet at a basically a marginal cost of of approaching zero and then you would also be able to intermediate that with with code that was published on the public internet and was tamper resistant and uh and auditable and those are the basic things that I saw you know over 10 years ago and have been pursuing in in developing Circle um and I think what what's been interesting is it's taken about 10 years but now we're sitting here today and effectively we' we realized that kind of 1.0 Vision that we had of a protocol for dollars on the internet that essentially with the latest Innovations in blockchain Tech you can settle transactions at scale for fractions of a scent um to any any counterparty in the world um and it's it's pretty remarkable and I think uh but still quite quite early stage in terms of where this eventually goes and jenemy what are the loopholes and issues that the current Financial system is facing and how you think that blockchain technology can address these issues well I mean we there's obvious things that we know about the traditional Financial system uh most of it is siloed it's siloed within proprietary networks that are that are out there it's siloed within countries um uh you know there's huge time delays and lags in the way that money moves so you have trap Capital at an enormous expense to the economy um intermediation of just moving money uh is you know there's a trillion dollar plus tax on the global economy that comes from that there's vast amounts of of underbanked and huge limits on financial inclusion and that's not just you know kind of having a bank account it's actually how do people meaningfully participate in the global digital economy it's very constrained um and and you know so all in you're talking about an industry that accounts for a very large percent of global GDP that has huge amounts of efficiencies that unders serves small businesses unders serves many individuals and households um and you know it's a Allin you know several hundred trillion dollars of of of value kind of floating around and so with respect to an industry that the internet could disrupt it's the biggest uh by far and uh and so over the next 10 years I think because this technology is maturing now and there's I think more or less going to be relatively clear regulations in place around how it gets applied I think the opportunity space uh to to really change things is is very significant one other comment though which is I would encourage people not to think about uh you know what happened in the past we're just going to replicate that and it'll be better faster cheaper that's that's not that's not what I think is interesting when you think about the changes that have happened in Communications in the world uh and and the the sharing of information in the world if we just said well we're going to put newspapers on the Internet or we're going to you know enable you to do a a telephone call on the internet it wouldn't be very inspiring but what's actually happened on the Internet is when you took the marginal cost of moving data or communicating and sharing information to zero the the net World output of communications you know million x the netor output of information that's shared in the world which has now given us things like generative AI uh million x these extraordinary multiplier effects and I think with money that can move at at effectively zero cost and with the essentially the speed of light and the the scale of the internet money velocity will increase me many many orders of magnitude which I believe in the end will stimulate a level of economic output in the world that is far far greater than than we currently are realizing today and Jeremy let's talk about adoption in initial days we saw retail site took the lead in adoption but in the recent years we have seen that many institutions are coming in the blockchain ecosystem as well so for the next wave of adoption do you think the next W adoption will come from the institutional side or the retail side or would be like a mix of both well it's kind of like the growth of the internet when you know um when the internet really took off in the 2000s it was everyone it was mass consumer it was Enterprise it was it was uh you know all all parts of society began to uh apply themselves and utilize the tools and Technologies of of the internet and you know blockchain Tech is is really no different it's a new very powerful capability for uh you know Assurance around data in the Integrity of data Assurance around computation and the Integrity of computation and and value exchange more broadly and that touches everyone so the five billion people that are connected to the internet all of them will benefit the tens of millions of businesses that are part of the online world are all going to benefit and and of course every financial institution in the world um because this is going to become I believe the backbone of the future internet-based Financial system the the the internet Financial system will include all of those participants and jenemy when we talk about regions taking a lead in blockchain and digital asset regulations in your opinion which regions are taking a lead as of now in providing the right opportunity right regulatory environment to the digitalized FS it's been fascinating to watch in particular over the last year you know there was a lot of attention on you know uh companies that imploded fraudulent actors criminal actors and I think it's great that criminals and and are being held to account I think it's great that uh you know companies that were opaque and running offshore collapsed on themselves in some cases but what's emerged from that is governments are not overreacting I think what the smart governments are doing is they're prioritizing this as an industry they know they need to have Smart effective regulations in place around web 3 as a technology more broadly and they're doing it so you're seeing that coming from Japan you're seeing that come from Singapore uh here in the UAE very much very active very proactive uh you've seen that with Comprehensive rules around uh around crypto assets and stable coins in the entire EU um and and the UK so I I think if you look at Financial Market centers uh Hong Kong as well which is you know a very strong push around web 3 and digital said so if if you look at Financial Market centers um I think you're seeing very steady progress and I think 2024 if you look at the roll out of these rules which is going to be overwhelmingly happening during 2024 that is really going to be the year where this goes from an early adopter phenomenon into a mainstream scaling phenomenon and and so I think we go from the hundreds of millions of of users that are interacting ING with this into 2025 and Beyond into billions of users interacting with this and that is in part because of the smart regulation that's coming into place in all these major jurisdictions around the world and you talked about UAE generally what are your thoughts on Abu dhabi's digital asset ecosystem well the adgm has been actually at the Forefront of uh of this space well well before many other governments uh had a constructive framework for LIC ing uh you know virtual asset service providers uh you know had a framework for evaluating digital tokens you know usdc was in fact one of the very first and is still the only stable coin that's authorized for adgm Market participants uh so I think they've done a I think they've done a very good job uh you know and and that's evolved right that's now starting to cover uh other activities custodial activities exchange activities so I think adgm has been early and I think think now my impression at least is that uh adgm is is moving uh you know and is moving forward um uh to to really make sure that quality institutional players are operating here uh and and I think that's the heritage of of of this island and and of this uh of this Market is quality institutional players and I think that's attractive you see many of them in in uh at the event here this week uh are here because of that I think constructive thorough diligent approach uh to uh I think uh you know productive regulation in the space and we have seen in the recent times quite a lot of people talking about the integration of AI in different sectors be it like Asset Management Financial Services what's the role of AI in the digital asset and the blockchain ecosystem I think it's going to be massive and I'll talk about two things um the the first is uh AI one of the one of the most profound challenges with AI is with generative AI in particular is determining truth and we see hallucinations uh and and and also governance models around the the utilization of data by AIS and so what what are blockchains really good at blockchains are good at providing Providence of data and so blockchains can become the basis for verifiable data and the utilization of that verifiable data by AIS uh so I I think um the intersection of AIS with the sort of data integrity and and and cryptographic proofs that blockchains can produce is going to be fundamental so I think they're almost two sides of the same coin in terms of they need to grow together the second is that um we're going to see a mass explosion in the use of AI agents uh AIS that uh piece together interactions with other AIS and and coordinate activities on behalf of firms and individuals and there are going to be AIS that are interacting all over the world over the public internet and AIS are going to need a medium of exchange they're going to need a way to transact whether it's uh you know at a fraction of a cent for piece of data or for a more elaborate compensation for an actual service that an AI is procuring on behalf of uh uh of its ultimate uh user or beneficiary and the only viable way to have a a uniform Global open interoperable efficient medium of exchange for AIS is stable coins and so my expectation is that stable coins will be the dominant medium of exchange for AIS uh and we will see that play out over the next uh you know five to 10 years as well so just closing remarks what are your thoughts on the digital asset ecosystem as of now and where is the future um you know I I think um the the digital asset ecosystem is um is going through a pretty significant maturation phase I think as we go into a phase where uh you know a dramatically larger number of of households and and institutions are participating and and using it we're going to go from the kind of wild west of you know a lot of uh unregulated actors to a world where there's trusted intermediary that are executing uh and delivering you know Services um I think you're going to you're going to see the infrastructure side of this which is the underlying blockchain infrastructure begin to be treated as as a as a a fundamental kind of core internet infrastructure by countries around the world uh and so you'll you'll probably see evolving rules around that um but that you know that kind of maturation from the you know early adopter as we cross the chasm into the the what's often called the early majority where this really goes on on a on an exponential growth curve it is going to be you know I think the grown-ups in the room are going to uh play a larger role uh and uh and that'll help us you know I think experience this as as a more trusted uh infrastructure that Society can depend on well thank you Jeremy for your time and thank you everyone for joining us