Evaluating the State of Adoption of Stablecoins and CBDCs Among Traditional Players

so hello everybody uh a few people here but let's uh have this okay closer so hello everybody um I'm glad to be here to present some of our research my name is uh Jack MLL and I'm the director of the blockchain and web three Observatory uh what is the uh blockchain and web3 Observatory is uh um a research group inside a bigger uh research team at the poly Technic of Milan the main Technical University in Italy and we have more than 50 observatories about different digital Innovation uh digital Technologies for example of course blockchain web 3 but also Ai and other stuff and more than 130 researcher Professor involved in this uh we are not purely uh academic researcher we are are let's say trying to connect uh the business world of traditional companies uh startups and whoever is working on uh the blockchain web three so uh you can see some of the companies that are part of our community uh that are the traditional let's say not web three native uh companies uh we have a big research group uh uh with people working uh in uh researching web three and blockchain business business application and we focus not only on stable coin that we know is the main topic of this event but uh uh about every uh let's say uh a lot of the application that can be done uh with this technology uh try to uh cover every uh topic and um try to connect with companies and try to understand how are they using uh this technology and of course we focus also on stable coin as one of the main use cases for blockchain and web three okay so let's take a step back so not focusing uh from the start on stable coin we have a different perspective from maybe a lot of the speeches that are in this conference so we are not purely technical we are not purely focused on stable coin but we start let's taking taking a a large road to get to the point so let's try to understand the question from which we start that is how has the blockchain industry evolved in the recent years okay let's take a large and then get to the point so these are some data that are coming from our research about how traditional companies are using this technology and this is something that we do every year since 2016 trying to uh understand how companies are actually adopting this technology this is um something that we uh do by scarring the internet for newses uh project uh announcement for project and these number are related to PC or live project developed by traditional companies around uh around the world so we don't we don't focus on Startup but as you can see the number of project using blockchain and web3 is growing uh also in traditional companies also when we expect maybe the hype to be over uh for traditional companies we see still a growth in the um in the adoption of this technology also we have uh a focus also on Sim of the biggest company in the world like the Fortune 500 uh Global in here and we see that many of these companies are using this technology are trying to uh create project that are using blockchain technology in the web three area for example 153 big companies in the Fortune 500 are actually doing blockchain projects uh and what is interesting is not not that uh I mean the gross number of them are doing this this kind of project but that uh the 34% of them uh of the project that are done by these companies are have been done in the last two years okay so it's a very active uh community of traditional companies using this technology to create project of course uh talking about blockchain project now days make no sense because it's a general purpose technology that is evolving in very different directions uh so we try to have some uh uh category to understand what kind of project are companies doing the first one and it is the one that probably is of our interest for today is the internet of value the so-called internet of value so all the project that involves uh the adoption of cryptocurrencies stable coin and uh cbdcs for the the one that are uh live right now uh to exchange value in some in some way then we have a lot of uh other project that are the one uh mostly uh blockchain for business so all the project created by companies in order to be more efficient to use blockchain to replicate the system to replicate their processes but not really to innovate uh we uh we saw many project in the trade Finance supply chain in the many in the in the Years uh in the past uh right now we see less project but uh it's an actual thing that companies are doing and in the end the project that maybe our closest to the web three uh the decentralized web in which we have the most Innovative project uh developed by traditional companies uh that are closest to what we see do done by startup and maybe uh new uh Crypton native companies a lot of many things happened in uh in the recent years uh this is just starting from 2023 uh different announcement new project this is are just the maybe the one that make the news uh online so of course we have uh uh something that is more from a regulatory perspective itive uh some big actor in the finance world that is entering uh the crypto industry or this is or that is doing new project in the crypto industry uh some of them are launching their own stable coin for example PayPal uh for sure we see we saw the SEC uh approving uh the uh ATF spot for Bitcoin and uh ether so uh a lot of uh new project but when we have a look uh on them we see that the majority of them the majority of the news that we see not uh focusing on a specific industry so we are not focused on the financial industry but the majority of the project are focused on what we call the internet of value so creating new stable coins accepting cryptocurrency uh creating a financial instrument on traditional cryptocurrency or developing cbdcs or project that are linked to cbdcs so let's focus uh one second on the internet of value project so we analyze all the project done by traditional companies and we try to say okay what are the project that are mostly internet of value so that are using digital asset in order to exchange value for example stable coins or uh what are the project that are blockchain for business so try not really innovating but try to make a more efficient some process that is already uh in their traditional industry or tradition and we see also the growth in the years of traditional companies using this kind of instrument and what are the different path that these companies that we see in the internet of Value World for sure uh a big step towards uh legitimacy and regulation so uh one thing that uh probably probably is making the the market grow uh for this kind of Internet of value is the regulation so we know that in Europe we are having a Miker and uh it will be live fully as a regulation uh by the end of this year uh we have a lot of uh um companies and Banks Crypton native companies that are being regulated by mik being authorized by Miker uh right now and for sure sure we have some big signals also from the US uh like the uh the SEC approving the ATF for Bitcoin or ather uh so uh legitimacy is growing around this instrument is not only something that uh uh some uh wild startup is doing is something that is being more and more approved by by The Regulators for sure there are project that are linked to the cbdcs so uh I big competitor maybe uh to stable coins in Europe we have the digital ER project but in other countries we see many different cbdcs project and for sure this is something that is growing we don't know if it will grow for good or for bad but it's something that is in the in the picture and then many different stable coin project developed not by maybe the startup the defi protocols that we see here today but also by traditional companies by traditional Banks uh the last news where uh societ General uh developing more is uh your CV so opening uh the white list and leaving the exchange of his stable coin also to the market we saw PayPal launching his own stable coin we see a lot of interest also by traditional banks in creating the stable coins or deposit token some kind of instrument to exchange value using this technology so the other uh question that we have is right now okay the internet of value is growing the adoption by traditional companies is growing but why are we focusing on this kind of Technology why the internet of value is relevant today I we also heard different speeches the discussion about this instrument about uh stable coins mainly is focused on the financial stability so if uh uh there is uh some Reserve if there is a collateral behind the stable coins if they can be used as a payment method uh how is the custody managed for example uh how is managed the peg to Fiat to Fiat currencies so a lot of the the talk and the discussion around this topic is on the instrument itself so how to regulate the instrument itself how to make it uh safe and uh easy to use or more Innovative but we we saw that uh by uh talking with traditional companies uh with the industry with the financial companies but not only financial companies there is a lot of interest in the program ability okay so we are not only interested in uh how uh a stable coin is designed but actually we want to understand how to use this stable coin not only to uh let's say having a new way to exchange money a faster way to create payments or an easiest way to exchange value but actually we we see the stable coins and we see that they are interesting but we want to know okay but how to make programmable uh payments programmable money with this because one of the things that you can actually do with stable coins is not not make a payment make a money transfer but actually linking to what is cool in blockchain what is Smart contract prog ability so the idea is okay but how can we use this stable coin uh actually in our business there are two different ways uh uh to involve programmability in stable coin or in this kind of instrument from one side we have payments programmability on the other side we have currency programmability so for payments programmability we have to be able to create uh some programmable payment of course uh that is uh let's say on top or below the currency for uh instead currency programmability is me is meaning uh when we have a programmability that is actually developed inside the currency so for example you want to limit the expendability for a currency or to make uh uh some time constraint on how you can spend some currency for the second uh let's say the currency programmability can have different problems from a monetary perspective so we will focus more on the payments programmability so okay we have a stable coin we have this kind of asset how can we make programmable payments Pro programmable payments are not something that is uh new is not completely new you can do it nowadays uh with apis for example so in the traditional Market there is already the possibility to create programmable payments without using stable Co without using blockchain but of course if you are here talking about why programmable payments are cool and why we should be linked to web3 and blockchain is because we can have uh different interesting interesting features uh regarding what is happening when we link smart contracts to some form of uh digital money on on the blockchain so for example of course a higher level of transparency uh the correct execution that is not granted by third party but is granted by the network itself uh the fact that the protocol itself allows for this kind of programmability so you don't have to open some API to programmable different application to do this and many different uh other feature that can be interesting uh in order to use this kind of uh solution link to uh a network that allows smart contast such as blockchain there are many different use cases that can be enounced by the programmable payments some are uh let's say quite uh easy some other are more difficult uh but we can really enable new business opportunities by using this kind of stable coin this kind of instrument not only to exchange value but to interact with um some business processes for example the distribution of dividends uh the management of subscriptions uh the um um tra in trading in insurance payment so insurance policies the payments of royalties that can be linked to uh different use cases that can be automated uh by using this kind of technology so many different use cases uh we can roughly divide these use cases in uh three categories so the the first one is uh the ability to do split payments so one transaction that is uh in the same time uh going in different direction to different users uh one two uh two different users or many uh different users and this is something that can be cool for example for the dividend payments or for the royalty distribution so something that allows for uh new use cases we have all the the let's say the process is connected to the deliveries delivery versus payment so uh esro account machine to machine payment trade Finance we have a uh time bound automation for example when we want bond yields rents okay so if you want to pay the rent for something not only a house or um let's say real estate uh with stablecoin we can automate some some of this payment by linking to Smart contracts or to a decentralized application uh the management of subscription again but then of course um having this kind of programmability embedded in uh the decentralized uh protocol of blockchain the decentralized network we can use composability uh linking different uh uh programmable payments together linking different decentralized application together so we can uh enact programmable payments that are uh happening with a more complex logic uh so for example in the management of lending trading uh insurance policy and really here uh you can think about many different use cases happening if we have a stable coin that is linked to this kind of solution of course this is something that we will see in the future but this is how traditional companies are looking at stable coin aside to their financial nature so they are not interested the uh except Banks maybe they are not interested in okay I want to create a new stable coin because it's uh I want to create new money they are interested in because they want to create new business case they want to maybe bring their own business on chain and they cannot do it if they don't have a stable coin or a mean to exchange payment so this is really important for the growth of this kind of instrument uh in the future for example when we look at trade finance that was one of the uh use cases mainly developed by traditional companies by banks that maybe wanted to enact new ecosystem of companies on the blockchain one of the main problem that they had in the past and one of the reason because many of these project fail uh with we can think Marco poloo to mention a name a big project with big Banks failing because they didn't have an actual way to make uh value transaction on chain so they were doing some project on the blockchain but then they were doing Bank Traditional Bank transfer after uh all the process happened on the blockchain so stable coins and instrument like stable coins are very important for all the project that are maybe related to trade Finance or traditional industry they want to create this business also so on the blockchain but they need some instrument some digital money that they can use to actually make payments so not only uh focusing on the the process of exchanging documents but actually linking some form of payment some form of Boney to the exchange of this document and trades and here you can see also a lot of blockchain for business project numbers but also when we see uh other project in the decentralized web so also in defi or lending protocols people uh from traditional Finance from traditional companies that want to use this instrument need to have uh means of payment that actually that they can use okay so something that is regulated something that they see as safe instrument to exchange value and that can be linked to what is defi right now but maybe in the future we won't call it defi anymore because also big institution will enter some of them are already doing it but they want also something that they can use to exchange payment without touching cryptocurrencies without touching uh money that they maybe they cannot use because they are regulated or uh they have problem s with financial stability and so on so this is true also for uh the more I say Innovative project that we see on the web3 and blockchain ecosystem uh of course we are focused here in this uh event on stable coin but we see on the market from the traditional Finance perspective the traditional Banks from the traditional companies really they are looking at two solutions they can see in uh in competition in some way then we can argue if they are competing or not but these two solution are stable coins from one side that are growing uh both in number of different stable coin both in their development so we see also today many new ideas for stable coin development their market cap is growing uh their acceptance from the market the regulation is growing so more and more interest in stable coins but we have to keep track also of uh the other side of the room let's say that are Central Bank digital currencies many different central banks in the world are doing project uh trying to create their own form of digital money native digital money so not the one allowed for by retail bank but something that is created directly by central banks most of them are not looking at uh dlts web3 blockchain they are doing with traditional uh instrument but some of them are actually trying to understand trying to experiment how to link their cbdc also to web3 also to uh blockchain project and so on we can see this solution as a competitor we don't know in the future if we will use mostly stable coin and cbdcs only for specific task or if cbdcs will be widespread and all traditional companies will use cbdcs and don't use stable coins maybe they will be uh together solving different problems for sure they are uh they could have uh same um feature same uh characteristics of course coming from different uh uh backgrounds but they both allow for peer-to-peer fund transfer they both can allow for the maximum level of programmability of course uh it depending on how they are developed if we are talking about cbdcs uh they could both allow for user control over funds depending on the cbdcs if retain cbdcs or whale cbdc and they could allow DVP for tokenized financial asset that is something that is very cool right now for all the banks that are looking at at blockchain they will follow they are following a different path so uh trying to understand which one will be mostly adopted from the stable coin side uh again from the traditional Finance perspective the path is regulation Okay so they are already highly programmable they are already used by a lot of actors in The defi but regulation and legitimacy it will be the path that we will see for their acceptance also by the traditional Market the traditional companies on the other side there is a lot of discussion about design choices for cbdcs so right now we have very few project of cbdcs that are actually live and use and uh for example the digital euro is not live is a project that they are developing that we will see maybe in the in the future in the future years and they are right now discussing what the design choices will be so uh sticking to programmability or the link with blockchain is the digital Euro becoming something that we will use like stable coin that will allow the connection for example to defy to web three to blockchain or will be something that will be completely uh let's say separated by this market and maybe will use will be used by uh stable coin as a collateral for example so this is something that in the future uh we will see we will see sorry different choices uh regarding the geographical area so for sure there is a lot of also geopolitics involved in this so we know that M regulation started for example to protect the European ecosystem the European money but um cbdcs and St stable coin are maybe uh don't have a geographical area in which they are used cbdcs probably will be linked to some geographical area the accessibility so stable coin are accessible by whoever cbdcs maybe will be restricted only to some actor uh for kyc problems or maybe only to uh financial institution we we have to see in the future restriction on the use cases so if I have to make some sort of payment maybe I can use one instrument not the other uh this is something that we have to see and also the level of programmability we will see something that will be let's say tour in complete as a programmability sense or only can be used for some programmable payments and in the end let's say that to conclude these are two solution to the problem of programmability to the problem of creating business cases by using stable coin by us cbdcs maybe we will have a stable coin Prevail in the future because they are faster they are already in place and companies under migga culation will be able to use it maybe we will see cbdcs Prevail but probably we'll see some form of coexistent between the two of them so thank you for the attention if you want to get in touch or uh exchange some uh some thoughts or get a uh material you can follow us write an email uh whatever you want so thank you