The Evolution of Stablecoins - TOKEN2049 Singapore 2023

Wow, what a what a full room. Um hi guys, I'm Emma. I'm the managing partner of LongHash Ventures and thanks for the host for having us at this very exciting event. Uh we're going to talk about stablecoin. Uh but before that, I think we're going to take a a minute or so for each panelist to quickly introduce your background.

Um shall we start with Regulon? Sure. Uh my name is Regulon Pati. I'm the vice president for Asia Pacific at Circle. Uh most people would know the USDC stablecoin, the largest regulated stablecoin, second largest stablecoin in the world.

Awesome. Welcome. Hi, I'm Vincent Chok. I'm the group CEO for First Digital Trust out of Hong Kong. And we are a qualified custodian focusing on custody of real-world assets.

Um we are also like Circle, but smaller. Uh we just recently launched our FDUSD. And um you know, I think we're really excited to be here and and seeing this crowd. Uh very happy to see that this is this is what a bear market looks like. Well, Hey guys, I'm Hi.

I'm Guy from uh the founder of Athena. We're building out the uh vision that Arthur had for a delta-neutral stablecoin that lives outside of the banking system and uh coming out in a couple of months uh with a product. So, excited to be here and uh talk to you guys about it. Welcome. And a quick context about LongHash Ventures.

So, we're a web3-focused fund since the late 2017. Um have been surviving the last two bear cycles. So, um glad to be here. I think many people are asking, right? What is the killer app of web3?

And I think a one answer that's emerging is stable coin. Cuz stable coin has the most amount of adoption today, right? We're even saying some of the traditional institutions, say for example, Visa and whatnot, right? Have announced the initiatives to integrate USDC or some other stable coins into their network. So, I think just to set the context, it'd be good to understand, I think maybe Raghu will quickly introduce what is USDC, right?

From Athena Labs perspective. I think you guys are building a decentralized sort of like in the middle, right? Like stable coin and also from a First Digital perspective, how are you guys are involving stable coin? So, maybe we start from this side. Yeah, sure.

So, we look quite different to these guys in terms of the way the product is actually structured. So, the way a normal stable coin works is you have funds sitting within a bank account and you issue a digital sort of receipt against those funds within that bank. We basically try and remove funds within a bank and replace that with crypto collateral within the crypto ecosystem. And the idea there is if you take an asset, whether it's Bitcoin, staked Ethereum, Ethereum, if you're long on one side and then short the perpetual on the other, that creates a synthetic dollar position which you can then issue a stable coin against. And the idea there is that you remove the delta from that position so that it's always reducing the volatility to zero and represents a stable coin.

One sort of interesting byproduct of that is that if you're taking staked ETH, which obviously has a yield associated with it, and the yield that you capture from shorting the ETH perpetual, you can put those two things together and it starts to resemble a yield that looks quite similar to sort of US Treasury sitting within a bank account. And so, what you've sort of recreated is instead of having US bonds in a bank account, you've got something that we're calling an internet bond within crypto and it's sort of disconnected from the existing system. Yeah. What what are some of the just to um I guess lean into that? What are some of the trade-offs or design choices we're making here, right?

Yes, I think it's it's an idea that's been tried before in the past to do it entirely within DeFi. Uh something that Arthur sort of pointed out in his piece when he came out with the idea was that you needed centralized liquidity in order to get this to scale to size that's meaningful for both ourselves and then to actually get millions of users inside of it. Um and so we sort of accepted the fact that you need centralized liquidity but wanted to do so in a trust minimized way or at least reduce the counterparty risk to to exchanges on the other side. And so sort of an interesting solution that we've seen emerge since FTX is actually being able to isolate custody from execution and settlement. And so you can now hold your assets outside of an exchange and use those assets as margin collateral to take out the position on the other side.

And so disaggregating those two things uh apart, we think is a really interesting sort of middle ground between uh the transparency of DeFi but then the liquidity that you can source on centralized exchanges. Yeah, I think logically it definitely makes a lot of sense. And then you guys are launching in months, right? So definitely encourage people to try it out. And also Vincent, I know you mentioned you guys are building a a a version of stablecoin.

Can you walk us through what is that? Yeah, we're more traditional stablecoin uh backed by US dollars. And with the emergence of Hong Kong really pushing for licensing and coming out and saying that Hong Kong wants to be the hub of Web3. So for me, I think Web3, you really need three components: blockchain, uh you need AI, and you need digital currency. So those are the three components that will make it Web3 a reality in my in my opinion.

So um we want to be the native to Hong Kong to really show the banking infrastructure in Hong Kong, how solid it is, how strong. uh It's the third largest financial center in the world, so it's got no capital controls, no exchange controls. And I think it's just a very good strong foundation for hosting a stable coin. Got it. Got it.

And how different is that from say USDC? Because USDC is also a fiat backed We're very similar, I think except they're a lot bigger. But yeah, it's it's very similar. We hold USD as a reserve. We hold it in treasuries, banks.

We invest it through brokers. We put it into T-bills, repos, very secure type of investments, transparent. We use third-party auditors to do attestation. So it's you know, it needs to be as transparent as possible for users to adopt a credible stable coin. Got it.

Got it. And lastly, I think Raghuveer and right USDC USDT are the two undoubted kind of leaders of stable coin in the space, right? Um how like from you guys perspective, what are some of the priorities, right? How how are you guys saying like pushing the frontiers of adoption of stable coin? So um firstly, welcome to a lot of people in Singapore.

I live here, so it's amazing to see so so many people here. We're going to keep it a little bit lively because I think it's a late session. So Um look, when it comes to stable coins, the simple part of minting a fiat backed stable coin is that you give someone like Circle one US dollar and we mint you one USD. And that concept is pretty straightforward and pretty simple. But what I'd like to talk about is like what are the actual use cases for stable coins and what differentiates different stable coins in terms of network effects.

And that's really at the heart of USDC, right? So firstly, there's a lot of the traditional use cases are around crypto trading as well as DeFi, so within the crypto ecosystem. But, what we're also seeing is the emergence of this sort of third very large bucket of use case, which is really around US dollars predominantly, where people don't have access to a stable currency because they have issues with their home currency. It might be inflating away really too fast, which we see in certain parts of Asia, but lots of parts of Africa and Latin America as well. The second one is just the ability to be able to move money freely.

A lot of countries have very strict capital controls, which make it really hard to trade. And a lot of people want to trade both physical goods as well as digital goods without all these restrictions. And the money's not moving at the same pace as the internet economy. And I think the third thing also is just which is at the heart of crypto is a more secure way to hold stable currency as well. One of the major parts of the strategy I'm executing here in Asia is really around the network effects of money.

So, the minting and redeeming of of a stable coin, that's what most people know about. But, what actually differentiates us is the amount of blockchains we're on, the amount of licenses we hold, the amount of banks that we have through which people can onboard and offboard, the amount of partners through which people can do it. And that's the multiplier effect of stable coins that make some a lot larger than others, frankly, right? We we hold multiple licenses and we're pursuing more. And when you multiply all of that together, essentially like the goal for us is really simple.

Anyone who wants USDC, we want to be able to give it to them almost instantaneously as easy as possible. And that's not the case for all stable coins and certainly, you know, a hard bit of infrastructure to build. Sometimes people may ask like why do we have so many people? And that's really just putting all the hard work into the infrastructure of building that network effects of our stable coin. Yeah, that's super interesting.

I think in many ways you guys are starting to bridge the interoperability gap, right? Cuz you have USDC on multiple chains and I think a lot not too long ago you guys also launched this protocol layer, right? Which allows you to Exactly. So in many ways you're kind of helping to bridge the liquidity across different fragmented ecosystem, which is amazing, right? And I think like another point you mentioned about, right?

For people outside of like say US or China, like there there are certain countries with capital control or running away overnight inflations, this really provides them with a hedge, right? Provides them with a choice. So that's that's really pretty pretty interesting. I think I also want to quickly touch on risk because I think especially for fiat backed stablecoin, right? One of the biggest thing is about regulatory risk cuz you you have to kind of touch base with regulators across different jurisdictions and harmonization of regulation for crypto assets has been a major challenge, right?

Some people Some regulators moves faster, gets burned. Some moves slower. How are you guys How are you guys thinking about this regulatory risk? Well, I mean the Singapore government has done a very very good job in terms of regulation for the broader digital assets economy web 3 economy and has sort of really led in this space. We're seeing Hong Kong and Japan and other Actually frankly in Asia probably the regulators are doing a very very good job.

They're also not doing a bad job with Mika in Europe and I don't frankly think that the US is going to be that far behind. Obviously most people look at US regulations as challenged right now, but I do think that that tide will turn there as well. We are seeing that some regulators are coming up with rulings and the others ones watching and even though there's not like a exact standard per se, they are very very similar in the approach that's coming coming together. And you know, some fundamentals is for example, if you've got a fiat-backed stablecoin, it's going to be a single asset. It's going to be one-for-one.

It's going to be segregated, etc. In terms of risk, you know, I I would say just say a simple thing. One thing we don't publicize enough for stablecoins is that we're not a fractional system. If you go and put $100 in a bank, $90 of that gets lent out to people that you don't know like cuz that's the banking business model. It's a fractional business model.

Um versus if you go and put money in a stablecoin, the majority of it should be going in something that's 100% backed. We ideally would like the most safest like if we could put all of it with the Fed or Fed equivalents, that would be ideal. So it's as safe as possible. But generally I think if if you're managing the risk right and if we're allowed to to bring our risk almost to zero, we would. Yeah, I want to come back to that cuz now let's dive deeper into regulatory risk.

But I there's other type of risk which is relevant to I think earlier this year bank runs and whatnot, right? But I think I want to go to Vincent here because you mentioned you guys are getting license in Hong Kong, right? And that's the base where you're starting. And Hong Kong seems to be getting a lot of attention last couple of months by being very open and progressive in giving out licenses. Can you dive a bit deeper there?

Yeah, I think you know, where we originate from is through Hong Kong under the trustee ordinance. And what that means is that we are title holders. As a trust company, we look at not only the risks of the underlying asset, but we look at reporting. How do you deal with the OECD about automatic exchange of information? We look at the wallets.

We look at the actual tokenization, minting of the stablecoin, which can be treated as a security in some countries. So for us managing the assets, we have to understand laws. So there is Sharia law, there's common law, there's civil law. And these tokens are held by all kinds of people in these legal jurisdictions. What about reporting?

What about succession? Who has the rights to those assets if something happens to the wallet holder? So, there's legal ownership. And these are the kind of things that I think First Digital's been focusing on because risk is not only about how you invest the underlying asset. It's about how easy is the regulators going to come and take that asset if you don't comply KYC AML.

That's been sort of the keyword thrown around so often, and people in this industry now have to really consider the laws and the rules changing on a a very fast pace. And how do you deal with that? So, this is this is how we think, you know, us we manage two balance sheet whereby banks, you put money in a bank, you're taking banks' risk, the counterparty risk. And we've seen that with banks, Silvergate, with Signature. Um so, we have to think about our partners as we going to set who's our partners.

We put it into very strong financial institutions, into T-bills, we're taking government risk instead of taking the bank risk. But you you know, the the word cash is king is actually not true. Cash is actually the most vulnerable thing because FDIC only covers and insures a small per- percentage of what people's holdings are in those accounts. So, it it is a very convoluted, very complex system of running a stable coin. It's not just a one one-to-one, but it's about all of the people that holds the underlying asset.

That's how we see the future that needs to, you know, regulation is about that. Who can freely hold these stable coins? Yeah, absolutely. I think the mechanism is really simple, right? One-to-one backed.

But if you kind of break it down, there's so many layers of different type of risk, right? We touch on regulatory risk. You have market risk if it's algorithmic type of coins, right? Then there's counterparty risk like with the bank runs, right? How are are you keeping all your cash in one bank or are you spreading it across different How you measuring the different risk with different banks, right?

Um there's a lot You're right. I think risk management is so important. Um with Guy, cuz given what you're building is kind of moving more towards the decentralized kind of, you know, spectrum, right? Um how are you guys thinking about this regulatory risk or additional risk when it comes to what you guys are building? Yeah, sure.

So, I think um first point to make is that uh stablecoins are often marketed as sort of risk-free, I think sometimes, and that I think that's actually incorrect in the way that they're sort of uh pushed forward to to users on the other side. So, as you say, I think there's risks to all these things, but they're just hidden in different places until you look at them properly. So, uh fundamentally, what we've done, right, is is change holding bonds, as I said, in a bank account which has that counterparty risk and credit risk to the underlying bank. Uh you've taken that and replaced it with crypto assets within crypto, right? And so, you've transferred that credit risk from a bank uh to a custodian within crypto.

I'm not saying one of those things is better or worse than the other. Uh I think our view is like a custodian is set up to manage assets, and that's their job. They don't go and lend money and do other things. Like that is their job is to hold assets safely. Uh and so, we're not really making a claim about what is more or less safe between those two things.

I think all we're claiming is that it's different, and some people find having different uncorrelated custodial risk as something that's valuable, right? So, over a weekend when you saw what was happening with SVB, you basically saw every stablecoin in the market trading down in lockstep uh as as there was sort of issues there. Uh and there was nothing that was like truly uncorrelated to what was going on there. So, what we think is interesting about what we're doing is that uh the underlying custodial risk is fundamentally uncorrelated to to what these guys are doing. And I don't have a view on what's better or worse, I'm just saying it's different.

Um and that's sort of our view. Uh we do have additional risks um that are obviously involved in the mechanics and sort of financial risk in terms of how the whole thing's coming together. And so, I think that that is a very different type of risk profile to to basically holding assets within a bank where the mechanism is just a bit cleaner to be able to work with. Got it. And from you guys' perspective, did you think you guys have to worry about like getting licensed or not really?

That's not something Yeah, no, we we definitely take that seriously. I think um Mhm. our approach has been uh unfortunately the sort of clarity within the US is nonexistent, and so we just have to take the approach that we can't serve any of those users there in the US and and sort of have to do everything uh that we're building offshore. Uh there are some frameworks uh for example, MiCA within Europe we think is pretty constructive in the way it's been put together. It gives you an actual sort of framework that you can at at least look at and say we are within the rules that they've sort of set out, which is more helpful than not having any rulebook whatsoever.

Yeah. Um and so, yeah, we're sort of operating within those frameworks. It gives us a nice sandbox, I think, to prove that you're actually producing a product that's useful for people and uh that sort of a a real regulatory framework can like form around in in sort of like 12 to 18 months' time. So, yeah, we are sort of within those frameworks, and um the only unfortunate piece is just the US situation at the moment, yeah. Yeah.

Yeah, it's certainly like like I mentioned earlier, regulator kind of harmonization, right, has been challenging. And I don't think it will ever happen. I think some will move faster, some will move slower, right? You just kind of have to find a way. And luckily, global crypto is pretty global, right, and pretty decentralized.

So, um I I I I I think it's through the crowds, right? Like I'm I'm not not sure how many of you would have experienced the like the Terra Luna blow up, right? Like totally agree with what Guy was saying. Many people thought like stablecoin is risk-free, right? And it was marketed so, and and the anchor interest rate of 18% was also marketed to be risk-free.

So, I think in crypto we need to do much better in terms of like educating the users and kind of make the a lot of the risk of disclaimers a lot more transparent. So, now we talk about risk. I want to talk about something more exciting. So, let's um 4:30 p.m.

Yeah, exactly. So, we've we've covered all the risk disclaimer, but now let's go to the future, right? Like what are some of the exciting use cases you guys think, you know, stablecoin can bring in and and really bring in the mass adoption? I think today like a lot of people in uh stablecoins are trading, right? Uh needs or kind of there's a bit of like transfer money internationally and whatnot, but how are you guys thinking about this?

Let's look 5 10 years down the road, right? What are some of the exciting use cases? So, I think um I was on a panel yesterday I went through this. Actually, there's like net growth in stablecoins. So, when you look at the overall market cap it doesn't look like it's grown, but if you look at the underlying wallet addresses that you know, the amount of usage, it's actually growing through the through the bear market.

Absolutely. Um, the biggest impediment to if you call it the technology of stablecoins, which you know, basically allows like almost instant movement of money, to me is just sort of like two or three things. One is just ease of use. Like wallets too freaking hard, right? For the average person.

Like for us in crypto we might all have a wallet, but that's why we're stuck at like this 2 300 million users. You know, a company like Meta has got like 3 billion users. Um you know, we're not making that breakthrough until we make the technology of wallets really, really easy so that anyone can use it. They don't even know it's a wallet. They don't really care, right?

Um the second impediment really is getting in and out of a stable coin. There's so many things you can do with a stable coin. Um you know, you people might go you can you can do uh on-chain treasuries, you can do trading, whatever. But if it's really hard to get your money in and out of it, then you're kind of stuck on the other side of the fence, on the wrong side of the fence, not able to take advantage of the technology uh you know, advantages of like that you can move stuff around very quickly. The other third thing is, and I think this is a dirty secret in crypto, is uh apart from the wallet technology, we've just made like moving things around too complex.

There's just so many competing chains today. Um and this is what we're really trying to tackle with Circle with our cross-chain transfer protocol. So essentially, um you know, we're going to be aiming to be on more than 15 chains. We're calling this stable September where we're launching a lot of chains. Um but we want to be able to allow someone on one chain to be able to send USDC to someone on another chain almost seamlessly via the via the protocol, right?

So you don't have to worry about, okay, like like, you know, I can only send it to the same people on the same protocol and somebody else on another protocol or it's a different use case. So I think those technology breakthroughs, if you want to call them that, once you break down those silos, you make ease of use much easier both in terms of the end users' experience as well as the interoperability experience, that will have massive network effects. That will mean that like, I mean like if you want to move money, if you're like if you're visiting from another country and you happen to go make a friend and you go to a bar or restaurant in Singapore, this is a simplest analogy I always like to give, the bill comes, it's 300 bucks, and you want to move money to each other. It's a bit of a complex process if you're not like both from the same country. It should be like I'll send USDC or stable coin of choice to each other.

Now you got to have the wallet, you got to on-ramp into the wallet, you've got to go and figure out the chain and if you can blow up all of that complexity and make it super super simple, then I think adoption will grow just exponentially um because frankly the banking system's pretty when it comes to moving money around especially whether it's for small amounts or large amounts in a very fast way. And stable coins definitely can take the place of that usability um but we have other technology challenges within the crypto industry that we need to overcome. Yeah, that that's definitely sounds exciting. I think it basically UIUX, right? That abstract away a lot of the complexity uh will really unleash the potential of stable coin.

Yeah. Uh Vincent, love to hear from you. Well, I see stable coin in the future. The use of stable coin really is more for me um solving real life real world is uh problems. The unbanked, underdeveloped countries, uh we have you know, exporters of minerals like coal where they're subject to ESG and now banks won't issue letter of credits.

How do we use stable coins to help provide collateral and there's also the whole web 3 space. Of course, there's going to be I mean the dominant the dominant currency is USD. There's a lot of companies now starting to look at minting, creating a stable coin for other currencies. And I've always you know, a lot of people ask me, what are the difference between a CBDC and and our stable coin? I see the future that both will actually coexist quite nicely.

The fact that government issue CBDCs, there's going to be a lot of countries that's going to have forced adoptions of wallets. and these wallets, of course, privacy, KYC, you're going to know exactly how they're going to spend that. We are going to provide an alternative where a proper US stablecoin can now convert back and forth to different denominations using other stablecoins, helping industries, shipping industries, minerals, like just making settlements, right? So, we we kind of have a very different view. I think um Reg Alliance's view is more on using retail adoption, how the mass uses, but for me, I think it's about how to make lives, improve lives.

Somebody in Zimbabwe, you know, he's not going to be subject to to all of his privacy given away because he has to use that particular currency. So, one is about financial inclusion, right? It's much cheaper to offer this technology, right, compared to I guess retail banking today. Um secondly, I think you you also talk about uh like the the uh instant settlement of cross-border effects. Yes.

Um right, like the seamless integration of CBDC and stablecoin. Yeah, that's definitely super super interesting. Yeah. How are you thinking about this guy? Yeah, I mean, I echo his comments where I think uh undoubtedly the most compelling sort of use case for stablecoins is exporting dollars to people in the rest of the world who don't have access to them.

I think in terms of uh innovation and what I'm sort of excited for over the next 12 to 24 months within stablecoins is A, thinking about uh what are we doing with the yield that's sort of generated by by these stablecoins. So, I think there's been different approaches in terms of uh what proportion of that yield is actually given to users rather than internalized to the issuers. Uh I think that there are going to be interesting competitive dynamics with that over the next 12 to 24 months where the idea of giving out zero to users uh is a construct which I think is is going to be difficult to sort of hold going forward uh across across the space. And so when you start to unlock that yield as it's associated with the stablecoin, I think that becomes a really interesting asset to start using throughout DeFi as well. So at the moment DeFi sort of has either assets like staked ETH which are volatile and have a yield or you have stuff where there's USDC or USDT which is stable, super useful, but doesn't have a yield.

And I think starting to bring together those two qualities and compose those assets through DeFi. That's going to lock unlock like a lot of interesting things that you can start doing whether it's leveraging up on money markets or using it as as a reserve asset for for other activities within DeFi. So for me that's that's probably there of most excitement which is what happens when we start to add yield at scale to stablecoins. Yeah, super interesting. I I'm curious like from you guys perspective, right?

Are you guys thinking about enterprise integration as well? Um I cuz I want to kind of get everyone's view from which enterprise are you looking are you seeing to adopt stablecoin, right? Integrating to their systems and whatnot. Um is that something you guys are thinking about? Yeah, I mean obviously we'd love to get that, but these guys have sort of proven themselves out over many months, years, and like hundreds of millions of dollars.

I think we need to get to that sort of level before you start having that type of discussion. I would sort of say though as a general comment stablecoins are clearly the only area of interest for sort of web two type businesses where they're actually going to do real business, right? So I think it's a really high signal when you see a business like PayPal coming into the market at the bottom of a bear market, not at the top of a bull. Businesses like Visa are still making announcements now. These aren't sort of like surface level announcements that you get when it's in the middle of a bull market and you're just trying to associate yourself with with something that's hot at the moment.

These guys are making thoughtful decisions at the bottom of a bear market and I think that's actually very indicative of actually the product market fit for stablecoins within those businesses. So, I think naturally it's it's sort of the area that fintech and crypto converge, and I sort of expect that theme to continue for sure over the next 12 months. Yeah, yeah, yeah. And I think probably this is much closer to Raghu and and also Vincent, do you want to comment on this? Like enterprise adoption, which ones cuz I think this opened up a design space, right?

Not just the traditional settlement like Visa or Mastercard, right? Essentially SAPs could look into this, right? Like many other kind of enterprises could actually tap into this opportunity. But I'm sure you guys are much closer to this. Yeah, I mean look, I've been working with enterprises for a long time.

I think what's more interesting is seeing these um it's a stepped approach, right? Enterprises don't usually lead the market, frankly. Um if I'm just brutally honest about it. Yeah. Uh I mean like change in a big enterprise will take a really long time.

I think what you'll see is these web two companies, um you know, whether they're like wallet companies, gaming companies, ride-hailing companies, e-commerce platforms. I think you're going to see them install uh stablecoins as an option for payment and remittance and and movement of money. And I think that will create an onward traction, and you're starting to see that with this case use cases like SAP for example. Um ultimately like I'm not a big fan of pushing technology or solutions where there's no problem, right? And I think there's just so much latent demand for the problems that we face in the world that need to be solved today, whether that is um you know, dollars exporting dollars to people that actually need it, um you know, the use case I talked about before like security of money, movement of money, um and there's just so many people, like literally billions of people, especially across emerging markets um in Asia, Africa, um Middle East, and and Latin America in particular who need it and have huge latent demand for it.

And I think as you know happened like ages ago like more than 10 years ago I worked at AWS and when Amazon Web Services broke through in the cloud, yes, I was working in the enterprise division and we were trying to convince enterprises but the startups did it first. Yeah. They started scaling, enterprises get FOMO and they follow. And I think that's a very typical stage of how things will happen and I anticipate that's exactly how it's going to happen here. We're starting to see some unlock here in Asia, you know, you'll see some interesting announcements coming ahead which will show you some of that unlock starting to happen and I think that will just create this huge wave of people going if they're doing it, I need to do it and then I think you'll see dramatic movements in the next sort of 18 12 to 18 months or so with with big brand names unlocking the availability of stable coins.

Yeah, I think it'll be silly if they're not looking at stable coins, right? But every wave you bring in more adoption. Yeah. Vincent? Yeah, I agree.

I think um for us it's really the enterprise is really need to look at how stable coin can improve their business, improve the efficiency of their business. And you know, it's not our job, it's not my job to actually promote and say okay, you need to do this to help you. I think it's it's it's a thing that um trends it's about um looking at how easily they can do settlements and for for using a stable coin like in the NFT market, right? I think the currencies for settlement in NFTs, people are thinking that NFT may be something they will use for payments in the future. But if that's the case then NFTs of obviously won't be a utility, right?

So there is uh there is a you know, I agree that these enterprises there are there like web two there's still a large gap between web two and web three, I believe. Right? These e-commerce companies the biggest challenge is about settlement between the you know, when I buy something I have to send money and the banks can freeze it intermediate banks can say okay, what is your source of funds source of and that delays the trade and when something is delayed there's cost goods are not delivered on time. So that is eliminated by using a stable coin for settlements. For sure.

Yeah. Yeah. Yeah. Um I think we have a couple of minutes left. I'm just going to ask a last spicy question.

Which one do you prefer decentralized stable coin or centralized stable coins? But I think What was the question there? Do do you prefer centralized stable coins or decentralized stable coins? Um well, I mean I have to show a bias naturally because we're what you would call a centralized stable coin but I am also a deep believer in the crypto industry. So I do think that you know, there is a future for different types of stable coins.

You know, there might be ones you know, such as die is proven which are decentralized and there's going to be others like ours which are centralized. Now each one of them comes with their own benefits. I think decentralization is obviously core to the ethos of crypto but they will struggle with bringing the masses of people on because it goes back to the problem of how do you get people into the ecosystem in the first place, right? Not everyone can mine something to get into the ecosystem. They still have to transfer money from somewhere into the ecosystem and I think that's the role that centralized if you want to say centralized stable coins can play and we also play this part of like going around the world and being ambassadors for the industry and saying how good this is as a technological innovation, as an innovation for financial markets to allow regulators to start accepting this.

I would say whether centralized or decentralized, my greatest concern always is the protection of the end user. We cannot absolutely have a situation like we had last year with some of the the algorithmic stable coins because that's not in the interest of anyone. And so we do absolutely have to set some guidelines as an industry around what defines you know a stable coin and the protection of it. I think we're doing a good job on the centralized one. Maybe you have to do another similar job on the on the decentralized one at some point.

But yeah, like I I have a preference for centralized but I think each play their part. Awesome. I think Ragulan just laid down the gauntlet to build a better decentralized version. So yeah, how how are you guys thinking about it? I think my spicy take is uh I don't really think we have decentralized stable coins.

Uh Not something that's working really well at this point of time. Yeah, or even like Dai was the example you used there. Dai is whatever 30% USDC anyway and it's filled with bonds. So I think the word decentralization is actually slightly too broad when we're sort of talking about these things. I think narrowing in that definition to ask what is the quality that you're trying to retain and how has that stable coin sort of retained that quality and so I think in our mind it's censorship resistant rather than the sort of like broad definition of decentralization.

And I think there are some stable coins that sort of achieve that. There's like Liquity which is similar to Maker DAO but but doesn't have sort of like the RWA component that's sitting within there. I think that's a good example of something that's decentralized but the common I would have is like the market has clearly spoken that they care more about liquidity. They they care more about sort of ease of use compared to those type of stable coins. And if you're not listening to the market, I think you're sort of doing yourself a bit of a disservice.

So, uh my spicy takes are I don't think there are really any decentralized stable coins at scale that sort of exist now. That's true. Yeah. Any last comment? Um obviously same, you know, I'm a biased towards centralized stable coins.

That's because I think it's it just needs to be very simple, very easy to use. You know what it is, you know where it's going. And about who's going to be using them, the adoption of stable coin, centralized stable coin is like money, really. And uh for for different generations to understand that, because even myself I find very difficult to understand some of these decentralized stable coins, how the full functionality of it, what's the technology behind it works. But for me, centralized is because I, you know, I wear I wear this hat every day.

As long as it's working, right? So, I think just to conclude the panel on behalf of the crypto industry, whether it's decentralized or centralized, please keep it stable. Actually, the one thing I would say is that I don't love the word stable coins. That's a controversial way to finish it. I prefer the way to say digital dollars or digital money because we can I think the biggest fault we do as a crypto industry is getting really stuck in our terminology.

That will keep us on the fringes. So, my big encouragement to everyone is start speaking a language that the general public can understand. And digital dollars, digital money, this is how we're going to take us from like a couple hundred million users to the billions of users, which is the promise of our industry. On to the next billion. Thank you so much.

Let's give the panelists a round of applause. Thank you so much.