Fireside Chat: Jeremy Allaire - TOKEN2049 Dubai 2024

wow what an intro guys good morning welcome to day number two of token 2049 we're going to have a lot of fun today over the next couple minutes we're going to talk about the entire stable coin Universe what's happening not only with usdc and circle but really cross the ecosystem so a lot of exciting topics to cover with you all today but of course this is possible because I'm joined by the co-founder chairman and CEO of circle Jeremy aair Jeremy great to have you with us thanks but a fun fact about Jeremy many of you know him as the CEO of circle but he's also has a hidden talent uh which is by he's he's a Avid beatboxer so here we go the talent everybody in crypto has a special talent s we we we find out about Jeremy great to have you with us before we start a conversation maybe can you give us an update or where things are are right now with circle but especially with usdc I just saw you guys cross the 30 billion Mark but maybe give us a bit of a snapshot where things are sure um yeah I think uh you know a lot of different things I mean first is um yeah usdc has been growing a lot over the past uh past quarter or two um and growing in terms of absolute market share um but I think the some of the biggest things are you know we've just been continually improving the fundamental infrastructure of this um you know I think one of the one of the advantages that we have and have had historically is that we've always issued usdc under regulatory framework and we're now seeing uh you know essentially stable coin rules coming into place all around the world um and alongside that that's enabling us to really expand the market infrastructure that supports usdc so we've brought online uh essentially local banking infrastructure in Singapore in Hong Kong Kong in the EU we're in the process of rolling it out natively in Brazil and Mexico Japan ultimately in in the region here and and other places and the the key thing for us is we want to make sure that at a kind of a wholesale level that uh it's very very easy to create and redeem usdc as quickly as possible as capitally efficiently as possible so we've been building out that kind of global banking infrastructure working with you know dozens of banks uh who are who are you you know trying to um you know support the growth of this ecosystem uh the other is just advancing the technology of the protocol itself so we think about you know what we do is operating a stable coin Network and that Network includes the protocols those protocols now exist on 16 blockchain networks we're continually improving those protocols to make them more efficient add new features uh we launched a cross-chain transfer protocol which enables for teleporting usdc safely across these different ecosystems which is really significant and so we're we're making that infrastructure um you know faster and easier to use um and then you know working with developers in hundreds of countries now uh who are building on top of those protocols and building applications utilities and other things uh to help grow uh grow the stable coin Network When you mention these 16 different protocols I mean when you look at five years down the line do you think there'll be consolidation or it's a way for Circle to hedge its bets if you want or do you believe actually the this is just going to continue to grow as the web three ecosystem grows so you know my my background is in Internet uh infrastructure software so I got started building web programming languages uh virtual machines application infrastructure and I've worked in a lot of different parts of the stack of Internet infrastructure and my general view is that um blockchains are are a a new form of of distributed internet operating system and um you know effectively there is a lot of competition for those uh those operating in those operating systems trying to attract developers and applications and the like but I think um increasingly right you're seeing the layering model as something that is is is relevant and as we all know right the the tradeoffs in terms of performance security uh privacy other things that they're they're they're not perfect tradeoffs I mean they're they're people who I think believe that they can meet the scale needs of every application every user on a single layer I think the the layered model is going to continue to grow I think you'll see more and more I me take for example if you're a a giant consumer Scale Company in India and you want to uh use digital tokens as a mechanism for your end users yeah and and you're going to be minting and managing the life cycle of these digital tokens and you ultimately need those to be interoperable and portable uh with the global internet you're you're very likely going to do you know you know what people might call an app chain or a layer three or you're going to create your own um kind of compute space your own store of of of data and memory and you're going to kind of Hive it off just like in Amazon we have virtual private clouds like everyone doesn't stick all their stuff in one Cloud you have vpcs and you want to be able to Hive off your own data your own compute your own network perimeter Etc there's going to be these kinds of scaling models as well and so um there's a lot of really good competition in that infrastructure area but and when on this point you mentioned inia right now when again five years down the line do you believe that majority of the activity you'll see on this kind of stuff will be in Emerging Markets I mean if you look at today obviously we have a problem with remittances we have a problem when it comes to crossborder transactions but when it comes to within a country most transfers are are working fine on what you just mentioned on the stack for example do you believe there'll be a faster acceleration adoption in EM Emerging Markets compared to uh the developed world so I guess my my my view is that we're we're really just in the early stages of the development of the internet Financial system and uh we're we're talking about a today it's it's a a tiny tiny fraction of the current scale of the of the Global Financial system but the internet Financial system I believe ultimately will increase global economic output um we should see an acceleration in economic output in the world because of the internet Financial system and and what it allows for so when you think about the market today um you know the the market for existing forms of electronic money um you know just Fiat electronic money it's about a hundred trillion dollars uh and so um you know clearly just you know stable coins themselves have have significant Room to Grow um but then the intermediation that goes on uh that's involved in actual economic output so credit intermediation uh you know time value of money uh intermediation um I think more and more of that will move into this onchain world as well um but I I think I I don't think the right question is necessarily is it Emerging Markets versus developed markets it's like the internet is awesome in every country in the world okay like internet communications platforms are awesome in every country in the world yeah the web is awesome in every country in the world uh you know meaning these general purpose infrastructures achieve scale and they deliver 10x or 100x better utility than their predecessors like there was a time when oh yeah I could make a free long-distance telephone call in the United States well why would I need uh you know voice over IP or whatever is that the point is that um uh you know a a model of money where the marginal cost of transacting goes to zero and where money itself becomes a programmable composable form of data and object on the internet unlocks utility in a way that's never existed before and that's going to be hugely valuable in the biggest Capital markets in the world it's going to be hugely valuable for the biggest corporations in the world in developed markets and it's going to be hugely valuable in in um in in international markets that's not to say that there aren't going to be use cases that achieve scale first in certain places so yes we are seeing dramatic amounts of activity happening in crossborder you know applications of stable coins today that's like a very significant growth driver but I think when you step back and you think about the building blocks of the internet Financial system and what that represents to me that that's global scale and will touch every Major Market but on on this point Jeremy so when we talk about the internet internet Financial system right if we look today at the global crypto uh let's say the stable coin ecosystem right what do you think that people want the regulated USD stable coin to use for example we look at right now tther obviously as the is the biggest by market cap right in this internet of like the the this new Financial system that's being developed what do you think people are looking for right well I I think you know um I mean look in in a in a in an early stage Market which is sort of dominated by like offshore unregulated exchanges and it's mostly about speculating on different things right that's one thing okay the internet Financial system is clearly about actual economic activity so if we want this to be useful it has to be about actual economic activity and that means about people who are investing saving businesses that are needing credit that are building things that are hiring people actually producing goods and services that's the real economy so if we want the internet Financial system to be used in the real economy not just for speculating on memes like we have to have we have to have um you know digital currency Fiat stable coins that are treated as real money that are cash equivalent so that if you're a financial institution you can take this and you can hold it as collateral yeah if you're and and and settlement if you're a corporation you know what this is your accounting firm you're formerly from a large big four uh you know Universe right so a a an accounting firm can say this is a cash equivalent instrument I can treat it this way I can report it this way the the the the entirety of this we we have to have legally defined forms o of of stable coins and that's what's happening around the world by the way which is great once you have these defined as like a new form of legal electronic money instrument then actually this can take hold at scale for real economic activity and so that's really key we have to have that if we don't have that we're not this is not going to take hold as the basis of the internet Financial system and you so so that's a really really key piece and do you believe the US dollar like usdc or let's say right now we look at the global uh stable coin ecosystem US dollar it's all US dollar denominated for a vast vast majority of it right it's very interesting because as you mentioned you're going to different countries you know the if you're an you're a central Banker of an emerging country your biggest one of the risks you have in a way is that the economy comes dollarized if you're doing a bad job which is in a way people have the option to switch to dollars or other currencies when and we're seeing this from anywhere from Nigeria to Turkey to Argentina and so on and so forth right how do you balance that from your perspective when you're going these different markets saying hey we have a solution right now it's a US dollar based one and versus the country's owned Central Bank from a policymaking where they want to have their own currency and control it because this could accelerate the dollarization by the stable coin uh usage well you know the internet has created um these extraordinarily powerful utilities that exist just using software that anyone who has a device can connect to and and and people around the world have sort of said hey I I like this yeah you know WhatsApp or whatever example you want to use um the ability to freely publish information to any person anywhere like there's sort of these supercale things that the internet has produced that in most societies uh people people like really desire and then um it's hard for the governments to put the genie back in the bottle on those now money everyone says money is different and so on we we have we have a challenge right part of the challenge is that the vast majority of governments in the world are are are um they're kind of bankrupt right that that meaning they're in debt they're massively in debt uh they're trying to monetize that debt um we we have huge issues with fiscal discipline um you know it's a it's a strong you know it's a strong reason why non-sovereign you know digital commodity money like Bitcoin is so attractive is is in the face of that um but um it does you know the combination of sort of Internet scale Financial utility based on things like digital dollars or digital Euros um and and you know effectively like this very very high utility value that will come from those combined with the fiscal and monetary challenges that face many many countries I do think that there's something Brewing there it's going to be complicated and it's not clear exactly how that will get resolved but I you know I I have you know I do believe that individuals and and firms will be able to vote with their sort of software products what economic system they want to participate in and it's going to involve you know it's going to be a complex issue for for a lot of jurisdictions well you can argue it's happening right now with many countries I mean look at Turkey where basically just run on stable coins now for big chunks of the the economy one thing as well on this point which I think is is uh is interesting like you guys have done a pretty good job actually on the defi space for example I see so many def5 protocols now where the usdc plays a pretty interesting role well when you look at the future of the stable coin ecosystem we've had obviously some incidents last year with us now there's an interesting thing with atina and other projects going on how do you find the the future of stable coin issuers do you believe in in five 10 15 years in this new model that we go in it'll be centralized companies will be running it or it'll be more the the next algorithmic stable coin of thisa or a version of atina that will you'll see in the future yeah I guess um I I I I think um if we're talking about sort of what's going to be used for real economic activity yeah that is going to be used by households and firms and financial institutions you're going to need to have legal forms of uh digital currency money um and those are going to be regulated issuers and those are going to be fully reserved uh so you're going to have a full Reserve Financial system not a fractional Reserve Financial system and you're going to have re strong supervision uh around those and I think that those are going to achieve fairly large scale those will grow into the trillions of dollars in circulation now that doesn't mean that there aren't going to be other um other experiments in stable value tokens there are obviously there there are all I mean look synthetic derivatives uh that that attempt to achieve a peg that provide some underlying basket of risk management and yield like that's a that's a separate thing so synthetic Securities and derivatives that are designed to generate and pay yield those are other types of financial products so those are those those types of financial products will get regulated differently they will not be regulated as payment systems General Society will not depend on those as payment systems that corporations financial institutions will not hold those on their balance sheets as collateral but people who are you know are trading investing seeking yield who are you know risk managing uh are are very likely going to purchase Securities and derivatives that you know manage their their risk and and their yield so Securities and derivatives play a huge role and I think that synthetic dollars that are securities and derivatives are going to continue to grow how those are regulated as an open question right I mean I think we're seeing enforcement around these historically so I think how do you register these how do you regulate these how do how do people access those or you let code regulate it in a way well yes uh I I think um you know the whole code is speech isn't going to work uh for everything yeah uh like it doesn't work for AI like we're going to regulate what what AIS get produced so I I think it's it's more complicated than that so Jeremy we have 60 seconds left my bell is here I'm going to ask you quick questions I need one or two Word answers and we kick it off from there you ready sure what is the biggest risk we're facing as a crypto ecosystem for the next three years one more time what is the biggest risk we are facing as a crypto ecosystem for the next three years um the biggest risk that we're facing for the next uh two years is um catastrophic failures continue with uh un you know with with with uh problematic uh companies and projects in crypto if you could go back to school today what is the one course you would study that you wish you had studied before uh synthetic biology W interesting what is the best advice you ever received if you're stressed take three deep breaths if you could hold one crypto asset for the the next 10 years not usdc what would you hold I don't like those questions if you could go back in time any time in history what time would you want to go back uh that's that's a great question um I think I i' I'd like to go back to the enlightenment Enlightenment wow interesting and last question Jeremy to finish it off T typical question uh if you could have lunch or dinner with one person Dead or Alive lunch or dinner one person Dead or Alive who would you have with um prob probably an ancient relative of mine that I can't name right now ladies and gentlemen Jeremy C cirle thank you Jeremy thank you