Stablecoins and the Trillion-Dollar Payments Shift - TOKEN2049 Singapore 2025

Hello everyone. Happy Wednesday. It's Wednesday, right?

I don't know.

Beautiful midday in Singapore. It's pretty hot out, but I am on stage with some of the biggest names in crypto. So, I'm super excited to sit down with you guys. And stable coins topic of the day. I feel like stable coins is the topic of every single conference that I go to right now.

Um, and I would argue that 99.9% of people in this audience have stable coins. They use them. They love them. And there's definitely a product market fit.

But what about outside of the industry? I think that is probably the topic of discussion that I want to lay the land with with all of you. How do you kind of think about adoption from a mainstream perspective beyond where we are within this industry? Because I would argue most of these people have stable coins and use them every day. How do you think about getting it to the hands of the average person?

Paul, go first. I'm looking at you.

I will go first. Hello everyone. Um I think that um the actual I mean talking from my point of view as Tedar and USDT what we are seeing is that 35% of USDT users we have around half a billion users 500 million users across the emerging market developing countries and about 35% of them are uh in fact using USDT as a saving account. On top of that, 70% between 60 and 70% of the transactions that move USDT move USDT alone. That tells us that people that are a lot of people that are using USDT are using it as their currency, as their mean of payment, as their savings account.

So I think the beauty of uh of what we are seeing with with USDT is that it kind of started to decouple from the specific usage of as a crypto rail. Of course that is still important but at the same time it it is reaching the broader utility for all the people that don't have access to dollars in the emerging markets. Think about people in Turkey, in in Argentina, in Vietnam, in uh you know all the people that are underserved, underbanked that they have been left behind by the traditional financial system. That people not necessarily are in crypto. They don't ne necessarily are interested into buying some, you know, volatile tokens.

They they look forward to have stability in their lives. They were used to buy cash dollars in the black market in the streets and now they just found a better way through stable coins to hold dollars to hold the stable value. Stability is again relative. So they hold stability a stable value compared to their local currency of course the ultimate uh inflation hedge. We all know that is Bitcoin.

How do you think about the broader mainstream adoption Charles? So I think um probably was about a year maybe a year and a half ago where you hit an inflection point where stable coins started to be used outside of crypto

and so I think that was a and it started to build and then you had the Genius Act pass where you had the the administration change uh which changed their view on stable coins um in terms of embracing it and then of course the Genius Act and that has just led to a complete change in um the wind being in your face to the wind being from behind. And now with the Genius Act passing, you didn't need the Genius Act pass to have stable coins. Obviously, we've been issuing stable coins uh for years and years and years. Uh but you probably remember this like eight years ago, issuing stable coins. Everyone's like, "What's the business model?"

That doesn't make any sense. Uh it's not that interesting. uh or you know and you know of course interest rates changed and the world changed and you can now see how stablecoin is providing both a better rail which is kind of obvious you know 247 instantaneous uh programmable completely transparent uh virtually free that's amazing but it's also an account as Apollo was saying and um you know that wasn't all that obvious too long ago now that genius has passed um and it's made uh a clear legal framework for how you issue at least in the US but really setting standards probably for the whole world. Every institution in the world that is moving dollars especially when you're moving them across border you're moving them uh for businesses you're moving them in complex ways is trying to think how can they use stable coins and um you know there's an enormous stock of dollars that are moving inefficiently and it's the reserve currency but it's also the most inefficient currency and the most expensive currency to move around. So that's part of the reason why I think everyone wants to talk about stable coins now is because you had this fundamental change in the operating environment.

And it's not just being driven by the crypto price anymore. It's being really driven by adoption curves from large institutions, small institutions, new fintex starting up and being able to offer products in a way that just was never possible before. Uh it's really kind of a golden age for stable coins here. And then I want to double click on this a little bit because Paulo talked a lot about like the demand for US dollars and emerging markets, right? And I think that's been a lot of the Tether story and we've seen a lot of that especially across Asia across Latin America um you know Africa but you know we did a report with a business called Artemis which does a lot of stable coin data earlier this year and by far and away the fastest growing area of adoption usage right now has actually been crossber B2B.

So this is very much a SMB story, not like necessarily a large enterprise story right now, but you know, we're looking at um a $200 trillion market. It's about eight times bigger than the retail uh crossber market and remittance. And we've started to see those companies, those people who operate in those um you know, call it like emerging markets, but maybe also you know, not just tier one markets, but but tier 2 markets who've understood that they're not well served by correspondent banks, right? and they want to be able to utilize a technology that has frictionless money movement that treats them better, that serves them better than the banking system, which our legacy financial rails has served them. And so that's where we're seeing a lot of adoption across our portfolio is this you know call it middle market of of of businesses u along with the dollar access where as they accept stable coins as they use stable coins as they use things like you know um rain cards to pay for expenses like that has allowed for stable coins to be a just a lynch pin of how they operate everything that they do versus having to go call it from stablecoin to fiat and then you know back and forth and and having fiat be an everyday part of their life.

And so as stable coins are not are are the end point and are the things that people hold, that means that now you don't have to have fiat and you can start using it everywhere else and that will really proliferate I think the usage for you know uh both from from businesses and from the retail users themselves.

When it comes to investing in different stable coin startups, I'm sure you get hundreds of pitch decks on this front. What types of stable coin or payment opportunities do you see um hitting your desk that actually interest you?

Yeah, so we've definitely seen, you know, hundreds over the last year. I think uh I have striped to thank for that in many ways. Um what I tell people is you have to do the hard things, right? And so what what is crypto made easy? What are blockchains made easy?

They've made the money movement or the movement of value in information a lot easier than it was before, right? Like we had things like swift and correspondent banks who did that. We don't need that messaging system anymore. Now what we need is people who do call it the edge cases really well, who do last mile, who do they do compliance really well, who do the or face off with the distribution directly to the end consumer really well. And so what I tell people is like what is differentiated about your product?

Because if it's an API of APIs, if it's just somewhat sort of middleware layer, like often like you're not really doing anything better than you could be doing for uh directly on a blockchain itself or you could be doing through um or you don't really have value capture. you don't really have a moat in that case. And so do the hard things. Think about the last mile. Think about the end distribution.

That's where we're seeing people, I think, win today as issuance becomes, no, no offense guys, a little bit more of a commodity these days. I mean, Charles, Paulo, you both run very successful businesses. Um, and before you were talking about the Genius Act being passed, which has really given like a tailwind to stable coin adoption, right? So, everything seems pretty optimistic, but what is keeping you guys up at night? what are you afraid of not really helping scale this uh sector?

So um from my point of view what we are trying to do at Tedar is to capitalize on u our position in emerging markets. Again I keep talking about the emerging markets because um definitely there is a lot of interest uh on stable coins also coming from the United States but we think that the real opportunity still sits with the emerging markets. there are around three billion potential users right now we have half a billion so we can scale up much more at the same time I'd agree with the with you on the fact that what matters is distribution right so the technology behind stable coins is not rocket science of course you need to have uh now with the genius act you need to have licenses you need to have compliance robust robust compliance teams but same time the technology is very easy so what matters is distribution so you know that is I think what we got right at Tedar. From the beginning, we started buying distribution channels, invest in distribution channels that goes from chains of shops in Central South America to kiosks in Africa and Asia. Those kiosks and those shops where you can buy a phone credit and you know every week you go there, you buy something and um and those that um huge distribution network.

I think that um it's ted built the biggest physical and digital financial distribution network in the world with boots on the ground with hundreds and hundreds of thousands of these touch points uh that are unique to us that allow us to keep scaling on even the smallest communities in Africa and and so that we what we are going to continue to do because I think that we need if we want to create this global monetary network that uh empowers the people the poorer people living in emerging markets and put them in contact with um let's say the richer people living in the western world. I think that's what we should be doing right otherwise um stable coins will remain just a niche for for who has already a lot of access to finance that would be United States and Europe.

Is there any distribution network that you struggled to tap into? uh I must say that we are doing a fine job covering all the bases for example everywhere it's not only physical uh if you think about it we uh we are major shareholders of uh a social media platform called Ramble in the United States they have 51 million active users in the United States and soon we are going to in partnership with Ramble uh Ramble will launch um the Ramble wallet um that will be based on wallet development kit that is called WDK that is tether wallet technology that will be released later this year will be fully open source and the aim there is to prove how we can convert 51 million active users you mostly United States to use stable coins uh within the United States. So the most sophisticated um country nation for for financial rails but at the same time empowering them to use stable coins also to interact with the rest of the world for remittances crossber payments uh commerce and all that.

Charles what about you? What's keeping you up at night at Paxos?

Well, I think the market is in such an interesting point because you are going to be in a position where you probably have more than two but less than five major stable coins that are Rails and then you're going to have probably hundreds or even thousands of other stable coins. And we already see this starting to happen where, you know, almost every chain is going to want to have a a stable coin. You see, um different businesses want to have them. In some ways it's like branded credit cards or uh rewards programs or loyalty programs and uh there can have various levels of success but it's going to create um in some sense fragmentation at the same time that um I think you're going to have a um consolidation that happens and um you're going to have the need then for uh bridging technologies uh orchestration technologies but you're going to really also have um a lot of importance placed on uh solving problems at the edges kind of what like Paula was describing or and Robert was describing u you need to find where the unmet need is uh for people uh you know if you want to go down to your local grocery store and pay uh the current payment system works totally fine you don't need a stable coin for that um where do you have problems it's moving money across borders it's I want to be able to have dollars but I couldn't before um it's it could be consumer it could be business it could be in certain FX transactions where you have lags Um, so there's actually quite a few places where you have enormous friction in the current system and you don't need to have scale to be able to solve them. And then there are big problems within the current system that you need scale.

And in order to get to scale, stable coins have to get much bigger. And then you can solve problems in like maybe wholesale markets or trading markets outside of crypto with stable coins. It's not quite there yet. So it's still um even though stable coins are quite big at almost getting close to $300 billion that's kind of tiny in the drop of the monetary bucket um where there's like you know hundred uh billion dollars probably growing 10% a year um and so anyways I think there's a big opportunity here uh for obviously stable coins to completely shift the entire financial system uh but it it really is going to require ecosystems to be built around solving these problems on the edges. Mhm.

I was at another conference last week. I was at a dinner. I was sitting next to a executive of a well-known Japanese bank and he essentially told me they've been working on a digital asset strategy for over a year. Um, and essentially a lot of it comes back to stable coins and a lot of times in crypto we talk about the tech and the payment rails and all these different things that make um everything faster, more efficient, etc. Which I'm sure you all know um is a definite talking point and I think it resonates with a lot of people.

But with this person in specific, he was saying that our company doesn't really care about making the tech faster. Um, what they care about is profits. And so, how can we use stable coins in a way that allows for profit driven adoption? Um, and when we think about this trillion dollar payment shift, you have to think about institutions. So if that's the way they're thinking about it, how do you guys kind of have those conversations with them and say, "Okay, yes, the tech matters, but here's how you could kind of operate in a very profit driven way."

Well, go ahead.

I mean, um I think we we did a fine job in uh at Tedar on um proving that improving the financial rails for billions of people um or hundreds of millions of people can lead to good very good profits. Um, I think that if you design a technology profit first, you're going to fail. So you what you want to do is to create something that is uncompetable so that you become ubiquitous and then that's how you win. The more your technology is adopted, surely you can find a way to monetize it. When Tedor started in 2014, we didn't have a clue of how we were going to monetize it.

Um, until 2022, interest rates were almost zero. So, the the revenue model was um very diff different and difficult on on stable coins. Of course, now that u uh stable coins are, you know, bound to um for example, US treasuries and the the yield is still like above 3.5%. is a juicy profit for everyone.

But um if you design stable coins thinking about maximizing the profit now what happens when most of the profits will go away because maybe in 5 10 years inflation will go back to zero. I believe that inflation will not go to zero but nevertheless I mean I like to design technology that can survive no matter is what is the condition of the world. So I think that they should go back to the whiteboard and and uh redesign their incentives model. Mhm. I agree.

But that's a bank for you.

Well, I would actually invert the question a little bit, which is um it's not so much um it the opportunity is really that other people's profit margins can be completely shifted by adopting stable coins and that's going to unlock value. I think there's a couple ways. One is um you can start democratizing access to the risk-free rate. In some sense, stable coins are about democratizing access to dollars. And by the way, that's really important because it's generally not available.

Maybe 5% of the world can get access to dollars without stable coins. Being able to democratize access to the risk-free rate actually changes the value acrruel from the firms that are holding that until to the end user ultimately and um being able and that's banks and all these institutions that are holding uh the yield back and um I think you can now start to see a world where uh by taking that interest making it available to people who couldn't have it say merchants who are holding dollars uh end users who might be holding dollars. You're going to have a complete different way to acquire customers. And um I think we're starting to see this with like some of the actions that are happening in the payments industry. How can you change around payments so that the interest is now going to acrue uh to merchants and to end users in a way that means you don't have to pay for payments anymore?

Uh you could actually like be paid to accept payments. Um it could be a complete shift for merchants in many ways because of where interest rates are. And so that is actually a way of taking uh profits that are sitting somewhere else, giving that to the end user and creating a user experience that your customers are going to like and that will drive adoption and adoption is ultimately then what will create a better uh flywheel for your business.

I think what's really interesting here is you two both have essentially completely different models, right? Like Tether doesn't really share yield whatsoever. you and your and your largest uh stable coins often share the yield back to at least the business itself, right? And when I talk to businesses and when we think about like what is it that gets the banks excited? What is it that gets the Fortune 500s excited?

For them, it's almost never, hey, we want to, you know, we want to cut costs. It's always we want to drive revenue, right? Like, you always seem to get somebody who's a revenue driver. And for them, the conversation is often, okay, well, can we, you know, own the economics of the money market fund or the yield, right? as as Chad was talking about and they wonder why if there's all these deposits on their platform why are they sharing that with you know a stablecoin issuer why shouldn't they own that because they own the end customer they they have the distribution seemingly they have a better moat right and so there's a lot of conversation around that and I think stable coins if you go kind of to the next level on the payment side we've also started to see conversation around interchange right so in banks essentially have this monopoly on interchange and payments are more costly today than they need to be because of that right if you can replace the issuer bank.

You can, you know, put in some sort of techn technology solution that's maybe stable coin backed, maybe uses like a stable coin card. I mentioned Rain earlier that that does this for some of their own issuing. I think there's others like then you can take the interchange away from the banks as well and you can share that with the end customer as well. So maybe for the the bank that you sat next to, they wouldn't like that story. But for the technology company or you know the e-commerce company the people who are actually facing off directly with the end uh customer that have the distribution they want to figure out ways to get rid of the intermediaries.

And I think a lot of what is happening in payments on stable coin rails is about getting rid of those intermediaries. The issuer banks the correspondent banking system the whoever the the end issuers are. They if you get rid of them you share more of that revenue. You allow for just like less friction in the system. everybody is going to make more money except for you know those who have built their whole businesses by just creating friction.

Are there any specific startups that you think are building that today? I've mentioned rain a couple times before the company of ours to be uh just to be transparent but um I think there are a lot of people that are trying I mean I think broadly that is what the whole stable coin industry is doing right the I mean these guys are the pioneers of it it's but everyone is trying to figure out a way to get rid of and and frankly I think like the community banks are in a lot of trouble right I think the issuer banks um I think Chad disagrees with me on this because we talked about community banks a little bit yesterday at a different event but I think there's a lot of people in the correspondent banking system who just do not need to exist anymore. And if we can provide internet money for uh that is more borderless that allows for more people to interact directly with the system, then we can get rid of a lot of these entrenched incumbents who who aren't supposed to who don't need to exist. And I think this is why you see, you know, we've talked a lot about genius already. There's um rulemaking that's happening right now and the passage of genius.

Genius doesn't actually go into full effect until early 27. And there's some lobbying in effect right now by the banking lobby in the US that is upset about the idea that issuers can share revenue with a you know somebody who has distribution like say a Coinbase does with Circle and then they can pass it on to the end customer right and they're upset about that because they say it's oh this is yield sharing with the end customer. There's just an intermediary in there and they're worried about deposit flight. And the reason they're worried about deposit flight is because they do not innovate. They do not want to compete on the economics.

They want the the regulatory mode that they've had that does not need to exist for any other reason than the fact that they've just been there and they think that they're they they're beholdened to it, right? And so in my mind, what we're doing now is we are creating innovation by pushing the boundaries and and it's not me, it's it's these guys that are doing that.

For both of you then obviously uh Paxus and Tether, they both have stable coins. There's many options out there for investors in the market today. How do you kind of think about the go forward offerings for stable coins in the US and then globally? Is it kind of a winner takes all mentality or you think there's opportunity for a handful like one of you mentioned before for about like five of them to really prevail?

Um I I certainly think there's going to be uh more than one. Um and I think there's probably going to be more than two even. I think it probably ends up like three to five. And uh by the way, it's not that much different from the current payment system. I mean, you have Visa, Mastercard, of course, and there's MX and then there's Discover and uh you kind of go down from there.

Um I don't know if that's a perfect analogy. That's not exactly what this is. Um but I think it's probably fairly close. Uh but at the same time you end up having this real proliferation and I was talking about that before but I definitely agree with Rob that you know part of the whole point here is that you know the marginal cost of operating in the financial system should trend towards zero. That means the marginal cost to be able to create a stable coin trends towards zero.

The marginal cost of being able to offer financial product should trend towards zero. And so you have this giant unbundling that happens as a result of this financial innovation. And eventually that'll um then lead to rebundling and some recentralization in some way that we probably uh won't like and there'll have to be a new wave of disruption. Uh but that's kind of like the history of everything. And so I certainly think that will happen here which is you're still going to have the um the traditional banking system intermediaries start to it'll start to break apart and create more opportunities just like it did in telecom, just like it did in media, just like it did in all other kinds of industries.

It just took longer to happen in the financial industry and it had to really come from a completely different uh angle. I just look at this conference token 2049. I mean this is not like a bank conference by any stretch of the imagination. And that's what was required because the traditional financial system is so regulated and has created such incumbency that you needed to have something completely come from a different angle and that opening up is just beginning. Uh, and so we're talking about it as if it's like, you know, almost finished, whereas like we're probably in just, I don't know, to use a American analogy, we're just in the first inning here.

And, um, so I think there are big opportunities and it's going to evolve in ways that we can't even truly understand right now because you're talking about systems that are so big and they're also so old. I mean, they just don't operate well. I mean, days to move your money, but you can order toilet paper to your house in hours. Like, how does that make sense? Um, it's basically the same technology that moves email is what moves money, but one is taking forever and one is instantaneous wherever you are in the world.

Um, these anacronisms are obvious to everybody now. And uh, but yet the disruption hasn't truly happened yet. It's really just at the very very earliest stages.

Follow, what's your take?

So from my point of view, we again I'd like to distinguish um different areas of the world. the United States. Uh I would describe the United States financial rails as 90% efficient. So if you put a stable coin in the United States, you need to find the reason of why people should use it. And so why they should um embrace a new technology on top of something that is already very very efficient and you know making money programmable is a or having t plus one settlements where one is 1 second not one day is great all that right so and for that in the United States people are used to uh have bank accounts and are used to get an interest on their bank accounts but I like to describe as um everything has been relative so if you are in uh Mosmbique in in Nigeria and other countries their the devaluation of their national currency is so fast compared to the US dollar that sharing the yield of 3 4% per year doesn't matter much when there maybe their national currency lost 50% or 60% year-over-year in Turkey the inflation last year in 2024 was 50% yearover over year there are 120 million people 110 million people in Turkey so I think that you know there will be many stable coins coins.

So which lot will focus on the local needs of every single country and few will coordinate all this global liquidity and the FX market can be on chain of chain and so on. But really thinking about one stable coin that can fit all the use cases I think is going to be harder and harder both because of regulations and certain countries regulations will make it almost impossible to operate at the global level and offer basically a product that you know fits the needs of 200 different countries and so that's what we are thinking at Tedar how we can actually start designing stable coins that are fitting the the local needs. Uh USAT is a great example. Uh I get a lot of question why you have two stable coins, $2 stable coins. Uh in the United States, I see uh the need of efficiency and the need of uh having a stable coin that speaks to the digital um crowd to the young population that um that does to the vibe coders for example to the AI economy.

But the eye economy is not the first focus of some of a community in a small village in uh Lagos for example, right? So thinking about the same stable coin and the same incentives to run a stable coin should fit both use cases of an AI economy and a person in a very small village in Mozambique is I think not the right approach. So that's why we are thinking about studying all these different use cases and on one side on USDT yes it's true we retain all the interest because we serve 500 million people that don't they want to ensure that tatter is um is strong stable and can maintain this um this product for the next 600 years uh without worrying to have to share every single basis point back to the user because again what they make out of using USDT is already infinite compared to what they can uh they make holding their national currency. In the United States, of course, the the incentive scheme is different and so we are designed US USA usat to be speaking first to who is investing a lot in tech and AI and the improvement of already almost perfect financial rails. the American opportunity front.

I think it's very different than the emerging markets as Paulo was talking about uh with inflation going up to like 50% 80% whatever it may be in America. Yes, we have inflation things aren't like perfect but the need for stable coins isn't necessarily the same. So what do you see as the American opportunity? Uh and we could start with Paulo because obviously you just launched USAT and then we could talk with you two as well because you are based in America I believe and so obviously you have a perspective on that front too.

So I think that um in the United States our focus will be on uh very much digital um avenues for the distribution of USAT our domestic stable coin. Uh I mentioned before the idea of using um our existing partners like Rumble with 51 million active users per month. Um one interesting point is that Rumble has um the highest average salary as a user base in um in in United States. So these are people that would uh that are maybe more financially savvy. uh the uh in 20 between 2023 2024 uh Rumble creators sold more than $800 million worth of gold um through the through the Rumble channel.

So um there is an entire economy around these type of social media platforms and we believe that ter if we create a wallet as a distribution channel for stable coins and for uh product proper products that can fit the use cases of United States, right? So like again a tokenized gold is is a good example. I know that you guys have also a tokenized uh gold product. These are things that I think very are very fitting for United States. Um so a wallet that can um be become the payment mean uh allow people to maintain control over their own wealth compared to having money in a bank.

I was hearing people still also in the United States a uh some crypto funders were debunked in the last administration. Uh thankfully this administration is much more keen on crypto but u you will see maybe in the future more and more people being concerned about keeping the entire wealth in in banks and so keeping part of their wealth in stable coins and other digital assets um in the United States is going to be more and more important and so having a way to offer them custody and a way to transact. Um, keep in mind that also in the United States there are a lot of experts coming from Mexico, El Salvador, Argentina. So these people are sending money back home and the best way to send money back home is through stable coins. So we are speaking to that crowd because we are we know that very well.

So digital plus remittances that uh originate from the m massive um remittances corridor coming out from the United States.

Um so you know we actually issue stable coins out of three jurisdictions. uh one is here in Singapore, the other is out of New York, the other is um in Abu Dhabi. Uh so we actually have a pretty broad um uh issuance platform because we're trying to be neutral infrastructure. We're not trying to create one stable coin uh that is going to try to rule them all. That's not the idea.

I don't think that's what'll work. Uh you have different ones for different communities. Uh we issue the PayPal dollar for PayPal as an example. We issue USDG on behalf of 80 different institutions. Uh we in the past have issued the Binance dollar.

Um so there's different um uh companies and there's different communities that have different needs and um what we have done is create a multi-jurisdictional compliance framework so that our stable coins are able to operate in all types of different markets. So in the US we're issuing from New York here we're issuing through an MAS entity. We're doing something in Europe we have a uh issuing entity uh in Europe as well. So we're Mika compliant and so unlike really I think any other stable coin uh issuer uh certainly as a infrastructure platform anyone can come to us and you can now have a stable coin that is able to operate in many different markets. You can operate in Europe, you can operate in the United States, you can operate globally.

Um and so you can kind of choose your own adventure in a way. Do you want to um be in the US market because you really want to make sure that you can uh solve problems that are related to like Paulo was describing. Do you want to be able to operate in Europe? Uh do you want to be able to do different things in uh global markets or the in Asian markets? Um nothing's the same.

Uh all these markets have nuance to them. And so our goal is really to work with end distributors. We're not trying to distribute these dollars ourselves and distributors that are in these local markets and have that expertise and understand what the needs are of their customers.

I think you you originally asked like what was the the opportunity for us, right? And I think Paulo touched on one which is is remittance. And I I think by some data I think Artemis put out they think something like 10% of the remittance from US to India is now in stable coins. Something similar to that US to Mexico. These are two of the biggest remittance corridors in the world.

Like so that's obviously you know very positive for the US opportunity. I think the question becomes is how does it go from remittance for emerging markets it's still very much an emerging market story even though it's originating from the US to how do Americans want to interact with it every day? I think there's two things that are happening. One is I know of probably a few dozen Fortune 500s right now who are doing RFPs essentially to try to put stable coins as part of their treasury management solutions. Again, your Coca-Cola, you 80 get 80% of your water from Western Africa.

You want to be able to pay your suppliers, but you don't actually want to park the money in Western Africa, and you also want to be able to continue to get yield. So a business like that, a multinational who even if they're served by JP Morgan is actually frankly like usually unhappy with JP Morgan if you talk to them, they can understand that they can take more control. And we're starting to see a lot of that. I know some of these that are these names out there that are doing this are very very large names, right? I think the next question is like do we have to have fiat at the end, right?

And the more that we can we make stable coins usable and it can move like the internet then the less that we need fiat and the less that you know or the more that people actually gain from being able to stay in stable coins because it is lower cost because they don't have the same interchange because they can actually get intraday yield or a programmable yield that is and and I think for pel also talked about the agentic economy nobody knows where that's going but I think we're all you know in some way believe that there is going to be an agentic economy. It's clear that the ability to move more freely outside of traditional banking rails is where people make money and where people get more excited. And so I do think there's a US opportunity even if it's not quite the same of the you know US dollar access focus that we're on we're focused on in emerging markets.

Right. Taking a step back from just the US specifically and more at a global perspective. Do you see stable coins replacing deposits then? And if so by what time frame? I think that it doesn't they won't replace deposits um in some sense.

They'll replace it in the payment system.

So the whole beauty of stable coins is that they're fully reserved dollars. You don't have to have fractional dollars. And so when you hold a stablecoin dollar, that's the like the safest dollar in the world that depending on exactly how it's issued. But in our case, we're issuing it from a trust company. It's held in the customer name.

It's not our liability. It's actually the customer's asset. They're holding the T- bill themselves. uh that's actually safer than any dollar you put in a bank at least up to the uh uh insurance limit where the government is backing it. Um so you can hold huge amounts of dollars and it ends up being safer.

It's safer than a money market fund dollar and certainly safer than a banking dollar and you want to have that in your payment system so that there's when there's another financial crisis and there will be uh you don't have the accelerator effects that you got in the last one. So it's great you separate the payment system from the banking system but the banking system is still going to make loans. It's still going to have fractional dollars in it. it's still going to um want to borrow money from people. A deposit is ultimately just a loan.

You lo you're loaning money to a bank. We call it something different which is deposit and it kind of obuscates it uh because it's a special loan, but it's just a loan. And so you loan money to a bank. That bank is able to then uh turn it through the multiplier effect into many dollars. And that's the special thing about being a bank and that's why it's highly regulated.

And so you're not going to get rid of deposits and you'll probably even come up with way to put deposits or let's call them uh loans to banks. uh you'll be able to come up with ways to maybe create them fungeable u be able to move them around in a way that makes it uh quite efficient uh versus how it is today where you know it's just held in that one institution and so you can be able to transfer it around but it'll probably be through stable coins be my guess so stable coins will be that mechanism that allows it to move and that's why I don't think that it's stable coins versus deposits and stable coins plus deposits and frankly banks have all of the end users today um and they have to do a good job of keeping those end users and to the extent that the end user wants to be able to send money in a way that requires a stable coin they have to be able to offer it and so I wouldn't look at that as competitive at all I would look at that as um actually complimentary and in some ways and this is where Rob and I have disagreed in the past but even like for like smaller banks it actually is a a big um uh big opportunity because they rely on all the larger banks to move money up and uh through whether it's crossborder or even in the US you're trying to do uh interbank clearing. It all goes to big banks. The smaller banks now could actually unlock um a lower cost curve and a way of helping their customers and giving their customers a much better experience than they get right now. So, you know, on one hand it takes away and the other hand it gives you opportunity and you just have to figure out are you going to embrace it or are you going to kind of sit there and you know uh complain about how you wish it was the old days.

I think it definitely eats into deposits, right? Right? I mean, there's a reason the banking lobby is specifically telling the US regulators they were worried about deposit flight, right? Like we have US

it doesn't need that much. There's $8 trillion of money market funds and that didn't eat into any deposits.

Uh but but we're in a different interest rate environment, right? So like I I do think that changes, right? And we the banks are actively worried about it and they're telling people they're worried about it, right? And like they're tell raising the flag like you know

complaining about money market funds for years too and it didn't end up being a big deal. you know the you like just you know money like the money outstanding just continues to grow right so I think that mass part of that right but if look at what Stripe is doing Stripe is saying okay we're going to have virtual accounts for SMBs US and global we're going to have them in stable coins and then we're going to offer you the full stack to issue or to to move stable coins between each other

that's different than a money market

yeah that and and that is there actively replaces a deposit for an SMB that by the way like they hate the banks because they banks do not serve SMBs well right and So, and the biggest problem these, you know, startups have across my portfolio and across many others is actually getting good bank accounts and getting good banking, right? And and so like I think it's it's not going to replace deposits. It is going to eat into deposits and it is going to require that the banks digitize and that they compete and that they come into the 21st century.

And well, I I will remake the the point that I made before that is true for United States. Everywhere else is different. Um so uh 35% of USDT users in this moment use USDT as a savings account and u definitely we see um and we think that people local currency deposits in all the emerging market jurisdictions will be affected eventually by the usage of stable coins just because there is an incentive to hold dollars and the best way to hold dollars in um in non- US jurisdictions is to have stable coins and uh and people are waking up to it and so that you know the the growing market cap of US proves that.

Mhm. Uh before we wrap things up, Paulo, you confirmed last week that Tether was raising a lot of capital between 15 to 20 billion I believe at a $500 billion valuation. You said it's to maximize the scale, but I would love to know two things. One, why are you raising funds when the business is extremely profitable? And then two, uh, people are speculating on an IPO.

Are we gonna get one?

So definitely not in the short term. But, um, I know the valuation of 500 billion is a bit cheap, but um, uh, we should

should have been a trillion.

Yeah, I know. I know

they don't write check. you deal with bankers you know it's like they try to now joking jokes aside I think that um we are seeing so Tedar we are very lucky because Tedar is very profitable last year we made 13.7 billion in profits this year I think we are going to top that but we are expanding different areas from um peer-to-peer local artificial intelligence to telecommunication to social media look at Ramble for example energy and uh we are building I believe Tedar will be able to build uh decentralized and electricity for Africa uh by 2030 2031. So we our aim in Africa already what we're doing for example is this uh group of kiosks. So we go in villages and we we create a kiosk with solar panels on top and we put 300 rechargeable batteries inside and we sell subscriptions for $3 per three USDT per month to swap the batteries uh four times per month.

Uh there are 600 million people in Africa that don't have access to electricity but they have small equipment like radios, small TVs or smartphones. Um the average cost of a smartphone uh in the poorest part of Africa is between $60 and $90. And so we be believe that um with uh right now we have we built 500 kiosks. We have 500,000 users of these batteries already in Africa. We think that we can scale up to 100 150,000 kiosk by N 2030.

that would be a a massive uh economy around USDT and the dollar that is you know very very of interest much of interest in that region because you know they don't want these communities don't want to hold to their local currency but on top of that we are going to create this uh peer-to-peer decentralized electricity system and um it's one change that you can see from space because right now if you look at the center of Africa during night is very very dark and so with with the decentralized electricity we think we can actually light up also uh central Africa uh during the night creating this massive economy again a peer-to-peer economy through all these villages through our kiosks and that will be um one of our massive uh interests and uh and focuses in the next in the next few years and this is one of the this is one of the 120 companies that are invested in in the last five years

imagine the others.

Yeah. Okay. So expansion beyond stable coins into a completely different sector.

Yes. All right. And then Charles, what about you? Paxos, you guys raising a massive uh fund andor IPOing

uh Dragonfly investing.

We'll raise money at 500 billion, too. Um uh I don't think we're going to uh IPO is not in uh in the cards for us right now, but you always want to look at the markets. They're obviously like very embracing of crypto companies. I think that's something that makes sense and eventually uh when you're in infrastructure business, it always helps to be a public company, but I don't think that's the right thing for us now. We got to put our heads down and just take advantage of this market opportunity to keep building.

Yeah, for sure. Amazing. Well, Paulo, Charles, Rob, thank you so much for taking the time and thank you to everyone for listening in.