Crypto Meets Cards: Shaping the Future of Commerce | Permissionless IV Fireside Chat | Bonus Episode

Transcript

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. You guys are both upstaging me on the looks. You guys are both looking better than me. This is not great. Um, all right. So, uh, the the first thing I want to talk, so this is a very cryptonative event and we've got a lot of crypto companies. It's, uh, excited to be graced by Mastercard's presence here. Shar, I think I'd love to hear maybe just your your story of, I mean,

this is not, uh, you guys have not, you didn't just enter the industry, you know, two months ago or 3 months ago. I feel like we see a lot of enterprise companies, you know, genius passes, stable coins are hot, there's a lot of people sprinting to spin up a stable coin strategy. You guys have had this strategy for a while. tell tell me the story here. Yeah, so we we've actually been building in the space for years now. Um so at Mastercard in general, our one of our kind of core philosophies is choice. Um we like to be where our customers want to be, both consumers, you know, merchants, businesses. Um and kind of early on we saw a lot of potential with blockchain and crypto at the time that we started. Not really stable coin,

right? But um but that evolved to to be part of the picture, an important part of the picture. Um and the idea is that like our network, we've always been actually a multi-rail network, right? We have all kinds of payments on our network. We have we payments that allow people to purchase things. We have push payments that allow you to get send money back and forth, right, between friends. Um we've integrated accounttocount payments. We have mobile money wallets connected to our network. like all different kinds of things are connected and we want to always enable whatever our customers want to want to choose. And so from very early on um you know a whole bunch of years ago we started doing projects um and

partnerships with various players um in the industry including Moon um which was kind of actually a partnership that started a bunch of years back but we've developed a a whole bunch of commercialized products and services that like leverage blockchain and and stable coin that have been live for quite a while now. Um and now we're just you know building on that and with the clarity that's coming now we expect that will obviously continue. Yeah maybe Ivan. So when I think of Moonpace business I think of being the onboarding roles onboarding rails for the industry.

Um you guys do have more product lines than that where do stable coins fit into Moonbase Moon's whole business. Yeah so we're we're working to onboard the entire world to crypto. Uh it's a giant project which is you know complex because you have to think about every single point of distribution. It's across a bunch of different geographies. How do you do that within regulatory compliance and how do you really build a very seamless user experience? Uh when we started the business really the you know first thing that we thought about was these wallets are going to become really important. These wallets are essentially almost going to be like a a next generation version of a bank account. If you have an internet connection anywhere in the world, you can spin one up. And essentially, you're

going to want to build that backwards compatibility to the existing financial system. So, people can use the debit cards that are in their pocket to immediately come into this new ecosystem. Stable coins are the word that's on Vogue right now. I think this year, you can't go, you know, can't go like 2 minutes without hearing someone say the word stable coins. You know, I think there's a lot of reason behind that hype and there's really, you know, where we're at is I think we're in the enablingment phase of seeing businesses all around the world ask what are the solutions that we can offer to our customers. I think the first step of that is from on the infrastructure side what we're starting to see in real time is uh customers are wanting really cheap, easy, efficient access into stable coins. And so we're also finding

that partners are looking for more APIs, more more white label embedded solutions. And so early this year we acquired this company called Iron and it was really around let's build developer first infrastructure to make it easy for any business to plug in to be able to spin up a virtual account to be able to receive money into that virtual account instantly redeem it into a stable coin. Build an orchestration layer where we could do it a across a whole range of different stable coins. And you know, this is probably the most exciting area for our business because what we're also seeing with the crypto natives and the crypto wallets that we partner is they want to ultimately bring all that functionality that you can have inside of a bank account. You want to be able to receive a salary deposit immediately if you're a contractor in somewhere like

Argentina, receive a salary deposit in US dollars, automatically have that converted into stable coins, and then you're going to be able to access the entire world of crypto. You'll be able to earn yields, you'll be able to invest in any asset on the on the blockchain. And so we're really excited to accelerate that and make that happen. If we can talk about the partnership between you guys cuz I think maybe some people have seen the the you know news announcements and they think oh there's this new new partnership between Moon Pay and Mastercard. But really you guys have been at it for years. I'm curious. I mean we I've personally seen many crypto to enterprise partnerships fail over the years and it seems like this one's actually working very well. So what what makes this partnership work so well? Would you guys say?

So I guess talk about the first steps. The first step of Mastercard, obviously the the saying and the marketing slogan is priceless and priceless experiences. We had an opportunity to work very closely together with the team around thinking about blockchain initiatives. We started with uh web 3 priceless. And so essentially rewards, how do we put rewards on chain? And so we've been working with the Mastercard team uh implementing it inside of some of the most important marketing properties of of Mastercard over the last couple years, golf tournaments. Uh and we've seen some really interesting engagement. I I would say that was definitely more on the experimentation angle. I think now what we're really starting to see is there's real demand in the marketplace for stable coins. Um and so how do we enable businesses around the world to be able to spin up virtual accounts? And if

you think about it, the next step for them is you'll have a virtual account, you'll have a crypto wallet that underpins the foundational layer of the financial infrastructure. How do we spin up cards? How do we make, you know, how and and so if we think about that as a next step, you want to be able to take these stable coins that you have in a wallet, spend it anywhere where Mastercard is accepted. And so a lot of the work is, you know, working closely with Mastercard to see more Mastercard adoption on traditional rails, but also to bring that compatibility with stable coins themselves. But then more on like why why Moon, Mastercard? So Moonpay cares a lot about things that we care about. They care about choice. They care about trust. They spend a lot of time on compliance. Like obviously we work with

lots of regulated we work with lots of kinds of companies, regulated like regular you know businesses, merchants, but for banks in particular to want to work with us together with a partner, it matters a lot who the partner is um and that they actually take the time and care and you know respect the licensing structure and all of the rules, regulations, etc. um laws and Moonpay really stands out in that for us in that regard. Katana isn't another new general purpose blockchain. Its purpose built for DeFi users to provide the best experience possible. It does this by sustainably generating deeper liquidity and higher

yield than any other network. If your assets are sitting idle, then they're dead. Katana is built from the ground up with DeFi mechanics to bring your bags back to life. All you have to do is bridge over and Katana does the rest for you. Incubated by Polygon Labs and GSR, Katana launches with a notable ecosystem of primitives, assets, and partners like Morpho Sushi Vertex Lombard Chainlink, and Year. Be early to Katana. Join the pre-eposit campaign before mainet opens at the end of this month. Deposit funds and open rewards filled with randomized amounts of KAT tokens.

There's also a cryptounk and other exclusive NFTts hidden for the lucky ones. As always, investments in blockchain technology involve risk, terms, and conditions apply. Jerry, how do you think about who is going to benefit most from maybe like if you're painting a picture of the future, is it uh the emerging markets? Is it crypton natives? Is it regular consumers who don't even know what crypto is? Who who's benefiting from this? I mean over time I think it's all those things but initially yes crypton natives for sure um but also people and businesses gig workers contractors etc who live and work in emerging markets or in markets that are high inflation currency

unstable um as Ivan was saying before it obvious and all of you in the room probably know this it it makes a lot of sense um I understand why people in those markets like want to be paid in a US dollar denominated thing or in US dollars and then if we can convert that's to stable coin. There's just you can hold it easily and there's like a lot of utility that comes from that again through attaching a card to it. You can spend it anywhere. Mastercard is it's you know accepted and who knows what else we'll enable together in the future. Bill pay and all other kinds of things. Um Ian I'm curious how you think about like the market for Moonay. I would guess it's mostly been US. I don't I don't actually know where your market is right now, but how do you think about

this? I mean, there's this been this idea in crypto of like we're going to bank the unbanked, I think, or we're going to help uh, you know, maybe help folks who've been underserved by the financial markets. How do you think about Moonpay's role in that? Yeah. So, when we first started, we actually really focused on cryptonatives because we saw these non-custodial wallets and to me the magic of a non-custodial wallet is you're in control and anyone with an internet connection can spin one up. And so, if you think about the unbanked, there's 1.2 billion unbanked. 75% of the unbanked actually have smartphones. So you know I think for them they may actually leaprog the existing financial solutions that are out there. It's hard to get banking in all sorts of corners of the world. Uh there's a connection to the internet and these guys have smartphones. So I think

the logical step for them will be to adopt this technology. When we started it was okay well there going to be these wallets. First step is I want to put money inside my wallet. And so when we built Moon Pay, it was really thinking, okay, biggest distribution points obviously the card networks, Mastercard being a really important partner in that. And now you can use your card and immediately put uh digital money in your wallet. You know, where we're going now and as we start to see, you know, the market evolve, I think the total addressable market of crypto is growing. I think there's demand from businesses and those businesses might not want a Moonay widget, might not want a Moon SDK. they want may want a fully headless white label APIdriven experience. I also think what you're seeing with the advent

of AI, AI doesn't really care about your UI. They're literally going to ruthlessly, you know, execute on APIs. And so, a lot of our focus has really been on building the developer infrastructure, building the platform to make it really easy for businesses to integrate this technology. Can you say more about the your I mean this is kind of getting away from the topic of the panel a little bit but uh just curious Ivan your vision for the future with like aentic AI commerce and like the role of stable coins in that. Yeah. So I think they go hand in hand. I think stable coins are going to be the uh payment method of choice of AI agents. Um you know I think they are you know they're obviously internet native and so it makes sense that there needed to be uh internet native currency for

these AI agents to execute on. I think more trading activity inside of centralized exchanges and the rest just exchange activity in general. I think we're going to see more and more activity happen in the form of an AI agent taking these actions on behalf of users. So I think we're in the first f phase of AI is really the readonly phase where uh we use AI to gain incredible insights about the market to understand what's going on. I think the next step will be offering API keys and delegating access to these AI agents to do all sorts of things for you. And so I think that's the next frontier of commerce. I think it's changing very very quickly.

Uh but I but I really see the future will be you know when you want to you know auto ramp into a crypto asset or you want to take a particular view on the market uh these AI agents will go and do that for you. Yeah. Um Sherry from a Mastercard like business strategy perspective. Do you think that you guys will get into stable you guys are pushing into stable coins and blockchain and stuff because the market is going to pull it out of you or it increases the TAM or why why why why get into this? Oh no, I mean it it definitely increases the TAM. Um but kind of where I started, you know, we we really there there's demand for this. I mean we we anticipated that there would be demand. It actually took longer to kind of come to fruition than we thought

because we've been at this for actually a while. We have a lot of people that work on this like big team of you know crypto digital asset blockchain and for a while they were just sort of like doing their thing and like you know excited about when the company would let them do a press release kind of thing. But um you know now they're like the bell of the ball. Um and so why we're doing it I mean I it's it's imperative that we're that we're there. I mean especially with genius you know passing the Senate and that look being on a good path. Um there's just a lot more clarity now and so there's an expectation also on part of our customers that we're going to be like very kind of well um like well enabled to enable them and

this is something that you know banks are already asking about this like you know a few years back um we launched something called multi-token network and we've been you know tokenizing bank deposits for a while now um you know, it's not like this is most of the volume on our network that banks transact with each other in um but more and more you will see more banks, you know, kind of joining that platform and putting tokenized deposits on their plat on the platform. Like if we weren't there for them to do that, those flows would move somewhere else. So, of course, you know, it's like an obligation that we have, but it's also there's a lot of innovation that you know that is

happening right now and we're excited to be a part of it. Nice. Um right right now when anyone in this room uses stable coins you are very aware you are using a stable coin because it is pretty clunky. Um how far away are we from using from like mainstream consumers using stable coins in the background maybe without even realizing it. So some of that's available some well without realizing it more like you know that you're spending from a stable coin balance for example if you're using a master card to transact at the point of sale. Um, so like in my mind, some of that's happening today. And in addition, like we we settle on both sides of the network. Like if you are an issuer that wants to settle with us in stables, that's fine. If you're on a merchant and

you want us to settle with you in stable coin, that's fine. Like that's going on in the background and regular people probably have no idea. Um, so some of that is is available today. But how will you do it and not even know it? I feel like you'll know that you're somehow that you're hold because you're making a choice to hold staples and not hold like crypto or not hold fiat. Well, maybe that gets into how do you guys think about uh like stable coinbacked cards and I mean I know there's they're already you love them. You love them. Yeah. Um no. Well, I mean actually also for a while now we've been doing um we've done crypto like kind of denominated cards also that and facilitating conversion to

fiat um for actually you know for spend at the point of sale. Um but now with Moonay um you know stables are the star of the show with uh you know as you connect bank accounts to wallets um and have balance held in stablecoin we put you know a a card in front of that and then magically it also comes with all the consumer protections that we offer and like the I mean merchant protections as well like all of the that trust the security etc. Yeah, it feels like the dream user experience is spend I don't because I don't want to spend my crypto.

I want to spend my stables. Yeah, I want to spend my stables and have the stables sitting in some account getting, you know, 4% on treasuries. Spend the stables and then get the rewards in crypto. Katana isn't another new general purpose blockchain. It's purpose built for DeFi users to provide the best experience possible. It does this by sustainably generating deeper liquidity and higher yield than any other network. If your assets are sitting idle, then they're dead. Katana is built from the ground up with DeFi mechanics to bring your bags back to life. All you have to do is bridge over and Katana does the rest for you. Incubated by Polygon Labs and GSR, Katana launches with a notable ecosystem

of primitives, assets, and partners like Morpho Sushi Vertex Lombard Chainlink, and yearn. Be early to Katana. Join the pre-eposit campaign before mainet opens at the end of this month. Deposit funds and open rewards filled with randomized amounts of KAT tokens. There's also a Cryptounk and other exclusive NFTts hidden for the lucky ones. As always, investments in blockchain technology involve risk terms and conditions apply. Well, we have exciting things coming uh on that front. But what I'll say is um I think what's really interesting is if you think about how hard it was to build a neo bank if we even went back a couple years ago, like you would have to go

into the uh region, get a banking support, you get an e-oney account. Uh you know, if you were a developer and you wanted to build uh a banking type experience, you know, there's a lot of operational complexity. uh very costly to get up and running. Now you have this advent of this crypto technology that's relatively democratized and it's very easy to go spin up one of these cryptocurrency wallets. And I think ultimately if you think about the pipes of our banking infrastructure, a lot of it was not upgraded for the internet. It's decades decades old. I think when you think about some of the best consumer fintech experiences, it's built on these legacy rails and there's been band-aids to make the user experience feel instant or to feel better, right?

In a lot of cases, they're using factoring or they're they're doing things to make that experience feel instant. Now, we actually have a technology layer that is instant uh and is blockchain driven. And so, my my whole take is over time, more and more transactions are going to settle blockchains uh over blockchains. More and more people are going to interact with these wallets. you're they're going to be maybe completely invisible. You won't even know that they're maybe even there. U but I really think wallets are the new communication layer for money. And so our job is okay for a user, you're going to now have this non-custodial wallet. I want to make it just like my interaction with my neo bank. And so we need to upgrade it with those neo bank capabilities. Virtual accounts is a really important part of that equation because now I can receive

things like salary deposits. I'm going to be able to pay for bills with it. I can now automatically convert that into a stable coin. uh swap that into any crypto asset. And then I think the next step will be you'll want a card attached to it so you can spend it in everyday life. And then we're also going to see merchants adopt solutions where they will have wallets on the other side and you'll be able to start paying with those native crypto assets. We're not there yet. And if you think about any technology, you know, it takes years, right, for people to move into a more efficient system. I talk about telecoms all the time. I think it's the best analogy because if you think about uh the way that we communicate long distance, it was very expensive. And then we saw the advent of voice over the

internet protocol. We saw Skype. We saw Zoom. We most of the apps that you use now are using internet based technology to communicate. Same thing is going to happen for money. So we have these legacy systems. They're not going away anytime soon. I think over time we're going to adapt and you're going to see wallets embedded more and more and more and more and more activity is going to be uh settled over these new networks. But our job is to bring that user experience to make it really easy to enable developers to get these experience up and running with as limited complexity as possible. And I think ultimately that will lead to more efficient outcomes for consumers. Yeah. I um maybe stable coins aside, Ivan, I'm curious your Okay, so if all transactions end up moving on chain via stable coins, what is your broader

thesis for just the industry at large right now? I mean, we first met in I think 2018, been building for several years. Um I'm curious like if uh if all transactions come on chain, do you think are are equities coming on chains, stocks bonds currencies commodities? Does it all come on chain? But I'm curious to get your haven't talked in many years, but curious to get your updated view of the the future here. So I have a agnostic almost Switzerlandike view of this technology. I think we just have to leave it to developers to build the best products and best experiences. Uh when we think about the issuance of crypto assets, we have obviously the major network tokens. We have stable coins across these different chains.

Different chains have different advantages, right? Some are going to be faster, some are going to be more secure. Uh some of them might be used for particular use cases. Um, and we're seeing a whole emergence of these different chains. You know, I think from from my perspective, the the next big thing is on the issuance side, it's not just crypto assets, but we're going to tokenize everything in the real world. I think the problem that we had was, especially in the United States, which most of the world looks to in terms of regulatory clarity. We had no regulatory clarity, right? And I think the big question was, are these tokenized instruments, are they securities, market structure? First, we got to solve what is a stable coin? How should it be backed? We've seen some of the issues when they're not actually backed by real US dollars. Uh we've seen all sorts of

uh hiccups as we've uh you know enabled people to just go and build. I think we're now getting to a place where we're bringing more structure into it. But I think stable coins are the first major enabler, right? And then from there, you're going to want to be able to trade into anything uh that is a financial instrument. I think the first, you know, the next evolution is really going to be around yield. So I now have a stable coin. How do I earn yield on that? Does that yield pit pay me better than holding that deposit with the bank? That's going to be I think one really big area of innovation that we're already seeing in real time. People holding crypto assets and then staking and earning much higher yields than they might be earning with their bank account. How can they do that safely?

Then the next logical step will be oh I want to offer uh access to a tokenized stock right and especially if you think about in other parts of the world we might not see and we take it for granted in places like the United States but if you're in a country that has incredible inflation being able to receive US dollars have US dollars that they can receive from anyone in the world already a really big deal because they can start to combat inflation and then what they can do with it with this new crypto economy I think we're just getting started but you can imagine for someone to be able to get access to tokenized Nvidia or tokenized any uh name any stock. Um that's incredible opportunity for people to make their money work for them. And I think it's going to be this in you know this this liquidity network

that we already see inside of crypto I think is quickly and if you ask chat GBT actually asked it a couple weeks back you know when do we think that uh global liquidity within the crypto economy is going to overtake things like US equities. Uh it's saying you know I think within the next three years. So very interesting. Wow. It's all the time we have. Ivan Sherry, thank you so much and congrats on all the progress so far. Thank you. Thank you so much. [Music]