DAPPCON 2024: From Crypto To Cards: Shaping The Future Of Self Custodial Current Accounts

Transcript

before we jump right into it just a quick uh round of intros uh I'm Rafa I'm with noses pay uh we're going to be piggybacking on what Marcus introduced today like the concept of like banking uh 3.0 and the separation between bankers and banking so I would like my colleagues here on stage to quickly introduce themselves as well so get to know them start visually yeah thanks my name is julan I'm head of Institutions and fintech at safe uh safe is your account for everything in the future uh be it banking payment uh crypto whatsoever uh so my past is I worked four years as a lobbyist in the realm of payments and also crypto uh after that three years as a managing director in a

bank heading the digital asset business um so I know a thing thing or two about regulated finance and uh what I can tell you I I learned some dark lessons and uh working here at safe is kind of uh solving that basically for Humanity uh because um if you really control your bank account and you can take that wherever you want and instead of kind of us like in web 3 we getting integrated as an embedded wallet or something instead we integrate the inst rails I think that's a way better future and get really ownership to to the customers thanks thanks for having me I'm Z reginato I'm one of the J it's the first panel ever that I've been with another fighting outside of Brazil proud

to be other fellow Brazilians I I lead strategy for mzero labs um at MZ Labs we build um the the infrastructure behind the a project called mzero which should be launched soon mzero is an infrastructure for a Federation of U digital dollar issuers um so imagine u a situation where you have these stable coin products that are centralized and have a single issuer um I'm talking about like externally coll lateralized stable coins um we are building a solution whereby any institution can plug into this infrastructure can plug into this protocol and become an issuer of a fungible single um stable coin a single crypto dollar as we prefer to call um prior to working at mzero I

spent uh eight years at Circle uh where I led the the build out of USC awesome uh my name is Christian I'm heading uh fintech enablement in crypto goto Market from estto card in Europe uh before this I was General Manager in our uh one of our European markets and heading call product management for mastercart my first job was in corporate Banking and then I moved into internet services and and Telco uh prior to joining MasterCard awesome um my name is Joan as well um I'm actually one of the co-founders in BRX we are partners with uh TR um and we develop a capital markets web 3.0 so we orchestrate all of the

capital markets infrastructure within transfu through smart contracts to create a seamless experience for institutions and for users that are using our our infrastructure um we usually abstract the the web three kind of complexities that users deal with and uh orchestrate everything through smart contracts and account abstraction and uh our objective is to make um products that are creative um are not copycats of traditional products but on chain so our idea is to develop always like products that have a take on the benefits that web 3 offers us and not just replicating products awesome so uh let's get right into it uh I think like maros introduced

the concept of banking 1.0 where like Bankers had control over technology and used technology to kind of like improve profits by being more efficient then we moved to web to banking 2.0 where like technologist took over Banks and created like awesome user experiences and used Banks as infrastructure and now we're getting to the ownership era right where users have control back and ownership back of over their assets so uh first question to you Julian like uh what mistakes uh from the past we can learn from those different stages of evolution uh so for instance like open banking uh was always a desire but never reality so how we can make make sure that uh we

don't repeat the same mistakes and enable sort of like a true open Banking and ownership experience to Consumers um the easy answer and a little bit of an abstract layer is um by building on the right Tex stack that has the core values that we need uh um for for this more truly open system which is obviously crypto um but to toit be a little bit more precise it's actually funny to see a mic on stage um and also Christian you uh like five years ago we were kind of meeting with bin because we were all in jobs in fintech on the rather Lobby side M and myself and you on the business side but we were discussing this concept of open banking

quite a lot so what does that actually mean right so back then uh so I give you a little bit of a pitch that I had on my slides like five years ago in front of regulators and stuff and the pitch was basically so we are getting into kind of modular Services basically everywhere right we looking uh watching movies on Netflix they hosted by Amazon on a computer built by Apple and stuff like that so there's a nice network of different Services plug into each other modulized you can say but in banking it didn't work that way so we had these those silos imagine you have a landscape and there are kind of big rocks and there there are no kind of bridges between them and you cannot put a brick out here and put it there it's absolutely the opposite of modularize it's kind of a how we call that in in

crypto canonical or siloed approach so um the regulator understood this is not good for um competition this is not good for driving prices down this is not good for Innovation this is not good for stability and a heterogeneous uh system so uh they try to bring out um out these kind of psd2 Regulation payment services directive with apis and the banks can then um put plug into another and kind of build good Services as you just said that didn't work out well because they don't have no interest in in sharing those data as Marcus also said like if I give away my kyc data to another bank they kind of have the customer you don't have an incentive in that and also there are some regulations that make it very

difficult so for example imagine the example of Netflix and Amazon if both were regulated this Outsourcing that Netflix does to Amazon to host the the movies um is a highly complex thing Outsourcing analysis is uh uh needed here in crypto now jumping to the light side or the bright side of the story it's so different the smart contracts like the ones from safe are sitting on the blockchain since 217 uh you can just build stuff on that and and we don't have those old problems of those silos anymore because the services in in its core are modularized and open source there's a lot of Lindy effect and and that's by the way the reason why so many people on stage here today are building exactly on safe because you have this L

it's open source you can plug into other you see an ecosystem growing on that so why don't you build on that too so that's why I believe finally we're getting to this vision of open banking uh be it now banking 3.0 open the true open banking but that's I think what's um making me really excited and a lot of people who come from fintech now working in crypto are really excited to see that no awesome awesome and uh John maybe like flipping over to you uh open banking will require like inter interoperability amongst like all the different types of players what is the role of money on this and like how m zero is is is looking into that yeah and and I remember this period of time five or six years ago and I I

already I remember mentioning to people that the best open banking API that they had was was on chain right that was the best API already um but going going to your question um and I'll I'll allow myself to to nerd out I think we're all money nerds here as as I called so um just just we have to we have to go deeper and and look at things U from a technology point of you to be able to really disrupt things and not not just come out you know with another layer of another like um kind of you know nice looking facade on top of existing infrastructure that doesn't really innovate at all at the end of the day lipstick on a pig if you will if you if you look at money from a technology point of view it's actually extremely

complex right um you know there's no definition even for for the technology of money perhaps like we have on the internet with you know seven layers and all that kind of stuff but but uh the way the way that I look at money I I look at it from from a technology point of view into three three layers right there's there's this foundational layer the base layer if you want to if you want to call it um which really has to do with uh you know the belief systems that we have as societies right we we choose to get together as nation states as societies and believe that you know there's value in gold or there's value in you know government or there's value in the tax system or in armies you know things like that all those things that effectively guarantee some base level of

um of of you know uh what underpins money again whether you agree like it or not you know that's just something that we get together as as Citizens and and and believe together on top of that then there is you know again if you want to call it layers there's sort of a middleware layer um where actually money gets um you know produced and and moved at scale so these are things like uh you know governance systems like who who gets to do what who's licensed to do what and and how um How is money actually issued uh how is actually how money is actually you know uh settled and transported um and then only on the top you have this front end layer you know which I think in the the last number of years we we essentially call

it fintech right uh these are front ends these are actually applications that consumers use on a day-to-day basis um fintech I think we touched and we we we're going to touch more fintech has had a lot of problems it's certainly where most of the innovation in the money tax Tech have has happened in the last number of years but it's it's also a little bit like lipstick on a pig because you can put a nice front end a nice facade on these services but if it doesn't actually settle on a weekend if it doesn't actually work after 5:00 p.m. like what are you actually doing right what are you actually innovating on base layer it's not for me to innovate I think you know Bitcoin ethereum these things potentially you know in our field can innovate at the base layer but fundamentally I live in the US I still

use the dollar I don't think that's going to change anytime soon but this mware boy there's a lot of opportunity for innovation here and I think this is where really crypto can play a role um we we organize again around these these systems of of governance right today which are essentially uh executed by regulatory bodies around the world but crypto can innovate a lot on that and so those are one of the things that we are trying to do at mzero we're trying to connect this base layer of money which you know uh again if you want to use the dollar as an example the foundation of the dollar are us treasuries right um that that's that's what the dollar is actually like the dollar balances that you have on a bank account that's not actually the dollar that's a claim from

a commercial Bank on on us treasuries um we we can move all that infrastructure and run a lot of that on chain right so we can run issuance money issuance is super easy we understand that on chain governance we understand how to do that on chain in a decentralized manner so what we're trying to do is bring all that technology and that infrastructure to run money issuance and democratize the access to that on chain and by doing that we believe that a lot of you know what we know today as banking services and fintech services can connect directly to that and be a little bit more independent from this commercial banking system that we know today no that that's awesome and I'll piig it back on something that you just mentioned like having money is infrastructure right uh customers need real sort of like life applications so

like money is going to be used to pay for something as as an example right so Christian like maybe like over to you uh how do you see like MasterCard like innovating and building up on top of like what has been just mentioned by by Julian and and draw I think I can relate to a lot of points that that were iterated today both by Marcus I think who also took up a theme that you know dates back almost 25 30 years to Bill Gates who was saying you know people need banking but not Bankers so I think you know it was a promise uh for for the longest period of time or a bold statement you know however you choose to look at it and I would also agree that fintech was a you know I don't lipstick on a pck is of course you know wording some some ftech

people would disagree with but it was sort of a superficial uh if you will user experience optimization which I think has immense value because it raised the bar uh for for the industry as such right uh if you look at the fact that nowadays you can use your iPhone or Android phone to pay pretty much everywhere in the world and you get a transaction notification before it says on the terminal you know transaction approved I I think there's inherent value in this uh and and consumers absolutely benefited because um yeah it reduces cost friction and so on and so forth but I fully agree that the core um and the core for me constitutes Two element the underlying technology and

the concept of money itself the core as of now has not been really touched but only in in what we now call digital assets or crypto the fundamental concept of money um is is really reassessed and I think we see multiple inroads of challenging the concept of money um we will have cbdcs Central Bank digital currencies that might or might not be based on on blockchain uh we have stable coins which I think are super interesting especially in Europe with the upcoming regulation uh we have tokenized Bank deposits so we're not only discussing form factor uh Innovation but really the underlying technology and then without boring

people too much and and Marcus alluded to it I think Julian also app until now we still run in a realtime authorization and then clearing settlement and batches and in a world that is very much spoiled by realtime expectations on everything and I have the world at my fingertips is that the best that we can do as an industry uh quite quite likely not and that's also one of the reasons why MasterCard engages in this and uh we heard about stable coin settlement that is also something that we're engaging with and again I think it's about uh using the underlying technology in a very meaningful way um to enable consumers um to use their funds as they will in a very safe simple and

convenience Manner and that's at the end what it's all about because that's that's what we learned in MasterCard over the last 50 years people don't want to pay nobody wants to pay right you want to shop you want to watch a video you want to split a bill after dinner and uh you know you can't convince people and say oh that was a real time payment and this was a token payment or this people don't care and I think as to the theme that we are today if we push that in the background if we make it easy frictional at the same time uh very secure and transparent uh that's the way to go no awesome and I think like we're going to go back to this uh sort of like seamless experience where people need banking but banking touches everything

it's it's a friction so uh but I wanted to pick back on something that mentioned also on tokenization maybe like Pro to you all in terms of like on top of like uses for payment like people need like savings right need invest for the future and so on Jo can to talk a little bit about tokenization and how it this whole thing evolving in this Bank banking 3.0 era yeah so I come from a very different Market I think um that is the Brazilian Market um which I don't know if everyone is aware but we're going through a process of mass tokenization um there is an expectancy of a cbdc for late next year so once we have the the currency tokenized we need assets to be tokenized for the currency to interact with so um and that brings

about um some questions and some challenges which I think uh only in Brazil we'll be able to to answer this in the long run but um just uh again as a background the Brazil is a market that's extremely evolved in um Financial technology because of the level of fraud that we had in the past so we have extremely evolved Financial products um but it it always lacked a high level of uh of people being bankr right banked um we had a around 40% un banked before pxs and uh PS push this level to where you probably have more bank accounts today in Brazil than you have citizens just new bank has half the population right

so um so this takes me to the cbdc right so when when we talk about Investments on chain um in Brazil especially um this is tied a lot to the cbdc because we see the cbdc as the as the wave that's going to push these people on chain banks are already having this discussion currently and um and then we we start to deal with the important part of tokenization right tokenizing an asset is extremely simple and it's just a legal process currently and very well detailed in Brazil currently but then the next question is like how do these assets interact right um uh how do you make them them talk to each other and how do you evolve them so that they can have kind of this 3.0

effect and not just mimic assets that are off chain to be on chain right so um we are working on these questions today without the cbdc yet um and we've come up with some some interesting answers but um in in my opinion uh the products that thrive they will be products that usually are going to P piggyback on the traditional distribution rails um they will uh abstract the the web 3 kind of interaction and I think us as developers of the technology it's our responsibility to make uh the interface as simple as possible so that we have this growth which if you look at the

fintech revolution that you guys mentioned it's just based on UI and ux right uh and and in crypto we need that we need the blockchain to to to have the UI ux that uh that fintex proposed and for financial products and investment is the same thing so having native products with the benefits of the of the composability that we offer on chain is where I see the future um and and where I think uh we are in the right Market to explore this starting in Brazil because this exploration is going to be kind of forced by the Central Bank into all citizens and all banks so instead of having this Gatekeepers like Banks which usually prevent um us from inov inating

and um and developing new things that are going to compete with the current products we actually have the bank starting to get interested in uh how are they their products going to be interacting on chain and how are their products going to be when they are tokenized and how they're interacting with other products so yeah pretty exciting times in Brazil and uh excited to see the future and see how we can explore expanding this Beyond Brazil right so uh I think that's so like I think that's a great warm up so we've spoken about all the things that we pretty much like all agree on and have some some sort of like converging uh views of the world so I would love now to kind of like hear things that we

don't necessarily Converge on right and have different opinions uh my my personal belief is that uh finex have made sort of like great dent in the in in in the history of humanity right now kind of like creating like awesome experiences uh Bank more people uh allowing more people to use digital uh currencies uh having like checkings account savings account doing crossb payments and so on and so forth but it hasn't ultimately changed the business model right so if take a look at the most successful uh finax out there like you can talk about new bank revolute wise uh you name it they all are going back to the old banking business model right you

have this checking account you make money out of of fees out of interest you create closed systems gated systems where like you protect your users from like everyone else so you still have that concept of like owning the user and so on and so forth so I'd love to hear sort of like different views on like how we can avoid the different pitfalls that have been made on this transition from banking to finex so we don't fall into the same traps again like when we going towards this ownership era so how can make this system more open uh more user owned uh leveraging the best experiences uh leveraging the best maybe like core evolution in terms of like back end so I'd love to kind of like hear from from

you guys a little bit about that and I Engage The Audience a little bit on to help us kind of like getting getting the hit up here so I may shouldn't like start with with you on that yeah so why I am very confident that we uh will not repeat the the mistakes of the past is the very core is not Silo the very core is not the one company one fintech be it new bank be it n26 be it revolute or any kind of this old Inc comment um where you have your kyc data and then only the ones who have your kyc data how old are you what's your name what's your birth name where you born we all have done like too many kycs in our life um the one only the one who

has those data um can offer you financial services and here is the tricky point so what is a financial service actually what we Define as a regulated Financial Service is usually the point where you give up control so if you have your money with the bank it should be regulated it should and since it's blackbox banking other than open permissionless onchain explorers where can see way your F funds are flowing um they are responsible for anti-money laundering that cannot be outsourced because only they know oh Julian is sending stuff from Deutsche to HSBC to new bank or something only the banks know the bank cannot look into the next hop on chain you can do that so by having our industry built on a

completely different core in the very Inner Circle of it which is a permissionless blockchain and the smart contract that you can trace through those needs are not there so we are not stick to the one service where we did the kyc on with we can move on and that's the that's the point why I I'm so confident that we'll not repeat those task I mean obviously we can be abused or mistreated by Regulators if they um crack down on on payment a P2P payment so basically self- custody wallets if that would come into effect that would be kind of that that would be a nuclear option then we would probably not have this panel again next year because everything is is done but I don't believe that's coming I think we have

very good reasons for that and also kind of things like M show us a path that yeah there is compliance for example you guys at nois pay you working you're doing kyc for the the way you need it right because where wherever you give up control and settle where one of the schemes Visa Master Card potentially MX then you have to still uphold those um um licenses but not when I do onchain transaction so the future will be you have the account usually the safe smart account and you implement those rails and you can plug them out and integrate others you stay with the um with your account and here you can modular in a modular way plug things on top of and that's yeah that's the reason why I don't think we'll miss uh repeat the mistakes of the past awesome but right now like we're feeling a safe let's call

it a safe account right uh I can pretty much like own each different type of asset that I want right and it's a permission L system so like let's say that I want like a token that's issued by or like a stable currency ISS should by using J uh infrastructure uh how does this stress system like work you like how can I make sure that a stable that sits on Save is going to be accepted by Christian uh whenever like I'm processing like a payment touching my Mastercard at the point of sale uh how does that work in your view like yeah that that that that's uh so so using your your prompt to kind of disagree a bit uh while I agree with Julian that I think we are in

a better path and we have a better Foundation but I'm not so Optimist as Julian because I think we we as an industry and we as a sector we we also like to like repeat mistakes that have been done in the past and right now let let's Zoom just in the stable coin sector right um if you want to read a bit about history for example of Commercial Banking in the US you know early 1800s like that's where we are we have like these private isolated issuers issuing their own um you know um like um claim on on a private liability and they're not interoperable right and there's no infr infrastructure to kind of allow true interoperability I mean we have we we have swapping we have trading but but you go through price Discovery

that's not really interoperability if I'm using tether and there's a use case where I need to use USC instead I need to go myself as a user or you know developer of that functionality needs to plug into like some some sort of clunky and and non-standard interoperability function so I think I think we are in the 1800s of stable coin sector just to use that sector as an example and we have to move a lot forward to be able to really like fulfill some of the the the promises that agree with Julian that we are on the path to um so so I think you know and and this is not to criticize Christian and MasterCard and Visa but I think if we don't fix that that side of the sector ourselves you know there's going to be a lot of interesting

business for companies like MasterCard and visa and others because they will continue to build this network of networks right they will connect to all these stable coins and say don't worry we deal with all of them we'll trade with all of them you know we'll connect to all these networks and like are we building anything new fundamentally if we if we end in that path I don't think I don't think so I think it will be more lipstick on a pck so that's why we have this really uphill battle ahead of us at least at m zero but we we are going to fight the good fight which is um there shouldn't be many stable coins there should be one stable coin because we don't have many dollars we have $1 we have one Euro granted you have you have specific liabilities of specific Banks

when you have a bank account with a balance in that currency that's not actually the currency right that that's a like a liability you're holding towards that bank that has a claim on the actual currency but you are free to take your funds out and to move to another bank and there's there's a lot of interoperability and infrastructure that has been built over years to allow that to happen today if I'm holding us or if I'm holding tether and something happens I need to you know figure out myself and a lot of people lose their shirt in that process but also I think the motto is completely upside down right because we have these companies that are stable coin issuers and what do they do they issue a stable coin fine but what actual value what actual service they're providing to end users um our perspective is that instead if

you look at the companies who are building used cases in this sector they should be stable coin issuers not because they want to be a stable coin issuer but because they have customers they have customers the posits they have built that trust with their customer base why are they allowing somebody else to monetize their customer deposit float that doesn't make sense to me but do you think like i' agree with disagree with that I know it's your business model that everyone can issue you on the kind of a common infrastructure your own stable coin and that's kind of really floating and infungible but like when we look into this fintech revolution of the last 10 or 15 years it wasn't kind of the Deutsche Bank and HSBC and and well neww wrong but like it wasn't the big incumbent coming up with the most

Innovative front ends it was rather new bank it was rather revolute and in 26 and trade Republic and Robin Hood for trading so do you believe that the incumbents will now kind of leap fro everyone and pass away and and nosis Zeal and all those those companies i' I'd rather bet on the nosis pay and Zeals to be the big new customer fronting retail banks of the future oh I I completely agree with you no don't don't get me wrong I I don't think uh I don't we we we don't serve without an infrastructure we don't serve Banks we actually will compete with banks we actually will democratize access to any fintech front end to become potentially their own crypto Bank we we don't need the Commercial Banking layer I'm sorry to say this if it is a

surprise for anyone we don't need a Commercial Banking layer as it is today with crypto we don't need it we can directly plug in the underlying Foundation of money you know treasuries whatever you want to believe in um directly to the front end with like on chain infrastructure so it this this middleware is R to be disrupted right now so so Christian let's bring you in on that discussion because it's super interesting right I think one point that I would uh sort of politely disagree with that um repeating the mistakes of the past I think it's a journey and and when we speak about banking 1.0 as it was called today I would actually argue that was a banking o.0 when there was brick and mortar Banks before online banking was even around and I think it's

un sort of almost unfair to judge uh fintech you know and pulled it out of the historical context because these companies started uh between 2012 and 2014 and obviously the technology as we have it today wasn't there yet and I would almost argue that the Evolution for consumers to trust a company that hadn't been around uh like 50 years or 100 years ago and say okay this is a bank that only resides on my mobile phone that was a big step maybe not in the underlying technology but uh financial services and economies a lot of psychology so I would say it was a necessary part of the journey and for sure not the end of the journey that

that's one statement uh the second statement what is necessary NE to succeed or to evolve I think regulation is and in Europe I think we are fortunate with MAA coming up because only if consumers have let me call it the equivalent level of comfort to what we now have with Deposit Insurance Zer liability chargebacks uh what we call crypto will scale Beyond 2 to 5% of the market because a lot of people uh you know they they they don't want they don't want to deal with all the complexities they like the you know ownership and whatnot but they don't want to be confronted with all the risks so um that's why I think regulation is key and the

third sorry what what risk pardon me what risk um let let's put it like this if uh today something goes wrong with the payment transaction right um and let's say I buy something I'm residing in Portugal and there's a Polish web shop um you know no offense just taking um examples from the other end of the of the continent if I wire transfer €200 to the Polish web shop today and the merchandise never arrives you know is a consumer can choose you know do I want to open a court case do I file a claim in V or in Lisbon or whatever if I do it with a card I can call my bank and say I made a payment uh the merchandise never arrived I want to trigger a charge back

so that's uh what I say you know in in what we call Web Two or traditional payments there's rules regulation there's dispute resolution and as much as we would like the world to be binary and be fit in smart contracts maybe it's not maybe the Polish web shops sent me the merchandise but it was wrong it was broken so they can say yeah but we send it but I would still argue so that that's why I say there there's nuances there's details their Shades of Gray and that gets me to to the third Point um that I wanted to make I wouldn't you know reinvent the Wheel from scratch just as much as Marcus was saying you know he has a global platform global vision and he partners with companies

such as uh visa and MasterCard who are Global by definition you still see the need to connect into local rails right and and that's where I would say don't don't fix what's broken if you consider uh you know International schemes uh scalable efficient and consumer friendly on and off rims and connections into the real world uh why why fix it Apple didn't use iTunes as an acceptance system I mean Apple could have gone to any German bakery and say you know we have 1 million or 1 billion iTunes accounts so why don't you uh you know open up iTunes as an acceptance brand they basically piggy back on on card

rails and I think the way gnosis is about is going about it absolutely makes sense to it so back to your question um I I would say it wasn't a m or there wasn't all there were mistakes and there continue to be mistakes are they unavoidable they part of the journey um point one point two I think regulation is key point three is leverage what's there take existing bits and pieces optimize what we what you can optimize and where people have pain points that would be S of my position no awesome Christian and I feel like the only people who make mistakes are the people who are in the arena building stuff right so it's not it's not a criticism it's about kind of like learning right so and and I think uh and that's something that that that very much makes

sense for me and when ftech for me was questioning uh the Paradigm of rendering the service but not the service itself right the playing field stayed the same but they say we don't need mainframes and Cobalt and and and and Branch networks we do everything Cloud first realtime mobile but it was still optimizing within the old Paradigm and now sort of you redraw the map and say let's challenge the Paradigm and as per my initial statement you know let's challenge what money is does money always need to come you know from from the ECB when it sits in my wallet physically or does it have to reside in my current account as in commercial money from deut Bank Commerce Bank

societ and I think obviously that opens the the sort of the the funnel for for Solutions and I think it's super exciting to see where if we reconvene in five years to say you know what were the mistakes that were repeated you know with with with good intent and what were the real increments yeah but let me kind of like bring joh to the conversation now because like I think touch on a very interesting point I think like all of you like touched it lightly or not like regulation right and with tokenization now like you have assets that can be tokenized and become accessible for everyone anywhere on Earth for now maybe like even out of Earth like in a few years but you like how the role of

Regulation and uh on this tokenization of assets uh how do stop like people from different places getting access to things that they're not supposed to or like uh how you protect those people should you protect those people what is the role of different like players on all of that yeah I think that's uh a challenge that this Global Network kind of imposes on us um we are deep Believers that you know like a a transparent and clear regul regulatory um framework is always needed for this to be institutional and not be just you know like a side project for people so but we we we understand that the regulation should be on distribution right on on which types of investors or

which type of of customers you can acquire um and not on the The Innovation side and the types of product that you can create so you can limit the types of of people that can access this product but not limit the The Innovation on the product side that's at least our take on it um and and this uh kind of resonates a little bit with the with the kyc challenge that I think Julian posted and the the Tech Revolution and the effects of it right um we talk a lot about the finex and they were all good and everything happened we have the examples of the winners like new bank but how many losers did we have for one new bank to be be there right and at what cost were they there right new bank was deeply backed in the initial stages so

um the reality there in the fintech world especially where I come from is uh you have a very low switching cost to move from one platform to the other because there's no cost cost on the emission of the card for on boarding the company is taking that cost in and increasing its customer acquisition cost right um and once we move to a framework where you know the kyc is is more on chain and the data is is an available availability layer that's a little bit different than we have currently where it's siloed as Julian put it um we start to not incur into that mistake that the fex had which is you know inquir coming across huge boarding costs and instead uh they could actually um monetize the

onboarding throughout the platforms right um which is a model that we've seen in in in crypto for for some types of kyc project so uh once that is solved uh you can start having kind of a global reach kyc because if people are sharing the information of course with the consent of the user you start being able to have this kyc come across borders and be implementing in different jurisdictions or being added you know if additional information is needed and you start giving access to these people to more products because they are kyc then they are they are eligible for for that investment um and we don't go back to that model where you know in the fintex they want to Silo their clients isolate

them because they had a cost to put that guy in there and they need to make money on top of him at some point and most of them offer a lot of free products and don't actually make any money on top of them great so like I think we have like about a minute left so I'd love to take one or two questions from the audience to kind of like spice up things here to to wrap it up so questions thank you um I think we're talking about non-custodial uh accounts and I'm curious to hear if you have any thoughts on uh non- pegged uh stable coins that are built on top of ethereum we have a few examples these days and it feels like today we are just talking

about usdc and usdt as the only options for stable coins but are if there are any thoughts on Ry or any options that are actually nonpaged uh low Vol volatility uh collor or for for ether yeah I would love to hear that yeah maybe I'll take I'll take a First Step at that given that that's our sector that that's why honestly um I don't particularly I don't personally like the term stable coin because I think it puts everything um in a in a very broad basket and and and the these these instruments as I call them you know they're very different one from the other I mean what is a stable coin oh is

an asset that has a peg to another reference fine us was very well pegged up until it wasn't anymore right so is it a stable coin uh like I I don't think I think people focus too much of on price stability in that sector um as as a definition of an entire sector which is which is I think not the correct thing to do our interest and that's why I I I maybe mentioned too much you know Fiat collateralized or or exogenous collateralized table coins um because our our focus is really on how this type of Technology can become mid aware for for money can become infrastructure for fintech so that they instead of you know having a partner Bank as it used to be

the case for many years now they can potentially have you know their crypto infrastructure and and and and and uh and operate like that instead but I think U I think there is space for experimentation with all these instruments right Athena like all these things that are being built I don't think they are stable coins I think there are something else I think if you dig into you know traditional Financial Services like there's a name for those things and they're not stable coins or they're not uh you know they shouldn't be treated because they have fundamentally different risks um I think there's a space and I think uh decentralization is really important we are trying one approach to decentral ization but the collateral is exogenous so you will always have things that are hard to manage on chain but I I don't like the the term because I think those

instruments are very different they have very different risks yeah I think so there's there's Nuance right we have the guys from from monium here and that's actually real money by definition right it's uh monium has an Emi e money Institute license and what they issue no matter where it is and it's on a blockchain it is money and um that's definitely different for ethena by the way Etha is not claiming that it's a stable coin I think there it's kind of a derivative on US Treasury yield or something like that and um there's new one so I like saves perspective on that you can throw in whatever you want you can have a trump nft and you can have I don't know a some kind of meme coin or ether in your wallet we don't care I

think who should care is definitely the front ends who are in part regulated or integrating regulated services and that's why nosis pay chose monium and not ethena because it makes sense because at someday you will roll out your product to non crypto sevy people who uh know about things in the past like teruna and stuff like that so definitely you have some responsibility to pick the right stable coin um but we don't I agree and the last thing I would add to that is that because I didn't mention I think people focus too much on price stability and if you are a fintech front end you should care more about solvency I think because ultimately if you're really building for your consumers and you want to care for them in the long run you should care about soleny of one of these instruments not necess price stability yeah that was a

great question because we can keep talking about this for like another 30 minutes like I think there are like different perspectives on it thank you thank you very much for the question so there was a first very good one so anyone else want to keep up with that question like back there hello um so you you said something about how how decentralization ation uh is very is uh important and you're pursuing some uh decentralization uh in your in your project and from from transfer also talked about the the Drax project uh in Brazil uh at some point in my in my

career uh last year I was uh deeply researching different initiatives like uh stable coin consortiums um the the DX itself uh with MasterCard uh I spoke with with Raj thean from from uh who who was the the vice president and still is I think for for blockchain so uh I would like to understand so touching on on decentralization are we talking about uh just using ethereum as a credibly neutral settlement layer or does it extend to to the to the infrastructure let's say let's say the hardware um in terms of of the Dre I also heard that there's a focus on

privacy so are these initiatives uh looking to build on on distributed systems or will the infrastructure itself be be more centralized and just get some some small benefits from uh from the ethereum blockchain like the the credible neutrality Etc or is there a a real intention in having uh distributed systems uh for for the infrastructure and and for the users to to connect to each other and do their payments Etc so I can answer about the the draxx um they're having issues now with with privacy as you mentioned it's not actually a focus on privacy it's that

they they figured out that the the transactions are going to be transparent and each bank is going to be able to see their their competitors but uh they're they're getting it solved the direct is going to be issued initially in a hyper Ledger Bezos and the validators are actually going to be the financial institutions so I don't think they're going lot for for for um centralization right um it's a central bank issued currency so I think they are solving for other issues right um so if you think about in Brazil you already have pics which is instant money transfers so that use case for digital currency is useless in Brazil you may say so why are they doing the drags for it to have

programmable currency and interaction between tokenized assets and uh and the currency so I think in the long run um the the drawing they have the for the Drax is initially a issuance for the banks reserves so the central banks are going to the central bank is going to issue for the banks and they're going to be able to hold reserves in Drax and then each bank is going to be able to issue their own kind of a stable currency which is a little bit of a a drawing of a way back of on on currency wise um but this is again like it's we are optimistic because there is a view on on developing the technology institutionally within within the country but I think we are like 5 to 10 years away of having the draas you know

circulating in a public blockchain um integrating with with the application so what we view is that for example for stable coin issuers in Brazil like transar um today the reserves are kind of opaque right they're held in a bank account you can do an audit you can provide some type of transparency but they're held in a bank account um with the Drax we can start to see these reserves starting to become um transparent and with that you kind of start to abstract this private layer which is the the stable coin issuer from the equation because you have real time access to the to the reserves Holdings and uh that can be a direct proxy for

the DRS in uh public chains yeah I know we're over time so I'll try to be super quick I I I think I think decentralization is the only reason why I'm in this industry is because of decentralization and it's always a spectrum but I think just as what the internet has allowed um you know for us to to like completely disrupt the way communication and media and and you know and getting connected to other humans um and and that was that became like an open system that anybody can connect to it's not completely decentralized but it's it's much better than what we used to have and and all the problems that we're having now discussing you know what is true what is fake news like in a way it's it's a good debate because because we have an open

system and anybody can participate that's a proof that anybody can participate we don't have that for finance I think I think people should continue to question and push the boundaries there uh so that's why we are building a system that is potentially uh multi-issue uh that is uh open in terms of you know the the the way that ises can connect to the network it's governed on chain uh it has it has a a layer of validators that can actually introspect and and prove that on chain that the the reserves are what what people claim they are the the protocol is immutable the stable coin is immutable so there's no Central entity that can say you know oops we we would like to change the functionality as I think you know that's my problem with cbdcs is because there will always be a way to upgrade them and

completely um pull the rug from under consumers um so yeah I think I think for me that's why I'm in the industry I think if we are not pushing for decentralization then we're not doing the right thing yeah so we ran out of time uh it would be lovely to see you guys back here in depcom 25 see like how much progress we have made so thank you thank you for being here uh thank you for like staying with us hope to see you all next year here [Applause]