The Global Stablecoin Wars: CBDCs vs. Stablecoins

Transcript

Timing is important. Next we'll move on to the panel discussion. The panelists are Mr. Takeshi Chino, Mr. Jacob Kro and Mr. Yanagi and the moderator is Karan York. The

theme of the discussion is CBDCS versus stable coins. Now, please begin. Thank you so very much and once again, thank you Edcon for having us today at the panel. So, we have our introductions already. Um, should we just jump straight into the conversation, gentlemen, or do you want to say a little bit about each uh each company? >> Sure. Um, hello. Uh, thank you for having me in some great panel. Um I'm Takesh Chino currently with Binance as a CEO of Japan business. Uh before that I work for another crypto exchange called Kraken and then I I I was also the CEO of the Japan business. I mainly came

from TRI starting career at Tokyo Stock Exchange and work for them more than uh like 10 years. Yeah. So my career is a kind of mixture between Trify and web three finance. >> Fantastic. Thank you. Um, over to you, Jacob. A little bit of brief intro. >> Thank you very much. My name is Jacob and I'm the founder and CEO of Clearool. Clear is a onchain private credit marketplace. We've been around for four years and we've done about 900 million US dollars uh worth of loans. Um, we're mainly focused on sourcing liquidity for stable coin enabled fintex uh mainly in the payment space. And um you know my

background is in two and fintech actually. >> Oh thank you for uh having me for today and I'm Ricky and I'm I came from and I'm the director and head of Japan for big go sales in Japan and uh a little bit of my background. So I came from a bit different from those guys. So I came from the IT uh sectors more of like book. So I came a bit from the traditional finance but now into the the cryptos.

>> Thank you so much for the introduction and I'm Caroline York, your moderator for today. Um I'm the marketing director at Serotonin which is a web 3 marketing agency and we help exciting projects such as all those here on stage go to market. And one of the hottest topics right now uh on I think in the cryptosphere is actually stable coins. we have the latest stable coin regulation that came through the current regulations um and I think Japan is going to come out with their first ever uh private stable coin as well. So considering that this is the uh current climate um this topic talks about a war between CBDC versus stable coins um do you see and this question is open to all

the gentlemen here on stage uh right now do you see it as a zero sum game where one must actually replace the other or do you think there's actually uh a hybrid coexistence that could happen so maybe we start here with Teshi um Yeah. >> Um I personally not quite sure whether there is a ongoing war between CBDC versus stable coin business. Uh in my understanding uh CBC is just an uh replacement for paper money and uh mainly uh I think sated uh among uh big uh banking institutions and also a big

corporations but when it comes to uh retail business I don't think um central bank or government institutions have intention to uh kind of take a uh leadership in in the retail business rather they let just an private sector to uh do the business whatever they want. So uh I certainly predict uh there will be a coexistence uh of CBDC if if central bank uh decided to issue and also uh stable coin which is mainly uh issued by the private sector.

>> Thank you for that. Um, now Jacob, this uh com this question is ongoing for you as well. You know, for a retail person, you know, why would we choose to use a stable coin versus a CBDC? Like where are the use cases for either or of them or are they mixed? >> Are they the same? >> I think I think in general, right, we need to point out that currently it's um it's not really a choice that most retail people have. Currently the market is dominated by USCT and USDC right that's a that's a fact and I I don't think as a retail person I'm giving it too much thought um you know as a retail person I choose whatever I can use on Binance for example right so um currently the the adoption is with

private stable coins um and you know uh we actually see that probably there's going to be a lot more stable coins coming out right we saw Amazon and and and Walmart are even considering launching their own stable coin. I think all the big fintexs are probably going to launch their own stable coin. I think PayPal already has one. Stripe is even launching their own chain. They already have one internally. So, there's going to be a lot more stable coins coming out and I think even within those stable coins um you know now those stable coins are are regulated to a large extent, right? Um so you know you have a regulated stable coin um you have like like Tedar just launched a American regulated stable coin. So even within

the stable coin landscape um there's quite a lot of um differences and I would say you know in a way um I don't know there's maybe a bit of a misconception that most stable coins are completely permissionless because you know also there you have regulatory oversight you have programmability you know the issuers can basically freeze your funds etc etc. So, so um you know retail is going to use whatever um is going to be the most adopted, most liquid and the one with the most use cases. Currently, this is obviously private stable coins. Uh and also, you know, stable coins that if you want to use DeFi, you need something that is um on a public blockchain. I I believe most

CBDC's are intended to be on private blockchain. So, so there are those kind of use cases that aren't even open for the normal retail investors. So, for now, there is basically just USDT and uh and USDC for most uh retail users except for some smaller ones, but that's the the bulk of the offering. >> Perfect. Thank you for setting the scene. And I think as we pass it over to um Ricky here, we will talk about then what is the real use case then for CBDC's? where are we seeing the opportunity and maybe some of the challenges?

>> Uh what we can see from the CV CBDC is still like there are a lot of PC's uh going on and only limited number of CBDC's uh in production at this moment but what we see like in the conceptual level is the central banks and also government what they want to use CBDC is more for the like keep having the control over the monetary policy. So when it comes to the stable coins that's all the like that's backed by the like uh the real asset still the if the government they if they want to enforce the the policies then they have that power if it comes to the CBDC when it comes to the the payments actually like I don't think there's will be the lot of

the the differences from the stable coin and CBDC but in yeah in case of the lower use case I think the the stable coins from the private sector they can have much faster innovation and also the more real use cases around the stable coins. So still I think the the the central banks they need to look for the how they can you know uh expand the usage real usage was in the the sector for the CBDC. >> Okay, thank you for that. Um if we could just pass the mic all the way back through this side again. Uh we're going to start on this end. So uh Takishi we are now talking about you know from B

fin Binance's perspective and I think Jacob laid a very uh groundwork on that. um retailers are not given much choice. It's just whatever is currently on the exchange, right? But how do you see that evolving? You know, as these regulations are changing, we're also seeing uh different currency denominated type of stable coins. What is your kind of or Binance's kind of perspective and prediction for what will happen in this space? Well, well, it's very hard for us to predict everything happening in the future obviously, but but um uh I I I think we should clearly state that our position should be neutral to any type of project. Uh we don't uh champion one stable coin or uh particular project uh

you know like over another project. Um so when it comes to uh stable coin or CBDC whatever market or players prefer to use we are open to uh listing these um projects you know to our exchange platform. Uh so obviously uh Tesar USDC are more widely used at this moment but we are quite not sure whether uh the regulatory changes or more political reasons or uh specific countries initiative uh there might be something new happening in the future then as Binance we are happy to accommodate uh any type of new offerings to accept uh

these like a new innovations, >> right? And I guess in terms of CBDC's, then it'll also be accepted onto the platform. >> Yeah. Yeah. When when the uh country decided to issue a CBDC, then why not? We just to uh accept that one for for payment purpose. But then we our stance is just let the market decide uh what kind of like currency, what kind of type of project they prefer to use. And what kind of insights are you seeing currently from the users existing users right what kind of demand are you seeing uh for these stable coin usage >> so interestingly you know like stable coins I'm talking about stable coin at this moment uh because no major countries have issued CBDC yet uh stable

coins uh the people who want to use stable coins are mainly for like a defy protocols or just depositing and withdraw everything they want to complete on the chain uh not relying on the traditional financial institutions that's the main purpose for them to use the stable coins but currently we are seeing a growing demand for payment uh we we have a payment service binance pay which is widely used in African countries especially and you know using like QR code and the people can you know pay uh for for their daily goods for example um but then they use uh stable coin for

such payment purpose. So that demand is growing at this moment. But um when it's come to major countries I I I read the news in the states like restaurants are currently accepting stable coin payment but but in Japan particularly uh not that movement yet. Yeah. So lot of like regulatory restriction we have unfortunately but hopefully in the uh someday the Japanese regulator decided to get rid of that kind of restriction so that retail players can use a stable coin for day-to-day uh kind of payment purposes.

>> Thank you for that. Okay on to you Jacob. So you know we were discussing a little bit about the use case for stable coins um you know for a DeFi lending protocol. What are you seeing in terms of the space and how do you think if CBDC's were to become more popular? We don't know if that is going to be the case, but how do you how do you think that would actually affect all the DeFi lending protocol space as well? >> Yeah, I think you know as a protocol we take a similar stance as uh Binance. You know, at the end of the day, we would accept whatever is uh commonly used, right? Right. So, as long as there's a demand, we don't really um favor USDT, USDC, the new Ripple stable coin, or

potentially even a CBDC, right? Um, personally, you know, I've never really interacted uh myself with a CBDC. And I think that's why, you know, there are some questions about that, you know, are those even um you know, are they operating on public blockchains? um you know probably most most most are not intended to do so. So there is um there is this right that would obviously not work with any D5 protocol already to start with right. So um I think you know the the big observation is that obviously now there are multiple stable coins but there is mainly obviously USDT USDC the dollar is the uh the dominant currency right 99% plus is is dollars

and um you know and and the US already said that you know they they basically clearly went with uh private stable coins right so in a way judging from that you would think that you know this battle as as you call it for now it's it's definitely going into the direction of the the private stable coins um that are just going to grow further and um you know the dollar is um is obviously very powerful right there as as he mentioned there there is also a you know emerging markets they're they're using stable coins not just to transact and to pay but also to hold um you know they they um there's a there's a positive correlation between, you know, countries

with inflation and stable coin usage, you just want to hold the dollar and then you want to deposit into dollar denominated yield products versus your currency that devalues every single day uh or year, right? So, so um and then for global trade and and for trade like like the dollar really became the dominant currency. So, um I think you know I don't really see that changing. Um >> but even with the all the Asian stable coins coming through as well. Uh yeah, I think global trade in general is still mainly dollar heavy, right? So so it's not even a DeFi uh it's not even a DeFi only uh thing right now. It's but but there's definitely going to be more usage for local currencies I would say.

Um as soon as the stable coins are not just being used for DeFi and trading, but as soon as stable coins are entering everyday's life, obviously a a merchant and a person here still needs to transact and and live on on Japanese yen. Um, so there's going to be usage for for those um, activities. Um, but I would say overall DeFi um, is is probably going to stay heavily reliant on dollar denominated private stable coins. >> Got it. All right. Um we'll circle back around because there are some other interesting questions that we can actually talk about uh in terms of you know what retail traders currently in the space are utilizing stable coins for what they are actually uh leveraging stable coins for and different types of strategies around in the area. Um I mean

we go on a little bit on this and then I'll I'll move on to uh uh Rickan there. >> Yeah, just very shortly I think once you have stable coins um there's a lot of different yield products um on chain. So it goes from you know tokenized T billuilds all the way to tokenized private credit funds or trading strategies and um I think the big unlock with DeFi is higher capital efficiency. So you can use this you know stable coin denominated yield assets as collateral um to you know loop them usually on those D5 protocols and and you basically um are getting a much higher um interest rate from that. This is something that is quite defi specific and this is driving a lot of um the current um you

know defy adoption. I think this is the big unlock. You can get you know higher risk adjusted returns versus investing in uh the nonchained market. >> Thank you for that. All right, over to you Rickyan. Um so you know as a as a custody player in the space what are some of the fundamental differences or maybe even some challenges in providing secure custody uh for a stable coin because we stable coin for the moment but also you know we're going to throw CBDC's in the mix. What kind of uh factors are you considering when providing custody for these assets? So actually from the custodian perspective there's no differences to like how we secure the the the how we implement

security for CBDC and stable coins because it's not about the asset but more for the the governance and operational control. So when it comes to the the like real um real risk arise is the if let's say if the central banks or the government if they demand more of the like customization deviating from the current best practice we have so I believe every casin we have best practice in the company from the like you know the over the the years of experiences but if the clients they demand to change in terms of like governance or operational um flow then it can be the the risk because it's not something we

consider as best practice. So depending on the regulations or the requirements that can be the this part as well but other than that like to you know the manage CBDC or stable coins or even other cryptos the essential point for the the safeguard the asset that's quite the same for any any assets. So going into this conversation because previously um CBDC central bank digital currencies um and I think with the web3 ethos that we have here privacy is always been of key concern right we haven't really touched on this topic yet um so in terms of privacy um are are we looking at stable coins as getting more

and more similar to a CBDC as the regulations kind of come through? What are your opinions on this on how to safeguard um you know customer privacy for example when utilizing uh stable coin assets or um I mean CBDC's so to say. Do you have thoughts on that one? >> So uh five thing I need to emphasize is as to as a custodian we don't have any control over the cran asset or the cran data in in in a sense. So we cannot do anything on the client's privacy or the uh the data related to privacy but the it's more of the control over the the the issue side. So let's say if the issuer wants to embed their like

phrasing asset or the mechanism to control over the asset when they issue the stable coins or the CBDC then those you know the those operation will be done by the issuers not by the custodian. we are just safeguard to the asset and we do the operation on behalf of them. So we don't do the proactive control over the client asset or the data. So I want to emphasize that again uh the custodians we don't you know harm the client privacies but more of the it's the control of by the the central banks.

>> Got it. Um I mean this is a little bit of a a question also for Binance on this side as well. you know, um how do we kind of balance privacy um and sovereignty over your own data uh when all of this money that's become uh fully regulated and also that you could be whitelisted or blacklisted on using them as well? >> Yeah. Um that that's a great question and um that is uh one of the hottest topics in in the industry I think. Um yeah so I I think currently uh data privacy isn't a kind of big issue among regulators at this moment when it comes

to the stable coin regulation. Their main concern is over money laundering or uh kind of financing kind of terrorism uh kind of thing. Um so uh we we have a travel rules uh which require licensing exchange to uh kind of um uh require users to uh designate the destination of the fund. Uh just like uh we have um uh traditional banking institutions and uh you know we needed to uh designate where the fund is going to. uh the same rule has already been applied to uh

cryptocurrency transfer in the major countries and a stable coin is another exception uh from the uh travel rules. Uh so we do need to comply um but um uh it isn't like the government controls everything every kind of a funding flow uh of the private sector. Um but then the CBDC if if the government or central bank wants to uh monitor and control that trading flow or funding flow uh they can technically uh enable to do that right uh so I I think a stable coins I'm not quite sure

whether the government try to control every single activity in the market um but I don't see uh that kind of uh move is happening now. Um but on the CBDC uh they may want to do that kind of thing. >> So interestingly because there are so many regulations coming out for stable coin issuers. I think what we're seeing also is perhaps the stablecoin issuers are self-censoring themselves before even the government regulations come through. So they also act almost like a little bit like a CBDC in a way. Um, now we had this really interesting conversation um just over at lunch and I

actually want to learn a little bit more about your thoughts perhaps over to um yourself Teeshi uh and also Jacob and uh Ricky you know would we be also seeing a rise of we wouldn't really call it um this similar stable coins to like a USDT right where the boundaries are a little bit more vague than a oneto one peg would those you also as um people will still have that demand for it, right? Curious to hear your thoughts if you guys have any. I perceive that uh less and less space for such kind of stable project uh to thrive uh in in the market at this moment given that the major countries

regulators are moving forward with uh regulatory kind of framework for stable coins uh issuing and distributing businesses as well. Um so uh like Japanese financial agency they once told me that uh they will never allow uh USDT uh to be sacrated in this country uh given that um uh they are un clear uh kind of management uh or unclear investment uh while they try to be transparent but but uh for the regulators

uh they don't want to have such an kind of uncertain uh kind of operation uh in the regulated world. So I don't think there will be more uh that kind of project coming up in the market. >> There is certain risks associated. Jacob, what are your thoughts on this? >> I think I agree. I think um you know most users of stable coins whether that's retail institutional are actually quite happy um with you know having uh regulation in place um for the backing of the stable coins right um obviously you know there's the extreme ends that everything is being monitored etc but

currently you know just as as the you know the stable coin regulation basically just you know tells the issuers um that they need to be backed and and I think everyone sleeps better having a lot of money on stable coins if if that's the case. Right? So while there are will be always um you know use cases for maybe something that is slightly less regulated um I do think that um the the biggest adoption is going to come for um from the from this you know regulated stable coin and it's going to go outside of I would say this um you know it's a little bit like um you know back in the days I guess everyone really cared about uh you know to to hold their own seat phrase their own keys to their cryptocurrencies but

when you really go mainstream. The reality is probably most people they don't want to um they want to they don't want to self custody. They don't want to have the responsibility to you know not forget their seed phrase and and potentially lose everything right and I think it's a little bit similar with um you know money um actually having regulatory oversight having clarity having guarantees um is a good thing and especially as stable coins and now moving away from just being a you know trading uh instrument to actually being you know the the the new financial rails right for payments uh for for for basically everything right I mean you know stocks and bonds are probably going to come on

chain as well everything's going to interact with stable coins as that grows um I I would say um we're going to sh move towards a um you know more sort of like regulated um path yeah >> so Ricky I guess um as we continue to round up this uh panel. The question here then would be you know as Jacob was mentioning there's more and more people who might actually give away certain types of sovereignty over data or sovereignty over anonymity for uh ease and convenience right and how does Bitco kind of play that role for the upcoming I would say the stable coin wave that we're seeing happening >> so as a big go like we provide B2B mainly but what we see in the market is

the even the higher worth individuals what they're looking for is more of the c And that's not only for the ease of using the services. So that like like as mentioned like uh they don't want to forget or the the password is or they want to manage to do the self custody but it's more for the what they're looking for is more security and also the the inense insurance. So casually like as a cas we cannot do any you know instance but when it happens something like just in case they can be assured or they can feel more comfortable if there's an insurance so all they I I believe all the the custodians we

provided insurance although like we have never you know had any insurance but those individuals and also the the the B2B prayers they look for the the most secure way to having the losses as well as yeah to prepare for the something happens in case. >> Yeah. And I think you know um as a custody player as well there's definitely much more stringent guidelines on making sure that all these stable coin issuers actually do have their onetoone back um assets in hold.

Um how are you guys monitor uh monitoring this? You know what interesting uh new innovations have you guys got coming out? Um I'd love to hear a little bit about that. >> So um for the big go like we do support for the USD1 so which is this the stable coin security in the US but what we provide is the not only the custo but also minting burning and also treasury management management those systems so that we can ensure all their stable coins or you know works as planned as designed and we provide the security for the the back assets as well.

>> Yeah. So I guess all in all stable coin issuers uh just have a lot more hurdles to go through but it is for the safety of all the public adoption that's going to happen. Um we have 30 seconds left. If we could just quickly round up you know one sentence on saying what are you thinking that excites you the most within the stable coin space in the coming 12 months. Um let's start with you Ricky. What would it be? For me, especially for Japan, so a lot of stable coins are in the project phase right now and we see some banks proactively working on the stable coin project. So we I expect we going to see the JPY stable coins coming in the future and the circulating in the market.

>> That would be exciting to you, Jacob. >> Yeah, >> I think the the fact that we now have, you know, real world use cases um outside of cryptonative adoption and and trading is is very exciting. payment is the first big use case. Um but um you know now that more and more stable co more and more people are holding stable coins it will also be um you know um basically setting the basis for adoption of other tokenized RWAs right so you have um any type of yield products stocks bonds and who knows in the future you know other illquid assets maybe also going to come on the blockchain so I think we're at the very beginning and uh but it's going to accelerate very quickly

>> fantastic Jacob. >> Yeah, just continuing from what what yeah, Jacob said, um, so I I think a stable coin will be having more CBR competition uh among stable coins and so like market selection phase is coming up and and that one would be going along with the tokenization of traditional financial assets. uh I think we'll be having more traditional financial asset bonds and equities everything can be tokenized and available on chain and stable coin will be used for settlement of such tokenization uh activities.

>> Thank you so much to all our panelists here. I guess the war for stable coins versus CBDC might no longer actually be a war. So great harmonizing future ahead and I wish you all the best for the coming afternoon. Thank you everyone. >> Thank you. >> We'd like to invite our next speaker, Mr. Dimma Gusakov. Mr. Gusakov, the floor is yours. [Music] Hello folks. I'm super happy to be here.

The day is coming to an end. So I won't be talking I'll try not to be very boring and I'll try to like give a bit of an enjoyment for you. So today we're going to be talking about the importance of building a community behind a brilliant product or a brilliant technology. And first of all let me again introduce myself. I my name is Dimma and I'm a technical leader of the team working on the community staking module product in laid out and you might have two questions the first one why do we have community in the name of the product are we so much about community and the second one why the hell on earth tech

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