MoneyGram CEO: Tokenization & Stablecoins Are Set To Explode (Why We're Betting Big On It)

Transcript

All righty, guys. Welcome back to Stabled Up episode number 39, our premiere weekly stable coin show powered by our friends at Frack. Visit fra.com to learn more about what they're doing with FRXUSD and more. Today, we have Anthony Su, chairman and CEO of Moneygram, appointed in October 2024. He's leading the company's digital transformation and stable coin initiatives. Uh, drawing on 25 years of technology experience, Walmart, other Fortune 100 companies. Anthony, great to have you, man. >> Yeah, great to be here. Thanks for having me. Most definitely, man. I mean, what a what a time to be bullish on tokenization and stable coins in this market. I mean, while while we have so much riffraff around Michael Sailor and around what the price of Bitcoin is

going to be or whether Stretch is going to blow up, we have this mega mega mega super trend happening of tokenization and stable coin growth. And so, Anthony, I know it's your first time on the show. um CEO of Moneygram. Would love just to get an understanding a bit about uh your background, what what your kind of like main prerogatives are uh at MoneyGram and then let's let's kind of discuss this mega trend and we'll get into all the nuances. >> Yeah, sure. I mean uh a little background on myself. I spent my whole career actually in technology. Maybe to even go back I uh I grew up in my byproduct of the of Silicon Valley. I grew up in San Francisco, learned to program when I was 12. And then I spent the first part of my career in in tech,

working at companies that you might have heard of like uh Apple, Yahoo, uh early days of search engine, leading search engine called Inc. to me. And then the second part of my career, I've actually used that knowledge because of a startup I that I started got acquired by CBS and I helped them transform into streaming. And then it led me to lead the digital transformation at uh at CBS as well as uh Walmart. And the reason uh I ended up at at MoneyGram is because when I looked at all the transitions that happened say from uh the internet boom to the movement to mobile and cloud and everything that had happened on ecom.

You know, I saw the same opportunities here in terms of money movement globally. Uh, similar to maybe the way you and I would think about these platform shifts, which was a way to operate the network a lot more efficiently to bring down the cost, but also just drive mass adoption. I I think that the the point you bring up about so much noise in uh in the current market's really true, but if you think about long-term where this stuff is going, I think you and I can probably agree that there's probably nothing more clear that like currency is going to go more digital. I think tokenization is going to be happening everywhere. And the question is how do you take advantage of that? And that's kind of why I joined

Money. >> Yeah. Yeah, man. I mean a lot of these shifts have happened simultaneously right with regards to the shift towards e-commerce the shift from analog to digital when it comes to stock trading the shift you know now with AI and and and kind of like what that's happening or you know what what that's causing it and looking at the you know kind of blockchain shift I suppose um what what was the kind of light bulb moment for you when you kind of came to MoneyGram your previous experience Um you're looking at a business here that you know has done billions of dollars of revenue annualized consistently. You're looking at this kind of trend of blockchain and this growth of 24/7 global markets

whether it be for settlement for uh crossber for remittances etc. What was kind of the clear light bulb I have to join money gram I think this is the way that I can really make an impact in the company. What was that for you personally? Well, I spent a number of months looking at the opportunity. I think one of the things that's really appealing about financial services, especially payments, as it goes online, is the margins get better. Uh what I would say that most people lose sight of is whenever you go most digital transformations when you go digital from analog, you actually lose margin. Best example uh is when you think about uh you know client serverbased software that goes to SAS, they actually lose money or lose margins. When you think

about e-commerce, the easiest example to use is when you have to ship a box at someone instead of them walking into your store to fulfill, you lose margin. But when you think about tokenization and you think about digitizing payments, your margins actually go up because the business gets a lot more efficient because you're running on much more efficient rails. And there's also with what you brought up about AI, you have the benefit of leveraging AI for a lot of orchestrations over time that also just kind of improves. So I've I think that the exciting thing is when you think about most transformation, they're typically off of like one platform shift. You know, we brought up PCs, we brought up the internet, brought up cloud, mobile. We're talking about two or three right now, all happening convergingly at the same time. You're

talking about uh digital currency with blockchain. You're talking about the movement with AI and you're also talking about uh agent commerce. And I think that all three are going to really change the landscape about how consumers uh conduct business and commerce online. And then the second part is how businesses operate on their back office. >> Yeah. Interesting. Interesting. Interesting. So, so when you move from when you move payments businesses from kind of the traditional system a wired transfers, I mean we've heard this a trillion times, right? Stable coins are far better. you actually you you gain margin like I think Western Union is gaining a huge huge b huge amount of

revenue from you know having their own stable coin using it as well similar to moneygram but in other transitions you're saying that you actually you basically don't make more money you actually lose and so this transformation is is specifically special in that regard then I was going to get into some of the some of the pointed questions here why launch your own stable coin. Why not just use, you know, circles USDC, Tethers, USDT, doesn't having your own stable coin, um, and using somebody else's or a variation of it, doesn't it not achieve the same purpose in terms of cheaper costs, uh, 247 global? What is having your own stable coin enable you

to do? >> That's a great question. So, let's just take a step back. So we actually have been working with Circle for a long time and we continue will work with Circle because we use uh uh we use their coin USDC for a lot of our products including how we settle with treasury and we use other types of uh of uh coins according that way. The our our announcement at MGUSD maybe the thing that's different about this versus what everyone else has done is that we actually launched it for our own network for our own benefit. We didn't launch it specifically for institutions or trading. Uh, so MGUSD is being used specifically for our consumers. And you might ask, you know, why do you want to operate and why do you want to own that? Well, if you, and

there's some stuff I can get into, but some stuff I rather hold off on for the time being, which is if you think about kind of how vertical integration works, there's a reason why over time I think Apple wanted to uh own their own microprocessors inside their phone. It's better for how they operate and integrate power management. They can build specific applications that leverages the best benefits of the chip. We see we actually launch our own coin for our own network that there was a lot of benefits to that in terms of building a using it as a foundation to build out uh applications that we're going to be launching for our consumers in the future. So that was a main driver about it. You know, at the end of the day, I

think you and I can probably agree. Most consumers won't care about what chain you're on. They just want to know that I want to make sure that I send money in the most efficient way. I save money, I save effort, and I save time doing it. And if I can earn a some type of reward on it, that's even better. And if you can get it there quicker and you can do tracking better and you have, you know, you can lower the cost in terms of doing so because it's within your own stack, that's even better. And that's kind of the thought process we went through. >> Yeah. And and obviously there's the economic side of it with regards to the treasury bills and the yield as well.

>> Yeah. Yeah. And some of that we, you know, we'll look for ways to, as we save money and we have a much more efficient way we can run treasury, we'll try to pass all those savings back to the consumer. >> Yeah. So, I've never used Moneygram or Western Union or any of these types. I've always just been like, I don't know, Wise or PayPal or just using stable coins to send stuff global. Like, we have global employees. We've just been paying them in stable coins or crypto for five years. you know, anytime anytime that there's like any sort of payment, it's typically for for me, it's usually with somebody who's gonna accept stable coins on on the other side just kind of in a native fashion. Maybe you could just help us understand the direct unlock by walking us through a bit of

like what a what a typical consumer journey or you know uh actions are on Money Grant and then what that kind of like implementation has looked like from the stable coin side and really like what you're seeing from the consumer preferences user data as far as like you know whether it's time spent on the app or higher satisfaction or you know cheaper rates kind of talk us through what the consumer journey is and then these implementation details and some of the outcomes. >> Sure. I mean uh I'll I'll share with you a use case of how people use it today and then maybe what I'll do is I'll talk about the the ways we believe people use in the future and you know one of the things uh in terms of new use cases we just signed uh a big partnership with Kraken where we're their cash offramp

for that and I'll explain why that partnership is exciting for both of us. So when you when if we take a step back, the typical moneygram user is a person that is working overseas. It's trying to send money large majority of them sending money back home. It's a market called the remittances space. And what they typically do, it's an ongoing uh transaction where every few weeks they are sending a a set of funds back to their families back home to pay bills. Um, and typically when that's happened, uh, where it originally started was through a cash network in the physical location. And so they would walk into a Moneygram location, let's just say here in the US, and then they wanted to send

money back home to Guatemala. And that would be a cash to cash transaction. And we do that very well. I would say, you know, we have just a sense of close to 500,000 retail locations around the world. To give you a sense of how big that is, that's uh that's bigger than McDonald's, Subway, Chipotle, and uh and Cabba I think combined by a factor of like five. So that's amount of scale is massive. And that still serves a big purpose. And when you say, you know, people are going digital, don't why they still need um a a physical location?

Well, >> the idea of sending money is uh there's a high level of trust here that we're talking about. And when you're sending funds, especially if you're in a foreign country, a lot of times you want to talk to someone who speaks your language and also you can look the person in the eye before you send it. I would say that that needs actually going to come up even more in the future as uh the ideas of uh deep fakes propagates. You're going to want to know that your transaction should be very trusted. Now uh over the last five years I think MoneyGram's really pushed and in terms of trying to make sure that we offer the uh option of a consumer who wants to transact through an app and we launched uh the what we call MGO or Moneygram

online where they can transact through either an iPhone or an Android phone through the web or our apps to send money to appear and they can either pick up a physical location, get their funds sent to a bank account, uh have it sent to debit card, all those type of things that you might typically think of but it is a crossber transaction. [snorts] Um and when we talk about crossber what makes it more complex than a typical transaction well as you know we work in a highly regulated industry and when you're talking about sending money from one country to the next you're not being regulated by one side you're being regulated by both sides and then you have to go through a complexity and mazes in terms of orchestration which we all try to hide the complexity from our

consumer and all they need to know is they send from point A to point B but between there there's a high level of information needs to be captured Ed in terms of KYC in terms of making sure that the transactions are cleared and safe going through our ML checks and then uh once that transaction happens we do it within seconds. We try to send it for most best case situations from point A to point B in seconds and it gets settled. When we talk about stablecoin, the thing that changes is that idea of sending from point A to point B is going to be that much faster because you're now talking about 24 by7 instant payments. You're also talking much more direct way of sending. And as especially

as you think about AI as an orchestration agent to allow sends to u go from one place to the next I think what you're going to find is that that kind of traffic cop of uh that orchestration layer it's going to be a lot more efficient with AI. [snorts] Um and then let's take a step back and I'll add one more point. So you're like since you know you feel very comfortable with uh stable coin you're sending person to person in a safe way. Why do you actually need these cash locations? A lot of times though in a lot most economies around the world, uh cash is still the dominant way that commerce gets done. So you can imagine when you think about other countries, there's

cash discounts. I was recently in Italy, they actually wanted more cash than uh in terms of transaction, you actually get 5% less when you do that. Every penny matters for a lot of people around the world. So that is also one of the reasons why in if you stay within the crypto arena sending if you're transacting from crypto to crypto it's perfectly safe and great if you can do that but when you need to convert to cash that's where you run into the first hangup which is why I think Kraken was so excited to partner with us and why we were so excited to partner with them is because anyone in any of their cryptocurrencies that they transact online if they wanted to convert that within the Kraken app and say I want a cash payout they can do. So they can go

to one of let's just say the 5,000 Walgreens location or Walmart locations around the world or specifically in US right now where they can then do a cash out of their crypto to cash in terms of conversion. So all those reasons why I think if you rethink the network and the use cases for it what we wanted to do is think about ourselves less like a remains company much more this is a global payments path platform. So, what can we do with this global payments platform beyond what we've traditionally done? And I think that's a big part of this rebounding we're going through.

>> Yeah. Yeah. And and on the blockchain specific side here on the stable coin side, um you know, obviously Kraken has has is now a big partner when it comes to facilitating the stable coin transfers for uh MGUSD and previously USDC. what what is the underpinning infrastructure that you guys are using uh on the blockchain side on the uh protocol side if you're moving funds across different blockchains um can you just give us a bit of an insight into like what Moneygram is using to move stable coins what what what blockchain networks what tools what kind of digital asset infrastructure are you guys using

under the hood >> so I think on the consumer wallet when we're talking about MGSD and by the way we see ourselves as really building out an open network. So what you see is that we just signed a deal. We're the we're the validator for Tempo. >> We're also a validator I think for Salana that got ma announced last week and you'll probably see us do a lot more arena without announcing anything too early. But what I would also say is that when you think about the consumer >> uh MGUSD product that we're talking about that operates on the stellar network on their ledger. Um [snorts] the the way we do issuance on that is through bridge slstripe and then uh our smart contract infrastructure is managed by uh M0.

Um and uh we go about you know orchestrating between each of these areas. And then you know in terms of uh the security of it as well as doing the custodial part we uh leverage Fireblocks >> and so all of those I think are leading firms that we use for specific purposes. We think for instance M0 is just really in our mind bestin-class in terms of doing smart contracts especially in terms of what we do. I think uh you know what we are doing with uh uh with uh stripesbridge you know they were we looked at a bunch of partners and they appear for us we were very excited to work with them on that issuance part and so when we

assemble it what you have is where we are still doing a lot of the I would say the coordination >> but when you think about the issuance of it we hand that out to bridge and then on the smart contracts we give it to M0 and it's all run on that a stellar blockchain that we've been partners with for about five years. Um, and we're excited about that. That's one use case. I think in the futures as you think about Treasury, which you alluded to, we'll, you know, we'll specifically look for different use cases for them too. And we do, by the way, still transact, especially on the back end in terms of settling with USDC still as well.

>> Yeah. Yeah. And then on the validator side, obviously to be, you know, a a Salana validator, you do need to hold a soul stake and, you know, stake it. Um, similarly on Tempo, they're obviously pre-token, so it's a bit of a different dynamic. And then >> Stellar, you you didn't mention that it is a proofof work chain, so it's a little bit different. Um, but is this going to be part of like the distribution and go to market strategy then for MoneyGram? like accumulate uh tokens based on networks that you guys want to be a part of or affiliated with that you are excited about longer term.

Become a validator. Uh kind of have a stake in the network, help govern it, help be a part of it in the early days and kind of signal your let's say for lack of a better term alliance to what's being built here. >> I think that what you said is correct. Maybe a different, you know, another angle I would say that we're thinking about it is that we're excited about the world as it moves to digital and the best thing we want to do is operate in an interoperable way on an open network. And I think for our consumers, what we're going to do is find the best blockchain and the best infrastructure for their use case in mind. What we do know is that however way we used to do

it will over time evolve into something that's smarter, faster, and much more costefficient. And if that's the case, the way to do that is by moving everything to digital currencies and blockchain. And so we'll find the best use case. We might find that honestly what based on our trading partners that there's a blockchain that we're currently not even talking about that works better for treasury in a country like India or something like that as our vendors. But uh what we have done so far is that uh on blockchains that we feel excited about we want to have uh participate as part of the community to make sure that we help and I think these validators is a good first step but there's many other things that we can do

in terms of contributing to these networks. >> Yep. you know, part of this uh larger digital shift of digitization. I just had like a Larry Frink clip play about tokenization and just speaking about how it's so obvious that the ease and efficiency capabilities of, you know, digitizing a lot of parts of finance. It's just like the world tends to move where there's seamlessness, right? It's just like it's just like we humans are designed to go towards more seamless infrastructure. This has happened over time. it'll continue to happen. When it comes to kind of building out that that broader idea, what a lot of companies have done, Anthony, is they've they try to become like the super app. So, your

wallet is where you have your stable coins where you send your mittances, but there's also prediction markets on there. There's also per you can also buy and sell spot tokenized equities, commodities, securities, crypto. Um, you can stake, you can earn yield on these. Then they have a card. So, you have your your card attached to it and all of a sudden you've got, you know, this entire all-in-one everything app and and it feels like every fintech services company is competing to be the everything app, which to me feels like a little bit of an interesting dynamic where maybe you don't do that. Maybe you just really specialize in one area or you compete on that big stage against the Robin Hoods, the Coinbases, the

Revolutes etc. What do you see as MoneyGram's unique advantage here in this kind of classification? And like is there a future where we can trade crypto on MoneyGram and we'll have a card and tokenized equities and kind of more in that everything app direction? What do you think about that from a philosophical business economic lens? >> What I would say is that uh I think our sweet spot uh so far as we think about our user base is that we have we actually have a massive trust and a massive customer base. We have 60 million active customers on the Moneygram network globally which uh are typically customers that have been underbanked because up to this point delivering services to them have been I

would say uh inefficient and difficult. We also work in an environment uh where we're heavily regulated. So I wouldn't be able to comment if we're going to do anything like in a prediction space or not. But what I will say is that when you think about the promise of owning that whole stack, our goal is let's offer and democratize finance for people around the world who might have potentially been left out of uh getting being included in terms of all these financial innovations that has happened up to this point and give them access in many ways that Amazon has done in the past by opening up commerce and others.

you know, the point you brought up earlier about like wh why do people need all these services? We'll we'll study and and look hard and figure that out over time. I do want to say that uh in the beginning of any I would say technology revolution you always find people say why do I need that? I remember when Amazon first came out, people were like, why do I need shipping in two days? And they were like this all you had a lot of retailers that would say you, you know, why is 10 days not fine? In the old days, if you remember, there's this great uh Tom Watson Jr. quote that said, you know, the market for a PC is not more than five people we can see that will actually need it in their home. And so I think we're just kind of going through that. But if you

take a look at where this stuff's going long term, it's clear as night and day to me that uh the where the world's going and that's the future we need to uh build towards and not you know get influenced by the day-to-day noise in the space. >> Yeah. So just coming back to like the stable coin and payments part of of the business and you know you you you explained how at least at the top of this you explained the transition from analog to digital or you know similar uh industries but you know different outcomes with regards to the profit margins whether they've been squeezed or expanded. When it comes to implementing MGUSD and stable coins into the payments offering, what does this actually enable

economically for MoneyGram? How much like are you guys thus like by saving a bunch of cash? Are you guys earning more on the top line revenue-wise? Aside from the payments experience and the quality of the experience economically speaking, what what was the incentive to do this? And if you get it right, what does that economically mean for the business side of Moneygram? >> Well, I think uh the most important thing is first, it's really early for me to give you any pro uh predictions about where we are right now, but what we would say is that the promise of what we plan to do is that we believe it's going to allow us to draw run more efficiently, especially with our float.

It's going to allow us to lower the cost to operate. Um, and it will allow us to settle much quicker and as a result, it's going to allow us uh I think really quickly to if we see savings, we're going to be able to pass that on. So, we can talk about an industry where, you know, a customer would be charged one, two, sometimes 3% for a send and lower that by 50% if not more over time. What I do believe is if we get this right bec and the way we think about MGUSD is that we are trying to verticalize the whole thing is that we're going to build a much deeper customer relationship because we're going to build services on top of the MGUSD which will increase the lifetime value on it which will in the long term drive much higher revenue for

us and much higher margins because we're going to have deeper relationships with these consumers. The key thing in any financial service is it's not uh trying to win one transaction but really to try to win that customer relationship over a number of years. That's why you know you see so many banks in the space today and traditionally have offered customers a certain amount for free checking. Well, it still cost them a lot of money to operate those checking but if they can keep your balance there means a lot. And I think the same thing is going to kind of play out uh when we talk about stablecoin.

>> Yeah. Do do you see a future where Moneygram would put Bitcoin on its balance sheet? >> Uh I don't want to predict too far ahead, but based upon where we are right now, my answer is probably no. Um just because I think there's a lot of regulatory reasons why we would not do that for the time being. Uh but that being said, you know, there is a lot of reasons why we would have MGUSD on our balance sheet and I could suggest taking other types of stable coins on our balance sheet as we convert them in and out because what you even if we have MGSD, we we are not naive to think that's the only stable coin we're going to trade. So what you're going to have to do is think about how you how you link these crosschains and cross

currencies back and forth on stables. >> Yeah. Yeah. Um coming to kind of like how you're thinking about where where the business goes from here with stable coins with MGUSD. Um you know we've we're in the middle of the regulatory hurdle right now for blockchain and for this industry. Uh there's going to be another Clarity Act hearing on July 17th. Uh so you know couple weeks away, three weeks away. when it when you think about what you guys need to really fully unlock what you're trying to do from the vision side um regulatory speaking Genius obviously has been passed but it's kind of in the stages of implementation um not exactly implemented in the in the

way that I think all of us have expected quite yet but it's it's a process and then clarity obviously being the big one when it comes from the money grant perspective about moving forward moving faster faster getting deeper into uh using these payment networks, using blockchains. What what do you need to see from Genius, from Clarity? Are there obstacles, holdups that are kind of holding you guys up from moving right now on the regulatory side? What's your kind of highle view on here's where we're at. You know, if we get clarity through Genius Act fully implemented, here's where we can kind of go. How do you think about what's happening up in DC? Yeah, like any type of regulation, people that work in a regulated

industry, when you have any level of clarity, no pun intended, you can operate a lot faster. I think in this case, uh providing a better understanding of where things sit in terms of rewards, I think where things sit in terms of what we want to what the framework is within the guard rails of how we operate within stable coin is going to be massively important. Then that being said, the one thing that's different about 30 act and that's only applies to the US is that we will have a framework and then we're going to want to use that to be able to interoperable within the countries that we operate within because we're connecting the world. We work in over 200 countries, 20,000 corridors. So there's a lot of permutations you can probably imagine.

By the way, that complexity is a mode for us >> because it is so complex that you have to uh uh operate within. And I would say that as we build that clarity, it's just going to be one more step forward. I would say that, you know, not to lose sight, the Genius Act provided a huge amount of confidence of how we could operate at least taking that first step. Yeah. >> And so it gave us a lot of assurances about, you know, when we talked about our partnership with Bridge, what we needed to ask them for and what they needed to be compliant to and what we were building towards gave us clarity in terms of that. And I think it's going to probably dictate the same way. What h usually happens is when a bill gets passed, there's a level reaction that

would take a little bit of time for that to play out. And I think that's what we're really seeing with the Genius Act. I hope the same thing happens with Clarity. >> Love it. Anthony, last thing for you from my side. boldest prediction for financial services apps as a result of stable coins in the next couple of years, Aentic Finance, stable coins, blockchains, tokenized assets. What is the what is kind of like the tipping point? What is the zero to one? What is a bold prediction about where apps and companies like yours are headed? Well, maybe what one thing I would te tell you is that when you think about a gentic commerce uh that we talk about, I uh I think that at some point those people

are going to get registered. They the Gentic agents are going to probably get uh registered to a real ID before they can actually transact. So, we know actually how to handle returns and who's actually transacting. That's my personal feeling about where things are going when you ask me about 2030. It's going to be an exciting space. No one's talked about that, but the the level of you know what we have right now is the wild west of the early days of cookies online if you remember like who cared on your browser and then it became a really sore topic >> or point. So as you play this out over the next five six years I think that that's where it's going to go and it'll be really interesting to see how the space evolves.

>> Anthony, I appreciate your time. Best of luck. uh congrats on launching MGUSD and we love to have uh more financial services companies coming into the space taking it seriously doing things the right way and utilizing the amazing technology that has been built here. So appreciate your time Anthony and uh have a great week. Hope it goes well for you and um it's a it's a bull market for stable coins man. >> Yeah in the long term like I said I completely agree with you. We just have to drown out the daily noise. Uh, we are bullish as anyone else, but appreciate you having us on. And >> let's get some Bitcoin on that on that balance sheet. All right. Come on now.

Come on. [laughter] All right, Anthony. See you, buddy. Cheers, man. All right. Hi.