The Race to Put Dollars on the Blockchain

Transcript

passage of the stable coin [music] legislation drafted by the Senate dubbed the Genius Act because analysts say a wave of competition could complicate [music] things. >> Stable coin issuer debut right here at the NASDAQ today. >> Hello everyone. We are with another episode of CEO beat. Uh today our guest is Chad or Charles Cascarella. Uh welcome to our show Chad. >> Hey great to be here. Thanks for having me on. I know you don't take a lot of uh podcast calls. I'm very grateful for you to spending time today with us. Um we have a lot of founders in the audience that um would love to hear more about your stories. I'm super super excited for this show.

>> Yeah, I can't wait to have the conversation. Uh it's going to be fun. >> Yeah, 100%. uh before we start and asking all the serious questions about the paxis and a stable coin why don't you tell us a little bit more about your journey where you were born like uh how was the childhood and how did you get into like the founder mode and entrepreneurship >> uh yeah well I was born in Lancing Michigan um and uh still Michigan State fan and I grew up in Cleveland um where I spent you know kind of really my whole life um and so in the Midwest Um and uh you know this kind of like during the rust belt era so you definitely lived in somewhat depressed times. Um and uh in

some ways like I think maybe that helped you constantly think about what ways could you try and go out and make money like what kind of businesses could you start what could you do? Uh you know these weren't like boom towns. Uh you know it was quite the opposite. So, you know, what side hustles could you try to put together and be able to make some money and, you know, think really creatively? Um, and you know, Cleveland is a fantastic town. I mean, it's you like kind of learn about loyalty and hard work and, um, uh, you know, really kind of appreciating your friends and family. And so, you know, being from Cleveland is like indelible. Um but at the same time uh you know sometimes you know it is also an impetus to be able to

move to new and bigger and better things as well. >> And you have a you have an interesting background um to to what extent you want to share but I know there is some immigrant in your blood. >> Well you know I guess we're all immigrants in some ways. It's like maybe sometimes it's easy to forget when it's far enough away. Uh but yeah I'm half Lebanese, half Italian and so >> that's combo. That's combo. [laughter] Yeah, I mean the best food combo, that's for sure. There's nothing better, you know, at least in my mind. Um, and so we always had good food growing up.

Uh, though nobody knew what hummus and babusha was in Cleveland in the in the early 80s. I can tell you that right now. [laughter] It's not quite the fad today. It was like uh definitely um you know very uh unknown and exotic at the least. >> Yeah, makes sense. And then what was the first time you felt like you can do it yourself? You can make your own money. You don't need to be an employee. What like tell us about your entrepreneurship journey. How did it >> I don't know. It's probably some lemonade stand or mowing lawns and shoveling snow. Uh you know, you're always trying to think of like some crafty ways doing yard work for other people. Um you know, painting houses. I remember breaking concrete. I can't even

think of all the different jobs I had over time. And so, you know, but you go back all the way. I remember buying like my first stock when I was in oh I don't know it must have been fourth grade or something like that fifth grade and my grandmother explained to me uh the stock market and uh LTV Steel just came out of bankruptcy and I thought oh yeah we should buy LTV Steel you know it's from Cleveland uh yeah wasn't a good investment I think went bankrupt again but you know it was like um uh you know it continues on uh the same cycle but um you know really kind forced me to think about what are different ways you could invest money.

You know, you're earning money. What do you do with it? Um, you know, I remember getting like $200 in total for like my first communion money or something in second grade and thinking, well, where can I put this money? Like what could what could I do to generate like a good return. Um, and you know, so maybe that was always inherent some way. And I think you know the Cleveland side of my family is Lebanese side and I think you know they're always entrepreneurial and you know everyone in my family you know doing all kinds of businesses that they ran themselves and uh so it's kind of a little bit in the blood too and you know when you have that type of um exposure you know I don't think it feels so foreign to say oh yes I I want to go do something entrepreneurial because you

just kind of expect that you will um and because that's what everybody else is doing that you're seeing around That's That's right. And then um you your first job like serious job was at Goldman. >> Yeah. I mean um I I guess uh I was at Bank of America and I did high yield investment banking and then I uh moved to Goldman in New York and I was there and investment banking was okay. I didn't really love investment banking um because I mean it seems transactional. It is transactional. Um it's obviously very sophisticated and hard work and so is a good um groundwork to understand businesses and cap tables and what's going on but you know high yield banking

is very much about the transaction of enabling someone to issue debt. Um moving to Goldman I went to the cell side uh covering financial institutions. So it was research uh and writing reports and following companies and it was like American Express and MBNA and Capital One and a whole variety of other Fanny and Freddy. Uh it was all the specialy finance companies which are kind of like um uh the non-bank uh lenders and it was a not exactly what I planned to be doing. Uh I was actually supposed to go cover the technology companies at Goldman. Uh and this was in 99 2000. So that's exactly where you wanted to be. The last thing anyone wanted was like a mortgage insurer, a bond guarantor. You're like what the heck? You know, this is not interesting.

These aren't changing the world. Uh actually it turns out they did uh because they all blew up in 2008, but you know it's a different part of the story. Uh so anyways, I was at Goldman writing research and that was kind of interesting but I always really wanted to be on the buy side where you're allocating capital um analyzing businesses and putting money behind your decisions and like really thinking about how you know different products and different management teams could really change the competitive position for their companies and for in the industry and even society. And so being on the sell side was good, but it was really more about um laying groundwork and uh you know I kind of was there for a couple years. That's the normal tour duty unless you want to continue to

extend it out and uh I then left uh went to the buy side. >> Nice. And and Goldman, you've seen the first bubble, right? 2001. >> Yes, definitely. This was I mean I think part of the reason I got [laughter] >> I think that's part of the reason I got hired uh was you know I remember the Asian financial crisis well was when I was in college and we were like spent a lot of time studying it. So you saw like uh that crash >> 97 Yeah. >> Yeah. 9798 you know the all the you know kind of different tiger um Asian tigers they were called uh kind of their growth models started to unravel and then um you know obviously that actually in some ways created uh the easy money we put

into place created this really enormous bubble uh that came out of the internet and uh I think maybe that's part of the reason I got hired at Goldman everyone was hiring as many people as they could find uh so they're like we'll even hire you And uh so I ended up with Goldman and um you know that was definitely during the the this bubble but it was so strange because I wanted to cover technology stocks. I ended up covering financial services companies and uh financial services companies they were trading they just kept going down every day because everyone is selling everything to just buy more you know Nokia or uh Niku or whatever it was you know there's like so many of these darlings pets.com uh I mean half these things are gone now but anyways uh the

ne next networking company uh Juniper and um so everyone's selling everything buying those these are trading at like five times earnings like you know one times book value And when the bubble happened, strangely all those stocks started going up. So it was the greatest time in the world to basically be long like very cheap value and very cheap growth and short, you know, kind of bubble stuff. And so even though technology stocks were going down and clearly the bubble hurt everybody as it was popping, uh the financial uh stocks and industrials and a bunch of other sectors actually really went up a lot.

And uh you know you could really have if you were running a hedge fund, people made enormous amounts of money because this was like the perfect setup. And um you know this the easy money policy that Green Sandman put into place coming out of the bubble. You know he kind of always hurt the one you love the most and like you know he loved the stock market and you know actually he just kept blowing bubbles because he kept trying to bail it out and so he started cutting interest rates and the financial stocks went up and they just kept going up for like the next five six years until you know we hit like kind of um you know terminal.

>> The music stopped. Yeah. [laughter] >> Yeah. The music is stop at something, right? Um, >> yeah. You can only blow bubbles so big, you know, and they're always based on something that's true because, you know, people are smart and, you know, they get uh captured by a narrative and a trend that had to be based in reality. >> Yeah. And then past 2001, another bubble burst or another financial crisis, which is 2008, which was the root cause of uh Satoshi starting Bitcoin. Yeah, by then you were like this experienced guy. You already knew the tech. You already knew the financial institutions, financial products.

>> Uh like how did you know that Bitcoin is the next big thing? How how did you get too early uh on on the bit Bitcoin bandwagon? >> I wish I could tell you that it was because I'm like some preient like technologist. I'm not a technology and I'm not preient. >> You're not Satoshi, right? [laughter] It would be such an amazing uh catfishing if I was Satoshi. Uh since I've only learned how to code by using Claude uh you know so I'm missing some of the requisite skill sets to be Satoshi. Uh even to be one part of Satoshi even. So um uh you know look when we started I started my asset manager with a partner in 2004 late 2004

early 2005 and it was really about how the financial industry and financial technology was going to evolve and some of that was >> uh credit uh underwritten through the internet uh that was different ways of provisioning loans securizations really came into full force um and definitely how trading technologies were going to change with tech uh with you know the use of more electronic measures. Uh you know when I started in 99 2000 I almost went and worked at Spear Leads and Kellogg which was a market maker on the floor of the New York Stock Exchange.

Now I basically said look I don't think this thing is going to last. this doesn't seem like the greatest place to go build your career and but it was still trading on the floor you know what I mean and it was still trading on the floor for quite some time and then you know decimalization happened and then you know electronic trading happened and that was a huge shift and so we really invested in those themes um then we modeled every mortgage in the country down to the zip code we were short subprime going into the financial crisis uh we could see what was happening and we realized it was the funding mechanism that was the best place to express the imbalances that were building up through the whole economy It just happened to be that subprime was like the most imbalanced place, but you know, we had a debt bubble. And it

wasn't just a subprime debt bubble. And today, we still have that exact same debt bubble. Uh it's just unlike in the early 2000s, we print money anytime it looks like it's going to pop. Uh there we didn't print any money and we kind of let a bunch of financial institutions fail and it created like some, you know, obviously accelerator effects. But and that's by the way what led Satoshi to create the white paper which was let's print our way out of the mess. And you know we're still living with the legacy of that printing today and all the I think uh chaos it's creating in financial markets and throughout society. Um and uh when he wrote that white paper you know we just came across it by happen stance. It was very early days like April 2010 and uh you know I

didn't know that it was going to be successful but um I could see Bitcoin as a store of value. I could also see Bitcoin and there was no other thing then uh aside from Bitcoin. So you're like well I could see it as a store of value. I can also see this as a technology that you could use to issue assets on. And we definitely tried to issue assets on the Bitcoin blockchain all the way back in like Paxos's early days when it was still, you know, colored coins and uh a whole other types of technologies came out. We were trying to use the oper part of the Bitcoin blockchain to put code into, but it just wasn't built for that. And so uh it meant that you know we were partly right, partly wrong about what was so

interesting about Bitcoin. But lots of other blockchains obviously soon came to exist and they started to solve the idea of um having a blockchain for information not just a blockchain for Bitcoin. >> That's correct. So Bitcoin is like that it has this curse and blessing, right? You cannot really change it much which is good in some ways but also bad in other ways that you cannot create new type of assets. You cannot run a stable coin on it. You cannot bring real world assets. It doesn't have barely has smart contract capabilities which is great because you don't want like your digital gold to be manipulated too much. Uh at the same time there are many other use cases that can be built outside of

Bitcoin. So you went from Bitcoin like April 2010 and uh then you started Paxus at what time? >> Um so we started Paxos in 2012 basically incubated within our asset manager um so that we could then uh go and apply for licenses. So we didn't really um you know have like a a true launch until basically we got approved in May of 2015. But we were incubating the business. Um, and the most important license we were working on was a New York trust. And we started working on this New York trust in 2012. Um, this predates the bit license that didn't exist. We were the first trust company

ultimately got approved in May of 2015 in the whole country to operate in Bitcoin and blockchain. We really pioneered this way of getting regulatory approval uh to hold assets and issue assets. >> Wow. And then you went from like zero to two billion market cap um or even more after that like tell tell us the challenges that you had in that journey that like when you started. Well, you know, there's two challenges I think when you start um in an industry that is so early and so nent as well as a business that's so early. And you know, it's uh it's not so much that you're just disrupting within an industry. You're kind of trying to

really be part of the disruption that's going to happen in the broader financial system. Um and that's not going to be linear. And crypto is anything but linear. uh you know because it's so prone to these booms and busts driven by price cycles. And for us the whole idea of starting Paxos and by we invested in a whole variety of um early crypto firms um all the way back in you know 2012 and earlier um so we were doing that as part of our asset management business. The idea for Paxos was that someone should build neutral regulated institutional infrastructure so that you could replplatform the financial system in a way that was trustworthy and reliable

and accessible for all the different institutions and that just wasn't going to you know kind of happen otherwise. Now there's a lot of things that were right about that and there's a lot of things that were wrong about that. Uh but when you live through an industry with these ups and downs and the crypto prices, we're subject to them too. Even as trying to be neutral institutional infrastructure, whether we're trying to issue assets or provide uh wallet infrastructure, uh you're tied to that cycle. And there's been a lot of examples where you kind of thought you were going to get institutional adoption happen and it kind of ended whether it was FGX blowing up or some uh kind of big bull market came to an end. Uh so many of those happened. uh kind of I've

essentially lived through every single bull market and bare market in Bitcoin uh believe it or not. Um you know and so since three cents basically so I've seen them all and uh every single one feels terrible. Uh I can tell you that and the bull markets feel great. Um and but it makes it difficult because you're building a business not on price cycles. You have to build it on fundamental operating cycles. >> Right. Make makes sense. And then what was the from your perspective what was the peak of Paxus? Is it right now you're at the peak or did you did you see like better days at Paxus?

>> Well I mean it depends on what peak means. Um if you said uh institutional adoption of infrastructure today is absolutely the peak. I mean this is like the moment we've been waiting for. uh like my way of really synthesizing the environment we're in is it might be a crypto winter but it's institutional summer. >> That's right. >> And that is like something we've waited for the entire life of of Paxos. Now on the other hand, if you said like what was our revenue peak? Well, we had a product called uh BUSD. It was the white label stable coin and we issued it for Binance. It was a great partnership and it was up to $25 billion almost of market cap, you know. So anyways, that

was like uh definitely at the revenue peak and so we've had to rebuild the revenues because that product uh was shut down by the regulators. >> So what what year was B USD? >> Uh what year was it launched or what year was it shut down? >> Launch. No, what year was launch? >> I think it was launched in 2020. Uh basically. Yeah. >> Where was Circle and Tether USDC USDT back then? >> Um well they were both larger but not that much larger. Um I had to like go back and look at what the Well, I'm sorry. I'm thinking of 2023. Uh in 2020, I mean, look, they were um they were definitely like uh bigger uh market caps, but um the whole space was quite small. I mean, you know, you're only in

like hundreds of millions or lowdigit billions of market cap. It really started to explode in uh the pandemic uh because that's when stable coins really took off. Uh interest rates went to towards zero. uh crypto prices started going up, you had an enormous bull run and you had to get into stable coins in order to get into Bitcoin and other crypto and it just created a complete adoption curve that no one was really expecting. I mean there's all kinds of origin stories around Tether and Circle and by the way we launched the first regulated stable coin in 20 uh 2018 2019 uh and it was our own called Pax Dollar and we quickly realized we don't have the distribution. we're not a

distribution um organized institution. We need to go work with institutions that have distribution. And in some ways that was what Circle did. They worked with Coinbase. Makes sense. And so I remember like early 2020s like after the the bull market in crash 2022 and FTX happened, everything was going down. But when you were looking at charts, stable coin was going up and up and up. Even like for stable coin, you were like two to three years earlier than anybody else. Uh so why you thought the stable coin is the next big things and you invested in B USD and launched it with Binance?

>> Well really it's the legacy of how we thought the uh financial system would get replatformed. Um so when we got approved for our to trust in May of 2015 we started working on tokenization of RWAS. That's what we were focused on first and foremost and that um involved us looking at well could you do syndicated loans? Uh there are some other companies in this cohort R3 digital asset. Um they're still around today great companies. Um and uh we were looking at um should you do fixed income, could you do equities?

Is it private shares? And you spent a lot of time working on this and we actually were going to create our own blockchain called Bankchain. um believe it or not and the whole concept of bank chain was that you needed to have a private permission ledger. um you know we got that wrong like I definitely think it's all about uh public ledgers um ultimately public and open not private and closed and um uh so we were working on bank chain for quite some time we ultimately decided not to do that but uh we were continuing to work through um securities tokenization for a long period of time and we applied for started working on applying for a clearing agency with the SEC back in 2016 2017 and we ultimately got a no action letter in 2019 and we

really moving real live tokenized US equities around. And what we realize is if you want to tokenize whether it's syndicated loans or private shares or equities, you can't have it syndicated and or a security put onto a blockchain without having the cash leg on a blockchain. So now that look, I didn't realize that we're going to have these unbelievable crypto bull markets that was going to pull cash on chain. My view was you need to get cash on chain so that you could then have the cash leg to put securities and RWAS on chain. So we were not approaching it from a crypto lens of you need to have it for the crypto markets.

Um in hindsight that's almost feels obvious. Basically you have onchain assets, you got to you need an onchain um uh cash like we were approaching it the opposite which is let's get an onchain cash leg so that you could then get off-chain assets onchain. you know, weird, you know what I mean? Like we didn't get everything right and like certainly understanding that evolution of the product market uh was surprising for us. Now, I don't know if we're the Village idiots. I don't think anybody else expected that either. Uh but, you know, if you got it right, it would have certainly helped uh our maturation as a company.

>> Makes makes sense. And you went from BUSD to a consortium called USDG. Um, so that was your double down doubling down bet on stablecoin. >> Well, um, we actually launched the PayPal dollar first and this is something we're really proud of. >> Yes. So, we pioneered this concept of white label stable coins. We had our own. We said we don't have distribution. So, the first white label we created was for Holi. >> Uh, most people don't remember this.

There's a Holy dollar. Then we created the Binance dollar B USD. That one obviously had tremendous success. Um and um then uh we launched um but any case um when we launched the B USD uh you know you know we were really proud of it uh obviously that ended PYUSD also very proud of it. Um and then we launched something called the global dollar which is what you're referencing and this is a consortium dollar. So we issue the PayPal dollar today we issue USDG today.

Um there's 171 firms that are part of the global dollar network. We issue on behalf of the global dollar network just like we issue >> five. Is it Kraken, Robin Hood? >> Uh Kraken, Robin Hood, um OKX, um there's a whole host of other uh firms uh that in the US and Europe uh that have either joined or joining. Even Mastercard has joined it. This is an open consortium. Anybody can join. uh we issue on behalf of it just like we would any other white label. The really the the driving focus there was many of the firms that wanted to were considering launching their own brands.

>> Yes. >> Uh said you know what maybe this makes more sense to join together. And I really do think this is the right way to approach the stable coin market today. We've seen uh kind of a um you know uh uh I think flattery is being copied and uh OSD has copied the uh the method that we came about with which is to create an open consortium for uh both the rewards and and maybe in some sense the governance and um I think that's the way you're going to get to a place of uh real societal scale just like how Visa Mastercard did it and so I think that that's what the global dial network has pioneered. Um, it's the fastest growing uh dollar at this point. I think it's up

5x year-over-year and doubled so far this year and um Robin Hood launched with it on its chain and it's like had some great success there. So, um I think a consortion model makes a ton of sense. I also think a single issuer model can make sense too. it just um you have to really dedicate an enormous amount of time and effort to kind of push through the fact that um a lot of firms don't want to use someone else's uh dollar because that's giving them a benefit versus you. Um and by the way, that's part of the problem with USDC today. And and uh as well >> Yeah.

>> Yeah. So before getting more into the stable coin, I have one interesting question for you. So you powered most interesting products uh related to stable coin on the planet like BUSD, PYUSD, USDG, but you were like you decided to be the plumbing the infrastructure behind the scene. So probably if you go ask people in the street what is Paxus, they don't know what they might use. They might have used BUSD or PYUSD or USDG. Does that bother you? >> No, not at all. I mean >> it was it was not a bog. It was a feature maybe.

>> Yeah. Look, I know I just we don't eat psychological food. We eat success. And like you don't you you can succeed in many different ways. And um having looked at the financial system for a long period of time, some of the most successful companies are the ones you've never heard of. Uh or some of the most important ones are the ones you never heard of because they're in the background. There's going to be a lot of competition for customers, uh the end customers. And if you are the actually the infrastructure layer underneath, you can create scale, but you do it in a wholesale basis. And I really spent my career in kind of the institutional markets anyways. So going out and doing retail marketing wasn't something that was native to me or to what we maybe even be good at. Um I do think that um

you know when you look at the crypto markets obviously it's been enormously about retail and ironically because the government was cracking down so hard all the other institutions that have the end customer you know basically every American's got a financial relationship somewhere u but they couldn't go to traditional institutions to get access to these assets so the government created an unbelievable hook for all of these disruptors to come in and be able to gain market share because they were able to launch crypto trading um for a whole variety of reasons, but most traditional financial institutions weren't. Again, it's like you're the more heavily regulated you are, the less chance you're going to have to be able

to use this. And so, it created an opening for all these new firms to come in. And uh I certainly wouldn't have expected that that's how this would have all played out either in 2015 or 2016. another thing that we just didn't expect and you know I think you know you're maybe finally seeing that shift to the institutional summer that I was describing but I would have thought it was going to happen half a decade ago and it almost did it came close you know it was just FTX really you know really shifted everything >> makes sense um so what do you think so there two two things happened on the stable coin one is circle went public and and Circle and Coinbase, they have a

very close connections some point. I think Circle was like almost as valuable as Coinbase. What what's your take on on that? And then we get to I want to chat a little bit about Tether and USDT2. >> Yeah, they got like a hair's breath of each other. It's interesting, you know, I don't know. It's always hard to tell uh when right when you go public the market um the the the float uh for people who don't know like you know when you go public most of the stock is still locked up. Uh so it doesn't take very much buying or selling uh to have very large fluctuations in the stock price and you know this is like fairly common like what right after you go public and so if you're a hot uh IPO your stocks will go up a lot and then it might go

down a lot and if it's not a hot IPO uh sometimes you could go down and you can maybe go down a lot and then you go up uh and you know everything in between and so there was a moment in time where obviously circle got very close to Coinbase's market cap. And that's somewhat counterintuitive because basically half or more of the revenues go to Coinbase. Um, right. And Coinbase has got a lot of other businesses that are also generating revenue. So, you're like, how could they be worth the same? And, um, I don't know. I think there's probably some dislocations in the market and maybe some sense that you could get a pure play exposure to stable coins and maybe to a new payment network that they might be able to monetize away from whatever Coinbase agreement they have.

Um, I'm kind of answering this more as like the stock analyst than I am like the industry competitor here. Um, you know, it's always hard to disagregate those two things, but um, that's how I would try to answer like how it that evolved. Uh, but it was pretty puzzling to a lot of people, but you know, that happens all the time. I mean it's just like kind of part for the course when you especially when you go public but anytime people >> see that as a vote of confidence of street on stable coin because like circle was the only public stable coin company that's why it went from like 5 billion to 80 billion post IPO um was >> yeah that was definitely an important component of it I think and I think you know um you know there was a lot of

interest in stable coins at the moment that they um you know so they're the only expression of it and you're getting everybody like and there's not that much float. You put those three things together and you can really create a quite a perfect storm. Tether the owner of USDT become one of the largest buyer of US treasury and as a result of that they started building kind of this friendmy relationship even though it was offshore kind of unknown entity but it was an important success factor for US government uh during hard time.

>> Yeah I mean look I think um is a big holder of US treasuries for sure. Um, I don't think of that as per se um uh, unique demand. Um, I think it's new demand for sure because these stable coins exist and people are now able to hold dollars they couldn't before. Uh, but it's not unique demand, meaning that I think that if um, Tether wasn't serving those customers, other people would be able to serve those customers. And you know, there's probably some advantage to having an offshore issuer uh just like there is in uh having a Euro dollar market uh which are like wholesale markets in Europe uh that

trade in London or the Asian dollar market that really trades in Singapore. And so you have like these offshore markets where dollars move around um outside the United States. And so you know in some sense like what they're doing could be looked at analogously to that. But I do think that there's a lot of competition in the stable coin space. I mean, forget about like us issuing for the global dollar network, which has lots of international institutions or PayPal or Circle or whatever it is. There's, you know, another half dozen other ones that would happily take their place. And um, you know, I think that that would happen really quickly um, you know, if people had the ability to do it. Um, so I don't so I don't think it's

unique demand. I do think it's not new though. >> Makes sense. And um recently uh stable coin the volume on the stable coin surpassed 35 trillion which is more than Mastercard and Visa combined which is around like 25 trillion but a lot of that is trading um in asset circulations versus like payment. Maybe a fraction of it is payment but it's growing very very fast. Um, so what's your take on stablecoin use case on the payment side uh versus just trading because a lot of the traction was on the trading side. Um, so

do you think payment would be a major contributor to the next wave of growth of stablecoin? >> Yeah, it's interesting. What was that number again? You you were just saying it was >> 35 trillion. Um it's more than it's more than Visa and Mastercard combined but Visa Mastercard everything >> in the last year basically right >> last year. Yeah. >> Yeah. Yeah. So it's interesting now that's retail >> and I think when you look at crypto movements some of it's retail but some of it's like kind of trading institutional right >> most institutions actually. >> So Fed wire by the way this does not include like uh kind of everything. Fed wire is 1.6 quadrillion a year.

>> Yes. >> Yes. [laughter] >> Right. So, you know, in some sense it's like, you know, that's really big that uh we're at $ 35 trillion, but if you looked at it as a percentage of wholesale markets, you know, >> yeah, >> it's still like a couple percent. You know what I mean? Uh which by the way makes sense because here's another way of thinking about it. There's two to three trillion dollars of crypto market cap depending on like what day we're talking about. Um and uh there's $900 trillion of other assets, right? And so that's basically, you know, 3% uh so there's 3% of the world's crypto assets and in order to have movement of crypto assets, you need dollars and they're

onchain. So it's like tied to that. And then you basically have uh the rest of other assets. So you could look at it as asset markets. You could also look at as payments. Payments should have a lot more velocity than assets because um you know they're being used like every single day. Um, so I mean I think you know we can maybe get a little carried away like if you have stable coins and you went down to your grocery store and tried to use them, good luck. You're not right. You're basically you might use a stable coin that's loaded onto your credit card but nobody's accepting a stable coin for most goods and services throughout most of the US economy or even most of the developed world. Um, >> but do you think are you seeing that changes like people go and buy coffee with the stable coin? Well, I don't know

if I quite go that far yet. I would I mean, you know, or you know, it's probably more agentic commerce that I think will change it faster than like, you know, getting someone to buy a coffee with it because uh that works well. I mean, it works totally fine. You don't disrupt a scaled solution. You disrupt the part of uh the market the scaled solution could never serve. That's where disruption starts. And then you build up enough scale to then be able to solve bigger and bigger problems. If you try to go right at like supermarket spending on credit cards, you are going to fail and it's going to be ugly. Um, if you basically say, I'm going to give a wallet to people outside the US who have never had access to dollars,

you're going to succeed. And that's what's happening. And oh yeah, now you can do crossber payments faster and maybe in a way that you could never do before. That's going to uh succeed. Um, so you have to be strategic and smart about how to insert yourself in the problem cycle uh for whatever you're trying to fix. I mean, you know, you can just bang your head against the wall and it doesn't matter if you're right. The market has to be at a point where it can accept it and where it's worth the switching costs. Switching costs are zero when you don't have something. You know what I mean? But you need it.

[laughter] >> Makes [snorts] makes total sense. Um yeah I think um uh from my perspective there are so much broken things or outside of US that stable coin can fix that we don't need to replace things that are actually working great in favor of consumers in US yet but at some point maybe a stable coin sandwich becomes a thing that you're like using the same cards same payment method but the actual settlement happens on blockchain just because it's faster cheaper better um >> well I definitely think uh you know you see example of the stable coin sandwich.

And for like kind of the um you know kind of the basic listener, it's like if you have Brazilian real, you're in Brazil and you want to send something to China today, it takes five days uh to send money. Uh instead, you could take the real, turn it into a dollar stable coin, send it to like Hong Kong or something or uh somewhere in China and turn it into a remn uh or the Hong Kong dollar in basically, you know, no time. And that's a huge improvement uh because otherwise you have to turn by the way there's still no way to go from Brazilian realale to remnim you'd have to go through dollars anyways but instead you have to go through dollars through the banking system and that takes five days and you lose all that time and the interest on the money and so I mean I think stable coin sandwiches

are real um because I think 80% of all FX trading has a dollar on one side like dollars to euros or dollars to yen or whatever it is and so everything is trades against dollars and putting stable coins in there is definitely to make things more efficient. So I there's lots of like great uses for stable coins and I think we're going to look back and say well it's 3% today or 1% or I don't know whatever way numerator divided by whatever denominator you're going to look back and say it's growing 10x >> from what we thought. And um while you're not using stable coins at down at your local coffee shop, I can tell you like the usage of stable coins for

payments is growing dramatically. It's just still a relatively small number compared to the other uses of stable coins. >> Makes sense. My last question for you is agentic commerce. Uh you alluded to that one as well. So, do you think at some point agent commerce would be bigger than the entire e-commerce that we have, humanto human interaction or transactions? >> I don't know if I'm going to uh be able to leave us with any deep thoughts here, but I will offer them. I absolutely think it's going to be bigger. I think that's a no-brainer that you're going to end up with a lot of agents and they're already see I forget what it is on web traffic now. Uh but majority of web traffic is basically uh AI driven. Um, I don't know why that wouldn't be the same

in payments in Agent Commerce. It will be um maybe it's a little it's happened with a little bit of a lag. Um, but you can already do it now. You could have an agent. You go to Open Claw, you can download a MetaMask wallet. You can put $30 in there and say, "Go generate a return for me in DeFi of 10%. Come up with a strategy." And like it may or may not execute that strategy well, but it will come up with a strategy for you. And so you can just, you know, it's not hard to imagine, well, come up with a stock portfolio. I'm, you know, uh, 70 years old. I'm going to retire in three years and, you know, my life expectancy is 15 years. Come up with a portfolio of stuff I should earn and hold and and do it for me. and it executes and you know

you keep asking it to rebalance it and it handles it and you'll end up getting way more velocity across all of assets and and um and payments and I mean I almost can't imagine that's not what the world's going to look like now. I don't know exactly when uh but probably sooner than we think. On the other hand, Agentex payments is like really at zero right now. Um, and everyone wants to talk about it because of course, >> cool, >> that's the future, but you know what I mean? Like I remember talking about the future of uh stable coins in, you know, 2019 or 2018 or the future of the blockchain. I mean, sometimes these things take longer than you think and then sometimes they take shorter. Um, you know, it's can be very unusual.

>> Makes sense. Um, Chad, I really appreciate your open and honest conversation about uh even like your competition. Uh so I'm sure like founders would would love to hear your opinion about u deep opinion on the industry but if you want to leave us with one advice for younger version of yourself um when you started your first company what would that be for for our audience? >> Um you know I think there's a couple things about starting your own business. One is you really need to be obsessed with the problem that you're trying to fix. uh you know that's not going to like start a company because it's fashionable. You got to be obsessed about it. And if you're obsessed about it, then you're going to work at it

really hard and you got to have to keep working. And so like you have to also want to win. Uh because it's the world's competitive. Like you're going to have to be out there. You got to work hard and you got to be obsessed. And you know you have to really care about your customers because you're solving somebody else's problem. And so you got to understand how do they think? How do they feel? How do you have empathy for them? And that's the uh framework and the groundwork for starting a business. There's so many things else that go into around hiring people and managing people and raising capital and how do you scale? But the bottom line is if you're going to go start a business, what are you obsessed about? How much do you want to work on it? Like pour your heart into

this thing uh like there's nothing else there. And really, how do you make sure that you care about the customer? And but that that's a good starting point. Yeah, that's that's uh that's true. And also there is no better time than today to build like because it's so much easier to build so much easier than 20 years ago >> even than 10 or 15 years ago because >> you know the thing is you you have AI so of course that's helpful but it's more than just AI you have all this software and the internet and so that means you can get to a different type of scale and it used to be the hardest problem was how do you manage people in order to scale now you can get to much bigger scale before you have to worry about that problem and managing people is the

hardest thing in the world and it's actually a completely different skill set from like how do you obsess? How do you build something? How do you like really care about like customer problems? It's not the same thing as managing people. And so that's why like professional manager mode is a lot different from like professional professional like kind of builder mode or like founder mode. And like they usually the tween don't cross and you know you kind of have to move on from the founder at some point because you can't keep running the company like you're running out of ramen or something you know you have to like run it and but now you can defer that day a lot longer than you ever could before and that is a pretty cool thing.

>> Makes sense. Um my last question I promise what's your favorite restaurant and favorite food? >> Uh [laughter] my favorite food it's always Lebanese food of course. Uh hopefully my uh Italian grandmother's not rolling over in a grave, though her lasagna is like still the best uh lasagna I've ever had. Um and uh I don't know what my what my favorite restaurant is. It's hard to say. I think it's probably Grand Mercy Tavern in New York. You know, it's good, but it's not too good. I feel like you get to like some of these places and they're too fancy and like you don't even know you're eating food anymore and you know, you leave hungry half the time. And you know, at the same time, you kind of want fresh ingredients that are really good and like uh from the farm. Uh, you know, but I take grandma's

cooking all day long over any restaurant. >> That's great, Chad. I really, really appreciate your time. Uh, it was a fascinating conversation. Thank you, my friend. >> Yeah, great to be with you. >> Yeah. Where where people can find you uh on LinkedIn, on on Twitter? >> Yeah, you can ping me on LinkedIn and uh that's uh probably the easiest way for the general public to get me. >> Yeah, sounds good. And you can find me at uh bam as easy mesh or you can go to meshbay.com. Thank you everyone for listening. Uh this was another episode. Please uh don't forget to subscribe and like and share. Thank you.