Scaling Real-World Utility: The Operational Challenges of Stablecoin Payouts

Transcript

My name is Dante Reminik. I lead all of the stable coin initiatives at Holiday Payments. We do universal deposits and payout solutions. But the real star of the show here is Josh. So Josh, can you just kick us off, give us an introduction? You have a very interesting background, by the way, so you should touch on that. >> I happy to Before I get started, it's important to know that Dante just got married, and I think we need a little round of applause. He got married last weekend. Thank you, Dante. Congratulations. Um yeah, happy provide my background. So I um prior to Moneygram, I joined Moneygram about a year and a half ago and prior to joining I was co-founded Pangia money transfer a digital first remittance company in the space and uh ran that for about 10 years sold the

company was looking around for what to do next and sort of have a weird resume where you'd spend 10 years founding a company. The natural thing to do is like found another company. It's sort of hard to hard to fit into an HR box at that point. Um, and so I ended up talking I'm based in Chicago. I talked to some of these guys at Madison Dearborn private equity shop and they were like, "Oh, you should we just bought MoneyGram. You should join." And I was like, "Why why would I ever join MoneyGram? It seems like Netflix people join Blockbuster. It seems like a bad a bad approach." Um, but when I took a look, it was it was a really cool and interesting opportunity.

So for those in the room, I'm sure you guys know MoneyGram. I would ask for you to kind of like take that knowledge and put it in a box and put it on the shelf and just be open to a new idea of what we're building over here. Because the reason I joined, I got excited is so I was at a competitor in the space and when you look at Moneygram, there's all these things that assets that they have that take billions and more importantly calendar time, decades to build. networks, network connections, the ability to move money globally, the brand, the licenses, all these things.

And and not just licenses, like it's not like a a cab driver medallion. It's like building relationships with regulators so they know how you run your business, you know, how to talk to them, all that. And I knew how hard that was because I tried to build it on the outside. And so it was really cool to come in and talk to them. and they're saying what we need, what we lack is we lack a really great consumer app. Can you help us build the next generation of remittance apps? And if you think of how quickly you can build a tech company that you you see new startups sprout up over 12 18 months, you can really build a tech team and a great product pretty quickly.

And what's cool is I think we've done that. Um and so um that's what my focus has been. My role is to manage our digitally funded remittances. So if you think of that as or a digital connection point with customers. So we have retail we call it which is going somebody going to Walmart and sending a transaction which is still a huge part of the business. Um but I manage anyone who's sending with a phone or a website. Um and so yeah so it's been really cool. We've totally revamped the team. We've we've totally rebuilt the tech infrastructure. Uh it's weird to be with the team at an 85year-old company but most people there have been there for less than 18 months. So it's a very startup fastpaced high velocity environment where there's you know also things that get a little clunky at times

but sort of in a fun way. Um, so it's it's it's cool to be here and and I think, you know, obviously there's lots of different technologies that we are implementing to help us on that journey, but one of the key ones is using crypto and more more specifically stable coins to help us offer a much better consumer experience to do. We talk a lot about leaprogging at the company, making sure that we're not just getting into par, but building if we were to build a remittance company today, what would or a remittance product today, what would that look like? And so uh so yeah the stablecoin use case is is core to that.

>> Well tell us more about that. We are at a conference called stable summit. How are you guys using stable coins? >> Uh so the the biggest thing is we announced on Tuesday that we launched our own stable coin MGUSD. Uh which is pretty exciting. I think that there's sort of two aspects. Number one, I want to call out because there are a number of parties in the space that have launched uh stable coins of their own and I think anyone's everyone's got like a slightly different perspective. I think for the unindoctrinated it all looks kind of the same. Uh for us it's a really a consumer use case. That's the focus point. So we've been for example we've been using stable coins not MGSD uh for treasury for backend for years.

We'll move uh over $2 billion this year through stables for just treasury purposes. So that is sort of table stakes for us. But the reason to launch our own coin is not to make partner force partners to use that. We want to work with partners how they want to work. They want to use fiat. They want to use fiat stables however they want. For us it's the consumer use case. So not only do we have the benefit of stables generally which is the same technology infrastructure. So we offer a balance now in the app. If you want to hold USD in our app, you can through MGUSD, which in the US is not much of a differentiated product, but for many of the 200 plus received countries that we have in the world, that is a huge value ad to be able to hold dollars. And

what's great for us is that would be sort of untenable if we were to try to do that country by country to build that out with fiat rails. But having built that on stables, we're rolling that out at the speed of rolling out websites. We're in three countries today. El Salvador, Ghana, and Colombia. Not three countries that normally go together, right? But the reason that we're in those three countries is finding product market fit. Making sure that we fine-tune our product. But as far as scaling from there, it's the matter of the pace that we want to scale it.

There's not there's not like boundary there's no the country boundaries aren't a limiting factor in that. So that's just this the stablecoin use case of it's it's great infrastructure for scaling. It allows USD as a as an asset for uh especially our receiving receivers to hold. And then as far as MGUSD, it's it's like the the the primary use case for that is that now the yield on stables, we enjoy the full stack of that and can pass that to our customers, pass that back in rewards, pass that back in lower remittance fees.

And so to have full control over the asset um and how it's designed gives us uh you know a way to lower the cost to our consumer. >> I love it. And the company that you started before was not in crypto. You weren't necessarily hired to be the crypto guy. Can you walk us through sort of why you became interested in in using stable coins and what that journey was like for you as someone who started with like a deep deep background in traditional payments? I appreciate that. Yeah, I I so we founded Pangia in 2012, which is around the time uh Bitcoin started to be popular. I was telling Dante before we raised our first million. Our CTO said, "You should just

put all that in Bitcoin," which we should have. It was $100 each and we would have just it would have been a lot less work and a lot more money. Um but so you might imagine you're building this while Bitcoin is is not just uh uh not just existing but gaining popularity. And people would say, 'What is your Bitcoin strategy? What do you do? You're building remittance. What's your Bitcoin strategy? And so we thought a lot about it and couldn't find a use case and and did. We moved we said, "Okay, what do we do? Fiat to Bitcoin and back to fiat and and so we but none of it really moved the needle." And now I think with with stables and there's two things like stables are didn't start existing this year. So it's not that, but we've been working in some way with

it for about five years now at MoneyGram. Um but the big thing for us is number one there is enough sort of general acceptance of stables in the in the in the broader environment. Both consumers but also regulators have a comfort level with what it is. And two it has real like practical value for us and our consumer. And so that like the fact that it is not volatile is really helpful. the fact that we went through the the ease of scaling to 200 countries where we don't have to do uh country bycountry specifics makes a huge difference. So anyway, so uh long story short, I've been looking for a crypto use case for remittance for a long time and um and and we finally have one.

>> That's awesome. I before when you and I were talking, you mentioned that you have 500,000 Moneygram agents. Can you walk me through a little bit around what that means for the stable coin side of things? How those agents make using stable coins more impactful? >> Yeah, sure. And 500,000 like it is just a general number, but it's sort of like, you know, you hear a number and if I said 300,000 or 600,000, it would kind of sound the same as 500,000. To give some context, if you take Subway, McDonald's, 7-Eleven, and Walmart and you combine them, they have fewer than 500,000 locations globally. So it it's a really big footprint. Um yeah, I think for us what we have successfully done is turned the remittance flows from a send

receive to in or out and in or out. And I think what that does is it allows for you know you know before I arrived at Moneygram a year and a half ago uh they had a real problem with digital versus retail. like as their digital business grows, does do they they upset their agents who are then losing that volume? What's nice about the balance feature and the ability to sort of use the agent as a global ATM? Use that agent network as a global ATM is agents are now saying more transactions and so that way they are they are kept happy. We solidify that network and we're offering a better product to the customer.

>> I love it. So, traditionally, most of your clientele have been retail users, right? Hey, I work in the US and I need to send some funds over to my family and, you know, Colombia or whatever it might be. How is that? How are how is using stable coins shifting your business model and allowing you to serve new audiences that you couldn't before? Well, day one and today which is our focus, it is still very consumer focused. I think the biggest element of change is that instead of it just being like I think in terms of CACL LTV, we acquire customers for this. What's the return on investment? And that's how we are

growing the business. But all of that today is based on the LTV of a sender. By introducing a stable coin balance, we're suddenly now we have the receiver as a customer. now them holding a balance that's revenue for us. We're adding the ability to spend from that balance. So for us it's really gamechanging of you know potentially doubling your customer base immediately. So for and while there's a need on the there's there's a need for remittance on the send side the receive side is in general less financially served. So it's a much bigger opportunity to layer on additional financial services for that receiver. So so that's probably the biggest thing. Now, building on stables does open up new channels as well as far

as money movement. Do we want to do more business dispersements? Do we want to do actually get into B2B? I think all of that is really interesting, but frankly, today we're just like very focused on the consumer and how we go from send and receive to more of a global Venmo. >> Why Why should your users care about this? Like to your point, you've been around for 80 years. You've built up 500,000 agents around the world. You guys can already do global money movement. You have for quite some time, right? So, why even go down the stable coin path? Why should people care about you doing this?

>> I I think it's a good question. I went to, I don't know, a stable coin conference about a year ago and and it was fun for me to watch on stage as somebody who didn't know remittances all say what I think is right, which is like remittances are sort of solved. Like if you want to send an instant transfer of $200, it is instant from any provider and it's not that expensive. Like we all the the the percentage is still higher than we want, but it's it's fine, right? And it works really well. So for us, I think there's two sides. One, there's real efficiencies that obviously we've gained internally. So that allows us I mean just for the unindoctrinated, we have billions of dollars in bank accounts all over the world at any given time. That's how we facilitate instant payments. So if you hit send

>> and that's how most people do this, >> correct? Right. So if you hit send and you're sending money to France, we've got money sitting in France that we pay out and then your money shows up to us the next day. So there's a negative float component. Now with with stables, we can speed that up and our negative float is much less, which allows us to save money and pass that to the consumer. So that's the backend treasury thing, which is what I was saying we've been doing for a long time and we'll continue. We're seeing those volumes grow and grow. Um, on the consumer use case, I think that is that's a different thing and it it sort of articulates that if you're if we're sending transactions to Venezuela and the V Venezuelan customer that normally picks up in cash now is given an option of do you want to

pick up in cash or do you want to pick up a third of that in cash and hold the rest in USDC or excuse me MGUSD. Then at that point, we've now offered a very different product to that customer. Uh, it's funny that I made the slip because one of the things that that we really try to thread the needle when we're saying this is that our customers, to your point, don't care that it's MGUSD or USDC or whatever it is, right? For them, they care that it's dollar denominated. And so we never say that we hide it from our consumers because it's disclosed and explicitly accepted and everything, but we want to make it so that they don't have to learn any of it if they if they don't they don't need to care how it works, but they get the benefits of having access to dollars.

>> I think that's the way that most fintexs will adopt stable coins. And truthfully, that's the way I think it should be is like you should not care what stable coin you're using or if it's a stable coin on what chain and what wallet or any of that. Like my grandma uses Visa. she has no idea what an acquiring bank or an issuing bank is. Same thing is going to happen with with the stable coin stack, at least in in my personal opinion. So, you guys have been around for 80 years. You've built out this entire network. You're sort of revamping this network for the modern world of money built on stable coins. What's next for MoneyGram? >> A lot more. We've got a fun summer of announcements. Stay tuned. Just a little teaser. Um but no I think you know for us it is it is very much like heads down

growing adoption. We're in those three countries today for the receiver wallet. Um that'll be over a hundred by the end of the year which is >> that's crazy. >> It is crazy. But going back the hardest part is done. We spent about a year building this right. But now lighting up new countries again we already are connected to the on and off ramps. We're so we have we already have the licenses. So now it's a matter of the slow roll out as you would do any tech product. So anyway, so that's super exciting for us to start to see a really a global network where we've had that in cash but have that in a digital form.

Can I today take stable coins that exist in my MetaMask in my you know nonto crypto wallet and use moneygram to send it to someone overseas and have them end up in cash or does all of that need to be contained within the moneygram ecosystem. So there's two so not directly. So today there's two ways right? So you can fund a moneygram transaction or fund your balance with money which could be done through uh cash ac but there there are like a number we we

announced a deal about six weeks ago with Kraken where their users can now use moneygrams on and off ramps. So we we also have our network exposed for other parties to use the on-off ramps that we've built um where they can use our on andoff ramps to as basically an ATM for their account with Kraken and that's global. So those are the two ways that that others could get access to the Moneygram rails. Um but today we're not accepting like actual payment within the Moneyagram app in anything but but traditional Rails.

>> I love it. And last question for you before we wrap up. Obviously, you're out here evangelizing all of stable coins. Moneygram is a massive organization. Oftent times at these massive payment companies, you know, more traditional payment companies, you see one small team who cares about stable coins. One small team who wants to push it forward. Is that the case at MoneyGram or do you guys have full buyin from pretty much everyone? You're like, "Hey, this is the way that we're going to run our business." Yeah, I think um certainly full buyin, you know, I think one of the greatest proponents and the paths forward that we have is that our head of regulatory is fully bought in and helping us navigate this to do it in the right way, which means the right parties we're using, the right treasury uh

partners, the communications that we have with regulators to make sure they know how and why and who we're working with. Um, but I will say we also have a strong belief at MoneyGram that small teams go faster. So while the entire company's bought in and the entire exec team has bought in, we do have a team of about 25 maybe 30 folks that are running full speed at this because we believe in pods and and there's a reason startups run faster than big companies. And so we do have a very dedicated, very knowledgeable team working on this. Uh, but it's yeah, certainly full company buyin.

>> Love it. I have a million more questions for you that we will talk about not on this stage. Um, but thanks for coming up and uh thanks for telling us more about what money is doing. Appreciate it. >> Thank you. Appreciate it.