WalletConnect CEO: The WalletConnect Bull Thesis For 2026 (Billions in Volume)

Transcript

All righty guys, welcome back to episode number 38 of Stable up our premier weekly stablecoin show powered by our friends at Frax. Visit frax.com learn more about what they're doing with their FRX USD stablecoin. We've got Jess Houldgrave, the CEO of Wallet Connect, a leading financial connectivity layer for for crypto, for TradFi, for tokenized assets powering seamless crypto stablecoin payments. We're talking merchant stablecoins, we're talking actual e-commerce adoption of stablecoins today. Jess, welcome to the show. >> Hey, thank you so much for having me. >> It's good to have you back. Um with quite a bit of progress. We're getting very close on clarity, genius almost implemented.

Uh stablecoins are fully in the supercycle, Jess. It's been about 6 months since we chatted last and I think you guys had uh a big announcement then. Maybe just catch us up over the last 6 months of what you've seen on the stablecoin front holistically, whether it be payments, whether it be raises, whether it be adoption, and then specifically kind of like what you guys have pioneered over the last 6 months with Wallet Connect. And welcome back. >> I mean, what a 6 months it has been for this space. It's kind of crazy actually like looking back. Um I think if I had to summarize it in a like really succinct way, this has been the 6 months that I think we are closer than ever of the traditional financial world and the

kind of like crypto stablecoin world really like becoming one. Um the for me personally, every time I speak to a more traditional financial institution, the level of maturity, the way that they think about this, the sophistication of their understanding of the space has grown so much even over that short period of time. And it's been really incredible to see um you know, people actually implementing things in their core product stack, not just as a press release for a kind of like a nice show-and-tell thing, but actually thinking about how this is affecting their core businesses. I mean, we've seen these huge acquisitions.

MasterCard, what a giant, getting involved in in this space with the BVNK acquisition. We've seen a whole host of other things. Massive raises. I mean, stablecoin card, that company valuations have obviously gone through the roof. Um so, you know, all things to me are pointing to to, you know, a great second half of the year certainly and like meaningful adoption. I do think that the um Clarity Act is a, you know, everybody is on tenterhooks for the next few days um waiting to see what's going to happen there cuz I think if that doesn't go through, that is going to put a little bit of, you know, restraint on on the space maybe a little bit. Um but

overall, yeah, what a what a crazy 6 months. >> Yeah. Incredible and and you guys have been absolutely crushing it. Um I saw $6 billion of stablecoin volume in the last week I think has flowed through WalletConnect. Uh and you put out a nice a nice report uh about stablecoin and payments. Um would love just kind of like, you know, given that you're in the trenches, you guys have, you know, a business here that is doing some significant numbers, what are some of the most exciting metrics that you're seeing on the adoption front? You know, we've seen sort of the amount of stablecoins I think kind of stay relatively steady and for what people are calling a bear market, if you want to call it that's depending on where you are, you know, it

it is okay to see those numbers stay steady, but the the payment, the volume, the amount of times that we're turning over the amount of stablecoins has increased significantly. Maybe you could just, you know, tell us what you think that might be attributed to and some of the most exciting metrics that you're seeing on the ground. So, I think definitely we're seeing um you know, growing numbers of use cases of stablecoins. And by that I mean and less kind of just like buy, hold, sell activity than we've seen before. Although DeFi and kind of trading activity still main makes up the biggest volume for the wallet connect network.

But we're seeing really rapid increase on things like payments. And this is a real indicator. Again, it's a it's growing from a very small base. Payments is by certainly no means like the biggest percentage of what we do today. But that growth is really indicative to me that stable coins are moving out from assets which people are just using to maybe move in and out of more volatile assets or to send funds from one place to another. But when you start to see consumer use cases e-commerce more money remittance, B2B payments, you start to see that this is actually something that's going to you know, be a be a very fundamental instrument for for the future. The other

thing I would say on stable coins that I have found really interesting in the last few months is the growth, again from a small base, of non-US dollar denominated stable coins. Here in Europe, we've seen the growth of a many euro denominated stable coins. MiCA and the legislation that we've got here has been a kind of key driving factor for that. We also had news the other day, of course, that USDT is now kind of not no longer MiCA compliant as of July 1st. And that I think is going to change the mix of assets that people are using certainly in Europe.

And also in these last 6 months, we've seen Standard Chartered Hong Kong dollar. You know, we've seen yen stable coins starting to come around. One partner of ours has started issuing Swedish krona, Swiss francs. So I I think that this year is also going to be the year of the non-US dollar denominated stablecoin as well. >> Mhm. You know, I saw that news as well from the EU, right? I think Binance had its license taken away or is in the process of losing their license. And then the central bank of Europe seems to be fighting stablecoins as a result of

their desire to potentially launch like a CBDC or some form of a digital dollar, a digital euro within Europe that's more centrally planned than the traditional stablecoin that you would know. You know, I'm just curious like not to go off on a tangent too far here, but in that in that world it is is is this just is this just going to look like what would be like a a CBDC from the EU that you know, proliferates and dominates in Europe and that they would just think to not allow any external stablecoin usage in that given area or like just like generally from the business perspective I know that

you're you're also you know, thinking about how to integrate more deeply in Europe, but do it in a compliant fashion. Like what what was your first reaction from like the you know, crypto first kind of crypto native perspective, but then also on the business perspective as to like what precedent this sets and kind of how you think about this this move from the EU? >> You know, the the the digital euro has been on the cards for many years now. People have been talking about it and I think those plans are are certainly very interesting when you look at an area the size of the euro of Europe and and assets the size of the euro denominated economy having a CBDC.

I think it's super super super interesting. However, Europe has always also been very, very pro competition and I don't think that just because we're going to have a a euro denominated CBDC that that's going to crowd out private market alternatives. I think in fact what we've seen is many regulators in Europe be particularly kind of pro euro denominated stablecoins. There is the Kivalis consortium which started with 12 large European banks. I think it's now up to 30 European banks who are issuing a euro denominated stablecoin as part of that consortium. So, I don't think that it's it it's going to kind of crowd out the

alternatives, but I do think it's really interesting when you look at some of the retail use cases or it even kind of like B2B use cases moving euros around around the the world and having the European Central Bank as the counterpart for that stablecoin really, really interesting offering. And I think that's something that's often overlooked when we talk about stablecoins is there is ultimately counterparty risk to these assets, albeit very small. And so, as businesses and as consumers are thinking about the stable assets that they want to hold having an asset backed by the European state European Central Bank or having an asset backed

by a consortium of 30 large European banks is very different than having a stablecoin backed by a a small organization. So, I think we're going to see a lot of very interesting evolution over the next kind of 3 to 5 years in Europe as as those two alternatives mature as well. >> Yeah, I must say that I I enjoy this from a perspective of financial experimentation, right? You know, like Europe and the US are taking fundamentally different approaches, especially if the CBDC does end up becoming, you know, uh put into circulation. And just from a point of, you know, there there was a lot of research done on whether CBDCs were a good thing, quote unquote. And I think ultimately there's different

design choices that could make sense. Fundamentally, for a few different reasons, I I think, you know, the the non-CBDC route, taking the route of more privatized, you know, alternative is is the right approach, but I'm I could maybe see some some different use cases that would call for some different design choices. And so, I'd love to see both of these, you know, put into practice so that we can see this play out in the real market. I'm curious from, you know, the perspective of an infrastructure provider and an operator, given that you may have competing solutions for the money, like the actual instrument, and your job as an operator is to support both, whether that is a CBDC or maybe a genius compliant stablecoin or

an algorithmic stablecoin or all these different types of solutions, how do you stay somewhat credibly neutral, you know, in in a position where is there anything that you need to do as an operator to prepare for supporting the different types of solutions when it comes to stablecoins? How do you prepare so that you can be, you know, maximum maximally flexible to the different alternatives that are out there in the stablecoin market? >> So, it's a great question. At the WalletConnect Network level, we basically support all assets on all chains out of the box. Sometimes, if a new chain with, you know, completely new programming

language or something comes up, we sometimes need to do a little bit of work to make that easy for the developers, but the core protocol is is chain and asset agnostic, and that's really important for us. We are just the pipes. We're not here to kind of recommend or or even signal which which chains people may or may not want to to transact on. Some of our products are a little bit more opinionated. So, take the WalletConnect Pay product, which is that acceptance product that I was here talking about last time. So, this is a product that we have for payments companies to be able to accept cryptocurrencies and stablecoins. And that is a little bit more opinionated.

So, we basically curate the set of assets that can be accepted. Our goal really though is to have a very broad range of assets and chains supported by WalletConnect Pay. I think we're up to more than 100 today. And so, even within that, where we have to be a bit more specific just because of the way that tokens move and and all of the compliance pieces that we build around it, even within that, we basically provide this as a modular offering. So, as a payments company, you can say, "I'm based in Europe. I want to only accept me compliant stablecoins."

Or you can say, "I'm going to accept anything." Or you can say, "Hey, I only want to accept USDX on chain Y." So, we again, even for our customers and even in these more opinionated products, we provide modular solutions so that it's up to the underlying payments company what assets they want to be able to to accept and work with. >> Yeah. Yeah, I mean, that makes sense. I mean, you want to be as kind of like broad as possible and be able to offer the tools and services to basically anyone who's joining this kind of this race, one could say. As >> And I think Oh, sorry, Andy. I was just going to say, I think that's really important

because and I actually encourage a lot of our partners to open up a very broad range of assets because if you have people coming into your store and they have asset Y on chain X, you want them to be able to spend it. You don't want to say, "Actually, no. Do you know what? We only want this stable coin." You want as many people through the door being able to transact in your store, whether that's in store or online. Otherwise, you're just creating greater checkout drop-off, which is obviously what retailers want to avoid.

>> Yeah. Yeah, definitely. I actually saw some some stuff about that, how using stable coins could help save a lot of the failed credit card transactions that end up equating to like 3 to 5% of any given online retailer. They lose that much customer value just from failed credit card transactions. One thing on the kind of Wallet Connect Pay and the suite of tools is you know, I'm just curious what the what what the business lines for Wallet Connect are. Um what that what that revenue story is, and just generally how how you guys are making making fees, generating revenue from the product line, and kind of what what that story

is. >> Yeah, so think of Wallet Connect at that kind of core network as the the most low-level piece of our technology stack. So, this is the network that allows our 700 different wallets to communicate with hundreds of thousands of applications, whether that's first signing in and logging in to to an application, hedge fund making a trade, or an end user making a a payment. So, that's this very low-level stack. It's open source. Anybody can can join the network.

And that is [clears throat] used by many many organizations around the world. And on top of that network, we then build products that we monetize. And so, Wallet Connect Pay, which is the acceptance product, is is one of those. For Wallet Connect Pay, we charge transaction fees, like most merchant payments. We take a small percentage or under a percent so that we can compete and and make this as cost-effective as possible for for merchants. So, we take a small transaction fee on that. We have other products in the wallet connect kind of suite of of offerings as well.

So, we have some tooling for compliance use cases. So, here think things like travel rule uh where somebody needs to verify that they own a specific wallet. We have a product offering for that. We're We're building against payouts and other use cases. We have some trading offerings and we have a suite of developer tools also under the Re-owned brand for people building applications. So, that's that's kind of our model where we have this free open source network products on top of it that that we build against. And our goal over the long run is to make that network uh kind of self-sustaining. So, driving that revenue that we're making back into the network to the node operators, to the

token holders, um to to make sure that over the long run wallet connect continues to be uh and continues to be able to operate as this kind of core very very neutral infrastructure for the ecosystem. And I think that neutrality is what's most important to us um is we're there for the entire ecosystem, TradFi and crypto native, um any asset, any chain. >> Yeah, that neutrality and that flexibility to support different kinds of stablecoins, you know, different models is extremely important because we're seeing more businesses become better educated and therefore more opinionated about the practices that they ultimately put into place. Um and

so it makes sense, you know, uh the way that you you frame and lay out, you know, the different revenue streams that you have in the different uh you know, factors in in the overall wallet connect complex. I'm curious about kind of the the growth story here. You know, we we obviously know that stable coins are uh exceedingly interesting for a variety of businesses. I recently had the realization that you know, the merchants themselves may not even need to opt into this into this model for them to work. And I'm curious about your perspective to this because we walked through this example, this hypothetical scenario where maybe you know, I walk in, I want to buy a cup of coffee, I tap my card.

That consumer behavior is is very ingrained in consumers that you know, tap a physical either phone or card experience. The merchants probably just want fiat delivered to them. That's what they're accustomed to, especially as you know, that's what they're paying their bills their their rent, you know, their payroll. That's what they're paying their expenses in. But in the back end of both of these things, we have the banks. And the banks are able to coordinate the most capital efficient process for settling those transactions. So I tap my card, my my money gets drawn from my bank, but when it goes into the merchant's bank, the settlement of that transaction could be done in stable coins, and then the merchant bank could

deliver fiat to the merchant when they're ready to pay payroll. Do we need consumers or merchants to opt into the stable coin experience, or can this be entirely abstracted away? We can go to the banks themselves to coordinate most of the settlement and most of the volume of these consumer transactions. >> Um so, great really great question. And I think that the key thing here is to recognize that a payment is actually made up of multiple layers. So, it has a settlement layer to it, but it also has a kind of coordination and messaging layer that allows the parties in that chain to say yes, this payment is authorized, or maybe no, this may be a

fraudulent payment, for example. So, in this use case, blockchain is a brilliant, brilliant settlement layer. It's incredibly fast and incredibly efficient at moving assets from one place to the other. Um and we've seen that, um you know, uh the big card schemes are already doing some settlement. A lot of the large acquirers are doing some settlement using stable coins. A lot of B2B payment processing is now taking place using stable coins. But, for consumer payments, you also need this additional layer, which does things like fraud, compliance, and and other checks. Now, in parts of the world where card payments are very uh dominant, you just pointed out, uh you

know, everyone's used to using their card and going and and tapping tapping their card. Um uh you know, we can use this messaging layer of uh a major card network, for example, to bring that kind of coordination, and then the settlement can happen on chain. Um one of the challenges with that, and I think, you know, I'm I have mixed feelings about stable coin cards, because I think they've brought great um possibility for end users to hold these assets and do things with them. They brought very little um benefits to the merchants, because they just looked like a regular card transaction. The fees are very high, typically. Um and so, we haven't yet kind of delivered, I think, all of the benefits of this technology to merchants in those

use cases. And then, also, there are many places around the world where card penetration is very, very low. Um often driven by even higher card fees and even slower settlement times from the card networks. Um and so, in those places, actually having this kind of um more consumer-facing layer, which allows people to bring their assets and use them directly, enabling that whole payment to take place on chain, um I think is really important. I think we're also um you you in going to be in this intermediary stage over the next 5 to 10 years as different parts of the stack catch up.

Today, definitely most merchants say, I want to be able to accept fiat or I want to receive fiat even if I'm accepting stable coins. But, we're seeing more and more big corporates move their treasury on chain. We're seeing more and more um companies be able to make their payroll in stable coins and do payouts. We're seeing more and more people being able to pay their suppliers in stable coins. And so, for me, it's kind of like everything is moving for different companies at a slightly different pace.

But, I think that the end state is going to be let's keep as much chain as much on chain for as much of the of the stack as possible. And then, these direct acceptance routes where there's no fiat leg involved and you can just kind of cut out that off-ramp at the very end of the transaction make a lot of sense. >> Yep. You know, on that on that kind of like broader vision there and on on the growth story getting to Wall Connect specifically on, you know, revenue side there, the growth story side, it's really just kind of like an understanding of of a of an investment or or or a thesis around growing stablecoin volumes, growing payment and merchant relationships.

What I'm trying to understand a bit is like what is like the Wall Connect like bull thesis here? Like like like like what is the like Tokens being absolutely battered and people want real fundamental value that gives them an investment into something that uh provides a longer-term uh return of revenues to the token, a a growth-stage market, a large TAM, adoption. Could you just kind of give us like your high-level like um what is the what is the the longer bull kind of thesis or vision for how you guys scale your merchant relationships, your adoption, and thus your revenue, and kind of your broader kind of financials, and you know, kind of tying

that back into the underlying equity or or the token itself. How do we think about understanding WalletConnect from a uh investment perspective? Not financial advice, just kind of trying to un- understand what the big picture is here. >> Yeah, so look, I think um WalletConnect historically has been core infrastructure for the crypto world, and as that market has changed, we have really repositioned ourselves as core infra for the entire financial services stack. Um so, the last year has really been focused um on WalletConnect Pay, as well as on other products, you know, things around tokenized equities, tokenized real-world asset trading capabilities, um B2B payments, and

things like ISO 20022 Swift messages. W- So, really thinking about the stack that we have in the technological capabilities that we have, and how they're going to be used in the future. And I'm a big believer that in many, many financial transactions, whether that's a consumer payment or a business payment, or a uh securities trade going forward, WalletConnect has a really important role to play there. We've been building out the team accordingly. New Chief Revenue Officer joined us recently from Visa, uh which I'm very, very excited about. Um we've started to think more about how we commercialize our products effectively.

And you know, I'm also, to be very honest, I think historically in Web3, there's been uh lack of appetite sometimes to pay for this kind of infrastructure. As we start moving into the more traditional space, um people are very used to and willing to pay for secure, robust, and resilient infrastructure. Um so, our revenue model there is changing, and I think we've built great foundations now, so that as we start to see those those numbers come in, um you know, we're going to be able to drive um value back to the token um of over time. Um I do think it's a long-term game. This these the the global financial infrastructure is not going to change overnight. Um and so for

us it's about building the right very long-term partnerships and taking a long-term approach to making sure that we maintain this moat that we have um you know, WalletConnect doesn't really have many competitors um certainly of the network size and scale that we do. And so for us it's about continuing to protect that and invest in that moat, invest in those long-term relationships, and over time being able to capture that value. >> Yeah. Yeah, and so like the thesis there on like the adoption and and the partnership side as well as the scaling of the business lines, it it's really like a economies of scale type of game.

Like you need to get, you know, as many B2B partnerships as possible, um as much kind of consumer and and merchant adoption as possible. And like the spreads that you guys are charging for the business side, they're they're they're quite quite small, but are you also doing things with like with like enterprises and these types like more like kind of traditional businesses in like SLA models and like guaranteed like licensing agreements or is it purely on a transaction basis? Like is there any kind of nuances to the business side that you can share that aren't like proprietary?

>> Yeah, I mean again, different products of ours are monetized in slightly different ways. So some are these type transaction fees. We're getting an increasing number of requests for almost like dedicated channels through the WalletConnect network for um different reasons, whether that's security or or resilience. So we're exploring almost like a an enterprise-grade version of WalletConnect, although um what I would say to that is probably actually that the entire network is is pretty enterprise grade given the volumes that that we do today. But all of these different use cases support, integration help, are definitely driving a lot of demand for us as well.

So I think, you know, it's all of that, but what's most important for me is also that we have this optionality. We have the core network, but then we are able to place different bets on top of that. The payment space is is one of those big bets. Tokenized equities tokenized assets is another big bet. And that gives us a lot of flexibility and a lot of agility that even if our thesis around let's say consumer payments is wrong, although I'm pretty sure we're going to be right over the long run, even if that's wrong, we've got a whole other set of suites of suite of products and services that that we're supplying to the market as well.

And that gives us great resiliency, I think. Nobody quite knows how this is going to play out. Certainly if you if you'd asked me 10 years ago about the 10 years that we've just seen in this space, I definitely wouldn't have got got it right. So nobody knows what the next 10 years is going to hold, but what I feel very confident about is that we're really well positioned to adapt to that market and to be able to serve the people who are driving change there. >> Yeah. I think maybe the last question here just to this end is, you know, we we kind of opened up the show talking about how, you know, $6 billion of stablecoin volume flowed through the Wallet Connect network last week.

How do we get that, you know, to 10 billion, 50 billion, 60 billion per week? You know, what what is the succinct answer there? >> Yeah, so I think a lot more business use cases. You know, we have we've been doing a lot of work in compliance, in making sure that transactions are safe and secure, in security. And I mean the last we didn't touch on this at the beginning, but the last 3 months has obviously been one of the worst, you know, in in the history of crypto for security incidents. So, that's something that we're really investing in and that people care about a lot at the moment where I think we have a a very important role to play. So, um for us it's about continuing to kind of like

double down on on some of these spaces and make sure that we've got the right offerings. Um and then also making sure that over time we're able to build the right business models around those. >> Yeah. >> Yeah, love it. Jess, thanks for answering the tough questions. Thanks for coming on. I appreciate it. I hope you have a great rest of your day. That's been our Stable Up episode number 38. Um different times in the market, different different set of questions, different set of investor uh you know, uh wants and a changing institutional enterprise stablecoin kind of intergalactic bullish time and kind of a bit of a token slump, which I think uh these two will probably kind of even

themselves out in the coming months to year. So, thanks for joining us, Jess. >> Thanks very much for having me. >> We'll see you next time. Thanks, Jess.