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Welcome to Executive Conversations by the Papers.
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I'm Dwayne Jeffrey.
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In this episode, I'm joined by Coctus Razzi, CEO of America's at B2C2.
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We're discussing how B2C2 is building liquidity infrastructure for digital assets and what that means for the future of institutional crypto trading.
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I don't want to jump straight right into it, right?
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Most people in payments will not have come across B2C2, even though you move billions of dollars a day.
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So maybe give us a little bit of an introduction about what is it that the company actually does and who is it for?
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B2C2 was founded uh over a decade ago as a as a crypto market maker, liquidity provider.
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Our primary uh activity is to serve exchanges and our institutional clients and providing liquidity to them when they want to buy or sell digital assets.
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And more recently, we've made a lot of investments in the stablecoin space.
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And the uh our client base has grown to include payments companies and more recently, even you know, credit card firms and a wide variety of other firms in consumer financial services that are adopting some portion of blockchain technology for uh for applications that are outside of core crypto.
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Fantastic.
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So maybe let's walk through that, right?
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Like, so some let's say somebody wants to buy some Bitcoin.
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They open up the app, they have a couple of dollars in there, maybe in a stable coin.
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Um, what is it that your firm does behind the scene that makes that happen?
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Yeah.
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So we provide prices not only to exchanges, you know, you could Coinbase or Kraken or Binance or over 40 exchanges globally.
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So part of what we do is we act as either a liquidity maker, that is to say, providing prices to allow transactional activity to happen, or sometimes we're also taker, so we'll trade on those exchanges to hedge ourselves, for example.
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And then there's retail platforms.
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Um and in the crypto world, these are there's um blurring of the lines between the two.
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But a strict retail platform you can think of would be something like Robinhood or these types of platforms that have a large user base, and there's many of them globally, and we serve them by again providing prices so that their users can buy or sell a bunch of different crypto and digital assets.
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More recently, uh, with the rise of prediction markets, um, you know, polymarket is crypto native, so there's that, and then there's other prediction markets globally, both in the United States and elsewhere, that I again are starting to adopt portions of blockchain technology.
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So that's a natural growth area for us.
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Not so much in the sports or in the celebrity bets, but in in macroeconomics and in uh bets around core crypto.
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For example, they have one of the most popular contracts out there is whether Bitcoin will go up or down in a in a reasonably short time interval to these types of things.
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Yeah.
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So it's not actually betting on the not buying the asset as and to see if it goes up or down, but actually placing a bet just on what happens with the underlying asset.
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That's fascinating.
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Yeah.
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So you said it's already been 10 years, you're moving massive numbers of volumes already.
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Um, but most of them, most of the companies that you're working with, the banks, the payment companies, they are your clients.
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So is it actually beneficial for you to be invisible or sort of like behind them?
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Or is it something else that and that that you're working on?
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No, I think you're right.
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We're we're a B2B company.
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We're strictly institutional.
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We don't have a user base of individuals and we have no plans to do so.
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It's not in our business model.
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And so we support our our front partners, whether they're they have their own retail platforms, some of them are institutional lending platforms, for example, and other institutional businesses.
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An example would be custodians.
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We have a really robust franchise working with custodians who then provide liquidity to their customers, again, all institutional, but we're the essentially one of the liquidity back end to uh custodians' execution desk.
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Absolutely.
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So it's really just behind the scenes, but making sure that those who are providing the retail users and and businesses with the solutions, you're the ones sitting behind that.
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That's right.
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Fantastic.
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So um, but especially now, right?
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We see stable coins, of course, being everywhere, right?
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Like at different conferences, people are talking about it.
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Um it started out as a trading tool.
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Stablecoin started out as a trading tool, and then it made its way in and out of crypto, of course, making sure that it was pegged against, um, or at least helping with trading the other crypto assets within that.
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Um, why is that something that banks and payments companies are all of a sudden looking into and can't ignore anymore?
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Really, more than anything else, it's the uh it's a similar reasoning as to why there has been just general technology development in FinTech uh over the past 20 years, which is uh generally it's uh either faster, cheaper, or preferably both.
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When you look at stable coins, um moving value uh from point A to point B is generally faster than doing so uh through the existing frameworks.
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That's particularly true internationally, and that is also true domestically in countries that don't have instant payment networks.
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So, for example, in Brazil, you have PICs and you can move money very quickly, very cheaply in Brazil.
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But getting, let's say, a payment to a company in Singapore from Brazil is a multi-day process, and that's where stable coins help.
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So I think um I don't think there was necessarily a lot of enthusiasm for blockchain technology within the payment space, but quite the other way around, that this is a new technology that is faster and cheaper than existing um, you know, existing workflows, and so there it naturally um starts to uh um be adopted.
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Yeah.
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Oh fantastic.
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So especially if you look at the stablecoin market, right?
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You have UEDC, you have USDT, um, and there's no one single dollar equivalent anymore.
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Um but you also have different currencies, you have different issuers, you have different networks all trying to get in there.
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You have companies like Stripe buying different companies and actually encouraging others to launch their own uh stable coins and their own platforms as well.
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Why does that fragmentation matter to anyone trying to move in and out of uh money?
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Well, it's interesting.
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Um, there's a couple of things I'll say.
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Uh the first is why would you want to have your own stablecoin?
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Because that's what at the root of this concept of fragmentation is this idea that uh there will be many more stable coins in the future.
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And we're seeing that, you know, just a couple of days ago, MoneyGram announced its stable coin.
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Uh, we're working with Western Union.
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They have uh they have uh announced a stable coin.
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And um, we're very close to stablecoin orchestration firms, so there's a lot of things that I can't share publicly, but there are a lot of more stable coins coming.
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So why is that?
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I think that um as you want to think about issuing your own stablecoin if you have a network.
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And a network can be defined as uh as a lot of different things, but you would certainly accept the case that Stripe has a network, hundreds of thousands of merchants.
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Shopify has a network.
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Uh I don't have any knowledge about a Shopify stablecoin, but I'm using that as an example of a network where people won't necessarily think of it as that, but that's what it is.
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Telegram users are a network, and we can go on and on, many, many different networks out there.
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If you want to facilitate value transfer within your network, that's one if.
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But if you want to do that, you will likely want to own that technology because it allows you to then take advantage of that software in ways that uh are going to be potentially strategic in the future.
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So again, sticking to an example that we uh that's all public and we know about, such as Stripe, again, I have no specific information.
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I don't hang out with the with the Cole Some brothers, but I will say that um, if I were running the company, I would say to myself, I don't want a third-party dependency.
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I want to be able to develop software to run on top of my stable coins for the benefit of my network.
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And I want to be able to control implementation, I want to be able to control timelines and costs.
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Yeah.
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Well, I think that's at the root of why Western Union wants to have its own stable coin.
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You know, they were they always had the option to use Circle, for example.
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Nothing against Circle, great company, great leadership.
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But um, it's, you know, all of us who have built things in the past, as have you, we really don't like the idea of having third-party dependencies because you uh you usually, when you call a partner up and say, hey, this is what I need, this is what I'm trying to get into production, they'll tell you it's gonna be sometimes expensive, but even if it were to be cheap, it's gonna be many more months than perhaps we had hoped.
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They have their own development queue.
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And so therefore you say to yourself, great, so network owners are likely to want their own stable coin.
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And that results in fragmentation, but that is not the intent.
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I'd also point out that from a fragmentation perspective, there's a couple of different questions.
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Um, there are solutions in the market to allow any institution to accept all relevant stable coins, but to settle in their preferred treasury asset.
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We offer one at B2C2.
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Okay.
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And this is the ability to instantly and costlessly convert any any one of currently about 18 stable coins, and that number is growing, and convert them to your preferred treasury asset.
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That includes non-dollar stable coins as well.
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And so, and and uh, you know, we think we have the best solution in the market, but there will likely be others that will that will create such similar solutions.
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And that really obviates any concerns around fragmentation for the most part, because ultimately it allows you to settle and manage your preferred treasury asset while still accepting a wide range of stable coins.
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And this other thing I'd say is uh at the consumer level, it's unclear what the user experience will be.
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Certainly right now, if you open up your MetaMask wallet, and most people don't know what that is, but if you were to do that, you would see a bunch of different assets in there.
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But tomorrow there could easily be a fintech that abstracts away uh some of this, um some of the the many different assets you might end up holding.
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And and then the last thing I'd probably point to is currently stable coins can't pay interest, as we know, with uh with some with the Genius Act.
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But it's a it's really trivial to uh convert a stablecoin into a yield-bearing instrument.
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And so you would think of stable coins as a superior product for the transfer of value.
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And then you have other products that are better, likely better for store of value.
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Yeah.
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That could include deposit tokens in the future as well, and many, possibly many other developments that still lie ahead of us.
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And because the conversion is instant and uh and uh effectively free, you know, you you you as a user, you don't really care.
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When you need to move things around, quite likely behind the scenes it'll be via stable coin.
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And meanwhile, when you need to, when the money is not moving, again, quite likely behind the scenes, it'll automatically be converted to a yield-bearing instrument.
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Yeah.
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So I I think we have a bright future ahead.
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And I think some of these possibilities around programmability and uh convertibility, uh fungibility, I think some of these possibilities are why stable coins remain such a hot topic, for example, here at Money2020.
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Absolutely.
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So, and I I think especially on that point, like whenever I talk about stable coins as a matter of conference where we're at, um, there's always that point out by those who are in the trading part, probably what's much, much more of um what you're working on, versus the ones who are working with is stablecoin actually a store of value or something that we're using to actually buy goods and services with.
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And if you look at that, in the last year, I believe it was around$30 trillion that was actually being moved.
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And the majority of that, I think anywhere between$25 trillion or probably even more than that, was actually coming from going in and outside of those crypto assets, right?
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Probably a lot of the things that you're doing.
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Yeah.
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And then only a smaller part, only$5 trillion, was actually being used for other other um other means, basically from merchant processing to uh settlement currencies, etc.
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Um, what do you think the trend is going to be?
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Do you think that we'll continue to see a massive growth of going in and out of those cryptos?
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So trading that that will continue to be or even adopt more to going in and out of stable coins?
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Or do you think we'll see more on the other side that growth actually accelerating on the acceptance of stable coins in retail environments, online, or maybe even agent-to-agent type of transactions?
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It's unclear to me whether we're going to need to get to a place where stable coins are explicitly accepted by uh point of sale.
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It could be abstracted in the background, depending on what's being developed by companies like uh, for example, Square or Clover, and then you have many, many other ones, you know, all the acceptance companies, Ad Yen and Checkout.com.
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It goes on and on.
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There's a global phenomenon of point of sale.
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And it's unclear whether you're gonna have to explicitly use a stable coin or whether there's gonna be sort of an implicit, elegant solution to being able to utilize them for spending at point of sale.
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Yeah.
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I think at the same time, uh, we're gonna get a uh, I think it's uh very likely.
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I I'm not really in the predictions business to be clear.
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I think it's a terrible business to be in, but I will say it's very likely that corporate treasury moves to uh to stablecoin native.
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Okay.
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And that to me is uh is an interesting side point because I think that you know Citibank put out a piece of research several months ago saying, you know, by 2030 the stablecoin market could be four trillion.
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Okay.
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And at the time, uh I think at the time it was probably closer to 220 billion or so, something along those lines.
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So the number, the headline numbers looked really exciting.
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So when you say four trillion as in the money being as in the total, not the total amount of trading, but rather the total capital sort of um being uh expressed in stable coins.
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Like right now, it's you know, at the time, I think Circle was around sixty billion.
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Yeah.
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And the rest of it uh was uh tether, obviously.
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Aaron Powell But it's the velocity that big makes the bigger number, even though the actual value was.
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No, it's just that those those commensurate numbers of like let's say 220 billion at the time was going to be four was gonna be four trillion by 2030.
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So long, you know, some years ahead.
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I think that that, you know, again, I'm not in the predictions business, but I think that that was a gross underestimation of what the total amount of capital being in the form of stable coins is likely to be by 2030.
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And I say this primarily because of corporate treasury.
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You know, you take one institution like Bank of New York, they have a very strong uh digital assets team there, and they more recently have made um indications that they are making heavier investments in digital assets.
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That's the world's largest custodian.
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They've got uh over$35 trillion.
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The last last I checked, it was$36 or$37 trillion in corporate cash alone.
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So just done it.
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Even if they were to give their clients uh an option to opt in to having a stable coin form, uh you would already blow that$4 trillion prediction completely out of the water.
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And that's just one institution.
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Now, why would why would a treasurer or a CFO choose to uh keep their assets in the form of a stable coin?
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Well, it's just faster to move around.
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It moves around 24 hours a day.
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You don't have cutoff windows like you would in traditional money movement um architecture.
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So it seems pretty clear to me that the direction of travel is money moving faster, money moving cheaper, uh money moving at when you need it, where you need it.
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And uh and all of that suggests to me that a a large portion of corporate treasury is likely to move to stable coin form uh over the course of the next three or five years.
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Perfect.
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Yeah.
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Um so I think especially on discussing like when when we're moving these stable coins, you already mentioned that it's pretty easy, faster to move, absolutely.
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Uh let's say uh we take one of those payments companies that is working with you, or just any company at at that point, um, and they're promising, of course, their customers that cross-border payments will be settled in stable coins because it's faster, it's cheaper than just a bank wire, right?
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So I can imagine global payments processors, targeting merchants, hey, we'll we'll we'll settle you pretty much instantly or the next day at least.
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Um, as those customers need to pay their suppliers who only accept one particular coin or one currency.
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Oftentimes that's even uh fiat.
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What happens uh when we need to start expanding that?
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So do we need to start convincing merchants to accept stable coins, or is that much more of a conversation that needs to happen between the payments processors and the merchants?
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That's an it's an interesting question.
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Um, I don't believe uh there needs to be a big uh sale to merchants per se.
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I think that uh merchants should be fast to adopt stablecoin frameworks if there is a perceived benefit.
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Merchants tend to be very uh kind of aggressive about, you know, saving a penny here, a penny there.
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You hear a lot of noise from merchants about the credit card uh interchange fees and and the the fee stack to utilize credit cards.
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And so uh any any perceived benefit, I think, will essentially sell itself.
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Now, if the merchant does not perceive a benefit, that's where you have a challenge and you have a sell sales problem.
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But so long as the merchant perceives the benefit, which almost always is either lower costs or you get your money sooner.
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Yeah, then I think that uh it's a foregone conclusion.
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Okay, perfect.
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Um, well, for all the talk that we have about a multi-currency future, right?
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There's still almost entirely a dollar world world.
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Um, anywhere in the world, the dollar is preferred over other currencies.
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Um the market was around$305 billion at the start of the year, and roughly 99% of it was dollar-based.
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Um now we have Euro versions, which are barely a sliver of it.
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So the stablecoin markets.
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When you describe a real Euro alternative and a multi-currency market, are you describing things where things are today, or are you placing a bet on where they are going?
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Well, um, I think that the dollar is the kind of RD lab for a lot of the things we've been talking about.
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We've been talking about programmability, speed, uh, lower cost reductions, and other benefits of uh deploying blockchain technology in the payment space.
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And yeah, it's true that the sort of whether we like it or not, the environment in which a lot of this development is being done is dollar-based.
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To the degree that there are benefits coming out of that space, to the degree that there are real benefits to some of the things we've been discussing and some of the possibilities, I think that they'll naturally move over to other currencies and other jurisdictions.
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We currently support, yeah, B2C2, we obviously support EURC, um, but we're in uh you know very close to the founding teams of um uh GBP, BRL, MXNB, Colombian Peso, uh I'm trying to think, Hong Kong dollar, uh, and yen stable coins.
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That's just off the top of my head.
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You know, so uh people come to us and they want to launch their products.
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Is there a huge amount of demand for a British pound stable coin right now, for example?
00:18:56.000 --> 00:18:57.279
No, not necessarily.
00:18:57.599 --> 00:19:02.000
But to the degree that there's adoption in dollar space, the adoption will be for a reason.
00:19:02.079 --> 00:19:02.160
Yeah.
00:19:02.319 --> 00:19:13.200
And that reason will likely also apply in the UK in GBP uh and and will likely end up being part of the feature set of the GBP stablecoin.
00:19:13.680 --> 00:19:14.240
Absolutely.
00:19:14.400 --> 00:19:14.640
Okay.
00:19:14.799 --> 00:19:18.160
So I want to bring it back to B2C2 again.
00:19:18.319 --> 00:19:21.759
Um you've launched a product, it's called Penny, right?
00:19:21.920 --> 00:19:29.519
It's free to use, and um, you've said that the pricing on this trade has to be wavertin or the advantage over a bank wire disappears.
00:19:29.599 --> 00:19:33.200
Uh that sounds like a business with no obvious way to make money.
00:19:33.359 --> 00:19:40.319
Where does the money actually come from and what stops a better funded rival from undercutting you on margin uh once that's gone?
00:19:40.559 --> 00:19:50.240
You know, we designed Penny specifically, understanding that there were likely going to be race conditions, both with regards to how fast it works and with regards to cost.
00:19:51.039 --> 00:19:55.440
So we designed it to be an instant swap, and you can't get any faster than instant.
00:19:55.519 --> 00:19:57.519
And that was one moat around the product.
00:19:57.759 --> 00:20:03.039
And we designed it to really just reflect institutional pricing between stable coins.
00:20:03.119 --> 00:20:12.799
And the reason for that to be very specific is that, you know, there's this assumption in the marketplace that stable coins should always always be worth par, but they're not actually always worth par.
00:20:13.119 --> 00:20:15.359
And we're not the central bank of stable coins.
00:20:15.440 --> 00:20:22.559
You know, we it it there are, I don't need to name names, but there are some really large stable coins out there that persistently trade below par.
00:20:23.039 --> 00:20:29.200
And so uh obviously there would be an arbitrage opportunity if we're willing to buy it at par and people are offering it below par.
00:20:29.359 --> 00:20:35.920
Yeah, it might only be a a cent or even basis points below par, but still in the appropriate amount of size, that's free money.
00:20:36.160 --> 00:20:41.680
And so what we do is we just reflect the what the market believes the correct pricing is on the different stable coins.
00:20:41.759 --> 00:20:49.039
And that's a that's a better product, frankly, because a product that tries to distort market prices eventually gets caught out by the market every time.
00:20:49.279 --> 00:21:08.640
Nevertheless, point being, um, if someone else wants to stand up and lose gobs of money, so I mean, we can't stop them, but if if if it's a rational economic actor, you you can't provide the service at a lower cost than simply reflecting market prices, and you can't provide the service faster than instant.
00:21:08.880 --> 00:21:10.160
Now, why would we do that?
00:21:10.319 --> 00:21:12.799
It's not exactly going to be the world's largest moneymaker.
00:21:12.880 --> 00:21:14.000
That part is true.
00:21:14.240 --> 00:21:26.160
But we believe that we're at the uh very early stages of a significant technology shift within payment space, and we think there's there's space for a facility in the marketplace that just becomes the bog standard.
00:21:26.400 --> 00:21:38.079
It solves a very specific problem that we discussed earlier, the need to accept all relevant stable coins, but the desire to settle in one or a very small number of preferred treasury assets.
00:21:38.480 --> 00:21:49.039
That's a problem that we hear about from anyone from open banking companies to credit card companies to acquirers to cross border payments, and the list goes on and on.
00:21:49.279 --> 00:21:55.200
And we've gotten quite a number of incoming calls from um companies all over the world asking if this is something we can do.
00:21:55.279 --> 00:21:56.240
And we say great news.
00:21:56.319 --> 00:21:59.759
We have a product in production already built, no counterparty.
00:22:00.160 --> 00:22:07.519
risk instant and uh and covers 99.99% of the size tran transaction size that you'd want.
00:22:07.839 --> 00:22:44.640
Uh so for all those reasons we think that Penny is is has good product market fit and uh and we're not particularly concerned about another market maker uh somehow you know um undercutting us in some way there are a lot of solutions in the market that are either vaporware meaning it's a press release or um they are an aspiration uh for example companies that um want to offer the marketplace software but don't want to be party to the transaction and don't have a multi-billion dollar balance sheet to contribute to ensuring that everything settles and everything works correctly.
00:22:44.880 --> 00:23:13.599
And we already have those solutions in the market they're called decentralized exchanges pricing is wide and liquidity is not sufficient for a true you know top-tier consumer use case it's perfectly fine for DeFi DGens to to move move around their their coins and so um you know when you think about needing needing it to be a centralized function needing there to be KYC uh needing there to be regulation and needing to have certainty of execution with a balance sheet behind it we think we have a terrific product.
00:23:13.920 --> 00:24:34.960
Fantastic so there's a number of companies Wintermut Cumberland my ears you hear their names well as you you know you come out of that world yourself so um from the outside the offers all look alike right what can B2C2 actually do that a rival or maybe any new well-funded newcomer cannot easily copy we're not as worried about what well-funded newcomers just to dispatch that it takes a long long time to onboard the thousands of institutions that we and frankly some of our best competitors such as a Wintermute or Cumberland we have nothing but respect for both of those firms it takes a really really long time to onboard a large institutional user base and and get your business up and running earn trust and so that we're not so worried about necessarily about um new startups with regards to the large established uh competitors it it's a hand-to-hand combat every single day you know we compete on price we compete on product we also compete on other uh areas that are not as obvious such as operational um solidity uh we've we at BTC2 have invested huge amounts of money in our operational capabilities and that's uh I think a differentiating factor to some of our competitors who have who have made more of their investments in front office.
00:24:35.119 --> 00:25:00.000
Um so we don't operate at the same scale in terms of headcount as some of our competitors but um we have a a super robust uh back end we're able to settle our balance sheet multiple times a day uh and so that's a that's a feature that a lot of our clients really like is the ability to settle at any moment in time it allows them to get their money sooner it allows them to manage the counterparty risk and some of these capabilities are not as widespread as you might think.
00:25:00.400 --> 00:25:20.160
Got it okay so maybe like when we look at the financial world there's probably a company that stands really out who you've been able to help right you've helped JP Morgan put its dollars actually onto a public blockchain and a dozen of the Europeans largest bank are about to launch a shared Euro coin with their own wallets.
00:25:20.400 --> 00:25:45.440
If the banks and the issuers cannot connect to each other directly what stops them from cutting out the firm in the middle which probably would be you um you know I think that the market structure in payments um with blockchain technology is still is is gonna is yet to be determined and frankly I think it's gonna be a uh sort of homogenized market structure.
00:25:45.599 --> 00:25:53.599
When I talk to payments firms they both compete with and collaborate with and transact with a wide variety of firms around them.
00:25:53.759 --> 00:26:06.240
So the the refrain we most often hear is that um I will say like well hey isn't that firm your competitor and they'll say well in in these two countries or in this one corridor or in this one specific workflow, yes.
00:26:06.400 --> 00:26:14.480
However, we collaborate with that same company in other workflows or in other jurisdictions or other client types, other use cases.
00:26:14.799 --> 00:26:20.079
And so um I think that it's unclear exactly what the future market structure will be.
00:26:20.240 --> 00:26:22.160
I expect it to be really dynamic.
00:26:22.319 --> 00:26:35.519
And I believe that our job is to remain relevant to a wide wide range of different um client types and be really clear about what it is that we're offering them and why we're creating value, how we're creating value.
00:26:35.759 --> 00:26:52.079
For the time being the ability to transact 24 hours a day seven days a week settle 24 hours a day seven days a week to have a specific set of products and services around stable coins while it's strong to say that that's unique, it's still rare.
00:26:52.240 --> 00:26:55.759
Yeah it's unclear what'll happen tomorrow.
00:26:55.839 --> 00:27:01.039
It's not likely that we will remain sort of the preeminent service provider in stable coins forever.
00:27:01.519 --> 00:27:14.079
But at the same time the opportunity set is likely to grow as well in terms of the scale of activity, uh in terms of the um different regions of the world that are that are um adopting blockchain technology and payment space.
00:27:14.319 --> 00:27:23.599
So we're while it's true we have an eye out to ensure that we're thinking um smart strategically at the same time there's what we see a lot of opportunity ahead.
00:27:23.920 --> 00:27:34.480
Absolutely I think it's fascinating to hear because if you sometimes just look at the markets, you know it goes up, it goes down, it goes up, it goes down it could be very discouraging.
00:27:34.720 --> 00:27:54.319
So maybe from your experience what have you learned about all of those things like especially with B2C and being in the industry for such a long time how how do you deal or how should companies deal with that volatility of those type of assets or is stablecoin really the the next frontier so that you don't have to deal with those type of volatilities?
00:27:54.880 --> 00:28:02.000
It's an interesting question at B2C2, we essentially have three product verticals our first product vertical is Bitcoin.
00:28:02.240 --> 00:28:08.640
Our second product vertical is stable coins and then our third product vertical is everything that is not Bitcoin or stable coins.
00:28:08.880 --> 00:28:20.720
So we have these product verticals built out and you're absolutely right that you know the I would say Bitcoin prices have been range bound and then all of the crypto assets have you know moved around in various ways.
00:28:20.880 --> 00:28:24.079
In general though I would agree that activity levels are low.
00:28:24.640 --> 00:28:30.400
Engagement currently is reasonably low and and we're off the highs in a lot of assets.
00:28:30.480 --> 00:28:38.960
And then we've we saw you know this whole rash of digital asset treasury companies many of whom are have their stock prices down really significantly since the peak.
00:28:39.200 --> 00:28:58.400
At the same time I think that this is there's a little bit of I would say navel gazing within the crypto community about these things if you look at a whole range of different public equities you see a lot of household names whose stocks are down 60, 70, 80% from their all-time highs and you do actually see a lot of volatility there as well.
00:28:59.359 --> 00:29:08.799
So you know that's a little bit of a peculiar answer to your question, but I'm not we're not as worried necessarily about where crypto prices are today and where they might go tomorrow.
00:29:08.880 --> 00:29:11.119
We obviously have no control over any such thing.
00:29:11.279 --> 00:29:17.119
We have control over what products we roll out and what the what the client experience is working with B2C2.
00:29:17.359 --> 00:29:19.519
And that's really what our areas of focus are.
00:29:19.759 --> 00:29:38.880
We have developed some great products we mentioned Penny uh earlier we have some really terrific lending products that have uh have some really uh I think excellent features and that's really where our focus is in serving our clients and ensuring that we're rolling out value added products uh rather than sort of just sitting around hoping Bitcoin goes to 200,000.
00:29:39.200 --> 00:29:40.240
Which by the way we do hope.
00:29:40.480 --> 00:29:42.319
Absolutely when I see it go to the moon.
00:29:42.480 --> 00:29:43.200
Yeah that's right.
00:29:43.440 --> 00:30:01.119
Absolutely so let's say five years from now if B2C2 has you know has done its job or you've been successful at executing on your strategy what part of moving money simply works without anyone thinking about the machinery underneath and what will it have to do to take it over there?
00:30:03.359 --> 00:30:12.160
Um my expectation is that moving money will become will become increasingly easy friction the reduced friction.
00:30:13.119 --> 00:30:24.079
My expectation is that there will be right now there's essentially a very small number of networks that allow you to move money both either domestically or internationally and I suspect that these networks will start to compete with each other.
00:30:24.240 --> 00:30:35.200
I mean a great example is Stripe and I have no knowledge of what's going on inside Stripe obviously but it's a company that not only I but I think almost everybody in financial services has a lot of respect for.
00:30:35.359 --> 00:30:46.319
We could easily see a situation where an increasing amount of merchant to merchant financial activity is done within a Stripe network and never to really touches a bank.
00:30:46.480 --> 00:30:46.720
Yeah.
00:30:46.960 --> 00:30:55.759
As that's the kind of thing we could see we could also see Stripe if there were a regulatory snag Stripe would simply just purchase or or somehow collaborate with a bank to satisfy the regulatory need.
00:30:55.839 --> 00:31:01.200
As you know there's a lot of these types of services already in the market banking as a service regulation as a service things like this.
00:31:01.440 --> 00:31:08.559
And so what you what you end up with is a market structure where you have a variety of different networks to accomplish your task and these networks compete with each other.
00:31:08.799 --> 00:31:18.799
From a market structure perspective that's not radically different from what we see currently in digital assets or crypto where you have a number of L1s competing for transactional activity.
00:31:18.960 --> 00:31:26.319
You have a range of L2s scaling solutions to make uh their respective L1s faster again competing for activity as well.
00:31:26.559 --> 00:31:38.559
And so we you could see a a future world where the the that's the market structure is multiple networks and the user experience is really one where you're able to choose whatever network is faster and cheaper.
00:31:38.880 --> 00:31:49.920
You earlier in our conversation you mentioned agentic finance and agentic transactions and I don't you know while I believe that that's the future it's also a bit of science fiction at the moment so I want to stay away from it a little bit.
00:31:50.079 --> 00:32:05.920
But the only point I will make is rather than the user experience being that you need to do a heavy amount of research and investigation to figure out for any one transaction what might be the fastest or cheapest, it's very likely that that type of workflow will be will be devoted to a machine in the future.
00:32:06.079 --> 00:32:09.359
That's a that's a a pretty easy prediction to make.
00:32:09.599 --> 00:32:35.279
And so uh the user experience is very likely this is my wallet or account, however you want to refer to it this is some place where I keep my money and I want to take this amount of money and send it to some other place where they keep their money there will likely be a passive background KYC KYB AML OLFAC you know screening to make sure that this transaction is kosher and that both nodes are kosher and then it'll run through the cheapest path.
00:32:35.440 --> 00:32:57.359
Yeah um I'm a very future focused optimistic guy um and I like to ask each one of my guests like there's always roadblocks ahead regulations that are popping up in the US and Europe uh challenges on a technical basis and we've we haven't even dove into AI or anything like that.
00:32:57.440 --> 00:33:11.519
But what is something that you're seeing as maybe a roadblock or a challenge right now that needs to be resolved especially if we want to see more adoption of stable coins and you know of course B2C2 as a company?
00:33:12.960 --> 00:33:35.359
I think we still have work to do um for one on security right so uh one of the things that we thankfully we haven't spent a lot of time talking about is DeFi and the reason I say thankfully is because as much as I think the promise of DeFi is is really exciting, you know, these constant hacks are are just it's abundantly evident that this is a product that has a lot of product development to do.
00:33:35.440 --> 00:33:44.880
I mean it's not just one product obviously it's an entire marketplace and it's a lot of it's it's thousands of well-meaning professionals trying their best to build and builders and you have to respect that.
00:33:45.119 --> 00:33:50.559
At the same time the the state of affairs with regards to security is just not acceptable.
00:33:50.640 --> 00:33:53.599
So that's one that's one critical area.
00:33:54.000 --> 00:33:59.279
I think um a lot of the regulatory uh questions are being cleared up as we speak.
00:33:59.359 --> 00:34:47.840
So we've got obviously legislation coming through Congress in the United States we've got um some activity out of Europe as well and Singapore has been kind of forward in its regulatory posture as well so I think that that area is getting cleared up I also think that um you know the the in the United States the crypto uh digital asset community has has uh arguably over uh sort of overindulged in getting itself um really really close to some politically toxic entities and uh it's it's quite possible if that were a change of control in some parts of the government um that that could end up being a problem for us down the line.
00:34:48.159 --> 00:35:01.360
We went from being blamed by the Biden administration for a lot of ills that were not of our making and that I think there was a very strong anti-crypto bias in the Biden administration for reasons that remain unclear to this very moment.
00:35:02.480 --> 00:35:12.320
But um you know I think that the the industry in general over indexed on political contributions to one side versus the other and and uh that's not likely to work out well in the long run.
00:35:12.639 --> 00:35:18.639
Perfect well thank you for that answer and thank you for joining us here at Executive Conversation and it was great to speak with you.
00:35:18.880 --> 00:35:24.400
My pleasure thank you thank you if you like this episode hit like follow and subscribe for more
00:00:00.160 --> 00:00:02.720
Welcome to Executive Conversations by the Papers.
00:00:03.120 --> 00:00:04.240
I'm Dwayne Jeffrey.
00:00:04.879 --> 00:00:09.519
In this episode, I'm joined by Coctus Razzi, CEO of America's at B2C2.
00:00:10.240 --> 00:00:18.640
We're discussing how B2C2 is building liquidity infrastructure for digital assets and what that means for the future of institutional crypto trading.
00:00:20.239 --> 00:00:22.160
I don't want to jump straight right into it, right?
00:00:23.120 --> 00:00:29.760
Most people in payments will not have come across B2C2, even though you move billions of dollars a day.
00:00:30.000 --> 00:00:36.159
So maybe give us a little bit of an introduction about what is it that the company actually does and who is it for?
00:00:36.799 --> 00:00:43.759
B2C2 was founded uh over a decade ago as a as a crypto market maker, liquidity provider.
00:00:44.960 --> 00:00:54.880
Our primary uh activity is to serve exchanges and our institutional clients and providing liquidity to them when they want to buy or sell digital assets.
00:00:55.119 --> 00:00:59.439
And more recently, we've made a lot of investments in the stablecoin space.
00:00:59.600 --> 00:01:17.920
And the uh our client base has grown to include payments companies and more recently, even you know, credit card firms and a wide variety of other firms in consumer financial services that are adopting some portion of blockchain technology for uh for applications that are outside of core crypto.
00:01:18.319 --> 00:01:18.959
Fantastic.
00:01:19.120 --> 00:01:21.519
So maybe let's walk through that, right?
00:01:21.599 --> 00:01:24.719
Like, so some let's say somebody wants to buy some Bitcoin.
00:01:24.799 --> 00:01:29.120
They open up the app, they have a couple of dollars in there, maybe in a stable coin.
00:01:29.200 --> 00:01:33.840
Um, what is it that your firm does behind the scene that makes that happen?
00:01:34.079 --> 00:01:34.719
Yeah.
00:01:35.040 --> 00:01:42.560
So we provide prices not only to exchanges, you know, you could Coinbase or Kraken or Binance or over 40 exchanges globally.
00:01:42.719 --> 00:01:55.280
So part of what we do is we act as either a liquidity maker, that is to say, providing prices to allow transactional activity to happen, or sometimes we're also taker, so we'll trade on those exchanges to hedge ourselves, for example.
00:01:55.519 --> 00:01:57.120
And then there's retail platforms.
00:01:57.200 --> 00:02:02.000
Um and in the crypto world, these are there's um blurring of the lines between the two.
00:02:02.239 --> 00:02:18.319
But a strict retail platform you can think of would be something like Robinhood or these types of platforms that have a large user base, and there's many of them globally, and we serve them by again providing prices so that their users can buy or sell a bunch of different crypto and digital assets.
00:02:18.719 --> 00:02:31.680
More recently, uh, with the rise of prediction markets, um, you know, polymarket is crypto native, so there's that, and then there's other prediction markets globally, both in the United States and elsewhere, that I again are starting to adopt portions of blockchain technology.
00:02:31.759 --> 00:02:34.000
So that's a natural growth area for us.
00:02:34.240 --> 00:02:41.360
Not so much in the sports or in the celebrity bets, but in in macroeconomics and in uh bets around core crypto.
00:02:41.520 --> 00:02:49.520
For example, they have one of the most popular contracts out there is whether Bitcoin will go up or down in a in a reasonably short time interval to these types of things.
00:02:49.759 --> 00:02:49.919
Yeah.
00:02:50.080 --> 00:02:59.199
So it's not actually betting on the not buying the asset as and to see if it goes up or down, but actually placing a bet just on what happens with the underlying asset.
00:02:59.680 --> 00:03:00.319
That's fascinating.
00:03:00.479 --> 00:03:00.639
Yeah.
00:03:01.120 --> 00:03:06.800
So you said it's already been 10 years, you're moving massive numbers of volumes already.
00:03:06.960 --> 00:03:14.159
Um, but most of them, most of the companies that you're working with, the banks, the payment companies, they are your clients.
00:03:14.319 --> 00:03:19.039
So is it actually beneficial for you to be invisible or sort of like behind them?
00:03:19.280 --> 00:03:22.080
Or is it something else that and that that you're working on?
00:03:22.800 --> 00:03:23.840
No, I think you're right.
00:03:23.919 --> 00:03:25.360
We're we're a B2B company.
00:03:25.520 --> 00:03:26.800
We're strictly institutional.
00:03:26.879 --> 00:03:30.400
We don't have a user base of individuals and we have no plans to do so.
00:03:30.479 --> 00:03:31.919
It's not in our business model.
00:03:32.080 --> 00:03:43.199
And so we support our our front partners, whether they're they have their own retail platforms, some of them are institutional lending platforms, for example, and other institutional businesses.
00:03:43.439 --> 00:03:45.039
An example would be custodians.
00:03:45.199 --> 00:03:59.759
We have a really robust franchise working with custodians who then provide liquidity to their customers, again, all institutional, but we're the essentially one of the liquidity back end to uh custodians' execution desk.
00:04:00.080 --> 00:04:00.479
Absolutely.
00:04:00.560 --> 00:04:10.879
So it's really just behind the scenes, but making sure that those who are providing the retail users and and businesses with the solutions, you're the ones sitting behind that.
00:04:11.120 --> 00:04:11.520
That's right.
00:04:11.680 --> 00:04:12.240
Fantastic.
00:04:12.479 --> 00:04:15.039
So um, but especially now, right?
00:04:15.120 --> 00:04:18.639
We see stable coins, of course, being everywhere, right?
00:04:18.720 --> 00:04:21.360
Like at different conferences, people are talking about it.
00:04:21.519 --> 00:04:24.079
Um it started out as a trading tool.
00:04:24.240 --> 00:04:36.160
Stablecoin started out as a trading tool, and then it made its way in and out of crypto, of course, making sure that it was pegged against, um, or at least helping with trading the other crypto assets within that.
00:04:36.319 --> 00:04:42.560
Um, why is that something that banks and payments companies are all of a sudden looking into and can't ignore anymore?
00:04:42.879 --> 00:04:57.600
Really, more than anything else, it's the uh it's a similar reasoning as to why there has been just general technology development in FinTech uh over the past 20 years, which is uh generally it's uh either faster, cheaper, or preferably both.
00:04:57.920 --> 00:05:08.480
When you look at stable coins, um moving value uh from point A to point B is generally faster than doing so uh through the existing frameworks.
00:05:08.560 --> 00:05:14.879
That's particularly true internationally, and that is also true domestically in countries that don't have instant payment networks.
00:05:15.040 --> 00:05:22.240
So, for example, in Brazil, you have PICs and you can move money very quickly, very cheaply in Brazil.
00:05:22.399 --> 00:05:32.319
But getting, let's say, a payment to a company in Singapore from Brazil is a multi-day process, and that's where stable coins help.
00:05:32.399 --> 00:05:52.319
So I think um I don't think there was necessarily a lot of enthusiasm for blockchain technology within the payment space, but quite the other way around, that this is a new technology that is faster and cheaper than existing um, you know, existing workflows, and so there it naturally um starts to uh um be adopted.
00:05:52.560 --> 00:05:52.879
Yeah.
00:05:53.360 --> 00:05:54.319
Oh fantastic.
00:05:54.560 --> 00:05:58.240
So especially if you look at the stablecoin market, right?
00:05:58.319 --> 00:06:05.199
You have UEDC, you have USDT, um, and there's no one single dollar equivalent anymore.
00:06:05.360 --> 00:06:11.680
Um but you also have different currencies, you have different issuers, you have different networks all trying to get in there.
00:06:11.839 --> 00:06:20.160
You have companies like Stripe buying different companies and actually encouraging others to launch their own uh stable coins and their own platforms as well.
00:06:20.399 --> 00:06:26.480
Why does that fragmentation matter to anyone trying to move in and out of uh money?
00:06:27.279 --> 00:06:28.319
Well, it's interesting.
00:06:28.480 --> 00:06:30.160
Um, there's a couple of things I'll say.
00:06:30.240 --> 00:06:33.279
Uh the first is why would you want to have your own stablecoin?
00:06:33.519 --> 00:06:39.680
Because that's what at the root of this concept of fragmentation is this idea that uh there will be many more stable coins in the future.
00:06:39.759 --> 00:06:43.600
And we're seeing that, you know, just a couple of days ago, MoneyGram announced its stable coin.
00:06:43.680 --> 00:06:45.600
Uh, we're working with Western Union.
00:06:45.680 --> 00:06:48.480
They have uh they have uh announced a stable coin.
00:06:48.639 --> 00:06:56.560
And um, we're very close to stablecoin orchestration firms, so there's a lot of things that I can't share publicly, but there are a lot of more stable coins coming.
00:06:56.639 --> 00:06:57.600
So why is that?
00:06:57.920 --> 00:07:02.480
I think that um as you want to think about issuing your own stablecoin if you have a network.
00:07:02.639 --> 00:07:10.720
And a network can be defined as uh as a lot of different things, but you would certainly accept the case that Stripe has a network, hundreds of thousands of merchants.
00:07:10.959 --> 00:07:12.879
Shopify has a network.
00:07:13.040 --> 00:07:20.399
Uh I don't have any knowledge about a Shopify stablecoin, but I'm using that as an example of a network where people won't necessarily think of it as that, but that's what it is.
00:07:20.560 --> 00:07:24.800
Telegram users are a network, and we can go on and on, many, many different networks out there.
00:07:25.120 --> 00:07:30.000
If you want to facilitate value transfer within your network, that's one if.
00:07:30.160 --> 00:07:40.399
But if you want to do that, you will likely want to own that technology because it allows you to then take advantage of that software in ways that uh are going to be potentially strategic in the future.
00:07:40.639 --> 00:07:47.279
So again, sticking to an example that we uh that's all public and we know about, such as Stripe, again, I have no specific information.
00:07:47.360 --> 00:07:56.000
I don't hang out with the with the Cole Some brothers, but I will say that um, if I were running the company, I would say to myself, I don't want a third-party dependency.
00:07:56.160 --> 00:08:00.879
I want to be able to develop software to run on top of my stable coins for the benefit of my network.
00:08:00.959 --> 00:08:06.079
And I want to be able to control implementation, I want to be able to control timelines and costs.
00:08:06.240 --> 00:08:06.879
Yeah.
00:08:07.600 --> 00:08:11.759
Well, I think that's at the root of why Western Union wants to have its own stable coin.
00:08:11.839 --> 00:08:15.360
You know, they were they always had the option to use Circle, for example.
00:08:15.519 --> 00:08:18.160
Nothing against Circle, great company, great leadership.
00:08:18.399 --> 00:08:37.039
But um, it's, you know, all of us who have built things in the past, as have you, we really don't like the idea of having third-party dependencies because you uh you usually, when you call a partner up and say, hey, this is what I need, this is what I'm trying to get into production, they'll tell you it's gonna be sometimes expensive, but even if it were to be cheap, it's gonna be many more months than perhaps we had hoped.
00:08:37.679 --> 00:08:38.879
They have their own development queue.
00:08:39.840 --> 00:08:45.039
And so therefore you say to yourself, great, so network owners are likely to want their own stable coin.
00:08:45.120 --> 00:08:48.399
And that results in fragmentation, but that is not the intent.
00:08:48.720 --> 00:08:53.360
I'd also point out that from a fragmentation perspective, there's a couple of different questions.
00:08:53.919 --> 00:09:04.080
Um, there are solutions in the market to allow any institution to accept all relevant stable coins, but to settle in their preferred treasury asset.
00:09:04.320 --> 00:09:05.840
We offer one at B2C2.
00:09:06.080 --> 00:09:06.320
Okay.
00:09:06.480 --> 00:09:16.639
And this is the ability to instantly and costlessly convert any any one of currently about 18 stable coins, and that number is growing, and convert them to your preferred treasury asset.
00:09:16.960 --> 00:09:19.600
That includes non-dollar stable coins as well.
00:09:19.840 --> 00:09:27.200
And so, and and uh, you know, we think we have the best solution in the market, but there will likely be others that will that will create such similar solutions.
00:09:27.360 --> 00:09:39.600
And that really obviates any concerns around fragmentation for the most part, because ultimately it allows you to settle and manage your preferred treasury asset while still accepting a wide range of stable coins.
00:09:39.919 --> 00:09:44.799
And this other thing I'd say is uh at the consumer level, it's unclear what the user experience will be.
00:09:45.039 --> 00:09:52.320
Certainly right now, if you open up your MetaMask wallet, and most people don't know what that is, but if you were to do that, you would see a bunch of different assets in there.
00:09:52.480 --> 00:10:01.600
But tomorrow there could easily be a fintech that abstracts away uh some of this, um some of the the many different assets you might end up holding.
00:10:01.840 --> 00:10:08.799
And and then the last thing I'd probably point to is currently stable coins can't pay interest, as we know, with uh with some with the Genius Act.
00:10:09.039 --> 00:10:14.799
But it's a it's really trivial to uh convert a stablecoin into a yield-bearing instrument.
00:10:14.960 --> 00:10:19.919
And so you would think of stable coins as a superior product for the transfer of value.
00:10:20.639 --> 00:10:26.080
And then you have other products that are better, likely better for store of value.
00:10:26.240 --> 00:10:26.480
Yeah.
00:10:26.639 --> 00:10:32.320
That could include deposit tokens in the future as well, and many, possibly many other developments that still lie ahead of us.
00:10:32.559 --> 00:10:39.679
And because the conversion is instant and uh and uh effectively free, you know, you you you as a user, you don't really care.
00:10:39.759 --> 00:10:44.080
When you need to move things around, quite likely behind the scenes it'll be via stable coin.
00:10:44.320 --> 00:10:51.600
And meanwhile, when you need to, when the money is not moving, again, quite likely behind the scenes, it'll automatically be converted to a yield-bearing instrument.
00:10:51.679 --> 00:10:52.000
Yeah.
00:10:52.240 --> 00:10:54.639
So I I think we have a bright future ahead.
00:10:54.720 --> 00:11:05.440
And I think some of these possibilities around programmability and uh convertibility, uh fungibility, I think some of these possibilities are why stable coins remain such a hot topic, for example, here at Money2020.
00:11:05.759 --> 00:11:06.320
Absolutely.
00:11:06.559 --> 00:11:30.320
So, and I I think especially on that point, like whenever I talk about stable coins as a matter of conference where we're at, um, there's always that point out by those who are in the trading part, probably what's much, much more of um what you're working on, versus the ones who are working with is stablecoin actually a store of value or something that we're using to actually buy goods and services with.
00:11:30.480 --> 00:11:35.840
And if you look at that, in the last year, I believe it was around$30 trillion that was actually being moved.
00:11:35.919 --> 00:11:44.879
And the majority of that, I think anywhere between$25 trillion or probably even more than that, was actually coming from going in and outside of those crypto assets, right?
00:11:44.960 --> 00:11:46.480
Probably a lot of the things that you're doing.
00:11:46.559 --> 00:11:46.799
Yeah.
00:11:47.120 --> 00:11:59.120
And then only a smaller part, only$5 trillion, was actually being used for other other um other means, basically from merchant processing to uh settlement currencies, etc.
00:11:59.519 --> 00:12:01.840
Um, what do you think the trend is going to be?
00:12:02.000 --> 00:12:07.360
Do you think that we'll continue to see a massive growth of going in and out of those cryptos?
00:12:07.519 --> 00:12:12.639
So trading that that will continue to be or even adopt more to going in and out of stable coins?
00:12:12.799 --> 00:12:25.600
Or do you think we'll see more on the other side that growth actually accelerating on the acceptance of stable coins in retail environments, online, or maybe even agent-to-agent type of transactions?
00:12:26.240 --> 00:12:35.279
It's unclear to me whether we're going to need to get to a place where stable coins are explicitly accepted by uh point of sale.
00:12:35.600 --> 00:12:47.840
It could be abstracted in the background, depending on what's being developed by companies like uh, for example, Square or Clover, and then you have many, many other ones, you know, all the acceptance companies, Ad Yen and Checkout.com.
00:12:47.919 --> 00:12:48.399
It goes on and on.
00:12:48.480 --> 00:12:51.039
There's a global phenomenon of point of sale.
00:12:51.200 --> 00:13:00.639
And it's unclear whether you're gonna have to explicitly use a stable coin or whether there's gonna be sort of an implicit, elegant solution to being able to utilize them for spending at point of sale.
00:13:00.799 --> 00:13:00.960
Yeah.
00:13:01.679 --> 00:13:06.320
I think at the same time, uh, we're gonna get a uh, I think it's uh very likely.
00:13:06.480 --> 00:13:08.960
I I'm not really in the predictions business to be clear.
00:13:09.039 --> 00:13:16.240
I think it's a terrible business to be in, but I will say it's very likely that corporate treasury moves to uh to stablecoin native.
00:13:16.399 --> 00:13:16.639
Okay.
00:13:16.879 --> 00:13:26.559
And that to me is uh is an interesting side point because I think that you know Citibank put out a piece of research several months ago saying, you know, by 2030 the stablecoin market could be four trillion.
00:13:26.799 --> 00:13:26.960
Okay.
00:13:27.440 --> 00:13:32.799
And at the time, uh I think at the time it was probably closer to 220 billion or so, something along those lines.
00:13:32.879 --> 00:13:34.720
So the number, the headline numbers looked really exciting.
00:13:35.120 --> 00:13:44.080
So when you say four trillion as in the money being as in the total, not the total amount of trading, but rather the total capital sort of um being uh expressed in stable coins.
00:13:44.240 --> 00:13:47.919
Like right now, it's you know, at the time, I think Circle was around sixty billion.
00:13:48.000 --> 00:13:48.080
Yeah.
00:13:48.320 --> 00:13:50.399
And the rest of it uh was uh tether, obviously.
00:13:50.480 --> 00:13:55.039
Aaron Powell But it's the velocity that big makes the bigger number, even though the actual value was.
00:13:55.360 --> 00:14:03.120
No, it's just that those those commensurate numbers of like let's say 220 billion at the time was going to be four was gonna be four trillion by 2030.
00:14:03.360 --> 00:14:05.440
So long, you know, some years ahead.
00:14:05.759 --> 00:14:17.039
I think that that, you know, again, I'm not in the predictions business, but I think that that was a gross underestimation of what the total amount of capital being in the form of stable coins is likely to be by 2030.
00:14:17.120 --> 00:14:19.759
And I say this primarily because of corporate treasury.
00:14:20.960 --> 00:14:33.440
You know, you take one institution like Bank of New York, they have a very strong uh digital assets team there, and they more recently have made um indications that they are making heavier investments in digital assets.
00:14:33.600 --> 00:14:35.200
That's the world's largest custodian.
00:14:35.360 --> 00:14:37.519
They've got uh over$35 trillion.
00:14:37.840 --> 00:14:41.840
The last last I checked, it was$36 or$37 trillion in corporate cash alone.
00:14:42.159 --> 00:14:42.960
So just done it.
00:14:43.200 --> 00:14:53.360
Even if they were to give their clients uh an option to opt in to having a stable coin form, uh you would already blow that$4 trillion prediction completely out of the water.
00:14:53.440 --> 00:14:54.559
And that's just one institution.
00:14:55.679 --> 00:15:00.879
Now, why would why would a treasurer or a CFO choose to uh keep their assets in the form of a stable coin?
00:15:01.039 --> 00:15:02.480
Well, it's just faster to move around.
00:15:02.559 --> 00:15:04.240
It moves around 24 hours a day.
00:15:04.399 --> 00:15:09.519
You don't have cutoff windows like you would in traditional money movement um architecture.
00:15:09.759 --> 00:15:19.440
So it seems pretty clear to me that the direction of travel is money moving faster, money moving cheaper, uh money moving at when you need it, where you need it.
00:15:19.600 --> 00:15:28.080
And uh and all of that suggests to me that a a large portion of corporate treasury is likely to move to stable coin form uh over the course of the next three or five years.
00:15:28.480 --> 00:15:28.879
Perfect.
00:15:29.039 --> 00:15:29.519
Yeah.
00:15:29.840 --> 00:15:39.360
Um so I think especially on discussing like when when we're moving these stable coins, you already mentioned that it's pretty easy, faster to move, absolutely.
00:15:39.519 --> 00:15:55.279
Uh let's say uh we take one of those payments companies that is working with you, or just any company at at that point, um, and they're promising, of course, their customers that cross-border payments will be settled in stable coins because it's faster, it's cheaper than just a bank wire, right?
00:15:55.360 --> 00:16:02.960
So I can imagine global payments processors, targeting merchants, hey, we'll we'll we'll settle you pretty much instantly or the next day at least.
00:16:03.360 --> 00:16:09.519
Um, as those customers need to pay their suppliers who only accept one particular coin or one currency.
00:16:09.759 --> 00:16:11.759
Oftentimes that's even uh fiat.
00:16:12.399 --> 00:16:16.480
What happens uh when we need to start expanding that?
00:16:16.639 --> 00:16:25.679
So do we need to start convincing merchants to accept stable coins, or is that much more of a conversation that needs to happen between the payments processors and the merchants?
00:16:26.399 --> 00:16:28.639
That's an it's an interesting question.
00:16:28.799 --> 00:16:34.480
Um, I don't believe uh there needs to be a big uh sale to merchants per se.
00:16:34.639 --> 00:16:41.440
I think that uh merchants should be fast to adopt stablecoin frameworks if there is a perceived benefit.
00:16:42.000 --> 00:16:47.519
Merchants tend to be very uh kind of aggressive about, you know, saving a penny here, a penny there.
00:16:47.600 --> 00:16:54.320
You hear a lot of noise from merchants about the credit card uh interchange fees and and the the fee stack to utilize credit cards.
00:16:54.399 --> 00:16:59.279
And so uh any any perceived benefit, I think, will essentially sell itself.
00:16:59.440 --> 00:17:04.079
Now, if the merchant does not perceive a benefit, that's where you have a challenge and you have a sell sales problem.
00:17:04.160 --> 00:17:11.839
But so long as the merchant perceives the benefit, which almost always is either lower costs or you get your money sooner.
00:17:11.920 --> 00:17:15.039
Yeah, then I think that uh it's a foregone conclusion.
00:17:15.359 --> 00:17:16.319
Okay, perfect.
00:17:16.480 --> 00:17:20.640
Um, well, for all the talk that we have about a multi-currency future, right?
00:17:20.720 --> 00:17:24.079
There's still almost entirely a dollar world world.
00:17:24.160 --> 00:17:27.920
Um, anywhere in the world, the dollar is preferred over other currencies.
00:17:28.079 --> 00:17:35.359
Um the market was around$305 billion at the start of the year, and roughly 99% of it was dollar-based.
00:17:35.519 --> 00:17:39.599
Um now we have Euro versions, which are barely a sliver of it.
00:17:39.680 --> 00:17:40.880
So the stablecoin markets.
00:17:41.359 --> 00:17:49.519
When you describe a real Euro alternative and a multi-currency market, are you describing things where things are today, or are you placing a bet on where they are going?
00:17:51.119 --> 00:17:58.480
Well, um, I think that the dollar is the kind of RD lab for a lot of the things we've been talking about.
00:17:58.640 --> 00:18:08.079
We've been talking about programmability, speed, uh, lower cost reductions, and other benefits of uh deploying blockchain technology in the payment space.
00:18:08.319 --> 00:18:14.880
And yeah, it's true that the sort of whether we like it or not, the environment in which a lot of this development is being done is dollar-based.
00:18:15.279 --> 00:18:27.359
To the degree that there are benefits coming out of that space, to the degree that there are real benefits to some of the things we've been discussing and some of the possibilities, I think that they'll naturally move over to other currencies and other jurisdictions.
00:18:27.599 --> 00:18:45.680
We currently support, yeah, B2C2, we obviously support EURC, um, but we're in uh you know very close to the founding teams of um uh GBP, BRL, MXNB, Colombian Peso, uh I'm trying to think, Hong Kong dollar, uh, and yen stable coins.
00:18:45.759 --> 00:18:46.960
That's just off the top of my head.
00:18:47.039 --> 00:18:51.200
You know, so uh people come to us and they want to launch their products.
00:18:51.680 --> 00:18:55.839
Is there a huge amount of demand for a British pound stable coin right now, for example?
00:18:56.000 --> 00:18:57.279
No, not necessarily.
00:18:57.599 --> 00:19:02.000
But to the degree that there's adoption in dollar space, the adoption will be for a reason.
00:19:02.079 --> 00:19:02.160
Yeah.
00:19:02.319 --> 00:19:13.200
And that reason will likely also apply in the UK in GBP uh and and will likely end up being part of the feature set of the GBP stablecoin.
00:19:13.680 --> 00:19:14.240
Absolutely.
00:19:14.400 --> 00:19:14.640
Okay.
00:19:14.799 --> 00:19:18.160
So I want to bring it back to B2C2 again.
00:19:18.319 --> 00:19:21.759
Um you've launched a product, it's called Penny, right?
00:19:21.920 --> 00:19:29.519
It's free to use, and um, you've said that the pricing on this trade has to be wavertin or the advantage over a bank wire disappears.
00:19:29.599 --> 00:19:33.200
Uh that sounds like a business with no obvious way to make money.
00:19:33.359 --> 00:19:40.319
Where does the money actually come from and what stops a better funded rival from undercutting you on margin uh once that's gone?
00:19:40.559 --> 00:19:50.240
You know, we designed Penny specifically, understanding that there were likely going to be race conditions, both with regards to how fast it works and with regards to cost.
00:19:51.039 --> 00:19:55.440
So we designed it to be an instant swap, and you can't get any faster than instant.
00:19:55.519 --> 00:19:57.519
And that was one moat around the product.
00:19:57.759 --> 00:20:03.039
And we designed it to really just reflect institutional pricing between stable coins.
00:20:03.119 --> 00:20:12.799
And the reason for that to be very specific is that, you know, there's this assumption in the marketplace that stable coins should always always be worth par, but they're not actually always worth par.
00:20:13.119 --> 00:20:15.359
And we're not the central bank of stable coins.
00:20:15.440 --> 00:20:22.559
You know, we it it there are, I don't need to name names, but there are some really large stable coins out there that persistently trade below par.
00:20:23.039 --> 00:20:29.200
And so uh obviously there would be an arbitrage opportunity if we're willing to buy it at par and people are offering it below par.
00:20:29.359 --> 00:20:35.920
Yeah, it might only be a a cent or even basis points below par, but still in the appropriate amount of size, that's free money.
00:20:36.160 --> 00:20:41.680
And so what we do is we just reflect the what the market believes the correct pricing is on the different stable coins.
00:20:41.759 --> 00:20:49.039
And that's a that's a better product, frankly, because a product that tries to distort market prices eventually gets caught out by the market every time.
00:20:49.279 --> 00:21:08.640
Nevertheless, point being, um, if someone else wants to stand up and lose gobs of money, so I mean, we can't stop them, but if if if it's a rational economic actor, you you can't provide the service at a lower cost than simply reflecting market prices, and you can't provide the service faster than instant.
00:21:08.880 --> 00:21:10.160
Now, why would we do that?
00:21:10.319 --> 00:21:12.799
It's not exactly going to be the world's largest moneymaker.
00:21:12.880 --> 00:21:14.000
That part is true.
00:21:14.240 --> 00:21:26.160
But we believe that we're at the uh very early stages of a significant technology shift within payment space, and we think there's there's space for a facility in the marketplace that just becomes the bog standard.
00:21:26.400 --> 00:21:38.079
It solves a very specific problem that we discussed earlier, the need to accept all relevant stable coins, but the desire to settle in one or a very small number of preferred treasury assets.
00:21:38.480 --> 00:21:49.039
That's a problem that we hear about from anyone from open banking companies to credit card companies to acquirers to cross border payments, and the list goes on and on.
00:21:49.279 --> 00:21:55.200
And we've gotten quite a number of incoming calls from um companies all over the world asking if this is something we can do.
00:21:55.279 --> 00:21:56.240
And we say great news.
00:21:56.319 --> 00:21:59.759
We have a product in production already built, no counterparty.
00:22:00.160 --> 00:22:07.519
risk instant and uh and covers 99.99% of the size tran transaction size that you'd want.
00:22:07.839 --> 00:22:44.640
Uh so for all those reasons we think that Penny is is has good product market fit and uh and we're not particularly concerned about another market maker uh somehow you know um undercutting us in some way there are a lot of solutions in the market that are either vaporware meaning it's a press release or um they are an aspiration uh for example companies that um want to offer the marketplace software but don't want to be party to the transaction and don't have a multi-billion dollar balance sheet to contribute to ensuring that everything settles and everything works correctly.
00:22:44.880 --> 00:23:13.599
And we already have those solutions in the market they're called decentralized exchanges pricing is wide and liquidity is not sufficient for a true you know top-tier consumer use case it's perfectly fine for DeFi DGens to to move move around their their coins and so um you know when you think about needing needing it to be a centralized function needing there to be KYC uh needing there to be regulation and needing to have certainty of execution with a balance sheet behind it we think we have a terrific product.
00:23:13.920 --> 00:24:34.960
Fantastic so there's a number of companies Wintermut Cumberland my ears you hear their names well as you you know you come out of that world yourself so um from the outside the offers all look alike right what can B2C2 actually do that a rival or maybe any new well-funded newcomer cannot easily copy we're not as worried about what well-funded newcomers just to dispatch that it takes a long long time to onboard the thousands of institutions that we and frankly some of our best competitors such as a Wintermute or Cumberland we have nothing but respect for both of those firms it takes a really really long time to onboard a large institutional user base and and get your business up and running earn trust and so that we're not so worried about necessarily about um new startups with regards to the large established uh competitors it it's a hand-to-hand combat every single day you know we compete on price we compete on product we also compete on other uh areas that are not as obvious such as operational um solidity uh we've we at BTC2 have invested huge amounts of money in our operational capabilities and that's uh I think a differentiating factor to some of our competitors who have who have made more of their investments in front office.
00:24:35.119 --> 00:25:00.000
Um so we don't operate at the same scale in terms of headcount as some of our competitors but um we have a a super robust uh back end we're able to settle our balance sheet multiple times a day uh and so that's a that's a feature that a lot of our clients really like is the ability to settle at any moment in time it allows them to get their money sooner it allows them to manage the counterparty risk and some of these capabilities are not as widespread as you might think.
00:25:00.400 --> 00:25:20.160
Got it okay so maybe like when we look at the financial world there's probably a company that stands really out who you've been able to help right you've helped JP Morgan put its dollars actually onto a public blockchain and a dozen of the Europeans largest bank are about to launch a shared Euro coin with their own wallets.
00:25:20.400 --> 00:25:45.440
If the banks and the issuers cannot connect to each other directly what stops them from cutting out the firm in the middle which probably would be you um you know I think that the market structure in payments um with blockchain technology is still is is gonna is yet to be determined and frankly I think it's gonna be a uh sort of homogenized market structure.
00:25:45.599 --> 00:25:53.599
When I talk to payments firms they both compete with and collaborate with and transact with a wide variety of firms around them.
00:25:53.759 --> 00:26:06.240
So the the refrain we most often hear is that um I will say like well hey isn't that firm your competitor and they'll say well in in these two countries or in this one corridor or in this one specific workflow, yes.
00:26:06.400 --> 00:26:14.480
However, we collaborate with that same company in other workflows or in other jurisdictions or other client types, other use cases.
00:26:14.799 --> 00:26:20.079
And so um I think that it's unclear exactly what the future market structure will be.
00:26:20.240 --> 00:26:22.160
I expect it to be really dynamic.
00:26:22.319 --> 00:26:35.519
And I believe that our job is to remain relevant to a wide wide range of different um client types and be really clear about what it is that we're offering them and why we're creating value, how we're creating value.
00:26:35.759 --> 00:26:52.079
For the time being the ability to transact 24 hours a day seven days a week settle 24 hours a day seven days a week to have a specific set of products and services around stable coins while it's strong to say that that's unique, it's still rare.
00:26:52.240 --> 00:26:55.759
Yeah it's unclear what'll happen tomorrow.
00:26:55.839 --> 00:27:01.039
It's not likely that we will remain sort of the preeminent service provider in stable coins forever.
00:27:01.519 --> 00:27:14.079
But at the same time the opportunity set is likely to grow as well in terms of the scale of activity, uh in terms of the um different regions of the world that are that are um adopting blockchain technology and payment space.
00:27:14.319 --> 00:27:23.599
So we're while it's true we have an eye out to ensure that we're thinking um smart strategically at the same time there's what we see a lot of opportunity ahead.
00:27:23.920 --> 00:27:34.480
Absolutely I think it's fascinating to hear because if you sometimes just look at the markets, you know it goes up, it goes down, it goes up, it goes down it could be very discouraging.
00:27:34.720 --> 00:27:54.319
So maybe from your experience what have you learned about all of those things like especially with B2C and being in the industry for such a long time how how do you deal or how should companies deal with that volatility of those type of assets or is stablecoin really the the next frontier so that you don't have to deal with those type of volatilities?
00:27:54.880 --> 00:28:02.000
It's an interesting question at B2C2, we essentially have three product verticals our first product vertical is Bitcoin.
00:28:02.240 --> 00:28:08.640
Our second product vertical is stable coins and then our third product vertical is everything that is not Bitcoin or stable coins.
00:28:08.880 --> 00:28:20.720
So we have these product verticals built out and you're absolutely right that you know the I would say Bitcoin prices have been range bound and then all of the crypto assets have you know moved around in various ways.
00:28:20.880 --> 00:28:24.079
In general though I would agree that activity levels are low.
00:28:24.640 --> 00:28:30.400
Engagement currently is reasonably low and and we're off the highs in a lot of assets.
00:28:30.480 --> 00:28:38.960
And then we've we saw you know this whole rash of digital asset treasury companies many of whom are have their stock prices down really significantly since the peak.
00:28:39.200 --> 00:28:58.400
At the same time I think that this is there's a little bit of I would say navel gazing within the crypto community about these things if you look at a whole range of different public equities you see a lot of household names whose stocks are down 60, 70, 80% from their all-time highs and you do actually see a lot of volatility there as well.
00:28:59.359 --> 00:29:08.799
So you know that's a little bit of a peculiar answer to your question, but I'm not we're not as worried necessarily about where crypto prices are today and where they might go tomorrow.
00:29:08.880 --> 00:29:11.119
We obviously have no control over any such thing.
00:29:11.279 --> 00:29:17.119
We have control over what products we roll out and what the what the client experience is working with B2C2.
00:29:17.359 --> 00:29:19.519
And that's really what our areas of focus are.
00:29:19.759 --> 00:29:38.880
We have developed some great products we mentioned Penny uh earlier we have some really terrific lending products that have uh have some really uh I think excellent features and that's really where our focus is in serving our clients and ensuring that we're rolling out value added products uh rather than sort of just sitting around hoping Bitcoin goes to 200,000.
00:29:39.200 --> 00:29:40.240
Which by the way we do hope.
00:29:40.480 --> 00:29:42.319
Absolutely when I see it go to the moon.
00:29:42.480 --> 00:29:43.200
Yeah that's right.
00:29:43.440 --> 00:30:01.119
Absolutely so let's say five years from now if B2C2 has you know has done its job or you've been successful at executing on your strategy what part of moving money simply works without anyone thinking about the machinery underneath and what will it have to do to take it over there?
00:30:03.359 --> 00:30:12.160
Um my expectation is that moving money will become will become increasingly easy friction the reduced friction.
00:30:13.119 --> 00:30:24.079
My expectation is that there will be right now there's essentially a very small number of networks that allow you to move money both either domestically or internationally and I suspect that these networks will start to compete with each other.
00:30:24.240 --> 00:30:35.200
I mean a great example is Stripe and I have no knowledge of what's going on inside Stripe obviously but it's a company that not only I but I think almost everybody in financial services has a lot of respect for.
00:30:35.359 --> 00:30:46.319
We could easily see a situation where an increasing amount of merchant to merchant financial activity is done within a Stripe network and never to really touches a bank.
00:30:46.480 --> 00:30:46.720
Yeah.
00:30:46.960 --> 00:30:55.759
As that's the kind of thing we could see we could also see Stripe if there were a regulatory snag Stripe would simply just purchase or or somehow collaborate with a bank to satisfy the regulatory need.
00:30:55.839 --> 00:31:01.200
As you know there's a lot of these types of services already in the market banking as a service regulation as a service things like this.
00:31:01.440 --> 00:31:08.559
And so what you what you end up with is a market structure where you have a variety of different networks to accomplish your task and these networks compete with each other.
00:31:08.799 --> 00:31:18.799
From a market structure perspective that's not radically different from what we see currently in digital assets or crypto where you have a number of L1s competing for transactional activity.
00:31:18.960 --> 00:31:26.319
You have a range of L2s scaling solutions to make uh their respective L1s faster again competing for activity as well.
00:31:26.559 --> 00:31:38.559
And so we you could see a a future world where the the that's the market structure is multiple networks and the user experience is really one where you're able to choose whatever network is faster and cheaper.
00:31:38.880 --> 00:31:49.920
You earlier in our conversation you mentioned agentic finance and agentic transactions and I don't you know while I believe that that's the future it's also a bit of science fiction at the moment so I want to stay away from it a little bit.
00:31:50.079 --> 00:32:05.920
But the only point I will make is rather than the user experience being that you need to do a heavy amount of research and investigation to figure out for any one transaction what might be the fastest or cheapest, it's very likely that that type of workflow will be will be devoted to a machine in the future.
00:32:06.079 --> 00:32:09.359
That's a that's a a pretty easy prediction to make.
00:32:09.599 --> 00:32:35.279
And so uh the user experience is very likely this is my wallet or account, however you want to refer to it this is some place where I keep my money and I want to take this amount of money and send it to some other place where they keep their money there will likely be a passive background KYC KYB AML OLFAC you know screening to make sure that this transaction is kosher and that both nodes are kosher and then it'll run through the cheapest path.
00:32:35.440 --> 00:32:57.359
Yeah um I'm a very future focused optimistic guy um and I like to ask each one of my guests like there's always roadblocks ahead regulations that are popping up in the US and Europe uh challenges on a technical basis and we've we haven't even dove into AI or anything like that.
00:32:57.440 --> 00:33:11.519
But what is something that you're seeing as maybe a roadblock or a challenge right now that needs to be resolved especially if we want to see more adoption of stable coins and you know of course B2C2 as a company?
00:33:12.960 --> 00:33:35.359
I think we still have work to do um for one on security right so uh one of the things that we thankfully we haven't spent a lot of time talking about is DeFi and the reason I say thankfully is because as much as I think the promise of DeFi is is really exciting, you know, these constant hacks are are just it's abundantly evident that this is a product that has a lot of product development to do.
00:33:35.440 --> 00:33:44.880
I mean it's not just one product obviously it's an entire marketplace and it's a lot of it's it's thousands of well-meaning professionals trying their best to build and builders and you have to respect that.
00:33:45.119 --> 00:33:50.559
At the same time the the state of affairs with regards to security is just not acceptable.
00:33:50.640 --> 00:33:53.599
So that's one that's one critical area.
00:33:54.000 --> 00:33:59.279
I think um a lot of the regulatory uh questions are being cleared up as we speak.
00:33:59.359 --> 00:34:47.840
So we've got obviously legislation coming through Congress in the United States we've got um some activity out of Europe as well and Singapore has been kind of forward in its regulatory posture as well so I think that that area is getting cleared up I also think that um you know the the in the United States the crypto uh digital asset community has has uh arguably over uh sort of overindulged in getting itself um really really close to some politically toxic entities and uh it's it's quite possible if that were a change of control in some parts of the government um that that could end up being a problem for us down the line.
00:34:48.159 --> 00:35:01.360
We went from being blamed by the Biden administration for a lot of ills that were not of our making and that I think there was a very strong anti-crypto bias in the Biden administration for reasons that remain unclear to this very moment.
00:35:02.480 --> 00:35:12.320
But um you know I think that the the industry in general over indexed on political contributions to one side versus the other and and uh that's not likely to work out well in the long run.
00:35:12.639 --> 00:35:18.639
Perfect well thank you for that answer and thank you for joining us here at Executive Conversation and it was great to speak with you.
00:35:18.880 --> 00:35:24.400
My pleasure thank you thank you if you like this episode hit like follow and subscribe for more
