The Missing Link Between Stablecoins and Banks w/ Tony McLaughlin

WEBVTT
00:00:00.320 --> 00:00:08.480
Passage of the stablecoin legislation drafted by the Senate, dubbed the Genius Act, because analysts say a wave of competition can complicate things.
00:00:08.480 --> 00:00:15.759
Everyone, welcome back to Stable Pulse.
00:00:15.759 --> 00:00:23.760
We have a special guest here from a company that I think gets thrown around a lot, but in my opinion, very few people understand.
00:00:23.760 --> 00:00:35.840
And I want to spend a lot of time today diving into a Tony, your background, also, you know, what sort of led you to found Ubix, but also more importantly, what Ubix is doing today.
00:00:35.840 --> 00:00:47.679
Because what you guys are doing is incredibly structurally important, not just for the people who work in stablecoins, but for the general world for the general world who might use stablecoins.
00:00:47.679 --> 00:00:49.520
So we're going to dive into everything.
00:00:49.520 --> 00:00:57.439
For those who have listened episode after episode, you know that I like to start every single episode with a segment that I call Braggadocious.
00:00:57.439 --> 00:01:04.239
Tony, this is an opportunity for you to introduce yourself, for you to tell everyone a little bit about what you are building.
00:01:04.239 --> 00:01:10.000
The reason that we call it Braggadocious is because I always find that in intros, people tend to be a little bit too humble.
00:01:10.000 --> 00:01:12.079
And I want to throw that out the window.
00:01:12.079 --> 00:01:18.000
You have a lot to brag about in your background, and you have a lot to brag about with what you've done with Ubix currently.
00:01:18.000 --> 00:01:20.400
So with all that being said, Tony, I'll leave it to you.
00:01:20.400 --> 00:01:21.519
Tell us all about yourself.
00:01:21.519 --> 00:01:22.719
Tell us all about Ubix.
00:01:22.719 --> 00:01:24.640
And again, brag, brag, brag.
00:01:25.040 --> 00:01:36.319
Hey, Dante, you're really asking me to go against my principles here because you know, in in presentations, that they tell you the first thing you've got to do is credentialize yourself, right?
00:01:36.319 --> 00:01:41.519
You've got to signal to the audience that you're someone worth listening to.
00:01:41.519 --> 00:01:49.200
And my thing has always been hey, forget who I am, just listen to the message, just process the message.
00:01:49.519 --> 00:01:54.079
But since you asked, I wouldn't have let you get away with that, by the way.
00:01:54.079 --> 00:01:55.280
Well, that's that's fine.
00:01:55.680 --> 00:01:58.079
Well, the sooner we get through this part, the better.
00:01:58.079 --> 00:02:00.719
But since you asked, uh, I'm Tony.
00:02:00.719 --> 00:02:06.879
I'm the CEO and founder of Ubix Inc., uh, which is an American company.
00:02:06.879 --> 00:02:09.520
Uh, I happen to be based in London at the moment.
00:02:09.520 --> 00:02:13.439
I spent over 30 years in traditional finance.
00:02:13.439 --> 00:02:23.520
Some of the things that I'm kind of proud about that, apart from making a heck of a lot of money for my for the banks that I worked with over my career, that's probably the biggest thing.
00:02:23.520 --> 00:02:26.159
I won't talk too much about that in detail.
00:02:26.159 --> 00:02:40.159
But I I originated something called the Regulated Liability Network, um, which was trial a few times in the US uh in association with the New York Fed Innovation Center and a bunch of banks.
00:02:40.159 --> 00:02:48.000
It was also trialed in the UK and has now become something called GBTD, Great British Tokenized Deposits.
00:02:48.000 --> 00:02:53.759
It also was picked up by the BIS and became the Unified Ledger.
00:02:53.759 --> 00:03:06.400
And I also started something called the BIS IIF project Agora, which is not to be confused with Nick Van Eck's Agora stable coin.
00:03:06.400 --> 00:03:16.560
Uh, but the project Agora brought together seven central banks and over 40 banks in an interoperable tokenized deposit network.
00:03:16.560 --> 00:03:22.319
So that was my life in banking, in traditional finance.
00:03:22.319 --> 00:03:34.080
And then after the US election, I thought the world had fundamentally changed, that banks would have to enter this world of private permissionless blockchains.
00:03:34.080 --> 00:03:42.560
And I could see that stable coins and tokenized money were going to be a very, very important part of the financial system going forward.
00:03:42.560 --> 00:03:47.840
So I quit my MD position at Citibank.
00:03:47.840 --> 00:03:50.800
Uh, I quit on Christmas Eve.
00:03:50.800 --> 00:04:03.680
Uh, if anyone knows things about uh the bonus cycles of uh banks, I quit a month before my sal my bonus was getting paid, which most people would say is a crazy thing.
00:04:03.680 --> 00:04:07.199
You should wait to get paid your bonus and then quit.
00:04:07.199 --> 00:04:28.160
Um, but I was compelled, I was compelled, and uh and it was just meant to be that I would enter into the public blockchain space, the stablecoin space, and try to bring my my payments background to the development of this super exciting method of payment.
00:04:29.519 --> 00:04:30.160
I love it.
00:04:30.160 --> 00:04:31.680
And how are how are you doing that?
00:04:31.680 --> 00:04:36.240
How are you bringing all of your experience and your passion, your excitement into payments today?
00:04:36.240 --> 00:04:37.279
Tell us more about Ubix.
00:04:37.759 --> 00:04:45.759
Okay, so I start from start from the top level, which is you know, there are three there are three worlds that that have to come together.
00:04:45.759 --> 00:04:48.879
One what or three concentric circles, if you like.
00:04:48.879 --> 00:04:54.079
One of them is this world of traditional finance that I spent 30 years in.
00:04:54.079 --> 00:04:59.519
The other one is the world of web three, and the other one is the world of regulation.
00:04:59.519 --> 00:05:06.800
And what I thought I could do is I could help, I could help create a bigger intersection between these three circles.
00:05:06.800 --> 00:05:14.560
So I see a merger uh is necessary between the worlds of Web3, TradFi, and regulation.
00:05:14.560 --> 00:05:23.120
And what that will mean is stable coins and tokenized money and public blockchains will become ubiquitous.
00:05:23.120 --> 00:05:36.399
So I could also see uh a role that I could play in bridging the gap between Web3 and traditional finance because these two groups of people don't speak the same languages.
00:05:36.399 --> 00:05:45.360
Um and I and having when I worked in in the bank, I was on the receiving end of lots of pitches from Web3 players.
00:05:45.360 --> 00:05:49.519
And it was amazing how how bad the pitches were.
00:05:49.519 --> 00:05:58.319
So the go-to-market of Web3 towards uh TradFi is is less than optimal, let's say that.
00:05:58.319 --> 00:06:06.800
Um also on the TradFi side, the deficiency is not understanding the meaning of the development of these public permissionless blockchains.
00:06:06.800 --> 00:06:18.480
And also on the regulation side, there's a great deal of comfort that needs to be given to the regulators that these instruments can be incorporated in a way which is which is safe.
00:06:18.480 --> 00:06:22.000
So what is what is Ubix?
00:06:22.000 --> 00:06:29.759
Ubix is bringing an age-old solution to this modern problem that we face in stable coins.
00:06:29.759 --> 00:06:33.199
What is the modern problem that we face in stable coins?
00:06:33.199 --> 00:06:44.000
There are going to be many issuers of stable coins and many issuers of tokenized deposits and many issuers of tokenized money market funds.
00:06:44.000 --> 00:06:48.959
And all of those issuers need there to be acceptance.
00:06:48.959 --> 00:06:52.560
Acceptance means where can you use these instruments?
00:06:52.560 --> 00:06:59.920
Now the problem is each individual issuer cannot build their own acceptance network.
00:06:59.920 --> 00:07:01.839
That doesn't make sense.
00:07:01.839 --> 00:07:16.879
And everywhere in history, always, whether it's uh checks, ACH, SWIFT, debit cards, credit cards, we've solved this many-to-many problem in the same way.
00:07:16.879 --> 00:07:26.800
And we've solved it by putting in institutional arrangements, which means that you've got interoperability and a pluralistic competitive marketplace.
00:07:26.800 --> 00:07:35.120
So UBix is just bringing old wisdom to the new field of stable coins.
00:07:36.240 --> 00:07:38.959
What does that look like pragmatically, though?
00:07:38.959 --> 00:07:44.160
Does that mean that you guys have partnered with all of these different banks to make sure that they can accept these stable coins?
00:07:44.160 --> 00:07:50.240
Does it mean that you guys have a netting mechanism that you do stablecoin interoperability with?
00:07:50.240 --> 00:07:54.560
Walk us through how you actually accomplish that goal.
00:07:54.560 --> 00:07:56.399
Because it's it's a mighty goal, right?
00:07:56.399 --> 00:08:06.399
It's it's necessary for anyone who understands the world of either traditional finance and or the world of sort of stablecoin-based modern finance, or you know, both.
00:08:06.399 --> 00:08:08.800
It's a it's a really, really hard thing to accomplish.
00:08:08.800 --> 00:08:14.480
And we're going to dive into why it's so hard to accomplish, but I want to hear how you guys are doing that today with UBanks.
00:08:14.720 --> 00:08:22.079
Yeah, well, well, let's think about what it looks like when we get to the point in space-time when the mission is achieved.
00:08:22.079 --> 00:08:25.040
What does success look like?
00:08:25.040 --> 00:08:37.759
What success looks like is you uh log into your bank, and today you see a routing number, and that routing number is an address where you receive traditional types of payments.
00:08:37.759 --> 00:08:52.320
So success looks like you log into your bank and you see your routing number for traditional payments, and you see a wallet address, and that wallet address enables you to receive tokenized money payments.
00:08:52.320 --> 00:09:04.240
Now, when we're really successful, you'll be able to receive any kind of tokenized payment into your existing bank or fintech.
00:09:04.240 --> 00:09:17.039
So the the success criteria is this that every bank and fintech on the planet provide their customers with wallets connected to multiple blockchains.
00:09:17.039 --> 00:09:28.879
And you can easily receive stable coins, tokenized deposits into your bank account in the same way that you can deposit a check into your bank account.
00:09:28.879 --> 00:09:32.879
Now, in the US, let's just take the take the example and give the parallel.
00:09:32.879 --> 00:09:35.039
In the US, you've got 5,000 banks.
00:09:35.039 --> 00:09:37.840
And let's say Dante you banked with Wells Fargo.
00:09:37.840 --> 00:09:50.000
So you you think nothing, if I come to you with a check, if I'm buying your car and I come to you with a check from fifth third bank, you don't care about fifth third bank.
00:09:50.000 --> 00:09:52.639
You don't care about the issuer of the check.
00:09:52.639 --> 00:09:59.120
So the success criteria for stable coins is when, and this is this is very different from where we are today.
00:09:59.120 --> 00:10:07.440
The success criteria is when you can receive a stable coin and you don't give a damn about the issuer.
00:10:07.440 --> 00:10:09.679
That's where we're going.
00:10:11.120 --> 00:10:12.000
I love it.
00:10:12.000 --> 00:10:12.720
I love it.
00:10:12.720 --> 00:10:17.360
And so pragmatically, are you actually moving between stable coins?
00:10:17.360 --> 00:10:30.559
Like one thing that we see a lot is you know, people in emerging markets wanting to use a specific stablecoin on a specific chain, and maybe you know, a bank across the world wants to accept a different stablecoin on a different chain.
00:10:30.559 --> 00:10:36.000
How do you actually accomplish it where those two parties are able to work together?
00:10:36.000 --> 00:10:47.039
Are you moving between various different stable coins and chains and allowing that bank to settle in their preferred stable coin, or are you setting it up in a way where they can actually accept a different type of stable coin?
00:10:47.039 --> 00:10:48.159
What does that look like?
00:10:48.559 --> 00:10:58.159
Okay, so to answer that question, I'm going to root that in something which is uh, again, lots of young people uh in America you still use checks, right?
00:10:58.159 --> 00:11:05.679
But around the world, generally speaking, lots of people, when I s when I give this check analogy, that they haven't seen a checkbook.
00:11:05.679 --> 00:11:07.360
They have never they've never used a check.
00:11:07.360 --> 00:11:09.679
This is outside outside of the US.
00:11:09.679 --> 00:11:12.799
But let's let's go back to the example that I gave before.
00:11:12.799 --> 00:11:17.039
So you're uh you're a Wells Fargo customer, and I bring you a check.
00:11:17.039 --> 00:11:20.080
I'm buying your car and I bring you a check.
00:11:20.080 --> 00:11:22.159
My bank is fifth third bank.
00:11:22.159 --> 00:11:26.000
And so I'm giving you a I'm giving you a cashier's check, right?
00:11:26.000 --> 00:11:34.639
I'm not giving you a personal check because the difference between a personal check and a cashier's check is that a cashier's check is drawn on the bank, right?
00:11:34.639 --> 00:11:38.399
It's not it's not a risk against Tony, it's a get a risk against fifth third bank.
00:11:38.399 --> 00:11:39.840
So I'm buying your car.
00:11:39.840 --> 00:11:42.399
I'm I'm buying your Toyota Corolla.
00:11:42.399 --> 00:11:45.679
I'm sure you've got a a cool kind of like fintech car.
00:11:46.159 --> 00:11:50.000
Uh for is a is a Toyota Corolla a really cool fintech car?
00:11:50.000 --> 00:11:52.240
I live in New York City, I don't have any car.
00:11:52.559 --> 00:11:52.799
Okay.
00:11:52.799 --> 00:11:54.240
So isn't that what people drive?
00:11:54.240 --> 00:11:56.639
Isn't that isn't that the humble brag you do?
00:11:56.639 --> 00:11:59.519
You you're like a billionaire, but you drive a Toyota Corolla.
00:11:59.519 --> 00:12:01.120
Isn't that like the humble brag?
00:12:01.440 --> 00:12:01.759
Maybe.
00:12:01.759 --> 00:12:04.879
I'd be happy with just a bicycle, but we can get to that later.
00:12:04.879 --> 00:12:06.639
I buy a car.
00:12:07.039 --> 00:12:10.799
I'm buying your car and giving you a check from Fifth Third Bank.
00:12:10.799 --> 00:12:13.200
You don't give a damn about Fifth Third Bank.
00:12:13.200 --> 00:12:16.639
You give that check to your bank, which is Wells Fargo.
00:12:16.639 --> 00:12:19.679
Now, what does Wells Fargo do with that check?
00:12:19.679 --> 00:12:22.240
They send it for clearing.
00:12:22.240 --> 00:12:24.080
They send it for clearing.
00:12:24.080 --> 00:12:25.360
Now, what what does that mean?
00:12:25.360 --> 00:12:32.240
Clearing just means sending an instrument back to the issuer for payment.
00:12:32.240 --> 00:12:34.000
That's all it means.
00:12:34.000 --> 00:12:51.120
So Wells Fargo take the fifth or check, they send it back to take the fifth order check, they send it back to fifth or bank, fifth or bank pay Wells Fargo, and then Wells Fargo pay you.
00:12:51.120 --> 00:13:08.559
Now that happens to be a a beautiful transaction, but it's a different transaction than we're used to in the world of stable coins, because stable coins have arisen in a trading mode, meaning these things are bought and sold.
00:13:08.559 --> 00:13:18.639
And so if there's one thing for your audience really to grasp, is there is a very big difference between trading and clearing.
00:13:18.639 --> 00:13:33.039
Now trading is if I send you a stablecoin today, Dante, and you take that and you sell it on an exchange, the stablecoin goes into an order book and you get the pri you get the spot price on the order book, right?
00:13:33.039 --> 00:13:36.720
You you don't necessarily get one-to-one, you get the spot price.
00:13:36.720 --> 00:13:42.799
Um that's uh fine for many different use cases.
00:13:42.799 --> 00:13:55.600
But additional to that, there's also another route called clearing, which is I give you a stable coin, you give it to your bank, and your bank gets the money from the issuer.
00:13:55.600 --> 00:14:02.000
Now, when the bank gets the money from the issuer, they get par value, meaning one for one.
00:14:02.000 --> 00:14:03.919
And this is super important.
00:14:03.919 --> 00:14:07.840
This is another part of making stable coins uh good.
00:14:07.840 --> 00:14:12.559
That stable coins need to become cash equivalents.
00:14:12.559 --> 00:14:14.879
And that's an accounting standard.
00:14:14.879 --> 00:14:16.879
Cash equivalence is an accounting standard.
00:14:16.879 --> 00:14:26.960
The reason why cash equivalence is so important is number one, the central banks care about this thing called singleness of money, which means a dollar is a dollar.
00:14:26.960 --> 00:14:27.919
Right?
00:14:27.919 --> 00:14:31.759
Dot a dollar is a dollar is not a natural state of affairs.
00:14:31.759 --> 00:14:40.480
Because even with banks, Wells Fargo and Fifth Third Bank are different, have got different counterparty risk.
00:14:40.480 --> 00:14:49.600
So if if a Wells Fargo dollar and a th fifth third dollar, if they traded against each other, they wouldn't trade at par value.
00:14:49.600 --> 00:15:04.399
But when you have a a check processed between those banks or an ACH processed between those banks, or a wire payment between those banks, they are processed at par value, and that that enforces singleness of money.
00:15:04.399 --> 00:15:06.799
That enforces a dollar is a dollar.
00:15:06.799 --> 00:15:16.960
So this is a characteristic that we that we must bring to stablecoins if we want them to be accepted by, for example, large corporates.
00:15:16.960 --> 00:15:24.320
So there's a there's a host of benefits that come from adding a new lane to the highway.
00:15:24.320 --> 00:15:27.679
That lane to the, we've we've got trading of stable coins.
00:15:27.679 --> 00:15:28.879
That's fine.
00:15:28.879 --> 00:15:32.720
Um, I'm not talking about replacing trading of stable coins.
00:15:32.720 --> 00:15:41.440
I'm talking about adding a new lane to the highway when anyone who wants to can take a stablecoin to their bank and they get par value.
00:15:42.960 --> 00:15:46.000
Do you need to work with the issuers themselves on it?
00:15:46.000 --> 00:15:46.240
Right?
00:15:46.240 --> 00:15:52.879
USDT, USDC, they're some of the most by far and away the most dominant stable coins in the world right now.
00:15:52.879 --> 00:15:57.679
Do you need to work with Tether and work with Circle directly in order to make this happen?
00:15:58.159 --> 00:16:06.240
Ideally, yes, but in practice, no, because we can source that liquidity through liquidity providers.
00:16:06.639 --> 00:16:08.080
On a one-to-one basis?
00:16:08.480 --> 00:16:12.720
Well, it's possible to do it on a one-to-one basis and have the fees separate.
00:16:12.720 --> 00:16:16.240
So you can still get one-to-one, but the fees come separately to that.
00:16:16.240 --> 00:16:17.840
That's possible to achieve.
00:16:17.840 --> 00:16:19.840
But that's not the ideal solution.
00:16:19.840 --> 00:16:23.840
You can think of that more as a bridge to the ideal solution.
00:16:23.840 --> 00:16:35.919
The ideal solution is that the all of the issuers are plugged into the UBIX system, and the receivers are plugged into the UBIX system, and everyone follows the same rule book.
00:16:35.919 --> 00:16:48.720
And this is this is again in every previous generation of payment technology, whether it's with paper checks or ACH or credit cards or debit cards, it's always the same, it's always the same problem.
00:16:48.720 --> 00:16:50.720
It's always many-to-many.
00:16:50.720 --> 00:16:54.879
And that many-to-many problem is always solved in the same way.
00:16:54.879 --> 00:17:02.159
And so that the many-to-many problem also exists in stablecoins and tokenized money, and it will be solved in the same way.
00:17:02.159 --> 00:17:05.359
The only question, so so my thesis is correct.
00:17:05.359 --> 00:17:09.359
The Ubix thesis is correct.
00:17:09.359 --> 00:17:15.599
The only question is whether Ubix is the one to commercialize it, but that's uh you know, that's up to the gods.
00:17:16.000 --> 00:17:16.160
Yeah.
00:17:16.559 --> 00:17:18.000
I don't think that's up to the gods, Tony.
00:17:18.000 --> 00:17:19.200
I think that's up to you.
00:17:19.200 --> 00:17:23.839
And I've seen how hard you and your team work, so I've no doubt that it'll it'll uh come to fruition.
00:17:23.839 --> 00:17:30.960
So I just want to to recap on the mechanics to make sure that I understand it and to make sure that our audience understands it.
00:17:30.960 --> 00:17:35.359
The the synopsis on Ubix is this.
00:17:35.359 --> 00:17:43.039
You guys believe in a world in which there are many different stable coins, banks want to interact with multiple different stable coins at a time.
00:17:43.039 --> 00:17:45.279
I agree with that, 100%.
00:17:45.279 --> 00:17:54.880
I agree with that future, and I think that it used to be a very contrarian view, and now it's starting to become a little bit less contrarian because, to your point, your thesis is being proven correctly.
00:17:54.880 --> 00:18:05.200
The way that Ubix sets this up is you guys work with a lot of banks and enterprises, and we'll get to that in a second, but most importantly, you guys will end up working with every single issuer.
00:18:05.200 --> 00:18:23.920
And the way that stablecoins operate today is through what we call a mint and burn mechanism, which is if you want a stablecoin, you move dollars into the issuers or fiat currency into the issuer's bank account, and they give you essentially an on-chain version of that dollar that we call a stablecoin.
00:18:23.920 --> 00:18:47.920
And so what you are able to do when you work with multiple issuers is you can say, okay, I'm gonna take this stable coin and I'm gonna essentially move it into an account, and you as the issuer are going to send me the redemption for that, the the dollars for that, which can then be used one-to-one to go and mint a stablecoin that the recipient, the bank, the enterprise, whoever it might be, would want.
00:18:47.920 --> 00:18:54.559
Because it's burn and mint, you're able to do that relatively seamlessly because you have this network of issuers.
00:18:54.559 --> 00:18:58.240
Am I on the same okay, correct me.
00:18:58.640 --> 00:18:59.279
Not exactly.
00:18:59.279 --> 00:19:07.680
So so conceptually, you're you're right that we are integrated with the issuers and we do facilitate these transactions.
00:19:07.680 --> 00:19:12.400
We don't do it exactly as as you say.
00:19:12.400 --> 00:19:22.720
And the if you forgive me, Dante, I'll probably not completely open the kimono on our on our inner workings or or on our legal structure.
00:19:22.720 --> 00:19:25.599
That's part of the secret sauce of of how we do it.
00:19:25.599 --> 00:19:30.880
But you can just think of it as a you can just think of it as a black as as Ubix as a black box, right?
00:19:30.880 --> 00:19:32.720
So here's the here's the black box.
00:19:32.720 --> 00:19:38.400
On this side you've got the issuers, on this side you've got banks and fintechs and exchanges.
00:19:38.400 --> 00:19:40.720
So what operations do we support?
00:19:40.720 --> 00:19:45.519
We support uh stablecoin in, fiat out.
00:19:45.519 --> 00:19:48.880
We support fiat in, stable coin out.
00:19:48.880 --> 00:19:52.640
We support stable coin A in, stablecoin B out.
00:19:52.640 --> 00:19:56.160
And by the way, we do all of those things for tokenized deposits as well.
00:19:56.160 --> 00:20:03.119
Because they're they're when it comes to the redemption mechanics, you can treat them exactly in the same way.
00:20:03.119 --> 00:20:13.440
So what we're what we're really trying to do is to is to bridge these two worlds, not bridge in the web 3 sense, but we're trying to make a connection between these two worlds.
00:20:13.440 --> 00:20:27.599
And and and the the reason for that, the reason why it's important for the for the blockchain community, the reason why it's important for the stablecoin community is we want stable coins to be used for every use case.
00:20:27.599 --> 00:20:37.440
Not just uh crypto and adjacent use cases, but every payments use case we want to make available to stablecoins.
00:20:37.440 --> 00:20:42.240
And bank acceptance and fintech acceptance is is intrinsic to that mission.
00:20:42.240 --> 00:20:44.000
It's necessary for that mission.
00:20:44.000 --> 00:20:47.519
That doesn't mean that people can't have self-custody wallets.
00:20:47.519 --> 00:20:50.240
That doesn't mean that people can't do their DeFi stuff.
00:20:50.240 --> 00:20:52.319
And this is additive.
00:20:52.319 --> 00:20:57.759
It's not taking away from anything that is intrinsic from the from the crypto perspective.
00:20:57.759 --> 00:21:09.519
The second reason why this is an important mission for the community is if we're successful, every bank and fintech in the world will be connected to multiple public blockchains.
00:21:09.519 --> 00:21:11.440
Public blockchains.
00:21:11.440 --> 00:21:19.599
Now I I don't know if you if you pick up on this, Dante, but interest in tokenization has never been higher amongst banks.
00:21:19.599 --> 00:21:26.240
But if we're not very careful, they will they will they will they will go back down the private permission route.
00:21:26.240 --> 00:21:32.160
You look at a bunch of the projects out there, they're using private permission ledgers.
00:21:32.160 --> 00:21:44.400
So if if the if the result of if the result of this interest in tokenization is banks adopting private permissioned ledgers, we haven't won.
00:21:44.400 --> 00:21:50.799
So our mission is to get banks and fintechs connected to private permissionless ledgers.
00:21:50.799 --> 00:21:56.799
Um and and and and that's a natural consequence of them connecting into the Ubix network.
00:21:56.799 --> 00:22:06.079
They must connect into Multiple public permissionless networks in order to be a part of Ubix.
00:22:10.319 --> 00:22:10.640
Okay.
00:22:10.640 --> 00:22:11.839
Okay.
00:22:11.839 --> 00:22:13.519
I think I'm starting to understand.
00:22:13.519 --> 00:22:21.519
I want to pivot this conversation a little because there's a a word that you mentioned a few times that I want to go down a rabbit hole here, which is tokenization.
00:22:21.519 --> 00:22:23.599
And in particular, tokenized deposits.
00:22:23.599 --> 00:22:26.720
Can you explain what the hell those are and why they're so important?
00:22:28.000 --> 00:22:28.319
Okay.
00:22:28.319 --> 00:22:35.440
They're, well, first of all, tokenized, I mean, tokenization is just something that stands for something else.
00:22:35.440 --> 00:22:39.680
So I I always use my uh my AirPods case as my prop.
00:22:39.680 --> 00:22:42.079
That's always my token, right?
00:22:42.079 --> 00:22:42.720
I love it.
00:22:42.720 --> 00:22:46.720
So for tokenized deposits, why are they important?
00:22:46.720 --> 00:22:48.880
I'll give you, I'll give you the honest answer.
00:22:48.880 --> 00:22:55.680
They're important because banks want tokenized deposits to be competitive with stable coins.
00:22:55.680 --> 00:22:57.839
That's why they're important.
00:22:57.839 --> 00:23:02.400
Why do banks want them to be competitive with stable coins?
00:23:02.400 --> 00:23:16.319
Because let's say you and your bank, uh, and again, I won't pick on a specific, a specific bank, Dante, but let's say that your mainline bank, um, for whatever reason you want to make a stablecoin payment.
00:23:16.319 --> 00:23:32.559
So if you if if you're making a stablecoin payment and funding that from your bank account, you're debiting your bank account and then let's say paying away in USDC, then the money leaves the balance sheet of the bank.
00:23:32.559 --> 00:23:37.519
And the bank doesn't like that because your deposit is their raw material.
00:23:37.519 --> 00:23:42.240
That's how they make money by lending against your deposits.
00:23:42.240 --> 00:23:50.799
So anything that that leaches deposits away from the from the bank balance sheet is not something that the banks want.
00:23:50.799 --> 00:23:53.279
A tokenized deposit is different.
00:23:53.279 --> 00:23:58.400
A tokenized deposit is a token that represents your money at the bank.
00:23:58.400 --> 00:24:12.880
Now, if if we're both uh customers of the same bank, let's say that we're both JP Morgan customers, and JP Morgan gives you a JP Morgan coin and you send that to me, the money hasn't left JP Morgan's balance sheet.
00:24:12.880 --> 00:24:16.240
So from a from a bank perspective, that's good.
00:24:16.240 --> 00:24:21.920
So tokenized deposits are the bank horse in the race.
00:24:21.920 --> 00:24:26.000
Banks prefer it because it keeps the money on their balance sheet.
00:24:26.000 --> 00:24:31.519
But but there's a significant difference between the functionality of tokenized deposits and stable coins.
00:24:31.519 --> 00:24:38.720
And one of the most significant differences in functionality is that stable coins are not whitelisted instruments.
00:24:38.720 --> 00:24:48.640
So stable coins, uh, let's let's say that you're you're making a payment to your relative who's gone to who's gone to live in Japan.
00:24:48.640 --> 00:24:54.559
When you send that stablecoin payment, that uh token can travel to your relative in Japan.
00:24:54.559 --> 00:25:01.200
And the issuer of the stable coin doesn't know your relative.
00:25:01.200 --> 00:25:02.160
Right?
00:25:02.160 --> 00:25:05.839
So so the the stablecoin hasn't been whitelisted.
00:25:05.839 --> 00:25:08.720
The issuer doesn't need to know your relative.
00:25:08.720 --> 00:25:14.160
But for a tokenized deposit, at the moment they're fundamentally whitelisted instruments.
00:25:14.160 --> 00:25:21.759
So if you're sending me a JP Morgan coin, Dante, then JP Morgan needs to know who I am.
00:25:21.759 --> 00:25:26.160
And in in today's world, I would need to be a JP Morgan customer.
00:25:26.160 --> 00:25:42.000
Now the banks are working super hard on making tokenized deposits interoperable, which means that in the future, they want it to be the case that I can be a Citibank customer and you can send me a JP Morgan tokenized deposit.
00:25:42.000 --> 00:25:44.079
But that's not the way they work at the moment.
00:25:44.079 --> 00:25:51.200
So stable coins are much more, let's say, free in terms of where they can be sent to than tokenized deposits today.
00:25:51.519 --> 00:26:02.480
I was talking to someone earlier about this, and I think that the mental model that really stuck with me is tokenized deposits are really, really awesome for bank-to-bank value transfer.
00:26:02.480 --> 00:26:11.279
And then stable coins sort of act as the best and most efficient first and last mile uh extension of that.
00:26:11.279 --> 00:26:11.599
Right?
00:26:11.599 --> 00:26:22.559
So an individual might use an individual user might hold stablecoin A, stablecoin B, and then once they deposit it, it becomes, you know, it sort of adds to the tokenized deposit.
00:26:22.559 --> 00:26:28.559
An individual user will never hold, you know, to your point, a tokenized deposit of JP Morgan Chase.
00:26:28.559 --> 00:26:33.759
Uh an individual user will never hold a Wells Fargo tokenized deposit, but they will hold stable coins.
00:26:33.759 --> 00:26:37.279
And so they're they're not competitive against each other.
00:26:37.279 --> 00:26:42.960
They're two very, very important parts of the same value flow within the same ecosystem.
00:26:42.960 --> 00:26:44.319
Is that is that fair?
00:26:45.519 --> 00:26:48.559
There are lots of subtleties to add to it.
00:26:48.559 --> 00:26:54.720
Um, one subtlety is in the main, stable coins live on public networks.
00:26:54.720 --> 00:26:58.799
In the main, tokenized deposits live on private networks.
00:26:58.799 --> 00:27:01.359
Um stable coins, again, are not whitelisted.
00:27:01.359 --> 00:27:03.680
Tokenized deposits are whitelisted.
00:27:03.680 --> 00:27:08.240
Tokenized deposits are unambiguously cash equivalents.
00:27:08.240 --> 00:27:11.359
They really are cash because they're bank instruments.
00:27:11.359 --> 00:27:16.480
Stablecoins are still struggling to reach cash equivalents from an accounting perspective.
00:27:16.480 --> 00:27:26.880
Um the one one use case which is interesting for tokenized deposits is the use case that I spent 30 years in, which is corporate cash management.
00:27:26.880 --> 00:27:33.839
So corporate cash management is a big US multinational moving money between its 100 different subsidiaries.
00:27:33.839 --> 00:27:46.480
Now, the reason why tokenized deposits is interesting there is because they're FDIC and they're FDIC insured, they pay interest, their cash equivalents, but also the this is something very, very important, counterparty risk.
00:27:46.480 --> 00:27:47.039
Right?
00:27:47.039 --> 00:27:55.039
So if you are a large multinational, you've probably got $100 million of counterparty risk against the GCB bank.
00:27:55.039 --> 00:28:02.799
You may not have $100 million of counterparty risk against uh a stablecoin issuer at this at this particular moment in time.
00:28:02.799 --> 00:28:07.599
So I think your your general analysis is correct, which is it's going to be horses for courses.
00:28:07.599 --> 00:28:11.039
Um, and and both of them will play a part.
00:28:11.039 --> 00:28:24.640
Um, but one thing I I would very much like to see is uh a greater um, let's say, courage from the banks to start putting the tokenized deposits onto public chains.
00:28:24.640 --> 00:28:37.599
Um, the next thing that the banks need to do to make tokenized deposits truly competitive with stable coins is uh trust the KYC of third parties.
00:28:37.599 --> 00:28:46.640
So in again, in today's world, uh JP Morgan coin can be held by JP Morgan customers.
00:28:46.640 --> 00:28:59.440
But to make that useful, it will have to become the case that JP Morgan coin can be held by non-JP Morgan customers, maybe by Citibank customers or Wells Fargo customers.
00:28:59.440 --> 00:29:01.599
Those things have to be made interoperable.
00:29:01.599 --> 00:29:07.200
Otherwise, uh tokenized deposits won't be competitive with stable coins.
00:29:08.240 --> 00:29:15.359
You mentioned that it's very difficult right now for stable coins to maintain cash equivalency.
00:29:15.359 --> 00:29:17.440
Can you tell us a little bit more about that?
00:29:18.160 --> 00:29:18.960
Yeah, sure.
00:29:18.960 --> 00:29:28.960
Because the the natural the natural market price of any IOU is related to the counterparty risk against the issuer.
00:29:28.960 --> 00:29:38.079
So let me just let me just talk about that, even in the world of uh not not stable coins, but just uh pieces of paper, right?
00:29:38.079 --> 00:29:50.960
So imagine um you gave me $10 and I wrote on a piece of paper, I owe the bearer of this piece of paper $10 payable on demand.
00:29:50.960 --> 00:29:56.400
So I give you that piece of paper and I've got your $10, and the $10 is in my pocket, right?
00:29:56.400 --> 00:29:58.240
The $10 is in my pocket.
00:29:58.240 --> 00:30:02.960
So here's what you can do with that IOU.
00:30:02.960 --> 00:30:04.640
So you've received an IOU, right?
00:30:04.640 --> 00:30:06.640
You've got this piece of paper in your hand.
00:30:06.640 --> 00:30:11.279
You can come back to me and you can say, hey Tony, give me back my $10.
00:30:11.279 --> 00:30:17.680
Now, in that in that transaction, it's quite likely that you get your $10 back, isn't it?
00:30:17.680 --> 00:30:26.640
So this is a little bit like going back to the stablecoin issuer directly and getting the money directly from the stablecoin issuer.
00:30:26.640 --> 00:30:28.079
But then think about this.
00:30:28.079 --> 00:30:35.839
Let's say that you walk out of your room and you walk down the street and you say, Oh my god, I really need money to buy a coffee.
00:30:35.839 --> 00:30:41.279
And the only thing that you have in your pocket is the IOU from Tony.
00:30:41.279 --> 00:30:52.640
So you've imagine you walk in, you walk into Starbucks and you say, Hey, random, random girl, I want to buy a coffee, I've got no money, but I've got this IOU from Tony.
00:30:52.640 --> 00:30:54.000
It's for 10 bucks.
00:30:54.000 --> 00:30:57.759
And if you give that IOU to Tony, he's going to give you 10 bucks.
00:30:57.759 --> 00:31:01.440
Now, how much is that girl going to give you for that IOU?
00:31:01.839 --> 00:31:03.920
Hopefully $10, but probably not.
00:31:04.240 --> 00:31:06.480
Well, why should why would she give you $10?
00:31:06.480 --> 00:31:18.720
She if she's a rational actor, she will evaluate the counterparty risk of the issuer, and she will give you a discount, which is reflective of the counterparty risk.
00:31:18.720 --> 00:31:22.240
So if she's a rational actor, she will give you less than $10.
00:31:22.240 --> 00:31:23.839
Right?
00:31:23.839 --> 00:31:25.759
Now she go on.
00:31:26.240 --> 00:31:29.599
What do you think it will take in stablecoin land?
00:31:29.599 --> 00:31:32.400
And I this is one of your concentric circles, the regulation.
00:31:32.400 --> 00:31:32.559
Right.
00:31:32.559 --> 00:31:54.880
To make the barista trust the Tony IOU and actually enable, you know uh stablecoin redemption at $1, which obviously is the first step towards uh singleness of money and dollar ubiquity, which you mentioned before.
00:31:55.359 --> 00:31:55.759
Exactly.
00:31:55.759 --> 00:32:09.519
So so if that barista, if that barista knows that she can give the IOU to her existing bank or fintech and get 10 bucks, then you are then she'll take it from you.
00:32:09.519 --> 00:32:11.200
Right?
00:32:11.200 --> 00:32:14.319
That's the that's the that's the condition.
00:32:14.319 --> 00:32:27.599
So the can the condition necessary for cash equivalence from an accounting perspective is that the instrument with a very, very high degree of confidence can be redeemed at par value on demand.
00:32:27.599 --> 00:32:37.839
Now, here's a here's a here's a very strange way in which checks are superior to stable coins.
00:32:37.839 --> 00:32:43.119
So you this is a this is it maybe a bizarre claim, but it's it's nonetheless true.
00:32:43.119 --> 00:32:49.039
So a check is just that piece of paper which says I promise to pay.
00:32:49.039 --> 00:32:49.440
Right?
00:32:49.440 --> 00:32:57.599
Again, I'm buying your car, I'm giving you uh a cashier's check from Fifth Third Bank, you're a customer of Wells Fargo Bank.
00:32:57.599 --> 00:33:03.759
If I if I give you that check, there are actually three ways to redeem.
00:33:03.759 --> 00:33:06.000
You might say there are three off ramps.
00:33:06.000 --> 00:33:09.519
In stablecoin parlance, there are three off ramps for the check.
00:33:09.519 --> 00:33:11.119
What are the three off-ramps?
00:33:11.119 --> 00:33:18.799
Number one is you can actually take that check back to fifth third and ask for the money.
00:33:18.799 --> 00:33:19.359
Right?
00:33:19.359 --> 00:33:22.480
That's like going back, that's like having a circle mint account.
00:33:22.480 --> 00:33:26.079
You take the instrument back to the issuer and you say, give me my money.
00:33:26.079 --> 00:33:28.240
So that's that's route number one.
00:33:28.240 --> 00:33:33.440
The second route with that check is you can sell it.
00:33:33.440 --> 00:33:36.799
So you know that these uh I think you still have them in America.
00:33:36.799 --> 00:33:40.720
You know the places where you can take your payroll check during the week.
00:33:40.720 --> 00:33:46.319
And when you take your payroll check to one of those places, they don't give you full value, right?
00:33:46.319 --> 00:33:47.599
They give you a discount.
00:33:47.839 --> 00:33:48.000
Yeah.
00:33:48.079 --> 00:33:49.359
So a payday loan.
00:33:49.359 --> 00:33:50.880
A payday a payday loan.
00:33:50.880 --> 00:33:57.839
So so essentially what's happening there is you are you are discounting the you're selling the check for a discount.
00:33:57.839 --> 00:34:02.960
So this is this is like taking your stable coin and selling it on an exchange.
00:34:02.960 --> 00:34:05.359
You're selling it into an order book.
00:34:05.359 --> 00:34:08.159
So these two things you can also do with a check.
00:34:08.159 --> 00:34:10.960
These two things you can do with a stable coin.
00:34:10.960 --> 00:34:21.119
But the third thing you can do with a check you can't do with a stablecoin, which is you can take that check to your bank and get par value.
00:34:21.119 --> 00:34:25.119
You cannot take a stable coin to your bank and get par value.
00:34:25.119 --> 00:34:33.119
So stable coins in that respect, in that off-ramping respect, are inferior to checks.
00:34:33.119 --> 00:34:36.239
Now I think that's ridiculous.
00:34:36.239 --> 00:34:39.039
I think that's nonsensical.
00:34:39.039 --> 00:34:41.760
Now here here's the here's the thing.
00:34:41.760 --> 00:34:50.719
Do market participants want an oligopoly in stable coins or a pluralistic competitive marketplace?
00:34:50.719 --> 00:35:08.719
So if you want a if you if like me you want a pluralistic marketplace at stablecoins with many issuers, not just dollar coins, but coins from many currencies, then here's what you do: you enable banks and fintechs to receive stable coins.
00:35:08.719 --> 00:35:14.320
Because let's think about how that levels the playing field, Dante.
00:35:14.320 --> 00:35:21.599
It means that your stable coin from whoever the issuer is can be accepted.
00:35:21.599 --> 00:35:25.519
Why why is there an oligopoly today?
00:35:25.519 --> 00:35:32.880
Because the acceptance network doesn't exist for the other coins.
00:35:32.880 --> 00:35:36.960
That's why there's a barrier to it.
00:35:36.960 --> 00:35:44.559
That's why every other stable coin struggles to gain traction because acceptance doesn't exist.
00:35:44.559 --> 00:35:48.400
And acceptance should not be proprietary.
00:35:48.400 --> 00:35:59.840
So if you're a stablecoin issuer and you pay, you have to go around and pay every exchange millions of dollars to get a listing, then you're building it a moat.
00:35:59.840 --> 00:36:05.760
Can every issuer pay millions of dollars to every exchange to get acceptance?
00:36:05.760 --> 00:36:06.320
No.
00:36:06.320 --> 00:36:12.559
So then the conclusion is that the acceptance network has to be common across issuers.
00:36:12.559 --> 00:36:18.400
Once the acceptance network is common across issuers, anyone can be an issuer.
00:36:18.400 --> 00:36:21.519
And that's when we get to a competitive market structure.
00:36:21.519 --> 00:36:24.880
So that's what needs to happen.
00:36:24.880 --> 00:36:33.119
And the I I you know, because I hope this analogy of the checks stick, I say this in in many markets.
00:36:33.119 --> 00:36:37.920
There are six words that lead to an efficient market structure for stable coins.
00:36:37.920 --> 00:36:43.679
And those six words are banks can process stable coins like checks.
00:36:43.679 --> 00:36:46.400
Those are the six words.
00:36:46.400 --> 00:36:49.119
And it's gonna happen, Dante.
00:36:49.119 --> 00:36:50.719
I'm I I don't know.
00:36:50.719 --> 00:36:54.880
It's a bit like the Elon Musk predictions of self-driving car.
00:36:54.880 --> 00:36:57.199
It's gonna happen in 18 months.
00:36:57.199 --> 00:36:58.400
I agree.
00:36:59.599 --> 00:37:00.320
I agree.
00:37:00.320 --> 00:37:04.239
I think it's funny, and I'm actually very interested to get your take on this.
00:37:04.239 --> 00:37:12.960
Is I am sitting in the US, and right now the US is undergoing a lot of very, very intense stablecoin regulation.
00:37:12.960 --> 00:37:26.239
And you see sort of the stablecoin industry really, really pushing for just, in my opinion, what's very, very basic clarifications, some might even call it clarity, on regulations around stablecoins.
00:37:26.239 --> 00:37:34.400
But you also have this opposing force in the US, which is coming from the banking lobby and you know, regional banks and community banks.
00:37:34.400 --> 00:37:46.159
And their fear is, and this is something I believe to be unfounded, is that stable coins will actually uproot their business model and cause a lot of damage to that very delicate ecosystem.
00:37:46.159 --> 00:37:51.199
Now, I view stable coins as a tool, as a tool that anyone can realistically use.
00:37:51.199 --> 00:37:53.280
And same thing with tokenized deposits.
00:37:53.280 --> 00:37:58.239
But you come from a very you come from a lot more banking expertise than I do.
00:37:58.239 --> 00:38:12.960
So I'm very curious how you view the relationship between banks, both you know, large multinational banks and smaller, more local regional banks, their relationship with stable coins and tokenized deposits.
00:38:13.280 --> 00:38:23.119
Yeah, these are these are great questions and and thorny questions, but I think it deserves to go back to first principles, which is uh where's the land of the free?
00:38:23.119 --> 00:38:26.079
What's the uh what's the home of capitalism?
00:38:26.079 --> 00:38:29.199
What's the shining beacon of capitalism for the planet?
00:38:29.199 --> 00:38:32.559
What is capitalism if it's not com if it's not competition?
00:38:32.559 --> 00:38:37.599
If you've got a choice to make, then you should tend towards uh competition.
00:38:37.599 --> 00:38:48.559
Now, having said having said that, there has been a long uh, let's say, bias against what you might call nar narrow banking.
00:38:48.559 --> 00:38:58.239
So is it a good state of affairs if all of the depos if all of your deposits end up in treasuries?
00:38:58.239 --> 00:39:01.360
Is that a good state of affairs?
00:39:01.360 --> 00:39:08.559
I mean, is is that cap is that capitalism if all of your deposits end up in government debt?
00:39:08.559 --> 00:39:10.719
That's probably not capitalism.
00:39:10.719 --> 00:39:26.480
So banks play a fundamental economic a fundamental economic function in capitalist economies, which is they create risk assets.
00:39:26.480 --> 00:39:28.960
I mean, look you're uh you're in New York, right?
00:39:28.960 --> 00:39:33.039
Look out look out the wind go to the highest tower and look out.
00:39:33.039 --> 00:39:39.679
Everything that you can see that was paid for was bought on credit.
00:39:39.679 --> 00:39:46.239
There is nothing you can see from the highest tower in New York, which is paid for in cash.
00:39:46.239 --> 00:39:49.119
Everything is built on credit.
00:39:49.119 --> 00:39:57.360
So we don't want everyone's deposits to fuck to be to go into government debt.
00:39:57.360 --> 00:40:02.480
We do want banks to be able to lend to on to entrepreneurs.
00:40:02.480 --> 00:40:06.239
So a balance does have to be uh does have to be struck.
00:40:06.239 --> 00:40:13.519
But on the market, I mean the the the conversation in the US is such a uh a polarized conversation.
00:40:13.519 --> 00:40:15.440
Can you pay interest, yes or no?
00:40:15.440 --> 00:40:17.519
This is very, very black and white.
00:40:17.519 --> 00:40:23.920
Um, you know, other instruments are going to come up which will pay interest, there'll be tokenized money market funds.
00:40:23.920 --> 00:40:30.639
Uh tokenized money market funds, I think, offer great promise to give yield to people who are not getting sufficient yield at the moment.
00:40:30.639 --> 00:40:38.480
So I would I I would like market forces to take their course, their natural course.
00:40:38.480 --> 00:40:41.440
I'd like them to be free to take their natural course.
00:40:41.440 --> 00:40:54.960
But it would be a bizarre outcome if the stablecoin revolution led to all the deposits in America being backed by US treasuries, which again is government debt, which is government debt.
00:40:54.960 --> 00:40:59.280
So look, the world the world is made up of balance sheets, right?
00:40:59.280 --> 00:41:00.960
This is the fundamental reality.
00:41:00.960 --> 00:41:08.079
There's the government balance sheet, then there are bank balance sheets, then there are corporate balance sheets, then there are individual balance sheets.
00:41:08.079 --> 00:41:10.320
It's a stack of balance sheets.
00:41:10.320 --> 00:41:16.960
It's a stack of deposits and a stack of it's a it's a stack of of assets and assets and liabilities.
00:41:16.960 --> 00:41:23.519
Where those assets and liabilities sit is very influential on the economy.
00:41:23.519 --> 00:41:28.800
But is there is there room to compete again to compete more against the banks for deposits?
00:41:28.800 --> 00:41:30.400
You're damn right there is.
00:41:30.400 --> 00:41:31.840
Of course there is.
00:41:33.519 --> 00:41:35.599
Yeah, I think you're goddamn right, Tony.
00:41:35.599 --> 00:41:36.159
I love it.
00:41:36.159 --> 00:41:41.519
And I'm I'm gonna make sure to flip that and and you know throw it on everywhere I can.
00:41:41.519 --> 00:41:49.920
I think that you know, to your point, and I recognize I'm a broken record here, is that stable coins and tokenized deposits are a tool.
00:41:49.920 --> 00:41:52.960
And that tool serves customers.
00:41:52.960 --> 00:41:59.519
And as a financial institution, your job should be to provide the most amount of value to your customers.
00:41:59.519 --> 00:42:06.559
And in a capitalist world, everyone is competing to provide the most value, the person who provides the most value wins in a purely capitalistic world, right?
00:42:06.559 --> 00:42:40.480
Obviously, there's regulation that needs to be involved, that it's rapidly, rapidly developing as we speak, but to treat stable coins, a fundamental innovation in the way in which money moves and is accumulated, as the enemy, I think is shooting an entire system in the foot and doing a disservice to users, whether these be you know retail consumers or businesses, rather than recognizing what's right in front of you, which is the opportunity to take the the existing system that you've run on for 50 years and radically improve it.
00:42:40.480 --> 00:42:44.639
And you know, no small part to folks like you uh for making that happen.
00:42:45.039 --> 00:42:51.760
Dante, the change is coming anyway, because you can't you can't stop the the revolution which is which is coming.
00:42:51.760 --> 00:43:05.039
Um because once you look, I'm a lot older than you, and I've seen multiple waves of technology, and it always it always looks like the thing that you've got can't can't change.
00:43:05.039 --> 00:43:17.679
Like I I remember when I had my Nokia feature phone, and I I I can specifically remember thinking, I cannot believe that I cannot imagine a better phone than this Nok than this Nokia.
00:43:17.679 --> 00:43:19.679
Was it the brick one?
00:43:19.679 --> 00:43:25.280
It was, you know, the one in The Matrix uh where you clicked it in the flick down.
00:43:25.280 --> 00:43:32.079
That was the one after I mean the these phones were um as good as you can imagine that they were possibly going to be.
00:43:32.079 --> 00:43:35.199
And then in 2004, I got my first BlackBerry.
00:43:35.199 --> 00:43:40.639
And I couldn't imagine you know, Blackberry used to be called Crackberry because people were so addicted to them.
00:43:40.639 --> 00:43:42.320
They couldn't believe how good it was.
00:43:42.320 --> 00:43:44.000
And then iPhone comes along.
00:43:44.000 --> 00:43:54.960
So it always looks like things can't change, but the I'm afraid the forces of technology are more powerful than vested interests.
00:43:54.960 --> 00:43:59.360
So um banks and fintechs, here's what here's what's gonna happen.
00:43:59.360 --> 00:44:05.920
Fintechs, a lot of them at the moment are saying to themselves, what's my digital asset strategy?
00:44:05.920 --> 00:44:13.440
The foundation of any bank digital asset strategy is to provide wallets to their customers.
00:44:13.440 --> 00:44:15.679
Now, let's just play this forward, right?
00:44:15.679 --> 00:44:21.280
You've got a bank account, but what you haven't got is a wallet from your bank.
00:44:21.280 --> 00:44:23.360
Now, let's think about this then.
00:44:23.360 --> 00:44:28.880
You've got your Bank of America bank account and your Bank of America wallet.
00:44:28.880 --> 00:44:31.199
I'm talking like three years from now.
00:44:31.199 --> 00:44:36.239
So what can you hold in your Bank of America bank account?
00:44:36.239 --> 00:44:37.599
Just dollars.
00:44:37.599 --> 00:44:40.000
Just dollars from Bank of America.
00:44:40.000 --> 00:44:43.280
What can you hold in your Bank of America wallet?
00:44:43.280 --> 00:44:55.039
Well, you can hold tokenized deposits, you can hold stable coins, you can hold tokenized money market funds, you can have tokenized stocks, you can have tokenized bonds, you can have cryptocurrency, you can have Bitcoin, Ethereum, you can have whatever you like.
00:44:55.039 --> 00:45:05.360
So when those two things are compared to each other, which which infrastructure is going to be the place that the innovation takes place?
00:45:05.360 --> 00:45:16.559
The innovation, once the cat is out of the bag, once you give the general purpose technology a chance, it subsumes the special purpose technology.
00:45:16.559 --> 00:45:29.440
And that is a is a confident prediction that the the the locus of innovation is going to move to the wallet and it's going to move to the chain.
00:45:29.440 --> 00:45:37.119
Because just like the iPhone, it's a more general purpose technology than what came before it.
00:45:37.119 --> 00:45:41.519
The general purpose technology subsumes what came before it.
00:45:41.519 --> 00:45:44.960
So this force cannot be put back in the bank.
00:45:46.960 --> 00:45:48.480
Yeah, I love it.
00:45:48.480 --> 00:45:49.280
I love it.
00:45:49.440 --> 00:46:08.480
And now one caveat one caveat to that is if we leave banks to their own devices, then what they will do is they'll come up with bank-centric solutions and they will tend to keep play it safe and stay on and stay on private permission chains.
00:46:08.480 --> 00:46:10.320
And this is a trap.
00:46:10.320 --> 00:46:11.679
This is a dead end.
00:46:11.679 --> 00:46:21.280
So I think one part of advocacy from from uh from our community should be to get banks onto public chains.
00:46:21.280 --> 00:46:30.480
Um last week we we published an article with the help of 17 chains, and it was called banks should validate public blockchains.
00:46:30.480 --> 00:46:35.920
So there, you know, the the banks are scared about moving onto public chains.
00:46:35.920 --> 00:46:42.719
They don't know whether they'll be held responsible for bad things that happen on public chains.
00:46:42.719 --> 00:46:55.360
Um the the the key example that people always come up with is well, if I'm on Ethereum and then I pass I pay gas fees to the North Koreans, will I be um fined by the by the OCC?
00:46:55.360 --> 00:47:04.320
But the truth of it is that the banks not being on the public chains is making the public chains less safe than they otherwise would be.
00:47:04.320 --> 00:47:10.559
So the the the re the revolution is not just tokenization, it's public chain.
00:47:10.559 --> 00:47:13.440
It's not it's not getting every bank onto private chain.
00:47:13.440 --> 00:47:14.559
That's not what the game is.
00:47:14.559 --> 00:47:20.559
That's been tried over and over and over for the past 10 years and it hasn't scaled.
00:47:20.559 --> 00:47:22.960
The revolution is public chain.
00:47:22.960 --> 00:47:25.840
And the banks haven't got the message yet.
00:47:27.280 --> 00:47:28.559
What is that message, Tony?
00:47:28.559 --> 00:47:30.719
You talk to banks all day, every day.
00:47:30.719 --> 00:47:35.440
When you try to convince them to work with Ubix, what message do you do you send them?
00:47:35.840 --> 00:47:43.920
Well, I I don't I don't start by talking to to to uh about Ubix because that's not the first discussion with with a bank.
00:47:43.920 --> 00:47:47.280
The first discussion with a bank is this.
00:47:47.280 --> 00:47:58.880
And you have to meet you have this is the part of the problem of the go-to-market from from crypto and from chain into bank, is what which we don't recognize how to meet the bank where they are.
00:47:58.880 --> 00:48:02.719
So the first thing that I say to a bank is uh is as follows.
00:48:02.719 --> 00:48:05.039
And if we just role-play this, right?
00:48:05.039 --> 00:48:10.559
So if you're a bank executive, I say, Dante, do you think that tokenization is a thing?
00:48:10.559 --> 00:48:15.519
And most bank executives will say, yes, you know, tokenization is definitely a thing.
00:48:15.519 --> 00:48:22.480
And then I will say, Dante, do you know which chain will win or which token will win?
00:48:22.480 --> 00:48:26.480
And they say, No, I've got no idea which chain will win or token will win.
00:48:26.480 --> 00:48:42.559
So then I say, What is the what is the what is the no-regret investment that you can make that equips you for a future of tokenization and hedges your bets against there being lots of different tokens and lots of different chains.
00:48:42.559 --> 00:48:46.639
And that fundamental investment is in wallet infrastructure.
00:48:46.639 --> 00:49:01.920
So the first thing the first thing for Web3 to sell to a bank is the notion that the bank is future-proofed once they have wallets.
00:49:01.920 --> 00:49:06.960
They've got accounts, but they need to be able to provide wallets.
00:49:06.960 --> 00:49:16.079
Now, are we is the first thing, and this is again another mistake that the chains make when they go to the bank, when the chain goes to the bank, they say, I'm the best chain.
00:49:16.079 --> 00:49:18.079
You must choose my chain.
00:49:18.079 --> 00:49:28.000
And so that pres that what that does is it gives a computation to the bank that takes too long to solve because the banks don't want to try to pick a winner.
00:49:28.000 --> 00:49:38.000
So the the correct thing to say to a bank is forget about you're not picking a chain at the moment, but your wallet infrastructure needs to be able to connect to any chain.
00:49:38.000 --> 00:49:50.480
Now, the minute a bank has a wallet infrastructure and it can the minute the Bank of America can give Dante a wallet connected to any chain, Bank of America is future-proof.
00:49:50.480 --> 00:49:53.920
And that's the starting line.
00:49:53.920 --> 00:50:00.400
Now we can get into discussion about what's the best chain for the best use case.
00:50:00.400 --> 00:50:05.679
But the first thing for the banks to do is not to start issuing tokens.
00:50:05.679 --> 00:50:10.000
The best thing for the banks to do is to start receiving tokens.
00:50:10.000 --> 00:50:13.199
So let's think about that community bank you mentioned, Dante.
00:50:13.199 --> 00:50:19.440
That community bank is afraid of stable coins leaching balances off their balance sheet.
00:50:19.440 --> 00:50:22.559
So, what's the best thing for a community bank to do?
00:50:22.559 --> 00:50:30.320
Get a wallet infrastructure, give wallets to your customers, and enable your customers to receive stable coins.
00:50:30.320 --> 00:50:33.280
This is money coming into your balance sheet.
00:50:33.280 --> 00:50:34.480
This is something you like.
00:50:34.480 --> 00:50:37.039
You'll like money coming into your balance sheet.
00:50:37.039 --> 00:50:43.199
So the first thing to sell to a bank is get a wallet infrastructure that connects to any chain.
00:50:43.199 --> 00:50:49.360
The second thing to sell to a bank is receive stable coins, not issue stable coins.
00:50:49.360 --> 00:51:00.960
And then we're off to the races because I hope you can see once the bank has the wallet infrastructure, every other use case is available to them.
00:51:00.960 --> 00:51:06.639
Whether that's buy, sell, hold, crypto, or issuing tokens or whatever.
00:51:06.639 --> 00:51:09.280
But this is what I mean by go to market.
00:51:09.280 --> 00:51:12.000
This is what I mean by meeting the banks where they are.
00:51:12.000 --> 00:51:15.199
Um, I'm a big fan of Wolf of Wall Street.
00:51:15.199 --> 00:51:19.679
I'm I'm sure you've what you've watched that that movie many, many times, right?
00:51:19.679 --> 00:51:27.920
So when it comes down to sell me on Web3, we have to start in the right place.
00:51:27.920 --> 00:51:30.400
And we have to close.
00:51:30.400 --> 00:51:40.480
And there are there are thousands of banks on this planet, thousands of fintechs on this planet, and we have to get them on the on the path to merging with Web3.
00:51:40.480 --> 00:51:46.000
And the go-to-market of that has to be prosecuted in a specific order.
00:51:46.000 --> 00:51:56.400
It um it it is it's um because I've been on the other side of it, I've seen the ineffective go-to-market from Web3 to TroudFi.
00:51:56.400 --> 00:51:58.159
So, yeah.
00:51:58.159 --> 00:52:00.800
Sell me a Web3 strategy.
00:52:00.800 --> 00:52:06.559
I've given the uh hopefully I've given an outline to the industry of how to go about doing that.
00:52:06.559 --> 00:52:09.519
First call it, second, receive.
00:52:09.920 --> 00:52:10.559
I love it.
00:52:10.559 --> 00:52:11.119
I love it.
00:52:11.119 --> 00:52:21.119
I think that this is an excellent message to end on, especially for anyone who is a banker or working in a bank or trying to sell two bankers or someone in a bank.
00:52:21.119 --> 00:52:23.440
Um, that is a really, really excellent message.
00:52:23.440 --> 00:52:26.480
So, Tony, I very, very much appreciate you coming on.
00:52:26.480 --> 00:52:44.639
If you are an enterprise that's looking to get involved in stable coins, if you are a bank or a financial institution looking to get involved in stable coins or tokenized deposits, I highly recommend that you learn more about Tony, learn more about UBIX and what they're doing, because it really is really incredible.
00:52:44.639 --> 00:52:47.519
Um keep keep tuning in to the show.
00:52:47.519 --> 00:52:52.480
We're gonna keep really amazing guests coming on, and uh as always, stay stable.