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Visit CreditKarma.com today to explore cards tailored to your needs. Credit Karma simplifying your financial choices. We have a lot of optimism now about, hey, I think we're heading in the right direction. Standard tokens, public blockchains, Ethereum, stablecoins, all good, right? But when we get there, when we have new regulators in place and they have specifically written the rules, that's when we're going to see a whole bunch of people who are sitting on the sidelines jump into the pool.
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Hello and welcome to Markets Daily, hosted by me, Jen Sanasi. On the show, we navigate the current shaping the crypto markets, providing insights against the broader financial landscape. So whether you're actively trading or simply fascinated by what's going on in the crypto markets, this show is your compass to understanding what's happened, where we are and where we're going. Joining today's show is EY global blockchain leader and chairman of the enterprise Ethereum Alliance, Paul Brody. Paul, it's been a while since we've had you on how's it going?
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It is going, actually really good. It's really good. That's the theme for 2025. It's going to be good.
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B
That is the theme for 2025. I mean, I said it's been a while since you and I have chatted on Coindesk and so much has happened. You wrote an op ed for Coindesk. It's published on CoinDesk.com now. You talk about all of the breakthroughs that we saw in 2024. If you were to pinpoint one major breakthrough that really defined the year, what would you say it was?
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Oh, I mean, everyone's going to say it was a U.S. election. And if you sort of take that One out of the picture because it is hugely important in terms of changing the vibe. The other one I would say is the Bitcoin ETF that started the year like it's just been a year of continuous acceleration. It's not that the direction has changed. The only thing that's happened this year is the direction stayed the same and the pace of acceleration has just kept going up.
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B
Well, that's exactly it. You know, things really started to take off like, almost like rapid fire this year. What does this tell you about where we're going in 2025? What do you expect to see in 2025 given that the ETFs have been approved in the United States for Bitcoin and Ether? We have a new administration coming into the United States that is much more friendly, or they say they're much more friendly to crypto. What do you expect to see?
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So if there was a theme that we've seen in the last few years, it's that in general, people are moving towards a world of stablecoins and DeFi services running on public blockchains. And the entire world is engaged in this process of gradual regulatory conversion. We saw this like with MICA last year, right? Almost everywhere in the world you could buy crypto, you can use stablecoins, you can make international payments. Right? The regulatory structure is moving. It's not completely aligned, but it's moving in the right direction. But at the same time, it's been a very gradual movement. The big theme for 2025, the thing that's really different is how radically things have accelerated and how far down the path we are going to be very quickly and specifically what I mean by this is, all along the way, as we've been heading towards public blockchains and standard tokens on Ethereum and stablecoins, banks, enterprises, others have been saying, well, I really want to get to this destination, I want to have standard tokens on public Ethereum. But the regulators, the rules don't permit me to do so yet. So I'm going to do these kind of compromise things which are sort of partway there. All of a sudden the value proposition of all these compromises has disappeared. Right. We have suddenly sort of raced towards the destination and we know where this is going and that's going to be really different. It's just people know what the destination is now and they know we're going to get there much more quickly than they thought they were going to a year ago.
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B
Now, you mentioned stablecoins there. That's something I want to talk to you about. It's been a really big year for stablecoins, for really solidifying many of the use cases that stablecoins can slot into. I know that you've done some work on the enterprise side with stablecoins. Let's start there and then we can broaden out to some of the other great innovation we've seen in the space when it comes to this specific asset.
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So stablecoins are really, they're in this breakout moment where they are moving from something that gets used in the crypto ecosystem to a standard tool of person to person and business to business payments. Now, specifically in the area of enterprise, the thing that's been holding back stablecoin payments is automation and scale. So ey, my firm, we're a good example. Like, we've been taking stablecoin and crypto payments for a while, but every time you do it, it's a manual process. You call us up, we make arrangements, you send it to our institutional custody account. What we have done over the last year with working with SAP, PayPal and Coinbase is industrialize this. So now, for example, we received the first B2B P yus dollar payment from PayPal. It was executed inside their enterprise computing system. They said, Pay this EY invoice because we were doing some work for PayPal. And that automatically paid from PayPal's wallet directly to EY's institutional account at Coinbase, facilitated by their enterprise ERP system. That kind of automation means that banks can, or enterprises can very easily switch their payments from, say, a banking rail to a crypto rail without any incremental cost. And this clears the path for what I think is going to be a flood of B2B payment transitions. And just to give you a data point, a real one, we estimate that internally at EY alone, we spend over $100 million a year on bank fees for payments and receipt of mostly of international pay. Because we operate in like 200 countries, we're not atypical, right? We probably are a bit more international than most firms, but we are not atypical. And those kinds of fees offer the potential for very significant savings if you can run that kind of thing at scale.
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I mean, that sounds incredible. I think about this going mainstream, but I also think about the banks. Talk to me about how the banks are seeing experiments like this and if there is a role for the banks to play in these transactions, given that they are going to be losing in the hundreds of millions of dollars of fees should this become commonplace.
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So this is going to be. I think one of the defining regulatory battles of 2025 is leveling the playing field between banks and crypto companies. So crypto natives, particularly depending on the regulatory regime, crypto natives are not subject to quite the same set of rules. Banks are subject to a different set of regulators. And some of the rules are quite different, especially ones that are specified in like sap121 or in the Basel kind of financial reserves rules. So banks feel like the level, the playing field is not level. Now in the short run there's a huge role for banks which is you need to have this on and on and off ramp. Right. Most companies don't have a ton of money in crypto, so there is this opportunity for on and off ramping. But I think in the longer run, banks want to play in this game too. And I think we could see in 2025 some pretty competitive price actions in the traditional payment infrastructure. And we could also see banks pushing really hard for a much more level playing field between the different types of companies in the space.
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So that's on the enterprise side of things. I mean, outside of enterprise, we've seen incredible innovation and adoption when it comes to stable coins, particularly outside of the United States. On this show I like to talk about, we did a CoinDesk live broadcast from Buenos Aires a few months ago and it was incredible to see the, the adoption. Everyone I talked to understood stable coins. They understood how to use stable coins. It was such a vast differentiation from here in the United States. Now with a different regime coming in, we expect deregulation, we expect more regulatory clarity. Could we see stablecoins become more pervasive for the everyday consumer?
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So it is happening in, especially in emerging markets. Right. And one of my favorite case examples is the Ethereum L2 blockchain called Celo. Right. They have a partnership with Opera and through them, Opera minipay that gives people access to US dollar and local currency payments on smartphones all across Sub Saharan Africa. Their, their stablecoin volume has been booming this year. Nubank in Brazil has a partnership with Coinbase. So we are seeing very deep person to person payment integration. And what we're also seeing reflected is the immense demand for the US dollar. Right. So still something like 99%, more than 99% of all stablecoin payments are US dollar denominated. And what we're seeing in a lot of these emerging markets is that people in those markets want access to the US dollar. So that is a hugely important milestone that we're seeing and a Regulatory environment that permits that is probably going to increase the US Dollar's dominance globally.
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B
At the top of the show, you mentioned Defi, stablecoins, public blockchains. We talked about stablecoins, talked a little bit about public blockchains. Talk to me about Defi. Many of the folks have come on this show in the past few weeks are calling for a resurgence of Defi again because of the deregulation that is to come in the United States next year. What do you expect to see?
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Two things. Both of them are going to fuel a spectacular Defi summer. I mean, everybody in this business should be putting on sunscreen, right? It's going to be that good. Like it's. And that the two drivers are the following, right? First of all, the regulatory environment is going to be much more favorable. When we put together, like, little charts of, like, what's allowed to wear around the world. The one category that's really not regulated or has no special regulations that explain things and kind of clarify the rules of the road is Defi. Defi is going to get those rules of the road probably first in the United States, but it could possibly clear the path for defi style, regulations or guidance in a lot of other countries, just as a matter of kind of competitive, kind of regulatory consistency. And then the other thing that's happening is Defi had a bit of a winter, not just because crypto had a winter, but also because interest rates are really high. Like, if you can make 5% on treasuries in the real world, why would you chase extra two or three points on DeFi? Now, as interest rates come back down, that's going to kick off a mainstream search for yield, right? If the real rate that you're getting on your treasury or your bank account is 1 or 2%, then getting another 2, 3, 4, 5% from DeFi is starting to be meaningful. And so I think those two market factors coming together, a more positive regulatory environment and a search for better yield is going to drive demand for Defi through the roof. And So I expect 2025 to be an absolutely blockbuster year for Defi.
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You know, regardless of all of the breakthroughs that we've had, there is still this call for mainstream adoption. What is it going to be that brings the mainstream to crypto? And as you're talking about, you know, all of the great innovation that is to come for Defi, I think, you know, what is it going to take for just like people on the street, my cab driver, my mom, people I run into outside to actually interact with some of these DEFI protocols and, and use them as they do, you know, web pages or websites that they're using today. What do you think that's going to take and how long do you think that's going to take?
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So I believe the key to technology adoption, technologies become embedded and adopted sort of massively at scale when they become invisible. When you go to your brokerage account and you buy some shares of a company and the S&P 500 or you buy an S&P 500 index fund, you don't know which system it's being executed on. You don't know if it was the NICE or the NASDAQ or some kind of private dark pool. You don't know and you don't care. And this is what we have to get to. And just a great example is some of this integration, for example, that Nubank and Coinbase in Brazil did, or sorry, Circle, New bank and Circle in Brazil did for US dollar payments. I would venture to guess that the vast majority of people who use that, they don't really know who is making it possible for them to send and receive US dollars very easily from their bank account. They just know that it works. And I think the same is true for most of the Opera mini pay users in emerging markets. They don't really know what the underlying technology is. They might not even know it works on Celo. They just know that they have a wallet in their phone and now they can have dollars. And that's that invisibility, that sort of. It just works and it's plugged in. It's going to be really big. One of my predictions, which I made like four years ago, and I am, was way too early then, but one of my predictions is that one of the first people to really scale up DEFI will be a major player that will offer a curated window into the world of Defi. And it won't be called Defi or anything fancy. It'll just be like, hey, you know, we have a. We've selected a number of savings tools that you could put money into and earn. Instead of 3%, you can earn 6 or 7 or 8%. And you know, we've selected a list of four that you can pick from. These are riskier than normal, but. But they also give you a better return. And it'll be this curated window into DEFI that banks and payment services will start offering. And again, people won't know where or how or the underlying infrastructure. Instead, what they'll be looking at is this is how they get their return. This is the kind of risk you can expect. It'll be sold like a regular investment and the plumbing won't matter. That's what I think it's going to take.
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B
I want to talk about another one of your predictions that you wrote about. You said that 2025 is going to be a fabulous year for fraud. Why do you think this? Unpack it a little bit for me.
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So in this industry, and this is my cynicism, having been around now for 12 years, I think in crypto and blockchain, we are so good at providing a nice holiday gift to our critics, right? Usually in the form of some kind of, like, gigantic fraud or business collapse we've had. We have never made it through a major crypto cycle without quite a few of them. I feel like we are speedrunning the entire regulatory cycle again this time. Right. If you go look at, like, Pump Fun and kind of the casino and atmosphere, it feels very bubbly, to be honest, very frothy. And so I do not love that about the ecosystem. That being said, I do think we have the industry as a whole with audits and better regulations. We have closed off some of the worst avenues for fraud and theft. And so I hope that although there will probably be the same grifters will be back at the table in 2025 pumping meme coins and other nonsense, their ability to do so at a very large scale might hopefully be quite a bit smaller.
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B
I gotta ask, just before we wrap up, you mentioned meme coins and other nonsense, and they really are one of the driving narratives as we head into 2025. There are meme coins. There are now meme coins that are being generated by AI influencers and AI agents. It's so easy to use Pump Fun and spin up a meme coin faster than you ever could before. What does this tell you about where we are? And do you think that that's going to drive us right through 2025? Is this momentum going to be sustainable?
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I don't really know. A lot of people are losing money on meme coins. Fortunately, in most cases, they're just losing small amounts of money. And it's kind of fun and entertainment for them. You know, there's a lot of us in the ecosystem who are kind of divided in their opinion of the value proposition of this. There's definitely one point of view which is like, meme coins are harmless and they're getting people to open up wallets and familiarize with themselves. And there's another viewpoint which is like meme Coins are basically kind of gambling and it might be entertainment, but some people, like, we know with gambling, some people don't handle it well. And we're going to see the same thing with Meme Coins. So I probably sort of would be. I make, I make it feel. Makes me feel old to say this, but I'm not, I'm not the most enormous fan and I don't have Brody Coin here to pitch to you, so. But I think, I hope that what it mostly does is it just gets people on board and open a wallet and they start to think themselves, well, I could do something useful with this, not just like bet on Meme Coins.
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B
All right, this is a show where we are optimistic, where we're looking forward to 2025. I don't want to end on that note, so tell me, what's the one we talked about, the one big breakthrough in 2024? What's the next one big milestone you're looking forward to in the new year?
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A
So I think the one big milestone that we're going to look for in the new year is written rules that kind of guide the path forward. So what's sustaining the optimism right now is knowledge of where we are going, but where we are, knowing where we are headed and actually being there are different things. And so we have a lot of optimism now about, hey, I think we're heading in the right direction. Standard tokens, public blockchains, Ethereum, stablecoins, all good, right? But when we get there, when we have new regulators in place and they have specifically written the rules, that's when we're going to see a whole bunch of people who are sitting on the sidelines jump into the pool. And so we'll have, I think, the second wave of optimism and engagement that will come once the new regulations actually get specified and take hold. So I feel like, you know, 2025 is going to be a year again where we have a bunch of as cycles of good news as that takes shape and grows over the course of the year. So I'm, I'm incredibly optimistic. We sort of set our theme at EY for 2025 around crypto and blockchain. We're calling it into the Sunshine. Right? And that is. That is where we are headed. We are headed into the sunshine.
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B
I love that. Paul, thanks so much for joining Markets Daily today. It is always a pleasure.
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A
Thanks for having me and thank you.
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To our audience who watches Markets Daily and listens to Markets Daily every day. If you don't already subscribe to the Coindesk Pod Network that is available on all podcast platforms. If you prefer watching our shows, we are on YouTube. Subscribe give us a thumbs up. Leave us comments, leave us feedback. Thanks so much for watching the show today. We will see you tomorrow.