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- [00:00]
Chris Tyre
Foreign.
- [00:07]
Jen Senasi
Signed the Genius act, pushing stablecoins into the spotlight. A major milestone for the crypto industry. I'm Jen Senasi and today I'm joined by Bullish President Chris Tyre and Solana Foundation President Lily Lu to chat about how exchanges and Layer one ecosystems are positioning themselves for this new era of crypto. Hello to you both.
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Lily Lu
Hi, Jen.
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Jen Senasi
Well, I just said it's a new era of crypto and it really does feel like some energy has been breathed back into the space. Chris, I'm going to start with you. Just what's your feeling this week? I mean, the Genius act was signed last week, Markets are up. Talk to me about what your feeling is and how the folks you're interacting with clients are reacting.
- [00:52]
Chris Tyre
Yeah, look, I think that this is a major milestone. I mean, it's hard to imagine 12 months ago that we would be here this quickly and that we'd be moving at this pace. Look, we came from a, a period where the US Administration was actually trying to stamp the life out of this industry and now we have an administration that's really actively trying to support it in, in many ways and this is just the first of those. And so I think that the momentum that we're seeing is tremendous. I, I see the US as being, you know, phenomenal opportunity for us as a business and I think many others feel the same way. So I don't think it's possible to overstate the importance of this and the pace at which we're now moving.
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Jen Senasi
Lily, could you have predicted this 12 months ago?
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Lily Lu
12 months ago, I think 12 months ago we were still at the phase where I remember when Ryan Selkis shook Trump's hand in Mar? A Lago and everyone lost their minds because even that just being in the same frame and that anyone in an official position in the United States would remember crypto's name in a fond way was unimaginable for so for this to come, that's as much as a 180, I think, as you can imagine, in a 12 month period. I think it's pretty momentous. And I was actually in D.C. last week and we're meeting with a lot of the folks that had a role in this passing. And what was interesting to me is, look, I've been in this for about over a decade and the entire time we've predicated our involvement in this whole space on the assumption that the United States government would be hostile towards crypto. So for that to turn around is kind of bizarre and it's a little bit surreal. I'm not really sure. It's just so different from the way we've been operating for, for the majority of crypto's existence that we're getting used to this perspective that they've been sharing with us in Washington that they actually see us stablecoins as being of strategic huge importance to the country. Issuers are going to be large bondholders. And so for this to go from enemy of the state to of strategic importance is there's going to be a lot of downstream consequences of that.
- [03:00]
Jen Senasi
Chris Lily was just reflecting on the last 10 years and I think anyone who's been working in the industry would say like wow, what a 1 80. Even if you expected something like this to happen, maybe people weren't expecting it in this way. How does that change your perspective and how you start planning for the next 10 years?
- [03:18]
Chris Tyre
Come back to what I said earlier. I don't think we overstate the importance of this. I mean when we look at the U.S. you know, it might only be 4% of global population, but it's 24% global GDP, but it's 40% of global capital markets. And so the U.S. is very significant. So I think what we're going to see now, you know, as an industry is people are going to re pivot towards the US we had seen a lot of companies moving. We've seen places like the UAE be big beneficiaries that as people look to offshore and focus energies elsewhere and seek regulatory clarity. Because what we have seen historically is where you have regulatory clarity you see a flurry of activity thereafter. We saw this in Switzerland, you know, we had, everybody remembers kind of like crypto valley. We don't hear about it so much these days. But in 2017, 2018, 2019 people were talking about that all the time. That was really. And that promoted. We have a number of crypto focused banks out in Switzerland right now. We saw the same thing in Singapore that gave clarity to the likes of DBS to launch an exchange to the likes of Standard Chartered to start developing their OTC market making business. We saw that in Europe with mica. Now just following the implementation of Mica, we've now got Deutsche Bank's launched custody. Commerzbank has launched Custody, Socjan has launched Custody Sochan's launches Euro stablecoin is launching a US dollar stablecoin. So again I think that you know what this means is that certainly we are expecting a huge amount of activity in the U.S. and if you look there are some of crypto's biggest businesses were born out of and operate within the US Already. And now we are really just giving them the oxygen that they need in order to really thrive as businesses, especially within, you know, what is the world's largest economy. So we're looking to, you know, we are very close to getting our bit license. We expect to have that by the end of the summer. And, you know, look, as soon as we get that, we're going to be very active there and putting a lot of our business development efforts there. In terms of future growth, from your.
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Jen Senasi
Perspective, I mean, I know you interact with a lot of firms in the industry. What does this mean for other Web3 hubs? You mentioned folks coming back to the US previously, people were going away from the US to places like the Middle East, Hong Kong, Singapore. What does this mean for adoption and acceleration in those regions, do you think?
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Lily Lu
Well, I think that we've seen how mobile crypto is. I remember when I first got started in crypto, I was in Shanghai, and that was a big hub for crypto. And then San Francisco was considered like the immovable hub of blockchain and cryptocurrency for many years up until the pandemic. And then it was Hong Kong, before it was Berlin, and then also Lisbon, then Singapore. And today that has now shifted to. There's always been kind of like, at any given time, there's kind of dual capitals of the crypto world. And today that is New York and it is the uae. Oh, and of course, Switzerland was on the map for quite a while as well. Still is. It's, it's, it's a little bit smaller than it used to be. And so crypto will follow where, where it is being welcomed. And that also means that it's reshoring into the US at a pretty rapid pace. And already before, before November, it already, New York was attracting quite a lot of talent. And now the capital will follow that, I think where the crypto capitals of the world, if you will, are forming right now. And that's as it typically has been. There's always been sort of the western capitals, the crypto world and the eastern capital of the crypto world, or the US and the non US Capital. And I think that's where it's probably going to be over the next couple of years. And I think that's pretty, that's pretty exciting as well, really, for the U.S. the U.S. has always been the leading capital market center of the world, of the global economy. And also the US has been the deepest talent market in the world. And there's just not a lot of places that really have depth and talent and also in capital markets. So it's always been natural that the US Would lead something that is as transformational as crypto, creating the Internet of finance. And now the US Actually has a. An opportunity to really exercise that leadership. People oftentimes draw these parallels between the world of. The world of blockchain, kind of the Internet of finance, and the Internet itself about 30 years ago, and never a perfect analogy, but I think there are some apt ones. There could have been the development of Internet into usnet and then Europe webnet or so on and so forth, these sort of siloed technology platforms that would have aligned with, you know, nation states or geopolitical boundaries. And that's, I think, for all of our benefit, not how it ended up. I think that's something we should all aspire to as well. When it comes to the proliferation of blockchain standards, I think you want to have one shared platform, open standards, open something that's equally accessible to all who use it. And hopefully we can also, as the US Lead the development of that in the coming decade, just as we did with the Internet, what, 30, 40 years ago.
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Chris Tyre
So one thing I would add there, just to augment Lily's answer is the one thing that the involvement of the US does bring is in my mind, crypto are really digital commodities. So I spent 17 years trading commodities. These are digital commodities, and generally they trade in US Dollars around the world as all. As do all commodities. And, you know, one of the things that having a somewhat hostile US Administration meant is that it was very, very difficult for crypto businesses to get, you know, dollar bank accounts. And given that that was the sort of currency with which the crypto trading ecosystem was denominated, it really kind of hindered progress. And that's the other kind of major unlock here is not just from a domestic perspective, which unlocks its own opportunities, but from a global perspective. You know, giving the air cover to, you know, banks globally to provide corporate banking services is a, is a major reduction in friction for adoption and for the continual, continuous provision of services.
- [09:29]
Jen Senasi
Luli, I want to come back to you for a second to just pull on what we were talking with Chris about just a few minutes ago. When you look at how you're going to move forward from your perspective in a layer one ecosystem, how are you planning for the next 10 years?
- [09:42]
Lily Lu
I think the recognition that crypto assets, stablecoin is probably the top new class of crypto assets as being legitimized regulated and legal form of tender these days. I think that is very bullish for, for the underlying tech and for protocols for chains. It legitimizes chains as bonafide sort of financial rails to be used for first of all, moving stablecoins. But that is really the trailhead for so many other uses of financial instruments, financial, financial venues and you know, a really bonafide on chain future. So I think that this is incredibly, incredibly positive for, for protocols, certainly Solana amongst them. And to highlight with Solana, we've been focused on stablecoins for many years now. We've always seen it as Solana is financial infrastructure. And the asset that underlies all of the sort of economy on chain is the stablecoin. Because ultimately at the beginning and the end of every market cycle, people trade in and out of stablecoins and certainly all payments as the on chain payments activity is picking up as well, is all going to be denominated in stable coins. No matter how much you love your bitcoin, first of all, you're not supposed to spend it. There's endless stories about people who did that and you know, spent a billion dollars in today's money or something. And second of all, people just don't denominate their, their everyday lives and their transactions and goods and services in bitcoin or sats. Right, that's always just on a fiat currency. Whatever your critiques are of, of fiat currency from a more philosophical macro standpoint, that's just being pragmatic. So stablecoins have always been this kind of crux of enabling on chain economies to exist and to thrive. And that's what protocols, that's what chains are all about. It's all about taking financial use cases and putting them natively on chain just for our audience.
- [11:46]
Jen Senasi
Chris, you know, Lily was just talking about really the main use case for stablecoins over, over the past years, I guess the main use case in this part of the world which was to operate in defi ecosystems. Since then we, we've had folks in other parts of the world really rely on stablecoins for remittances, for transferring money. We have other real world use cases now. Institutions and exchanges are using stablecoins for settlement. Maybe talk to me from your perspective and from Bullish's perspective about what this legislation unlocks for you. How are you thinking about stablecoins in the years to come?
- [12:22]
Chris Tyre
Yeah, look, the vast majority of our clients use stablecoins to move money around and the reason that they do that is, is not ideological in any sense of the word. It's really just that it's, it's better technology to undertake the actions that they're trying to perform. So it's quicker, you get supplement finality better, it's better across border. And so even within the institutions that we're dealing with on a day to day basis, the vast majority of ins and outs of dollar value hitting our books comes through the form of stakeholders. So this is something that we saw relatively early on. Look, I think that the export of the US dollar to countries where there is very high persistent inflation and giving people an alternative, you know, to their local domestic currency is a social good. And it's something that we should encourage. And it's great that we now have this capability and it's Internet enabled. We are starting to see other real world use cases outside of that more in the corporate sphere. So again, coming back to, you know, my former life as a commodities trader, some of the commodity cross border trade settlement is very complicated because you tend to be dealing with, you know, companies and countries that are in relatively far flung places in the world. And so, you know, let's say we have a, an Algerian crude oil producer trying to sell crude to a Vietnamese refiner. The, you know, those are, I'm not sure where they sit on the fat F list, but I'm pretty sure it's not at the top of the list. And so, you know, you're going through multiple correspondent banks. Each of them have to do extra due diligence. That settlement could take weeks to effect. And meanwhile you have very little visibility into, you know, where that transaction is hung up or how to unlock it. With stablecoins you can get, you know, total settlement finality within a matter of seconds. So we're starting to see real world use cases in commodity trade settlement and beyond. So I think that the promises here are vast and I think it's with the fact that we're having this conversation right now. I think that we would all agree that at a $240 billion market cap, I think that's going to explode over the next three to five years. And we see the writing on the wall just in terms of the corporate use cases, the retail use cases and then starting to see the bore of really credible stablecoin issues coming into this space. And I think you only have to look at the financial performance of a company like Tether and all of a sudden that's really raised the eyebrows.
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Jen Senasi
$13 billion last year is what Tether.
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Chris Tyre
Made more than with a staff of less than 100. So, yeah, look, there's a lot of companies that would like to share in some of that profitability. And so we are seeing a ton of really credible issuers coming to the table now, banks included, asset managers. Fidelity is obviously an asset. Stablecoin, a number of other others are rumored to be coming to market. So I think that we are going to see this Cambrian explosion of innovation in space.
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Jen Senasi
Luli, what's that killer use case for you?
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Lily Lu
Being able to quickly 24. 7 move money around the world. And people see that with stablecoins. But then if you just go one small step beyond that, then there's an almost infinite possibilities that open up from there. Because stablecoins are essentially v0 of RWA, I consider them quite literally a form of RWA as well. So what that means is if you have tokenized an asset and you can pay with it, you can transfer it 24. Seven, you kind of have full, full flexibility around how you use that asset. Well, then that tokenized asset could be something other than a dollar. Then. We've already seen quite a number of money market funds be issued on chain. And that's really just the first drop in the bucket of all assets that can be tokenized. Once you can tokenize that, you can tokenize anything. And once you can pay with a stablecoin, you can pay using that technological standard with really any asset, then the next thing that you put on top of the tokenization capability is the composability, programmability of blockchains that we've always talked about from, gosh, for over a decade now. That becomes quite exciting because what this means is that your crypto wallet becomes your singular portal into the whole range of assets, which could be anything between memecoin and a money market fund, or an equity or you name it, and also is a portal into the whole range of the ways that you can use your assets. And that could be anything as simple as paying for coffee to highly leveraged perp trading, if that's what someone wants to do. And these are all experiences that are really just a fingertip away from your wallet as being a portal for that. So the ease with which we access information on the Internet today, that is now that ease, that user experience, that simplicity now becomes accessible to finance. And that's. That's pretty momentous.
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Jen Senasi
Chris, the last thing I'm going to ask you and Lily is when we look into the future, we think about all of these stablecoins. I know you mentioned Circle and Tethers, PayPal. There are stablecoins launching on every chain. Now do we need all of these stablecoins? Are they going to be able to coexist in the future or do you think we're going to see some kind of consolidation?
- [17:41]
Chris Tyre
I think we have to see some kind of consolidation. Like I think ultimately monies are network technologies in as much as, you know, they're as good as as many people will accept them. Lily can probably talk about the interoperability because she's far more technical than I am. But just in terms of, you know, for me I would think that look, there's not going to be just one of these in every jurisdiction. So we're not going to have a single, you know, Euro stablecoin. Like that would just be far too big risk, especially if this gets really interwoven into the banking system and the payments system within that jurisdiction. So I think the policymakers and governments will encourage a competitive market. They're going to want to see at least two, maybe three, maybe four. Are there going to be like 15 to 20 to 100 in each jurisdiction? I think that's incredibly unlikely. So I think that some competition is good. And look, going forward, I would imagine just given the importance that the money has, these things are going to be, you know, regulated to within inch of their lives. I think the Genius act is kind of, you know, laid out some of that, but I would imagine that just persists over time. Over time these things will be managed almost like utility type businesses.
- [18:50]
Jen Senasi
Lily, do you agree with Chris?
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Lily Lu
Yeah, network effects and power laws tend to matter in every industry. I think that's also going to matter here. There are the branded stablecoins, the pure play stablecoins that we're all very familiar with today. I think there's now also going to be quite a bit of white labeled stablecoin infrastructure where they will allow folks to create like a branded stablecoin and manage unified liquidity on the backend for that. I think that's going to be an emerging business model we're going to see play out over the next year. So I think that there's only going to be so much stablecoin issuance infrastructure and there might be more branded stablecoins out in the wild, if you will, but there will have to be network effects around the liquidity of these different assets. And we already see that as being a bit of a challenge day with new entrants into the market.
- [19:42]
Jen Senasi
Lily, Chris, thank you for joining me today. It's been a pleasure hearing insight from both of you and I'm sure we will chat again soon.