Money After AI: Meet the New Digital Dollar Built for the Internet "Stablecoins" w/ Jeremy Allaire, Emad Mostaque & Salim Ismail | EP #200

29:17Yeah, we had that. We had that. Yeah. So you had you had these things. And I'm a big believer. And I know you are, too, Peter, of when, you know, kind of when you have multiple exponential technologies that compound each other. Converging, yes. Yeah, the convergent forces. I think that's one of the most important things that a tech entrepreneur can do is sort of seeing those points. And new business models that come out of that. Yes, 100%. So Jeremy, I've heard you talk about two scenarios which show how absolutely inane and antiquated our financial system is. And I would love you to just do it in brief for everybody, all of our listeners who really get this.

29:59When you look at how a brokerage, how you invest in stocks through a brokerage, compare that today to what it could be, and then how banks actually work when you deposit, say, a million dollars into a bank, what happens? Can you cover those two and talk about, like, you know, when you stop and realize, like, really, that's the way it works? That's insane. I think that a lot of people don't understand. I mean, they do viscerally because they get nervous when they give their money to anyone. But like, you know, we've heard about bank runs. Like, what is a bank run? Well, a bank run is because the business model of a bank is to take a dollar, to borrow a dollar from you.

30:41They're borrowing a dollar from you, and then they're permitted to lend it out 12 times. That's insane. That's what fractional reserve banking is. And I have been an adherent since the founding of this company, and I continue to be an adherent today, the idea that you can have a separation of money and credit, and that you can have full reserve money, where if I give you a dollar, I'm not allowed to do anything with it. It's a dollar. And I can build a super hyper efficient payment system on that extremely low risk form of money. And then if you want to borrow money, it's got to be borrowing on that full reserve money.

31:23Can I drill in on that just for a second? This, I think, is one of the most admirable aspects of Circle where each dollar is fully collateral. Fully reserved. Right? Yeah. That's not the case with, say, Tether or some of the other coins. What made you, how did you make that choice? Because that's a very principled choice that costs a lot. So something had you made that kind of principle and go, We're sticking by that. I'd love to hear the history of that. Yeah. I mean, there's a short, easy answer, and then there's a slightly longer, fuller answer that expresses the real thing. The short, easy answer is we're required to by law.

32:04So when we built USDC, we're regulated under what are called money transmission statutes. And money transmission statutes are federal law, which guide how electronic money transmission works. And then each state in the United States has a license that you get for being what is called a money service business. It's essentially a bank that takes money and moves money but can't lend money. So it is a narrow focus. And so in the historical realm, that was Western Union. And then that later became PayPal and Apple Pay and all these things. And lots of the fintechs are actually money transmitters. So we were regulated under money transmission law.

32:50And let's say we go to the state of, I don't know, where do you live, Selene? New York, New Jersey. Wherever. You're in a place. Okay, you're in a place. You're in a state. The state has a banking regulator. And the banking regulator, we had to go state by state and say, okay, we'd like a license to operate in your state. And they say, okay, here it is. You got to post some bonds that are like collateral. And then you have to basically back your electronic money instrument with a permissible set of investments that are called the permissible investment clauses, which are these super narrow. They're designed to be hyper liquid, you know, kind of kind of assets.

33:27And so that is to to have that that instrument be as safe as possible. So that's like the legal short legal answer. But the other is more philosophical, which relates to the discussion we were just having. And one of the motivations for starting Circle was I got very interested in the nature of money, the nature of banking, and the nature of the monetary system after the great financial crisis. And I studied it. And stuff I already knew, like if you had ever watched It's a Wonderful Life and like, wow, these bank runs. But the GFC was like a totally different scale. I mean, it was like all this opacity at like all these like levered up instruments.

34:06And it's like, what the fuck? And I looked at that and there were ideas bouncing around as there have been from time to time for, okay, is there a way to have full reserve payment system money separated from lending money? And that idea came up again after the great financial crisis and it stuck with me. And it sort of really occurred to me that a more, a sound, what I kind of consider a more sound money basis for the banking system makes a lot of sense. And I thought when I started Circle with Sean, it was like, well, actually, we could construct that on the internet, actually. And in fact, it's totally necessary on the internet.

34:45Like, you don't want like these IOUs floating around, free floating, moving around on the internet. That's like a recipe for total disaster. And so it was almost like, OK, well, we have to design this this way. And so as we moved from like the early regulations, like the money transmission laws into stable coin laws that sort of deal with this at a at a deeper level as a this is a defined form of money in the financial system level like that, that kind of reserve model became paramount. And it went from an operating reality for us into kind of federal law as well. You know, I made a list of all the people you must have threatened along the way, right?

35:26Which were competing stablecoin folks, the big tech and financial payment systems like PayCal, the banks, and especially some of the smaller banks, the regulators and monetary authorities, the Fed, the payment intermediaries like Visa and others, firms giving credit and lending, incumbents in the fiat banking system. I mean, you had to navigate all of that. I'm still navigating it. doesn't the federal reserve kind of go wait a minute he's acting like a central bank shut him down don't you get that response and how have you navigated that so a couple things uh on that i've had a chance to spend a lot of time with the leaders of many of the biggest central banks in the world uh just in the past you know a couple weeks uh uh and and i shared the stage with the head of the world bank of the imf now they're not central bankers but they look over like big big big things.

36:21I think one thing that's really important is that a stable coin, a regulated stable coin inherits the monetary policy of the central bank. It does not replace it. Like, we do not set interest rates on money. We do not establish the price of money, you know, nor do we create money. Like, a central bank can create money. As I like to say, They have the SQL insert statement capability in their database. You can do it once. You can do it once. Well, yes, but not even once. I can copy once, basically, right? And so we do not create money, nor do we set the price of money. And so, you know, nor do we replace the central bank's core settlement ledger for at an absolute level for that fiat currency.

37:23So we kind of augment that with an Internet infrastructure that makes that particular currency super useful, more useful than I think it has been before. And we inherit from the monetary policy. So if the price of money is increasing or the price of money is decreasing, the behavior of markets adjusts accordingly. But we don't have any role in that. We are what I call a kind of macro-cyclical, macro-sensitive business, like banks in that sense. But we don't actually – we're not involved. I don't go to the rate-setting meetings. So I think probably some listeners are wondering, why do the central banks issue their own digital currencies?

38:08And the Trump administration said that's a bad idea. Why? And the other part is, what happens with the Genius Act when JP Morgan and others say, hey, we can do a stable coin too? Like, how do you see all that playing out? Yeah, it's a great question. So you probably remember back in 2018, 2019, there was a proposal for something which were colloquially referred to as Zuck Bucks that came out. And so what's interesting is that, we launched USDC in 2018. We published our white paper in 2017. And then that was kind of conceptually introduced in 2019. And we were like a little guy, right? And there was 500 million USDC in circulation.

38:58But Facebook was like, oh my God, they have 3 billion users. All the governments in the world were like freaking out. And, you know, there's probably a good reason. For good reason. Yeah, right. And I think the other challenge was like, Zuckbox were actually like synthetic money that were going to be like based on a whole bunch of currencies. And they thought like, oh, the world's ready for that. And it turned out like a lot of governments were very uncomfortable with that idea. So that was like a wake-up call. And the result of that wake-up call was that certain governments, notably first the Chinese, said, we cannot allow private money to kind of come and sweep over the world, right?

39:43So we're going to respond by building a central bank digital currency. And research into central bank digital currencies like skyrocketed. The Atlantic Council, I think, talked about there are 122 governments researching central bank digital currencies. But China actually had begun work on this. And I met the founders of it back in 2014. I met them in Beijing. And then that project, which was sort of a laboratory project, was like, okay, we got to ship. And when the Chinese decide to ship, they ship. And so that launched what is now known as ECNY. And it's a really interesting lesson because the Chinese government is a very powerful government.

40:25I think, you know, we all think about the Chinese government as a centrally run government that can just tell people what to do and they'll do it. But in fact, it's not the case. It's not the case. And that product got launched in 2020, it got launched over two years ago. And no one uses it. Like no one wants to use it. And there's, it's interesting, you know, No one wants to use it. They made every payment app, every bank, everyone had to have ECNY. Why? Why didn't people use it? It's because, in my view, people want the most innovative product. People want to use the thing that has the most utility for them.

41:10And guess what? Alipay and WeChat Pay just have more utility. And it's private sector innovation. Like I can walk into a store and I can go up to the counter and they can say, you know, do you want to buy this? And yeah, I want to buy this. And it voice authenticates me and I walk out. And that's like a feature of Alipay and WeChat. OK, is that a feature that the central government is going to build? Private sector innovation, technology and software innovation is like it's all, you know, you may have government funding, et cetera. But it's it's like fundamentally entrepreneurship. Entrepreneurship, it's why we're sitting here on Moonshots, right?

41:48Entrepreneurship is so key. And I think even in a place where the government can say, you have to have this, you have to support this, people didn't want to use it. And so what's actually happened is this has become somewhat of a spiritual, philosophical, maybe not spiritual, philosophical debate. And it is a debate between the government being in your pocketbook directly and having direct access to your money and your behavior and the choices you make directly? I'm piped right into the government's database. Or is there an air gap between me and the government? And today, 97 % or so of the financial financial transactions we have are intermediated by private third-party intermediaries.

42:40That is the way it works today. And if you go back over, say, even 75 years in the West, in the liberal market order, like every major technology innovation and money has come from the private sector. You know, that was like checks and check clearing and ATMs and credit cards and debit cards and then like PayPal and then Apple Pay and then stable coins. And like all this innovation comes from, you know, many times consortiums of actors getting together and saying, hey, we're going to build this new technical utility and we're going to agree on it and people are going to use it. And so I think in the United States, there's hostility.

43:25There's just outright hostility to this concept that the government's going to build all this for us. And so, you know, I think the Trump administration essentially banned it. So there's like nothing going on here. In Europe, the central bank is pushing forward with a digital euro project, but the banks are very resistant to it. The actual commercial banks are very resistant to it because they're like, hey, you're going to disintermediate me. But at the same time, the Europeans have passed stablecoin laws. And now the banks and others and circle are doing euro stable coins, the estimated launch date for a CBDC in Europe is 2029.

44:07And I don't know if they're going to have, again, if that's going to slip or what, but like, if you're saying it's 2029, right? So by the time we get to 2000... Europe keeps defeating itself. Yeah. It's quick for Europe, I'd say. I mean, so I, you know, I think that this sort of like, hey, we're going to take a bet on open source, open internet, software innovation, entrepreneurship, competitive markets, and a fair playing field. I think it's a winning bet. So I think the US is the winning bet right now. But it does come to the other part of your question, Ahmad, which is like, hey, aren't these, okay, okay, well, JP Morgan, other guys are going to come in.

44:42And I think a couple things. I think, You know, one is that, you know, for a commercial bank, the sort of creating a new under the genius act, a commercial bank is actually banned from issuing a stable coin. Why is that? Because you wouldn't want a stable coin backed by risky deposits and risky loans. And so but a bank holding company, a company that owns a bank can also create a stable coin subsidiary and issue a stable coin. And then the guys running that are going to say, OK, I have this money I can get over here or I can lend it out 12 times and I capture more margin or I have this thing I can't do anything with.

45:24And and it and its ultimate promise is commoditization of payments into where the payments are priced at zero. Right. So there's sort of a structural thing there, but it still may be that the that the that banks actually want the payment system utility benefits. They want the programmability of money. They want to offer their corporate and institutional clients this innovation. And we actually see huge opportunities to partner with banks. And we are. You'll see more and more of that. But we're partnering with banks where they're like, well, we can just kind of convert in and out of the stablecoin for its utility on the Internet, but then preserve our deposits and lending.

46:05And so you're seeing some hybridization happen. um so but but i think nonetheless though imad like there's going to be a lot more competition there's going to be a lot more competition um in in this space and i think my my best reference is that stable coins are internet platform utilities and networks and they have developer driven fly wheels and network effects and they have liquidity driven fly wheels and network effects and those are those are significant competitive moats we have those moats but we're not sitting still because Like there's so many people who see like this is a huge multi-trillion dollar opportunity.

46:39So Jeremy, this has been an incredible moonshot that you've effectively achieved your first goals of a decade ago. Looking 10 years out and speaking to the entrepreneurs who are, you know, our subscribers on moonshots, what should they be thinking about? Where's, you know, where are the massive untapped opportunities that you're excited about seeing? Yeah. You know, it touches on something we were talking about earlier, which is, well, first of all, I think we're in the super early stages in all this. Like, this is super early stage. And, you know, I like to think about it as, and through a couple of lenses, the, like the total addressable market of the global financial system is like, you know, I don't know what it is.

47:28It's like hundreds of trillions of dollars. It's like this enormous thing. And like the revenue streams of all the intermediaries is, you know,$10 trillion. It's like this huge thing, right? And I think just like earlier epics of the internet, where kind of open internet infrastructure and open software kind of collided with industries, restructured the product utility, restructured the unit economics, built a better way to approach it, and unlocked completely new things that weren't possible before. Those kinds of things happen over 10 or 20 years. They take longer than people think. We might be in an acceleration environment because of AI.

48:12That may come in. But they still take these long arcs. But even after these long arcs, even after 10 or 20 years, the platform businesses that get built are trillion-dollar companies. But they still represent a small percentage of the equivalent of the prior regime, right? The viewing hours of broadcast terrestrial cable satellite are still far in excess of people who watch streaming, even though we're like, what? You were in the digital media world, right? And there's so many great analogies between old media and today's media world and stable coins. Yeah, please. I like to say over-the-top internet money.

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50:02You were going down, you know, you and I have talked about the idea of the future of the corporation, which I think is very cool for entrepreneurs to be thinking about. And we'll be talking more about that in the weeks ahead. But do you mind sort of giving a vision statement there? Yeah. So I wanted to share that, which is my first point is it's early days. And so I think for entrepreneurs and people who are thinking about what can they do with this technology, it's super early. I think the second is that we're at the front end of a new operating system paradigm. And we go through these kind of platform shifts every so often.

50:45Like the web was a platform shift or went away from personal computers. It was a platform shift in terms of information. We've had platform shifts in terms of communications utilities and social media, social messaging. We've had platform shifts in terms of going from desktop to mobile, from data centers to cloud, blah, blah, blah. So we have these platform shifts. And I think there's two operating system kind of platform shifts happening right now. One is AI foundation models, which are effectively new operating systems. And I think they are compute engines. You write apps, and they execute tasks.

51:22And they're far more capable operating systems than we've ever had before. So that's one incredible platform shift. And the other are these economic operating systems, which are, you know, purpose-built blockchain networks. And these economic operating systems are another platform shift. And I think with that, you know, just like with other platforms, you get a new set of material to work with. Like with the iPhone, you had the GPS and you had the touchscreen and you had another camera, right? So you had new facilities to work with. And so you're getting these new facilities to work with, with these economic operating systems, these blockchain networks.

52:04You're getting the ability to have like provable, executable contracts that can be deployed and intermediated on the internet. You're getting the ability to have kind of provable tamper resistant data structures that can be can be interacted with. And so it creates a substrate where you, for example, could take conceptually what is a corporation and you could actually implement that entirely in software as a mixture of humans and agents. And so, like, you could form the capital by selling tokens. the token capital can be stored in a treasury that's on chain. And that treasury could be mostly stable coins.

52:45You can automate all of the monetary flows on that. You can have the governance, which is like stakeholder participation, who decides what to do with the treasury, who decides what contracts to enter into or manifest can be the governance layer with provable voting entirely done on chain. The entire audit of the books and records and everything that happens is real-time auditable. You can use view keys and other things to kind of create selective disclosure models. And so you can create on-chain governance, on-chain decision-making. You can have that entity delegate work to AI. You can have it delegate work to humans.

53:21You can have the actual contract between the AI and the entity manifest in code. You can have the contract between the humans manifest in code. And you can build all that. That's available. Salim, let's be able to do this. It's coming, Salim. It's like the promise of DAOs without the governance issues. Well, yeah. So, I mean, DAOs, I think, are fascinating because they're an experimental thing. But I think I've studied sort of 400 years of the development of, say, the joint stock corporation that then became modern capital markets that then became modern banking and the emergence of corporations as organizing entities.

54:05And then all of this is tied up in – I think about this a lot. It's tied up in theories of capital. And the Industrial Revolution is all about capital and labor. And it was Adam Smith versus Karl Marx and what is the ultimate relationship of labor to capital. But now, like that's being disrupted, right? Because capital can have a relationship to machines and machine labor and not human labor. And this is deeper philosophical questions for society, but those are real things. And what in this world that we're moving into, like, I think it's the first time since the kind of corporations, joint stock corporations, the governance models that we have, where we can revisit all that.

54:50We can actually revisit all that. Jeremy, you're describing the first fully on-chain corporation, right, where contracts, payments, treasury, governance, agents, even robots are on the blockchain developing products and services and delivering them. Yes, 100%. Yes. And we do need laws. We need laws. And the velocity – We actually have to have enforcement. Like that's the other thing. We still need prisons for the humans that do bad things. What about prisons for agents that do bad things? We still need – we still have people who do not meet their commercial obligations and you need to be able to sue them and go after their assets.

55:26Like there are certain things we absolutely need. So like we're not – there's no AI court, which is probably a good thing right now. But the velocity of those companies is going to be so explosive that I'm not sure any corporation can compete. So is there a hard takeoff in the future of corporations in that capacity? Yeah. So that's what I think. I think – I don't know what the timeframe is, but I think given exponential improvements in AI and given this technology substrate, I think we will – and we already have like the single founder company phenomenon, right, which is sort of an AI-driven phenomenon, right?

56:09And actually, you have on-chain organizations. I mean, the best recent example is something called Hyperliquid. And Hyperliquid is a software protocol, okay? It is a set of smart contracts that exists on the public internet, okay? It's open source. It's a protocol. It has a token. and their stakeholder economics for the people who created it, the people who govern and make choices and make improvement decisions on the protocol itself. And then the protocol itself generates fee revenue from the use of the protocol. Now, it's a specific protocol that is focused on futures, like structuring futures markets.

56:52It's a perpetual DEX, if I remember right. It's yes, it's a perpetual derivatives exchange protocol, but it's actually now like an underlying infrastructure where you can instantiate it for other things. You can create a perpetual for sports betting. You can create a perpetual for anything that you want a perpetual future on. You could have a perpetual futures market on AI compute, whatever you can imagine. So they've kind of created this thing where you can instantiate on it, and that instantiation derives revenue. Now, that entire protocol and that entire infrastructure has been built, delivered, and operated by 10 people, 11 people, 11 people.

57:31It's doing well over a billion dollars of revenue right now. It's a billion dollars of revenue. Now, that revenue is actually being returned to the token holders and the stakeholders, which is getting more people to pile in and build on it. So it's creating compounding network effects for the protocol itself. And I think that these kinds of digital token-based incentive systems combined with AI workers and human workers and these kind of new systems of governance that are possible on these networks that are highly globalized will create kind of super predator corporations, if you will, that are a hybrid of humans and AI.

58:19AIs and we'll, we'll make things. They'll make physical things and they'll make services. And I think that. They'll drive the bankruptcy lawyers business. I mean, it's definitely going to keep the lawyers. Which will also be AIs, by the way. So I have a quick scenario. I just want to hear Emad's views on these things, but go ahead, Salim. But we'll go to Emad. No, no, go ahead. Let's hear from Emad. I've got a thought. I don't know. I just think it's going to be fantastic. like the the us hasn't recovered in monetary velocity since covid right yeah basically what you're describing and i think this is why you're building arc your own l1 and things like that as well money's about to go from static to supercharged yes and the thing that i'm like most fascinated about like i've been working on new economic theory and things like that how you've talked to lots of central bankers are they even ready for that pickup and monetary velocity because that impacts inflation if you don't have output impact that's a rhetorical question by the way from are they even aware about what's coming i'm telling them i'm telling them and i think uh the really smart people and i'm not going to name names the really smart people are like oh my fucking god i mean so this this you're exactly right imad i think you're exactly right.

59:37Like monetary theory, like the money velocity and monetary theory are going to get upended. And I think, you know, one of the risks, of course, is that, you know, people throw up the gates, right, and say, you know, no. And I think the fact that currently, right now, the United States is not throwing up the gates. The United States is saying, no, we're going to let this we're going to let this grow a similar situation with AI, right? You know, people can throw up the gates, you can throw up the gates, or you can, you can have prudent regulation and kind of what I call agile policymaking, which is an oxymoron, but, you know, agile policymaking, because it will, there are going to be these, these, these things that are, that are profound.

1:00:27And I think the concern, of course, if for people who've studied recent financial crises is, you It was the liberalization of derivatives regimes that arguably allowed for these toxic balance sheets to develop that then led to the blowups behind the great financial crisis, right? So there's an argument to be made. And that also had to do with just sort of inherent opacity in the system. And so one of my first principles is that – and blockchains are really good at this – is radical transparency and cryptographic proving are like, again, part of the new toolbox. What's different? You have this new material to work with, cryptographic proofs, and that allows for real-time auditability.

1:01:09It allows for a lot of things that weren't possible. And so I think, you know, probably like in other areas, you know, the governments are going to need technology people to be writing software to deal with some of this stuff as well. One of my community members, Jerry Mikulski, is famous for saying abundance equals scarcity minus trust. And something you've done profoundly well is create structures for scaling trust. And this is going to help us get to where we want to go. Very essential. Really powerful. Just a comment back to the core future of the corporation. When I'm advising CEOs, and Peter and I are both doing a lot of this right now, What we're saying is basically create a digital twin with everything being AI native and digital native with smart contracts running most of your operations and put the entire company on chain driven by AI.

1:02:07And essentially, that's going to replace the mothership with all these people at headquarters, bean counters and policymakers and product strategy people. And if you're not doing that, somebody else is doing that to you and you have a choice. And it's a really simple discussion. I think that's right. Right. I think that's right. And I would say 100 percent. And, you know, now I'm like a New York Stock Exchange listed public company. And so like I have a lot of embedded infrastructure obligations that are there for a good reason. And so I'm not that agile startup. I can't just like poof, I'm on chain.

1:02:43Um, uh, so I think, um, the road for, for, for larger companies that are, that have these larger systems of, of, of, of regulation on them is a, it's a, it's a different road. Um, but I think that the, the basic advice I agree with, and I think, um, the, you know, the, the, there are still open legal questions on a lot of stuff and, um, and, and the tooling is not quite there yet on some of this stuff, like to do everything, like put all your operations in smart contracts. Like it's still, it's still like, it's still hard. Um, but I, you know, I, if I, if I look at kind of the progression of things, it's going to become easier and easier and easier uh you know in in in the coming years um and and now the people are starting to conceptualize this like there's going to be people really going after it and there's a tools market to to to develop here as well huge iman yeah yeah i think um so it's all kind of you're launching your own l1 arc and there were two really interesting things kind of picking up on salim's thing about transparency and trust one is that on the one hand it's going to be super fast like sub second finality on the other side there's refundability like i just got some stable coins today and i was like where are they and they're like oh what's we sent usdt instead of usdc and i was like usdc all the time obviously so i just kind of wondered how is that balance there like how did you come up with the requirement finality but then the ability to reverse transactions as well like what was the thing behind that so so actually there's a there's a little bit of reporting that you probably picked up on, which is that, so fundamental is sort of deterministic settlement finality as fast as possible, as cheap as possible, right?

1:04:32So that's like a fundamental thing. And that is core. And that's important, not just for moving a dollar, that's important to like the who owns the house or who owns the stock or did did the contract complete its its execution right all all these things sort of provable final state is like essential uh and so that's there now what you have to think about is like okay now now i have other things like i have a i have an issued uh i have an issued asset that's a protocol usdc and that's there and i know that circle is a regulated centralized issuer, but it sort of works on the public internet. But Circle, because it's a regulated centralized issuer, has to follow sanctions law.

1:05:21So if an entity is sanctioned, we actually have to freeze that account. And we do that on 28 blockchains, not just ARK, but on 28 blockchains. That is a hard law requirement. And so that's there. But then you sort of say, okay, well, I want to start using this in retail transactions. Like I want to buy a cup of coffee with this or more realistically, I want to buy a product on the internet that someone's going to send to me. And there, all of a sudden, there's other things you need. Like you need metadata. You need other data alongside the cash. That data could be the invoice or the receipt. That data could be other relevant metadata.

1:06:06So, for example, we are adding a native protocol called Recibo is what we call it. But it's essentially like an ISO data messaging protocol that is useful. It's like a useful thing for metadata alongside the actual bearer asset, the monetary asset. And then what we've also done is we've created, and this is just in R &D right now, we haven't published it. We've created something called the refund protocol. And so the idea is not that the blockchain itself is reversible. No, the blockchain is not reversible. It's not that USDC is reversible. No, USDC transactions are final unless they're sanctioned.

1:06:44Okay, so that's just a thing. And then above that, you create a – essentially, you can create a payment protocol that supports a refund. And that's experimental right now. But the concept is that if I do buy the product and it was fraudulent or I do buy the product and I don't like it. It was the wrong product. It was this shitty thing I bought and it's broken. It came with whatever it was. You need the ability to have a way to return value on the basis of whether it's fraud or just a customer choice. And so refund protocols is just a proposed protocol. It's not actually built into the blockchain.

1:07:22It's a higher level protocol. And we've proposed an insurance pool model so that people can stand in the transactions and basically effectively buy the insurance and sell the risk. And so you effectively have a market for the risk of refunds that anyone can participate in. And so you create a global decentralized market for risk of refunds. And so that's actually what we are proposing. We are not proposing a blockchain that reverses transactions. We are not proposing that USDC reverses transactions. We're working on these higher level things that are, I think, important at an application layer for ultimate commerce, right?

1:08:01Jeremy, take it home for me one second. When am I buying things on Amazon or Starbucks with USDC? Where is it right now? What is the average user listening today using USDC for? And what will they a year from now? Yeah. So it's interesting. Like, you know, USDC is widely used around the world and it's used in, you know, by people and businesses in hundreds of countries. And obviously it got its start as a digital cash for investing and trading and as working capital with the digital asset markets. That was what I called the bootstrap utility. 24-7, 365 markets need 24-7, 365 money. And naturally, that emerged.

1:08:46That morphed into innovators that are building on-chain protocols for financial products, so borrowing and lending protocols, things like these derivatives protocols. And so USDC has become capital in borrowing and lending. But what's really happened in particular over the last couple of years is we've seen this really strong growth in its use in cross-border transactions, international transactions. And there are so many companies now that build products in payroll and payouts and B2B payments and others adding in the stablecoin rail because it's just a more efficient medium to settle transactions into markets around the world.

1:09:27And that relates to another major use case, which is as they store a value. So this gets back to your dollar question, which is actually people want dollars. People want to hold dollars. And in huge parts of the enormous parts of the world, they'd rather hold a digital dollar that has Internet utility than hold a local bank dollar or a local bank currency. And so there's sort of this is over the top again. Like it's when people figured out, oh, I can use WhatsApp instead of paying SMS fees with my local carrier. And so there's sort of this over top phenomenon and that's proliferating. And so you're getting users and that's cascading into small businesses who are figuring it out because they don't have big compliance departments.

1:10:05And so you're sort of seeing this happen around the world. And so by virtue of that, that is not you're walking into Starbucks. There's plenty of what I call USDC debit cards. So Visa and MasterCard have wired up to USDC. So if I'm an issuer and my card is actually the money I have is USDC, you can actually use that USDC to pay at a merchant. And just, but it's the same payment rails. It's the Visa rail. It's the Apple Pay. But the actual settlement between the person who gave you that card and Visa is done using USDC, which is kind of cool. But I think my view is that the kind of retail commerce, I mean, you've got Shopify just rolled out USDC for all their sellers.

1:10:50And it's like, it's just there. It just shows up. And they're incentivizing merchants with like, they'll pay the merchant 50 basis points to accept a payment in USDC. So that's coming online this quarter. I don't know what that's going to do. Stripe has rolled out USDC as a payment method that's available out of the box to any merchant. But the usage in e-commerce is still very, very small. And I think that we still have – there's still work to do on the user experience. There's still work to do getting more and more, what I'll just call like mainstream wallets to have this integrated in a simple, seamless way.

1:11:26And we need things like the refund protocol. We need other pieces there so that like some of the user expectations can be met. And that's why I think it's still a couple of years away from kind of widespread use. You haven't had your pizza day yet equivalent. I mean, there's lots of transactions happening that are – there are lots of retail transactions happening. There's lots of every kind of transaction happening. People buying digital goods. Sure. People buying other things. And actually, there's a lot of huge transactions happening too. The biggest electronic trading firms in the world use USDC to settle multi-hundred million dollar transactions with some frequency.

1:12:05And so it has all that. But I think there's areas from a UX and ultimate distribution perspective that there's still work that's really good. So let's move it up from the consumer to the CFO. We have a lot of corporate CFOs, CEOs who are on this podcast. Five years from now, you're running a multinational organization. Is USDC sort of the internet rails of all your transactions to all of your stores around the world? Yeah, I mean, we believe that sort of on-chain treasury management is going to become a huge thing. There are also, again, lots of companies, lots of startups, lots of fintechs that are already in this space that are baking USDC into what they do.

1:12:53It's actually a fast-growing startup area and established companies like Brex just launched USDC as a feature for people. You know, you're seeing, you know, spin outs from the big ERP systems like SAP building like on-chain treasury solutions. So I think, yes, the ability to move money from, you know, a tokenized money market into stablecoin cash to settle transactions programmatically, instantly, anywhere in the world across geographies is very powerful. and, you know, it's sort of time value of money, capital efficiency, auditability. There's a lot of really, really powerful things there. And I think that the regulatory clarity that's coming online is sort of been one of the missing pieces.

1:13:43Until you have, you know, USDC is treated as a cash or cash equivalent instrument on a balance sheet that an auditor can say what it is. and you have the regulatory backing that this is actually legal electronic money from a payment system perspective, and you have the tooling and the enterprise infrastructure, that's all kind of coming on right now. And so if I look a year out and then two years out and certainly five years out, that curve, I think, on that kind of what's happening with on-chain treasury is one of the most exciting areas of this space. Salim, what are you thinking? How do you compare with Tether?

1:14:24What are the big differences? You know, I mean, I think Tether has actually built an extraordinary business and obviously have have they're larger than us. So they're they're a good bit larger than us. And I think, you know, they they really had a lot of their core strengths come from the critical role that they played in offshore crypto markets. I mean, it was actually kind of birthed out of one of the offshore Asian exchanges, Bitfinex. And then obviously other big Asian exchanges adopted it because they didn't have dollar banking. And a lot of them were Chinese firms. And so they needed to kind of create a way to have a kind of form of dollar banking.

1:15:08So they got bootstrapped in that. And they're still very strong there. And so USDC has grown a lot in these digital asset markets on a percentage basis in terms of what's happening in those markets, but they're still super, super strong there. And so their growth is strongly supported inside of that space. I would say, you know, we've also, you know, I think philosophically, our outlook, I don't know if it's different entirely, but we've always been rooted in this idea that we're building a new internet financial system. We need to do this in the regulated realm. We need to enshrine this in law.

1:15:45We need to work with policy makers and regulators. You've been U.S. first. We've been U.S. first and we've been, you know, kind of regulatory first. And we've built a very strong compliance apparatus. And that's allowed us to work with some of the biggest banks in the world, some of the biggest asset managers in the world, some of the work with the biggest governments in the world. So those are things that we've done. And I think our view is that when we talked about that TAM earlier, this multi-hundred trillion dollar TAM that's out there, and then the TAM just in the revenue streams of what runs through all that, like that's still on the come.

1:16:23A trillion here, a trillion there. No one's really kind of gone into that. And so I'm comfortable and confident that continuing to do what we do the way we do it is going to lead to continued growth. That's what I obviously believe. And I think that this is a market that will support many significant platforms as well. And look, I mean, yeah. You've definitely taken the road less traveled on that one. I'm going to guess that the Genius Act is generally a great tailwind for you. Am I right? My question is, what did you do to celebrate when the Genius Act got passed? You know, it's pretty amazing.

1:17:05Really, I mean, I did, you know, I had been, you know, sort of working on getting a federal law for stable coins for like four plus years, five years explicitly where there was actually a bill being discussed. And then, you know, conceptually for much longer. Um, uh, and yeah, it was a pretty, pretty, uh, extraordinary moment. I think, um, I, uh, yeah, my kids were in summer camp. And so my wife and I, uh, I think, I think we, I don't know what we did. We had a good, we had, we had, we had fun. I was in DC. I went to the signing ceremony and, uh, and, and that was, that was, that was pretty powerful.

1:17:45Um, but I think it is, yeah, to, to the question. Yeah, it is a tailwind because I think it starts to build that certainty around what is this form of money? How is it treated? If I'm a mainstream corporation or I'm another financial institution, I now have the confidence that I can start to use this and build on this. And that's huge. And it also is recognized around the world. I mean, right now, my team are like the explainers in chief of Genius Act to governments all around the world who are like, OK, what is this? What does this mean? Should we be doing this? And then also, like if you're a Genius Act compliant stablecoin, like how do we treat you in our financial system?

1:18:32Just like they all support dollars in their financial system. How do they treat this in their financial system? And so it's really causing that. And those are good backdrops. But as Ahmad noted earlier, right, it's invited so much more interest, so much more competition. I wouldn't be surprised to see a new stablecoin every week that's introduced that's purportedly Genius Act compliant, even though Genius Act is not yet statutory in effect for a while. I'm going to create a competitor you call Square. No, I'm just kidding. It's been taken, Salim, already. Did you hear Circle and Square merged and formed Hexagon?

1:19:19That was an April Fool's joke. Okay. So Imad and Jeremy, a question for you. It's 10 years from now. We've got digital superintelligence, you know, way beyond our current conception. And there's a trillion agents running around. And these agents have buying authority. They have access to stable coins. I mean, is that a viable option a decade from now? How is that going to be even conceivable in today's regulatory structures? And what kind of a hyper, hyper exponential is that going to cause us? And how exciting is that future? Imad, you first. Look, I think that's a super exciting future. I think, you know, with stablecoins and the work you've done at Circle, it's always like, why would you want dumb money if you can have smart money, right?

1:20:13And obviously the agents will want smart money, and they will direct it to where is most economically valuable. So the goal of regulation shouldn't be to stifle innovation. Like, earlier Jeremy was talking about the Chinese and the DCEP that turned into ECNY. I was a hedge fund manager back then, and Tencent and Alibaba had Alipay and WeChat Pay. they enforced reserve regulations on them because the money was going around this is before the digital one yeah yeah and they basically said you have to give us all the interest so there's a trillion yuan there where unlike you're generally putting it into really high quality ust bills and things like that they just lost billions of dollars a year because of regulation and then a lot of the chinese payment regulation slowed down so if i look forward 10 years what's happening is they're finding the most economically valuable things and again we need to define the value to end users they're using smart and then intelligent money on optimized rails to move that around and then you have a self-balancing self-driving economy if we get it right if we get the regulations wrong and there's going to be this competition to adopt it because money will flow where money is liquid so if europe doesn't adopt this and other countries don't it will come to the US, which has the regulation, then I think that's a world of abundance because we'll finally be allocating stuff where it matters.

1:21:33As opposed to now, most of the money just sits there. Dumb. I like that perspective, Ahmad. I definitely share that view. I think there are, you know, there is such a thing as a control function, you know, in corporations. And so I I think the interesting question is, and regulators, mostly what they do is check that you have a control function that's functioning, actually. Like that's actually, they're like, show me your policy on this. Show me your policy on that. And they'll get a third-party auditor to come in and perform a SOC 2 audit to make sure that what you said you do, you actually do.

1:22:13And so controls are really important. And so I think one of the things that we need to work towards is how do we have provable controls in an AI intermediated system, both human in the loop and agentic, provable controls, auditable controls, and get policy and regulation to deal with these kind of proving grounds again for control mechanisms. And we actually just launched an open source project called SecureTool, which actually is a wrapper on OpenAI SDKs for agents that specifically enables the ability to insert control functions into monetary transactions that agents would conduct specifically to deal with this issue of, wait a minute, like, I'm not just going to, like, delegate that the agent can just party on with this wallet.

1:23:07it. Like I'm going to, I'm going to actually, I'm going to want like the API to have a permissioning structure for the AI itself. Now that's just one like example that we've crafted. And I think like that's, again, it's a whole tool, entire tool chains can get built up in this area. And again, I think it's probably the innovators, the builders, the tool developers, the software creators are going to figure this out by necessity before like, you know, the, the, you know, the, the regulatory bodies. But I do think to achieve that hypervelocity, which I do think is an incredible world of output and capability building and wealth creation and prosperity, we have to kind of figure out what are the control functions.

1:23:53And that's obviously an issue with unbounded AI as well, right? Control functions, societal control functions, et cetera. So it's not unique to financial. It relates to interaction with critical systems and all that kind of stuff too. If we get it right, the future is going to be amazing. I remember Jeff Booth saying once that what he was excited about Bitcoin was that it gives you money velocity without debt. And I think what you've achieved with USDC is the same thing. You have money velocity without the extreme debt, which is huge. It's a first principle. Yep. Well, Jeremy, I know that your 10-year vision, your founding vision, if I have it correct, was raise global prosperity through the frictionless exchange of value, build safer and more inclusive financial systems on sort of an internet financial system.

1:24:42And you've done that. I'd love to close with like, what's your vision a decade from now? Is giving you founding mission a decade from now? Well, I actually feel like we're still at the front end of realizing that mission. And I think, you know, I talked to my team about this and I just had a leadership gathering and talked to my team about this and sort of looked out a little bit and described some of the things that we talked about here, which is really rewarding to talk about here as well, which is, You know, what is the nature of corporate forms? What is the impact of this? Can I share our secret that we're maybe talking about an XPRIZE on this topic?

1:25:30It's an interesting idea. That's for sure. It's definitely an interesting idea. I think, I mean, look, so I think we're early. And I ultimately, I want to see, like, I mean, you could argue like data center and GPU and energy spend has contributed all the GDP growth in the U.S. this year. So arguably, at least GDP output has increased because of AI this year. Yes, for sure. Now, converting that into other output is like obviously the thing that everyone's focused on. I want to see at some point that the economic infrastructure that we're helping create and the economic velocity that is actually going to be measurable because it's all measurable on chain.

1:26:21I want to see measurable increases in economic velocity that actually lead to measurable increases in global GDP and prosperity. And I'm not going to be happy until I can actually see that and measure that. And that's, you know, that's we're not there. We're not there. We're not even close to there right now. And so, you know, that animates my work as I think about the decade. In the early days, when you digitize systems, there's deceptive growth that eventually becomes disruptive growth. And it dematerializes, demonetizes, and democratizes the world. I love it. Congratulations, Jeremy, on that.

1:26:59Where do we find you on the World Wide Web? What's your handles? Yeah, so best is Jeralair on x.com. And yeah, that's my public handle. And then otherwise, you can check out what I'm working on at circle.com. Amazing. Imad and Salim and Jeremy, we're going to all see each other in Riyadh in about 10 days time at FII. Looking forward to it. Yeah, it's going to be fun. Salim, how's your weekend look? I'm bringing some USDC for you to sign, Jeremy. Okay, that's it. I can use a digital signature. Imad, how's your week ahead, buddy? The work always continues, buddy. I reach you. You know, it's so funny.

1:27:47I get a text from Imad at like six o 'clock at night. And I go, where are you? He goes, I'm in London. And you're still awake because I'm always awake. Oh, well, amazing. That's good. All right, guys, gentlemen, a real pleasure. See you, folks, in a few days. We're excited for USDC and for the world that Circle is creating. Thank you. It's going to spawn a million new entrepreneurs, probably, you know, 100 million new entrepreneurs and make the world faster. And just huge congrats on everything. And more abundant. Just incredible. Thank you. It's been a lot of fun. Thank you guys so much. Thank you so much.

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