Stablecoin issuance is overrated, with Tony McLaughlin, Founder & CEO at Ubyx

0:00 You built the intellectual framework behind the regulated liability network, which the Fed prototyped and the BIS referenced in Project Agora.

0:10 By any measure, you had one of the most influential seats in institutional digital money If we had social media at that time, there would be people who would say, "Oh my God, the whole world is gonna be dominated by US dollar credit cards, and there's a power law that means that only two credit card companies can be successful, and why would we need any more credit cards?

0:30 Because then you would have fragmentation." That's what people could say at the early stages of credit cards, where and are saying at the early stages of stable coins.

0:39 Now fast-forward to twenty twenty-six, and there are fifteen, sixteen thousand issuers of cards.

0:46 We will have eventually hundreds and then thousands of issuers of tokenized money, and hundreds of thousands and then millions of accepting points for tokenized money.

0:56 But the entire payments TAM is in the trillions of dollars. That TAM becomes addressable. A token on a blockchain can represent anything. And- Welcome to another episode of fifty one Insights.

1:14 Today with Tony McLoughlin, CEO of UBIX. Tony, welcome to the show. It's great to be here, Marc. Tony, I'm very excited to have you on the show today.

1:23 It's been a long time since you attended one of our webinars, and I know that you have so many interesting things to say about stablecoins, and you're also building a very interesting company.

1:34 Yeah, it's great to have you here today. Yeah, it's great to be here. I'll, I'll try to live up to that billing.

1:38 And for those who don't know Tony McLoughlin yet, you're also present, uh, on LinkedIn with very intriguing and interesting and smart posts, so follow Tony on LinkedIn. Tony is a payment and banking veteran.

1:52 You spent roughly twenty years at Citigroup. You were managing director of emerging payments.

1:58 You built the intellectual framework behind the regulated liability network, which the Fed prototyped and the BIS referenced in Project Agora.

2:08 By any measure, you had one of the most influential seats in institutional digital money.

2:13 What led you to building UBIX, and what was the moment when you decided, uh, this wasn't enough, I need to go and build something on my own?

2:21 Well, I'm, I'm glad you thought these things were influential, but, uh, unfortunately, most of the work that was done on private permissioned ledgers didn't actually scale and become real world accepted.

2:34 And that was always the problem when working for the banks pre the US election. Uh, the banks, especially the US banks, weren't permitted to participate in public permissionless networks.

2:46 And there was, you know, there was nothing wrong with the technology of the private permissioned blockchains, but they all suffered from a, a very big weakness, which is they didn't have what it took to, to gain adoption.

2:56 So influential in a test environment isn't influential in the real world. Tony, you spent twenty years in banking. What was the moment where you thought, now you're gonna have to build it yourself? Yeah.

3:08 Well, look, I, I saw tremendous, um, comparisons between previous generations of payment systems and the emergence of stablecoins.

3:17 My first job back in nineteen ninety-three was working on traveler's cheques for Barclays Bank, and there was a surprising degree of similarity between traveler's cheques and stablecoins.

3:28 There's a surprising amount of lessons learned or lessons that you can apply from the development of credit cards and ACH and faster payments.

3:38 And I saw people making statements about stablecoins that were, to my opinion, just plain wrong.

3:44 Again, you have to take yourself back to November twenty twenty-four, where people said that there would only be a few stablecoin issuers, that they would be US dollar denominated.

3:54 And already we're seeing that, that pattern change. But I, I knew back in November twenty twenty-four that those assertions were wrong. And why were you so certain that these assumptions were wrong?

4:04 Because of the ways that previous, uh, payment systems, similar payment systems had developed. Uh, let's take, uh, let's take credit cards, for example.

4:12 So there was a, there was a point of time where there were only a very few number of credit cards. They were American dollar issued.

4:19 And, you know, if we had, uh, Twitter or X or social media at that time, there would be people who would say, "Oh my God, the whole world is gonna be dominated by US dollar credit cards, and there's a power law that means that only two credit card companies can be successful, and why would we need any more credit cards?

4:37 Because then you would have fragmentation." That's what people could say at the early stages of credit cards, and that's what people were and are saying at the early stages of stablecoins.

4:47 Now fast-forward to twenty twenty-six, and there are fifteen, sixteen thousand issuers of cards, and there is no fragmentation.

4:56 So the, the development of tokenized money is, I would argue, very likely to follow the same path.

5:03 Now, I think it will follow the same path on compressed timeframes, but the dynamic that led there to be a pluralistic cards network is already at play when it comes to the development of tokenized money.

5:15 Nevertheless, stablecoins have been dominated by two companies, which are Tether and Circle- Yeah... in their early days at least.

5:24 Why do you think that was the case up until now, that two companies basically dominate the global stablecoin market? You've always got in any new technologies, you've got early pioneers who carve out a great niche.

5:37 Um, Marc, bef- this is before you were born probably, but there used to be something called America Online, and America Online was the, was the pre-internet, uh, portal to the information superhighway, as we used to call it.

5:50 There was something called CompuServe, uh, before the internet as well, and it was a, it was a walled garden. Now that's not... I'm not saying that, I'm not equating either of the two, uh, c-...

6:00 companies that you mentioned with, uh, America Online and CompuServe.

6:03 All I'm saying is that what you observe at a point of time at the early stages of a market, if you extrapolate forward, you're, you're probably making a mistake.

6:13 And I think what's a far more likely outcome is that we will have eventually, and in the not too distant future, um, hundreds and then thousands of issuers of tokenized money, and hundreds of thousands and then millions of accepting points for tokenized money.

6:29 Um, so that's my... It's, it's, you know, it's foolish to predict things, but that's, I'll, I'll, I'll, I'll be judged by the, that prediction over time. I think that's exactly what's gonna happen.

6:39 You left Citi after twenty years. You had a very strong thesis. Your thesis was there will be a plethora of stablecoin issuers. There won't be just Tether and Circle.

6:49 And what led you eventually to build the company called Ubix?

6:54 I could see that, uh, features that had existed in the past needed to exist in the world of tokenized money, and in particular, the feature that had to exist as a way of solving the network that exists when you have many issuers and many receivers.

7:12 So if you have, irrespective of the technology, if you have many issuers of a method of payment and many places where it's possible to use that method of payment, the number of connections between those parties is either A times B or A plus B.

7:28 And whether it's in checks or ACH or faster payments or in cards, the world has always moved to a clearing mechanism where the number of connections becomes A plus B.

7:41 And this will be true in the future if someone develops, um, some holographic i- or quantum method of payment.

7:48 There's gonna be a many-to-many network, and there will be the necessity to resolve that network through a clearing mechanism. So it was obvious to me that that type of a, that type of a solution would be necessary.

8:01 Um, I also thought that I was relatively well equipped to, to build such a solution.

8:06 I had b- I had been participating in the building of previous, um, important payment systems, uh, such as when I worked at ABN AMRO, I, I contributed towards the development of their continuous link settlement solution, and I'd worked on every kind of payment system from traveler's checks through faster payments, ACH, wallets and, uh, and beyond over the past thirty years.

8:28 So I had a inclination that I could make a, I could make a contribution to the development of tokenized money. Tony, just take us inside a traditional bank.

8:37 You've been twenty years at Citi, and you saw how the traditional financial system works from the inside. You just mentioned you're solving the clearing problem for stablecoins. Yeah.

8:48 How has problem been solved in the past?

8:50 Let's unpack a couple of things because, one, if you come from the crypto community, you might be tempted to say these things move peer to peer, and peer to peer is many to many, and you don't need to have an intermediary in the middle.

9:04 In fact, the whole purpose of, of Bitcoin is peer-to-peer payments without intermediaries. So why would we reinvent TradFi structures in this world of, uh, of, of cryptocurrency?

9:15 And that's a very good, that's a very good challenge.

9:18 The only time that Ubix is necessary is when a person or a business wants to move from the, the s- the crypto token into the f- into the fiat world or from the fiat world into the, into the crypto world, into the stablecoin world.

9:34 Now, why is, why is that necessary? Um, that's necessary because at least for a period of time, there's gonna be coexistence between these two world.

9:42 And, you know, maybe you, Mark, maybe you are a hundred percent on-chain with your wealth and you have, uh, crypto assets and you've got stablecoins, and in the future, you might have tokenized real world assets and, and you're pure on-chain.

9:56 This is, this is great. This is fine. Um, but lots of people straddle both worlds. Lots of businesses straddle both worlds.

10:03 And so there needs to be a function where you move from the existing paradigm into the token paradigm and vice versa.

10:10 And it's only at that point where you have to turn tokens into cash or cash into tokens that Ubix will become necessary. So what is clearing?

10:18 Uh, this is also super important to dis- to disambiguate from trading because, again, in crypto, everyone is used to trading, everyone is used to exchanges.

10:29 Um, if I send you a stablecoin today, unless you're an institution, when you're off-ramping, you're selling that to- you're selling that token, so you're selling that into an order book.

10:39 And when you sell it to an order book, you're not guaranteed to receive par value. Clearing is something different.

10:45 Clearing is you have a token where instead of it being, uh, bought and sold, it is col- the original amount is collected.

10:53 Now, this is very familiar for anyone, and I, and I know that, and many of your listeners will be, will be young. They won't deal with checks anymore.

11:00 But when your parents took a check to the bank, the bank deposited that check into their bank account. And essentially, I'm saying that that operation should be possible with stablecoins.

11:11 Everyone on the planet, any person, any business should have the ability to take a stablecoin to their existing bank and deposit it into their bank like a check.

11:21 That should be a basic service provided by banks and fintechs, by every bank and fintech. And I believe it will be provided by every bank and fintech. That's another hard prediction.

11:31 Tony, you also raised ten million seed funding in June twenty twenty five from very notable investors such as Galaxy Ventures, Coinbase Ventures, Founders Fund, VanEck, Paxos, LayerZero, Monerium, and o- and others.

11:44 What was your pitch back then to investors? How big is that market for a stablecoin clearing house?

11:51 The other part of our thesis is that stablecoins and indeed other forms of tokenized money are very likely to jump from Crypto use cases into every other payments use case.

12:04 And, and let's just think about the existing revenue pool for stablecoins.

12:08 So if you add up what, uh, the existing players, maybe you get twen-twenty billion dollars and, uh, yeah, twenty billion dollars is a lot of money for sure.

12:16 But the entire payments TAM is in the trillions of dollars, and that TAM becomes addressable if certain things happen. And the things that, the things that I think will happen all have strong reasons for happening.

12:30 The stablecoin or tokens on chains are general purpose technology. They are-- I often give the comparison that when I was growing up, I had a physical alarm clock, a physical calculator, and I had a, a Walkman.

12:42 The-these devices don't exist anymore. They're all subsumed within the telephone.

12:46 Um, when I'm growing up in my career, the payment rails are like the calculator, the Walkman, and the physical devices that have been subsumed within the telephone. An ACH is a special purpose rail, right?

12:58 The only thing an ACH does is, is carry messages be-between banks pertaining to low-value payments.

13:05 The only thing a so-called RTGS system, a real-time gross settlement system, does is carry messages between banks pertaining to high-value payments in one currency.

13:13 The only thing that the cards networks do is obtain an authorization and then perform the settlement. So these things are special purpose infrastructures.

13:22 A blo- a token on a blockchain can represent anything, and the infrastructure isn't, the cost of that infrastructure isn't tied to a specific use case.

13:31 So those are very, very powerful factors when it comes to which technology wins over time.

13:37 And my thesis is simply that if given half a chance, if given a quarter chance, the general purpose technology is likely to subsume the special purpose technology. That's what I think will happen.

13:50 I think in the same way that we don't have physical alarm clocks and calculators and Walkman anymore, I think that the business case going forward to build a special pur-purpose payment rail, something that can represent lots of different types of assets on the same infrastructure, will become difficult to justify financially.

14:08 Tony, you're basically saying stablecoins collapse a range of different technologies and, and payment networks into one, or at least consolidate it.

14:17 And you before mentioned the comparison with a check, and everyone should be able to bring a check to a bank account. Yeah.

14:26 Why would anyone wanna do that if we now have new technologies like stablecoins who were peer to peer- Right... who don't really require checks anymore? Just help us unpack that a little bit. Yeah.

14:39 Look, I'm not suggesting that stablecoins are checks.

14:41 I'm just saying that it would be-- it would increase the capability and increase the utility of stablecoins were it to be possible that you could receive a stablecoin and deposit it into your bank account.

14:52 Now, I'm not suggesting for one moment that anyone be forced to do that, but that should be a possible off-ramp, because in, in a world where there are many issuers, you cannot have a bilateral relationship with every issuer.

15:05 So that's an, that's an impossibility. And you shouldn't be forced to sell the item. So there should be some way to get par value, one for one, on any stablecoin that you wish to receive.

15:17 And one way off, one very powerful off-ramp for stablecoins would be if you were able to take any stablecoin to any ba- to any bank.

15:25 There's a second side effect of that, super important side effect, which is what the central bankers call singleness of, of money. Singleness of money means dollar is a dollar. That's one way of describing it.

15:36 There's an-another way of describing it, which is, uh, slightly more pointed, and that means, or that other way of describing it is the issuer doesn't matter to the recipient.

15:47 So imagine you are, um, you're Bloomingdale's, and you're receiving, uh, card payments. You don't care about the issuer. You don't give a damn about the issuer.

15:57 And that's a very, very good thing, because can you imagine if the Bloomingdale's clerk had to care about the issuer? The lines would be extremely long. You can... In the US, there are like five thousand banks.

16:08 You can receive checks from five thousand banks. You don't care about the issuer. You take the check to your bank, and the bank collects the money on your behalf.

16:15 So in this wor- emerging world of stablecoins, if we have even tens or dozens or hundreds of issuers, when it comes to using that stablecoin, the most desirable feature is you don't care about the issuer.

16:28 Now, issuers might rebel at that idea, uh, but they would be categorically wrong to do so. Because when you have the feature which is the, the issuer doesn't matter at the acceptance point, you have universal acceptance.

16:42 And once, once we've got universal accept-- Uh, this is what I ask you and your listeners to i-imagine. Imagine the point at which every bank and fintech on the planet have wallets connected to multiple blockchains.

16:55 That's the planning assumption. That's the, that's the point in time that we're all heading towards.

17:00 At that point in time where every bank and fintech on the planet is connected to multiple blockchain, blockchains through, through wallet infrastructures, that gen-- the general-purpose rails are living side by side with the special-purpose rails, and the special-purpose rails won't be able to compete.

17:16 Now, it just so happens, the re- the reason why stablecoins are so important is stablecoins are the reason why every bank and fintech on the planet will have a wallet.

17:25 They're the first use case that makes sense for a bank and a fintech to engage with, and I can give you the reasons.

17:31 But once we're at that point, once we're at the point where every bank and fintech on the planet have got wallets and, and also everyone who wants a self-custody wallet can have a wallet, then you've got universal acceptance of digital assets.

17:46 And that's when the true power of digital assets will kick in, because those same wallets, those same chains can represent any given digital asset.

17:56 And that's the point in time, that's the token singularity, that's the point at which tokens win. Every bank has their own wallets. Those wallets are connected to many different blockchains.

18:06 And you're also saying that every bank should have or should be an issuer of their own stablecoin, correct? Well, I would say that every bank and fintech is wondering what to do about digital assets. Exactly. Right?

18:18 There's confusion about what to do. So my recommendation is, is the fo- the following order of operations, I think is, uh, is, is right for most institutions.

18:28 So the first thing that a bank or a fintech should do is ask itself this question: Do I believe we're moving into a world of tokens and chains? Now, the answer usually is yes, they do believe that to some extent.

18:40 Do they know which token or chain will win? The answer is no.

18:43 Um, and they don't need to know, because if they implement multi-chain wallets, then it's like the best insurance policy a bank or a fintech could possibly have.

18:53 Because ha- once you've got those multi-chain wallets, you are equipped to transact in any token or any chain that comes along. So this is the, this is the first step for every bank and fintech on the planet.

19:05 It's the cheapest insurance policy to say that you're gonna survive in the world of tokenization. So this is step one. Now, okay, you're a bank. You've taken that advice. You've got the wallet. What do you do with it?

19:15 The first thing you do is to accept stablecoins and tokenized money, not issue. The, the next thing you might do is you might think about issuing, but that's step three.

19:25 So here's the crazy thing, Marc, which is why is everyone obsessed with issuing? Issuing isn't step one. Issuing is, at best, step three. But once every bank and fintech on the planet Have wallets.

19:39 Anyone can issue, right? Think, think about, uh, cards. The barrier to entry for there being a, a, a marked card.

19:45 The barrier to entry is not the acceptance network, because if you issue a Visa card or a Mastercard, you get access to the preexisting acceptance network. So what that means is anyone can be an issuer.

19:58 So that's the place. Again, I'm making up a bunch of, uh, wild predictions here, but that's the place we're going.

20:05 We're, we're going to a place where the acceptance network is so, is so ubiquitous that issuing becomes easy. So step number one, get a wallet. Step number two is receive stablecoins.

20:17 Step number three is issue, but by that time, it becomes a lot easier to issue if the acceptance network already exists.

20:24 I think the reason why everyone is obsessed with issuing is because they see the profit margins of Tether and Circle is a lot lower, but particularly Tether, and they think that's a great business.

20:35 I need to become an issuer as well, right? Yeah. That might be the reason why people are so obsessed with issuance. I mean, the regulators are obsessed with the issuers.

20:43 Um, you know, banks, lots of banks are, are, are so obsessed with issuance that...

20:48 And they don't really know whether they can make it by themselves, so they form these consortiums, and then they try to do the, these consortium issuance plays.

20:56 And, um, you know, there are dozens and dozens and dozens of companies waiting to issue under Genius when it comes into full, un- under f-full force, and in many other countries.

21:05 But imagine a world where we've got credit cards, and everyone can issue, but no one can accept. The, the market doesn't work. Accept the size of the, uh, I give you a very simple, like, uh, formula.

21:18 The, the size of the on-chain economy is a function of acceptance. Acceptance is the unlock for issuance. So having 100 people coming to the market to issue, then saying to themselves, "Hold on a minute.

21:32 How do I get distribution?" They, you know, they have to think [laughs] think one step, think one step ahead. Yeah, exactly. Yeah. And I'll, I'll tell you something also.

21:41 I'll tell you something really super interesting when you make the historical comparison, Marc, which is, again, I won't name names of issuers, but there, there's a very big issuer that pays a lot of money for distribution and has had to pay a lot of money for distribution.

21:56 But let's compare that to the cards world. In the cards world, the distribution network pays the issuer. That's called interchange.

22:03 So you take your credit card to a trip to Japan, and you spend, you, you pay for your hotel bill.

22:08 The hotel is paying, let's say, three percent, two and a half, three percent to their, to the acquirer, and one and a half percent is going back to the issuer.

22:16 So the, the hotel is the accepting agent, and the issuer gets paid one and a half percent.

22:22 So we're not-- It's a cockamamie world if we're in a situation where the issuer has to pay for distribution, and it's extremely important for the health of the stablecoin market that that's, that that flips.

22:34 And the reason for that is because interest rates won't stay high forever, and you, you cannot...

22:38 It m-may be attractive to be a stablecoin issuer, a monoline stablecoin issuer when rates are four percent and you've got no other way of making money. But rates are not gonna be four percent forever.

22:49 And so if we want to have a thriving, if we want to have a thriving pluralistic stablecoin market structure, tokenized money market structure, then the, the business model has to be resilient, and it cannot be based ninety-nine percent on interest rates, and it cannot be based on every issuer trying to build its own acceptance network.

23:06 So these things, these things have to be true. Very interesting, Tony. And you also mentioned bank consortiums launching their own stablecoins. One of those consortiums is called Cuvalis.

23:18 It's a consortium of European banks issuing their own stablecoins, competitor against the official Euro stablecoin that's planned for, I think, twenty twenty-seven, that the ECB announced.

23:30 Do you think, uh, there will be space for privately issued stablecoins once, uh, central banks like the ECB start issuing their own money? Sure.

23:40 I think there's space for hundreds and hundreds of, of issuers, of tokenized deposits in the same way that there is space. How is there space on this planet for sixteen thousand card issuers?

23:52 Uh, again, if we were, if we were in the early seventies or late sixties and someone made the suggestion that there would be thousands and thousands and thousands of card issuers, it, it would appear crazy.

24:02 But that's reality. So the form factor of tokenized money will take over from the existing legacy form factors, and there will be space for many, for many participants.

24:13 Now, I have a word of, uh, caution for the issuers of consortia coins. Very careful not to say that you're only going to accept your own coin in your own consortia. This is, uh, this would be a significant mistake.

24:30 It would be tempting for a consortia to say, "Okay, we issue Consortia Coin X within this group of six banks, and therefore we only accept Consortia Coin X." This is category error. This is, this is wrong.

24:44 So I very much hope that the groups of banks who issue Consortia Coins do not fall into that obvious trap. But I bet you they don't take my advice. Tony, let's go back to UBX for a moment.

24:57 You said you're building the clearing house for stablecoins. You've been live, I think, since October last year.

25:04 What was one surprising thing in those last six to eight months that you didn't expect when you started building out UBX?

25:12 Well, the surprising thing, to be frank with you, Marc, is I spent thirty years in large corporate life, and, uh, my biggest surprise is how hard it is to be a founder and a, and a CEO of any company.

25:25 So, you know, hats off to anyone who, uh, is successful or even tries, even tries to, to, to do that. It's a very different mode of life to being an employee in a, in a company...

25:37 company, especially in a, in a big company. So that's been super surprising. I think the, the thesis that we started with is playing out exactly as predicted.

25:47 There are more and more issuers, there are more and more countries who are saying that they're going to issue stable coins. There's more jump of the stable coins from crypto use cases into normal payments use cases.

26:00 There's more need for the-- from-- I'll tell you something very clear from the last six months. The, the banks want tokenized deposits to be competitive with stable coins. This is for sure.

26:12 The, the banks are very keen to give the stable coins a run for their money through tokenized deposits. And for that to be true, there also are a set of things that have to happen.

26:21 At the, at the moment, the tokenized deposits are not interoperable. You can't send a JPMorgan dollar into Citibank. You can't send a Citi tokenized deposit into JPMorgan.

26:32 If tokenized deposits are to be successful, then banks have to overcome that interoperability problem. So this is one thing that has to be true.

26:40 The other thing that has to be true, and it's been, uh, clear to me from the start, is that there are some use cases where privacy, I say privacy, you say privacy or vice versa, where privacy, privacy is table stakes.

26:51 And an example there would be in business that I spent thirty years in, which is corporate cash management.

26:57 If a treasury of a corporate is making a payment, if Mark, if you're, if you're doing work for a large corporate treasury, you send them an invoice and they're sending you a payment, there's no way that their balances can be visible on a, on a block explorer.

27:10 There's no way that that transaction can be visible on a block explorer. The corporate will simply not use that method of payment if they have to expose their balances and transactions in that way.

27:19 So there are use cases, very, very important payments use cases like corporate cash management that require, uh, privacy solutions.

27:27 So I think these are, and these are al-already on the market, and there, and more will come to the market, more chains will work on these privacy solutions.

27:35 And I'm firmly of the belief that, uh, all of these use cases will fall to tokens. Tony, let's speak about the first thing you mentioned, which is tokenized deposits. Right.

27:44 And that these tokenized deposits need to be interoperable. How do you think banks will achieve that? By looking into history. You know, there's no problem today in today's world.

27:55 I'll give you the example of dollar checks. So if you are a stockholder of an American company and you live in Malaysia, it's very likely that you're receiving dollar dividend checks.

28:06 And you take that into your bank in Malaysia, and your bank in Malaysia sends those checks to, to its dollar correspondent.

28:13 The dollar correspondent collects the money from the issuer, gives the money back to the Malaysian bank, and the Malaysian bank gives you Malaysian ringgits. This is happening as we speak all around the world.

28:24 So if you just think of the tokenized deposit as the equivalent of a check, then similar mechanisms can be used for that Malaysian bank to receive a tokenized deposit.

28:34 In fact, similar mechanisms can be used for that Malaysian bank to receive a stable coin. So the fact that the, a check is a piece of paper and a stable coin is a token, that doesn't really matter.

28:44 That's not, that's not intrinsic to what these instruments are. These instruments are all promises to pay, and we've had promises to pay in paper format in lots of different form factors of promises to pay.

28:57 Uh, you know, the early days of correspondent banking were letters, letters being sent from one city to another city, and they essentially contained promises to pay.

29:07 So the answer to making these things interoperable is staring us in the face if we look to the history of banking. Now, UBIQS builds for corporations, for customers, companies that wanna clear stable coins.

29:21 How do you think about the whole agentic economy now with the emergence of, for example, Coinbase's Agentic market, where agents can start paying with stable coins through the Four-O-Two-X protocol and start doing economic activity independently?

29:38 How do you see the agent economy unfolding, and what role does UBIQS play in that? I see from history when new payments channels are implemented, you get massive increases in volume.

29:49 You see when new business models are developed, you get massive increases in volume.

29:53 So let's think about the emergence of the gig economy or, you know, the emergence of the sharing economy, the emergence of the attention economy.

30:03 All of these developments created payment flows that never existed before and in massive numbers.

30:10 And now we have the development of the agentic economy, and we will see potentially ten X volume in payments coming from agents.

30:18 So this is wonderful, and I don't think that the existing legacy payment rails will support those transactions in an, in an optimal way.

30:26 I think if the agents want to make micropayments, for example, that's better achieved through tokens on chains rather than through a legacy ACH or a legacy, uh, payment system.

30:37 And I also think it would be highly beneficial if we were able to have proper competition. You know, the type of payments that we represent, Mark, they're not meant to be behind a card.

30:48 So just to get slightly, let's say, controversial for a second, I'm not a fan of stable coins being co-opted by the cards world.

30:58 I'm not a fan of cards on the front end of stable coins, because then what happens is the stable coin is just another account feeding the legacy beast. This is not the intended future.

31:10 This is not the manifested da-destiny of stable coins. When we get to the right place, Mark, the tokens will compete against the previous paradigms.

31:19 Now, again, I understand why entrepreneurs take the interchange and, you know, people can get rich on, on putting cards in front of stable coins and living on the interchange.

31:28 But who pays for that in the end is the merchant. When you go to a, a nice steak restaurant, Mark, and the bill comes, you bring out your card. By the time you leaveLeave the restaurant, you haven't paid.

31:39 What has happened is that the cards networks have r- have obtained for the restaurant an authorization. That's what hap- that's what the auth transaction is. So I, I obtain an auth. That auth is just a promise to pay.

31:51 The, the, the restaurant will receive the money. The restaurant will get the money in two days, and they'll pay two and a half or three percent for the privilege of receiving their money in two days.

32:01 And if you think about it, that's a sales tax. That's a tax on sale. So that's the existing cards paradigm.

32:07 Now, imagine instead, you could go to that restaurant and you have stable coins on your wallet, and the restaurant has a wallet, and you, at the end of the meal, transfer the wallets, the stable coins, from your wallet to their wallet.

32:19 Now, then they've been paid, and there's no reason that the restaurant should have to pay two and a half percent to receive payment for its services. That only comes about if we conquer some very specific territory.

32:33 That territory is inside the point of sale device because that's the th- and it's inside the Apple phone or the Google phone. We in the coins world, we in the tokens world, have to break those two rocks.

32:45 Your wallet, Mark wallet on Apple, needs to be able to access the NFC insecure element on the Apple phone.

32:52 And the restaurant, they need to get their wallet connected to the point of sale device and the NFC on the point of sale device without being prevented from doing that with, by any legacy incumbent software.

33:05 At the moment, that software in the point of sale devices are the EMV co-kernels. We don't, at the moment, have a native way for you to pay that restaurant with your stable coin at, at the point of sale.

33:17 So this is, uh, where we need to get to. The, the n- the new form of payment needs to have a chance of competing against the legacy form of payments. And then that's not to say that cards will die. They won't die.

33:30 ACH won't die. Swift won't die. The legacy forms of payment won't die. But the growth will come from the tokens and the chains.

33:37 I remember we already built on a payments solution at Bitcoins way back in twenty eighteen, and it has been extremely hard to push consumers, but also push businesses to pay with crypto or at least stable coins.

33:51 At that time, there were really stable coins around, let alone pay with crypto. And you're saying it's the point of sales that needs to change. But the UX has also improved in the last few years, right?

34:02 We have now, for example, Coinbase Wallet, which has a really smooth UX. You have tons of different consumer wallets. Why do you think it's still such a niche for people to pay with stable coins?

34:13 Is it only the point of acceptance, or is it something else as well? I, I come back to my previous suggestion, which is the size of the on-chain economy is a function of the acceptance surface.

34:25 Now, there is an issue in crypto land, and that issue is crypto or the crypto wants to get, let's say, traditional finance on-chain.

34:34 But to be frank with you, and again, I don't-- maybe it's just because it's late here in London. I'm being more unfiltered.

34:40 So I, I've seen, I've seen the go-to-market of crypto towards the traditional finance players from the other side, and the go-to-market is not good, Mark. I'm afraid the go-to-market is really bad.

34:52 [chuckles] So let me give you an example of bad, of bad go-to-market.

34:55 So I'm in a big bank, and, uh, fifteen different salespeople or representatives of, uh, of chains call on the bank, and they all make the same claim, which is, "I'm the best chain."

35:09 So when the go-to-market is, "I'm the best chain," and, "Wouldn't the world be great if only everyone used my chain?" What that does is it creates a computation that the bank needs to go through.

35:22 Banks don't like to pick winners, Mark. So if fifteen people are asking you to pick a winner, don't be surprised at the lead time.

35:28 Don't be surprised if it takes the bank three years, and if at the end of the three years, they don't decide anything.

35:33 So my view is that we need to get Tradfi to take the first step, and the first step doesn't require the bank to pick a winner in terms of chain or pick a winner in terms of token.

35:43 Our common message, everyone in the crypto, in the chains, in the token industry, we should say to the bank, "Hey, don't worry about which token or which chain." The first step, very cheap, is implement wallets.

35:56 Give-- Have the ability to give wallets to your customers. By the way, those wallets can connect to any chain, and they can handle any token.

36:03 So yeah, I guess I believe my chain is the best, but that's not a discussion for today. My, my best advice to you is get a wallet.

36:10 That would be, that would take the industry of several steps forward because we wouldn't be asking the banks to pick a winner.

36:17 Now, the chains are not the only folks who are asking the banks and the fintechs to pick winners. Everyone who's got a particular hat on is asking them to pick winners.

36:26 But the truth is that we all benefit if traditional finance comes on-chain, and I believe that our go-to-market should focus on the big picture. The big picture is eth acceptance.

36:38 On-chain economy is a function of acceptance. The, the supply of self-custody wallets is infinite, but the self-custody wallets, uh, still have in the minds of the regulators an issue with compliance.

36:50 Some regulators want to ban self-custody wallets. So I contributed to a great article that, uh, Jess from WalletConnect wrote recently about how self-custody wallets can be made more compliant.

37:01 We have to get over this idea that self-custody wallets are bad and, and hosted wallets are good. So self-custody wallet acceptance surface can, can be made more compliant.

37:11 Almost no banks or fintechs offer, uh, wallets, so that's a market failure. All of those banks and PSPs who've got trusted relationships should offer wallets to their customers.

37:20 That will bring millions and millions of people into the on-chain economy.

37:23 So if we kind of get out of our own way and, and just, let's say, see past our individual sales pitch, the size of the on-chain economy is a function of the acceptance network, and I, I would-- I think we can do a much better go-to-market than what we're doing at the moment.

37:37 Yeah, I definitely agree with you, Tony. Even though go-to-market has evolved in the last ten years in crypto, it has definitely become better, but I agree with your point here as well.

37:47 We're almost at the end of the show, Tony.

37:49 Uh, one of the questions I had as well is, we were talking about that thesis now for a while, but what if stablecoins and this whole thesis that we just laid out here or you laid out turned out to be wrong?

38:01 What will kill that thesis? What would it be? Well, if the thesis is wrong, it's kind of okay.

38:06 You know, my hero is, uh, Richard Feynman, who was the American physicist, and the scientific method is you have a thesis, and then the test of the truth of that thesis is experimentation.

38:18 And basically, science is-- It-- science progresses through falsification of thesis. So a thesis being wrong is okay. You know, my investors won't be happy if the thesis is wrong. I would feel terrible about it.

38:29 So there are things that can hold back the speed of adoption.

38:33 I've been worried for some time about the, the business model of stablecoin issuers if they only rely on interest rates, uh, because, you know, I've lived through many interest rate cycles, and if people think that stablecoins at four percent is the business model forever, it's not.

38:49 So I felt it really necessary that the stablecoin industry have different ways of making money, not just on, uh, on interest rates. I do think that the progress of the regulation is slower than it should be.

39:02 For example, in the UK, this discussion about stablecoins having holding limits is not necessary, and it's not good.

39:08 It will hold back the development of the market in the UK, which, as a UK citizen, I feel, I feel bad about.

39:13 I would like the UK to be one of the winners in the stablecoin game, and London is a tremendous financial center, tremendous FX center. It has all of the latent talent to be super important in this emerging ecosystem.

39:25 So regulation, when it's not properly formed, can be, uh, retrogressive as-- in terms of development of the market. But I genuinely think, Marc, that the, the forces at work now cannot be stopped.

39:36 One of my favorite, um, business examples is Research In Motion. Um, Research In Motion with the BlackBerry. There's a very good document to look at, which is the annual report of Research In Motion in twenty eleven.

39:49 In twenty eleven, Research In Motion were at their peak, but the thing that actually killed them, the shots were fired in two thousand and seven and two thousand and eight, which was the launch of the iPhone and the launch of Android.

39:59 So they were shot, and they were-- they didn't know that they were dead because their best years were ahead of them.

40:05 In twenty eleven, I mean, that annual report is remarkable because it's them at their absolute peak of success in terms of subscribers and revenue and everything is looking good.

40:15 They've got BlackBerry Messenger, and after twenty eleven, it's like, it's like that. It goes precipitously down- downhill because the general purpose technology took over from the special purpose technology.

40:27 And that, I think, is gonna happen to traditional finance unless they take my modest advice and step into the world of tokens and chains and implement wallets. Yeah. That's a great ending, Tony.

40:39 Last question from my side before we do a very quick lightning round is: What are some things that you personally look forward to, that you have on your radar as an operator in the space?

40:50 I look forward to corporate adoption of tokenized money.

40:54 Large corporates who operate-- Large multinational corporates who operate across the globe end up having thousands of bank accounts, and it's very difficult to optimize across thousands of bank accounts.

41:06 I think in the world of tokenized deposits, stablecoins, and tokenized money market funds, corporate cash management can be much more efficient. So I look forward to that beginning to happen.

41:17 We brought together a group of twenty corporates in a body called the Tokenized Cash Management Advisory Group, who are the practitioners who will lead to the development of corporate adoption of, of tokenized money.

41:28 So I, I very much look forward to that happening. I look forward to the day when you can deposit a stablecoin into your bank account. That's, that's a good day, and it's coming very soon. Yeah, I hope so too, Tony.

41:38 We're at the end here. A quick lightning round. Those are short questions with short answers. Uh, the first one, what changed your perspective on money? Bitcoin whitepaper.

41:48 Who in this space do you disagree with most, and what do they get wrong? Quickfire round. I-- Well, I, I dis- I disagree with anyone who believes that there's gonna be an oligopoly in stablecoin issuance.

42:00 Where is the best place in finance right now?

42:03 The best place in finance is you are someone sitting in a traditional finance business, and you're in some niche that nobody else knows anything about, and you s- you have the bravery to step out of that space, and you take that use case on-chain.

42:21 And there are thousands of those people who are working on niches in finance that nobody knows about, and all they have to do is to find a buddy who knows about the on-chain world, bring that use case on-chain.

42:34 And last one, if Ubix wins completely, what does the world look like for someone who never thinks about money? Ubix will be like one of the card schemes that will be the acceptance network for tokenized money.

42:49 Whether it's Ubix or, or something else, I have little doubt that tokenized money will become the dominant form of money on the planet. So, uh, let's see how it plays out.

43:00 I think the thesis is correct, and if Ubix wins, then so be it. That's great. Tony, thank you so much for coming on the show. It's always a pleasure to talk to you. This was extremely interesting.

43:10 Where can people learn more about you, about Ubix? I am, pr- rightly or wrongly, more of a denizen of LinkedIn than, uh, Twitter or X.

43:18 I find it difficult even to open that app sometimes, uh, because I, I don't know if it's just the fact about the algorithm maybe reveals to me stuff that it knows about me that I don't want to know about myself.

43:29 I, I can be mainly found on LinkedIn. Yeah, and as mentioned at the beginning, it's worth following, uh, Tony for his hot takes on stablecoins and money. Do that and also check out Ubix.

43:40 Tony, thanks for coming, and, uh, all the best with Ubix, and see you soon. Thank you, Marc. You obviously like this video enough that you got to the end. Listen, do me a favor.

43:50 Hit that like and subscribe button because I think you'll like it.

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44:11 See you next time. [outro music]