Bankless - FinTech Meets Crypto: The Future of Global Payments | Simon Taylor

Episode Date: September 17, 2025

What if payment chains are the “AWS moment for money”? Simon Taylor — fintech veteran, ex-Barclays crypto lead, and author of FinTech Brainfood — joins Bankless to map the convergence of fintech and crypto. From stablecoins serving as the Trojan horse for tokenisation to Tempo’s push for a payments chain, Simon explains why finance is on the brink of its biggest infrastructure shift since Visa. We cover the rise of payments L1s, the regulatory roulette of stablecoins, and whether neutrality and permissionlessness can survive in corporate-led networks. Plus, Simon breaks down the differences between stablecoins, tokenized deposits, and CBDCs — and explains why the future of finance is already being rebuilt on-chain. --- 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium --- BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🎩DEGEN | JOIN THE COMMUNITY https://bankless.cc/degen 🌳KGEN | REQUEST A DEMO https://bankless.cc/KGEN-podcast 🏄 SURF | UPGRADE YOUR CRYPTO RESEARCH https://bankless.cc/surf --- TIMESTAMPS 0:00 Intro 4:28 FinTech Meets Crypto 9:47 The AWS Moment for Money 14:34 Why Payments Are Broken 21:25 Stablecoins in Action 25:59 The Rise of Payments Chains 38:11 Neutrality, Permissionlessness & The Libra Lesson 52:48 Stablecoins, Tokenized Deposits & CBDCs 59:08 The Stablecoin Boom Ahead 1:12:24 Is FinTech Becoming Crypto? 1:15:22 Tokenization Beyond Payments 1:36:25 Agents & AI Commerce 1:40:33 Closing Thoughts --- RESOURCES Simon Taylor https://x.com/sytaylor/ FinTech Brainfood https://www.fintechbrainfood.com/ --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

Crypto doesn't really exist in the fintech world, but stable coins are the number one topic. That's the nuance. Stable coins are the fintech 3.0. If the beginning of fintech was making better user experiences from crappy user experience, and then the next thing was making better APIs for developers, the third one is making better payments infrastructure. Welcome to bankless, where we explore the frontier of fintech's crypto transformation. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become. more bankless. We've been exploring this topic of crypto and fintech and how they are converging together. And we have probably the best guest on this subject. Simon Taylor is a fintech

guru. He's been long into fintech. He has a podcast on the subject. He recently joined the FinTech Payments Company, and it's a layer one, tempo, that Stripe is rolling out. So all of these, I think, make him the perfect guest to explore today's conversation. We talk a lot about the modern conversations floating around the industry at the moment. The tempo chain is, of course, front and center. But what is a payment chain really? How does it differ from a public permissionless blockchain that we're used to, like Ethereum, what are the different properties?

We talk about why it's all happening. We all kind of know the Tradfai payments world is a mess, but why is it a mess and why are stable coins so much different and better to be adopted? And then how Simon thinks that stable coins are actually just the gateway drug for a bunch of more tokenization to show up in the world of. of fintech. And then we kind of just talk about the cultural differences

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When it comes to costs, Unichain is a no-brainer. Transaction fees come in about 95% cheaper than Ethereum mainnet, slashing the price of creating or accessing liquidity. Want to stay in the loop on Unichain? Visit unichane.org or follow at Unichane on X for all. the updates. Bankless Nation, very excited to introduce you to Simon Taylor. He's a Bridger of World, both FinTech and Crypto. He's ex-Barklays. He was the head of Crypto R&D there. He's the author of FinTech Breakthrough, Brain Food, excuse me, which is a fantastic blog that I enjoy. And also,

okay, this is great, this is new. He just joined the Stripe-sponsored Tempo Payments Chain. You guys recall Tempo. We were talking about that last week. Simon, thanks so much for joining us. Welcome to Bankless. Thank you for having me, guys. I am not kidding. You should when I say huge, huge fun, I think you guys do a great job in choppy waters. So I appreciate you. The whole market does. Wow.

I don't know if the whole market does, but I'm thankful that you appreciate us, Simon, because we also appreciate you. And this episode is very much, I think, a little bit of the meeting of the worlds because you have been doing God's work covering FinTech for many years.

Almost I think of like your work at FinTech brain food as the bank list of FinTech. And also you have a, like more than a foot in the water of crypto as well. So you're someone in FinTech who can also cogently speak crypto very well. I think we want to bridge these two worlds today as FinTech is undergoing this crypto transformation. Does that sound good? I love that. I will be your Tradfai translator, your Tradfi translator, your Tradfi Sherpa, if I may, your payments guru. I would love to do that because small worlds collide. When I was head of Crypto R&D at Barclays, I was also

helping the London Ethereum community organize some of its first ever meetups and they used a Barclay space in London which was just too perfect wasn't it? But I was like, I've always been that day walker. You know, by day I wore the suit and by night I was like all going to these events. So now I feel like Wall Street

loves Ethereum and loves tokens and has really come around to it. The payments industry was always a little bit more conservative and needs a bit more convincing. So I'm trying to find like that middle ground between the two. And there are things that are features of crypto and there are things that are bugs if you look at it from a payments perspective. And then there are things that are features of the payments industry and there are things that are bugs. And it's not all bugs, right?

There are some things they do that's really, really good. So yeah, happy to share what I can. Since you're familiar with bankers, you probably know who our audience is composed of. We're all like crypto people who are chronically online paying attention to crypto drama year in, year out. Like every single year, 2023 was a specific year in crypto and everyone kind of remembers that

and what happened there in 2024 and 22 is all kind of the same. What's it like to be in FinTech? Is it kind of similar in the sense that there's like FinTech, Twitter, and there's our themes and medas that people gossip about. Yeah.

Tell us what's that lifestyle like. It's just, there's just not nearly as much. The bags aren't quite as deep. Yeah. There's plenty of crime in regular Fratfight. Great. So the big drama, so FinTech had its peak in 2021, right? Like a one in five VC dollars went into FinTech through that 2020.

That was the peak? Yeah, oh yeah. Like, bang, it was everywhere. It was everything. You know, this is Plata almost bought by Visa. The DOJ says, no, you can't. That's antitrust. Then you get this whole thing that has.

happens after it, you get this fintech winter. And there was a whole movement where fintech companies were coming to market, but some of them then started to go bankrupt. So you'll remember the Silvergate signature, everything that happened there. The other side of that story was it took down a fintech company called synapse. And synapse was a tech platform that helped a bunch of fintech companies do things like manage your savings. And so that happened in what? 2023? It's middle of 2025 and there are consumers who don't know where their money is and their

life savings are. Actually, some of those were crypto banks, I believe. Juno was one of them. They used synapse on the back end and they were kind of like doing crypto stuff. But unfortunately, they were brought down by the synapse thing. Wow. So this is like a parallel story to what we went through as well. It was.

And I was kind of living on both, right? Because I've always been the day walker. So when FTX went down, I wrote a piece like FTX WTF. Like, I thought you guys were cool. It turns out you really won. Oh, my God. And then on the other side, like, yeah, then I had the whole fintech dramas going on. And I was like, whoa, this is a bad, bad.

So when they're both down, it's really bad. But then one thing I want to leave you guys with is, it's like the whole issue that you had on the fintech side, though, was nobody could figure out where the money was. Nobody could reconcile. So the banks didn't know where the money was. Synapse didn't know where the money was. The FinTech companies didn't know where the money was. And a lot of people in FinTech looked at this and kind of went,

maybe some sort of chain of blocks might help me. That's great. I guess that's kind of the meeting of the world's here. We're both learning from each other, right? Fintech is learning from crypto and crypto is learning from FinTech. It's interesting you say 2021 was the peak because that was also when I felt like Robin Hood was really having a moment and then bam, the whole GME thing happened. Was that in January of 2021?

I mean, it kind of aligns closely with the peak of fintech. Let's talk about payments chains first because that seems like a massive intersection point and it all comes by route of this crypto innovation that is also strongly fintech of stable coins. and we're going to talk about tempo a little bit more. You joined the payments chain tempo. But you also, you wrote this post, you called payments chains the AWS moment for money. And keep in mind, everyone,

Simon's audience is FinTech people. And you were calling payments chains and stable coins, the AWS moment for money. Translate that for us. Like, why this comparison? Why does that resonate? Yeah, it's an unhelpful metaphor if you're in crypto,

but it's a helpful metaphor if you're in banking. So that's the caveat there. And also, I write headlines and I want people to click. But TLDR, what Amazon did when they enabled other people to use their infrastructure is they push down the cost of running their back office and their middle and back office. They externalized a lot of their costs and turned it into a way to generate revenues. And in banking world, we call that market structure.

Like we all agree that we've got this back office operation. We don't profit from it. We've all kind of got to do this ugly, nasty stuff. Why don't we all just get together, form a new company, and it'll take care of it? Well, the AWS side of that was a little different. AWS was like, well, we've already got all of this technology. The technology already exists. Why don't we just enable more people to kind of use it?

So that idea of like, how do you think about the business case as a payments company as all payments company, not one payments company, instead of having to build all of this complex technology internally, somebody went and built it for you, but it needs to meet your requirements. It needs to be extremely fast. You need fast finality. You need to be backwardly compatible with the law and compliance

and all of that sort of stuff. And AWS has kind of got there. They can be used by banks. They can be used by everybody. It's big market structure, but it needs to do all the. those things. And I was speaking to, I don't know if you've ever had Mike Hudak from Sling Money on the show. Mike's an interesting guy. So Mike was head of product for META. He ran the ads business.

He was then chief product officer at Monzo, which is a neobank. Then he went to build Sling money, which is a remittance app that uses stable coins. And when he looked at stable coins and when he looked at the world of on-chain finance, he went, somebody took 80% of my cost and complexity and said, hey, this is a utility. You can pay per hour. And that pay per hour utility thing is exactly the aha moment that bankers get when they see AWS and exactly the moment you get when you see payments change. You go, oh, it's a utility. You've dramatically, I could have built all of this myself, but I wouldn't have built it as well as somebody who does nothing but that at massive scale for the whole industry. Okay. So I see where this

analogy is going to make sense to me. So AWS, of course, is, you know, the advent of the cloud, basically. And prior to AWS in the early 2000s in the late 1990s, every single company who wanted to spin up something on the internet or build some software had to essentially either build their own data center or use a co-located data center space, like, you know, manage the racks, manage the individual servers, all of this. And then here comes AWS. And they say, no, you just spin up instances of these things. Spin them up, spin them down, on demand. They turned basically compute infrastructure into a utility.

And then all of these companies, SaaS companies, were built on top of this. Netflix, Spotify. Yeah. And you're saying that's what's happening with payments infrastructure today. And that's why payments are in stable coins, I imagine they're interrelated, are the AWS moment. I guess in order to understand that fully, though, we need to maybe understand crypto-natives need to understand a bit more about how payments work and Tradify today.

Because I'm not sure that we understand that sign. I don't know that. Yeah, that's the wildest, wildest thing. Do you think that payments are easy, but actually it's all edge cases all the way down and it's built on 1960s infrastructure. Payments typically come in one of two types, push payments, poll payments. So if I'm pushing a payment, that looks like a crypto transaction. I need an address, in this case, an account routing number, and I enter the details and I hit send, and it goes and hopefully it gets there. What you don't see under the hood are the thousands of banks

and all of the rules they have about what happens if something goes wrong. And that's the hidden cost a lot of this time, is that they're sending each other messages. They all use different standards, there's all of these errors. So what you see a company like Stripe does, what Aging does, what checkout does, what all of these companies do, is they build software that makes payments work the way you think they would if you'd never been exposed to payments before. Because essentially, a payment message looks like an email. So imagine your mobile app, instead of sending a message to the Ethereum network to move funds from one wallet address to another with a smart contract, was just sending an email to an SFTP server at another financial

institution. And then its computer had to figure out what to do with that message. It had to read the email, extract the relevant information, and apply the right bank accounts and balances to it. And that's where loads of stuff can go wrong when a lot of the mainframes that are running inside these institutions were the same ones that NASA was using in the 60. And the code goes back that long. There are literally, there's a group called the Cobol Cowboys, people in their 70s and 80s that go in and fix mainframes inside legacy organizations that are too critical not to fall over and nobody else knows how these things work. Wow. It's just wild how bad the tech is. We're not going to have them around forever if they're in the 60s and 70s. It's crazy. It's crazy how

expensive that gets and how much of a prisoner you are to that in the financial system. So if I go build Robin Hood, Reveloot, New Bank or whatever, I can build something really great, something really low cost, I can really make a difference for my customers. But ultimately, I'm a prisoner of the Tradfai rails. Ultimately, I'm a prisoner of every other bank and financial institution. So, and then ultimately I'm a prisoner of like all of these payment rails that are 30, 40, 50 years old. And when I say payments rails, kind of a bad metaphor,

because that sounds a little bit like I had some money, I stuck it in a little train, and it tutled along, and then the money got out with the other side. It didn't. All I did was send a message

to move some money and the banks move the money, right? Like, it's actually a different thing. So payments chains have a real opportunity to take all of that complexity and really rebuild it. And this is why I got excited about Ethereum when I worked at a bank in 1314, is I immediately saw like, oh my God, you've solved 80% of the problem here. I don't have to spend

all my time and energy figuring out, do my records match with that other bank down the street who uses this weird system? That's all taken care of. But also, it's kind of slow. And there's a lot of attack surface areas and there's a lot of scams and there's no privacy. So for payments, there's a lot of features that we had where it ran at scale. It was incredibly performant that we need to have that most of the chains to date didn't have or had some variant of and various people were trying. This needed to do one thing extremely well. Less of a Swiss army knife and more of a machete. Just do that thing extremely well. There's been a few times where I have sent money and because something went wrong in that transfer, I was actually kind of able to see

a little bit behind the hood, not directly because there is no actual thing behind the hood because depending on who your financial institution is or who you're talking to, behind the scenes just looks different for everyone. I was sending money in a wire to some in some bank account in a foreign country, which is where things get really wonky because the input fields just start to change, right? If you're sending money domestically, at least in United States, the form factors are about the same, like bank address, like zip code, state. And these are things that I'm all familiar with. But as soon as I send money to like some country in Europe, well, like they don't really have states. They have municipalities or something and they don't really

have zip codes. And there's zip codes are different numbers of digits. And I did something wrong. And the money got lost. And there had to be this, this. The money got lost. The money got lost. And I started to have to email humans to go track down where the money went. And I realized, like, oh, it's because this financial institution's, like, website has dropped down menus that are of a certain form factor that my bank account or my bank needs to be able to ingest or interpret so they can match the records. And this is all starting to look much more like, I am sending a piece of mail to a address. Whereas in blockchain, what I'm used to is like, if Ryan sends me an Ethereum address,

me to send USDA to, I copy and paste that Ethereum address and I know deterministically that it is showing up at Ryan's address no matter what. I'm just not worried about the money getting lost. You've got block explorers. You can watch the things happening. Totally. Yeah. But like if I'm sending a wire, it's much more like I'm putting a piece of mail into the mailing system. And then a bunch of human hands kind of like pass the mail along until it gets to the end address. You know what? There's so many different ways to actually address a piece of mail for it to get to the correct address. And there's also many,

many different ways to write to address a piece of mail for it to go completely haywire. You know what, David? There's been actually an inversion for me where like it used to be the case that I was more terrified to send a crypto transaction because it's immutable and you're double checking, you're triple checking and oh my God, there's no one I could call if it goes wrong. Now it's the case because I'm used to that. I get much more nervous when I'm wiring funds. I totally don't like, oh shit. I can't see it actually settling, especially to a new location. I'm just like, do I have the routing number?

I have no idea. And then it disappears and it's gone. And like, I hope somebody's got it. Yeah. You know what I worked on back in my banker days once was just for the UK. We were going to do the equivalent of like the WhatsApp Telegram double tick. We were going to do tick one for send, tick two for received, tick three for, you know, and then it turns blue for having been reimb.

read receipt, like that for money would just be amazing. But it turns out it's actually incredibly hard to do because you can't guarantee it. And this is why bankers get like so obsessed with this idea of settlement finality as being this big legal thing because you can't actually always guarantee it. So you, like it's a detective job to figure out where money went. And this gets, like, this is fine from New York to London. Like you can kind of figure it out. It happens enough times a day that everybody knows what they're doing. But you try and move money. in Zambia. You try and be Starlink doing money in the middle of nowhere and collecting those dollars from the middle of nowhere and it suddenly gets extremely complex. You try and be a Kenyan

oil importer from the UAE and you could be looking at anything from four days to four weeks for the money to arrive, a fee between $60 and $600, you just don't know. And all of that time, your oil cargo might be sitting in a port costing you holding fees and you can't get your stuff because you can't figure out where your money is or if you've really been paid. So actually, Standard Chartered works a lot with Zodia markets, if you know these guys. And they will use Stablecoins as sort of the instant settlement rail. And then Standard Chartered accepts through Zodia custody, the stable coin and then does the banking off ramp on the other side in both markets.

So stable coins are live in production for global trade today, running on Ethereum and other networks. It's an upgrade to correspondent banking. And I think that, to me, as somebody who worked in the industry, is like insanely exciting. I'm like, oh my God, we can finally fix it. And most of what Web 2 did was just hide the wires and build really great software to handle the edge cases. But what if there was a network that meant you could really focus your software on value add? Like, wouldn't that be cool? Wouldn't that be much more exciting? I guess this brings up a really interesting point, Simon, is like, at some level, here we are complaining about the existing, like, payments and financial system. And I thought we're supposed to live in kind of the, like, the place

for banking access and capital markets, right? This is supposed to be the U.S., Europe. I mean, this is supposed to be the Premier League's with respect to how good our financial system is. Well, you gave the example of somebody in Zambia. I mean, there's a concept of like food deserts where you live in a location, there's just like no access to fresh, easy food. Well, there's also like finance deserts, aren't there? There's also like money deserts. I mean, this really, if we have, if everybody is on the same payments financial platform, everybody with an internet access has access to kind of that cloud service of money and

finance and payments, I mean, that kind of levels up the entire world, doesn't it? It is that democratization technology. It's huge. I mean, there's better 5G. signal in most remote parts of the world, then you'll get in major cities like New York or London. It's crazy to me. And a lot of that has to do with tall buildings and crowded network traffic, but still, you can guarantee a good internet connection and all you need is compatible software. And so there's a good friend of mine, Guara Kowana works at Sling Money. She used to work for MTN, Africa.

And she said in most parts of sub-Saharan Africa, in Uganda, Tanzania, many other countries, the person that used to be your mobile money agent, your mobile money guy, is now your Tethertron guy. And that has just shifted. It's just shifted. Yeah. And if you speak to the guys at Artemis, that's the same in Hong Kong as well. This other rail is emerging and that's becoming a norm. So the question is like, okay, what, usually I look at that and I go, the consumer businesses are pulling this into existence because global south to global south,

trade is a thing that people want to do. They don't want to have to route via New York to get to their next door neighbor country every single time. So if this dollar-based rail does that for them, like, they're obviously going to want that. They're obviously going to adopt it. That's huge. And as you say, all the need is compatible software. Can we talk about what we mean by payments chain, just so it's clear definitionally for those listening? So at some level level, people might look at something like Ethereum and say, oh, well, Ethereum does USDC. That's, you know, payments chain. And they're right. It does. Although I think if you look at Ethereum and what's optimized for and credible neutrality and permissionlessness and, you know, it has low transactions per second.

As a result, this is going to be more of a property rights route. Even if it does expand, it's not going to be able to support the payments of, you know, the globe, essentially. And all of the humans on the planet, and then all of the AIs that might need payments after that. This is why Ethereum has done things like layer two and that kind of thing. But today, when we're talking about payments chain and the rise of a new generation of payments chain, you can say, you mentioned Tron, right? That's a payments chain effectively. That's active and in use today.

And of course, it's more centralized than something like Ethereum. Now we're seeing the summer a new crop of quote unquote payments chains rising. So Circle has their arc chain that they've just released. It's not in Mainnet yet, but they released a white paper and plans, and this is going to be a circle. L1, it's EVM, but it's its own separate L1. We also have Tether with their plasma chain. They've invested in this. Again, it's an EVM, L1, focused on payments.

And we also have tempo from Stripe, invested in ByStripe. It's its own separate entity. It's building kind of a consortium-based approach. Talk to us about. payments chain. In your mind, what's the definition of a payments chain? I think a payments chain is one that solves the problems that payments need to bring the world's volume on it. You kind of set it in the question, right? Like, ultimately, there are a lot of features of the payments industry. There's a lot of bugs when we talked about them, like it taking weeks, like it taking a long time, but it's still

swift on a daily basis clears something like $5.4 trillion. It's insane. It's insane. and they clear quadrillions on an annual basis. The scale of the traditional payments infrastructure is enormous. It's all of the money in the world moving around the world multiple times per day. It's a marvel of modern technology. And it's also incredibly reliable for what it is, even though sometimes it's slow, it kind of gets you there in the end. And especially the cards networks, those things just work.

They are unbelievable miracles. So there's a lot of that going on and you need that throughput. You cannot walk into a store and your card not work. It's just got to work. So the payments chains need that instant finality. If you're waiting for finality, then yeah, 12 minutes is just, it's not necessarily going to work. And I think this is why lots of people are taking lots of different approaches. I'm quite happy personally to see a lot of those be EVM based.

It's like one big happy family that's hopefully there's a Thanksgiving and the future where we all get together and make right. You know, like, let's just, let's just figure all that out. But there's lots of teams trying to figure out what that route to market is. And then the other thing is distribution, right? Like there's, as I speak to lots of folks in TradFi, they're trying to figure out where stable coins fit, how they make them compliant, they have lots of worries about where this fits with their existing business.

So actually, Tempo is not a consortium. It's a business with design partners. So the logos you see are people. trying to help essentially drive the roadmap of that thing by saying, well, here's what we're worried about. Here's what our engineers think of it. If we were to put our payments volume on it, this would be our requirements. So they're really helping us design the thing to take the volume of TradFi and put them onto Stablekind Rails. So that's the lesson we're trying to learn in this process because, you know, Georgios and Liam and Dan and all of the team, you know, these folks

have been deep in Ethereum for a long time. They have been trying to build. out that ecosystem for a long time. And the question is, how do you make it fast enough for the payments volume? And then the second question is, how do you make that not be fragmented and work with everything else it needs to? And I think a lot of that, the bottom leg to my mind is much more on how do you get today's payments volume on chain rather than how do you get them between chains. I think that's a much more solvable problem than how do you get that waltz volume on in the footspot. The idea of tempo governance and all of these different parties coming together to like build this thing is definitely something I want to unpack. First, I want to,

I think the right order of operations though is diving into a little bit more about how the actual chain is constructed. You talked about the need for fast finality because we need, we have the ability for these things to effectively be instant settlement. And so that's kind of a requirement for payments if we're going to go a payments chain. But that's something that I think all blockchains more or less are optimizing for. Like everyone wants fast finality. Solana wants fast finality. Ethereum's going to get fast finality.

And so that's actually not something that I think is going to uniquely separate what is a generalized public blockchain from a specific payments chain. I'm wondering if there are other features that we are going to find in a chain like tempo, any of these payments chains, that we uniquely would not find

in a public generalized network. Things like, I don't know, I was just throwing things out here, like transactions reversibility. Like we would never see that in the Ethereum layer one, but maybe we see that in a tempo chain. I don't really know. Maybe that actually ruins the whole point of fast finality.

But like, what are some features that you think are going to be down there? The other key ones for me are gas paid in regular denominated currencies. I think, you know, as much as financial institutions in particular, who you want to bring the ability to off ramp instantly, if you want to bring that liquidity in and out of the network, that's a huge barrier.

because just to bank nerd on you for a moment, even though the OCC has said financial institutions can custody digital assets, the Basel Committee still says you have to treat that as an RWA, a risk-weighted asset, not real-world asset, as being an extremely negative thing on your balance sheet. It's very bad for your lending business if you were to try and hold that stuff. So they don't want to touch too much of that if they don't have to. and frankly most at-scale web two companies doing large amounts of payments for you really just want the simplicity of dealing in dollars, right?

They want to think about their treasury in dollars. They want to deal in dollars. So gas denominated in dollars. Tempos open to is stable coin agnostic, so it would support any stable coin whatsoever, and it would be permissionless in doing that. So anybody could create a stable coin, and it would have an enshrined automated market maker in it for stable coins. So that enshrined AMM then gives you quite a bit of efficiency, and that in turn gives you a lot more throughput. So you start to see the combination of these features looking really, really good for the on-chain world and the fast finality. And then there's some backward compatibility with TradFi quality of life features like memos, like what we're calling compliance hooks, whichever speaking to a banker would be ISO 20 or 2-2 rec fields and messaging fields. This is all of the stuff I need to put into a payment system to make it reconcile so that I can tell my regulator, I am a giant bank and I am following the rules as being a giant bank, even though I'm operating on chain.

Those sorts of things bake directly into the chain as features are hugely beneficial because you can get that trade off of not writing it as a custom smart contract as a something else and as a something else that's not very performant. You can bake this into the version of the VM Reth. You can really use all of the tools in Georgios's kit that he's been building for the last, what, two, three years to ensure that every single bit of that is dialed up to be as performant as possible. But this is where you really need those design partners to go, okay, but what system does it need to feed and how? So there's some like hardcore engineering going on here for the throughput at the edges of the chain as well as the throughput through it. So for people who aren't in the weeds with this and some of the names that Simon was throwing out, people like Georgios, people like Liam, these are EVM and Ethereum developers who are actually working on the Tempo project. So, I was like top 1% EVM talent. Yeah, they're really good.

And so, you know, Tempo is a combination Matt Huang from Paradigm is kind of leading it. A lot of the paradigm team. And so some of these folks are like Reth that you mentioned, Simon. That's an EVM client. That's a high performance EVM client built by the paradigm team. R and R and Reth is for Rust with very high performance code. So some of these team members really have the kind of juice to squeeze a lot out of the EVM, which is pretty interesting. I want to ask this question.

So there's a number of payments chains that are now rising. I already named three of them. We're like circle and dether and tempo. And there's like at least a half dozen more. I know that you've seen. I've seen some of these too. Oh, yeah. Some are layer two.

Yeah. Yeah, exactly. Some are layer ones. So doesn't this just descend in. to kind of a war of all against all. Like everybody wants their own chain. And they're like, yeah, everybody, come to my chain. And everyone's shouting, yeah, come to my chain.

We're going to be that we're going to have the network effect. If everyone creates their own chain, Simon, don't we end up kind of where we started, which is the fragmented banking system that we're trying to leave? How do we send messages between all the chains? The chains. Oh, no, it's classic, isn't it? No, look, I still think we're in an innovation phase and let many flyers bloom and we'll make a meadow and then we'll figure out how to garden the thing later.

Like, there is so much to figure out that all of these things need to exist and then power laws will play out. Like, there's always that sort of pull towards, I think, Ethereum and to where the gravities are and where the center of gravity is. And these things, I haven't spoken to the tempo guys, what I loved is, you know, they're writing more EIPs than most people on the planet. This is people that are trying to drive the whole ecosystem. forward. And so if you can do that and you can open source a lot of your ideas and everybody can

learn from you, but you have this window of opportunity to do something a bit of a different way than the way the community is doing it and to bring tradfai liquidity on chain, I think that's a net positive. And I'd also say they're all starting in slightly different places, right? If I look at what Socles seems to be optimizing for, I don't know, seems like they're optimizing for capital markets flows, which are very different to payments flows. And so if you're going to bring both of those on chain, your starting position is quite different. And actually some of the features you build might be quite different. And the lessons you learn might be quite different. Probably the same for plasma and stable and those other things. They're looking more the global south than what the

existing tether user base needs. So I think like this, this process of learning is a good thing. So long as we can continue to learn and so long as people continue submitting EIP, and we continue to do it in the open, and that we all kind of know that we're trying to make this thing better and we're trying to avoid fragmentation. These are non-trivial things to do. But I think that, I mean, look, when you listed out that team and kind of what they were,

I was excited to learn from all of them. But I was also excited that they are people that contribute back to the ecosystem. And it was weird for me. I had this uncanny valley moment joining tempo where people thought it was one thing, and I saw it as this very different thing. Because to me, the mission is, how do I bring Tradfai liquidity into a space that is going to get the benefits of going on chain? And how does that grow the whole ecosystem?

I think that's my perspective, anyway. That's great. I think that's my perspective as well. Although there are elements I kind of wonder about. And this may be our crypto-native bet coming from that side rather than Tradfi. So this is why there's an important meeting of the mind. So Matt Huang, who is leading this effort at Tempo, he is from Paradigm, of course, he wrote a post over the weekend talking about tempo.

And there were two words he used in that post. He said that tempo was going to emphasize neutrality and permissionlessness, which these are like, I'm like, hell yeah. That's why crypto exists, neutrality and permissionlessness. Then people see kind of a corporate chain launch with a permission validator set. And they say, okay, like, do you mean the same things we mean when we say, you know, neutrality and permissionlessness? because in crypto, for crypto, for crypto natives, that's a very high bar.

And a little bit. These words are sacred. These are sacred. These are sacred words. They have a lot of meaning. And some of what I'm reminded of actually is, you remember 2018 and the whole Libra thing playing out where basically Facebook, they wanted to do a corporate chain. They had all sorts of partners and sponsors, you know, and they went in, you know, they asked

the U.S. government, hey, can we launch this thing? The U.S. government said, hell no, you can't. Now, maybe that was a timing thing. different time in place. We didn't have the Genius Act. We didn't have the current administration. Regulators are much more friendly. But I saw a post from one of the people who was actually involved in trying to launch Libra at that time, Christian Catalina. And he basically went through and he said, you know, here's why we failed for Libra. And he was, you know, wondering if the corporate chains were also going to fail in a similar way. He said, the problem with corporate chains like Tempo isn't a matter of code.

It's a matter of incentives. We know the script. A tech player builds it. a network and promises fairness, neutrality, permissionlessness, to get everyone on board. But once they have a captive market, the temptation to tilt the playing field becomes irresistible, would a sane competitor bet it's future on Stripe's promise not to eventually favor its own products. This comes back to neutrality and permissionlessness.

Anyway, how do you think about these things? Yeah, I think ultimately it's about walking the walk, because those are big words. And I think there's a promise to keep. and I take that very personally and very seriously. And I think everybody in the team does. And on the way in, I'm quite careful about any time I go near crypto because I can still, thankfully, walk into most rooms in TradFi

and still have a shred of credibility and still try and convince them that going on chain is the right idea. But do so in a way that's not going to scare the crap out of their regulator or their risk teams. And so this is the fundamental tension that you have, is that one side needs to hear that you are going sort of all the way to credible neutrality. And I will put my hand on my heart and say that's what I believe that the tempo team is going to do and we'll walk the warp to get there. But reserve judgment until you see it.

I think that's absolutely fine and you should do that. The other side of that is the argument that you then need to make to traditional institutions, which is actually the lack of vendor and platform, lock-in is a net positive. And this comes all the way back to the AWS moment at the beginning, which is you can commoditize your costs, but so can quote-unquote we, separate operating company, like it's not related to its parent investor stripe. But any payments company could dramatically commoditize its cost of operations and its complexity. This is something that is a net positive and people who are validators on it in an open permissionless governance

have an opportunity to profit from it, sure, but they're running a utility. And we've seen that network model play out and quite a lot in the crypto universe. That argument is starting to land with corporates in a way that I don't think the market was ready for in 2018. The market didn't buy that the better performant lack of platform lock-in story was something that you could achieve with something that looked a bit like crypto. Most engineers would go, no thank you.

There was actually a lot of fud in the engineering communities, if you remember it. There's still some holdouts who say, oh, it's all scammed. But I think that's changed. The serious heavy engineers now will say, well, this is actually more performant than my existing payment systems in some cases,

and it definitely helps me over here. and it'd be really great if I didn't wasn't locked into that one provider. Something to think about as well. Every company that does payments will have multiple payments processes as its provider. Once you reach a certain scale, you never put all of your volume into one payments provider. You always want to spread that risk around. So having a network that does that means one integration and I've spread my risk around there's multiple validators. That's good. That's the way the market already looks. So to me,

it's like less of a religious, like, oh, we intend to do this because it's the altruistic thing to do. It's also the rational thing to do. It's the right thing to do from a business standpoint. I just don't think the market was ready for it in 2018. I definitely think that neutrality and permissionlessness can be a good business decision and is. I'd also contend that like maybe there's a different zone of meaning with those words. when you go to kind of the cyphur punk way of thinking versus when you go into a Tradfai boardroom. Okay, so the pure kind of crypto-native way of thinking about something like neutrality is, can your enemies and adversaries use the chain in the exact same way that you do with the same rights and guarantees, right?

So something crazy, don't say this in a Tradfai boardroom, but can Russia oligarchs be on the same chain as people in the U.S. and the U.S. government, right? And I don't think that that level of neutrality is going to be in some of these corporate chains. It can't. So there's kind of a zone of neutrality, right? It's like, you know, you have Ethereum,

which is maybe trying to be a world ledger. You have something like Bitcoin, which is trying to be a world store of value. In fact, Bitcoiners talk about Bitcoin is money for enemies, right? Ethereum is like kind of a ledger for enemies, if you will. the entire world can use it because it's maximally credibly neutral. I don't think that's going to be the bar for a payments chain, and particularly for a dollar payments chain.

But you can be neutral and permissionless within a smaller zone, which might be all of the good acting, Western, you know, banking and fintech companies of the world, for instance. And that's a smaller zone, and you could still strive to be maximally neutral and maximally permissionless inside of that zone. I don't see that there's a way for a corporation to get all the way to Ethereum levels of neutrality. And I feel like

that's not clear to people. So they see it as a threat or something like that. It's within a different zone. I can completely see that. Look, I think the zone you're describing is the target zone, but it's also anybody would be able to create a stable coin. Anybody would be able to create a wallet on it.

Then anybody would be able to write software that says, I don't want to touch anything. that's not these things as well. So you could create your own DMZs within it. I view stable coins as the same as cash, and the banking system is very familiar with dealing with cash. Cash can fall into the wrong hands. It can be transferred across borders,

but when you're moving large amounts of it, it becomes fairly obvious that you're moving large amounts of it. Same is true with stable coins on a network. So if I was speaking to a policy person, again I would say, I really want this to be as maximally, used as possible and to have as much economic activity on it as possible. And there's a lot of upside for anybody being able to do that.

And I think that's a really good thing, especially for financial inclusion, especially for people being able to access this stuff. So, you know, like I take your point. It's definitely not the target zone is to like, where for enemies, that's not the marketing structure here. But at the same time, the permissionless is genuine. Like it's really there. There will be stuff that's, that's, anybody can create their unstable coin.

Anybody will be able to access it. So will they want to? Will they believe it? That's up to them. But, you know, like let's see if we can sort of do the mission first and build just a really great product that improves people's lives. When it comes to the governance structure of tempo, there's something that you said earlier, Simon, that reminded me of just a really cool corporate story of how Visa came to be,

Visa the settlement network. The genesis of the Visa company is actually really interesting. It didn't start off as just a normal company. It started off as Bank of America's Bank America card like experiment in the 1950s. And instead of scaling this network alone, Bank of America just licensed their system to other banks, which created the first nationwide multi-bank like credit card network. And then by the late 1960s, these banks had formed this nonprofit membership cooperative to run this network, meaning Visa, which is what the network came to be,

was effectively owned and governed collectively by its member banks rather than any sort of single company or founder. And this cooperative model gave every participating bank a slice of the Visa pie through transaction fees, governance rights. And then decades later, in 2006, Visa was converted into being a for-profit corporation and then with public.

And so it started off as like, yo, there's this standard consortium thing that we should coordinate around and we can all govern how we want it to look together and then we will share some of the revenue and then later we'll back our way into becoming a for-profit publicly traded company

which I think is a pretty cool story for how a corporation comes to be. I don't know if that's explicitly the plan, implicitly the plan. It seems like tempo could be in the very beginning stages of following something like that. I don't know if that's even articulated anywhere

or I'm just DJing here. That's a phenomenal narrative, but I don't think it's the forethought or the calculus at tempo at all. But your point is a phenomenal one because if there are students of history, then the acquired episodes on Visa are must listen to, like if you want to understand it.

So DeHock, the founder of Visa. I mean, look, my co-host on the tokenized podcast is Kai Sheffield from Visa. Like, this is the ultimate student of DeHawk, if ever there was one. And D. Hock was a very interested character from a small town in Utah, very soft-spoken individual

who gradually, quietly, patiently, patiently, persistently convinced bankers that they should do something that were not in their short-term self-interest. Wild idea, I know. But then after a while, they started to realize that actually, no, this grows the network.

If I accept the cards with my merchants and your customers can use them at my merchants, then this grows the way. the network and I get more transactions and I get more fees and this is this is a really good thing like we want this growth and what he coined was this term which was chaos from orders or chaotic chaotic organization it's a killer phrase and kai sheffield says that what you know the i remember talking when downs were emerging he was like this is de hox vision coming to reality and that these chaotic chaotic organizations have just clustered and found you

each other and built their own governance models. And sort of their learning, I mean, you guys made the joke many times, speed running learning the financial, a thousand years of financial history, right? Like, I think there's also speed running the payments history. And those chaotic networks can sometimes just really genuinely emerge, but there's usually some crazy character in the middle of them. The story of Swift is quite different. Swift is international wires did not work.

So some banks got together in a room in Brussels in 9. 1973 and came up with a standard to send different types of messages to each other. The story of Swift is a lot more boring. The story of Visa, that chaotic network and the convincing work that had to be done with people who were adversarial is fascinating. But then that all happened in the 60s. It's 40 years later when D.Hawk has long since retired that any other future decisions are made and that that network goes on to become what it is today.

I think that there's still so much room to go in actually unifying all of these different payments rails. I once described stable coins as the rail above rails. We have lots of existing tradfai payment networks and there's always some integration issue. If I want to connect Picks in Brazil to UPI in India, to Fed Now, to Visa, to something else, each one of those is a point-to-point integration.

or I could just integrate them all to crypto networks. I could integrate them all to a payments chain. I could integrate them all with stable coins. And that becomes the one universal settlement layer for the internet. And that's kind of what excites me is this idea that you could have this more global fabric for settlement. And that's not what Visa was building. Visa is building the very top bit. It's like I walk into a store and I say, I'd like to make a payment please.

And then banks, you figure out what happens next. well, we've already got a lot of like wallets and we've got lots of card networks and we've got lots of Pixers and UPIs and Alibaba and Alibay and all those sorts things. They go down to the banking sector and that's when it gets slower. What if I could stick stable coins beneath those and what if I could stick the stable coins beneath the rails between the banks? And I think that connective tissue is really, really exciting for me. So yes, to the DeHoc story, but consider where it sits.

in history. Simon, let's actually talk more about staple coins and some related ideas, because I think you have a simple way of breaking this down. So everybody listening knows what a stable coin is, has probably used to stable coin before. This is the bankless podcast, after all. I hope you have. There's also something called a tokenized deposit, which is a bank kind of deposit on chain. I recently seen a headline about J.P. Morgan doing this on the base chain. They've issued their tokenized deposits on the base chain. People scratch their heads and don't know what that means. And there's also this concept of central bank digital currency, CDBC. Now, we haven't seen that out in the wild, but this is maybe, you know, connected in some way

to tokenize bank deposits and also staple coins. You have a way of breaking this down. You wrote a blog post called Every Bank Should tokenize its deposits. Tell us about these distinctions. So what's the between a stable coin and a tokenized deposit and a CBDC, how is this all going to work together as we go through this crypto transformation? The main difference is what's it backed by and what problem does it solve? So a stable coin under the Genius Act anyway is backed by T-bills and overnight repo in the United States and USDC, tether and whatever, they show up in your wallet and you know us fairly well. Problem they solve for crypto natives is it's money I get to live every day with. It's for trading. But for a lot of the world, it's access to dollars, hold dollars yield.

We know that story. And what problem does CBDCs solve? This is a really interesting one. Kind of like you've got to go right to the other end of the spectrum. Well, right now, if I'm a bank, I probably have an account with the Bank of England and the ECB and all of the European central banks in France and Germany and elsewhere, the Bundesbank, and I have account at the Fed, and I have accounts everywhere. And I have to deal with settlement delays across all of those. I have to trade across all of those. I have to deal with other banks across all of those,

and it's incredibly slow and incredibly painful, and a lot of it can go wrong. Central bank digital currencies are like stable coins for central banks. They're instant 24-7 and global, but they solve that for the commercial banks. So I'm a commercial bank. I want to move money at the speed of the internet. I want to do that with zero credit risk.

The zero credit risk of a central bank is it's the lender of last resort. So I don't have to park much collateral there to be able to use this in the first place. If I'm settling there, it's really going to settle. So for the big banks, CBDCs solve this wholesale markets problem. They do not compete with stable coins. And just really quick, when you say CDBC is you're saying hypothetically, this category, because do any CBDCs actually exist out in the wild that scale? No, not at scale, hypothetically.

There are some policy objectives, I think, in Europe and the UK, to have something that would work like cash and work offline. So imagine I have no internet connection and I need to pay for something and there's no ATM for 100 miles. Wouldn't it be really great if that vulnerable person could still pay for something? Like, that's the policy objective that is genuine and, true about some of these CBDC projects. I think they get demonized a lot, but actually when you look in the whites of the eyes of the people building them, they're trying to build something

that's useful for good reasons, I think. So solve different problems for different people. Happens to use tokens, happens to quite often sit on a blockchain network. Huh, interesting, right, but just very different universes. And then you get into the middle which is tokenized deposits. So who uses deposits most today are Fortune 500 companies. they want their money at some of the biggest banks because they want the lack of credit risk of that big bank going down. And those big banks solve all kinds of problems for them.

They are, if you are trying to get into a hard market, like say, get oil from Iraq and find a supplier, then this is going to be, the bank might know that and they've done it for some of the clients and they might be able to secure you some lending and get you good effects and connect you with some people that can help. you along the way. Like banks do so much more for a Fortune 500 than just move money and just

store money. They're a lot more than a wallet. And I think realizing that's a really important thing, there's a human side to managing complexity. So I want my credit risk not to exist at Circle or Tether. I want my credit risk to exist at BlackRock, for that matter. I want it to exist in a GSI bank. and therefore, but the problem with that is, unless I use a closed loop like Connectus, which we should talk about, by the way, is I think very underrated. Unless I'm just moving money between JP Morgan bank accounts, I'd really like that to be able to move 24-7 instantly and globally. And tokens on a blockchain network are instant 24-7 and global.

So if the banks could tokenize that deposit and they could be confident that it would meet all of their requirements, they could offer all of their customers instant 24-7 global settlement. And I can tell you, every single Fortune 500 CFO would jump out of their chair to be able to get that. That would be something that would be unbelievably exciting for them and, frankly, a lot of other folks. So solves a different problem for a different persona. So where do these three things connect to, I think, was your second question, right? Well, consumers of potentially stable coins of cash, tend to buy things from corporations, and corporations use banks, and banks use CBDCs. So all of that stack exists today. It just has a lot of inefficiencies in it. All of that

stack will exist tomorrow. It'll probably use tokens and it'll probably use blockchain networks. And so my hypothesis was, it's all going on chain. It's just happening at different speeds, and it's happening in different ways. There seems to be an opportunity for the banks with respect to tokenize deposits. let's say, like they can do that. That's a service offering that they have. Whereas with stable coins, it seems like this is a bit of an unbundling for banks, if you will.

So right now in many places banks kind of run the payments network and they do it in a really janky way. And maybe they're limited by their, you know, 1970s cobalt technology and it's all fragmented and janky. We talked about that. But with stable coins, what you're effectively doing is unbundling the checking account from a bank. at least for me as a retail consumer,

why in the world would I keep money in my bank's checking account where they're giving me 0.015% interest when I can keep it in a stable coin, in particular, even under the Genius Act, that does seem to be a way for me to receive the yield on treasuries for that, and I can get my 4% or whatever the Fed Funds rate is at that point in time. And I'm going to move my checking account, obviously, to the stable coin, right? So this seems to unbundle the banks.

I guess is that a fair way of looking at this? And is this a net loss for the banks? You think the banks are going to fight stable coins? It felt a little combative in the genius bill as it is. But are they going to try to strangle this thing? There's a fair fear of deposit flight. I think there is. And I think it's understandable, right?

Like if something, even if you look at this as a big merchant or retailer, like instead of holding my money at a bank, I could hold it as a stable coin. Let's say I'm doing payouts to dashes or Uber drivers or whatever and they've got a wallet and a balance. Why wouldn't I hold that wallet as a stable coin where I collect the yield instead of the bank collecting the yield on that? So I think there's a real risk of deposit flight that they're right to be concerned about.

But the flip side of that is, well, you can compete in other ways as well. You can wrap things around the token that you do just as you do today. a financial institution does more than be a wallet. It wraps financial products together with its balance sheet. It's able to be competitive for its biggest customers in a way that I don't think it had been historically for some of its smaller customers, which is, all right, you've got your checking account with us,

so we'll give you this better mortgage rate. Like that type of you did one thing so you do the other thing is what a balance sheet allows you to be able to do. And I guess it sort of looks like collateralized lending, but an even better deal because they can take the risk on some of that stuff because they have a license to print money. They can create net new deposits. And so that, again, I still think of the competitive advantage of a bank because they've got a balance sheet and they've got a license to create deposits. That, to me, is something that they could go use and go weaponize.

Like, why not? Go compete and expect that the innovators in the crypto community in the stablecoin world is going to innovate like heck. and they're going to do some incredible things too. You know, Etherify and Pyrr and all of those products, they're amazing. They're really, really good. And I hope it makes every financial institution up their game and build new products. I think it will. The banks definitely cannot sit still.

Another question I have for you, maybe you have the answer for this or maybe not, but maybe we'll have to bring on an economist to try to answer this question, somebody who's staple coin savvy, right? So just like in my way of thinking about it, you have the dollar, and then you have short-duration treasuries. And from a crypto perspective, short-duration treasuries, basically T-bills, are essentially a staked dollar.

Does that make sense? I take my dollar and I wrap it and I stake it, right? I put it in a bond. It's called a T-bill. And then I get my staking yield. I get my 4% yield, whatever the Fed funds is getting me, right? So this begs the question is if you have access to

a liquid treasury and it acts just like dollars, treasuries can be tokenized, why in the world do we need dollars in the first place? And I got to think some monetary policy people out there are like, well, this is how we've constructed the system and there's a reason for this, but I'm just thinking with a genius bill. Yeah, the idea of the genius bill is you can't spend those things. They would not be stable coins.

They would be tokenized treasuries. But effectively, we're kind of getting the same thing. if we have our stable coins giving us yield, right? Which it seems like there's plenty of opportunity to get yield from stable coins to consumers. This is the legal jiu-jitsu stuff, though, isn't it? Your stable coin's not giving you yield. You see, your stable coin, you're getting rewards for holding it.

Aha, that is a different thing. So somebody might be getting yield somewhere. So think about it as an exchange that's giving you yield for holding the stable coin. You're not actually getting yield on the stable coin. The stable coin issuer is giving the exchange a wire transfer. that wire transfer is being used as a marketing budgets for a rewards function, and you're getting those rewards.

So as far as the money flow has gone, that is not a yield. And you can spend that stable coin and that marketing dollar that got you to want to spend that stable coin and hold it there is kind of this different thing. I wonder if that loophole will get closed. I genuinely do because it creates a difficult thing to say no to as a consumer. and as possibly, you know, in a bit of a gray area. But my understanding of the Genius Act is that holding tokenized treasuries would not allow you to directly spend them. You'd have to do a conversion into a stable coin. Yeah, yeah, yeah, exactly, exactly.

And there might be like super transaction you could do, boom, and it turns into a stable coin, and then you spend that and, you know, sort of atomic swaps. And there'll be all kinds of kind of stuff, never bet against crypto to do. all of these things very, very quickly. I'm sure it'll happen. But, yeah, also expect the bank lobby to come back and push against it. But you're saying it's the bank lobby that will close this and maybe the bank lobby of all bank lobbies, which is like the actual, you know, the Fed, the central banks of the U.S.

will kind of block this. But just like fundamentally, do you understand the monetary economics behind this? Like, why can't we just have tokenized treasuries? That's what narrow banking is, effectively. Yes. Yeah, and I think there is a policy position. And again, I'm not going to claim to be an economist or a policy expert. But what I've read is the explicit statements and explicit policy are a little bit more narrow banking in the system might be a good thing coming out of the Besson Treasury and to create some competition.

I think that's one way to react to too big to fail and to GSEBs. The financial institutions, quite rightly in my view, would say, well, we could compete more fairly if we weren't under these massive capital controls that came under Dodd-Frank, and we could potentially offer more yield. So we've got one arm tied behind our back. I don't know who's right in that conversation, but it certainly feels like the risk of going too much towards narrow banking is everything's private credit,

and there's less obvious protections when it all does go wrong. What happens when there is a great financial crisis and the economy's on its knees? Do we just let it run? Do we just let it all burn to the ground, or do we want somebody to step in? I think that's an interesting governance question. question for nation states to start to think about. Because if history's taught us anything,

it's like, no, we quite like it when some, when mom and dad step in and, and like, stop the bleeding. That would be really nice. So let's see. On stable coins, how do you think this plays out? We're at a period of a lot of innovation. We're at the, we're at the starting line. Okay, the genius bill just happened a couple months ago. And so this is the, the starting shot of an epic competition that's going to play out. I mean, we're only at, you know, 270 billion in staple coins. We're going to get to many trillions, okay? It's going to eat everything.

How do you feel like this plays out? We had Zach Abrams on the show, who's the one of the founders of Stripe, excuse me, Bridge, who's acquired by Stripe. Stop confusing these things, man. There's so many FinTech names I'm trying to get in my head here. And his take is there's going to be like five big branded staple coins out there, right? Like Power Law winners and they all do something. But then there's going to be hundreds of,

of thousands of these abstracted stable coin. Basically, every bank, every company is going to have their own stable coin, gift card dollars, they become stable coins. All these things become stable coin. Is that how it's going to play out? Because there's some confusion in my mind. And I worry about this. We get all of these stable coins.

None of them are fungible. You have to swap them. It's just bad U.S. It becomes fragmented. We have to have some regulation to go fix that. How do you think the stable coin thing plays out with all of these competitors? I actually agree. with Zach on the power law at the top end and then everybody gets their unstable coin,

but I think we'll hide the wires a little bit better. And I think what's missing is some sort of addendum, dare I say it, to the Genius Act that considers the singleness of money and considers in Europe we have something called an electronic money issue or an EMI. And all electronic money can be held in a safeguarded account at a big bank or at a central bank. and that essentially means that it's held at par to whatever your local currency is, the pound, the euro, whatever. So a stored value account, a gift card is just a dollar but held on a gift card.

You just simplify the thing quite dramatically. And so you don't need a technology solution to a governance problem necessarily in this case. And I suspect that's how it plays out is we start needing those governance solutions. let me tell you, as somebody who's run prepaid programs, like if you're going to run gift cards, if you're going to run pre, oh my God, they're so hard to run, they're so expensive, they're extremely painful. Stable coins are a massive upgrade for users and they will happen. And I suspect what we're just going to see is that that AMM style swapping from niche stable coin to top five stable coin just becomes a utility. It just becomes a utility that's always on, always available. like electricity, you just plug into it and I can swap between these things.

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Sign up now and use code bankless to get a seven-day free trial to Surf Pro. Click the link in the description for more information. Simon, are you familiar with the idea of the defy mullet? Oh, yeah. I'm actually, I have a little WhatsApp group of defy mullets. It's fintech nerds who went deep on early on. Yeah, no it was. Funny. Funny. Yeah. I saw a tweet yesterday. It came out of somebody who works at Coinbase. They tweeted out, fintech is dead. It's just crypto or tradfai now. And inside of the crypto industry, we tend to think that we're the center of the universe. And so when Stripe spins up by payments, blockchain, that makes Stripe a crypto company, no longer a FinTech company.

That's because we're the center of the universe here. To what degree do you think that that has action, that sentiment is true? As in like, if you're in FinTech, you better be doing something with crypto right now or you're just falling behind. To what degree is crypto sort of like the main character in the FinTech world or not? Crypto doesn't really exist in the FinTech world, but stable coins are the number one topic. And I think that nuance is a, that's the nuance. Stable coins are the FinTech 3.0. Like they are, if the beginning of fintech was making better user experiences from crappy

user experience and then the next thing was making better APIs for developers. The third one is making better payments infrastructure. Wait, so from the fintech view of the world, is it basically like, thank God these crypto people finally made something useful and now get out of the way. We're going to scale this thing. aren't crypto, they are just FinTech. Yeah. Correct.

Correct. Duh. What's wrong with you guys? John Collison had this great quote that he was talking about. So the big, like the Super Bowl conference for FinTech is money 2020 every year in Vegas. And everybody descends on it, you know, a bit like permissionless kind of thing. It's like, you've got to be there. And so this thing is held in the Venetian in Vegas.

and there's this like horrible smoke-filled atmosphere, slot machines, loud lights and everything. And in the middle of it is like the serious payments conference and the serious payments business. And he said, that's crypto. You've got to get through all of the casino crap. And then in the middle of it is the serious payments thing. And I was like, oh, my God, yes. That is exactly what it's like. It's so true.

And don't get me wrong, I kind of love crypto. as much as I hate it for that stuff. Like, God damn it's funny. And the innovation and the soup and the weirdness just creates beautiful things as much as it creates horrible things. But that was so spot on because I can make a credible argument

to any bank CEO about why they need to take stable coins, if not tokenized deposits, extremely seriously. And yeah, it's, duh. It's not a crypto thing. It's nothing to do with meme coins. Okay, but it doesn't end here, though, because there are legitimate,

tokenized assets beyond stable times. There are tokenized T bills. And so a lot of, there's a lot of FinTech apps out there that start with payments. We've actually seen this in Argentina, which has a very, like, if you go down to Argentina,

they are like two to three years ahead of everyone in the crypto space about crypto adoption. And I will also say similarly with FinTech, because they need it, because they need payments to work. Hyperinflation, oh my God. Hyperinflation. So they have been like the osmosis poll

to get them on chain and into dollars has been way more, way accelerated. And so they all, like, there's so many Argentine fintechs that are all start with payments. But then they're like, okay, but how do we keep money inside of our app? Let's offer our customers investment opportunities. And that can start with like,

T-bills, but then also tokens. And there are like token stocks. Exactly, all that kind of stuff. And so throw me a bone here, Simon, tell me, it doesn't just stop. Stable coins, right? Oh, no, stable coins are the gateway drug for fintech into tokenization. I mean, there's a reason we called the podcast tokenized is because the revolution will

be tokenized. It's a matter of time until every asset class is a token. It's just you've got to get payments are like the core primitive of finance. Once you get those right, then you can build everything else on top of it. But you have building, that sounds like a trivial sentence. Building payments right is incredibly hard. because payments are easy, edge cases are hard. What happens if you buy something and the goods don't show up?

What happens if you buy something and you claim the goods didn't show up? But actually, you're the fraudster and the merchant is the good guy. Who makes that right? How do they make it right? What PKI signatures need to be? The edge cases go on forever. So just solving that is a hard enough problem. And then you can start to get some of the other tokens.

But yes, you get stable coins the last mile, then you get T-bills, then you get treasuries. Sorry, then you get tokenized stocks. I saw the NASDAQ is now going to tokenize all stocks from 2026 on HyperLegibisu, I believe. That's coming. And there's the cap markets world is very, very alive to that. But also there's just this like decade long weight and yearning for the infrastructure to feel like I can really put my volume on here. I can't.

And there's always like, nope, but I can't because of that. And I can't because of that. And I can't because of that. Stable coins are one of the first ones where I could kind of if you just, so it's that classic Overton window of like, well, if you're in Argentina with hyperinflation, then the risk of, you know, sort of a meme coin drop slowing things down are probably a little bit less concerning to you than they are if you're running the payroll for 10% of the population. Like that's, there's a two different risk calculations.

But David, you were asking for like Simon to throw you a bone and he threw you the bone of tokenization. but I'm guessing from the fintech perspective, tokenization is also a fintech thing. Okay, it's not a crypto thing. At that point, you know, the Trojan horse is through the gates. You know, we all, like one of my friends, Arjun from Connect, he gave me this line that crypto has always been just plumbing. Crypto's plumbing.

Like there are some apps that are fun that are also the cosmetic layer of crypto, like pump fun, polymarket. These are like cosmetic emergencies out of crypto. But for the most part, crypto's just back-end plumbing. And that's what I'm hearing Simon Echo. And as more of this stuff comes online and there's more options, then you'll just see that in your fintech front end. What blew my mind a couple of weeks ago as I was speaking to Eric from the Canton Network. If you've not spoke to those guys, that's mind-blowing.

He was saying that there are capital markets trades now where Bitcoin is considered a high-quality liquid asset. And it's building out energy infrastructure in parts of the world. It's collateral for energy infrastructure. I mean, this is mainstream as it gets. We've already arrived. It's just an Overton window thing. Different people. It's kind of like adoption of AI, right?

Like you probably know people in your personal lives who still don't use AI every day and you're like, why? This is wild to me. And that same Overton window applies to institutions as much as it does as anything. And there are different folks in Wall Street. There are different folks in banks and payments are now coming up. How is this going to shake out in this clash of the civilization class of clash of the cultures, do you think?

So I think some crypto natives are a little bit worried now that now that Tradfi is here, now that FinTech is here, right? And this time it's definitely not the blockchain, not Bitcoin thing. The blockchain, not Bitcoin thing, people are getting excited about nothing. They didn't have use cases. Now there's actually regulatory push for this. And I think this accounts for the explosion that we've seen, the stable coins and tokenization of everything.

It's legal now, guys. Wow, it's legal. And so FinTech's like, okay. if it's legal, let's do it. This does sound great. Anyway, this clash of civilization is kind of happening. And from the crypto-native perspective, some of us worry that some of the values and some of the things that we've built over the last 10 to 15 years are going to start to be eroded as this new,

like, you know, you know the things you've been here, Simon, forever. And we care a lot about property rights, for instance. Those words like permissionlessness and credit union neutrality that we talked about earlier, We care about that. There's this cyphor punk vision of like owning your own property without any third party intermediaries. And there's some shared, I think, elements here. It's like even in Tradfai, people worry about, you know, third party, counterparty trust

and things like that. I understand that crypto-native assets don't have that. Anyway, how is this going to resolve, do you think? Is it going to be like a melting pot of these different cultures and we all kind of come together, or do you think that there will be the crypto-native side that's kind of a niche, and then there's the TradFi kind of blockchain crypto stuff that's its own separate world, and we go to separate conferences and we don't talk to one another? How does this work? I mean, I think the cyphopunk movement will always find the next thing, and they'll always find

the next thing, and they'll keep evolving and they'll keep doing their thing. So whatever gets mainstream, they're going to invent the next thing and the next thing. That is not a static position to take. I also think, though, you've got to recognize that not everybody in the world wants the same thing as you, and that a lot of people would quite like it if

they're not their own bank. Being your own bank means dealing with your own bank robbers, and that's not uncognitive overhead that the vast majority of the economy wants to take. They want to outsource that risk. And maybe we can change that by making

UX so good that actually it feels like that's happening some other way and you actually have more sovereignty over your assets and that would be amazing. I would love that. But frankly, that's just another way of saying, I still want to offload the cognitive effort of being my own bank,

of managing my own effort. Things. So you can't want two things at the same time. You can't want all of the world to be transformed to your vision and for them, and for all of the volume and all of those opinions

to come in at the same time. Like, you've got to win their hearts and minds with something that meets them where they are. And I think therefore, what you see is, like, that cyphorpunk movement will go on and continue to have its corner of the universe where it is pushing for the things it believes in and continues to pull humanity towards its better demons.

And long may you continue to do that. Just remember that not everybody's ready for that. And we've got to find ways and on ramps and easy buttons for some of those people. And I don't think that means anybody has to give up on their values. But just remember, not everybody shares yours, right? And they don't have to, too.

And so what can you bring them? And what can you do if you want to make this world kind of something that you want to be? I always think that, I mean, you guys live this. Crypto always feels more like a battle of religions and Tradfai always feels like a battle of frenemies. Like, I go hard and I compete, but I also do business with you.

And it's just this more grizzled like, you know, we're fighting like heck one day and then we're shaking hands on a deal the next day. And I wonder if that's a maturity of the industry thing. Because I grew up in banking and finance where it's really normal to be super competitive with these people, but they're also my best customer. And these complex relationships are super, super normal

in some industries, in some cultures, and they're way less normal in the crypto universe. And I just wonder, like, that's a feature of TradFi I quite like. I like that many things can be true and the world is messy and complex. Isn't that like all great art? What comment on that I think is like

I think your observation is right. It's like crypto feels very religious, very tribal, very like everyone's an enemy. And yet underneath it when you talk about kind of like there is the fact that all boats rise actually together even though we'll never admit it online on Twitter. But the fact that Bitcoiners hate Ethereum. It's a con us coal.

Yeah. Like I'm at Bitcoiners hate Ethereum or Bitcoin Mac C-Su, and yet Ethereum has been so good for Bitcoin. Okay? You know, even Solana and Ethereum, Solana's also been good for Ethereum. More private keys and more hands. It increases the value proposition of Ethereum.

Like, there is an element here, even though no one will ever admit it on Twitter, that all boats rise are rising together and like what's good for whatnot, work is good for them. It's not a zero-sum competition, which is why I see many of these corporate chains. It's getting money out of TradFi,

and it's getting them more adjacent to our crypto-native networks, that's going to bleed into our crypto-native networks. It's also standardizing the EVM. Like, imagine that. We're going from COBOL to the EVM being the standard. That's incredible. And I think that's very good for, you know, crypto-native Ethereum network effects.

I'd like to push back. We opened up this podcast talking about all the different, like, I like this just like cup by cup thing. Yeah, yeah, yeah. We just switch. Ryan was the bad cop earlier and I was good cop and we're talking about tempo governance but now we're switching around. And so like we opened up this podcast talking about the just different 10,000 different standards between all the different banks and one bank need to communicate in this way with that bank and then it gets even harder to communicate across countries and even harder across continents. And the cool thing about crypto is we're massively collapsing simply the number of silos that exist. We're going from like 10,000 patchwork silos all across. across the world, and we're collapsing it down to like the front page of coin gecko and really just the top 20 of coin gecko, right? And so the number of financial silos are collapsing down

to like 10 to 15 and they're all publicly viewable and auditable. And when finance coordinates around the same silo and it chooses Bitcoin to coordinate around or it chooses Ethereum to coordinate around, all of a sudden it doesn't get, the stakes become much higher. As in the code that runs these systems, how these systems are constructed, who governs these systems, when the Pareto distribution is around the top five most significant financial standards, all of a sudden, the nature of governance and upgradeability and how these systems are maintained and how these systems have uptime and who really has power and control matters much, much, much more than who's in control of Wells Fargo or who's in control of Goldman Sachs,

because there's only one Goldman Sachs, but there's like 5,000 banks across the world that basically do the same functions, right? And that's not the same in crypto. So these are supposed to be human scaffolding coordination technologies and they're meant to support the most number of humans possible. And so I'll push back on the notion that like the religiousness is a weird quirk of crypto.

And I'll say that like, well, it actually really matters. The future will be different based on which platform that we coordinate around as a human species. Yeah, I was being glib, but I do love the anti-fragility nature of crypto and the fact that it has, like, it's fights in public. That anti-fragility is a really useful thing. So as you were talking, I wrote down EMV. EMV stands for Eurocard, MasterCard, and Visa.

You'll see that that is on pretty much every debit and credit card, their EMV spec cards. that is a very polite argument that happens every six or 12 months about how we're going to change how credit cards work and the cryptography standards that exist underneath them. And the level of discourse in that would be right at home, as you'd see in, you know, like listening to people talking about optimistic roll-ups versus ZKEVM versus, like it is. But it's just like a more polite version of it. When you're dealing at that scale, you need to be taking those things seriously.

and you need the anti-fragility. And I think that's a feature, not a bug. My lesson from history, though, is we've sort of had open public protocols adopted by banking. They use HTTP today. Quite, and they must, it's funny, there is a story of a bank in the UK in the mid-90s that decided that the internet was really interesting. And there was definitely something to this networking idea, but they should build their own network because they'll build their own internet.

because this one needed to be faster and cheaper. And so I'm consciously mindful of that lesson of history of like... Because that didn't work, I'm guessing? No, it didn't. In that you've got to find this tension point between like what your requirements are today and what the technology is ready for, but also where the technology's headed. Like consider its pace of change, consider where the community is going, and consider the compounding effect of that over multiple cycles.

And for most banks to stay, the annoying thing about crypto cycles is for most banks to stay interested in something, it has to be the same for about three or four years. Crypto has this annoying habit of just going and disappearing for a little while. And so just when you spend all of your internal political capital to get something done and to get it ready and to get it over the line, then it disappears. And everybody goes, nah, don't worry about that. We'll use this budget over here instead. And then you have to start all over again in four years. Yeah. So that's why I think moving away from the boom and bust, you know, like just the noise of crypto can be useful sometimes, is if you want to bring mass market liquidity in, you need to give it a safer space.

But that safer space needs to be on chain. And once you get them on chain, then you can build DMZs and you can figure out safe ways to kind of take care of all of that. I guess that's a good point, right? The payments chains are pretty immune from our four-year boom-bust crypto cycles, right? So you guys will continue to be building while we're, maybe that's evidence for the super cycle. Simon, one other question I have for you is just like I felt maybe 24 months ago. I was like envious of Europe, actually, because it seemed like it seemed like the EU was actually doing something positive with respect to legislation. They had Mika.

and this again 24 months ago was Gary Gensler regime, Operation Chope Point. Like they really were out to get us in the U.S. here, Simon. And now, fast forward to 2025, and I feel like the U.S. is really leading. And it happens so quickly. And the Genius Bill kind of further cements that lead. And then if you look at the stable coin market share, it's $99% dollars, even though dollars have been down 13% on the euro this year. So the euro has been a better fiat.

product than dollars on a yearly basis. But where are the euros? Is Mika like slowing it down or like what's happening here? A little, yeah. If you speak to the guys at Circle, it's still tricky to operate in Europe. Mika, remember, was not a stable coin legislation. It was a markets legislation. It was designed to prevent a Terra Luna style collapse. And they mirrored banking regs to be able to do that. And they said, okay, you're a bank. You need you park 200 million before you can do anything and it's like, ouch, that's quite, that's quite painful. So you've got to consider it that way. Back then, crypto was for trading, not for payments, whereas the Genius Act is for payments, not for trading. So they've kind of, they come at the market from a very different place.

But my advice should any European policymaker ask me is, yeah, this is your opportunity. The euro is a more stable coin than USD. Surely the market would want that. And if you could issue some more European debt and Eurobonds, very difficult to do, that's a low risk asset that people would like to hold on to. Like, numbers stay flat is a feature, not a bug. And especially when you're trying to avoid this stuff and especially with liquidity. So I know there's work on this thing that regulators like to call functional equivalence, which is regulatory speak for we're going to go have arguments in quiet rooms and figure out

how we make these things kind of work together. I do think that some of the noises and some of the rumors about Europe putting its central bank digital currency on chain were possibly overstated. Ah, okay. I was wondering. That was the headline that we saw, right? The ECB was considering like public blockchains for its currency in an effort to keep up with the genius act and what the U.S. is doing. There is within the Bank of England innovation hub an attempt to, you know, look at just a pure experimental basis, what would it look like to put central bank money on chain?

And I think there's a desire to understand, like, what would it take? Could you ever meet our requirements? And so what that says is there's a genuine research question happening. It's not policy. It's not an objective, but there's a genuine, genuine research question about what that would look like. I feel like that's the problem, though. They spend so much time, like, in the banking class researching this stuff, whereas, you know, like, but some of the private companies are actually just like building stable coins and making it do things in the here and now. Which, you know, the ultimate Trojan hosts, yeah, like this is happening. If I'm a global company, why would I not want a stable coin right now? Like, it's just, why would I not want

the yield? Why would I not want instant $247 when I can? And that's what all my accounting's in. And if I'm sitting in Europe, I'm thinking, what am I going to do to compete with that on the global stage? Like, I almost want to shake Europe sometimes. I'm like, come on, guys, you've got all of these strategic advantages. The talent here is unbelievable. The food's amazing. And my God, you should see how walkable this place is. You don't have to take a car anywhere. It's lovely. Come on over, guys. We'll host you. But, ah, the policy stuff sometimes. Is that the message for fintechs now? Do you think they're all going to go through this crypto transformation? If you're in fintech, pivot to stable coins. Is that a thing that fintech should do? I don't know if it's pivot your whole business to stable coins,

but understand where stable coins support your business completely. Like what value do you bring a customer? Do you make their lives easier for moving money across borders than whoever you are? This is a no-brainer. If you are a neobank that just operates in euro or sterling, a little bit harder, but if you wanted to expand market presence,

go into new markets, that's something, that's a question I've had six or seven times in the past month. Could stable coins help us go? into a new market without having to get different licensing. Could stable coins help us, you know, address a new client segment? This is something that I get asked on a regular basis. And corporations ask it too.

If I'm ahead of payments and I work in a Web 2 company, anybody that's online, you should be absolutely looking at what Stable Cines can do for you because the business case is real. Simon, this was a real pleasure, real treat. You know, as we end this, actually both David and I before we were crypto nerds, We were actually kind of fintech nerds. I haven't even dove into this to David's extent. But remember my early fintech days, I was using like this cool wallet aggregator.

I couldn't believe it was so web 2.0. It was called mint.com and it would aggregate all my accounts across all of my different banks and, you know, e-trade and all of these things. I don't pay as much attention to fintech now just because there's too much going on in crypto. For those listening who are like me, what's something cool in fintech that, they should go check out that you think is kind of neat for somebody who's in crypto. What toys do you have? Yeah. Our toys are name coins and leverage. No, we got to lose something that, but you know. Agentic commerce is wild. Agentic commerce is going to reinvent everything. Jesus. Essentially,

you have a personal shopper and a personal CFO who just does your finances. It's wild. So you give them a credit card and you go, go figure out my holiday plans. And it's, just does it and it's live and it's in production now. And it can go horribly wrong and it can explode everything or it can come back with a new TV for you and it just arrives at your house. Oh my God, it's so cool. And it's going to remake everything. It potentially breaks Google's Monopoly and Messrs Monopoly on advertising. It means that maybe Open AI is where I'm going to chat GPT is going to be my new wallet where I do all my shopping. Nobody knows what this looks like. everybody's trying to figure it out.

And wouldn't it be really cool if there was some way to have cryptographic guarantees of where the money went and some kind of contract, maybe we could be smart, that could just like give this fixed defined window and budget to these agents. And so genuinely, AI labs and startups are going, like the stable coin cross-agentic commerce, an agent-to-agent payment space, is probably like the cool thing within the, cool thing. That's, if I'm not writing about stable coins, then I'm writing about that. I'm probably going to follow up with what might be the lamest question about that.

But if I have an agent and I wanted to go buy me a vacation package, maybe I log in a chat GPT and be like, hey, plan a vacation for me in South America or something. And then I authorize it to go spend my money. And then it just does something completely different. It buys me a TV instead. Where's the liability? Who? Where's the liability fall on that? Great question. So in the United States, liability lives with the merchant. So the merchant has to block the transaction if it thinks the agent has messed up.

And so the merchants are like, how the hell do I know if a merchant, if this agent is doing what it said? So Visa comes along and says, well, what we're going to do is when you, David, give the instruction to your agent, we're going to give a little token, completely different kind of token, doesn't live on a blockchain network, only lives in the visa. rails and this payment token is going to travel through the visa network so that when the agent comes to pay with that card credential and pops up at the online store, it's going to match the token to say this agent was only allowed to buy holiday shopping and it's trying to buy a TV. Don't authorize this transaction. So the visa network would block it. But again, that's something that you could write as a smart contract.

So liability in the Visa card networks and most of the car. networks in the United States always lives with the merchant unless you do some sort of step up security, which nobody ever does. In Europe, it typically lives with the issuer, so the person that gave you the card, because every time you make a transaction online, you have to do like a little biometric authentication to allow the transaction to go through to the liability shifts. So yeah. Oh, my God. So cool. It feels like we should actually do a podcast at some point in the future. Simon, thanks so much for coming on. I know I'm reminded of one thing we've always said, which is like once defy finally goes mainstream, we won't call it decentralized finance,

it'll just be called finance. I feel like we're in the midst of that happening is crypto's just becoming finance at this point in time. You were at tempo right now. Best of luck there. Keep us updated. I'm sure what we'll be watching with great interest. The tokenized podcast, you mentioned that a few times. You're still doing that though, even more at tempo. Okay. Yeah. So tokenized podcast is still happening weekly, get it wherever you get your podcasts, Kai Sheffield and me talking through the weekly news, but try to unpack it for a more TradFi payments audience. So if you are Tradfai curious, come join us, come find us. We get less into the... Those words have never been

uttered on this podcast before. I love it, though. I do love it. Come, come back out. But genuinely, we get into the weeds more of how payments works and why this is interesting for payments professionals. And so, like, a lot of central banks listen to us, a lot of payments companies listen to us. So, yep, still be doing that. Still blogging at fintechbrainfood.com as well. Guys, the tradfine nerds are also nerds like us. Okay. So if you're just a common nerd, you'll find it. There's a lot of nerd injury over there. Simon, thank you so much for bringing it to the bankless podcast today. Got to end with this. Of course, none of this has been financial advice. Crypto's risky. You could lose what you put in, but we're headed west. This is the frontier.

not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.