Chit Chat Stocks - A Fintech Expert On Stablecoin Disruption And The Future Of Digital Payments

Episode Date: July 9, 2025

On this episode of Chit Chat Stocks, we speak with Jevgenijs Kazanins from the Popular Fintech newsletter on all things stablecoins and the future of digital payments. We discuss: (01:29) Understanding Stablecoins: Definition and Functionality (07:08) The Future of Stablecoins: Potential Applications (08:10) Impact on Remittances and Cross-Border Payments (20:57) Stablecoins and Merchant Payment Processes (29:21) Rewards and Incentives in a Stablecoin Economy (31:58) The Evolution of Stablecoins and Blockchain Transactions (34:12) The Landscape of Stablecoin Issuers (36:23) Corporate Interest in Stablecoins (38:02) The Role of Banking Charters in Fintech (40:52) Stablecoins in Remittance and Competition (43:03) Government Perspectives on Stablecoins (46:06) Visa and MasterCard: Disruption or Adaptation? (50:07) Fintech Adoption Challenges and Opportunities (53:57) E-commerce and Payment Innovations SUBCRIBE TO POPULAR FINTECH: https://www.popularfintech.com/subscribe Twitter/X: https://x.com/jevgenijs ***************************************************** JOIN OUR NEWSLETTER AND FREE CHAT COMMUNITY: https://chitchatstocks.substack.com/  ********************************************************************* Chit Chat Stocks is presented by TSOH Investing Research. Long-term equity research with 100% portfolio transparency.  Subscribe Today: https://thescienceofhitting.com/  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Bluechippers Club is a tight-knit community of stock focused investors. Members share ideas, participate in weekly calls, and compete in portfolio competitions. To join, go to ⁠Blue Chippers and apply! Link: ⁠https://bluechippersclub.com/ ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to another edition of the Chit Chat Stocks podcast. We have a fantastic interview for the listeners today. There's been a lot of talk. There's been some legislation, a lot of press releases, product announcements around stable coins and the fintech space, and it's become a huge point of discussion within the investor community. So that is why we wanted to bring on Jev from Popular Fintech Newsletter, a fintech expert, someone who's worked in the industry a long time. So, Jev, welcome to the show. And I have an

introduction question from a Twitter user that I think can inspire the discussion and what we're going to talk about today. So, thank you to the Twitter listener for saying this. Here's the question. I'm just a dude who works 80 hours a week, buys Starbucks on occasion, drives a Nissan Versa, and caves in immediately in an argument with his wife because I just don't want to deal with it. What can stable coins do for me? Hi, really excited to be here. I think it will be a great conversation. Should we jump into this question or let's try to make it a theme and arrive at the conclusion at the end? Yeah, we could actually keep it as a teaser and we could start out with what are stable coins. But either way, however you want to go about it, maybe just

explanation what they are you go you go with what you want to share sure right let's start what stable coins are uh stable court stable coins are essentially a representation of money uh on blockchain a token that is packed to specific currency whether it's dollar or or euro uh and and that can be used in blockchain how i tried to frame it is There used to be a time when people would get the salary in cash, bring it to the bank, and the bank would essentially turn cash into digital money. And this digital money opened a whole magical world. You can buy stuff online, you can travel globally with your linked debit card and spend your money and send it to your friends instantly over Venmo. So many, many, many things became possible because money became digital.

And so if you think of stable coins, you come to an issue, let's say circle. It doesn't really work like that with consumers, but let's assume it does, right? You come to Circle with your fiat money and Circle gives you a token, which is equivalent of your fiat money on blockchain. And then blockchain essentially opens up you a new magical world of possibilities that you can do on blockchain. Currently, this is very limited. You can send the money across the globe instantly,

can earn higher yield through lending protocols, do a few other things, trade on decentralized exchanges. But this is the very essence, your entry into the world of blockchains. And maybe we can go back to that initial question, which is in we're going to talk about the different industries where stable coins can maybe have an impact but when we think about transactions and the use case here uh from our twitter listener where it's like just i think he's painting himself as just the average joe

who wonders how are stable coins genuinely going to impact me what do you think are some of the the nearest term applications for stablecoin adoption for, in this case, the average Joe? Yeah. Yeah. So it is absolutely a fair question. And the fair answer would be not much at the moment, right? It is still a hypothesis, right, that essentially the bare infrastructure and openness of the system, so open architecture can allow us

building better things that we have now. Those things are not built yet, and I don't think we have even formulated what are those things. I typically hate analogies, so I will not bring the horse and the car, but let's take a more recent example, the mobile phones. If you remember Nokia phones, right i mean those were amazing phones uh call anybody barrier lasted a week or two

uh you could hammer nails if you wanted with that right so were amazing devices but then iphone came kind of also make can make the call it was worse the barrier was dying in hours network was dropping but it had gps and now we have uber right so essentially the the the technology enabled things that were not even possible before and and and maybe us walking with nokia phones around we did not imagine you know not calling a taxi company but but making a few taps on the phone. And then it's more, right? So data, you know, they have more powerful processors.

So kind of all the messaging and streaming became possible. But there was even more, right? So Apple opened the App Store and then essentially allowed, hey, look, come and build on that. And people started building all kinds of crazy stuff on top of what was essentially a mobile phone, but it had all these technological capabilities, right? It could process more data, process more fast.

It had a bigger screen, better resolution, and so on. And I think we're pretty much there with stablecoins, right? So we are discussing kind of what to do with them. Current applications are pretty basic. In most cases, the existing experience is better than the experience with stable coins. But it is not about that. It's literally the superior technology, the open architecture that bring the hope that we will be able to bear services on top of this infrastructure. So again, back to the question, it's like today, not much.

In 10 years, probably a lot of things that we cannot even imagine nowadays. Okay, well, I know the listeners of our show and they are probably interested in what could be the impact over the next 10 years and how it can impact any stocks in their portfolios. We can talk first, I think, about how these things could work

in looking at specific sectors. So I want to talk about how, this is one that's close to my heart and Ryan's as well, so we're going to choose them first. remittances how could they affect the traditional remittance market are you team remitly or team vice uh both all right yeah both all right let's let's let's talk about remittances and just cross border payments i think a brief intro of how money moves across the borders would help right i believe Sometimes people kind of miss what's happening under the hood.

In some cases, people see the end consumer experience and make judgment that, hey, it's fine. Maybe it's fine for you as a consumer. It's not fine for a merchant or your issuer or somebody in the value chain. A great example is chargebacks. A fantastic thing for consumers. Every merchant hates them.

So let's start with remittances. And we can kind of transition to card networks and other payment trails that we have. So people use SWIFT to move money. SWIFT doesn't move the money. SWIFT is just a messaging network. This is a global network that helps banks and different financial institutions talk to each other through a set of standards. so I'll give you an example how I could for instance

send you money in dollars over the existing rails I come to my bank and say hey I want to send money to Ryan, say Ryan has an account with Chase on my bank to do that

they need to go to someone like Citi or JP Morgan or Deutsche what we essentially call correspondent banks and say, hey, we want to allow our customers to send money in dollars, right, across the globe. Settable review, right, the bank, they essentially hold the keys.

They can say, no, we do not trust your policies. We do not like your clients. They're too risky. We will not act as your correspondent bank. No, it's kind of, you know, it raises smiles, but it is a reality, right? There are a few large correspondent banks and they essentially control who gets to play, who's not.

So my bank essentially signs an agreement with Citi. And then what happens is my bank opens an account in Citi US and puts dollars in there. So when I send now dollars to Ryan, my bank takes euro from me, right, or converts them. sends a sweet message to Citi, U.S., and tells, hey, send this money to Ryan.

So Citi would take money from my bank's account with them, right? So it's just an entry on the ledger and would send it over domestic rail in the U.S. to Chase account, right?

So you see, in reality, the money doesn't move across the borders, right? It kind of, it was there in the first place, right? So my bank has to figure out how to fund that account, how to put the money on their account with CDUS. So my bank's clients can send money in the US. And imagine if you want to enable multiple currencies, right?

You want to send, I don't know, Polish Zloty and Hungarian Forens and Mexican Peso. So you need to find Citi for pretty much every currency, right, and so on. So this is what we are up against, right? And then to Remitly and Vice, and I've been saying it quite frequently, my thesis about what Vice is building, Remitly is a bit different. What Vice is building, they are essentially building a modern correspondent bank, right? they are they are the city city's crown jewel is its global network right they have banks in

in many many countries they have the licenses they have the connectivity to local payment trails this is why they can actually move the money for the corporate clients and they can offer it to other banks right so but the way vice moves money is is the same right they essentially have this pre-funded liquidity pools and all the corridors so they have the money in the u.s they have the money i don't know in philippines and have money in in in mexico so so for you when you send the money to to that country they have the money locally that they could send over domestic cheap and fast rails right so for you as a consumer it's kind of magical in reality it's pretty much the same thing right it's just what what happened is that they they don't have this

correspondent banks in the process, it's their own process, right? They control how fast money moves and the messages moves. So they are essentially pretty much doing the same thing with the modern technology

and better processes, right? But it's still the same thing. It still requires having those profound details. Now let's look at if I send you money over blockchain, right? or send you stable coins.

Let's, for now, kind of put aside the question of on-ramps and off-ramps, right? Let's assume that I have USDC and you have an address to send it to, and I happen to know this address. So the money kind of actually does move, right? The money doesn't sit in any country, right? It doesn't care where I'm based, right?

It's somewhere on the blockchain, right? across all the different computers across the globe and the money actually does move instantly so when my bank tells CTI send the money

it's actually just a message the settlement happens the next day in the stable coin transaction the money moves right away actually does move not some kind of entries between different ledgers.

It really moves from me to you, moves instantly, right? And that's it, right? That's the magic. Okay. Can I pause you there, Jeff? So let me kind of walk through this transaction as I'm understanding it. Basically, Jeff, you open a wallet with a wallet provider, which I think that's basically like Circle or Coinbase or something like that?

No, essentially, yeah. So let's walk it through, right? So for now, you as a consumer cannot come to Circle and say, hey, I'll give you dollars, give me USDC, right? So you need to come to one of their partners. Coinbase is a huge partner for them, as everybody is now aware and read the agreement, the revenue share agreement, right? So you come to Coinbase and you deposit fiat over local rails. For instance, in Europe, they use SEPA instance. So for me, you know, topping up my Coinbase account is instant

and I can convert on Coinbase my fiat into USDC and then I can move it to my self-custodial wallet on blockchain. What happens under the hood is actually, you know, Coinbase at some point comes to Circle, says, here's fiat, you know, and Circle mints those tokens and sends them to Coinbase's exchange address. And then I essentially buy from Coinbase already pre-minted stablecoins. Right. But I guess maybe in the future. Right. So there will be a process to buy stable coins directly, right, that you could essentially come to Circle, send them fiat, and they will give you back stable coins, right?

And the opposite way, right? You send them stable coins, they give you back fiat, right? Are you tired of moving money between your bank account and brokerage account? Well, with Interactive Brokers, there's no longer a need to have a separate high-yield cash account. Interactive Brokers offers up to 3.83% interest on instantly available cash. That means if you've got some cash sitting in your brokerage account and you're waiting to deploy that money until you find your next great investment, now it's actually going

to be earning something in the meantime. This is just one of the hidden advantages that comes with being an IBKR customer. they simply do not cut corners. And I constantly find myself surprised by just how much they're willing to do for customers that other brokerage platforms are not. If you're interested in checking them out, head on over to ibkr.com. Restrictions apply. Interactive Brokers is a member of SIPC. And so Coinbase allows, as the custodian, you to convert fiat into USDC in your wallet and then you can send that usdc from your wallet to the recipient's wallet exactly yep yep and then on the whoever's on the other side they can pull from usdc in their

through their custodian usdc back to whatever their fiat is exactly and i know we didn't want to talk about the on ramps off ramps oh they're holding off but is there because that sounds like it's zero cost essentially uh like that specifically going from wallet to wallet what about going from taking the money out of your custodian to your bank account is there going to be friction there it is right and this is one of the arguments you know hey we don't talk about the cost of on-ramp and off-ramp right because i mean okay i sent you USDC but you really don't have

where to spend it so you still probably need to convert it and your exchange would charge you money for that that's clear but let's kind of think a bit ahead

and I'm kind of trying to paint a bullish thesis I think there are plenty of bear thesis on Twitter you don't have to look far So I'm being a bit optimistic, but I'm being open that this is still a thesis. Let's say over time,

there's higher adoption of stable coins, right? So what if companies start paying you in USDC and you can spend this USDC either through a wallet or a card that is linked to your self-custodial wallet. it. So why would you even convert to fiat, right? It's essentially if you get the money in stablecoins, because for your employer, it is more convenient, and you can spend it, right,

then the need of this onramp, onramp, onramp and offramp kind of disappears, at least partially. Right. And second part, this on-ramp and off-ramp is somewhat similar to a fixed transaction in the fiat world, right? And then if there is a demand, there will be competition, right? Because there's not such a difficult transaction. Yes, you have to do probably KYC to do that. But in reality, you know,

it should be pretty simple to do. And then essentially the cost of these on-ramps and off-ramps will go down, right? So I expect these two things to happen, right? So the need to convert from fiat to stable coins to diminution and also the cost of on-ramps and off-ramps to decrease. Interesting. So maybe the players that are already trying to drive down fees can benefit from this if they take on stable coin adoption and then i guess correct me if i'm wrong

but would you say the number one thing that stable coin issuers want to do is get stable coins accepted as a form of currency at or a form of payment at your local grocery store any online payment terminal that's the key to actually building this ecosystem which leads me to how this could impact the credit card networks and merchant acquiring store terminals the existing you know business to consumer payment uh process absolutely right so stablecoin issuers particularly let's say circle which is now a public company so you can look look up how they make money they currently, in the current setup, they just make money from the interest that they earn on their reserves.

So when you give them the fiat and they give you back the USDC token, they don't keep this money in fiat, they put them into certain treasuries and deposits with the banks and they earn the interest on those funds. So for them, the key metric is how much USDC ease in circulation right and and and and currently it's something like 61 billion right for the total market cap of stable coins is 250 billion this is nothing right this is this is still kind of limited adoption right so that people use uh stable coins right so clearly they

are motivated in in in in increasing this adoption because then they would have more reserve earn more interest on those reserves. And then you touched on very important parts, right? So someone is also interested in distributing. So for instance, Coinbase allows for free conversion from fiat to USDC, right? There is a kind of circle, it's clearly paying them, right? And through this revenue share agreement, right? But

But Coinbase is also playing a long-term game, right? They want to give it in the hands of customers, right? Try and let them kind of experience it, start exploring what are the use cases, give it in the hands of companies, developers, everybody around, right? They even kind of pay rewards, right? They cannot pass the yield,

but that would pay you rewards for holding USDC, right? But it's, again, kind of essentially the goal is very simple, right, to drive that option, right? So let's get it in the hands of as many people as possible, and let's build around it. Okay, so I think I'm following. And to kind of relay this back to the initial Twitter question, which is like, how does this impact the lives of the individual person? there could be a world in which he mentioned that he buys starbucks on occasion he could go up to starbucks pull out his uh coinbase app which holds his wallet which holds usdc we've got you've described the process in what it takes to get fiat to usdc and you've mentioned that

coinbase does it for free he could potentially theoretically here if starbucks were to accept usdc payments i don't know if they've ever announced anything like that but let's say they did he could then pay it's instantaneous transfer there's no uh you strip out the 2.5 percent or whatever it is from visa and mastercard and then starbucks has usdc and in a world where everyone's accepting usdc they can then pay their employees with that essentially but whatever that off-ramp is for them that's what happened how did you how do you accept the payment because those businesses aren't going to exist without those fees well let's touch on that right this this is also important question which i believe sometimes is is sort of misunderstood so let's start with

acceptance right so you're absolutely correct right so currently there's a lot of experimentation of how to enable stablecoin spend, right? So how, I sent you USDC, how do you spend it? Of course, I mean, the trivial use application is that, hey, let's give a special QR codes to merchants and, you know, you would pull up like Coinbase wallet with your USDC and that would be like, but this is not how retailers work

you know ask if any merchant or retailer would want another terminal in the store right and then they need to somehow reconcile all the stuff you know they spend like decades trying to kind of build the processes of how

they reconcile all the transactions they really don't want to do it right so there are some kind of adventurous folks right the Coinbase had this campaign of a, you can buy coffee with USDC, but practically, you know, for merchants, this is a dead end. So, another dimension of this experimentation is that people are building

cards that actually work off your USDC balance. So, think of a debit card trade that is linked to your bank account. In here, it would be linked to your self-custodial wallet or non-self-custodial, but still a wallet, right? So you, for the merchant, nothing changes, right? You top a card under the hood, you know, you're charged USDC. Your issuer of the card settles with Visa in USDC,

which is a little bit possible. Visa allows issuers to settle in USDC and then the merchant can decide how they will want to get the money whether they want it in fiat or they want it in USDC2 So this is kind of the next evolution We still use the card rails and all the POS terminals and all the reconciliation infrastructure that is built around POS terminals and card acceptance

But underneath, that would be not fiat, but stablecoins. Okay, so I think I'm following. So I guess my next question would be, what if I like my credit card rewards? Maybe the merchant saved some money in that transaction, but as a consumer, I like my credit card rewards. Is it possible for those card issuers to offer some sort of incentive program like that? Sound the alarms, new sponsor alert. This episode is brought to you by TSOH Investment Research. TSOH is run by recurring guest and friend of ours, Alex Morris.

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fiscal.ai slash chitchat the link will be in the show notes now let's let's talk about the rewards right because somebody is paying for the rewards right so let's let's let's let's start let's walk a bit you know through through through where the the rewards come from first of all that's the the merchant right so they they they pay to the acquirer by scheme rules part of this fee goes to the issuer so essentially your bank that issued you a card this is what's called interchange so they can share some of that

interchange that you earn with you in the form of rewards and this could be not even distribution, so you need to hit certain threshold, right? So they would earn interchange on every transaction, but only if you spend 5k a month, then kind of your rewards start making

any sense, right? And then you can do something. So essentially, the high spenders get the benefit, the low spenders don't, but bank gets the interchange every time. Then there's a second part, right? So this is essentially

revolvers funding transactors. So in credit cards, there are typically two types of customers, those who pay off the balance and those who don't. And then essentially the bank or your issuer starts earning interest. And you can use part of that interest to create rewards. And there is monthly fees or annual fees, like in case of Amex, that compensate

a part of those rewards, and there are special deals with merchants again, right? So, for instance, Amex comes to, I don't know, a restaurant chain and says, hey, we will promote you in our rewards program, but you need

to give us a 5-10% discount for all members, right? So essentially, you see, kind of, all of these things are paid by someone, right? This kind of money doesn't come out of the air. and part of it comes

from the merchant. There is nothing in the scheme that cannot be replicated on blockchain. So recently I wrote about Coinbase Commerce Payment Protocol where essentially Coinbase worked with Shopify and they said, okay, this simple wallet-to-wallet transactions don't really cut it for merchants, right? Commerce is a bit more complex, you know, sometimes you have to

refund transactions, right? There has to be some kind of fees paid in this transaction, right? So this simple account or wallet-to-wallet transaction don't really cut it. And they build the whole protocol. And this protocol has all this mechanism, right? They have a mechanism to charge a merchant for accepting USDC. They have a mechanism to reward an issuer

the same way as issuers are rewarded. So back again to the question, and sorry for long intro, but I think it's worth revisiting how those rewards

happen to be. There's nothing that cannot be built on blockchain. And currently we already start seeing things like coinbase commerce protocol that that does pretty much all that right out of the box but you don't have the network in there you don't have the time lag between the authorization and the settlement right so there is no cost of money there is no credit risk right because sometimes issues fail right sometimes wires fail all kinds of things happen before the transaction is saddled, all of that is gone because

the transaction, kind of the value moves immediately, right? So, and this is just kind of very basic benefit of stablecoin and running it on blockchain network, not on Visa or MasterCard,

right? This is something that is obvious, very on the surface, right? We haven't even touched the programmability, we haven't touched the open architecture of that. This is purely kind of one-to-one, right? You can build all of that just in kind of instant settlement, completely eliminating lots and lots of risks and costs on the way. We've described or you've described sort of the ways in which it could be used for transactions.

And we've primarily been talking about USDC as sort of our example stablecoin here. who else what other organizations or startups or whatever should should or could be launching a stable coin can anyone launch a stable coin pretty much yes right and there is even more anybody can launch a chain to to run this stable coin on right so usdc is second largest the the biggest one is still Tether, right? So I think the positioning of the two is, one is, you know, we are for freedom and self-custody and what's not, right?

So USDC says we're the most compliant stable coin. So an example is that in Europe, we now have the regulation, MECA, and then Tether decided that they don't want to be compliant. And so exchanges cannot even offer you that. so in Europe you have to use one of the compliant ones and that is fine

but then PayPal has its own stablecoin right PYUSD Robinhood with a few other partners just kind of launched together with Paxos Global Dollar right so USDG quite a few of them right so

it is not that hard to launch that right and i saw i saw that amazon and walmart were quote-unquote exploring launching a stable coin or is that was i reading that article incorrectly no you're correct but but somebody replied to that of course there is like a huge payments team in amazon it's their job to explore it right if they can cut costs they have to explore right it doesn't huge huge cost for them yeah exactly but but it is still kind of network is still a huge cost for them right so and of course they are curious how to eliminate it and then

of course they exploit it. I think what occupies my mind is that Visa is not slipping. Visa is all over this innovation. They are experimenting with issuers. They are experimenting

investing in companies that experiment on blockchain and stablecoins. I'm thinking that maybe Visa will actually launch its own blockchain so it would essentially instead of leaving this kind of

the opportunity to somebody building it on Ethereum or on Base and using USDC Visa will say hey here is the compliant blockchain, all the benefits of instant settlement 24x7 availability all that but

with the quality stamp of Visa and the funny part that for them it will actually be super super easy to decentralize it they can enforce that every issuer and every acquirer has to run a node

if they want to participate if they decide to do it I think they can Right, they have a lot of acceptance around the world and a lot of cards already Exactly Exactly. And they will say, you know, same rules, but we don't use those kind of domestic rails and the messaging system, the VisaNet that we built. We will just build it on blockchain and kind of keep that opportunity to ourselves.

Interesting. It is one of the scenarios, right? Because, you see, I mean, Robinhood said that they are launching their own chain. So probably there will be many, many chains and then go figure who will win, essentially. Right. And that would make sense for especially trying to tackle the international market. Now, I see a lot of announcements around stablecoin issuers trying to, I don't want to call it exactly replicate, but that's sometimes how you can see it. They're trying to get bank charters or they're buying bank charters by acquiring companies. why are they doing this and are they trying to just replicate the existing financial system with

more efficiencies is that the end goal here here's my take right so uh in the u.s in order to access fedvar right which is how banks move money between themselves, you have to be a bank. You as a fintech cannot get access to that. It's just a requirement. You need a banking charter and then there is a separate application with the FED to get a master account and then that gives you a lot of flexibility. So if you think of Circle, let's leave aside all the regulatory requirements and so on. Just for For them, getting a charter, getting access to the local rail means that they can do on-ramp, off-ramp without any partners, right?

You can send them fiat, your dollars, right? Or from your bank, they'll send you back. You have to see, right? There is nobody. So essentially, they will control the whole value chain, right, of on-ramps and off-ramps because they have this access. And I believe this is kind of one of the key reasons why they do it, right? At least this is absolutely why VICE does that, right?

They want this access, right? They don't want to have a partner in between them and the local U.S. rail, right? As I said, you know, eventually the kind of, when it doesn't move across the ocean, it kind of stays where it is, it's pure accounting entry, but it does move domestically over domestic rail, right? So for Vice, this is really accessing the payment trail to enable those cross-border transactions for Circle. I believe it is to enable on-ramp and off-ramp without having anybody in between. Right. And I could see, I guess, I'm just kind of spitballing here, some of these modern remittance players trying to adopt, you know, USDC or something like that within their process. Is that going to turn into a competition or could they be collaborators?

This is one thing that I actually don't understand. So Krista was asked on one of their next calls how they see use of stablecoins in their business. And he said something like, when we will see that this can improve the quality of our service or drive down the cost for our customers, we'll explore it. But there is nothing to report on the subject right now. So essentially, he was saying that, you know,

no, the way we do business is still better than what stablecoins can enable us to do. I've heard, you know, Weiss's compare, Erebolex, right? The founder wrote a tweet that, you know, he doesn't see a value in stablecoins, right? A very heated discussion, but kind of people trying to persuade him,

you know, why there is a value, right? And he's pushing back, right? Because he clearly understands this business very, very well, right? And then just what, like, yesterday or the day before, you know, people spotted a few open job openings at Airwallex hiring for stablecoin engineers. So at least they will start experimenting, right? But again, back to my thesis, right?

I think there is absolute value for these companies, is at least to enable this internal money movement, right? That maybe, yes, for kind of the last mile will run on the local rails, but them kind of moving the money across vice UK to vice US or vice India, you know, can definitely work on blockchain. Right, especially if their whole value proposition is we're trying to reduce costs as much as possible

compared to Western Union or the big banks. Exactly, exactly, exactly. All right. Now you're talking about rapid adoption of not rapid adoption, but adoption across, let's say, the United States. We'll use that as an example. What does the U.S. government do about this? Maybe you don't know or have like this is maybe kind of a curveball in the situation. But would they argue that we already have a digital currency called the U.S. dollar? Would they be okay with this? Like if trillions and trillions of dollars were USDC and converting to that,

and that's where all the power was. Yeah, but you see kind of the current administration is very pro-crypto, right? And the Genius Act was passed. There's more legislation coming, essentially building the legal basis for stable coins. I mean, banks now can do crypto, right? So, software is back in the game, right? So, clearly, they will try to become on-ramps and off-ramps to stablecoins, right? Especially as stablecoins kind of find their use cases and find their adoption, right?

This is why I was saying that, you know, the cost of on-ramps and off-ramps will go down because, you know, every bank can essentially pretty quickly spin up on-ramp and off-ramp and the tech is there, the legal basis is almost there, there's no

hostile regulator anymore to prevent that. So they would participate in that. But again, it is really early start. The main thing is adoption.

So what is it that will make you spend USDC instead of fiat on buying things? And what is it that will make companies pay salaries and use the C over fiat and so on? Before we move on, I want to talk about Blue Chippers Club. Blue Chippers Club is a tight-knit community of stock-focused investors. Inside this community, everyone gets to share and break down their portfolios, pitch stocks, receive feedback, and participate in weekly calls. I recently shared my reports on the real brokerage, Mexican airports, and Airbnb on the forum this year. Tired of the spam and chaos on Twitter? Then you'll love the like-minded stock-focused community on Blue Chippers.

When I first got into investing, a role model of mine recommended that I build a network or community of friends to bounce ideas off of and blue chippers club does just that if you're interested in joining head on over to blue chippers club.com and hit apply the link is in the description so going back to the discussion we talked briefly about visa and how it could potentially be implemented there we got a lot of questions about visa and mastercard as you might imagine since they seem to be, everyone seems to think they're at risk in the stablecoin world, which I guess sounds possible. But let's say Visa did become the disruptor to themselves in this case. Wouldn't that really hurt their existing business? I think it would. But again, let's

step back and discuss very briefly how Visa and MasterCard actually work. So Visa and MasterCard are somewhat similar to Swift. They are the messaging networks. For you as a consumer, the transaction seems to be instant. You swipe your card or put it in a terminal, the transaction is done. In reality, it's just messages traveled around the globe and there was a handshake between the merchant and the issuer

that the money will come to the world, right? But then there is the settlement process, right? Where Visa calculates who owes whom, right? Across the globe. And then starts moving that money over the same rails as everybody else, right? So they move it domestically over domestic rails. They use like correspondent banks

to kind of till the move the money across the borders to actually settle that transaction. And then in the US and Europe, the settlement is super fast. And in Brazil, credit cards are settled in 30 days. So you see essentially they're doing the same thing as banks sending money over SWIFT, as we say. So there is this cost. And I wrote a bit of yesterday that they report cross-border transactions. This is one of the key drivers.

why it is costly for them, it is more difficult for them to move the money across the borders and they charge extra for that. They charge extra for that, acquirers charge extra for that and then essentially blockchain would eliminate this bit. There is no reason why it should be

more expensive than a domestic transaction if this transaction is actually settled over blockchain rail. And there is no objective reason so anybody could go and challenge you know, why are you still charging us

extra for that? And this is not only Visa and MasterCard, PayPal, right? PayPal, for PayPal, this is also very critical revenue source, right? If you try to multiply, you know, how much money they make on extra surcharge for cross-border,

this is an important part of the transaction margin, right? So I think kind of this is very simple, right? Very straightforward, it kind of pretty much next evolution step, right? So somebody will do it, right, if not themselves. And clearly they have very limited

motivation to do it, so probably need to have some kind of trigger to that. Yeah, a little kick in the butt for that. Well, I mean, you see, it's still a league of parlay, right? So maybe, you know, who blinks first, right?

Maybe Master will, right? Because there is still a competition between the two, right? Maybe Amex will create some kind of better rail, right? Because Amex still in Europe, they are a challenger. They don't have the coverage of Visa and MasterCard, right? Maybe they will make it kind of their application, right? So I really think that the kind of few years it has will be super exciting.

Yeah, I mean, sounds like there's a lot of uncertainty, a lot of paths for change within payment transactions i think we that's all our questions regarding stable coins and the payment landscape we got to get 45 minutes there i think listeners will really enjoy that we have a couple follow-ups on your broader fintech coverage the first one i have and then i'll let ryan go after this what is an important topic in fintech or payments that you believe we aren't talking enough about today as the investing community?

One thing I still don't understand why there are no more people moving from banks to fintechs. Maybe the first few years, maybe even the first decade, we were saying it's a natural. right like we kind of people used to bank with the bank you know they they they got their account when they were teenagers so there's some loyalty but so and and then there is kind of it's still

an effort to change your bank right even if somebody else is paying high higher rates so what what is it right because because like it's been like what over a decade now right and it it is still working right so so bank of america laziness maybe right so so bank of america is like the average cost in retail banking is like 60 bps yeah well i'll give you a an anecdotal example i still have an account at bank of america but i try to minimize as much as possible the amount of money i hold there because i think i still get direct deposits to that account so i don't think i'm actually making them much money i transfer most of it to an actual high yield savings account and try to use you know whatever maximize my personal finance stuff in that in that

way but i totally understand where bank of america provides a terrible value proposition if i'm going to fully use them for my personal finance needs but hey i still have an account open yeah but but you see kind of you are an exception clearly the data tells you that you are an exception right they have because you're just exactly right trillion deposits you know some of them like not paying anything right and and literally you know money sitting on accounts and and people still don't don't switch right so so this this is something that i kind of don't understand right okay there is probably some risk right but but in the u.s you know kind of still it's not like in europe we have mostly money institutions right which

have different kind of protection right i mean kind of fintechs like chime they they're still bank under the hood right and then you have uh your fdic protection right in the high yield why why people don't move right why why more people have right why chime has only eight million customers like what is going on and i and i really don't understand right and and i had and i haven't found a very reasonable answer right some time ago it was still okay people lazy you know they're not aware don't trust but come on enough time has passed for for people to realize that they're just leaving money on the table and they still don't switch uh yeah i i'm with you there i my hot take is that those banks are either gonna have to change their business models and earn less or

they're going to be, at least on the consumer side of things, slowly dying businesses. Let's get to the last question. Maybe generation. Generation needs to change. For Robinhood, it's a big bad. The younger generation who grew up on Robinhood will inherit the money.

Probably the same with all those balances in Bank of America and Chase that pay nothing. Maybe this is what it takes. Okay. Now, here's our last question before we get out of here. You've said that e-commerce creates a strong foundation for payments.

What are some companies that have capitalized well on this and what companies have struggled? Yeah, Affirm. Affirm is a great example, right? So Affirm is essentially two things, right? The credit underwriting capabilities, right? That they can underwrite in a real-time transaction, not the customer, the credit companies, right? They really score every single transaction

and they can make a decision whether to underwrite it or not. But second part is distribution, right? I mean, they are just distribution kings, you know? I mean, they've done deals with every retailer that was kind of worth making a deal with. And so, and why this is magical? Because you are at the right moment, right? So the person has found the thing that they want to buy

and they are buying, right? And we're there, right? This is where we need the money, right? We don't think about money when we're watching TV or something. We think about it in very special moments, and shopping is one of them. A firm is a very good example. And if we go outside of it, then Latin America, clearly.

Mercado Libre, Southeast Asia, C, with the shopping. They are the e-commerce platform. they are there with the customers when customers make a purchase and they are there to offer them the loans and what's not. It's just that in the US, somebody else is filling this role, not Amazon. Yeah, it's interesting that Amazon was not able to capitalize on that, but I guess they have very strong relationships with, who is it, well Visa

with the Amazon card and stripe for processing. Yeah, and, you know, kind of a firm filled the void of lending at checkouts, right? So I think they did it really well, right? Maybe in

some of the markets, you know, there was just nobody else to provide this function, and so the e-commerce platforms had to build it themselves, or they saw an opportunity, right? And Amazon saw a competition and decided that they will do it better.

Okay. Before we get to the disclosure and get out of here, tell the listeners brief elevator pitch about the popular fintech newsletter. I see some articles on there recently posted that I think are quite interesting. How Coupang missed the fintech opportunity, how MercadoLibre built a fintech empire, stuff I think our listeners will very much enjoy. So what is it? And for anyone interested, the link will be right in the show notes. uh yes i i write about uh publicly traded fintech companies so really go go go deep you know in in into the business model into the financials right so how they make money and uh and and kind of trying to catch the trends or the change in the landscape that would help them make more money, right? So recently I explored the commerce platforms, right? Like Coupang and Catalibra, but I wrote about PayPal. I wrote about Block and Addy and pretty much

every publicly traded fintech company is covered there. So that's a place if you want to learn about these companies and if you want to catch those kind of moments of change, right? where something is happening, which I believe I noticed and tried to explain. All right. Wonderful. Jeb, thank you once again for joining the show. We knocked another country off our list for guests in Estonia, so glad you were able to join from halfway around the world.

But let's hit the disclosure and get out of here. We are not financial advisors. Anything we say on this show is not formal advice or recommendation. Ryan, I and a podcast guest may hold securities disgust on this podcast, may have held them in the past and may buy, sell, or hold them in the future. Thank you to all the listeners for tuning in once again, and we'll see you next time.