On The Brink with Castle Island - David Taylor (Etherfuse) on Non-USD Stablecoins (EP.620)

Episode Date: May 7, 2025

Wyatt sits down with David Taylor of Etherfuse. In this episode:  MXN stablecoins and other currencies Shaping regulatory frameworks Who wins out: innovators vs financial incumbents

Wyatt here, and on today's segment of stable coins in Defi, I was joined by Dave Taylor, founder of Etherfews. Etherfews issues non-U.S. Stable Coins and Stable Bonds for currencies and currencies with a focus on Mexico, other Latam markets, and beyond. I hope you enjoy this episode, and here is my conversation with Dave. Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures.

Guests and hosts may maintain positions in the assets discussed in this podcast. any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants

that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars and all of a sudden people start to worry. So out of this worry, we have something called the Bitcoin. Dave, founder of Etherfuse, thank you for joining us on the podcast. Very excited to chat today. I think you guys are doing some very interesting things.

I would love to kick off with a personal introduction from yourself if you don't mind so that we can get to know you a bit better. Yeah, thanks for having me. I really appreciate it. Happy to be here. I do listen to the podcast quite a bit, and so it's going to be nice to drive my son to school in the mornings, and I listen to it, and he's going to hear my voice in the next one, so it's going to be cool. Awesome. My background is computer science. So I've worked in security, like software engineering security for quite some time. I started out just in like companies.

We call them startups now, but when I was graduated in Arizona, you just call them companies. I ended up working at Boeing for quite some time. I did PKI management and a lot of like the API design for securely signing software there. Then I went to Apple. I did a lot of network security and a lot of design between how to normalize or standardize how secure software is used at Apple. I felt an awesome need to continue to punish myself and grow. And so I decided to go to business school at that point.

having had like 10 years as a computer scientist, and I went to business school, and I met a good friend of mine. He started this company called Sendgrid, which you probably heard of. They were bought by Twilio when we're in business school together. He IPOed and said, hey, I want to start a startup studio. The important part is it kind of got some startup chops, or at least some familiarity with how hard it is and how it works. We launched a few companies together. It was a great experience, and one of the companies we launched together is neural payments. Neural Payments is a huge, huge in scope payments company in the U.S.

Competitors like Zell. I think they're raising their Series B right now. So they've done pretty well in a competitive market. But what was interesting with that is we brought on a CTO at the time, who is now my co-founder, AJ, who's also my brother, by the way. And together we built the mechanism to send money outside of Visa's Rails from one account to the next. It was just this crazy feat.

of how difficult it was, how antiquated it was, how hard it was. And it really became astonishing to us how what we see is not what happens in our purview, or I would say the periphery of what we were focused on, you start to hear the blockchain getting quicker and faster. And it just became obvious to us that this was like the future. Even though I was pretty comfortable, we were working on some cool stuff. We said, hey, I think the blockchain is the future. So let's get into it. Up until this point of Etherfew, That was my history as an engineer who jumped into the business and started some startups and then went headfirst into probably, I would say, one of the more complex things I've ever done

in my life. And to be clear, you discovered crypto after you became a businessman in a business school. That wasn't during the engineering period. I was always on the sidelines. I always said, oh, I should have bought Bitcoin. I was more into being a software engineer and into cryptography, the old school one. after really feeling the pain of payments, it was when I started to think about it and go,

holy crap, like, this is the future. And a bit to the point of Etherfuse, were you a Bitcoiner early on, or were you interested in, it sounds like you highlighted the cryptography piece and maybe what you could do with assets more broadly? I really only focused on PKI. So I wasn't a Bitcoiner back then.

In fact, I've thought about it, I think in 2013, my neighbor worked for Google. This story kills me. And I went and I bought like a little Arduino or something like because everyone was mining on nothing back then. I was like, oh, I'm going to figure out how to mine. And he stopped me.

He said, you're too late. It's already done. So I just kind of gave up on the idea. And I kind of hate him now. That was not correct. But I think it was like 2013 or 2012. So I could have avoided all this stress and just gone straight to owning Bitcoin. Yeah, probably the person who's had the most adverse monetary effect on your life.

Exactly. And he doesn't even know it. I haven't even told him. Speak a little bit more to Etherfuse, if you don't mind. You guys are, I'd say, broadly in the stablecoin space as opposed to the Bitcoin and other asset space. I can take off from where I left off with my personal story into how we started Etherfuse and then that can kind of lead into our mission. But we three years ago said, okay, everyone at the time was proposing that nothing on chain was a security. Like they would probably, this isn't a security, you know. And we just hypothesized, well, what would the workload look like if we said it was a security that did some research in the U.S. on how we could do it. And it just became overwhelmingly obvious,

like we're going to get nowhere in the U.S. And so our goal was, okay, let's tokenize the security, say it's a security, how do we do that? And so we did a bunch of research on the world and said, where do the incentives lie, meaning what's the biggest nation where the economy and the demographics of that nation are such that if we could bring in the tokenization of assets on chain, that the government would benefit quite a bit from it and the nation would benefit from it. And if we can find that, then we'll go there because we think if we engage with regulators there, that they'll be incentivized to say yes. So back then, it was like, we looked at remittance flows, cost to credit, financial access, what percentage of the population has access to finances

and the ability to move money. And so back then, there were three, three big ones. It was India, China, and Mexico. I just kind of thought for one second, would China let us come in and build a security on chain and influence their monetary system and felt, no, that's not going to happen. I've actually done a lot of work with India at Apple. And India is a great country, of course, but is also pretty defensive to foreign products. And so we felt, okay, we're going to hit a roadblock here. Look deeper and deeper in Mexico and just felt like, hey, we think we could make an impact here. So three years ago, we went to Mexico, and we started to interface with, it's a funny story,

we literally just went there and were like, okay, where's a lawyer, where's a bank, and learned how we could interface with the SEC of Mexico. It's called the CBV. Inquired if there's a process for new technology. And we found out there was a process. It's called the sandbox model. They have similar ones around the world. I think it's based off the one in England.

But you could engage the CNBV and you could say, hey, we have this new technology. It's a net good for the country. And we propose doing it. And we think this is a security. And we think that you should regulate it and tell us how. We worked with them for two years. And the irony is they came back and told us we don't think this is a security after the first year.

And so then we went back and said, actually, we're pretty sure it's a security, which this is counter to what's happening in the world. Everyone else is like proposing nothing's a security. So we re-engage with them three times. And the third time, we asked them to write publicly all the reasons why our protocol does not constitute a security. So the final thing we got from them is a no action letter stating why things designed as they are through our protocol do not constitute a security. And when was that? What year did you get the no action letter?

It was like a year and a half ago. No action letter a year and a half ago. That was valuable. What we did is if you go to our app, It gives us a huge competitive advantage in Mexico. And so what we did is we kind of like the FBI does, we blacked out anything that gives a huge competitive advantage. And then we had a judge notarize it making the statements that say, I agree that this

document says etherfuse can do what they can do. We've used that to essentially establish the relationships with big banks like BBVA and Actenver and Santander and all around the world to integrate with the banking system there. So it's been hugely valuable for us. I think even if you sold our company for parts, it's worth quite a bit. We're the only company in Mexico with any sort of guidance on how to tokenize assets. And Mexico is quite a big economy. So that's how we got started. That's the genesis of etherfuses, go out, do some work, and get guidance on how to tokenize assets. I love that you guys took the approach of what if everything is a security and where can we go

to produce the most value at a time when most people are taking the attitude of what is the biggest market and let's somehow not be a security. Yeah, we looked at it as, I felt the blockchain was like the internet. So it's like, okay, I make a website from the U.S., but people from Europe can go there. And so if I can comfortably be regulated somewhere and I can connect to the blockchain, I have a connection to this global economy. We looked at it as like this opportunity. So let's go where the likelihood, I still think.

it's a contrarian move today, even though we've told people, Mexico's really hard. So we did get lucky in some capacity. It's not become like a standard. Like since then, I'd say Dubai has become a standard. The Cayman's become a standard. Some U.S. Treasury loopholes have become a standard, but people still aren't going to Mexico. So it's kind of interesting. Yeah, that was kind of our outlook, though, is like where, you know, Warren Buffett's show me the incentives, you know? So we really were like, where are the incentives that raise the probability that will have success? the store you were telling you guys receive a no action letter in Mexico, and what are the products that you guys then venture into that we would see today? So now we have the ability to

tokenize anything, and we actually have API access to the stock exchange in Mexico. We were like, okay, what could we do? We could do anything. We tried a few things, but we really kind of had a second order, like thought, what do we do that we think we can win? And so we looked around in history in the world and just felt like there's not really the supply for, I would say, the most popular, most boring investments in the world. We see a lot of need in history for government debt on chain, and we see a lot of demand for it. And we don't really see that opportunity on the blockchain. And we don't also see entrepreneurs or people focused on it. We see them focused on U.S. Treasuries, but we don't see them focused on other things. So we decided to take a sliver

of our opportunity and potential, and we decided to become the company that will provide the APIs and SDK or contract endpoint to tokenize the world sovereign debt on chain, to tokenize the shortest term treasuries with the largest amount of liquidity from each country, and to make that available through interest-bearing stable coins. And so that is our mission statement. That's where we're focused. We did raise a series, small seed round, and so we said, let's do five assets. to prove who we are, make some traction and move forward. So the five assets we tokenized were

U.S. Treasuries, European Treasuries, British Treasuries, Brazilian Treasuries, and Mexican Treasuries. And three of those five were the only company in the world who has the ability to do those. Where early on did you see captive demand for those non-U.S. treasuries on chain? I think more we saw gaps in what happens in TradFi versus what's happening in the blockchain. So I think if I took that lens, where's the demand in the blockchain? It's a good question, but it assumes that the right people are already on the blockchain. I think a lot of the demands right now are kind of highly speculative protocols, infrastructure.

That's what I'm seeing, you know, but I think 10 years from now, it's going to be a totally different ecosystem. So really, we thought, what's missing that historically has needed to be there before a nation grew in size? And it was bonds. If you look back, like, what built Europe, it was bonds, the interface of the bond. It was less demand and more of like cat in the hatting it. Where is it not?

And then also like the need. We saw last mile needs everywhere. Everyone wants to send money via remittance wallet. But then you see them and they just wrap like USC and then nothing. There's this missing last mile that we felt we could fulfill. Since we've issued and promoted and pushed them out, we've partnered with people to enable places that are not in Mexico and Brazil to issue stable coins in those currencies using us as collateral, and we've seen demand there.

We've seen that grow there. If you look at Defi, you look at our MXNE, which is what we call a sovereign coin. So it's a stable coin denominated in foreign currency, which uses our assets as collateral. We see quite a bit of activity trading and using those for payments. Yeah, I like the framing there. We pick up efficiencies on chain being faster settlement, anyone can have an account. But the thought experiment of where do we not see systems exist where we do in TradFi that create efficient systems.

And it just seems like an unsustainable reality that you have U.S. dollars on chain and you're going to have to go off chain to turn into any other sovereign currency when we live in a world with how many sovereign currencies. I don't know the exact number. Whether are 147 countries. So something close to that number. We all talk about remittances, right? But remittances doesn't work without an off-ramp in the alternative country.

I feel like the biggest frustration with crypto or the blockchain today is the lack of understanding of where it needs are versus like, hey, how much TVL does this product have? That's what I'm going to focus on at the moment. There's a lot of innovation that needs to happen still. We need to make space for that. I guess is kind of how I feel about it. In recent on-chain asset terms, we've had Bitcoin for a long time. We've had Ethereum and Solana and the longer tail for a long time. We've seen the rapid rise of stable coins now to some $230 billion market

cap. Do you see the potential rise of the MXN stable coin and other stable coins that you guys operate in as being commercially driven in that people will want to own them for investment purposes? Or do you see it as more of a workflow insert where the on-ramping, off-ramping, from and to USD needs to become more efficient. And because of that, it makes sense to have an MXN stable coin. I think the first set of demand is going to come from the fact that we are going to make on and off ramping from a local nation near free, free or near free, depending on your use case, free for T plus one for sure.

I think that will drive so much demand and trust of being able to on and off ramp that directly to a self-custody wallet that will see those volumes grow quite a bit. I think people will start to recognize that since the yield for these underlying assets are much higher than like, you know, safer products, that our revenue opportunities are 10x, those of normal stable coins, that you'll start to see people pay attention. So I think that's the first order of effect. The second is, it's ironic, but everything that's happening with tariffs is really good for us.

It's our idea. because if you want to exchange your USDC for like our Mexican Saites product, it is currently outperforming as a store of value U.S. denominated products. And so there's going to be chaos, in my opinion, for the next two years as we figure this out. If you wanted to move safe assets on chain into a different product, we're the only company that currently enables you to do that. So I think that there will be a lot of demand once people understand the potential. We built the trust gap and they trust us.

And just as an example, we magnify U.S. products too. So if you go to, I'm trying to think what's your blockchain of choice? I'll just pick Solana as an example. If you go to Camino, you could like short a U.S. Treasury and do something with it. Or you could invest in one that's there. But it's possible to buy Saites, short it. and then with that by a U.S. Treasury. And now I've had my U.S. Treasury yields,

but I also have any underperformance of that emerging market. So I could boost yields up by 5 or 6% just by shorting something else first. And this is a huge market in Troutify currency forwarding, currency options, and DFI is a better, more efficient place to do it. And so I think once we are effective as a company communicating, and people trust us, they see we have the volumes,

we have the transparency and the security for those investments, it'll explode. And retail of the individuals are completely excluded from that. Like, I can go to cash, but I can't go in my Chase account and say, okay, I want to be in pesos for the next six months. It's impossible. You as a U.S. person right now, if you wanted to buy like just Mexican treasuries, you have to go through like an ETF through J.P. Martin Trace here, and they're returning like 6% yields.

What are the fees on that? 3%. They're skimming about 3%. You go to us, you get full minus our take, so it's like 8 or 9%. So it's way better. It's way more efficient to go through us. In addition to, if you wanted to hedge a currency, say you wanted to buy pesos, but you want to hedge it with the dollar, that's a complex trad-five product that's not really possible

to do with like 300 bucks, but it's totally possible to do on chain. And to your point about the inefficiency that we have, I think a lot of people, especially users of crypto and even traditional financial venues in the U.S. don't have an appreciation of that globally. I've tried to learn myself about the proliferation of finance peer-to-peer and these peer-to-peer on ramps that you have, which is such a stark contrast to you have such efficient systems actually outside the U.S. in what I would call traditional payments with things like Picks in Brazil.

Are those systems that you guys have integrated it with any capacity that you've utilized, and is there a reason that the product potentially functions better outside the U.S. in any capacity like that? Yeah, I mean, you hit the down on the head. For some reason, we have one of the worst payment systems in the world, probably because we just have a lot of complexity. But in Mexico, there's spay. It's real time.

So settlement in seconds picks. Our goal for each asset is to enable on and off-wrapping for free or near-free depending on this scenario. So anytime there's a real-time payment system like PIX, we can do it for free. If you just think about it, we own the asset in that country. We just have to sell it. So if I can send funds to my brokerage immediately, I can also issue your token immediately. If I can burn that and then issue a sell order immediately, I can sell it and send it to you immediately.

So Mexico's our first pilot for on and off-ramping. That'll officially be available to the public next week. we are relatively certain that we'll be able to mint a token unchain denominated in peso for free and on-ramp it for free at least two plus one. And depending if we can get the yield of the volume to match the cost of a micro loan, it'll probably also be free to be instant. But worst case scenario, instant is five to seven pips. So it's a huge improvement over what exists today.

If you look at TradFi, it's like 7%, you know, If you look at like efficient tradfai, it's three. If you look at current state of stables, it's like 1%, you know, 100 bibs. So this is like a 10x of the best thing out there. So we're really excited by it. And we hope it leads to trust in our asset and that our assets proliferate because of that. So PICS is next.

We're all set up there. Officially we'll go to PICS in like July. I feel like we have an industry-wide innovators dilemma in U.S. Fintech and finance because the system is so entrenched in you. have people who are profiting so immensely off of the credit card system, off of the way our bank accounts function that my view at least is especially in the context of stable coins, it's going to be a reverse adoption for us, which is you get it in these other countries with smaller economies and then eventually will be the late adopters. I think so. I also think that the reason the U.S.

has done so well is historically it's proven to be a good place to start a company and a big economy. And I think it still is. I think you've got to be a little crazy to do what we're doing, go to a country and be like, how's it work here? Where's the bank? It did take a little insanity. I'm happy we were crazy enough to do it. We've gotten like all the roadblocks out of the way now for us to just like scale efficiently given the right tools and resources. I think it took a little bit of insanity for us to do it. I talked to a prominent startup investor. I said what I was going to do, He's like, don't do that. That's a crazy idea.

That's how you know you have to go and do it, right? A little bit of stubbornness. I was like, whatever, man. For clarification, you guys are a U.S. company? We're multinational. We have Etherfuse Inc. It's our cap table, essentially. And then our subsidiaries are in these local countries.

So the main one, Etherfuse MX. Our regulatory umbrella is through Etherfuse MX. So our operations and the issuance of our assets are all out of Mexico. And then due to some investor feedback, we did set up some operations in Switzerland. So we issue out of Mexico and then we tokenize under Swiss regulation. And I imagine without touching on the secret sauce too much, the entity set up and the structuring here is the big part of the undertaking, I would imagine. Compare Brazil and Mexico. Brazil is pretty sophisticated. It's kind of

straightforward how to set up a company. Mexico is super complicated. It's super slow and super costly. So yeah, just setting up an entity that's legal that you can pay taxes on. Paying taxes on crypto is pretty insane in a country that has no kind of guidance. So just getting to where we've gotten stuff nobody sees is like a miracle, to be honest. The fact that we have, we got a regulatory classification, then we needed a tax classification, which was different. So all that stuff was a crazy amount of work and stress, and that is done, which is nice. But it was a huge undertaking. Yeah, now the fun part. Yeah, grow. With stable coins today, you can hold dollars and send dollars all across the world. That's amazing. Call out of phase one. You guys have built the system

you were just talking about, call out a phase two where hopefully you can hold and send U.S. dollars. You can also hold and send other assets, other treasuries, and trade them against each other very easily without this reliance on an institutional account structure, without market hour constraints, all these legacy systems or legacy limitations. Is this crypto's killer use case in your view? Is that what we've been building for, maybe at risk of upsetting the Bitcoin folks? I think so. I mean, the Bitcoin folks, they have their use case, which is an awesome product that stores value and it's independent from an economy. But I think crypto has a few other awesome use cases. But I think one is just connecting the world efficiently through DFI. There's this

awesome book called Mystery to Capital, which you should read. You may have read. Just creating a universal process for trading across the world is an insane feat. What I view is Crypto's biggest use case is what the world's biggest market is today, which is the 4x market. If I can remove an efficiency probably the most efficient channel in the world of sending money is the U.S. to Mexico. Our product has increased the yield that you could get by 3% and remove the cost of on and off ramping to near zero. That's the most efficient channel. So now when I start to hit like Nigeria and Bangladesh,

it's going to be way more efficient in the future. So I think the biggest opportunity is bringing the security of DFI or bringing 4x onto Defi and enabling the trust and security of Defi to facilitate exchange across the globe. The blockchain world has done really well building the function F of X, but no one's really done well building X, which is the input. We're focused on the things people will trade and the X. We've looked at the world and we've said,

the stable bond we feel solves three problems, store value in investment and payments. So if we look at those characteristics across the nations, what are the top 15? So our goal for the next two years is to onboard those top 15 countries that have the highest store value, the highest yields, and are most used for remittances. We think if we can get those 15 assets on chain, we've brought 90% of the Forex market on chain, and we've made it more efficient, better investment, quicker, more reliable. So I think that is crypto's killer use case. The second is on and off ramping nations. So to me, connecting a nation to crypto or the blockchain is like connecting a nation to the internet or connecting

the nation to electricity. So in many cases, we want to be the first person in these remote areas to provide an interest-bearing asset denomining that currency that can on and off-ramp for near free. And then we felt we've on-ramp that country. Those are like the two kind of scenarios that we really think about. And in those cases, as you guys see continued adoption, do you think people will look at these stable coins and stable bonds each day? Will it be I pull up my phone and my app and I see my balance and I know they're stable coins or will this be hidden behind some, whether it's an agentic system, whether it's a messaging interface, a super app, something like that? I think in a perfect world for us, people don't even really know they're using etherfuse.

they look at a wallet, like I'm trying to think of somebody you guys know, like El Dorado, and they think El Dorado has an MXN account. It's not etherfus setes or ETFs or XMXNE. It's just abstracted, right? I think that's the killer use case. I think that's when people, nobody cares. Like, the real world doesn't care what it is, you know, or if it was AWS or Azure or GCP, you know, they just want the app to work.

So for us, we're trying to not be the last thing you see. we're trying to be like the AWS for sovereign debt. So I think in the future, people won't really know it runs on the blockchain or what it is. It's just a wallet. It's amazing. I've found that the people I know who actually know where stable coins are being used, especially the ones who use crypto, are the ones I know who are from the most vulnerable or difficult markets from a geopolitical and economic perspective.

I have family in Iran because my dad grew up in Iran. And I was talking about crypto, my family, and my Iranian grand uncle knew exactly about stable coins and how they move and all that, because there's just such a distrust of how money works. Whereas P-Y-U-S-D and even people I know who might be in the Western Hemisphere and hold dollars through a crypto account, they've no idea it's sitting in stable coins. It is interesting. I think part of that leads to how we got here too. If you grew up or you're familiar with an area where the currency fluctuates, you're yearning for

a safe, stable asset. And in your opinion, that's the dollar. If you go to Argentina, like you're saying, Iran, they know what it is. They can finally get access through stable coins. Sometimes I wonder, why are we the only people focusing on non-U.S. assets? And I think it's because we brought the alternative perspective, too. So just to play off that, I think it's interesting, like, we have access to U.S. dollars here in the U.S., but I don't have access to emerging market investments. quite efficiently as I think I should. So it's kind of interesting how where you grew up in like the context of your life leads to how you view opportunity to. It's such a world-centric view, especially in the context of history. I was having a conversation the other day where we were

talking about how no one knew the Roman Empire fell until hundreds of years later. To take a view that you only ever want to own U.S. at dollars is to say that you think the U.S. will be the only dominant currency for the foreseeable future of history ever. Which maybe, maybe not. Hopefully, yeah, hopefully for us. I win-win no matter what, but I don't think so, especially if you look at what Europe is doing with Micah, it was fundamentally built to protect their sovereignty and their currency. If you look, they have restrictions on non-European limits and things like that that they

don't have if your currency is mica compliance and denominated in the euro. I think we're going to see this start to happen more and more across the world where you have these regulatory bodies say almost like these new tariffs. I look at mica as a tariff, to be honest. It's like some added complexity to promote an internal economy. And I think we'll start to see those with stable coins probably in the next five years or so. Hopefully we're well established and we can kind of meet those demands. But yeah, I think we're going to see the world change quite a bit in next five years. You guys are in a very interesting position because you are going to be offering these assets to what is a really wide demographic of people when you think about the different profiles in these

countries. From my perspective, it seems like it's a bit of a jump ball in terms of the offerings of these assets and controlling the end user in the sense that it could be JP Morgan, it could be Apple, your former employer, it could be a government, it could even be. be NATO or some kind of multinational organization, maybe that's a bit of a stretch, but I think you understand the sentiment. Do you think they will all try and get into this game? In my view, it's only logical that they would, but I'm curious who you think moves here and then who is the issue or who's controlling the end user in the future. Ironically, I think the only thing that has enabled the legacy financial system to not completely dominate the blockchain ecosystem

is fear and regulation, because they have a lot to lose. So regulation saved us. Regulation has saved us. This gray area has enabled the opportunity for us to have upward mobility. I mean, just think about it. Like, tether is, what, $130 billion? Yeah. No, what's that line?

Regulation favors the incumbent, right? Yeah, yeah. J.P. Morgan Chase is $4 trillion. J.P. Morgan Chase doesn't need tether, and they don't need Circle at all. The second they know how they can operate and it's clear, they're all issuing stable coins and no one's going to care. I have Chase, you know. If my account is underlying stable coins, J.P. Morgan coin, I won't care.

You know, I don't think about it. I trust them enough. I think it's going to be interesting to see what happens in the U.S. I do believe that the established players like Tether and Circle will survive and they'll have a place. but I think these new ones who are, and I hate to say this because I like a lot of these people, and I hope I'm wrong. But I think it'll be a less trusted resource once regulation is clear, unless you get in the billions of volume, you know, or you have some niche, pretty sure that the banks are going to come for us all.

Now, our benefit is these emerging markets are way behind in a lot of stuff. When we issue an asset, we're kind of like the first company that comes in to do it. I think we have 10 to 15 years to make an impact before those regulatory bodies really do enough work to let their banking systems issue stable coins. So that's our philosophy. 10 to 15 years isn't bad. Yeah, not too bad. We can do a lot with that.

But especially just looking at Mexico, like, it's so old, like how it works is so bureaucratic compared to the U.S., which is also slow. I think before banks, and we're talking to a lot of them, by the way, so we kind of understand their dilemma. before Mexican banks felt comfortable enough to issue large volumes, a lot has to happen. And I think the U.S. has to move first. It was really strange how we heard knows. So some of our assets are in Europe.

And the early stages, the problem was finding a custodian who would say yes to us. And we got turned down by a lot of people. Interesting. So that was like an Operation Choke Point 2.0 issue in Europe, just like we have here. It was crazy. These are big banks, too. I could, I don't want to name names, but the second Trump won, I had three of them email me back saying, hey, we're looking to be more competitive. And I just like, dude, it was really hard

to find our initial custodians. And all our custodians are large and well trusted. And so that was part of the problem. But I think the U.S. leads and the rest of the world kind of like follows their guidance. If you take those banks or any others as an example, were they building crypto product and were they trying to get ready when Trump wasn't president and we were in a hostile regime or do you think they're a little flat-footed? I think they're flat-footed. I think the only emerging, it's not an emerging market, but the only bank that I'd say global that addresses emerging market needs that's really trying was trying back then, was BBVA. They have a platform in Switzerland. They've been working on some things. So they were kind of trying. But the sense of urgency that

they should have had was definitely not there. This is a huge disruptor. especially for emerging markets, 50% of BBVA's revenue comes just from Mexico, as an example. So in my opinion, I would be doing everything I can if I was the CEO of BBVA to ensure that I'm leading this space in Mexico. We work with them. They work with us. They're friendly to us. So maybe we can help them get there. I think that they are now flat-footed and trying to recover quite a bit. In the U.S., we've made major strides. People get very down on some of these topics, but the Bitcoin ETF exchange trading on traditional brokerages in terms of just giving normal people access to crypto, my sense is that that's happened a lot less elsewhere. And it's

funny, in our local circumstance, I think that that is probably actually stymied defy adoption to a sense. My view is people used to go to defy because traditional trading opportunities were limited. And now Coinbase is listing more assets. You can go and buy the Bitcoin ETF on various brokerages. Do you think more globally that that lack of crypto trading experience with traditional banks asset managers pushes people at Defi, is that a growth catalyst for Defi? Yeah, when regulation's unclear, it's the only launch pad. There is CFI, but is there a centralized, I don't know, the best way to say CFI, but. CFi works. Okay, CFi. CFi, in my experience, has felt a lot like extortion.

where it's like, hey, we're the only way for you to bridge to the blockchain, so give us a bunch of money and we'll let your token. But defy has been a way that we could use skills to grow without any gatekeeper. So my opinion over the next 10 years, centralized exchanges influence will be reduced, especially as things become more clear in ways that like a wallet could directly bridge you to the blockchain, not necessarily a big company. And I think defy's influence will increase for a few reasons. reasons. Even though regulation clearing up will make it easier for you to get access,

there's still going to be this nuance. So if you take equities as an example, we deliberately chose not to engage in equities because once you start selling an equity, there's a hundred X more issues you have to worry about. In my opinion, all these new equity platforms coming out, they'll have these restrictions, which will make it harder for you to trade, off-ramping, on-ramping, and things like that. So I think Defi will still have a place where someone who has a regulatory body that is favorable to them that can issue on Defi will have an asset that is more freely transferable. Both things are going to happen.

There will be better traditional access using blockchain technology available to people in highly regulated areas, but also there will be certain things that can only be done a defy like non-restricted tokens that can be freely transferable, that someone in Venezuela could buy on defy or that'll have to happen on defy and there will always be a market for that. And I want to pick your brain on your views for the future a little bit. And first in that vein, you mentioned wallets. For an etherfuse, for example, is better wallets one of the best things that can happen for your guys' business looking at how you're acquiring users? Best case scenario is you're a big wallet, you get my SDK and you mint and burn directly.

Better wallets are favorite partners, right? There's nothing in between the user and us except for this interface. And there's a lot for the wallet to gain. And there's a lot for the user to have. So like hypothetically. So if you're a wallet listening. Yeah, if you're a wallet, come talk to me. I can enable you multi-currency accounts that are yield-bearing, that earn you in different revenue.

while you just fundamentally give your users like a wise experience. Wise is bank accounts and different currencies. They don't earn yield and they let you send money. I can do that same thing for you just by giving you my SDK if you're a self-custody wallet. It's the best business in the book, isn't it? You just hold assets for someone and earn money for doing it for something that you don't even control or issue. Yeah. And even if you're a self-custody wallet, you're not technically even holding them.

It's just you work through our affiliate program and you earn a portion of the yield that that customer generates. So you don't even need like an MTL license. That's exactly like Coinbase's circle agreement, right? There's no difference there, really. Yeah, exactly. And Coinbase wallet does this. Coinbase, I don't know what your thoughts are.

I think they're going to do really well. The way they're vertically integrated, they already show preference over currencies. And so when you, like if you bought MXNE, it would be like a preferred asset. They really get it and they're able to do it because they have, the whole stack. I've heard they're going to become a bank here, which is a killer use case, too. So it seems like they get it. They're making a push into non-USD stable coins, as I'm sure you've seen. Yeah, we're a big part of it. If you see their dashboards, MXNE is on it. Well, in that vein, to close out a bit here, where do you see either fuse or where do you hope either fuse is in

coming months and years? What's the worldview that pushes you guys forward in the right direction? Our aim for the next two years is to onboard 90% of all assets used for remittances, the last mile, and that we can on and off ramp onto those assets. You can mint and burn essentially from the local banking system. So that's the next two years. The next five years, every country, we have an interest-bearing asset denominated that currency that can on and off-ramp, and we facilitate local stable coins to nominate those currencies. So that's the goal for us, is to on-ramp those countries and bring Forex on chain. And we want to be laser-focused on building the most robust assets with transparency,

with third-party checks and validation and verifications, improving our liquidity for these assets, and the utility of on-and-off-ramping those assets. So next five years, we hope to bring Forex on-chain through our assets on any platform on any blockchain and that that is a trusted resource, that etherfuses a trusted brand just like Circle is or Tether is. Awesome. Well, we'll leave it there with the hopes of a more globally, economically interconnected world.

Dave, thanks for joining us and hopefully you'll come back soon. All right. Thanks for listening to another episode of On the Brink with Castle Island. To find out more about Castle Island, visit castle island. Visit castle island. To listen to all of our podcast episodes, please go to On the Brink-podcast.com or just click on the tab in our website. Thanks for listening.