On The Brink with Castle Island - Nikhil Raghuveera (Predicate) on Policy Engines for Blockchains (EP.646)

Episode Date: July 14, 2025

Wyatt sits down with Nikhil Raghuveera of Predicate to talk policy for blockchain applications. In this episode:  How Predicate's "rules for blockchain transactions" are making on-chain finance more scalable and secure Creating more compliant stablecoin transfer systems suitable to mass financial use cases The future of secure money movement How leading software and financial firms can integrate transaction policies in their workflows

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 host may maintain positions in the assets discussed in this podcast. You should not treat 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, AI, $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 a Bitcoin. Bitcoin. This is Wyatt Kauser Shahi, and today I sat down with Nikiel Ragubira, founder of predicate. Predicate is a software solution for embedding rules into blockchain transactions. Predicate enables partners to seamlessly perform KYC, wallet checks, and other forms of verification on users, creating a more sound and secure on-chain environment. Ultimately, predicate will work with large companies and financial players, startups, and DeFi protocols alike.

Nikiel personally comes from a background in public policy and economics, and I deeply value hearing his views on how the industry will involve. Without further ado, I hope you can enjoy my conversation with Nikiel. Nikiel, thank you for joining us. Thanks for having me. What are the issues in crypto today that Predicate seeks to solve? Let's start there. So maybe taking a step back first, our vision at Predicate, and I think many folks share

this, is that blockchain's become the global financial settlement system. And so if that's the case, then what we are actually thinking about to advance and accelerate the movement of capital onto blockchain-based systems is that you are navigating across regulated and unregulated markets. So we're talking about businesses, users, organizations, living and operating across regulated and unregulated markets. So if that's the case, then really you're building different types of financial products that are on-chain.

Why on-chain? Because you get 24-7 access, global liquidity, composability, all of those things. From there, then what predicate sits is we are essentially the policy infrastructure that allows organizations and developers to be able to build their financial products while navigating the true realities of operating and traversing regulated markets. Now, that doesn't mean that everything has to be hard regulated. It's just that, hey, you're thinking about the fact that your users are in regulated markets. So there's certain things you just have to navigate. And so we really build the underlying infrastructure that can address all those problems. What are the use cases you to

isolate there where you think predicate becomes pretty immediately valuable. The ones that we've seen so far, and I think this will continue evolving as the industry evolves, but the ones that we've seen very immediately are in the RWA space. So real world assets, how do you set programmatic rules for what types of assets can flow into an RWA product, such as a yield product, stable coins? So stable coin requirements, I think you're going to see a lot of requirements as it relates to genius and stable in the United States. Singapore has also passed a law. And you, of course, have Nika and Europe, but you're going to have requirements particularly around AML, anti-money laundering, and counterterrorism for stablecoin issuers, just because that's how it's being articulated

and you're having organizations that are operating stablecoin companies in the United States, and they want to think about, hey, we want the stable coin to be used by fintechs, businesses, people in these markets. And so as a result, you're going to have AML requirements here. So predicate, we've been looking at a lot of those use cases. Another big one has been privacy. just because privacy just has to have some type of minimal requirements. And I don't think actually KYC is right solution for privacy. I think it just creates all these opportunities for data leaks and things like that. But you do need to have some semblance of clean liquidity and clean usage of privacy.

And so how can we actually solve for that? So that's another big use case for us. And then I think over time, you're just going to see other use cases around vaults and decks pools and things like that, where we've been getting a good bit of activity. For example, we're doing a lot of work with Paxos on liquidity pools that involve Unoswap. So I would say Stables, RWA's, liquidity pools that are interfacing

with regulated organizations and privacy. So does a company that wants to do KYC or ML in a seamless way or want to increase the level of privacy, do they reach out to you? Or how do these engagements happen and what do they look like? We do no real marketing, and this is intentional.

Our whole approach at the moment has been word of mouth and education because we think that's the best way to validate a need before doing an aggressive marketing push. The other thing we won't do, I think a lot of crypto projects will do this as infrastructure, is they will pay organizations to use their technology. We won't do that.

The whole idea here is that you use our tech, you integrate it, you build on it. The way we get reach out is usually, you know, a different group is already using us, and so they'll hear about it. Or it's just in our conversation, and the way we take our BD is just, look, we just want to understand what you're trying to solve for? And then we'll go from there, right? So what is the AML problem that you're trying to solve for? What is the KYC problem you're trying to solve for?

Just what are you trying to do? And then if we can solve for that, great. We'll work with you and we can do kind of the way we've taken so far as a white glove approach. And if it doesn't, we'll say, we're happy to recommend other solutions if it doesn't make sense for us or say, hey, look, you're trying to solve something that just our technology doesn't do. But it's all about, in this case, building trust, right? And it's about building something that is actually just valuable and useful for an organization.

If not, then we'll say, look, it's not worth our time. It's not worth your time either on this. And so it's just having a very, very good understanding of what that organization is going to solve for. There's probably a self-selection bias, but I imagine there's a varying degree to which companies in the crypto space want to engage with the kind of services that you're offering, whether it be around compliance, privacy, or just things that bolster the validity of these transactions. 100%. It is usually your organizations that are either already on day one saying, oh, we have to think about the markets that we're operating. the users that we're talking to. Or it's your larger projects, right? Who are like, we are scaling.

And so as we're scaling, we have to be more sophisticated because we are actually thinking about real capital. We're not thinking about only small amounts of capital anymore. We are thinking about really, very real volume. It ends up being those organizations. Which ones do you think this moves the needle for the most? Or who are the adopters of what you guys have created? So a few examples of this on privacy,

someone like AILO, where for them, we are a critical infrastructure for AALO to operate. They passed a governance proposal saying that they need various types of requirements for who can bridge into the ALEO blockchain. And this was a governance proposal, not even something set by their labs entity. And it's because they're saying that for us to exist, for us to ensure that we can even build what we want on our infrastructure, we need something like predicate in place. So all of Aalios Interop uses predicate. Another different use case in the RWA space is someone like Plume. Plum's a really interesting one because they've built this RWA-oriented L2. I see it almost like a fintech platform, right, where you're saying how do you have this mix of traditional capital

as well as crypto capital intersect with one another, but you're trying to create almost like a curated platform for that entire thing. So for Plum Nest, which is their vault system that provides yield and the yield comes from different types of tokenized assets, treasuries, private credit, those kinds of things. Predicate was needed there. It wasn't about enforcing KYC requirements. It's enforcing flow of funds requirements because you can't have assets originating from high-risk users, users that have been involved in sanctioned activities, terrorist financing, human trafficking, all of those things. The requirement here was not for KYC, but you need to have some view of assurance that the liquidity coming in is not tied to malicious actors. And so that's a really,

really great use for predicate because all this happens while the user has no idea what's happening on the background. All they're doing is they're going in depositing funds. Predicate is operating on the background for them. So that was one in which I remember we basically had to be live and ready for NEST to go live. And then a different one entirely is our work with Paxos. So we build unoswap infrastructure that allows you to set programmatic rules for who can LP or swap. In the case of Paxos, regulated financial institution that's registered in New York, in ADGM, in Singapore, now recently Europe. up all these different places. For their specific asset, Lyft Dollar, which is a yield-bearing asset, they can't sell to certain customers. It's a yield-bearing asset. So to the United States, that is a

money market fund, essentially. So why, for you and I sitting here, we should not actually be able to go and get direct access to US deal. Now, if it happens on secondary market, fine, but on primary market, you can't have that. And so for Paxos to supply liquidity for this, they need to actually enforce some geolocation requirements as well as AML CFT requirements for this. And so if to do that, they can actually use our predicate infrastructure that uses UNISWP. So that's another use case for them as they're saying, hey, we want to build the usage of USDL and tie more financial products to this. They need to have some amount of control over that. So all of these are really critical use cases for these organizations as they're looking to fundamentally scale. It's helpful to

frame what it looks like in practice. Can you explain what's happening? the technology that you guys are enabling in the background? Yeah, maybe we'll use the Plum Nest example for simplicity. So the user connects their wallet and they're going to make a deposit. Before they can make a deposit, essentially a call is made to the predicate network. In this case, the Plum team has set a requirement that uses a few different data providers and is checking for associations of sanction addresses, so not just sanction addresses, but any immediate relationship.

associations of terrorist financing, human trafficking, major instances of fraud, child sexual expectation material, all these different things. Predicate network essentially then leverages different data providers as selected by Plume. And what happens is they'll check that address. And then the predicate network then issues a signature. All this is sub-second latency. So for the user, when they go and hit submit on their transaction, you know how on your metamask or whatever shows all this like text. within that is a signature embedded in the transaction object, and that signatures from the predicate network. So when you hit submit,

the transaction only goes through and gets accepted by the smart contract because it has a signature from the predicate network. If you try to go and submit a transaction to the smart contract without a predicate signature, you will not be able to actually submit the transaction. The transaction gets rejected. So the general process is you have to receive a signature from the predicate network when you submit. Signature is included.

So when you submit, you have a signature there. the smart contract accepts the transaction, and then the signature is verified by our smart contract to say, okay, cool, this is actually coming from the predicate network, not someone else trying to spoof our creative fake signature here. It's almost like a moldy signature where you need a signatory. It's like a traditional finance legal sign-off in a way. It's almost like a notary service, but yeah, that's right. And it's all about getting a signature on the back end.

What are some of the more creative uses? Because I think the compliance ones are probably more intuitive, but I have imagine you guys can do a lot of more creative things around looking into user wallace potentially or looking at thresholds that someone might want to meet to enable someone to make a specific transaction if you look at where something like air drops could go. Other things that we can do that starts getting interesting are you can have different forms of rate limits or volume-based things. Predicate, we can use any type of historical on-chain or off-chain data. So this goes into the world of compute as well. So you can look at how much

as a user, you know, interact with a certain system and that can inform how much they can can deposit, right, or where they can even deposit in the first place. You start going to the world of market integrity as well. So think of like how much capital can flow into a system when we start looking at the world of market makers and liquidity pools, right? So if you're like, okay, cool, this asset is not very liquid, we have to actually set some type of controls to ensure that you don't have some massive incident that causes a token price to drop dramatically. You can enforce those kinds of requirements as well. I think civil resistance is another big one. We've talked a lot around AI agent guardrails as well. I think AI agents still are going to take time for on-chain activity,

to be honest. We haven't seen any massive true use cases of, oh, AI agent control my transaction flow and go and execute transactions for me. But you can use predicate to actually set guardrails for that AI agent and say, okay, great, you should not be interacting with a contract that's going to drain my wallet. And so let's set some parameters there. Or, you know, don't spend all my money within a day, like at least extend this out. I don't care how lucrative the yield looks like to you. Don't blow it all in one. So you can actually set AI agent guardrails as well.

So that's like another interesting use case that predicate can be used for all with our same design. Or so that you don't get the market injuries and use case where your agent suddenly spins up a meme coin. Yeah, that's right. Exactly. Or even, I mean, we've talked about like, don't spin up a meme coin and then market it and then be like, oh yeah, you should buy this coin. And now all your other AI agents are like looking at it as well. Like you can set guardrails for these kinds of things. I think of that is like a little bit more like future oriented, but the whole point of the way we design predicate is that it should be both relevant today as well as the ability to evolve

over time to meet future needs. Where do you think predicate stands in relation to the tokenization that we're seeing of traditional financial markets, which is happening increasingly. It's timely because Robin Hood yesterday announced some of their tokenized markets. It seems like you guys would sit squarely in the potential integration stack there. Yes. So the ways we can sit, it really comes down to how those systems are built. So take a Robin Hood L2 or even a Deutsche Bank L2. In that case, they're generally creating these KY seed environments. Now, the other thing is you're going to have as an L2 ability to bridge into those L2s. So how do you set the requirements for who can bridge in? Because they're not coming straight from an on ramping through Robin Hood.

You're coming from other sites. So how do you set those requirements? That's something that we're actually really well designed for. We work with layer zero and axel are on inter-ar policies. The other one is for all of these security types of assets, they have transfer requirements and things like that baked into the asset. But then you also will have liquidity pools for this, right? And so then the question is, is how do you actually enforce your requirements with the liquidity pools themselves? That's something that predicate can be used for. So you can actually set the requirements there. So that way you have requirements for the liquidity pools. And then when you have a user who picks up the asset, there's restrictions for transfer and all of those things.

For example, one thing we've been starting to work with kind of a traditional asset management fund. They have their tokenized assets on chain, and they're on a few different chains, and they have a sole bound identity. One question they've had is, okay, so we have this liquidity that's sitting on a few different chains, but if I'm a user on Ethereum, how can I go and access a yield that's sitting on this other chain, even though I have a solebound identity? So our system actually can facilitate that. You need to be able to have those checks for those liquidity pools on other chains.

That's where predicate is really well designed, because as a user, you can only then access a pool if you receive a signature from the predicate network. This gets down to the question a little bit of do stable coins trade on Solana or Ethereum or do they trade on like stable plasma, Canton, one of these new stable coin chains? Do you view Predicate's technology as being a partial part of a Solana ecosystem where you are catering to the cleaner, more compliant, or even just more thought out transactions? Or do you see a future state where there's a lot of volume on a server? chain, maybe a future chain, and you guys are a part of every transaction on that chain.

It could go either way here. I think when it comes to a Solano or, you know, an Ethereum or more traditional L2, I think you're going to have a world of both markets on those chains that are more tied towards traditional markets that interface and interact with the users and regulated markets. And then I think you'll have other aspects in that chain that will be more black market, gray market. And so we'll kind of be the ones who are honing in a bit more on that regulated market and potentially some of those gray market areas as well, right? Because at the end, we are able to facilitate the intersection of those markets. The end you were building policy networks is where we end up going. We can talk about that in a little bit. On your traditional chains, we can help

curate, use our technology to enable those markets. Then you have these more custom L1s or L2s. In that case, either they can build their own system ground up themselves or they can use predicates technology within those systems to be able to enforce their requirements more holistically across the chain. It really just depends on what are their requirements and what are they trying to solve for. We remain fully agnostic. So again, this is why you build something that is generalizable and we can kind of see where the market goes. But the way I see it is that on your traditional chains, you're going to have like a continuum of different markets. And on some of these other custom L1s and L2s, you might not have that same type of continuum. But in both cases, are tech confused.

Speak to the policy network point you made. What do you view as? being the endgame there. At the end of the day, what we really see is there's some lessons here from Web 2. If I send you money and you're in Canada, that payment happens really quickly and happens at a pretty low cost. You can use Y's or you can even do a bank transfer. If I send money from here to, let's say, South Africa or India, it's a lot more expensive. And the reason why is there's actually a lot more financial controls and you don't have the same data sharing types of agreements. And a lot of this comes down to custodian banks. Constantine banks is the ones who facilitate transactions internationally. They just don't have the same coverage. And a big reason for that

is actually the AML component. What that means is you can actually create aligned policies across groups. And we've seen that for custodian banks. We've seen that with FADF. We've seen that with DTCC and clearinghouses, all of those things. All these are aligned. You're basically creating financial networks and policy networks here. So for predicate, where we started going from a policy network standpoint is, you know, you've done a check on one place, right? Let's say your stable coin is already kind of deemed as like some form of like compliant because it is in the U.S. And then you want to go and deposit into a vault system that's also in the U.S. You may not actually need to do a policy check in both cases. You only need to do it once

because you already know that that stable coin is checked for some period of time. You'll have to do it again at some other point in time, but the idea is you've already done it once. So what that means is it starts reducing overhead or you actually don't have to do the same amount of checks every single instance because you're you're going to do it. you're creating a policy network across systems. And then the way we see it is that KYC was kind of one approach to that. And it's like, oh, you can create this KYC network and now you have all these users and those things. But I think KYC is a bit of a hammer when a scalpel is needed for most these types of requirements. And so then you're actually, what we envision is a continuum

of different types of requirements. That's the case. We can actually think about the alignment and the overlapping requirements across all of these. And you can think about how transaction flows across blockchains and across networks. All that means that, you know, once you're in the predicate network for policy checks, you have the ability to tap into liquidity in other places, assuming your policy overlaps with them. All of that can be routed and be programmatic. That seems really compatible with some of these consortium models, too, where you want to establish a standard that goes beyond a siloed network or a siloed closed-end system of like one company or one institution. That's right. And that's exactly how financial systems have

operated for the entire time that we know of financial institutions. But the, great part here in blockchain technology is that can be much more programmatic. It's not KYC-based. It's just programmatic rule-based off of a number of different holistic needs at different financial institutions and different organizations and users all need. You have a background in politics to some degree like some of the folks from our firm. So I want to ask some larger picture questions, I guess. What happens to cash in this outcome? I feel as though it seems almost non-intuitive that the government would continue to allow cash to exist unless it's something that is just so stompsey defended by people

in a context where you have traditional financial transactions which have our embedded financial system, which have the corresponding banking system, and now you guys are making on-chain transactions also much more compliant and basically giving thresholds. And cash transactions seem like they're going to become the de facto illicit way of moving currency around. I mean, if I remember, Kruk of the usage of cash

is continuing to go down. At some point in time, maybe we stop using cash entirely. But I think then there's this an infrastructure question, too, across these different countries, not just, I mean, in the United States, but also many countries of, do you have sufficient access to digital infrastructure so that you don't need printed money? U.S. still doesn't have complete 100% penetration of internet, which is crazy, but we should keep that in mind that even the United States doesn't. I think some Asian countries have the highest. Now, the stable coin issue is like Circle, I think, are trying to say that, oh, we are the digital dollar, right? And so you don't need to launch, for example, a CBDC, which has been the other question that government could launch a CBDC.

Now, you've essentially shifted from just pure cash to a digital currency. Europe has spent a lot of time thinking about this. China, of course, has a CBDC. The United States is still probably grappling with that question. But I think the way that, at least my view, is that you're going to have digital currencies that are issued by private entities, i.e. a circle or a tether. Now, you will have some countries that will have a CBDC and say, okay, we also have our digital currency. And your private money would be linked to that. Then I think you might have certain countries that just say, we're not going to have a CBDC. You can use digital money, private digital money.

If you want, you can use that. Otherwise, you can have more digital money that is not blockchain based. That's at least the world I see. So it's going to be, you'll still have cash for some time. Some countries might have a CBDC. If not, they will still have digital money that is not blockchain based. and then you'll have private money that is digital currency based. And in that scenario, there are certain stable coins that trade on certain chains that I imagine

will not be as readily embedded with predicates transaction policies. Do you think those eventually become heavily regulated in favor of those that accept policies as standards? Or do you think there will be a lag there? because a lot of the stablecoin volume that we've looked at, I would say, is probably in that camp that they won't be embedding these policies. I think that's the state that we've been in so far. And I think that's also a factor of crypto not really being regulated well.

But if we want blockchains to become the global financial settlement system, presumably then more and more that volume is happening in normal regulated markets and capital markets, just as a share of everything else. Right now, I would say if you want to do a very compliant transaction, you're probably not going to use crypto. It's just something you're fundamentally not going to do. And if you're a business in the United States, you're going to take the regulated pathways to use stable coins, right? Most of stable coin usage in is not really in the United States. It's in emerging markets, regardless. So in that case, I think you'll continue having the usage

of stable coins in markets that aren't fully regulated. And that's fine. That's great. But I think you're also going to have more and more usage of stable coins in regulated markets over time, because that is where at least if we want blockchains to become a global financial settlement system, we have to have that. If not, we're going to perpetually sit within this world of, great, we've basically built a gray market. That's going to be the extent of what we built. I don't think that realizes the full extent of the technology or the money and time that we spent into building all of this, not just for predicate, but I would say the industry as a whole. How do you look at the way that blockchains will hopefully continue to serve people who

maybe can't satisfy certain policy thresholds that might be expectations of large financial institutions or companies in a world where we're going to have displaced people and you have people who might not have traditional bank accounts who would love to hold JP Morgan back stable coin granted they live thousands of miles away. This is a really good question. And I should also say like my background, I've also spent time working on financial inclusion before predicate, even before I entered crypto. So like one of my big reasons for entering crypto was, hey, the traditional financial services system actually doesn't service many people, and it's not incentivized to do so. There's no real financial or monetary reason that they need to. And that's

across globally. That's not in any one specific market. I think that's holistically across the board. This is where I also believe that blockchains are built really well for this, in that you should have a holistic set of different markets and products. So if you are someone who's actually not able to access a traditional bank account, you shouldn't be blocked from financial services. And that's the way the current world operates. It actually should be that you have other options as well. And maybe they are gray markets. That's fine. But the tooling for that and the development of that really does matter. And I would say particularly in emerging markets where you don't necessarily have all the financial infrastructure. And so you should be able to have access to other resources and tools to be able to use.

Maybe you don't need all the same things in the United States. That being said, actually, there's plenty of people in the United States who also don't have complete access to financial systems. But you need a holistic set of market options. Right now you don't. And we've essentially gate kept that entire market entirely. Ideally, we have a continuum of different things. This is also why from a predicate standpoint, I don't think that KYC is the answer for all of this, because there's plenty of people who don't have an ID. That doesn't mean that you shouldn't be able to bank them or you shouldn't build to provide financial services. There's just other needs that you should be able to check for, right? If I'm going to do a financial transaction with someone, and even if I have a corner shop,

if I have a corner store and I'm taking money from someone, or if I'm a person going and buying from a corner store, I'm not going and doing K.YC of the person saying, oh, I'm going to buy Coke from you. All I need to know really at the end is, like, is it stolen goods? If it's so, then I might not go there for my own personal reasons. But I'm not KYCing everyone. And so I think in that case, what I really see is that

you're going to have, you know, traditional capital markets, regulated businesses, like users, depending on what you need to do. But then there are many cases in which you, actually don't need all of these different pieces. And we should envision a world of a full continuum and a holistic set of different, really, user requirements. This reminds me of economics 101 a little bit. You guys are trying to ensure that transactions that should occur in a perfect market economy do occur, whereas otherwise, they either couldn't or shouldn't. Exactly. And again, this is why it's that, I think my view was always that pure KYC is the wrong way to do it, because in that case, you're

trying to put everyone into the same bucket. That's not how a market works. That is an inefficient market in my mind. Instead, there are different requirements, different needs across different products, different users, different countries, all of those different things. And we should actually envision that type of market because we have such a unique opportunity to actually build that programmatically ground up, whereas you could not do that before. And you can't do that in Web 2 Rails. What are your views on where Bitcoin evolves to in the wake of this? And I say that because Because Bitcoin on its base blockchain is not geared towards integrating predicates or being composable. So do you think this is threatening to Bitcoin?

Do you think Bitcoin, I see a world where maybe it just sits sort of like deposits and is almost immobile on the main chain? And then it's moving around in other places that can have this embedded security. But what are your views on that? We haven't dove as heavily into Bitcoin, just from a bandwidth standpoint. I will say we've had some Bitcoin projects who've reached out to us. but more for them because they're thinking about building structured products that might sit on an L2 or like some type of side chain. And in that case, it's because they're then targeting large holders of Bitcoin.

We're like, okay, great, we're creating vault systems and things like that. And Bitcoin does have sanctioned addresses and all of those things. And they have malicious actors as well. So if I'm a business in the United States and I'm saying, okay, great, let me put some of my Bitcoin to work with these structured products and structured vaults. They'll have some questions around commingling of funds and things like that. That's the way I see. But otherwise, it's you hold Bitcoin.

And then if you want to earn additional yield, then you go and turn to different financial products. These are all financial products that are on chain. So if I'm going to go and use a financial product on chain, there's going to be certain requirements. Is there any analogous to what you guys have built that you think is an unlock for on-chain finance? Because presumably, you'll hopefully be enabling the build out of something like an interest

bearing stable coins and other products to exist in a way where the rules or policies behind it become more streamlined. I'd love to hear about the categories that you're excited about and then sort of what else is necessary to make the realities that you guys are trying to make real happen. So your question here is new emerging products that we're excited by that we think that predicate can fit in really well and what else is needed. I still think securities markets over time are interesting, not just in the form of tokenized stocks, but I think the holistic set of structured financial products that are on chain, right? Like yield-bearing assets that are on-chain

that are able to take advantage of blockchain programmability and compose ability, to deliver yield in a much more efficient manner that is also like a higher yield. That to me is really interesting. I think we're going to see a lot more work around that. I think there's still a lot to be done on privacy, to be honest. Privacy is one of those things that there's been a lot of thinking

on a lot of research. It hasn't gotten product market fit. But I do think privacy is going to matter for a lot of these pieces as we move forward in the long term. yield-bearing stables, not possible yet, still from a regulated standpoint. So Mika doesn't allow for yield-bearing stables. Genius and stable in the U.S. also will not allow for yield-bearing stables. But I think over time, it just comes down to a user experience standpoint.

And having yield-bearing stables, to me, just makes way more sense than just holding a flat stable. So that, to me, is really interesting. So let me start with those. I think for, let's say the privacy component, I think the thing that still has to really be sorted out are true use cases of it. It seems like payments might be a good angle there, but I'm not going to opine on what does the best go-to-market strategy for privacy. If I had that, I would probably be working on a privacy protocol as well. But I think those questions around, where is the adoption happen? How do you bootstrap that activity? How do you ensure that it's able to

kind of meet, also align with the liquidity across other places? You almost have this fragmentation, right, between public and private. So either you're saying that everything has to shift to private or you're able to intersect those things better. Those are tools that need to be in place. for yield-bearing stable, the technology is there. I think that's the real blocker is regulation at the moment. And then securities markets, this one's interesting because you have different thinking around how do you have acid-based requirements in the technology stack.

So that's fine. How do you start creating liquidity pools as well? I think the real unlock will then be, one, how do you get sufficient adoption of it? I'm very curious to see how Robin Hood does it because they have so many users. And then from there, how do you wrap that in? with additional composable products.

I think that's the unlock there, but we're not quite there yet. Who would you like to speak with, in general, of anyone that you could be talking to that you would be creating policies for for their on-chain transactions or for their integrations? Top the list of someone we have not spoken to

would be Robin Hood. We have generally a pretty good network, so I think we've talked to many people that we do want to talk to. I would say Robin Hood is very high up on the list because I want to understand that. And then the other one would be more understanding,

what Stripe is thinking about for their future because they made acquisitions recently, right? So what are they thinking about, how does digital assets actually fit into their overall roadmap and their plan? So that's the second one. And then the third one would be someone like a fidelity. This is more of the Trat-Fight-World, right?

And so what are they thinking about? How do they see their participation? What are the things that they envision to deploy actually on-chain versus, you know, keep like an arm's length away? So it's understanding when do they fully dive in and what are those different things that they're anticipating?

I'll leave you with a final question I want your view on. But what's your perception on timeline when it comes to some of the use cases? You mentioned securities or other assets, yield-bearing assets. Probably with an eye towards a market structure bill, I imagine. I'm curious if that's even how most of the partners that you guys are talking to are thinking about it, sort of post-market structure bill, here's what we can do, if there's still in their eyes ambiguity. How long you think that takes and what does the step function look like to get there?

Some of it happens through market structure, but even then market structure will then, basically, when Congress passes market structure, it then actually goes to the different regulators, the regulatory bodies, is then start defining specific rules and policies for all the different pieces that market structure gives a high level overview. Market structure is like, here's who's responsible. It's the SEC for this. It's a CFTC for this. But then the SEC and the CFTC have to go and make more explicit their position and their rules.

So it still has to sort of trickle down. As a result, I think that for these more like securities types of products in the United States, my hunt should be at least another year or two before you have really, really good clarity. But I think the cool part right now is you see folks like Superstate and Solana Policy Institute submitting proposals to the SEC to go ahead and start doing some of this work with a sandbox and approval from the SEC. There's actually a really good opportunity for that. So we can front run some of that now to basically start putting these in place.

Now the question is, is when does all that capital actually come on chain? I would still say maybe my hunt should be at least another two years, if not longer, for complete adoption. And it seems like maybe stable coins are the first way to at least get more meaningful capital flow. Well, we'll have to have you back in two years then to check on where we landed. Maybe you'll be sooner, cautiously optimistic and sooner. Thanks for listening to another episode of On the Brink with Castle Island. To find out more about Castle Island, visit castle island.V.C. To listen to all of our podcast episodes, please go to On the Brink dashpodcast.com or just click on the tab in our website.

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