The Breakdown - Google’s New Agent Payments Protocol and What It Means for Crypto

Starting point is 00:00:00 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Wednesday, September 17th, and today we are talking about Google's new agent payments protocol and what relationship it has, if any, with the crypto space. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, Google has announced a new open source payment standard to allow AI agents to use stablecoins. A little bit of background for this.

Starting point is 00:00:49 Right now, obviously, we are in the midst of the agent revolution. What started with a whole generation of AI assistance which help us do our work has now moved to agents which have more autonomy and which can actually do big chunks of work for us. The total capability set of agents is progressively increasing. taking on bigger and bigger chunks of work, longer and longer workflows. And as that's happening, companies are building standards around agents to allow them to function more broadly and interact in ways that weren't possible before. You might have heard of MCP or the Model Context Protocol, which is basically like a data

Starting point is 00:01:22 API specifically made for agents. So if you have a particular set of data, you can connect it to an MCP server, and then any agents can easily plug into that MCP server and get access to that set of data. There is also an agent-to-agent communication standard that Google released called A-2-A, and all of these things amount to expanding the use cases for agents and accelerating their development. So, this new standard, AP2, is explicitly designed to work with MCP and A-2A, and is, of course, about payments. Now, one thing that is really notable is that this was developed in collaboration with Coinbase, and in consultation with more than 60 other partners, including American Express, Etsy, MasterCard, PayPal, Revolut, and Union Pay.

Starting point is 00:02:01 Functionally, this is Google and Coinbase establishing a standard that would allow AI agents to transact. Again, if you want more on the technical side of the project, I talk about it on today's AI Daily Brief, but in basic terms, the protocol allows an agent to present a user's purchase intent and authorization in the form of an encrypted message. That allows merchants to authenticate these elements and have confidence they're processing a payment that won't be disputed later on. Basically, it solves the problem of verifying that a real person authorized a transaction when there's an AI agent in the middle. The protocol is, by the way, completely agnostic to which payment rails are being used. And yet, at the same time, it feels custom-built for crypto. Each part of the protocol could be

Starting point is 00:02:42 communicated through a blockchain to automate additional parts of the transaction. And in that way, it seems like a culmination of a lot of big ideas in the crypto space. For years, people have suggested that blockchains will be the perfect rails for agentic transactions, and AP2 seems like the first major step down that path. A lot of the discussion around the relationship between crypto and AI has been on the idea that stable coins or Bitcoin or some other coin are well suited to facilitate microtransactions where agents interact with one another without human intermediation. And while that isn't the explicit goal of AP2, this is very much about allowing agents to take on e-commerce functions that humans do currently, it is definitely a step towards

Starting point is 00:03:20 that potential future. Ultimately, at its core, this protocol is about enabling AI shopping agents to be built that can autonomously carry out shopping tasks. All of the examples that Google gives are in that direction. One example they gave was setting a $700 travel budget and allowing the agent to figure out the airline tickets, hotel room, and car rental by itself. Still, if those simple use cases function well, you can easily imagine networks of AI agents brokering deals between firms, carrying out back office functions and any number of other complex payments tasks. AP2 could be the start of automating away complex financial functions that require a level of subjective decision making that could previously only be done by a human. Nader Dabbitt, a partner developer of the

Starting point is 00:03:58 protocol wrote, with AB2, agents can securely transact on your behalf with verifiable signed mandates, clear audit trails, and support for everything from cards to crypto. One way to think of it is as SSL certificates but for AI agents making purchases. They can negotiate deals with other agents. They can make instant purchases based on real-world events. They can coordinate group buys and bundled services with other agents. Ten Yang and AI commentator tweeted, this is bigger than a payments tweak. It's the attempt to standardize trust for economic agents. If AP2 sticks, the question shifts from can agents transact to which protocol every agent must plug into. In my opinion, running this whole stack, accountability, payments, governance fully on chain,

Starting point is 00:04:36 would make things even simpler. Google is starting to recognize this and taking baby steps. Super interesting stuff. Definitely some very meaningful progress beyond some AI meme coin. So if you were one of those folks who was interested in that intersection, definitely go check out AP2. Next up, we move to a totally different type of topic. The UK is looking to deepen ties with the U.S. on crypto policy.

Starting point is 00:04:57 as the White House heads to London. The president and senior officials, including Treasury Secretary Scott Besson, traveled to the UK this week to hold a series of meetings on innovation policy. Collaboration on AI was a big topic with over $35 billion in new investment announced by U.S. tech firms. However, a meeting between Besson and his UK counterpart, Rachel Reeves, was focused on crypto coordination. The Financial Times reports that executives from Coinbase, Circle, and Ripple attended the meeting alongside representatives from Bank of America, City, and Barclays. sources said an agreement was struck at the last moment and will result in an announcement later this week as part of a broader deal with the U.S. Reporting also states that the U.S. and U.S. and U.K. will announce deeper cooperation on digital assets and will explicitly include stable coins as part of that announcement.

Starting point is 00:05:39 UK crypto policy has been, frankly, weird, and coming along in fits and starts over recent years, but recently has been marked by a lack of forward progress. Licensing is still difficult to come by, and access to banking is still a problem for crypto firms and individual crypto investors. In addition, the UK has strongly considered a CBDC in the past and doesn't seem to have completely scrapped the idea. More recently, the Bank of England proposed a cap on individual stable coin holdings of around $25,000. This all makes the UK decidedly behind the U.S. in Europe in delivering a permissive regulatory regime.

Starting point is 00:06:10 Sources told the FT that the Tuesday meeting featured significant discussion of alignment with the U.S. on crypto regulation, to the point that it was notable just how much of the discussion focused on crypto. Another source left the meeting feeling like there was a, quote, huge opportunity for the UK and digital assets. They added that the Trump administration's embrace of the industry meant the cooperation with the U.S. would be vital to unlocking adoption in Britain. The specifics are all very vague for the moment. Many are noting SEC Commissioner Hester Purse's idea for a cross-border sandbox for testing asset tokenization in a unified market. The core ask is that crypto should be

Starting point is 00:06:42 involved in the broader U.S.-UK. Tech Bridge, which will establish collaboration on frontier technologies, including AI, space, quantum, and biotech. We'll see what gets announced during President Trump's state visit this week, but three years, after the ambition was first announced, maybe the UK is finally ready to become a crypto hub? Question mark, question mark, question mark. Meanwhile, back in Washington, the Bitcoin Strategic Reserve is back on the agenda. A group of 18 crypto executives, including Michael Saylor and Tom Lee, met with lawmakers on Tuesday to promote the Bitcoin Strategic Reserve.

Starting point is 00:07:11 The roundtable was hosted by Senator Cynthia Lummis and Representative Nick Begich, who are the lead sponsors of the legislation in each chamber of Congress. The bill, known as the Bitcoin Act, sets out a plan to acquire a million Bitcoin over five years. It requires that budget-neutral accumulation strategies are used, suggesting seizure of Bitcoin from criminal prosecutions, using money raised from tariffs, and the reevaluation of the gold on the Treasury balance sheet. Very little has come out about what was said at the roundtable. All we really have is a picture of Michael Saylor wearing his orange tie. Maris Badcock, the VP of Industry Relations at the Digital Chamber, who organized the event,

Starting point is 00:07:44 tweeted, today marks the first day of the Treasury Council and we've already hit the ground running with Bitcoin Advocacy Day. By passing the Bitcoin Act, the U.S. will establish a strategic Bitcoin Reserve and reinforce itself as a leader in digital assets. And one question is whether this energy actually starts to activate markets. At least one company is preparing for an end-of-year rally, with Bitwise CIO Matt Hogan preparing for ETF Paloza with a wave of crypto-etf approvals on the horizon. Over recent months, the SEC has been working on a generic listing process for crypto ETFs rather than approving them one by one. Many believe the SEC is getting close by now. The general logic is that the SEC will probably provide a market cap or daily liquidity benchmark

Starting point is 00:08:22 and then allow asset managers to self-certify. If that happens, it's not unreasonable to think the listing process would allow tokens in the top 10, such as XRP, Solana, and Dogecoin, or even extend to the top 20 and bring in tokens like Chainlink and Hyperliquid. The prospect has Hogan all bulled up. In a note to clients on Tuesday, he wrote, watching the crypto market right now is like watching the Super Bowl pregame show. Things are set for a spectacular end-of-year rally with rate cuts, surging ATP inflows, rising concerns about the dollar, and incredible momentum in tokenization and stable coins. Yet as investors, we've largely been stuck waiting. Why? Hogan noted that when the SEC adopted self-certification of stock ETFs in 2017, the number of listings tripled to

Starting point is 00:09:02 370 the following year. He believes the same thing will happen with crypto and we are about to see a huge new wave of crypto ETFs. He also believes this could happen as soon as October. And if you are a believer in crypto seasonality, a giant everything catalyst hitting in October would sound just about right. Now, of course, Hogan noted that the existence of an ETF alone isn't going to be enough of a catalyst, pointing to the lackluster launch of the Ethereum ETFs in June of last year. He wrote, similarly, I expect ETPs built on assets like Bitcoin Cash, will have a hard time attracting flows unless the asset itself finds new life. However, Hogan concluded, what the ETPs will mean is that assets are more primed to rip if and when fundamentals start

Starting point is 00:09:41 to turn. Most of the world's money is controlled by traditional investors, and it is vastly easier for these investors to allocate to crypto when an ETP exists. There's a bigger and perhaps less quantifiable point here. ETPs lower the mystery factor for crypto. They make it less intimidating, more visible, and more accessible to the average investor. Chainlink or Avalanche or Pocod will no longer be strange-sounding tokens for crypto natives with a dozen wallet addresses. They're a ticker anyone can access in a brokerage account. That attunes people more to crypto in real life and its myriad use cases. They're more likely to notice the article about ChainLink partnering with MasterCard on payments, or Wyoming using Avalanche to,

Starting point is 00:10:15 issue stable coins, or standard chartered exploring XRP-powered technology for cross-border payments. The SEC adopting generic listing standards is a coming-of-age moment for crypto, a signal that we've reached the big leagues. But it's also just the beginning. Got to love the bullporn to close out the show on a Wednesday. For now, that is going to do it for today's breakdown. Appreciate you listening, as always, and until next time, be safe and take care of each other. Peace.

The Breakdown - Google’s New Agent Payments Protocol and What It Means for Crypto

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