The Wolf Of All Streets - Unstoppable Tether: Why This Stablecoin Is Poised For Massive Growth | Paolo Ardoino

Episode Date: July 14, 2024

Paolo Ardoino, CEO at Tether & CTO at Bitfinex, discusses the success of Tether, a $112 billion stablecoin. We talk about the factors that will make Tether a dominant player in the stablecoin market, Bitcoinization, tokenization of real-world assets, MiCA regulation, and investments the Tether team is doing outside of crypto. Don't miss this episode of The Wolf Of All Streets podcast! Paolo Ardoino: https://x.com/paoloardoino ►► Sponsored by iTrust Capital Invest in Bitcoin, Crypto Assets & Gold with Your IRA Using iTrust Capital. 👉 https://bit.ly/itrust-scott ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/  ►► The Arch Public Unleash algorithmic trading. Discover how algorithms used by hedge-funds are now accessible to traders looking for unparalleled insights and opportunities!  👉https://thearchpublic.com/  ►►OKX SIGN UP FOR AN OKX TRADING ACCOUNT THEN DEPOSIT & TRADE TO UNLOCK MYSTERY BOX REWARDS OF UP TO $60,000!  👉https://www.okx.com/join/SCOTTMELKER  ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. Use code 'TENOFFSALE' for a 10% discount. 👉https://tradingalpha.io/?via=scottmelker  ►►NGRAVE This is the coldest hardware wallet in the world and the only one that I personally use. 👉https://www.ngrave.io/?sca_ref=4531319.pgXuTYJlYd  ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets    Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading Timestamps: 0:00 Intro 1:25 Running Bitfinex & Tether 3:27 iTrustCapital 4:25 Business model 6:40 Investing beyond Tether 12:50 Synthetic dollar backed by gold 18:00 Vetting RWAs 24:00 Tokenizing legacy markets 27:30 MiCA regulation 31:00 Creating safe environment 33:50 T bills 37:00 Stablecoins are best friends of USD 41:00 Bitcoinization 47:25 Stablecoins vs banks 49:50 Tron 51:50 Education 53:20 Wrap up The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

Could stablecoins just effectively replace the banks? Humanity is trying to go to Mars, and yet we let people live in an incredible situation with a currency that is backed by truing them. What's new? What's new in our industry? It's going to be a great conference. It's a boutique conference, but last year we had the Assange family. They also said that all Bitcoin should be made in America. Well, it's a nice way to say that the miners should be welcome rather than trying to kill the miners. You know, the two friends that are escaping from the lion in, well, I just need to run faster than you. And that is basically the guy that runs the fastest is the US dollar.

Arguably, no company is pushing for the crypto narrative more than Tether and of course their stablecoin USDT. Paolo Arduino, the CEO of Tether and of course of Exchange, Bitfinex and I had a wide ranging conversation about the future of Tether, why they're investing in AI and biotech, their Bitcoin holdings, and what the future of dollarization looks like with Tether climbing the charts as one of the largest holders of US debt. This is a conversation you cannot miss with one of the largest holders of US debt. This is a conversation you cannot miss with one of crypto's greatest visionaries. Last time I saw you was in Dubai. You were typing away on your laptop very seriously and I made the mistake of running up behind you and giving you kind of a bear hug.

I don't know what I was thinking. And then I realized that could have gone very badly for me very fast. Some people started coming out the woodwork, youwork. What is this crazy guy doing? So maybe we shouldn't mess with you when we see you in person. I have Steph as my bodyguard. Yeah, Steph is your best bodyguard. She quickly came out of the woodwork. But you were doing some very, very serious things,

which I think is the case probably all of the time for you. I mean, do you ever get to stop for a second working? Cause you were there obviously to do the conference, but then pulled aside wires coming out everywhere. And yeah, I work all the time. So that's, that's my, that's my thing. But, uh, you know, when, when you're on like a few companies, you have, you are always, uh, you know, under pressure from each side, so it is what it is, but I like it.

I don't know how you handle that much pressure. And it's so much. It's not like you just run two casual, small businesses. And they're wildly independent, massive businesses. Which one takes the most of your time? Or is it relatively equal between Bitfinex and Tether, obviously? I think that they are balancing fairly well and due to very different things. On the Bitfinex side, it's all about architecture and building their seed infrastructure.

On the Tether side, it's more strategy, long-term vision on investments, the different pillars that we have finance, AI, education, you know, communications and an energy and Bitcoin mining, right. So, so very, very different things. And I like both of them, honestly, I still I'm very tied to my past as a as a software developer, as well as I really like to think about the future and building, you know, crazy things through in tether. software developer, as well as I really like to think about the future and building crazy things through in Tether. Crypto investors in the United States face some major challenges.

One of them is that there's almost no way to get exposure to the asset class inside of your traditional investment vehicles. The other thing is the taxes. They are absolutely atrocious. What if I told you there was a way to solve both of these problems? Well, there is, and it's with a self-directed IRA from iTrust Capital. Guys, not only can you open a new self-directed IRA and fund it with the limits each year, but you can actually convert over from your 401k, your Roth IRA, any other IRA that you already have, and you can do that tax-free,

just transferring over the balance, and then you can go to cash, buy as much Bitcoin than you want and not pay taxes when you sell it. You absolutely have to try this if you are in the United States. Use the link down below. It's bit.ly slash itrust-scott. That's bit.ly slash itrust-scott. You have to try this now. Yeah, Tether, it seems like your business model is ever evolving, as you sort of just alluded to. Maybe it's just been underreported in the past, the investment side. But recently, you said you were looking to invest over a billion in deals, likely in the next year. Right. Obviously, you've had a good few years here here benefiting from interest rates and well-structured investments. But now, AI, financial infrastructure, biotech, it seems like

Tether is really expanding beyond just being a stable point. Yeah, it definitely does. I mean, it's, I say it publicly and, you know, very in an humble way, we couldn way, we are very lucky. We couldn't predict the size of Tether and the size of this space when we created USDT in 2014. So it was a very simple idea, very intelligent, but very simple. Let's use the blockchain as a technological transport layer for the dollar, the US dollar, this is the most used currency in the world. And then we thought at the beginning that the crypto world was very small. At the beginning, we thought, oh, we are going to be lucky if USDT will be $100 million.

And then 10 years after is $112 billion. And also the second reason why I think we got lucky, we couldn't predict it, is the shift in interest rates, as you mentioned before. So it yielded the last year, $6 billion in profit and the first quarter of this year is a bit more than 4 billion. And so, yeah, we have a good part of the profit is staying in the company in order to, as excess reserves, as I many times said, because we believe that a stablecoin should be very, very different than the classic banking model that where they run fractional reserve stable coin should actually be over reserve that is very important to us and we want to show that we are

leading the path in in in terms of risk management and safety uh but the excess success right so what we do more you know while we keep good part of the profits in the company. The rest, we started to invest more than $1 billion in artificial intelligence infrastructure, $200 million into biotech with BlackRock Neurotech being a great company producing a brain sheet that has already 14 st patients compared to narrow link that has only one um there will be very very touching incredible stories coming from black curve neurotech in the next couple of months these guys can have a chip that can read 90 characters per minute from the human brain you know they they allow people to feel again, to hear again. It's very incredible what they can achieve. And they have an epilepsy chip that allows to identify the spike, the initial stage of

an epilepsy crisis and send an opposing signal to try to calm it down right so these are the things that um i am very excited about because we are in a situation where we couldn't as i said we couldn't believe it ourselves we we are um definitely uh looking outside of crypto as all the opportunities um that are very very um exciting in my opinion this moment are all related to the real world. We talk about real world assets, that I would also say real world opportunities, right? It's not all about our own industries. Most of the time, we're looking only inside the industry. Oh, what's new, right?

What's new in our industry? Which are the new tokens? Sure, that is interesting, but there is an entire world out there where the wealth that has been created from our industry can be deployed and can be very, very impactful because our industry created a wealth that is now between two and $3 trillion and can be very, very much used to help underfunded industries like the biotech industry and create technology to help people with all the knowledge that we created within our industry. So we are taking the knowledge that we gather on

cryptography for example when you think about the information that the human brain creates you want to make sure that it remains private. So imagine reading 90 characters per minute from the human brain, you want to make sure that it remains private. Zero-knowledge proof and cryptography are very important technologies. So everything that we build can be used in many different areas. We should have just to look up and see what's going around ourselves. That's interesting.

So you obviously invest money into these companies with the expectation or hope of profit, even outside of crypto. But as you describe it, there are some definite intersections between the places that you're investing and the knowledge that you've grown and what's been developed in our industry.

So do you actually get active in these investments and contribute on the technology side? Because we've seen, obviously, the intersection of AI and crypto, for example, discussed heavily. We know that Bitcoin miners are basically becoming AI data centers to some degree. So with biotech, are you helping them along with understanding ZK-Proofs and the privacy and that entire side, or does it just sort of make sense to you because you understand that side of the industry? We are definitely advising them on many areas when it comes to artificial intelligence and cryptography. that is something that we are very knowledgeable about so we are providing them solutions and suggestions on how certain topics can be tackled um let's think about

the fact that ai is very very new right so although we everyone talks about the eye today uh until two or three years ago no one knew what chat chat GPT was. And so the the learning curve and the explosion curve of this technology is will affect everything including biotech. So most of the researcher that took for the last 10 years to get to a certain stage, that timeframe can be compressed through the usage of AI and other techniques that are getting more and more popular today. So the escape velocity is being reached now and probably will continue to

grow very, very fast. So we only invest in things that we are excited about, right? So we are not a classic VC. We get hundreds of pitches per month and only very, very, very few. It's either zero or one get through the door, actually, because we believe that what we do care about is in this intermediation. So we did it with finance, with USDT, we do care about independence. For example, with the cheat and hole punch for independence for communications, we do care about resilience, right? So again, cheat, hole punch, USDT and Bitcoin are all about a part of a resiliency story. And we care about the freedom of information. And that's why artificial intelligence and biotech are very, very important steps for us. Because if something interacts with our brain, you want to make it very, very open rather than creating a closed consortium or closed company

that manage that. We see what OpenAI or Microsoft or Google with Gemini are doing when it comes to closed sourcing artificial intelligence that is such an important good for humanity. So that makes sense. If you're vetting thousands of deals, probably a large percentage of which could be wildly profitable for you, you're basically just doing the ones that align with the ethos that had you become a Bitcoiner and start Tether in the first place. Exactly that. That's really, really interesting. And you mentioned, obviously, the tokenization of

real-world assets, and that's why you're looking at making investments in the real world. You guys recently debuted your synthetic dollar. It's interesting, not being called a stablecoin this time. We're moving, obviously, the vernacular, I think, a bit to synthetic dollar that's backed by gold. And so this is not a wildly new concept, crypto backed by gold or synthetic dollars backed by gold. But maybe you could talk about Alloy and what you're doing on that side and why. So Alloy is a very cool technology. it's an open technology that allows to create tokens that are backed by other assets. In the case of a USDT, it's a synthetic dollar backed by gold. In a way, it's like going back to 1971 before the Fed decided to part ways with having the US dollar backed by gold. In this moment, I think it's a very interesting experiment,

an experiment of a new technology that can help companies and other issuers to actually think about more and more use cases for assets, you know, synthetic assets tokenized and backed by different types of collateral. So this is part of our real world asset tokenization platform that we are going to launch by the end of the year. And our platform, I think I mentioned it on Twitter or on X, is about creating a tokenization platform that white labels the entire technology that Tether built for the last decade, making it available to vetted issuers. You can use this technology to create stablecoins, to create synthetic,

for example, synthetic dollars, synthetic assets, tokenized stocks, tokenized equity, tokenized bonds, tokenized share funds, tokenized real estate. And the cool thing about it, about our platform is we'll be fully non-custodial in the sense that we provide the technology, we allow you to, we help you to deploy a smart contract. The smart contract will be assigned to your multi-sig. So everything will be under your control as an issuer, as it should be. You will have a platform that allows you to communicate as an issuer,

to communicate with your customers, so the investors in your product. So everything that we build will be available to everyone. We think it is one of the most important achievements that Tether is doing. So that, you know, something that is a technology that is securing $112 billion could be used and allowed to the benefit of everyone. So this is a picks and shovels approach like in exchange, right? Obviously, where you have experience with Bitfinex to some degree, but it's allowing somebody else to tokenize their gold, right? So you're allowing somebody to issue it and then do whatever they see fit with it without cussing it.

As you said, this isn't Tether creating a new stablecoin with gold and you managing the reserves. I think a lot of people probably believed that that was what it was when the news came out. And you've had Tether Gold in the past, right? Yeah. Tether Gold is token the past, right? Yeah. What did you do? Yeah. Tether Gold is tokenized gold, right?

So Tether Gold has 100% backing of physical gold held in Switzerland in a vault. That is our tokenized commodity. But we wanted to showcase that through that example, you can actually start deriving products. The beauty of alloy by tether is that right now, if you have gold, you can keep it somewhere in a vault and sit in there. So it's hard to extract value from gold. But what if on one side you can have a product that allows, and also just one step back, is hard for people to price things in gold, right?

So if I ask you, oh, how much is the cost of that microphone that you're using? You could tell me in dollar terms, but not like you will not be able to price it in top of your head, like 0.0001 ounces of gold, right? That is problematic. So imagine if you could basically pledge your gold and issue a dollar token. So on one side, you remain long gold, but on the other side, you still have a real world utility for payments that is a synthetic dollar, right? So that is the concept behind a Lloyd by Tether and AUSDT as the first product. We invite other creators, other issuers to look at the technology and use it for whatever they think makes sense.

With these real-world assets, where are the actual assets custodied and how is it vetted when you allow the tokenization? There was a wild, very cool story actually recently about the Stradivarius violin that Yatsu from Animoca bought and got a loan from Galaxy and it was all tokenized and the actual violin and the token, I believe, are in custody in Hong Kong, right? Complex. on a multi-million dollar violin. It seems very complex to make sure that people have the gold who are tokenizing this, or they actually own the real estate and they're not falsifying documents. So how do you vet the actual real-world asset itself when you issue tokens against it? So think about the easy case is tokenizing a bond, right? So you have the bond is a security,

so it has to be registered with a regulator. So a bond issuer would create a key information document, would apply for under a certain regulatory regime. We support different ones, starting from El Salvador, Kazakhstan and others. So there is a full vetting process that is the very same one that applies to normal bonds or equities, right? So also you have a company, you want to tokenize your equity and want to have access to liquidity

from the crypto industry. You would still go through the key information document preparation, work with the regulator, submit your application, the regulator will review it, our internal analysis team will review it, and then if approved, then you will be able to proceed, and you will have the entire technological platform at your disposal. So it's very, very different than what we have been used to in the crypto world, right?

Where everyone could wake up in the morning and say, oh, and think about an idea and start issuing token out of thin air is a very, very different process. So the vetting and the confirmation generally happen outside of your system. And then once it's all confirmed, they come to you and that's where they actually use the system to collateralize it i mean i always laughed there was that story it must have been 2019 when 50 million dollars of gold bars ended up in jp morgan's vaults fake gold bars right and i think we're doing a much better job we're doing a much better job with the with xot right withOT, with EtherGold, because every single gold bar is very carefully vetted, reviewed with all the latest techniques in order to be accepted

for. But what's actually maybe ironic is we laugh at JP Morgan all the time and we see Jamie Dimon making these outrageous statements about crypto being worth nothing and he would ban it. But JP Morgan has the Onyx platform tokenizing real world assets, including for, you know, between BlackRock and others. So this is happening and they're doing it. Everyone's looking to do it. So I guess, you know, A, it's ridiculous that there's what they say and what they do. But B, doesn't this show

that this is going to be the future one way or another and that you need to effectively win? Look, I wonder how much JP Morgan is spending to keep their technological infrastructure up and running. But I can tell you that having been for

Bitcoin, I've been working as a software developer, I have my startup in London, and I've worked with so many other developers and so many hedge funds and banks, the entire tech infrastructure of the entire financial industry is kept together by rubber bands and stitches. So if you could move everything on a blockchain layer where you make sure that all the data is properly inserted, right? So all the data, the beauty of blockchain is not like you can input transactions that are not properly formatted or like, you know, these companies

and these financial firms still use tab form files, right? So they still, you export the data in text files that are where the fields are separated by tabs. Like blockchain is beautiful and would make their job easier and will save them a lot of money because every single one of their subsidiaries would be connected, would have run a node and will see the very same thing that everyone else is seeing. So the problem is that in order for them to see it, it is taking an enormous amount of time. And there are many companies that are building really cool the advantage and their flexibility and their speed

in jumping on the bandwagon of this new thing. Imagine El Salvador, they are going to issue their volcano bond this year that will be tokenized. And it's a country that is the first year, I think that they celebrated a couple of months ago, the first year without gangs. So they have much bigger fishes to fry. And now they are already thinking about one of the probably the biggest real world asset that humanity ever seen. And as tokenized, I mean, the first tokenized real world asset, the biggest one. And they are a country with 6 million people. So the future, in my opinion, is in boutique countries that can move faster,

they can adopt the regulatory regime better and faster than others, and they will understand technology because it's their opportunity to have their renaissance, to gain market share, to gain traction, to invite people working in the country under a safe regulatory regime, for sure, but also a bit more forward-looking regulatory regime. Preston Pyshko So is it a pipe dream then to believe that the entire stock market eventually will be tokenized, even though we know that this is a superior technology, faster, cheaper, just because the United States government and our regulators and our systems move so slowly and maybe more sort of pessimistically because it would disrupt the

largest companies and infrastructure in the United States. You're talking about getting rid of basically the clearing houses, the exchanges to some degree, unless they're replaced by different ones, Visa, MasterCard, payment platforms. This disrupts everything if we tokenize all legacy markets. Well, eventually it has to happen. Try to look on the other side and believe that the world stops. Then it's not a strategy. So it has been proven throughout the history with this industrial revolution. Imagine a country that at the start of their industrial revolution was thinking, no, no, no, that's something that I will never do.

I will never adopt machines to improve my production. That doesn't make any sense. And it will happen in a way. You will only make your country falling behind the competitors. So no matter what, I'm pretty confident that we'll see in the next maybe 10, 15 years, the entire financial industry using distributed ledger technology, just because it makes sense. It's literally why this was invented and it's so far superior. It was so funny that recently they announced finally that they were going from T2 to T1 settlement on stocks. So, yay, you get it in 24

hours instead of 48 and you guys can do this in 24 seconds. Or less, 2.4 seconds. Yeah, depending on the blockchain. And there are different, very different types of blockchain. But again, if you think about it, the finance is already digital, right? So every most 99% of the money that you use is already digital. So it's just that we use technology that is from 20 years ago, it's Web 2.0 technology, and we actually should use all the cryptography improvements that happened in the last 15 years. We should use all the decentralized technology that was invented and improved in the last 15 years. So we'll be just a technological jump. And as any industry will benefit from disintermediation or reducing the, not disintermediation,

it maybe is too much, but reducing the intermediaries with the one and leaving only the ones that make sense. So you could have the banks, but you need only the banks that can run nodes and you maybe will less less you will need less uh um subsidiaries and so the the work of um of reconciliation teams in in a bank or in a financial institution will be less and less because everyone will use the same technology and they will be easier to

track you cannot make mistakes you cannot create more Apple shares than the one that are in circulation just because that will be guaranteed by cryptography. So it will be guaranteed by math. So it just makes sense. So trying to protect that change will not happen, is not viable. So you and I, Ted, have a conversation out talking about regulation, obviously. And I think Mika has been sort of in the forefront of late everything happening in Europe. There's some unique challenges as I read it for any stablecoin issuer, right? The usage limits and transaction caps and all these things that could, if I guess, implemented in their purest form, could make it almost impossible to use stablecoins in the way that they're intended all over Europe. So how are you sort of what are those challenges? How are you tackling them?

You know, are those things set in stone or is this sort of a work in progress for them to understand the technology and how to implement it? I think there has been some misperception about the position of Tether when it comes to Mika and the European market. So we started a few years ago our discussion with the regulator and with the European Central Bank, and we believe that it's very, very important to see these regulations happen. One of the main concerns that we had and we expressed to the regulator was the fact that the Mika license requires for stablecoin to keep up to 60% of its reserves in cash deposits. We have seen what happened to our major competitor last year with Silicon Valley Bank. They had $3.3 billion of cash deposits that are in the US.

The cash deposits are insured up to $100,000. When you have $30 billion, it's really nothing. And in Europe, the cash deposits are insured up to 250,000 euros. It's again, nothing compared to what you want or need to deposit in the bank. Now, what we suggest is as we do with USDT, we want to keep the vast majority in short term treasury bills from, for example, European Central Bank, or as we do for USDT, short term US T-bills. So, if we were a country, it would be the 18th country by size for holding TBLs. And the beauty of a TBL is that if the bank goes bankrupt, like in the case of Silicon Valley Bank, the TBLs are securities, they will go back to you

as a holder, you just move them in another bank. The cash deposits go into the bankruptcy process. So the lack of our competitor last year was that the FDIC decided to step in, otherwise they would be belly up. But, you know, imagine this simple, to explain in a simple way, imagine that you are a stable coin and you have your market cap is $10 billion. You have to deposit as cash deposits, so uninsured cash deposits, $6 billion in bank. Now, as you know, the banks can lend out up to 90% of their reserves. So now of your $6 billion, so $600 million are kept in the reserves and $5.4 billion are lend out to people that want to buy a

house, they want to create companies or build real estate and so on. Now you have someone that wants to do a redemption and they want to do a redemption of $2 billion. You ask to the bank a redemption of $2 billion, they have only $600 million available for you overnight. That is not sustainable. So that is our concern. So we beware of stablecoins that in this moment are operating in Europe. Now we also believe that it is important for regulators and companies like us to work on a viable solution, but also I want to reassure that we didn't give up with Europe and we have our own strategy for Europe that I think will be disclosed in the next couple of months that will prove how Tether actually is the one that is thinking

more about risk management than anyone else. It's interesting because when people think about Tether and Mika, we think about all of the ways that you wouldn't be able to use it as intended. And like I said, the usage caps and things like that. And you're actually going to the regulator and saying, you need to make this thing safer. It's almost the opposite. You would think that the regulator would be overshooting on the requirements and they're wildly undershooting because of their belief in fractional reserve banking and the banking system, which is the reason we're all here in the first place is

because we understand how ineffective that is and what the risks are and saw it play out to your point with Silicon Valley Bank last year. Not only Silicon Valley Bank, Signature, Silvergate, then Credit Suisse, New York Community Bank. And I believe that in the next 18 months, we are going to see many, many banks failing. And in the US and Europe, because there will be, you know, there is the interest rates at this level are putting a lot of pressure on real estate and commercial real estate. So we want, look, Tether has globally more than 300 million users. I don't want to put these users. These users don't have other options.

Most of them don't have a bank account. They are poor people living in countries where the inflation is very, very high, right? We complain in the US, we complain in Europe about our inflation, right? But there are countries where the inflation is 50% per year. So these people don't have, they need to have access to the u.s dollar they want the digital dollar they are all using usdt

and would be very very unfair if we would take risks with usdt and letting them down so we are very very careful we are you are deciding consciously to potentially lose some business in order to protect our users. And I think that is the most important thing. If someone will do a better job, they will deserve to rise and to take the market share from us. But we believe that our duty is to our users that trusted us and are using every single day in all emerging markets in developing countries. We want to work with Europe. We always appreciate regulations, but also we understand risk management better than,

I think, the banking industry most of the time. Preston Pyshko Certainly our entire industry believes that crypto is better than the fractional reserve banking system. But one of the other challenges that I alluded to, I believe it's a million dollar cap transaction with a total of roughly 200 million euros. I mean, how does that work for people that are moving Tether in size in Europe or have been used to doing so in the past? I mean, it sounds like a lot, but it's really not when you start talking about institutions or large whales. Look, I mean, that definitely is an operational issue and that could be seen as problematic, but also you could argue that it's a good sandbox, right? You could say, this is a sandbox, the regulator needs to be confident, comfortable, see how it works before opening up.

It's always easy to loosen the belt, but it's harder to put more restrictions. So I kind of appreciate these additional restrictions for the beginning, But I need to make sure that the product needs to maintain the same levels of safety that we have today. So I cannot, for us, it cannot become dangerous as a stable condition because with the US T-bills, we know exactly how much we have and we know exactly our risk parameters. We cannot be dependent on the risk parameters of a bank, and we don't see their daily balance sheet. So that is very problematic.

So the restrictions are fine, but I don't like additional risks to our operations. If treasury bills become worthless or not redeemable, we have much bigger problems. Yeah, look, I mean, the role of Tether is… So the beauty also of our setup as Tether is that we deal with… It has been public, right? Cantor Fitzgerald is custodying the T-bills. So we have a huge amount of overnight liquidity available to us. And look, we cannot protect from the devaluation of the US dollar, right? So if with the US dollar,

or with 1 billion US dollars, you can buy loaf of bread is not our problem, right? As long as we have the same reserves as the number of USB teams circulation, that is our job. Preston Pyshko I guess that's why you guys buy Bitcoin for your own reserves though. Marco Cappellino Definitely, we want to diversify our risk. I am not sure if it's true or not, but I was also reading that Trump suggested that as part of the US reserves, he could consider having a little bit of Bitcoin. I think diversification is always good.

Preston Pyshko He also said that all Bitcoin should be made in America. Marco Cappellino Well, it's a nice way to say that the miners should be welcome rather than trying to kill the miners and say that mining is a bad thing. Actually, every miner is desperate to mine in the US because of the greed and good access to cheap electricity. So it really makes sense. Preston Pyshko You brought up Trump, so it's a perfect segue. We've seen this pretty crazy wholesale reversal in the United States government of their takes towards Bitcoin because Trump has embraced it

so recently. We've even seen a softening from the current administration because they've basically been forced by Trump being so pro-crypto. And we have a lot of regulation or proposed legislation on the table now. And some some of that also if worded incorrectly could be a bit of a threat to stable coins and specifically to tether right i mean there's proposed language that says basically a stable coin would have to be issued by a bank in the united states correct yeah that's look at that many different, but here's the thing, right? I think that the conversation is moving in the right direction in the US. I think that with this new push towards understanding better crypto and how crypto can be useful and the US should lead the pack in crypto rather than be the last, is very helpful also in the conversations that we are having when it comes to stablecoins and stablecoin regulations.

Also, we made it very clear that stablecoins like USDT are actually one of the best friends that the US dollar can have. So think about every single person that holds USDT. We are taking what they have in terms of the reserves that they put out for that USDT and we are buying T-bills. We are in a situation, well, the US is in a situation where China, like three years ago, had $2 trillion in US debt, and now they have less than $800 billion, I think. So the US needs more buyers of the debt, and not just more buyers, but we are decentralizing the buyers of the US debt, if you think about it, because these are 300 million people on the face of the earth.

So these are things that now with all the effort that we're putting, we are able to explain why stablecoins are so important for the US economy. To not talk about the remittances and how remittances help the, again, the dollarization reward, that is a very important topic when it comes also in these political elections. So I think stablecoins are more and more seen as friendly and helpful to, and it's also foreign stablecoins like USBT, we don't serve US customers. Also, I've been quite vocal about that. So the example I make is that, in my opinion, apart from the crypto market in the US, stablecoins are a nice option, but you have Venmo, PayPal, Cash App. We have additional cash.

Yeah, exactly. You have FedNow and so on. So it's like selling a bucket of ice to an Eskimo. But the rest of the world, you have 5 billion people that need the US dollar, and we are reaching out to them. They are using USDT. And for them, it's a lifeline, right? It's a lifeboat. It's basically partnering up with the U.S. is basically, I think, the best way to describe our aim. It's interesting. You talked about China, obviously,

selling off a meaningful part of their treasuries, the majority over the last few years. We know that Japan, in theory, to defend the 15th, 10th, 5th largest holder of US Treasuries. I mean, is that a future that we could see as countries either because they choose to or have to sell off US debt, sell off Treasuries? Well, I think it's more on the other side, right? So the more global economy is going south, the more stable the stablecoin industry market cap will keep growing look it's uh it's not the best realization at least for us but the the success of tether is that is uh related to the success of of um economies and it is kind of sad right but it is what it is it's um the

gourd goes the world goes in that. You have mismanagement of national currencies. Think about the Argentina peso. So people want out, they want the US dollar. I think Millet said that in his political campaign, he said that he wanted to dollarize the Argentina because it's already happening. It was already happening before him. But now he explained how having access to the US dollar is very important for the Argentina economy and the people in Argentina, because people want to know that they have a way out, that they have an option. It's also what is happening in El Salvador. In El Salvador, there was the US dollar. Now there is another option that is Bitcoin. Providing options to people is very important. These are families that work an entire

year to put up some savings, and all these savings are eaten up by the inflation and the devaluation of the national currency. That is completely unfair. I think in 2024, humanity is trying to go to Mars, and yet we let people live in an incredible situation with a currency that is backed by chewing gum. And interestingly, they're rushing to a currency that is just a safer version of the same thing, which Bitcoiners have been screaming about the entire time. Makes perfect sense for a country like Argentina. But if you carry out the logic, eventually you land at Bitcoin. Absolutely. So look, I mean, the US dollar is the best of the

fiat currencies, right? So probably you could argue that the Swiss franc is probably the best one, but it's too small, right? It's smaller liquidity and smaller global acceptance. The US dollar is the best. It's the analogy with the two friends that are escaping from the lion, and one friend says to the other, well, let's run as fast as we can. And the other replies to him, well, I just need to run faster than you. And that is basically the guy that runs the fastest is the US dollar. But I agree that eventually the only thing that is not governed by humans, humans are the ones that keep making the same mistakes, and the only thing that we know in life and in our galaxy and universe is safe and is secure is math, right? Know that math is here to

stay, cannot be changed because we wake up with a different mood. And so Bitcoin will always be the last resort money for humanity. Preston Pyshko And you pointed El Salvador, the Bitcoin experiment really could have only happened in El Salvador, in my opinion, because they use the dollar as their currency, because it prevents the United States government, the IMF, the World Bank from being able to basically attack the currency for choosing to allow Bitcoin as legal tender because they'd be attacking their own currency. We saw Argentina in the past, even before Millet, basically come out and say, we're interested in Bitcoin. And immediately the IMF said, we'll withhold your loans if you do anything Bitcoin related.

Right. So most countries in the world, even if they wanted in some theoretical universe to move to the Bitcoin standard, really couldn't because their own currencies are at such risk. Sure. But now there is the ETF and also things will be changing. Right. So we came a long way this year as being the first year of real acceptance, but we are not finished, right? So if El Salvador will become a success story, and they shouldn't be judged just for the last two years, it will take a decade, right?

So first of all, for the first year, they had the gangs. Well, for the last 20 years, they had the gangs. But now they are the first year. This is the first year that they don't have any more gangs now. So they can think about their economy much more than before. So they can start proving to the world that they took their right choice. And if that works out, all the nearby countries will think, oh, maybe I should do the same. And all the population in these countries will start to demand that.

And the people will move. They will start immigrating to countries that are taking the best options and choices when it comes to monetary decisions. And so things will move. At the beginning, they will always be slow, but they will become faster the more that you have templates and frameworks and countries that will succeed. I'm using my research assistant live here, aka ChatGPT, looking at holders of US treasuries. It's not including private companies, countries,

but basically one through 20 ends in Italy at 146.8 billion, according to this. But by simply going up to, let's say, 300 billion for Tether, which is tripling for you, especially if we go into a major bull market, is very, very realistic. It would put you seven or eight. Yeah. And it's not impossible, I think. This technology allows for a very fast scale. And as long as you have secure custody, as we do have, and we provide the overcollateralization, that is very important important in a world, as I was saying, in the next two years, I'm not very confident about many smaller banks being able to survive, then the world will see more and more the importance of sound technology like the stable coin technology compared to bank deposits. Will St stablecoins just effectively replace the banks?

I think banks will accept stablecoins for the checking accounts. Saving accounts are different, right? They should provide a yield. I mean, especially, and again, think about who is using stablecoins in the US, right? If you in the US can buy any, you can buy T-bills yourself, you don't need, you have your saving account you want to yield there are not in there are billions and millions of people in the world they don't have a nice banking app on their smartphone right they don't they never had a saving account

so they were only getting cash and stashing cash under the pillow. And that is a common story for millions of people. So how for them already having a checking account is great. So I always, sorry, because when I always go to our users, right? So our users are the ones that cannot afford to any other option. And they are the ones that we believe we should help. And that's the entire reason of existence of USDT and Tether. So for the rest, I think there will be always better solution, faster solution, cheaper solutions. And so, well, I was reading that JP Morgan plans to add the cost for maintaining accounts. So that is quite interesting. Yeah, of course. But we also just saw that Justin Sun, whether true or not, said that we could do gas-free stablecoin transfers effectively completely free. I don't know if the truth of that, I don't know the technological complexities of making that

happen, but that's a pretty astounding claim because we know that at this point, I could be wrong, but isn't the bulk of USDT on Tron at the current time, or roughly 50% ish? Yeah, 50% is on Tron. Ethereum has around 40%, but we see PON and other blockchains are, we see a bit more diversification with other blockchains, especially when you have Telegram that has such a huge ecosystem. Well, you were in Dubai, right? So we met there and that is very, very exciting growth. They broke the record of 500 million issued on Tron in just less than two months, I believe. That is very, very astonishing. Yeah, but it's amazing.

And the point there is that people are already using Tether on Tron because it's cheaper and faster. And their friend in whatever country we've discussed says, listen, I want to send you 10 bucks, download this app. cheapest, easiest solution. So if those fees go to zero, that's going to be extremely compelling for those people you said who are trying to store $5 or $2 of value. Absolutely. I think the gas fees are very, very important on blockchains. So we know that Bitcoin is expensive, but also Ethereum is expensive. That's why also layer twos started to raise, but especially for stablecoins. Stablecoins are centralized, right? So we think about our ecosystem or our industry as a crypto industry be fully decentralized, but actually I have my opinion that most of the projects in crypto are very, very centralized,

although they claim otherwise, but at least stablecoins, for sure, are centralized. Blockchains for stablecoins are just transport layers. So it doesn't matter if you use one or the other. You should use the one that makes more sense for you, that has the widest adoption, that has lower fees. Because no matter what, Tether has, and again, very oftenly, has the ability to freeze assets on each chain to comply with law enforcement requests. So we need to keep the ecosystem safe because we are, as a stablecoin, as a centralized stablecoin,

we are using the banking layer to receive wires, to send out wires for issuances and retentions. So it's in our interest, but also our users' interest, that we have the same abilities in all the different chains. And by the way, the vast majority of the assets that we froze is to help the people that were hacked and their funds were stolen. So this is a level of service that no bank in the world would ever offer. And so that's why we are also excited. We believe that the stablecoin industry will keep growing in market cap because it's just much better. We had one final pillar that you mentioned at the beginning, which is education. You guys have PlanB.network.

Can you just talk very briefly about why you're doing that, educating people on Bitcoin? Why is that important? It's important because, again, it's an option. You know, PlanB movement starting in Europe, in Switzerland. And it's funny because Switzerland is probably the last country that would need that. You imagine it's Bitcoin and it needs financial education. First of all, it's the country of banks. It's the country where they have the highest salaries.

The lifestyle is the highest. But why then do we doing it starting from Switzerland? Because the way I describe it to Swiss people is for now you have been living the best life. Everything was, you know, your country has been the safest, the welshest. But history teaches us that things can change. So you want you need to understand that the world is different out there. If you take a plane and you go almost everywhere else in the world, things will be worse than in Switzerland.

So you need to understand why Bitcoin is very important to billions of people and why this movement represents the money for the worst-case scenario. We have the technology now to build something that will be resilient to all the possible catastrophes and we have it and we should understand it. By the time we will need it, we should understand it. Well, I think everybody appreciates your dedication to educating and moving everything forward, even just beyond, obviously, Tether. I have to say that if you become the single largest holder of U.S. debt, I will not be trying to bear hug you at conferences. I think I'll get in a lot more trouble. You should always try. Sorry, I was coding. When you came, I was coding. I had to look at very quickly something. You guys were literally making the ton announcement like that hour.

Yes. Right? Yeah. I'm really good in optimizing my time. I mean, it was pretty incredible. I've seen you maybe at two or three conferences. You always do your hellos. You're great.

You do the PR, then right back to the corner on the other laptop? And, you know, I don't know what kind of high speed Internet things you got going on there and security, but I will not touch the lab. I think I even pretended to type on your laptop. That was a really bad idea. You would have had an electric shock. It's only to get my my fingertips. Yeah, but as you move up, it's just going to be how many of my limbs end up broken if I try that again.

So Steph, as I know, she'll be listening at some point, but please don't hurt me. I know that you're trained in jujitsu and Krav Maga. Paolo, thank you so much, as always, for your time. We kind of have had the updates regularly. It was nice to sort of talk about the grander vision and not just focus on FUD or how much you guys

hold in treasuries on any given day. So really a great conversation. I look forward to catching up. Will you be in Nashville? I don't think so. I have a ton of travels in the next few months. But if you want to come at the Lugano Plan B conference, you are always welcome. That sounds fun. When is that? 25th, 26th of October. So it's going to be a great conference. It's a boutique conference, but last year we had the Assange family. We have the best speakers when it comes to freedom of speech and financial freedom. So I think it would be a different conference. You will like it. I would love to be there. So then we can do Token 2049 in Singapore and then do 180 degree kind of conference in Lugano.

We go from crypto chilla to something very serious. Yeah. Perfect. Thank you so much, Paolo. Thank you. Thank you, Scott. Have a good day.