Well, let's get to the big story breakdown.
While Money 2020 is winding down here in Vegas, there have been so many events focused on stablecoins as well as payments, and Borderless XYZ has launched the Borderless benchmark, the first open industry-wide reference rate for stablecoin FX pricing.
Well joining me here.
Is Kevin Lay, CEO of Borderless XYZ.
Thank you so much for joining me.
Thanks for having me on.
I feel like this year they should have rebranded it to Stablecoin 2020, even all the activity around stables and payments.
Yeah, absolutely.
So let's start out by talking about stablecoin.
Can you explain for our viewers out there what makes a stablecoin true?
A stablecoin is basically a blockchain based asset where instead of having some speculative market value based off of exchange pricing, it's reserved and fully backed 1 to 1 by some sort of a fiat currency.
So if you imagine a token like USDC, which is circle's staple coin for every USDC token that is in circulation, there exists $1 backing that token that is held in circles reserves.
That way, while it may have a volatile.
Market price still on exchanges.
There's an intrinsic market value of $1 because you can take that token anytime, bring it back to Circle, and Circle will give you that dollar back.
So it's really a blockchain representation of currency more than it is a speculative asset like Bitcoin or ether or some of the cryptocurrencies people may know.
Yeah, and Kevin, you and I have been here since day one, and today's the final day of the conference.
It feels like we've been here for longer than a week, but in reality there's so many events packed into these 4 days here in Vegas.
So what are your key takeaways when it comes to stablecoins?
What are people talking about on the floor?
No, I've been in stablecoins for 9 years now, which is a really long time to say stablecoins are going to get hot next year.
And finally I think this year that's come true.
I think the biggest takeaway is the amount of institutional and enterprise.
I won't say adoption, but definitely interest that's happening in stable points from the brands around here like FIS and Worldpay and AirWX and Wise and brands that people around the world know and are part of their daily vocabulary versus just the blockchain people talking to the blockchain people.
Well, you know, you mentioned an interesting thing and that is borderless because that's been something that we've been hearing about throughout the conference as well and they're already over thousands of people represented here from over 80 countries and when we're. talking about stablecoins, it's a very different story if you're overseas.
So what have been some of the conversations that have been striking and what are people actually focusing on right now?
Look, stablecoins are the best way that we have to export the US dollar.
It's a technology package that can ship basically US Treasuries because that's how reserves are held overseas in near real time for fractions of a second.
So from the US perspective, we don't necessarily intrinsically understand this value proposition because we are in the dollar banking system.
But when we go and look at emerging markets and we look at places like Brazil, Colombia, Argentina, Nigeria, Kenya, South Africa, and Philippines, etc. these are places.
With much less currency stability, much higher inflation, and for a lot of the consumer population, and there's certainly B2B use cases as well, but just for viewers maybe to understand the consumer use case is access to dollars.
That's how they want to save.
They don't want to save in local currency.
They don't want to see that purchasing power erode, and that's a lot of where we're seeing stable point adoption today is in those countries versus in the US and here we are in the.
US talking about inflation on Fed day and when we're looking at inflation in other countries, I always say that there's double digit percentage inflation, right?
So here in the US we might be talking about a 0.5% point or even lower with inflation.
But of course that brings me to fragmentation when it comes to different stable coins.
So how does all of that actually affect the global payments market?
In the traditional payments world we have this concept of networks, right?
Banks don't have to integrate other banks in order to transact with each other.
They can connect to something like SWIFT.
Card issuers and merchant banks don't have to connect to each other.
They can connect to Visa or Mastercard or to something of that nature.
That's really something that's been missing in the stablecoin landscape.
And when we think about the liquidity that exists between stablecoins and traditional fiat money is at the end of the day in this adoption environment maybe someday we're all unchain today that's not the case.
So you need to make stablecoins interoperable with bank accounts all around the world.
That liquidity is incredibly fragmented and these emerging markets.
You can have dozens of different players that are all providing bits of liquidity between the stable coins and their local currency pairs, and there's no kind of universal exchange.
There's no universal FX feed.
There's no universal index of any of this data, which is kind of that fragmentation that you've been talking about and you may have one venue that's trading tethered stablecoin USDT.
To Brazilian reals at 70 basis points of spread, and you may have another venue that's trading in at 6.
It's wildly different across the range of different venues.
Yeah, but with challenges come opportunities and when we look ahead, we don't have a crystal ball, but what do you actually expect when it comes to products and what needs to happen when it comes to regulation?
One of the things that I really believe that we need if we're going to continue this adoption wave that people here at Money 2020 have been talking about and we're going to capitalize on these interests from these large traditional firms is we need to give them trad file like tools and get out of our blockchain bubble a little bit.
So that's kind of what we had created recently with our announcement of the borderless benchmark.
We said, OK.
Our core product is connectivity into all these fragmented liquidity venues all around the world and on to all these fragmented payments providers for stablecoins and fiat currencies, and because we connect into all these people, we also see all the different price activity that's happening across all these different venues.
You think about traditional effects, I can go to Bloomberg and I can look at mid-market rates and I can do all these other indexes and benchmarks in the stablecoin world that doesn't exist.
So we said, OK, wait a minute, we tie into all this data, we see it all in real time.
What if we just published that benchmark for free available to anybody to consume?
And I think this sort of tooling is going to need to become more and more common if we're going to start to have better and better conversations with the likes of Mastercards and Visas and Worldpays and these giant multinational PSPs that move trillions of dollars a year, which is all.
Ultimately what we want to move on to stable because we think it's more efficient.
We think it's faster, and we think it's a better technology.
OK, Kevin, well, we will have to leave it there, but thank you so much for joining me as Money 2020 winds down and thank you so much for all of your insights.
Thank you very much for having me.
Thank you.
