Welcome.
Here we are at Money 20/20 Europe in Amsterdam, and I'm very pleased to be joined by Michael Shaulov, who is CEO and co-founder of Fireblocks.
Michael, thank you very much for joining us.
Thanks for having me here.
So you know it's been a very busy morning.
We're halfway through.
One, what are the top things you've heard here at Money 2020?
What are you most excited about?
Well, I think like every Money 2020, it's fascinating for us because we come here and we see the evolution from year to year.
I think it's like the 4th year that we are doing it or 5th year that we are doing it as a company.
And it's pretty wild to see how the industry came along in terms of adopting digital assets and specifically stablecoins.
Every year it's just a completely different climate in terms of the type of companies we meet, the types of clients we have, the type of discussions that you're able to have on this topic, and clearly like this year it's been like the peak since it started.
Absolutely.
I mean you think it can't get bigger and then here it is.
Even dominating the topic even more, perhaps only really in competition with AI and agentic AI on the stable points, payments points and to do with institutional adoption, what do you think apart from the Money 2020 programming, what do you think are the signals for where the adoption is going, how quickly it's going, what progress is being made.
We are now, it's actually quite interesting, so.
Firebucks right now is processing $6 trillion per year of digital asset volume.
About a year ago, 40% of that was stablecoin.
Now it's 65%, right?
So out of that basically we are at a 3.5.
Almost $4 trillion per year, it only goes for Firebucks, so we are about like 10% of all the on-chain transactions.
Now, it's also interesting to see that there is a very strong shift from stablecoins being used for trading cryptos.
That's actually how you know not many people are aware, but the way that stablecoin is specifically tether. is by helping facilitating trading or the settlement leg of it.
Now about 30% of it is already payment companies using stablecoins to move assets across chain, and the last 12 months it was the first time that USDC surpassed the percentage wise.
The volume of tether on our platform.
I mean this is really interesting news and to see that kind of moving alongside the regulatory landscape where I know we've got different jurisdictions that we're going to need to cover.
Let's start with what's going on in the US because USDC is obviously.
What we're we're paying attention to there, um, the regulatory landscape in the US and what everyone's waiting for in the Clarity Act to figure out this yields and conversation.
What's your take on the direction that?
Yes, I think that honestly for stablecoins in the US, the most important things were already made the Genius Act, and the Genius Act was basically unleash this crazy adoption that we are seeing among the fintechs, among the payment companies, among the banks, and now propagates actually the corporate world and to users in the last.
6 months or so we onboarded all the big remitters Western Union, MoneyGram, Rea Finance, Stups and all those guys are now using stablecoins and Clarity Act is still the open question and it mostly applies to I would say how aggressively the banks will lean in or how much friction they will actually put behind this topic.
My personal opinion actually doesn't matter.
And I think that the banks misunderstand the whole notion of stablecoins.
The main reason for that is that it actually doesn't matter if they do tokenized deposits or stablecoins in a system that you can subscribe in real time into money market funds and with everything that is actually happening from a tokenization standpoint on the capital market front like the project with Canton and so on.
If you're a user and it actually comes together with AI and you have some kind of programmable element, you would never leave assets idle, right?
So this algorithm or you as a user, you don't need to wait 2 days to deposit your money into some kind of savings account.
All this friction is gone, so users will accrue interest.
Directly from whatever money they have with the financial institutions, whether it will happen through stablecoins or whether it will happen by depositing and redeeming them to a money market fund, so I think that the business model of the banks will be under a lot of pressure and will have to evolve regardless of this entire discussion around the Clarity Act, which is just like a funny debate between two CEOs.
I think creating board used if necessary because one of them.
Doesn't understand exactly that his business model is going to change, right?
Absolutely.
And that changing business model based on consumer demand is always what we like to see rather than anything.
They forget who is the user and what the user is what exactly.
And speaking of speaking of that changing business model, how do the people who the companies that controlled the rails previously.
Visa, Mastercard, etc.
How do they fit into this landscape and how are they using stablecoins?
Yes, interestingly enough, Visa and Mastercard are tactically benefiting from this situation across three main pillars.
The first one is that right now a lot of the Basically programs or projects, they introduce wallets to end users in all of those emerging markets like people who are unbanked suddenly have a wallet with stable coins and they want to spend it.
So companies like Red.
Pay and many others, they're basically creating those programs that you issue a credit card against custodial or non-custodial wallets, or even like.
Metamask and some of those things, so they are benefiting from this new flow from emerging markets and en banc that are now able to spend through Visa and Mastercard, and you're basically seeing their volumes and the co editions specifically and all those geographies going through the roof.
The second thing that is now coming on board with those folks is that the acquirers and the are actually able to sell to them and they can sell to the acquires using stablecoins that makes settlements faster and reduces the collateral, so that unlocks even more capacity around their networks.
That's, I think, is a lot of interesting, somewhat tactical, somewhat maybe mid strategic shifts.
The main question will actually come once we will see alongside both the and the merchants.
Where they are willing to accept stablecoins and we have those wallets and then we will see basically an account to account transfer of stablecoins or an account to a merchant transfer of stablecoins and that can potentially disintermediate fully what Visa and Mastercard have been building and their empire and their network and that is a more strategic, I would say 2 or 3 year horizon, but I do think that it might happen.
Yeah, and I think a lot, a big theme of the conference here today has been that kind of unbundling, rebundling of all the different parts of the, the fintech landscape and, and, you know, and how everyone remains competitive and that is, is really the key question.
And in terms of remaining competitive, what are the great hurdles and bottlenecks?
Where are you seeing?
The biggest challenges in moving everyone along in progress.
I think that the interesting thing is that we are now at a point that because of the regulatory changes that happen globally, actually 50% of the global GDP is now under a clear, stable current regime, right.
Um, so what used to be a pretty significant regulatory hurdle somewhat disappeared, and we are sort of like also accelerating some of those things.
Last week we announced the open transaction layer initiative where we brought in quite a lot of really important partners including folks like Stripe and a lot of the liquidity providers.
Check out a lot of you folks into that and then basically streamlines all the regulatory requirements from a travel standpoint, identity, anti-fraud, payment initiation, which I think would just create more velocity around the movement of funds.
I think the biggest hurdle right now is actually talent.
We still need a significant amount of talent across all the incumbents that are trying to.
Go into the space and the education, I mean those are the two things that they really struggle with to move forward with their initiatives with like time and also we're putting a lot of investment over there to help them with advisory and education and the way that we just journey.
Engage in those projects specifically with incumbents is to help them to figure out not only how to deploy technology but what business model actually works and how they should look at it strategically.
You can't just look at this as here's a new toy to play with it.
How does this actually fit in again back to what you were saying for what the consumer really needs, what the end user really wants.
And honestly it all comes from first principles to that point on and to move over from our conversation about the states over here into Europe, you in the last few weeks had the great announcement with Kiervallis, a consortium of 12.
Is that right?
I think they just expanded it to like 24, 36.
My apologies, 24 or 36.
I mean this is really exciting to watch.
Talk to us a little bit about stablecoins, dollar dominance, what Europe is trying to do right now, and what the different moving parts are.
Yes, so I think as everybody is aware, 99.9% of all the stablecoin flow globally right now is happening in the dollar denominated stablecoins.
95% of it, 99% of it is tether and use the.
That clearly freaks out a lot of, first of all, the central bankers and also the banks, and there is, I think a big question of how this will impact the local currencies.
Now we're seeing a lot of initiatives that are mostly driven by fintechs of initiating or issuing localized effects stable cards.
We support a bunch of those projects in Brazil and Canada and Japan.
And specifically, I think two good examples like Japan.
They have the megabank stablecoin, which is the Japanese yen, but in Europe what happened is that that consortium was established initially by 12 banks, and I think now there are more and more banks that are joining in where they will create pending regulatory approvals that I think they are targeting.
In the second half of this year they will issue a euro stablecoin that the access to the euro stable coin, the backing will be through the banks and that's supposed to actually give probably the first real contender to the dollar denominated stablecoins with the euro assuming they are able to pull off.
The access and create the right level of circulation and use cases for that and the use cases being a fascinating words because back to what you were saying at the beginning, we need to move this along from just what instruments do you use to trade crypto to what are the daily use cases, what are the wider use cases across traditional finance.
AI I mean it's been a little bit overused as a term here.
Agente AI is all I'm hearing about.
What is the role of AI in stablecoins and digital payments, and how do you see this playing out for Fireblocks?
Yes, so we are investing heavily in two different capabilities, one around.
Agentic finance and one around agentic payments and I'll touch on both of them in a second, but I think before we go there, how do we see the world?
I think that it's very clear that for agents, whether you're talking about stablecoins, programmable money, or digital assets in general, we see and we believe.
That that will be the instruments of choice for agents.
Why it's actually like again going back to first principles.
It's everything that agents want.
It's fast.
It settles instantaneously.
You have direct access to data because the data that you're getting from the blockchain is the source of truth.
This is what agents love the most, like data and accurate data.
And it's programmable and that's also something that agents crucial and a key differentiator with other forms of payments and what do you see?
Where do you see that growing the most?
So we're basically investing in two areas.
The first one is to make fireblocks as a treasury infrastructure to be accessible for agents.
We actually released over the last 12 months are and extension.
We made a few announcements over the last month and that's specifically basically the use case that we discussed earlier that if you are a treasurer and now you live in the world of stablecoins and tokenized money market funds, all those flows are somewhat predictable, right?
I know more or less how much and where I need to pay salaries.
I know how much I need to pay to my vendor.
I, I know how much I need to send across the world, and if I'm basically bundling that with an agentic capability that can do the prediction and automate all that, probably I can reduce a lot of the manual work that is currently being done by humans and spreadsheets, and it's completely inefficient because you need to basically stage it like 3 days in advance to make sure that you didn't miss anything and that all can be done by.
This will optimize capital yield, everything that people care about, and what we bring to the picture is the infrastructure to do it, and creating the guardrails to make sure that the agent doesn't go wild and send you money in a way that is anticipated, not anticipated.
That's area number 1.
Area number 2 is agentic payments, so we do, it's quite early, but we actually joined the X402.
A consortium, we created a new extension over there, so the initial protocol over there had some security gaps.
We closed those security gaps through an extension, a secure export to exchange extension that we brought in into the consortium, and we, we basically developed for our clients, payment service providers and people that run agents.
We brought in the capability for them to.
The ability to accept payments from agents, stable.
There's a question of where the adoption will emerge first.
Right now it's mostly people that expose APIs to software infrastructure companies, but I'm of the opinion that Uber should do it, travel companies should do it.
Anything like now when you're planning a trip, most people now rely on.
To run their whole lives.
There's no reason that they won't book you the hotels.
It seems natural to me to want a digitally native asset to deal with digitally native activities, so that's the match made.
Well, thank you so much for joining us.
I really hope the rest of the conference is good.
I happen to know that there's an announcement or two coming up in the next couple of days around Staple Point, so we look forward to more.
Yeah, likewise, thanks so much for having me.
