Evolving Money: Stablecoins in Practice and Policy (Sponsored Content) | Masters in Business

0:00 Since you're a subscriber to this Bloomberg podcast,

0:03 we thought you'd be interested in a sponsored podcast

0:05 called Evolving Money produced by Coinbase and Bloomberg Media Studios.

0:10 It explains how institutional investors are

0:13 adopting the world's newest asset class, crypto.

0:17 Here's a recent episode.

0:22 You had the government sending a message to innovators

0:26 and developers that they should basically take any ideas

0:28 that they may have and take them overseas or put

0:32 them in a drawer somewhere and just abandon them.

0:35 That's Farar Sherzad, the chief policy officer of Coinbase,

0:38 talking about the way things used to be with stable coins.

0:42 But the message from Washington has changed in the last year.

0:46 And so what you're seeing now with this sea change

0:48 in governmental attitude is it's

0:50 actually a permission structure around developers

0:53 and innovators who want to think creatively about different uh payment

0:57 solutions that could be executed on with the use of stable coins.

1:01 That unleashed creativity is powering a movement amongst major financial

1:05 services companies who are now integrating crypto into their operations.

1:10 In many cases, they're starting with stable coins.

1:13 There are a number of reasons for that including

1:15 the ability to move money more cheaply and efficiently.

1:19 By our count there's about 250 different projects have been

1:22 announced by you know any number of financial players and developers.

1:26 So um the biggest banks, the payment processors, the credit card companies,

1:30 corporates and others uh to integrate and I

1:33 think we're just at the tip of the iceberg.

1:38 I'll talk more with Far about policy trends in a couple of minutes,

1:41 but first I want to give you a peek

1:43 into one of those 250 different projects he referred to, checkout.com.

1:48 It's an example of a major financial

1:50 player investing in stable coin infrastructure right now.

1:56 They are a PSP, that's a payment service provider,

1:59 an invisible intermediary working behind

2:02 the scenes when you buy something online.

2:04 Checkout.com started out processing credit cards, then moved into debit cards.

2:10 And because they're global, they also facilitate currency exchange.

2:14 Now, they're deploying a major upgrade

2:16 to their platform that will allow consumers

2:18 to shop using stable coins and vendors to get paid in stable coins.

2:24 That's what we're going to explore today,

2:26 stable coins in practice and in policy.

2:32 This is Evolving Money and I'm your host Angie Laauo.

2:35 This show is co-produced by Coinbase,

2:37 one of the largest cryptocurrency platforms

2:39 in the world and Bloomberg Media Studios.

2:41 Now, in the series, we are exploring how crypto is being adopted

2:45 by traditional financial institutions as the next

2:49 logical evolution of the monetary system.

2:52 And this episode is all about stable coins,

2:55 which are cryptocurrencies designed to maintain a stable value because

2:59 they're pegged to a fiat currency like the US dollar.

3:03 So, the price is fixed, but the currency is highly liquid.

3:06 And because it can be moved on crypto rails,

3:09 it's faster and cheaper to transact compared to legacy banking systems.

3:14 According to a report in Forbes, stable coins were used in more than

3:18 $30 trillion worth of transactions last year.

3:21 To give you a sense of scale, that is more than Visa and Mastercard combined.

3:26 Now, to be clear, the majority

3:28 of those transactions were trading in cryptocurrencies.

3:31 But other use cases are growing fast.

3:34 Payroll, international purchasing,

3:36 even retail shopping is all increasingly being done with stable coins.

3:44 My first guest today is Checkout.com's chief product officer, Keli.

3:48 I started our conversation by asking him to walk

3:51 me through the firm's 5-year relationship with Stable Coins.

3:56 Back in 2021, we were one of the first payment

3:59 service providers to offer stable coin settlement uh to our merchants.

4:03 And so this is already a very long time

4:06 ago in in in crypto world or in digital uh in crypto years.

4:10 In crypto years, exactly.

4:12 Um we offered a service that unfortunately we had

4:15 to wind down because the regulatory framework was just not there

4:18 and we were not able to find the right partners

4:22 and banks and and so forth in order to offer that service.

4:25 But um this is what something that we are

4:28 in the process of uh relaunching as we speak

4:33 and essentially it's um merchants that are acquiring funds

4:37 with us uh want to get settled with with stable coins.

4:40 Um what does that mean?

4:42 It means that they can um they can settle uh they

4:46 can get settled 24 by7 which is one of the big advantages.

4:50 Um the settlement is immediate.

4:51 You're not uh dependent on the bank hours

4:55 and so on and so forth and you're not dependent

4:56 on the on the bank rails and the merchant will

4:59 be able to you to choose how they get settled.

5:02 Whether they get settled with with regular fiat or whether they

5:05 get settled directly into their wallet will be up to them.

5:08 What are the markets that you're focusing

5:10 on and how is it all going to roll out?

5:13 Yeah.

5:14 In your mind, we we are an enterprise shop, right?

5:16 Like we support enterprise uh merchants that almost uh uniformly are

5:24 international like they they operate in multiple markets all the time.

5:27 And this is part of what we abstract away that complexity.

5:31 you know, we give them the ability

5:33 to accept payments with one global API that they

5:36 can uh that they can just uh integrate

5:38 and and and accept payments across the world.

5:41 And so, for sure, international is a big part of this.

5:44 You know, in terms of rollout,

5:46 we're going to start rolling out something which is

5:49 pretty unique for us because we're a Europe based company.

5:52 We're a UK based company.

5:53 Uh but we're going to start with the US

5:55 and we're going to roll out uh from there.

5:58 Is the marketplace in the United States already asking for this, demanding it?

6:04 Um, so it's it's a very good question

6:06 and the honest answer is that I don't know.

6:09 Um, you know, we we believe

6:11 in the the ideology and the philosophy behind stable coins.

6:15 Uh, we think that there's a future world where stable coins sit along other

6:21 type of currency and enable crossborder um

6:24 like borderless uh payments across the board.

6:27 We look at this as an experiment as something

6:29 that is could potentially do good in the world.

6:32 We want to put this out there.

6:33 We want to see how people react to it.

6:35 And and the interesting bit is that some of the big merchants

6:37 in the world are interested and curious because they have customers that are

6:42 crossber that they have customers that have uh wallets with stable coins

6:46 that they're currently not doing anything

6:47 with except for buying other forms of crypto.

6:49 And so using it for retail um is a logical uh next step for them as well.

6:55 Um and so I think that it's a um it's

6:58 kind of an experiment within the ecosystem where there's merchant

7:02 um making it available uh for the consumer and seeing

7:05 what the consumer adopts and chooses at that point in time.

7:10 Checkout.com is upgrading their platform to handle a payment

7:13 system that currently handles relatively speaking little volume.

7:17 But the word relatively is doing some pretty heavy lifting there.

7:20 As I mentioned off the top, stable coins were used to settle more

7:24 than $30 trillion US in transactions in 2025.

7:28 And 30 trillion is a number that has even

7:30 the most traditional financial services companies asking themselves, "Hey,

7:35 how can we get involved?" Moran says they see

7:38 this as a market with substantial growth potential around the world,

7:42 especially in developing economies.

7:46 If you're living in a in an economy that has

7:49 a very high inflation rate and a very unstable currency,

7:54 uh getting exposed to an equivalent of the US

7:57 dollar is something that is good for you.

7:59 When you want to buy crossber and obviously not pay

8:05 crossber fees and FX fees and so on and so forth,

8:09 then there is another uh benefit for you.

8:12 And you know frankly like in many countries

8:16 access to debit and credit card is not ubiquitous.

8:20 Um and this is an alternative form of payment that has

8:23 potentially a lower barrier of entry in multiple uh geographies.

8:27 So I I can definitely see a very good use

8:32 case for crossber payments for crossber retail and for developing markets.

8:38 But what about u larger more established markets

8:43 for developed markets like the US and Europe?

8:46 I think a lot of this is going to come down to um preference uh

8:50 and people sort of preferring uh stable coins

8:54 because you know they've they've traded to for other

8:57 crypto and they have liquidity

8:59 in their in their wallets and you know rather than

9:02 trading again to a to a fiat currency they just want to use it right there.

9:06 And the convenience actually of paying with a stable coin through

9:11 this experience that we're building is

9:12 actually it's going to be pretty convenient.

9:14 It's going to be pretty good.

9:15 And so I I think consumer preference is

9:19 probably going to drive that uh usage and utility.

9:22 And if I switch over to to the to the merchant side,

9:25 it's all about uh liquidity and availability of funds.

9:28 Um and the more the ecosystem uh builds itself out where

9:34 vendorto vendor payments can happen on stable coins where crossber payments

9:38 can happen on stable coin then there becomes a flywheel where

9:41 it starts making more and more sense uh for merchants to do

9:44 this and then down the line I think that some treasury

9:50 teams are are starting to think about you know managing their own

9:54 treasury completely on stable coins and not having to deal with you

9:58 know cross entity uh settlement between multiple entities within one company.

10:04 you can run it on an own on on a ledger internally and so that sort

10:08 of plugs into this settlement and acceptance page

10:11 if you look at it uh down the line when you are getting ready to roll out

10:16 in the US what is the biggest current constraint that you're

10:19 experiencing right now is it regulation is it consumer

10:22 wallet adoption merchant readiness operational complexity which is it

10:29 despite the fact that stable coins have been around for a number of years.

10:34 For us as a fiat-based business,

10:37 there are still a lot of stakeholders that you need to make sure that they're

10:41 comfortable and there are some operationalization hoops

10:46 that you need to to go through.

10:48 It's about ensuring that our regulators know what we're doing and uh

10:52 are are happy with it and don't have concerns with it.

10:55 It's, you know, getting the the contracts in order and in place.

10:59 So, nothing is a blocker.

11:02 uh but there are challenges right like the even

11:05 in the US there are different regimes right like there's New York

11:09 uh which has its bit it's it its own license versus

11:12 other states there's complexity there and how you operate and where

11:15 your entity is and all of those things imple influence

11:19 the timeline and uh the implementation path the technological build is actually

11:24 the the easiest part right uh everything around it is is

11:28 complexity Complexity is the focus for my next guest, Farardar Sherzad.

11:37 Because if the technological build is the easy

11:40 part and everything around it is complex,

11:43 well, Far's goal is to make sense out of the complexity.

11:47 He is the chief policy officer at Coinbase and his job is to work

11:52 with governments and establish the regulatory framework

11:55 that will let people like launch their technical solutions.

12:01 You're starting to see the enterprise and all

12:06 a lot more institutional players coming into the space.

12:09 But where are we right now in terms of regulations?

12:13 What is allowed right now and where will we be allowed to go?

12:18 What is the trajectory?

12:20 It's a good question.

12:21 It's also a very sophisticated question because you have two things

12:24 happening simultaneously uh that are kind of happening somewhat in parallel

12:29 but they will converge uh down the road and that is you

12:32 have the genius law uh having been passed by congress and signed

12:36 into into law by the president in July and this is

12:40 as you know well is the federal framework for regulating stable coin issuers

12:46 and so obviously in a normal kind of calendar of regulatory action

12:50 you have legislation and then the implementing rags and then you go live.

12:54 But interestingly with stable coins particularly under

12:56 this administration you have rapid movement by the regulators

13:00 to allow a use of stable coins

13:03 for some of the most complicated payment activities

13:07 uh even before genius gets fully implemented.

13:10 So you have genius getting implemented but then at the same time you have

13:14 the CFTC for example allowing stable coins

13:17 to be used for derivatives uh trade settlement right

13:21 uh and that is enormously exciting it's almost like a big sandbox for example

13:26 that is you know what they call

13:27 in a regulatory perspective where you've got market participants

13:30 executing on and using the innovative technology

13:34 with the blessing of the regulators even

13:36 as the actual regulations get you know bedded

13:40 And and that's uh and that's really powerful, right?

13:43 And and Moran Nelbi from checkout.com, I want to bring back what he said.

13:47 He mentioned earlier that as they design their processes,

13:51 they have to account for not just different countries regulations,

13:54 but even different states that have different rules.

13:57 Well, you know, that's the that's the big dilemma

14:00 that I think the industry has at the moment.

14:02 There's certain issues about how regulation takes place.

14:05 So for example, for exchanges who intermediate crypto trades,

14:10 spot market transactions,

14:12 which are the bulk of the crypto trading that you see out there,

14:15 um, at the moment that is subject to state regulation,

14:20 and it's not clear whether there's

14:22 full federal preemptive authority over the states.

14:25 And so that just creates a chaotic environment where

14:27 you have 50 different regulators across 50 different states.

14:31 consumers don't know what rules are applied

14:34 to them depending on where they live.

14:36 Uh and developers have a hard time implementing and managing the compliance

14:41 burden of having 50 different rules each different for each different state.

14:45 And so there are issues like that.

14:47 But generally speaking, you you also have at the same time a real

14:52 willingness on the part of the regulators under the Trump administration

14:55 to use every bit of the authority that they have

14:58 uh to provide the clarity that the industry is looking for.

15:01 So there's um legislation's critical.

15:04 It's our number one uh objective from a policy perspective.

15:08 I'm confident we're going going to get it done,

15:10 but we are at the same time working

15:12 with the regulators to encourage them to provide clear rules.

15:17 And what I mean by that is for sure

15:20 every time you have a change in administration,

15:21 new regulators come in and can change the rules.

15:24 But it's very it's it's not as easy as as it sounds for them to do

15:28 a 180 if the previous administration has finalized

15:33 the rules and market practice has adapted and adopted

15:36 those rules because it becomes hard the courts

15:40 are careful not to allow regulators to engage

15:43 in activities as that creates sort of an unfair

15:45 burden or chaos in the in the markets.

15:48 And so there is a really interesting effort by the Trump

15:51 administration to get legislation done but at the same

15:55 time to race ahead with a with sound regulation uh

15:58 that they hope to bed down have market practice evolve around.

16:02 So even if legislation doesn't get done done it becomes very

16:05 hard for a future crypto hostile uh administration to reverse things.

16:11 If I were to ask you to look

16:13 at the Doppler radar of crypto regulatory development,

16:17 what's the temperature right now?

16:18 What's the weather?

16:19 What's in the forecast?

16:22 It's a really really interesting time because there was a lot of momentum,

16:26 very fast momentum early in the in the Trump

16:29 administration to make these changes that I was talking about.

16:32 But what really has happened probably since Q3

16:35 Q4 of last year and it's even stronger I

16:38 would say now is uh kind of the incumbent

16:42 financial players have woken up and have launched

16:46 some of the most furious attacks on these changes

16:50 that we're talking about uh because of fears

16:52 about what it'll do to the economic rents

16:55 that come with you know their um their incumbency.

16:59 And so you're seeing all the traditional financial groups kind

17:02 of jump up um and say, "Oh, wait a minute.

17:06 We're not against this technology, but please not so fast.

17:09 Do it more slowly.

17:10 Uh put more frictions on it.

17:12 Make it harder." And companies are like ours are trying to uh

17:16 you know be a be a counterbalance to that resistance.

17:26 What do you think the stickiest issue is

17:29 right now between incumbents and the crypto industry,

17:34 the digital assets industry, the platforms?

17:36 The rewards fight is the most obvious kind of visible

17:39 example that you see written about in the press.

17:42 But the other example is is the fight that's occurring at the SEC.

17:46 The SEC chairman wants to migrate capital markets on chain.

17:50 T+ 5, T plus 6 has gone down to T plus1 plus two or three.

17:56 Uh we can take that down to T's plus zero.

17:58 Uh do instantaneous settlement.

18:01 Uh but a lot of folks who make their money off of that lag.

18:05 Don't want that to happen.

18:06 It's a big big issue because it implicates a lot of financial

18:09 intermediaries who are huge economic runs

18:12 by sitting in the middle of transactions.

18:14 But uh just like you don't need a a mailman to send an email uh

18:19 to someone uh you don't need to have

18:21 a necessarily have an intermediary to transfer uh

18:25 value in the way you used to or trans a stock or a um you

18:29 know or a dollar and the question is will public policy stop that or enable that

18:34 and we've talked a lot about what the US government is doing.

18:37 What about internationally?

18:39 Well I think of it in in two tracks um just to oversimplify it.

18:42 One is the stable coin track and the other is the market structure track.

18:47 I think a lot of other jurisdictions move well

18:49 before the US to establish rules around crypto trading.

18:52 Europe being a great example of Mika the market

18:54 and crypto assets regulation uh that they passed.

18:58 But where the shoes are reversed is

19:01 with regard to stable coins or digital money.

19:04 Uh in that other jurisdictions have moved

19:06 much more slowly than the United States and some places like the European Union

19:10 are let's say ambivalent about stable coins.

19:14 But what's happened is this Genius Act passed.

19:16 you've had massive adoption and all around the world now

19:20 uh there's enormous concern that because the US has gone

19:24 ahead and adopted so vigorously tokenized dollars and given the insatiable

19:31 demand the world has for uh dollars as a you

19:34 know as a sore of value and as a transaction

19:38 currency uh that there will be enormous pressure on foreign

19:42 currencies in terms of how relevant they can become

19:45 if the dollar becomes more accessible in stable coin form.

19:50 And so one of the messages that we've de delivered

19:52 to other jurisdictions is whatever you think about this technology,

19:56 the decisions been made.

19:57 The US has moved forward.

19:59 Dollar stable coins are going to scale dramatically.

20:03 Uh the adoption's happening by across the board by corporates,

20:07 financials, everybody.

20:08 And so if you want your currency to remain relevant,

20:12 you have to have a tokenized version of your currency.

20:15 And I think that's why you see more more

20:17 kind of rapid action in Canada uh the UK

20:22 to adopt uh stable coin frameworks for their own

20:25 currency and we think that's actually a good thing.

20:28 I think the more currencies are available in tokenized

20:31 form the healthier dynamic you have of you

20:34 know foreign exchange uh transactions occurring or transactions occurring

20:39 in in you know and settled in different currencies.

20:42 And so we we hope that will happen.

20:45 So do you think global players need one harmonized model

20:49 or can the market function with multiple national regulatory regimes?

20:54 You don't have to have harmonization.

20:57 But I would say I would say with stable coins, you know,

21:00 you'll have situations like right now in the UK

21:02 where the Bank of England is proposing

21:04 pretty tight caps on how much pound sterling

21:09 stable coin any individual can can hold or use.

21:12 Uh, and they're trying to do that because they want to be

21:14 careful about the transition from the the analog system to a tokenized system.

21:19 We think that's a big mistake and that they need to do what

21:22 the US has done which is to adopt it rapidly and integrate it

21:27 into a broad range of institutional and retail use cases and that flywheel

21:33 of adoption will be healthy for uh the development of the of the pound sterling.

21:38 So it's not an imperative that the rules be you know harmonized but there's

21:42 a common sense dimension to it that we

21:44 sort of support on the market regulations.

21:48 Um um that is a place where having

21:51 more consistent rules makes a lot of sense because

21:54 if you're building a financial product or let's

21:57 say you're building an update of a traditional app,

22:00 you need to have some consistency so that that app can be

22:04 uh you know accessed by users around the world under the same rules.

22:08 There are also some kind of more esoteric sounding things like for example

22:13 in Coinbase I'll just give you kind of a more practical example.

22:17 We want customers who want to use Coinbase to ultimately

22:20 be able to source the liquidity for their trade.

22:24 So if you wanted to buy a Bitcoin or whatever,

22:27 uh have all of that liquidity as centralized as possible.

22:30 That's actually a good thing because it creates deeper, more robust markets.

22:35 It creates more effective price discovery.

22:38 Uh deeper, larger uh pools of liquidity are less susceptible to systemic events.

22:45 Um but that requires some harmonization but that's where you you

22:48 you need a dialogue and the US and UK happen to have

22:51 a dialogue right now going on between the two treasuries u coordinating

22:56 and collaborating on crypto and blockchainbased

22:59 and tokenization market regulation and this is

23:03 one of those issues that we've urged them to look at which

23:05 is creating a system in which they recognize each other's regulatory

23:09 system and so UK companies who want to operate in the US

23:13 can provide US customers access to UK liquidity and vice versa.

23:17 And that requires harmonization.

23:21 That's Farar Sherzad, the chief policy officer for Coinbase.

23:27 It's clear that things are trending in the right direction.

23:30 The big questions focus on the pace of regulations and whether innovators feel

23:34 there's enough certainty and stability to build

23:37 products and push them into the market.

23:39 Checkout.com certainly feels that way.

23:42 It's going to be exciting to watch as they roll out their new platform.

23:45 With that in mind, I want to go back to Kalbeti and ask him if their roll

23:49 out goes as planned and stable coins become more

23:52 widely used as an easy to move universal currency, how will it change the world?

23:59 If this were to work,

24:00 I think that seeing the ecosystem of money movement move to towards

24:06 rails um that are digital and having payments that are borderless,

24:16 that are free across borders,

24:18 that don't suffer from the slowness that the existing system currently has,

24:22 that uh don't suffer from the exchange fees that we're seeing.

24:28 All of that makes for I think a better

24:31 consumer experience and a better merchant experience and that's what

24:34 we as Checkout are trying to facilitate all the time

24:37 and trying to find ways to to to enable.

24:40 So it's maybe utopic uh to to think about it now but I think

24:44 that there is a a few years down the line um it could happen.

24:48 So fingers crossed.

24:55 I'm Angie Laauo and this is Evolving Money,

24:58 a co-production between Coinbase and Bloomberg Media Studios.

25:02 Thanks for listening.

25:03 There are more than a dozen other conversations

25:05 in our feed for you to check out.

25:06 So don't hesitate to scroll back in time and listen to some of those today.