At Circle’s inaugural ecosystem conference, Converge22, held in San Francisco the week of September 26th, a few things were conspicuously absent: discussions about token prices, NFT launch flyers, and people claiming to be Satoshi Nakamoto. Instead, the conference was focused on operationalizing existing protocols, tackling challenging technological barriers, and providing new tools for traditionally marginalized populations. Circle Co-Founder and CEO Jeremy Allaire established the theme in his opening remarks: The blockchain industry is moving from the speculative phase to the utility phase – building products and services that can improve people’s everyday lives.
Circle’s push to move the crypto industry towards utility value is a subtle acknowledgement of the big promises from the last decade that have yet to be fulfilled. In a little over a decade – and starting 100% organically out of an email list in a corner of the internet – cryptocurrency has enabled nascent political, economic, and social structures that aren’t being explored anywhere else in society. It has presented financial services alternatives to the static banking industry (which only consolidated further after 2008). But in terms of value-to-regular-people, outside of novel financial markets infrastructure, it is a work in progress. Admittedly, that has hurt crypto’s credibility with new audiences.
That’s changing though. In payments alone, Converge22 demos and product launches showcased dozens of ways in which crypto rails can deliver new features and experiences to billions of people worldwide. Solana Pay, for example, featured a USD Coin (USDC) “faucet” that could be used to buy retail goods with low-latency and zero-fee payments – from $0 balance to t-shirt in less than a minute. Programmable dollars enable developers to build new user experiences that are not possible in legacy systems. As one of the demo developers said, “the benefit of paying with crypto isn’t that you get to pay in crypto.” Rather, digital dollars evacuated from the walled gardens of the banking system are fundamentally more usable – they have more utility value – than dollars shackled to 50-year-old rails. On permissionless, public blockchains, the surface area of innovation is whatever anyone in the world can think of.
As with all things payments, Stripe gets it. On the Converge22 main stage, Stripe’s Guillaume Poncin announced payouts to freelancers in USDC. Stripe partner Braintrust is a global freelance worker platform that vets high-skilled labor and connects them with Fortune500 companies. Walmart, Deloitte, Pacific Life, and Blue Cross Blue Shield are just a few of the companies that source talent from Braintrust. But while finding talent and obtaining high quality work is easy, paying contractors through the traditional financial system is hard. USDC payouts through Stripe allow U.S. employers to reach 4.4 billion people in more than 110 countries, who can receive USDC almost instantly. That’s a tangible improvement from the financial and economic system that is live today. All of the building blocks to conduct global value exchange using USDC as a platform exist, and entrepreneurs are making use of them.
Faster, cheaper, more programmable payments would be more ubiquitous but for one thing: a comprehensive legislative and regulatory framework for payment stablecoins. The backdrop for Converge22 was steadfast effort amongst Members of Congress and Executive Branch officials to establish a federal framework for payment stablecoins. On the main stage, former Treasury Secretary Larry Summers drew parallels between the current moment and how the New York Stock Exchange became the center of global financial markets under U.S. regulation, concluding “proper regulation” is a “substantial enabler for industry.” Without a federal framework, millions of people and billions of dollars are kept on the sidelines.
Our congressional leaders understand the urgency. House Financial Services Chairwoman Maxine Waters (D-CA) and Ranking Member Patrick McHenry (R-NC) both addressed the audience of Converge22 to great interest. They set out the importance of the U.S. carefully crafting stablecoin policy, holding at all times – as Chairwoman Waters said – the interests of the American people first and foremost. Ninety-nine percent of stablecoins today are dollar-denominated, reflecting the relative stability, strength, and property rights afforded by the U.S. dollar as well as the strong preference for access to the dollar around the world. As global strategists in D.C. fret about the threat posed by the e-renminbi, people around the world have organically generated over $130 billion of demand for digital dollars in the past four years. Emerging from the diverse array of voices at Converge22 was a clear call for the United States to seize the opportunity and win the digital currency space race.
The policy is relatively straightforward. In a world of jargon and novelty, stablecoins are a simple concept. Dollars on a blockchain. Money that moves natively on the internet. The federal rules to regulate this concept are clear: payment stablecoins must be universally defined and fully reserved; issuers must follow AML/CFT rules; they must face robust prudential regulation and oversight; and core financial infrastructure must have access to the safety of Federal Reserve deposits. Affirming the potential, Ranking Member McHenry said stablecoins issued under these broad principles could become the “cornerstone of a modern payment system.” While some issues around the edge may require compromise, the barriers are not insurmountable. They must simply be overcome.
Businesses, the financially excluded, and everyday Americans stand to benefit greatly from the widespread proliferation of blockchain-based payments. Traditional banks make money on the transaction friction that exists today, said Kevin O’Leary, but “too bad! If we could use a stablecoin that was regulated and approved by both sides of the transaction, it would be more transparent, faster, and a huge cost savings” for the end user. The technological primitives required to enable these benefits are available and quickly maturing, but adoption will not happen without a partnership between the private sector and public. Until then, the local coffee shop will continue to lose 4-6% of its revenue to card fees; the unbanked will continue to migrate from prepaid card to prepaid card; and “de-risking” will continue to be the dominant force in cross-border remittances.
Value from utility, not speculation; doing, not talking. That’s the charge that Jeremy Allaire gave to nearly 3,000 people in San Francisco, the great American city that has been the heart of American innovation for the past three decades. From the tech demos to the testimony of global role models such as Serena Williams, Converge22 demonstrated the resolve of innovators in the USDC ecosystem, and it sent a clear message to U.S. policymakers that now is the time to act.