Crypto's Next Chapter with Elizabeth Rossiello of AZA Finance, Antoni Martin Bertran of Polygon, and Emma Crosby of CNBC

At the World Economic Forum in Davos this January, Circle Co-Founder and CEO Jeremy Allaire  joined AZA Finance Founder and CEO Elizabeth Rossiello and Polygon Co-founder Antoni Martin Bertran in a discussion about crypto’s next chapter hosted by CNBC’s Emma Crosby. Allaire, Rossiello, and Bertran discussed the real-world problems they’re helping to solve, the regulatory outlook and the vision that motivates them as they contend with market tumult.   

This Money Movement episode covers:

  • [0:25] – What went wrong in 2022
  • [5:16] – The split between builders and speculators
  • [12:03] – Unleashing blockchain’s promise
  • [16:45] – Empowering communities
  • [22:05] – Outsized impact on the industry
  • [29:45] – Problems with regulation by enforcement
  • [35:13] – CBDCs

If you’re interested in learning more about the dawn of crypto’s utility era, tune in to this episode of The Money Movement.

Host: Were the failures we saw driven by bad tech, bad people, or bad regulation? What do you put it down to?

Jeremy: I mean, I think there are a lot of pieces here. I think the first is the blockchain technology did not commit fraud. Humans committed fraud and in fact, alleged fraud. I have to say alleged fraud. Fair enough. Although there are many events throughout the year, I think very clearly, if you look throughout this entire environment, public blockchain infrastructure just kept running and executing code and settling transactions and operating, and the entrepreneurs that are building technology continued to build. So technology certainly is not the issue here. I think regulatory is relevant, very much so. And there's sort of arguments like, had there been a regulation here or there, might this have been avoided? I think that there's some truth in that for sure. But that's a global issue, not a country specific issue. You need kind of G20 normalization so that there aren't people who are going to the Bahamas to run global financial institutions without any internal controls. 

So I think we need robust frameworks. But at the same time, I think 2022 clearly, in my opinion, marks a significant ending of what I think has been a dramatically, you know, sort of speculation focused phase of this market. And I think we are very definitively and we were talking about this last September at our own event. We're moving to a utility value phase of this industry. And in fact, digital assets like USDC, one of the only assets in the world that grew last year, a business that grew 300% and is profitable and scaling around the world that circle. And so technologies and products that are focused on real world utility are going to be what drives this industry going forward, whether that be for brands or financial institutions or others.

Host: I want to talk about utility value definitely in a few minutes time and of course, regulation. But Elizabeth, to you first. I want to get your views on 2022 and what you thought drove these spectacular failures and has it undone any of this hard earned progress that your industry has won?

Elizabeth: I think the same issues that think companies globally and before this technology are the same issues that think companies right now. Bad business culture, bad business practice, poor due diligence, poor oversight. I think these are not brain surgery level topics. These are some basics of business that are still not being adopted by companies, that are being invested in by some of the largest investors in the world and some of the largest regulators. I've been running the business for ten years, same as circle, Jeremy, and there's a cohort of good founders with solid business practices that are still building and have had great years. And while it's really damaging for the industry as a whole, I think it's just this lesson that still needs to be learned, which is why does a small company like ourselves have to file regulatory reports every single month in all of our jurisdictions? Why are we supposed to have so many different auditors from the big Four come into our building and billion, trillion dollar businesses don't have that same or not expected to have that same from their investors? 

I think it's just poor oversight. Which leads back to why do some people get less oversight and more others? I run this business that deals with African currencies, so we have every spotlight on us and we have since day one. And it's developed a very serious business culture. I know that the CEO of Silvergate, back in the day when he first started, said, I have the regulators in my office every month, so my business is built knowing that they're coming every month. So back to what Jeremy said about where are the regulators? But it's also what about the investors? What about the shareholders? So I don't think the technology has changed. I think the good founders are still building. The good businesses are still making progress. It's hurtful and provides more hurdles for the industry when so much of the noise gets a big distraction. But again, the fundamentals haven't changed.

Host: Yeah, I bet it is. Antoni, you have said it's a time to differentiate and build on the back of last year. What do you mean by that?

Antoni: Thanks for having me. Well, adding to what Jeremy and Elizabeth have said, I want to at first that I was working for 17 years in a bank, and I have seen this constant boost. Embarrassed. I mean, this is normal speculation, human behavior. Okay, then I think 2022 has been a very good year. And the reason is because it's been a good year. Yes. Interesting. And the reason is because we have a splitter between people who want to build, we want to create, and people who is there for speculation. And this, it clears all the forest. Let's say. Then it's true that I have seen amazing companies, and obviously Syed Khalis is one of them. But I can tell you have seen a lot of good developers, a lot of good companies starting projects for supply chain in Africa, for remittances in South America. Also, honestly, we are delivering the decade roll up in two weeks, which I'm really proud about. But okay, guys, we know in all the emerging technologies or markets, and we saw that with internet, with 2.0, we have seen this speculation before. I was there. And in fact, I can tell you I lost a lot of money at that time. I was religious. Now then, yes, I mean, this is normal, but for me, it's the time to be focused on building. And the good thing is that at this moment, each time the people is understanding that they should come less for grants, for nothing, or for free and more on a partnership mode, saying okay, I can bring you this. What you can bring me and Polygon, for example. We are very eager to help in kind meaning on marketing, providing technology, over coaches, open source we are looking for partnerships. Then for me, I'm still optimistic knowing that of course a lot of people have lost a lot of money and I'm not happy about that. And this is clear.

Host: I want to ask you about that. I'm not necessarily about the money, but it has been a very serious subject and we asked Brad Garlinghouse from Ripple earlier on whether there are more shoes to fall. I know it's something that everyone's I mean, do you think this is the end of it or do you think that there are other big kind of blow ups in your sector coming?

Jeremy: Well, I think there's a couple of things to keep your eye out on. I think the first is like boom and bust. There is a gradual period of people running out of money and so there's a lot of capital that's gone into a lot of different projects and companies and some of them don't have sustainable business models as capital dries up and the scrutiny of where to invest capital is not in a hype environment. I just think naturally you're going to see a lot of consolidation, a lot of firms that just have to pivot or do something really different or just go away. So that's sort of a natural market cycle in terms of bigger, if you like these big spectacular things. I think the thing to keep your eye out on are will there be significant government action on kind of offshore hydra companies that have tried to resist government regulation and maybe have flaunted the law aggressively for many years. I think there are risks for some of those and some of those are sizable businesses and so those could be kinds of shoes to drop, but it's hard to know those cool things and.

Host: Elizabeth, you're nodding? What do you think?

Elizabeth: I think we've learned from the recent situation is that there's some basics to follow. So proof of reserves if you're deposit, taking a bit more about governance, a bit more transparency. I mean, if the big companies are not able to do these very simple things very quickly, then there's something wrong. And I think at least now we know what we're looking for. We've learned this lesson for the 30th time now, so maybe this is the time that it sticks. But again, there are not that many companies as spectacularly large or as entwined as we've just seen. This is a relatively small and growing industry because we are still on the forefront of the growth. This is just ten years in.

Host: Antoni?

Antoni: Well, not a lot to add. I mean, yes, I think that now I was thinking that when I was 22 or 24, there is a book. This time is different from Carmen Reinhart. And as you were saying, this will happen again. There are these cycles, and we are part of that. And yes, I also feel or when I was speaking with some stakeholders, some partners, that we have understood that we should be very focused to do things in the right way, to be compliant. Why not? I mean, at the beginning, it seemed that this should be like a Well West sector, and it's not the case. At the same time, we are open source. We are collaborative. We want to educate people. And yes, with this in mind, I feel that we are in the indirect path.

Host: Okay. Now, you're all pioneers in this industry, has to be said. Jeremy, I think this might be your third or fourth crypto winter, is that right?

Jeremy: Yeah, the third.

Host: You see tough times before. So what is it that motivates you still? I mean, how is your vision evolving, particularly within your company?

Jeremy: What's interesting is that the vision that we set out with ten years ago is the same thing that we're executing on now. That being that open, public, open source, public internet infrastructure in the form of blockchains would allow for the representation of what we think of as traditional money. Meaning, like what I consider government debt obligation money, fiat money to be able to represent that as digital currency and to have protocols where you can transact that and program that and operate that on the public internet. And to have kind of frictionless, value exchange and new ways to use money on these networks and ultimately to kind of reconstitute the building blocks of the financial markets and financial system on that. So that's very much in scope and happening and building. And so for me, it's just been always I'm a technologist by background and have been through many, many technology boom and bust cycles in the internet industry since early 1990s. 

And I think what I look for is where are we in the technology adoption cycle? Where are we in the technical improvements? And like with the dot com bust of 2001 2000 2001 the promise of the technology was very clear, and so many companies were funded on the vision and the hype, but the actual capabilities of the technology weren't quite there. And so there was a real letdown and then that deflated out of the market. There's something similar here, which is blockchain infrastructure is just now hitting the point through platforms like Polygon, for example, where you can have highly scalable transactions that only cost a penny and you can have a regulated digital dollar like USDC running on that. And so we're just now hitting the point where the promise is available to us.

But if I think about the next couple of years there's tremendous progress being made towards making this a user experience that is in some ways invisible to users. They're not going to be thinking about I'm using cryptographic money, or they're not going to be thinking about a blockchain address. They're going to be using things that feel more like realworld identities and moving value around the way they move text messages around. And so that's right in front of us. And so what motivates me, my team, my company, is we have a mission, we have a vision. It's constant, it's consistent, and we're very optimistic about the technological progress that's happening and frankly, very optimistic about the regulatory progress where we were ten years ago to where we are now. The fact that this is a G20 major policy issue is tremendously positive in terms of this becoming a mainstream infrastructure around the world.

Host: Okay. Elizabeth, being a female entrepreneur in Africa and also a mum of three, I believe, is that right? You're a pioneer in your own right to have to say, deserve a medal just for that. But in terms of being a pioneer within the industry, I know you've talked about industries made up of people who have got a genuine humanitarian intent at heart. And is that your motivation still?

Elizabeth: Yes, but I mean, humanitarian aid is not only in vaccine distribution, so maybe I'm a capitalist humanitarian. So I think for us, our mission has always been from day one, remove the friction in using African currencies, because just that one little piece of the African macroeconomic component was holding back so many businesses and so much growth. So we're not going to tackle everything, but that's the little angle we've tackled. And by removing that friction, by introducing market making in digital currencies already ten years ago, we've now seen huge growth, and we're part of that growth on the continent. And we did a billion dollars of USDC. We'll do a billion dollars in USTC this year. And ten years ago, I would have to email Jeremy and say, I have a client and they need to send through from this remittance over here, and it's $10,000, can you approve the client? So, I mean, we were already making things happen together. 

A lots of founders around the world that we're building before we had the regulation, before the technology, before the infrastructure, and for those that have continued to build that infrastructure, now we can send through millions of dollars of payments on USTC without Jeremy even knowing what we're doing. Right. And that's the point of it. I mean, he knows, but he doesn't have to be called. And I think it's really exciting to see that evolution. So when I think about product market fit and I think what we've built on the continent and now we count 35 of the largest remittance companies use us, all of the major banks, corporates, fintechs on the continent trade with us. We've seen 150% growth from last year alone, and we've just opened our 15th market in Cameroon. So I think, step by step, that's what makes us proud. And every time we do that, every time we enable a fintech or a remittance company or a bank to trade between African countries and between Africa and the world, I think that's a humanitarian project, because why should Africa be left out of the growth? 40% of the global population will be African by the turn of the century.

Host: And a very digital savvy population that is coming up the ranks particularly well.

Elizabeth: It's the youngest population, right? And this is a population that was born with mobile money, which came online in 2007 when I first moved to Kenya. And we've seen 40% growth in the use of mobile money in Nigeria, which compared to 20% growth in South America. So while you still have double or triple the amount of mobile money users in South America, the growth has now starting to taper off, and we're seeing that transfer to the African continent. So this is the future.

Host: Antoni, let's bring you in here. I'm glad you mentioned your kind of previous 17 years working for kind of incumbent banks, the the old style banks. I read this fantastic article you said about your your first day working for a crypto firm or blockchain firm. Everyone was singing, and you were a bit kind of bit taken back by.

Antoni: The EDCON Toronto.

Host: Yes. So is that, you know, is that magic still there for you? Where do you think the blockchain current technology is on its kind of evolutionary journey?

Antoni: Well, I don't have the crystal ball, then. It's difficult to assess that.  The only thing, and with this, I will continue with your question, but I think when you were saying that we're in a crypto winter yes, but the trend is positive, and we cannot come back to 2015 and buy Ethereum at $15. Okay, that's what they are then. That's one thing. The second thing is you were saying this, and last year we were through different also African countries. In fact, I was also living when you're in Ivory Coast and yes, in Uganda, half of the population is below 15 years. I mean, this continent will explode. And I think we are not aware about the power that is the human capital power that they have. And the pity, as you were saying, is that they are coming to Europe and Africa because they don't have opportunities there. But if we create the right ecosystem through Stablecoins or through this kind of project, it is the best humanitarian project that we can do. And I totally agree with you. And then where we are, well, it's difficult, but it's also true.

And speaking of the incumbents, is that now blockchain is not a bank's word anymore, all the incumbents meaning this year, I have been in parliament, I have been in central banks, I have been in big corporates. They know that they need to use blockchain. Obviously, and this is what I sometimes try to explain also, maybe you don't need blockchain for all the used cases. Maybe for some used cases, a central survey is the best solution that you can have. I mean, let's be honest about that. Obviously, I believe in the centralization, in the empowerment that is given to communities. And we should bet on that. But for me, the reality is that all this initial stage is over. And I think the problem is that with incumbents sometimes, and I know because I was there, you need 15, 17 or two years to implement. And maybe Jeremy has some experience also there, but I see that in the next two years we will see a lot of the incumbents implementing blockchain solutions, which means that blockchain will become really mainstream.

Host: Yeah. And of course, you have endorsements recently from the likes of BlackRock, the likes of Goldman Sachs in terms of blockchain being used within the payments sector. Jeremy, you talked about utility value a short time ago, so let's talk about that. Can you give me real world examples of how this technology is helping citizens in all, in all aspects of life?

Jeremy: Absolutely. I mean, we see it in so many ways. And a brief advertisement, we put out something called the State of the USDC Economy report of this week, which talks a lot about all of the kinds of things that we're seeing in the broader USDC. USDC being your USDC being the digital dollar issued by Circle, and sort of the economic activity that's happening in that and how to interpret and understand that. So, real world examples, businesses moving money to suppliers in Africa using USDC. And right here, via a partnership that we have, we have many fintechs in Latin America that are building applications to enable seamless movement of payments both for businesses and consumers between Western Europe, the US. And Latin America. We have companies like Stripe that have implemented USDC to pay out freelance employees for marketplaces and marketplace suppliers that use Stripe's platform for eCommerce. And Twitter is an example of that, where Twitter allows creators on Twitter to receive their payments using USDC on Polygon, in fact. And so it's a combination of Stripe, Twitter, USDC, Circle, and Polygon that's a really powerful example of the creator economy benefiting from the ability to seamlessly receive digital dollars. 

Around the world, we have major payments companies like Block building remittance applications themselves between the US. And Mexico. So internationally, we're seeing that the other is just something as basic as there's strengthening of the dollar and there's demand for digital dollars around the world because people want to hold a digital dollar that's backed by government obligations. And that's a valuable thing. So the store of value used cases is not to be undersold as well. But we're seeing invoice factoring where USDC is being used for payments, we're seeing companies that are tokenizing investments into real estate where the payment flows are happening in this. So lots of things it's really exciting to see and the proliferation just continues.

Host: This is just your brilliant area for you. Can you give me some of your favorite examples, kind of what you're doing, which the Legacy Framework can't do right now, particularly in Africa?

Elizabeth: Well, it's seven day settlement. This seems to be missed a lot in the conversation. But business happens on Saturdays and Sundays, especially in countries that have a Muslim calendar, especially in countries that have people's needs 24/7. Like the remittance industry, we see a surge in remittances between Friday and Monday. If we can't trade on Saturday and Sunday with our remittance clients because the banks are closed or Swift doesn't settle or things like or it's a dollar holiday, for goodness sakes, like it just was where the Monday is off, that's three days, no trading. You know what kind of credit risk that puts on fintech, banks, businesses not to be able to settle on those days when it's Ramadan or a holiday and it happens to overlap with a US dollar holiday, I take on a huge amount of risk that can break us, that breaks a lot of companies. Or you see remittance prices triple. 

Since I've entered this business in ten years ago, this industry remittance prices have continuously fell. And I think it's pretty exciting that six months after we started, Western Union slashed their prices and were mentioning us in their marketing campaign and I'm just one drop in the bucket and just again about all the things that a company like Circle is like 43 billion, I think you guys have done right now. Now, I used to work at Credit Suite just down the street from here in Zurich, and that was 66,000 employees. Now, I'm not sure how many employees Circle 1000 now can do for 43 billion. What is 66,000 employees? That's wild. These are the size and the speed of these giant financial companies. So when you talk before about Polygon, working with Twitter, working with you and Stripe, that's very agile and easy to be done. So the speed of innovation continues because to be able to use this technology, you have to have businesses that are heavily based with engineers that are using APIs, that are thinking agile. It's not just what is this technology, it's what is this business change that we're really seeing that businesses have to adapt this technology all the way through their business to be able to keep up with the pace of change. And we're not seeing traditional financial institutions do that. 

And I think the companies that have been able to create a real business with a product market fit with real clients and real revenue and have this agile way of going, are completely changing the industry. And just one last thing on used case. We work with a bunch of Fortune 50 companies whose treasury team might sit in Geneva. And when they trade with local African desks, they were really struggling to receive settlement even from the largest banks like City or Sam charter were able to to offer 24/7 settlement for them and again, when the Ghanaian Cedi is crashing 40% a day, every day matters. And when you're a small African business and your swift payment goes missing, even one week a year, two weeks a year, that's two weeks of your working capital. So I think people don't understand that the system works good enough is what the answer usually is. But it's really hurting a lot of small businesses and preventing them from growing at the same pace that businesses elsewhere grow.

Host: Yeah, it's fascinating examples there. Antonio, how do you see blockchain technology helping real life situations? And maybe we'll see some leapfrog technology here. What's developing in Africa being used in other parts of the world?

Antoni: No. Well, I think that the good thing here is that Blockchain doesn't as it is decentralized, doesn't need infrastructure. And that's somehow the magic of the concept. This is what it's making different. Then what happens is that if you are in a refugee settlement like Nakivale in Uganda, where they have a lack of identity with your phone, they can have okay, according they can create maybe a reputation identity on top of Blockchain through this phone. And with this they can open a bank account also in a blockchain way or in a digital world, at least for me. And I will go to three concrete use cases. But more important is that through the education we are empowering these people. It's not that now we are providing a solution to them anymore. They know better than us what they need. And I have seen a lot of startups, we have more than 80,000 Dapps on top of Polygon and a lot of them are from these countries. And we have in fact one specific program named Polygon Village specifically for this startup from development countries. Not then obviously use cases, supply chain nowhere where you can ensure that the harvest is coming from farmer and you are trying to avoid that being a middlemen, they are keeping all the value and also through a Stablecoin you can pay to them and then they receive as many value as possible. 

And this is a game changer because some of them, they are earning less than one dollar per day. Another case, and you said that already the remittances. I mean, in countries where you pay 20% for a remittance, but that they also have eight or 10% daily inflation and where they need ten days to receive their remittance, then when they receive the money, the value is zero. Now, then you can imagine to send it through Polygon or any other platform, whatever, but in this case, Polygon and in a Stablecoin, it's a perfect use case. And also why not? I mean, let's reimagine TMM these days in Africa for some of the spaces that are in danger, they are creating an NFTs and all the village, if they take care of the gorilla or the giraffe, whatever, this NFT is earning value and they benefit from that, which means that they will avoid that. There are hunters around, not then. I think that there are a lot of tangible used cases. But if you ask me, for me, remittances and supply chain are the two main.

Host: Yeah, so it is a remarkable technology and the potential it's already being used and the potential is definitely there. But I suppose even the most remarkable technologies fail if there's no trust. And trust is a big issue at the moment within the industry. In terms of operating safeguards and regulation. I know this is something we were talking about when we had the chance to talk in May in Davos and the spring Davos. I know, Jeremy. You have been on Capitol Hill. You definitely are an influential figure within the industry. What do you think is coming down the track and what would you like to see in terms of regulation?

Jeremy: Yeah, I think there are a few things. The first is there are multiple parts of this ecosystem, right? We have Stablecoins, which I think everyone agrees is the lowest hanging fruit and the most clear. And in fact, there's fairly consensus view on what regulation should be. And that's coming into effect already in the EU over the next year. Singapore, Japan, Hong Kong, the UK very soon with the new financial services, financial markets legislation and there's proposed legislation in the US. Which is very similar to these. So that's very significant. Once we have a clear foundation for fiat digital currency that runs on these blockchain networks, that unlocks a huge amount of value in this whole ecosystem.

Host: In terms of the merit US and in the US. One commentary on CMC said that swift, difficult regulation is coming down the tracks. Do you agree with that?

Jeremy: I think that's hyperbole. I think the Stablecoin legislation that we see on a bipartisan basis coming out of Senate banking and the House is again, it's consistent with the principles that we've seen in other places in the market side of things. I think that's where it's a little bit more complicated and I think you see kind of a tussle between kind of commodities law and securities law and regulation through enforcement, regulation through interpretive guidance, regulation through new laws. And in the US. It's kind of messy. But I think it is fair to assume that we will see a sharp increase in regulation through enforcement in the market conduct dimensions of this. We're already seeing that we've seen multiple SEC and CFTC lawsuits.

Host: Is that the right strategy, enforcement rather than rules?

Jeremy: Some of the enforcement is sort of looking back at past sins. That was one of the criticisms of some things that just recently. Came out. I don't think regulation by enforcement is the right approach. And I think across the board, what I believe policymakers and regulators need to be doing is coming up with very clear statutory definitions of digital assets. Because digital assets exist on a spectrum. This is not everything slots easily into the buckets that regulators traditionally have. We need statutory definitions of digital assets, and then you need sort of the sort of risk appropriate supervision for those. And there's some novelties to this, and we have to accept the fact that some of this is very different, and that's okay. 

And so we need to come up with an appropriate risk management approach for some of the novelties as well. And so in some ways, Europe has started to do that with MiCA. In other smaller jurisdictions, you've seen that holistic approach to digital assets as well. In markets like the United States, it's a little bit more challenging because you have these very large kind of cones of regulatory apparatus. I think there'll be fairly rapid legislation in some areas, and I think in others, it will take a little bit more time, because, frankly, it's just a little bit more messy.

Host: Yeah. Elizabeth, talking of messy, or talking of the fact that things are difficult, aren't they, in terms of on a regulatory level, with you just explaining how many hoops you have to jump through, what would make your life easier? And what do you think might happen?

Elizabeth: Well, first of all, I'll say despite all the changes that are happening now, for ten years, you've been able to be licensed. The real companies working in the space have E-Money licenses. They have payment licenses, they have MSB licenses. I've had my MSB license in Uganda for four years already, so in Spain for five years and in the UK for eight years. So you can be licensed, and you can start already to prepare for regulatory oversight right now. So if you meeting companies that say they have to keep waiting, I think that's also a red flag. I think the second point is that there's a difference between regulation that comes out and the derisking that's happening in the banking industry, and sometimes there's a mismatch, and that's very difficult constraint for the industry. So I think with any increase in regulation, there has to be a clear understanding of how will the financial sector respond to that, because there is still a blocking out of our sector because of the fear of potential future regulations. So I think along with the regulation directly at our industry is the bridge to the financial services industry and how banks and how traditional financial institutions are allowed to cooperate or work with companies in fintechs. And that's a bigger issue for the fintech sector, not just the digital currency sector.

Host: Right, okay. Antoni, I know that as well as talking to many companies daily about blockchain, you also talked about 40 EU parliament members about legislation that's coming through and what does the move music from Europe in terms of what you're expecting?

Antoni: Well, here, the point is, I see that the regulators who want to understand for example, in the last year, I have spoken individually with 90 members of the European Parliament.

Host: 90. You must know the name now of what terms exactly?

Antoni: From different countries, from different backgrounds. Then also we have been in the UK Parliament. I mean, today, for example, the Central Bank of Spain has issued a digital euro on top of Polygon. It's what I was saying before. There is an interest to understand, but this doesn't mean that also in Polygon there is DeFi. But for example, when I was two years ago, I was analyzing to create a lending platform and what I was scared is about all the collateral that you need to put on site. And then I decided to stop it because I was thinking to do it in the proper way, in a regulated way. Then of course, I think that we need to create these alliances with these companies that we are speaking constantly, where we are receiving feedback, where we are approaching regulators and governments. But this doesn't mean that we cannot be disruptive from the technological point of view. Therefore, let's be clear, let's be transparent. We have nothing to hide. We have an infrastructure product I think is better than a lot of other ones in a lot of senses. Let's explain why and yes. And then let's look for used cases where this can apply.

Host: Okay, thank you. I'd like to take the chance now to open it up to the floor. We've got about ten minutes, I reckon, to get some good questions going. Who is going to be brave enough and ask the very first question? And we've got the microphones ready, haven't we? There we go. Lovely Mo here. He's a gentleman standing with his headphones on. And there's a gentleman behind you, Mo. If you could just pass and if you could tell us your name and stand up, sir, that would be great.

Antoni: Yeah.

Audience 1: So my name is Manuel. I work for Polygon. A question to Jeremy from Circle. What's your vision for USDC within the next wave of projects like Project CDR in the US project family, the digital dollar backed by the Fed or cross-border payments on blockchain? How is USDC going to compete or to even collaborate with these new details that are backed by the Fed?

Host: Thank you.

Jeremy: Sure. So I think one challenge with the question is the Fed is not building a digital dollar. There's very little interest in the United States in Central Bank digital currency. There's very little interest in Congress on enabling the US government to do that. I think there's a lot of skepticism about the government being directly involved in the operation of retail payment systems. I think basically the entire financial industry, banking industry, as opposed to it and so there's no prospect of that in the United States right now. There's a discussion around the kind of upgrading central banks kind of core systems and infrastructure. A lot of people call that wholesale CBTC, which is, can central banks use distributed ledger technology for some of their own kind of inter central bank settlement? That makes a lot of sense. Central bank money is running on a very legacy architecture, and that should be modernized, but at the sort of level of touching end user entities, whether they be firms, households, individuals, there's no prospect of that today in the United States. 

And so from my perspective, just in terms of what's happening, there is a lot of energy around private sector digital dollar applications building on public internet infrastructure, having a stronger regulation around it. So I think we'll likely see federal supervision by federal regulators that oversee banking and payment systems, but overseeing firms like Circle. I think that's the path that this is on. And that's very important, because once we have that, then again, households and corporations and other financial institutions will be able to trust this and use this in the same way that they might rely on commercial bank money today. But there's obviously significant advantages to a full reserve dollar digital currency model like USDC and the openness of the internet. And so our focus is really just how do we enable developers, how do we enable companies that want to build on top of this open infrastructure to do that as easily as possible, to build as many types of different kinds of applications as possible? And I think this is a lot like the traction of other internet platforms. It looks a little bit different than past payment system innovations. This looks more like internet platform adoption and developer adoption of internet platforms. And so that's an exciting development.

Host: Do you briefly like to respond before we take more questions or we'll move on. Okay, another question.

Audience 2: I'm Sushil. I'm the CEO of a micropayment company called Dropp. We use USDC and we're about to use MATIC, too. Just a general question, quite a big fan of everything. So have you seen any resistance or issues with everything that's happening with the exchanges? At some point, you exchange USDC to a dollar, and many of our customers buy USDC at one of the exchanges and then use it on our platform. Have you seen any sort of issues or resistance from the community just because of all the issues we are having with all the exchanges that have been bad actors?

Jeremy: Yeah, I think there has been a flight to safety and quality, and that is both in the exchange space itself, or in some cases people saying, I'm going to get off of exchanges and take direct custody myself because I don't know who to trust. But in terms of Stablecoins, right, there's been this. USDC has remained very, very strong because people understand it, it's trusted, it's transparent, it's regulated, there's daily transparency on the underlying T-bills that back it. And so we've seen a lot more traction on exchanges, exchanges wanting to move off of what are perceived to be higher risk Stablecoins. And we think that will be a continued shift as people want to know that they're dealing with regulated and transparent and properly observed and audited types of firms.

Elizabeth: 100% and we're a market maker and a liquidity provider for some smaller exchanges and some smaller fintechs across the continent. And what we saw in the recent collapse was some of them were not following best practice. They were holding balances on these exchanges. Not your keys, natural coin and things like that. And we've seen them move over and we've saw them freeze payments. And it's a sad day when we see these small companies not follow best practice and go out of business. And I was saying, in ten years we only see a really good, robust company come up every so often and there's a lot of smaller companies that are not accepting those good business practices. And we definitely saw them fall off. 

What we have seen is that the customers that were using USDC just keep growing. And we were happy to welcome some very large Fortune 50 companies that wanted to trade in Stablecoins a couple of years ago. And I remember saying to Jeremy when he first started with USDC, I was like, honestly, I didn't know what to expect. You hear so many buzz words, you think, are people going to adopt this? And they did. And I'm agnostic. When a company comes to us to trade, we're willing to make a market. So I think it was really exciting to see this as customer driven and those customers are still there using it, no matter what's happening else in this space. But I do think that, like I said before, has exposed some bad business practices and maybe those companies do need to get edited out or called and learn from their mistakes.

Antoni: Yeah, probably to add, I mean, that it's not only a flight to quality, it's also the awareness of the consumer or the user that someone was giving an eight or a 20% yield to an asset that normally would have been for then what was happening there.

Elizabeth: True.

Antoni: Exactly then it shows that the good exchanges doesn't matter if they were big or small, and in fact, one of the biggest is not here anymore, is that they have survived and they are thriving the situation.

Host: Okay, we have another gentleman. If you tell us your name, that would be great.

Audience 3: Yeah. Hello. My name is Sico. I'm CEO of Infi Bank. We are a partner of Circle Edition,too, but I have a question about vision of this year and steps of exploration of banks, how other banks will be used Stablecoins and why they so slow on it because, like, a lot of different centralized exchange need to use the dollars accounts, et cetera. But something go wrong and what are going wrong? Why this exploration not so fast.

Jeremy: There's a general issue of sort of banks and their ability to work with blockchains directly and work with blockchain assets directly, whether that be a Stablecoin or an intermediary that's dealing with blockchain directly. And I know this is an issue that you're dealing with constantly with so many different banks in so many different places. But I think in some ways it comes back to regulation. If you have regulation that is defined in the financial system that says a dollar Stablecoin or a euro Stablecoin is a settlement instrument, that a financial institution knows what it is, they know how to account for it on their balance sheet, they know how to integrate it into their transactional systems. But it is codified in law that will open up the door to banks directly integrating to this. And I think it will significantly up. There certainly are banks that are implementing support for things like Stablecoins. And we work with many neo banks and I think more fintech forward banks, but I think the larger banks, they need that regulatory clarity before they can really adopt that.

Host: When is that likely to come, do you think?

Jeremy: This year.

Host: Okay, very good. Elizabeth?

Elizabeth: I think it's some of my markets, there's a distinction between derivatives and spot trading. And I think sometimes in my markets especially, I'm thinking Anglophone West Africa, Stablecoins are still being coupled with the derivatives, which means that they'll never be allowed to be held as assets with some of the banks. But they will have to go through brokerages and exchange houses. And that's why we're there, to make a market and to be that brokerage. So I think depending on the market and the regulatory framework, you'll see a different approach. But I think we trade already with many banks across the continent, in Europe as well. And I think there's a way for banks to trade either directly holding his assets or as any other financial asset. There is a way forward. And I think really it's just the derisking and the confusion about what the risk is in relation to their local regulation. And if that continues to be clarified and there continues to be data points and case studies of how it's used and a portfolio of clients that they see that using, they see transaction history, they see the compliance data, it's just getting easier and easier.

Host: Antoni?

Antoni: Very quick. That, for me, banks are trying to understand there are a lot of rails that we are creating together. And once again, for me, the technology is not discussed arere the best practices or people who are doing the things in their own way, then let's continue, let's explain, let's evangelize, let's create a used case together and things are happening.

Host: Okay. Sadly comes the end of our time together. I just want to wrap up very quickly with very quick answers, if you don't mind, about what you hope or would like 2023 to stand for your industry. Jeremy?

Jeremy: Well to beat a dead horse, so to speak. I really want to see in 2023 just the focus on utility. And I would love to see the media coverage and the activity, the real world activity, and really just seeing case studies of what people are doing and building and really celebrating that and reaching kind of new heights in the kinds of applications that people can build. I think that would represent the kind of progress that we need as an industry.

Host: Good point. Elizabeth, what would you say?

Elizabeth: Well, nobody on this panel looks like Mark Zuckerberg, and I think let's stop featuring stories about the same kind of person just because the way they look or where they're from or what school. They went to makes you think of another success story. It's time to go past the superficial layer and dig deep and look at companies and founders and technology for the fundamentals. And I hate to sound like a professor, but the same things that have made businesses work from time eternal are the same things that are making them work now. And if we take off that little cover of the same story that we know in our head to be true, I think we'll see there's a lot of value in this industry all over the world, not just in San Francisco or New York. And I think focusing on real companies with real founders and real teams and real clients is always the way to go.

Host: Wonderful. Antoni?

Antoni: Yes. For me, I hope that this will be a year to become mainstream because we are still very marginal or very small. I mean, I'm not going to compare our economy with derivatives, but with normal stock markets, not then let's onboard all these governments, all these people that really needed all these incumbents. And what hope is that we are starting to see real used cases?

Host: Yeah. Well, we've had an amazing opportunity to hear real used cases. It's been an illuminating panel. So thank you so much for your time. Jeremy, Elizabeth and Antoni, a big round of applause for you. Thank you.

Jeremy Allaire
Co-Founder, CEO & Chairman at Circle
Elizabeth Rossiello
Founder & CEO, AZA Finance
Antoni Martin Bertran
Co-Founder, Polygon
Emma Crosby
Moderator, CNBC

Get more insights in your inbox. Sign up today.