"I believe ‘cross-border payments’ will become an absurd phrase. Just like it’s absurd to say, ‘have you sent a cross-border email?’… The cost will continue to plummet close to zero."

Available on: YouTube | Apple | Spotify | Google | Stitcher

Circle's Jeremy Allaire discusses how his background led to creating the company and the issuance of USDC stablecoins. He talks about the transformative effect of crypto and stablecoins on economic transactions like remittances. Allaire also describes web 3.0 where crypto will help create the world’s new economic infrastructure.

Jeremy Allaire is Co-Founder, Chairman and CEO of Circle, a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments and commerce. Founded in 2013, Circle is the pioneer of USD Coin (USDC), the fastest growing, fully-reserved, and regulated dollar stablecoin. Governed by the Centre Consortium, led by Circle and Coinbase, USDC's market cap is more than $26 billion with over $800 billion in transaction volume. Previously, Mr. Allaire co-founded and led multiple global internet technology companies with thousands of employees, hundreds of millions of consumers served, and multiple successful public offerings on NASDAQ. He has provided expert testimony on digital assets and monetary policy before the US Senate Committee on Homeland Security & Government Affairs, US Senate Banking Committee, and he has been named to the International Monetary Fund (IMF) High-Level Advisory Group on FinTech. Mr. Allaire provides perspective and policy recommendations at the highest levels inside financial bodies across the US, UK, and Europe.

SPEAKER

Jeremy Allaire

Co-Founder, Chairman & Chief Executive Officer

Circle

FULL BIO

MODERATOR

CHAPTERS

0:00 – Intro

3:55 – Circle and USDC stablecoins

18:00 – Crypto Eureka moment

20:37 – Circle business model

29:50 – Tether

35:20 – Remittances and regulations

41:40 – Web 3.0

46:35 – NFTs

TRANSCRIPT

Rev.com

John Darsie: (00:07)
Hello everyone and welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance, technology and public policy. SALT Talks are a digital interview series that we started in 2020 with leading investors, creators and thinkers. And our goal on these talks is the same as our goal at our SALT conferences, which we're excited to host today's guests at our most recent SALT conference in New York a few weeks ago.

John Darsie: (00:39)
But our goal is to provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And if you're new to SALT Talks or if you're not new, you know that we've been focusing a lot on the digital asset space and the crypto space. And today's guest Jeremy Allaire is somebody who has been in the space since 2013 and whose company, and one of the assets, especially that they have created, is on fire.

John Darsie: (01:05)
But Jeremy is the co-founder, chairman and CEO of Circle, which is a global financial technology firm that enables businesses of all sizes to harness the power of stable coins and public blockchains for payments and commerce. Founded in 2013, Circle was the pioneer of the USD Coin or USDC, which is the fastest growing, fully reserved and regulated dollar stable coin. And we'll get more into that, that why people are looking into USDC as an alternative to the existing options a little bit more during the talk.

John Darsie: (01:38)
But governed by the Center Consortium, led by Circle and Coinbase, USDC's market cap is today I believe more than 33 billion with over 800 billion in transaction volume. I believe since we put together this bio, that has gone up to about 1 trillion, and you can correct me if I'm wrong on that, Jeremy.

Jeremy Allaire: (01:57)
[inaudible 00:01:57].

John Darsie: (01:57)
Previously, Mr. Allaire co-founded and led multiple global internet technology companies with thousands of employees, hundreds of millions of consumer served and multiple successful public offerings on NASDAQ. He's provided expert testimony on digital assets and monetary policy before the US Senate Committee on Homeland Security and Government Affairs, the US Senate Banking Committee, and he has been named to the IMF high-level advisory group on FinTech. He also met Anthony Scaramucci, who is our host, who's the founder [crosstalk 00:02:28].

Anthony Scaramucci: (02:28)
Are you going to mention I'm fired from The White House, Darcy?

John Darsie: (02:31)
What'd you say?

Anthony Scaramucci: (02:32)
No. Are you going to mention that I got fired from The White House, or wait until-

John Darsie: (02:36)
I don't think it's particularly relevant for this talk, but I can definitely bring it up, just to give everybody full context that Anthony did spend 11 days in government, while Jeremy is-

Anthony Scaramucci: (02:44)
[crosstalk 00:02:44]. These millennials is non-stop Jeremy. It's non-stop. All right. Keep going John.

John Darsie: (02:52)
But that's about it, Anthony. I think we've covered all the bases there. I'll let you and Jeremy take over and I'll pipe in with some questions as we get going.

Anthony Scaramucci: (02:59)
So, Jeremy, we have a lot in common because we're old war horses at this point in our lives. And we're traditionalist by nature in the world of finance. And we're watching some contemporaries of ours, or probably a couple of years older than us, guys like Jamie Dimon and Larry Fink. Jamie Dimon is saying that Bitcoin is essentially worthless. Larry Fink says, "Well, I'm more in Jamie's camp." He said that recently.

Anthony Scaramucci: (03:28)
So tell us a little bit about your background leading up to the founding of Circle and why you have traversed into this realm, the land of worthlessness, which I also happen to be in, Jeremy. And then we'll get into why you and I think that we're not in the land of worthlessness, that we're landed in the lead of opportunity. But go ahead.

Jeremy Allaire: (03:49)
Yeah. Thank you so much. I'm really happy to be having this conversation. So yeah. I mean, look, my background is not in traditional finance. My background is in internet technology platforms, software platforms. I had the benefit of getting involved with the internet around 1990. And what captured my imagination in the early '90s was the ability to connect a computer to this global network and to be able to communicate instantly with anyone else connected to that network.

Jeremy Allaire: (04:29)
And I basically became obsessed with this idea of open networks of decentralized infrastructure and what that could do... In the early days, what I was excited about, what that could do to disrupting how information and communications work. And so as the web, as the world wide web became a technology in the mid '90s, I became very interested in how that could actually replace how traditional software was created and distributed.

Jeremy Allaire: (05:03)
Back then, you used to get software on a disc and you put it into your Windows machine and then install it. And I was of the view that basically anyone with a computer could connect it to the internet and could create pieces of software that could be accessed by anyone with a web browser anywhere in the world. That sort of idea of a web application invented technology to help make it possible for really anyone with, I don't know, I'd like to say a thousand bucks in an idea to build a global interactive online service.

Jeremy Allaire: (05:31)
And really followed that theme for many years, which is open networks, open standard protocols, decentralized infrastructure, I think of it as like the DNA of the internet that has enabled all these massive global network effects to happen in information, communications, media, telecommunications, software distribution, the ability for anyone who creates a product, anyone in the world to find a customer anywhere in the world, all these sorts of things have happened from that kind of model.

Jeremy Allaire: (06:05)
So went through building products in software distribution, content distribution, television distribution, all built on open decentralized infrastructure on the internet. I happened to also have spent my undergraduate work studying global political economy, international macro issues. I was very interested in how the world's economic systems work. And after the financial crisis in 2008, 2009, I became obsessed with the history of money, history of central banking, the international monetary system just became things that I wanted to better, more contemporary, obviously understand.

Jeremy Allaire: (06:46)
And then really in 2012, went down the rabbit hole in crypto. And I think for me, what I saw was the seeds of the next logical infrastructure layer of the internet, a layer of infrastructure that could enable value to be represented, value to be exchanged in the same way that we have these open permission-less networks for information and data and content communications and software and everything else, that it would become possible to do that with value. Value represented as a new non sovereign value that was algorithmically issued like a Bitcoin, I thought it was very compelling. But I also thought that you could build on top of these networks, representations of fiat value, and enable those to be transactable with the same ease that we can "transact" information.

Jeremy Allaire: (07:43)
So that's what led me to this. And so I would just say the high level is, I just look at this as the next logical infrastructure layer of the internet. It's sort of the internet actually becoming the substrate of the economic systems, of governance systems. It's an inevitable future in many respects. And I think we're the same as hive of creativity, helping to build it out now.

Anthony Scaramucci: (08:10)
Okay. I mean, I'm totally with you. You're also doing something that I think is helping the entire crypto ecosystem. I guess, I would say that Circle is probably best known for being the creator of USDC, with the second largest stable coin in the market with around $33 billion. There's some people here that are listening that don't know what a stable coin is. So let's start there, Jeremy. Tell us what a stable coin is. Tell us why USDC is so important to the crypto ecosystem.

Jeremy Allaire: (08:49)
Yeah, absolutely. So the phrase stable coin is something that kind of got applied to this category. It's not something that we embrace, but basically, the way I look at this, and actually it has to do with the way we've designed USDC is, if you think about the way the internet works today, there are the protocols that allow computers to talk to each other. Like the world wide web is a protocol called HTTP. You've probably seen it. People put it in URLs, you type it into a browser.

Jeremy Allaire: (09:30)
But basically, that is a way for one computer to connect to another computer and exchange content in a structured way. What's so powerful about it is that any computer in the world can connect to the internet, connect that protocol, and basically exchange information without an intermediary, directly, very efficiently.

Jeremy Allaire: (09:51)
We have other protocols like internet email. We all can have email servers. We can all have different email service providers. But everything can connect point to point. You can connect and exchange a message. That exists for so many other things now. Like when you do a FaceTime audio call or a Zoom call like what we're doing here, we're actually leveraging these sort of open protocols. So the idea was, why can't there be a protocol for dollars on the internet where anyone that connects to it can exchange dollars in the same way we exchange a JPEG photo or a piece of data or other things.

Jeremy Allaire: (10:32)
And the power of that, of course, is that once you have something like that, anyone who creates a commerce product, a financial product, a wallet, a service, can just connect to it and know that they can transact and settle with any counterparty directly on the internet, and do that at the speed of the internet, and do that with the increasing cost efficiency of doing that as well.

Jeremy Allaire: (10:56)
So in order to make that work, you not only need the protocol itself, but you also need to take an existing representation of money, like US treasuries, cash on depository banks, or even central bank money, and issue essentially a digital currency representation of that, that then can be transacted over these kinds of protocols. So a stable coin is essentially that. A stable point is both the representation of some asset that exists in the "real world," like liabilities of banks or central banks, or what have you. And it represents that as a digital token, that is able to be exchanged over a protocol like USDC.

Jeremy Allaire: (11:47)
So it's bringing what we are [inaudible 00:11:52] from our life of interacting with the internet and bringing that to money. Now, there are many different ways that you can do this. We chose to build a model that operated under the same regulatory framework that applies to all of the electronic payment innovations that we've seen over the past 10 to 20 years, like PayPal or Square or Stripe. So electronic stored value, money transmission, as it's called here in the US, in other parts of the world, it's called E-money, but basically it's a electronic money payment system innovation. That's how we chose to do this from the start. That was a clear regulatory framework.

Jeremy Allaire: (12:35)
And under that, we are required by law to basically ensure that at all times, every electronic money representation, just like your PayPal balance, if you think about that, you don't really think twice about what the PayPal balance is. You know that you can send it and receive it and it's always a dollar. So the same kind of model exists for an asset backed dollar stable coin like USDC.

Anthony Scaramucci: (12:59)
I mean, it's booming. I mean, you started 2020, USDC in circulation was about 400 million. It went up 10X to around four billion. It's likely to grow again 10X. What is the key to the rapid growth, Jeremy, but then also, what is the total addressable market? Where do you see it going?

Jeremy Allaire: (13:25)
Yeah. Maybe I'll start with the total addressable market. Our view is that fiat digital currency models, dollar digital currencies, eventually Pound, Euro, Yen, Peso, you name it, but let's just say dollar digital currencies to start here. Our belief is that it is a superior form of electronic money. It is dollars with the super powers of the internet. And as a superior form of electronic money, it can take share away from existing forms of electronic money.

Jeremy Allaire: (13:59)
Today, the predominant form of electronic money is privately issued by commercial banks, what I call ACH money. And you have a electronic record with a bank, and that's essentially an IOU against the lending book and liabilities of the bank. So that's one form of electronic money. The market size of M2 commercial bank electronic money is like, I believe over a $100 trillion today.

Jeremy Allaire: (14:30)
And so my own view is, if you look at the internet, they're sort of like the 10% rule, and the 10% rules after roughly 10 years, internet markets might be 10% of the market. So my belief essentially is that over the next 10 years, I think that dollar digital currencies like this can be many trillions in value. And the thing to note about this is like other internet technologies, things like a stable coin are network effects businesses. Money is a network effects business itself, but something like a stable coin is a network effects business, the more people who have it, the more utility it has. The more utility it has, the more people that want to transact in it. And what we found, which is really interesting about USDC is that the amount in circulation continues to grow.

Jeremy Allaire: (15:25)
There's a huge amount that's issued. There's a huge amount that's redeemed. The amount of issuance to redemption is roughly two to one. And so what that roughly means is that there's been, let's call it 65, 66, 70 billion USDC issued, and then it's redeemed. That's part of the utility. You can always redeem it for dollar. But the net circulation grows because it inherently holds utility and people want to stay in it because it has higher utility value for them than ACH money.

Jeremy Allaire: (15:55)
And I think a lot of people experienced this. Once you start transacting something like USDC, you're like, "Why the fuck would I ever use a wire? Why would I ever..." Yeah. It's just insanely better. It's that 10X user experience. So I think that that's part of what's contributing to growth. And then obviously, the rapid growth of digital assets as a whole, the rapid growth of decentralized finance is growing, all these things are contributing to the amount of growth in circulation and usage.

Anthony Scaramucci: (16:26)
Is a Bitcoin worthless?

Jeremy Allaire: (16:29)
I don't think so. I'm very much in the view that non sovereign digital commodity money plays a really important role in the international monetary system will grow in importance. I would expect, over time, a very significant number of governments will hold Bitcoin as a reserve asset. I think it is, to me, a sound money that is not controlled by any particular corporation or government, that has a fixed supply, is digitally scarce, secure, private, and decentralized is an extraordinary innovation and is likely to continue to grow.

Jeremy Allaire: (17:20)
And not just Bitcoin. I think Ether, for example, is also an extraordinary innovation in non sovereign digital commodity money as well. And I think this category of monetary instrument, I suspect will be larger and larger over time.

Anthony Scaramucci: (17:40)
So when did you have your eureka moment about what you just said? Did you always feel that way the day that Bitcoin was invented, or did something happen to you, Jeremy, where you said, "Wait a minute, there's something here that I really need to acknowledge and understand."

Jeremy Allaire: (17:58)
Yeah. It was really when I first started going down the crypto rabbit hole in 2012, and I think I got deeper and deeper conviction the more time I spent on it. And I think part of that was from... Look, I'm like an armchair academic economist. I'm not a trained economist. So pretty much every trained economist that you ask thinks it's complete joke, with rare exceptions, which probably tells you you're onto something. But I think, in all seriousness, following the financial crisis of 2008, 2009, there were really legitimate questions to be asked about the nature of central bank money, the role of a non sovereign form of money, you kind of go back in time and look at the underlying basis for even fiat money being pegged to a non sovereign store of value.

Jeremy Allaire: (19:09)
But I think even prior to my interest in crypto, I was an avid reader of Austrian economics of Von Hayek. And I think I've always just been interested in competition in currency. And looking at the history of money, it's clear that there's always significant competition. And I think the world and people and firms and households generally, I think, are attracted to something that is not tied to a sovereign. And I think in today's world, it's a global complex world. People are more interested in that. And I think that will continue to grow.

Anthony Scaramucci: (20:06)
Obviously we agree, but I think the more brilliant thing that you've done with Circle is you've more or less made Circle a bridge between traditional finance and, let's call it decentralized finance. So tell us a little bit more about the Circle model. Of course, it includes the stable coin, which you've eloquently explained, but what are the other elements of the Circle model that you're executing?

Jeremy Allaire: (20:33)
Yeah, absolutely. So, I think there are a couple of key pieces. The first which we talked a little bit about is USDC. And we're principal operator of that, and we look at that as essentially like a market infrastructure. It's almost like a market utility, and we want to make it as easy as possible for as many institutions as possible to be able to utilize it, to have really strong inter-operability between the existing financial system and that pure digital currency representation and digital currency rails. So operating that, scaling that is a huge effort. And it's growing a big ecosystem.

Jeremy Allaire: (21:15)
The second piece though is, we really believe that more and more companies around the world are going to want to bank, if you will, in digital currency. That they're going to want to have the equivalent of a corporate commercial bank type product. They're going to want to have the equivalent of a transaction bank like product, which is natively in a digital currency world, but has seamless interoperability with the existing financial system. So the Circle account is really the tip of the spear that gives a business the ability to take advantage of the payment utility of something like USDC.

Jeremy Allaire: (21:56)
But increasingly, we're providing a whole series of other services that we monetize. So that includes what we call our API services, but you can basically think of that as, you want to wire up traditional credit cards or bank transfers into an application and have it all natively settle and transact in the USDC, we give you a set of services to do that. You could be a FinTech, a startup, a crypto firm, a commerce firm, and you'll pay us on a usage basis for those transaction services.

Jeremy Allaire: (22:28)
We're also introducing what we broadly define as treasury services, which is effectively providing ways for businesses to take dollars or USDC they may already have and lend it through Circle out into an institutional borrowing market where you're generating high yields. And so that is a product that we have in what we call early access. It's going to be more widely available as we go forward. But we think lots and lots of businesses, whether you're an asset allocator or you're just a corporate treasurer, are going to want to get exposure to digital asset markets in a dollar denominated fixed rate, fixed term type of, fixed income kind of product.

Jeremy Allaire: (23:17)
So we're offering that. So it's treasury services, almost like cash management in the context of digital currency. And so that's another piece. And we think it's going to grow to be quite large and part of a bigger ecosystem that we're all kind of part of. And then finally, we have a fundraising platform where people can raise capital for selling securities directly on the internet called SeedInvest. We have a lot of ideas about how that become more digital asset native.

Jeremy Allaire: (23:47)
We think that more and more direct capital formation is going to happen on the internet and is going to happen using things like tokens. And so we have a vision for how that evolves as well. But think of circle as building kind of a suite of commercial bank like, transaction bank like services, as well as supporting this overall market infrastructure for stable coins.

Anthony Scaramucci: (24:11)
So I'm going to turn it over to the very successful question with John Darsie in a second, okay? But I got to ask another question related to Circle's future. I see you as an ambassador, Jeremy. I see you as somebody, not to use a turn of phrase, but a stable pair of hands operating a stable coin. And I see you as somebody that could win over the likes of a Jamie Dimon or a Larry Fink. And so let's pretend that we had both Jamie and Larry in this room with us here on Zoom on this SALT Talk. What would you say to them about what they could potentially be missing about the future of decentralized finance?

Jeremy Allaire: (24:56)
Yeah. I actually think it's pretty straightforward, which is that crypto as a technology and these public network infrastructures that are being built up around it represent as significant of an infrastructure upgrade to the internet as the web was, as the smartphone was. These are very, very powerful, general purpose infrastructures, that for the first time ever give us an opportunity to more safely enable economic activity to happen directly on the internet. Economic and financial activity to be happening directly on the internet.

Jeremy Allaire: (25:48)
And so I look at this as the beginning of the development of the new economic infrastructure of the world. Just like the internet became the new infrastructure of information and communications to data, this is the beginning of a new infrastructure development for economic activity and governance activity in the world. And so it's that big. It's going to create many trillion dollar companies over time. And gradually, the business of banking and asset management and investing and the utility value that comes alongside all of that, it will migrate to this new economic infrastructure.

Jeremy Allaire: (26:31)
And if you want to be involved in that, you got to get involved in that. And I think the instinct that large players have is one that the existing financial system is tightly controlled, tightly managed. It's a very closed infrastructure model. And I think it's taking some lessons from the rest of the internet in terms of... telecommunications used to be a closed permissioned, tightly regulated, controlled infrastructure environment. Media, television, other things, tended to be controlled, tightly regulated infrastructure models.

Jeremy Allaire: (27:17)
And so the natural progression is for these infrastructures to be open, global, interoperable, internet native, and that's what's sort of taking place right now. And so my ultimate message is, this is something that firms like BlackRock and JP Morgan should be actively involved in. Not just saying, "Oh, we like the technology. We don't like the crypto" or what have you, which is just nonsense. So I think it's committing to building an open internet of value and being part of a new open global economic system that's built entirely on the internet.

Anthony Scaramucci: (28:01)
It's interesting, when I hear them talk, I hear my own voice and my own thoughts and words from 2014 and 15. And so I was just wondering if the rock will land on their head or the apple will land on their head where they have that eureka moment there and say, "Wait a minute, I may have this wrong. I may not be sizing this appropriately." With that, I'm going to turn it over to John Darsie, Jeremy. And thanks again for your participation at our live event. And we want to get you back. Hopefully you'll come to Abu Dhabi with us, or we'll be back in North America next year.

Jeremy Allaire: (28:33)
Awesome. Thank you so much, Anthony.

John Darsie: (28:35)
Right, Jeremy, here comes the fun part. So when Anthony was talking about a safe pair of hands-

Anthony Scaramucci: (28:40)
[crosstalk 00:28:40] on top of everything else. I mean, he's good looking. And somebody told me that he was like an '80s matinee idol and was ready to throw up. Okay. Despite all that, okay, he's also a smart [inaudible 00:28:52]. Okay. Keep going, Darcy. Go ahead.

John Darsie: (28:53)
All right. [crosstalk 00:28:55].

Anthony Scaramucci: (28:56)
Remember your bonus gets paid out. It's two months from your bonus. Just to be clear.

John Darsie: (29:01)
That's fair. That's fair. I got to tone it down a little bit.

Anthony Scaramucci: (29:02)
All right.

John Darsie: (29:02)
But in terms of being a safe pair of hands, I thought Anthony was going a different direction with that ask you about tether. So anybody who pays any attention to the FUD, the fear, uncertainty and doubt in the crypto marketplace has heard of tether as a big source of that. It's a very controversial asset. It was recently on the cover of Bloomberg Businessweek, another rehashing of the similar doubts that people have expressed around tethers reserves and their general opacity that they operate with.

John Darsie: (29:32)
One, do you think tether is a systemic risk? Are you concerned at all about their lack of transparency around their reserves? And how has Circle, more importantly, gone about their business differently than tether has in terms of breeding trust, transparency, all those types of things?

Jeremy Allaire: (29:50)
Yeah. I think I don't know that tether itself is a systemic risk. I think the crypto asset markets are $2 trillion plus markets and the tether market cap is $68 billion of that. And there are really strong alternatives that exists. And yeah, we happen to operate one of them, I think. When we conceptualized a USDC actually four years ago, when we were kind of putting together the ideas, interestingly, from our perspective, we weren't looking at tether as a competitor. We were really focused on much of what I described earlier in the conversation, which is how do we create a standard that is trusted, that is a standard that people can build on, that is really focused on trying to actualize this vision of a protocol for dollars on the internet.

Jeremy Allaire: (31:04)
And our view is always that if you do this right, it could actually become something that hundreds of thousands of businesses are building on, that it's used widely and in every form of payments and commerce and finance, and the use cases would be as broad as a dollar on the internet. You can imagine it being useful in an incredibly broad range of ways. Now, the initial, what I call the bootstrap use case for something like USDC, was providing a strong dollar settlement option for the digital asset markets. That definitely is where the market was three years ago when this was introduced.

Jeremy Allaire: (31:48)
And I think USDC grew relatively quickly, relative to any other regulated dollar stable coin, because it had strong companies behind it on the institutional retail side, it was liquid, it was redeemable, it was regulated, it was transparent. We always worked with... We've state banking examiners that examine us all the time. It's defined under a very clear regulatory structure, in major global public accounting firm [inaudible 00:32:23] not just Circle, but also a testing every month to the full reserve nature.

Jeremy Allaire: (32:27)
And so we went out of our way to really try and set a bar that was higher, and then work with the developer community on how to support it and adopt it. And so I think the market is just spoken for itself. I think at the beginning of 2020, we might've been, I don't know, 5% or 8% of tether, we're now approaching 50%. And when I think about the use cases, coming back to use cases again, when you imagine a Visa or a MasterCard or a MoneyGram or a major e-commerce firm, or a major global FinTech or a financial institution deciding to start using stable coin, it's pretty clear that they're going to focus on doing something that is within the regulated supervision of the US banking system that has a really strong track record of compliance and transparency and security and other things, that's what people are going to use.

Jeremy Allaire: (33:29)
But at the same time I'm also wanting to say tether has immense utility and a lot of the growth for tether has come from the offshore Chinese exchanges, from the Yuan to crypto trade, which I think established itself very, very deeply with peer to peer over the counter markets in China, where people just would load up on tether. And so that's obviously a huge source of growth there. And we don't really play there. And so that kind of offshore Chinese dollar crypto trade or Yuan to crypto trade really is significant and you can't discount that, and that's not just going to go away, even if the Chinese government wants to basically make it go away, it's not just going to go away.

John Darsie: (34:28)
So Jeremy, you talked about remittance as cross-border remittance is one use case for something like stable coins. Sort of an aha moment that I had around things like remittence happened when Strike was leveraging the Bitcoin network, in El Salvador is the most high profile case, but also basically just putting dinosaurs like Western Union that take a huge chunk of people's money that they're sending, whether it's from Mexico to the United States or from El Salvador to the United States, or all around the world, is the use case for stable coins or cryptocurrencies for remittance. How are things like stable coins and other digital currencies driving down the cost of remittance, the delivery of global aid you've talked about in the media, on social media and how do you solve those problems without running a foul of things like AML, KYC type regulatory issues?

Jeremy Allaire: (35:19)
Yeah. So the first thing I'd say on this is that it's happening, and it's happening with, I think, increasing speed. And one of the really exciting things about USDC that we've seen over the past two years in particular is because it's an open standard anyone can connect to, it's just like a published protocol that anyone can connect to, hundreds of different wallets, exchanges, et cetera around the world have connected to it. And so effectively what's happened is organically, we've seen a global internet native dollar settlement rail just come alive that can reach countries everywhere.

Jeremy Allaire: (36:04)
And actually, I have my own podcast called Money Movement. I did an episode a while ago, which basically was showing how you could have USDC go around the world and interact with local currency models and go entirely around the world in 45 minutes. And literally, it's a USDC from a business to a contractor in London that the person in London sticks some of it into a DeFi contract to earn some yield, has to pay a friend back for travel, sends USDC to a person in Korea. They received the USDC. They're able to convert it instantly into won and have it into a Korean bank account. That person then sends the remaining amount of USDC onto a software contractor in Argentina. The USDC arrives again in minutes, is able to convert it into local Peso or into Mercado Pago, which is the sort of Amazon of Latin America.

Jeremy Allaire: (37:09)
And then they spend it at a marketplace in Asia where the seller on the marketplace is from India. They redeem the USDC into a wallet in India and convert it into Rupee and have it in the local Indian bank account in like 15 seconds. All this stuff is real. It actually works. You can move dollars at the speed of the internet. There are now services that are crypto native, that are exchanges and wallets in markets around the world that can convert between USDC and local currencies. And generally, all of these firms are doing it at like the interbank mid rate. They're not trying to build a lot of effects because a lot of their businesses is really trying to drive people to the investing on their platforms and things like that.

Jeremy Allaire: (37:57)
And so you kind of have this kind of organic happening. It's pretty cool to watch. Another example is Mexico. There's an amazing company, huge growth, called Bitso. It has tremendous backers. They're in Mexico and Brazil. They're regulated. They've got a great reputation. But like USDC to Mexican Peso, you can do it in minutes and you can go from USDC to MXN, and then through the RTGS, the real-time gross settlement system in Mexico, getting into Mexican bank account in seconds. This is the fastest cheapest way to get money to Mexico. And Bitso, the volume they're seeing, they have said, is 10% of the cross-border flows between the US and Mexico. That's pretty profound.

Jeremy Allaire: (38:45)
And so I think we're at the very beginning of this phenomenon. As I have said for many, many years, I believe that the phrase cross-border payments will become like an absurd phrase, just like it's just absurd to say, "Have you sent the cross-border email lately or had a cross-border web browsing session?" I mean, the whole concept is just ridiculous in the context of the internet. And so I think the whole idea of a cross-border payment would just disappear in a number of years. And the costs will just continue to plummet down to close to zero. So I think that's going to return very real value to people and the real economy. And it'll unlock a lot of new things and it'll move us into this realm of digital currency native, commerce, and finance, which is really where the latent power of all this lies.

John Darsie: (39:41)
Right. Anthony was talking about what's the promise of DeFi, and that's the way I try to explain it to people in very simple terms is that you're just removing so many toll takers that, while it might hurt certain companies, it's going to create so much value to people on the lower end of the socioeconomic spectrum, whether it be Mexican-Americans sending money back to their family, people in El Salvador, all across the world. People are going to be able to keep more of what they earn and send it to people in a more efficient way.

Jeremy Allaire: (40:07)
Yeah, I think that's right on. I have this phrase I use of the idea of long tail capital markets. And the internet is really, really good at creating marketplaces, multi-sided marketplaces, where a very, very long tail of participants can be involved. Like Google created long tail advertising platforms. E-bay originally was like a long tail marketplace. Like Amazon and Alibaba, any seller anywhere can reach any buyer anywhere, super efficient. You've got long tail content platforms. You have all these. Now, we have the opportunity to have internet native long-tail capital markets. And that's profound, because it means that everyone in the world will be able to participate in capital formation, savings and investing in a multi-sided way. The difference is Web 3.0 as a model is a decentralized model. And so the capital markets themselves will just increasingly just be machines on the internet that people are interacting with.

John Darsie: (41:12)
Was a good transition to talk about Web 3.0, which again, we dive deep into some topics related to crypto, but we also have a lot of people in the SALT community that are less familiar with some of these buzz words and what they mean. And Web 3.0 is something that if you're on social media or you read about digital assets that you hear a lot about, about the massive promise that Web 3.0 presents, could you explain to people in your own words, what is Web 3.0 and why is it so exciting?

Jeremy Allaire: (41:38)
Yeah, absolutely. Earlier on, I was talking about how when I look at this technology, I think about crypto and blockchain as really just like an upgrading of the fundamental infrastructure of the internet. And when you look at the way the internet has evolved, you had Web 1.0, which was very, very limited. One to many was the model. And then you had Web 2.0, which was anchored in the many to many model, social media being a huge representation of that. Anyone could publish, anyone could share information. You had many to many interactions. But the actual technical architecture of the web, the technical architecture of the internet, basically tended towards centralization. And it tended towards these many to many platforms actually being controlled by centralized entities like Facebook, like Google, like Apple.

Jeremy Allaire: (42:40)
And that's had a lot of potentially significant or demonstratively significant negative consequences, erosions of privacy, large honey pots of data, extreme levels of market power. And it's something that governments are concerned about. They're thinking about it from a regulatory perspective. I think the internet has responded and crypto and blockchain is the internet's response. As I talked about earlier, there's an inherent DNA in the internet of decentralization and of these open networks. And I think the internet wants that to be the case. And I think society wants that to be the case.

Jeremy Allaire: (43:23)
So Web 3.0 is literally building on a more decentralized infrastructure that puts users and communities in more control over data, over information, over economic value and the exchange of value. And it shifts from a centralized model to a decentralized model. And it's profound. I think it's very profound. There are some amazing examples out there if you think about protocols that exist on these decentralized networks, where the protocol itself is operated by a decentralized autonomous organization of stakeholders that are governing it entirely in software on the internet. There's no corporation, there's just this code and these stakeholders and it's cryptographically provable ownership and governance.

Jeremy Allaire: (44:23)
And a DAO like the Uniswap protocol is one of the biggest exchanges in the world. That's amazing. A DAO like the Axie Infinity game platform is phenomenal. It's created a labor market. It's created a digital goods market. It's created a market capitalization that is as big as the biggest game companies. And that's happened in couple of years. So I believe Web 3.0 will create in many, many categories, everything from cloud services, to entertainment, to social media, to communications, to finance obviously, in all these categories, will create on chain entities, these new types of corporate forms that are bigger than many of the biggest companies in the world, and that's profound. And I think it's accelerating.

Jeremy Allaire: (45:19)
And so that's a huge opportunity for the world. And I think at the end of the day, what does it really mean? It means an internet that puts individuals in more control versus these centralized platforms that are so concerning to so many people.

John Darsie: (45:41)
Yeah. I mean, as I've gone down the NFT rabbit hole, which is sort of the next question that I have for you. It's fascinating how natural it feels in terms of the evolution of things like art and gaming to be on blockchain rails, to be governed by a decentralized autonomous organizations, DAOs as you mentioned. I'm a big fan of Solana personally. And about a month ago, I started diving into the Solana NFT ecosystem, which has been a lot of fun.

John Darsie: (46:08)
What do you think the ultimate promise of NFTs is? Is it purely a manifestation of the future of art and collecting things like art? Or do you think the promise of NFTs is much greater? And talked about gaming, like Axie. I'm a big fan of the Aurory project, for example, on Solana. Can you talk about your view on NFTs? Are they a fat, are they a bubble? And what's the ultimate promise of NFTs?

Jeremy Allaire: (46:33)
Yeah. I think any given digital art phenomenon is sort of... And the market value is obviously highly speculative and subjective. So I'm not as interested in that per se, although it's fascinating. I do look at NFTs though, as I kind of talk about these building block primitives. NFTs are a very significant, generalized primitive that can be applied to a ton of different use cases and scenarios.

Jeremy Allaire: (47:07)
It happens to be that the digital collectibles and digital creative expression have been the first wave of how that happens. But I think fundamentally, it's a huge upgrade in how intellectual property creators can reward and incentivize and monetize their work and the shared communities of interests around their work. And I think it will touch every form of digital intellectual property. And in fact, it is the first... We had DRM technology that was more of a security technology, but NFTs are really a fundamental way to express digital intellectual property.

Jeremy Allaire: (48:01)
So I think that the use cases of that are very, very profound. But it's interesting, because years ago, we talked about the tokenization of everything, how property in the world will be tokenized, how your lawnmower could be tokenized. People could have it in the sharing economy and could borrow and lend against it and all kinds of, whatever. I still think that's all true. I still think we're on a road to that. Interestingly, property like a car, a house, stock in a company are all non fungible tokens. They're all just forms of non fungible tokens.

John Darsie: (48:37)
Right.

Jeremy Allaire: (48:38)
It's just that layer of jurisprudence and the existing legal framework around property and financial transactions around property, that's a beast. It's a beast. And people tried to break through that beast to tokenize things, and it's been hard. Eventually, it will happen. It will just happen. But the low friction of doing tokenization of digital intellectual property has actually been where that started first. And so I think NFTs in today's world are a very significant phenomenon that can be applied, and can be applied in creative ways when you're seeing this where a musician is selling an NFT, which gives you entitlements. It gives you the content. It gives you the rights to a certain creative output, but it gives you entitlements to participate in a community.

Jeremy Allaire: (49:32)
I mean, obviously Anthony launched his NFT product at SALT, and it was about the entitlements. Yeah, you got the bottle of whiskey or whatever it was, but you've got entitlements and you can prove the ownership of those entitlements. And so we're going to see a lot of really creative things from mainstream brands and products and services that start to utilize that. And so this really is, in some ways, a killer app category that will bring crypto technology into more mainstream hands.

John Darsie: (50:02)
Well, Jeremy, it's a pleasure to have you on. There's so many other topics we could go into and you've done such a good job explaining them in a way that offers depth, but also is understandable for the average person. One of the interesting things that we can talk about next time we have you on, I'd love to have you on again, is SeedInvest and creating secondary markets for startups and democratization of investing in private companies, I think is a no brainer.

Jeremy Allaire: (50:24)
Absolutely.

John Darsie: (50:24)
I know we have a mutual friend or mutual acquaintance securitize and things they're doing to tokenize startups and things of that nature. I think the sky's the limit for how we can use these technologies as you alluded to in the opening to just democratize the industry and all that type stuff. But thanks again for being at SALT. Your panel with Sam Bankman-Fried, Anatoly Yakovenko from Solana was fantastic.

John Darsie: (50:53)
If you guys haven't watched that on YouTube, I would highly recommend that you watch that. And it's been a pleasure having you on SALT Talks as well.

Jeremy Allaire: (50:59)
Thank you so much, John. Really enjoyed the conversation.

John Darsie: (51:03)
And thank you everybody for tuning into today's SALT Talk with Jeremy Allaire from Circle Financial. Just a reminder, if you missed any part of this talk or any of our previous SALT Talks, including all the panels from SALT New York, we made a strategic decision a several years ago to start opening the lid on the content that we produce at our conferences for people to watch after the event. So I would highly recommend you watch that panel with Jeremy, with Sam Bankman-Fried from FTX, Anatoly from Solana. You'll learn a lot there as well. All on our YouTube channel and on our website at sault.org/talks is where you can access all of the SALT Talks.

John Darsie: (51:41)
Please also spread the word about these SALT Talks. We love educating people. I think, again, this one in particular, Jeremy did a great job of talking about DeFi in ways that your uncle who's a crypto skeptic can even understand. But on behalf of Anthony and the entire SALT team, this is John Darsie, signing off from SALT talks for today. We hope to see you back here again soon.