WEBVTT
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Well, welcome, everybody. My name is Jonah Crane.
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I head up regulatory and policy strategy here at Stripe.
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So my team helps Stripe mind our current regulatory obligations and try
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and see around corners,
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and anticipate and shape the future regulatory frameworks.
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We're going to talk about stablecoins today,
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and I'm going to introduce our panelists in a moment, but this is Stripe.
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We love data, so let's start with a chart.
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This chart shows total outstanding volume of stablecoins over time.
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Starting many, many years ago when stablecoins first came on the scene,
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you can see they grew rapidly through a few crypto bull market cycles and then
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fell off quite a bit in the crypto winter, 2022, 2023.
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Bottomed out about two-and-a-half years ago at $130 billion. And since then,
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you've seen really steady growth.
Two notable things about that period of
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growth: one, lots of regulatory activity.
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Countries like Singapore and Hong Kong, and notably the EU, and, last year,
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the US, adopted regulatory frameworks for stablecoins.
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And crypto sort of unward itself.
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Stablecoins sort of unmoored themselves from the broader crypto markets.
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There's been a lot of crypto volatility,
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and yet stablecoins are still sort of up and to the right.
So,
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with the panelists,
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we're going to talk about everything that's to the right of this chart.
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What's next? Where are stablecoins headed?
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What role is regulation and policy going to play?
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So to walk us through all that, please welcome our panelists. First up,
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Katie Biber, chief legal officer at Paradigm,
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an investor and active builder in this space.
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We're also joined by Ondřej Kovařík,
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former member of the European Parliament and chief architect of Europe's crypto
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regulatory framework, MiCA, and John Tullis, head of payments at Gusto.
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All right. Ondřej, we're going to dig in with you. You were, as I noted,
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chief architect of MiCA,
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which is a broad crypto regulatory framework for Europe,
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including a piece on stablecoins.
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We're about two years into the life of MiCA.
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How would you grade performance so far?
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What grade would you give MiCA at this stage in the process?
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How is the development of the stablecoin market in Europe going,
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and what do you see foresee next?
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Thank you, Jonah. Well, good question. I think MiCA is,
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as a regulatory framework in general, we'd have a rather
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positive grade. I would go somewhere between A and B.
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But I think then if we stick specifically to the stablecoin part,
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I think we go more to the negative grades because
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if there is something to criticize on MiCA, at least from my side,
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but I'm not the only one from the decision makers,
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it's actually how strict MiCA is on stablecoins
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as it stands. And I think this is also maybe to
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remind everybody that when MiCA was designed, which is five years ago,
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there were discussions about proposition of Libra,
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or then later Diem, by Facebook and other companies.
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And MiCA was a reaction to that.
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So the stablecoins part is extremely heavy. It's regulatory-heavy.
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It's strict.
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And I think that one of the reasons why we see so far very
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low value of euro-denominated stablecoins on the market today.
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Yeah. They're like a very small fraction of that chart we saw before,
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somewhere in the low single digit billions, I believe.
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We're hearing rumors that Europe is going to reopen MiCA.
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We may get a MiCA 2.0 at some point soon.
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What areas do you think they should focus on if and when they reopen it?
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Well,
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the rumors about MiCA 2 are actually circling around since I think Fall 2022,
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when it was not even in force.
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But I think this time it's real. It will be happening. Obviously,
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even within current MiCA rules,
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there is a clause that requires a review of MiCA in a couple of years'
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time.
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We're expecting consultation to be launched so basically everybody can join and
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express their interest. From my point of view,
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what should be the key areas to focus in MiCA review
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would be precisely the parts regarding stablecoins.
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So they are called, in MiCA language, "electronic money tokens"
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and are since referred to as "tokens." This really needs to have some redesign.
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Then, we are in the US right now, I mean,
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we have to do more about the international equivalence regime.
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MiCA is a regulatory framework that is extremely closed.
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It only refers to Europe.
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It doesn't really look into other jurisdictions regimes.
And I think this is
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somehow not matching the global
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character of stablecoins.
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And I think the next issue to be tackled in the review should be also how the
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crypto asset service providers are treated by regulators.
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Very good. Well, Katie,
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let's turn to you and turn our gaze homeward to the US.
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The US adopted the GENIUS Act last year.
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We're in the midst of a bunch of rulemaking on that.
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We are also simultaneously in the midst of negotiations on Capitol Hill for a
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broader crypto market structure bill that includes some important provisions on
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stablecoins.
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What are the most important sort of decisions yet to be made in
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either implementing GENIUS or in adopting CLARITY,
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and how do you think those will impact adoption in the market?
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That is a big question.
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There are a couple of pending issues that will help determine whether the US is
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home to stablecoin startups and new entrants that can really provide consumer
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choice or whether stablecoins will remain the province of the incumbents and the
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entrenched industries. Those issues are: yield,
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which I'll get back to in just a minute; white labeling,
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which I know you and I have been in the throes of working on with the OCC;
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and reporting.
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So let's rewind back to last year when the GENIUS Act was signed into law.
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As we all probably remember,
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what it did was prohibit issuers from paying yield to stablecoin holders
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solely for holding that stablecoin.
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Now that was a very carefully drawn restriction that was written, frankly,
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against the backdrop of exchanges like Coinbase paying rewards to stablecoin
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holders. One of the main questions we're facing right now, as you know, Jonah,
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is whether Congress is going to permit the bank lobby to strip mine the crypto
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market structure bill and eliminate the ability to pay yield for the most part.
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Thankfully, this is actually trending in the right way.
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Members of Congress have really stuck up for the industry and pushed back at the
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bank lobby, but that remains a tiny bit of an open question.
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In addition to that,
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the OCC is exploring a couple of options that we do not think contribute well to
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consumer choice.
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The first is to expand the prohibition on yield payment to third
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parties, which is not in the bill and is sort of made up out of whole cloth.
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And the second is to create an odd burden-shifting structure that would assume
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affiliated entities are paying yield on behalf of an issuer.
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These may sound like small technicalities, but in reality,
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what they do is bestow a lot of discretion in the hands of regulators,
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which in the hands of a hostile administration-remember when we had one of
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those-might be deployed negatively to hurt the industry.
Beyond that,
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there are a couple of other things that we're watching,
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which relate very importantly to whether incumbents are going to own this
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industry or there's plenty of room for new entrants, crypto-native firms,
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fintechs, things like that. The first is the concept of white labeling.
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As I think any founder knows,
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fully compliant stablecoin companies do not drop from the sky.
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They need sometimes training wheels at the beginning.
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They need to work with an issuing partner.
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They need some help to get compliant and go on their way.
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If we disallow white labeling,
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it'll actually be quite hard for new founders to enter and offer products that
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consumers actually want to use.
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So that's something that we're hoping the OCC decides correctly.
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And then secondly,
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how we choose to require stablecoin issuers to report on their reserves is
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pretty important.
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Big companies like Circle can absorb just about any compliance obligations,
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but we want to make sure that the reporting requirements actually work for
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smaller companies.
Clearly,
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we want to make sure that consumers are protected and the whole system is safe
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and sound,
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but we can do that through a smaller sort of reporting structure than the OCC is
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currently contemplating. At the end of the day, we and a lot of others,
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Stripe included, have been engaging in good faith with the OCC.
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The folks who work there are really smart,
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so we have confidence that this is going to end in the right place,
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and we're super bullish on what's possible this year and next in the US.
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Good. I'm glad to hear you're bullish. John, let's turn to you real quick.
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You also seem to be bullish. You have referred to stablecoins, I think,
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as representing a generational shift in money.
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And Gusto is a global payments company.
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You've been sort of a traditional payments company for a long time,
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and now you're incorporating stablecoin.
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So I think you have a unique perspective to offer.
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Maybe you can start by just telling us a little bit about Gusto and what you're
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doing with stablecoins.
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Sure, absolutely. Gusto is a provider of payroll,
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human resources and benefit software to about 500,000+
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small businesses, mainly in the United States. As it relates to stablecoins,
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really where we've started our journey is in paying contractors globally in 100+
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countries on our platform. Really,
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the insights that we have at Gusto are always rooted in our customers and where
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they want us to take things.
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And the core insight really that we saw was that our customers wanted to be paid
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in USD equivalents, in a method
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that was fast,
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in a method that was transparent and that allowed them to keep more of their
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paycheck.
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And stablecoin's really fulfilled all three of those promises and are a place
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where we've definitely had some interesting early traction.
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Yeah. You talked about the number of countries, and that feels like a natural...
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It's been a natural fit for stablecoins from a use case perspective for a while.
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But you also mentioned sort of getting paid in dollars. And I'm curious,
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based on conversation we just had about Europe and where Europe is headed,
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and sort of the nascent state there,
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do you see within the Gusto customer base demand for other
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currencies potentially emerging, or is it too early to tell?
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Sure.
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I think early interest and some of our early insights were around the US dollar,
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particularly in markets where the local currency maybe had a good deal of
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volatility or where there was some degree of distrust.
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But I think that as the market develops more globally,
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and as liquidity develops and additional currencies,
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there's the potential to pay out in other sorts of digital methods,
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where the other parts of that benefit, the speed, the cost, the transparency,
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really provide what's needed for the customer.
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Yeah. And how does a company like Gusto think about, well,
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how do the evolving regulatory frameworks around stablecoins influence the
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decision-making at a company like Gusto? I mean, anecdotally, at Stripe,
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when GENIUS passed,
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there was just really a flood of inbound interest and demand,
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which was sort of funny for me to see. I mean, with my lawyer hat on,
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it was like, well, stablecoins weren't illegal before. Yes,
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we have a regulatory framework, but you could do this,
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but very clearly there was a signal derived from the passage of GENIUS that
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we're entering a new era, and we just had a ton of inbound.
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I'm curious how Gusto thinks about regulation in terms of your willingness to
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engage.
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Sure, absolutely.
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Increasing levels of certainty really have given us confidence in making
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investment in the area and have really been a stimulant that
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allowed us to do more in this area and that will continue to allow us to do
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more. I think as the proposed rulemakings come together,
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and as we get more clarity on what exactly that's going to mean to us,
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particularly in the payroll space,
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I think it is hopefully going to allow us to do even more in this space and
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develop interesting propositions that are beneficial to our small
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businesses who are cashflow-constrained and to employees who want to get
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paid quickly in a digital method.
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Katie, I'm curious if what you're seeing,
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hearing across your portfolio companies and the projects you guys are involved
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in, how are you thinking about the regulatory landscape?
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What areas feel like still sort of a danger zone?
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Where do you see potential landmines,
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or where do you see the opportunities maybe?
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Yeah, great question. I mean,
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I think an important thing to start with is to say that stablecoins weren't
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illegal before the GENIUS Act.
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I think what the GENIUS Act did was give confidence to more institutional
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players that the water was warm,
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and they could safely get in without their regulator having something to say
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about it. And something like 70% increase in stablecoin activity,
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I think it was after the GENIUS Act was signed into law.
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So all of those signals are positive.
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And I don't want to sound like a broken record,
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but what's going to help determine whether the US lets a thousand stablecoins
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bloom, at least until a few of them go out of business,
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depends on what the OCC does over the next few months.
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Are they going to allow white labeling by issuers?
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Are they going to create a reporting structure that is onerous or that permits
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new entrants?
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And are they going to follow Congress's intent when it comes to the GENIUS Act?
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One thing I do want to caution founders on though is always to think about what
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is it that I want to bring to the world? What products do consumers want?
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What is it that people want to use?
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A founder who finds a clever regulatory loophole or exploits a
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piece of legislation to build a product, in my view,
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is never going to be the most successful founder.
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The first question to start with is, what does the world need,
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and how can I bring it to the world?
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And then you worry about how to fit it within the regulatory framework as
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opposed to the other way around.
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And smart people like you are there to help guide them through the process.
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Ondřej, you mentioned in your remarks earlier,
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sort of a need to focus going forward on how the European framework fits in
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globally, equivalence regimes, et cetera.
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And it does feel like that's something that Europe is going to have to figure
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out. The US is going to have to figure out.
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Stablecoins are global by default,
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and yet regulation is domestic by default.
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And I think there's a real question as to sort of how much friction,
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as the regulatory frameworks get put in place,
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how much friction will that create for the marketplace?
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So maybe you could say a little bit more about how Europe might think about
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equivalency.
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Actually-it's a good question-just to showcase the frictions,
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currently we have a debate in Europe on the so-called multi-issuance issue,
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which is basically treating those tablecoins that are issued in third country
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jurisdiction like USDC, pegged to the dollar
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and have an equivalent in Europe that is traded on European market under MiCA
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rules.
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How difficult is it actually for those issuers to meet rules on both sides of
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the Atlantic at the same time,
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which basically requires day-to-day rebalancing of reserves, et cetera,
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et cetera. So yes, there are frictions,
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and I think to tap fully in the potential also that John mentioned of use of
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stablecoins on a global scale, we somehow need to address these frictions.
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European Union, in its own law,
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we know the possibility to establish the
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equivalence or adequacy regimes.
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So basically assessing how the European and the third country regimes are
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alike or not. And then, on top of that,
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being able to acknowledge and recognize
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the token in this regard, for instance,
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stablecoin that will be authorized under GENIUS Act, to be traded on the
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same set of rules in Europe.
As MiCA stands today,
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or the European stablecoin rules stand today,
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there is no such a mandate to anyone. So it cannot be, even if there is a will,
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there is not possibility to do it. So I think what would require,
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and there's already discussions on stablecoins that are held on global
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international fora such as G20, the OECD,
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Financial Stability Board.
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So there are actually global discussions taking place.
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I think it's really good to follow up on these discussions and come up with
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concrete solutions on how these equivalents can be established,
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which then obviously would need to be adopted on both sides into the domestic
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systems,
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but I think I don't see actually any other way to
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proceed. And at the same time,
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I see and feel the urgency coming also from the industry to do it as soon as
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possible because otherwise I don't think we will, as you mentioned,
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we would not end up in a situation when something will be completely illegal,
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but it may be unregulated. And this is also a sort of problematic,
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especially when there is a broader acceptance of stablecoins by companies,
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by businesses, by also institutional stakeholders.
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Yeah. Yeah. And you mentioned the importance of reciprocity there.
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It seems unlikely that Europe, say,
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would recognize another country's regime without at least some confidence that
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that would be reciprocated.
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Indeed, the reciprocity here is extremely important, but obviously, I mean,
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there's a lot of discussions between EU and other jurisdictions
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on different type of agreements, trade agreements, investment agreements.
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I think the equivalence or adequacy agreements can be also taken
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on board throughout these discussions. And I think, as I said,
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there is already an urgency.
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So there is actually an interest also from the regulator
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side to cover this because otherwise, what is at risk that
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it doesn't mean that the global payments will stop because there is lack of
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regulation. The global payments will find a way.
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The trend is inevitable. So I think the question is,
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are we creative and nimble enough actually on the
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regulatory side to address what is already happening in real economy?
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Yeah. John, Katie, happy for either of you to address this, or both:
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how do you think about
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the sort of reciprocity or equivalence regimes when you think about global
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markets? When is a market open to you, from your perspective?
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I know you're paying out into many countries already.
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How do you think about expansion from that perspective?
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When is it sort of safe to move?
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And how are the companies you guys are working with thinking about that?
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Yeah. I mean,
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I think there are three or four things that we would look to to determine
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whether or not a market is really open for business.
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The first is a clear and concrete rule that doesn't just bestow total discretion
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in the hands of the regulators.
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The second is probably at least one company that's been successfully operating
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under that regime for some time as a proof point to show that the regulators are
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going to allow them to do business.
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The next two are probably a little bit in the weeds.
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I think the first is a law that actually allows both retail and
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institutions to trade stablecoins,
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which is not part of every draft that we've seen globally.
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And the last is what we've been discussing already, passporting.
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It has to be the case that local consumers can access stablecoins that are
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denominated in currency other than their own,
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or the system doesn't work very well.
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Yeah. John, any thoughts?
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I'm definitely excited about and optimistic about any sort of standards that
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create trust and uniformity of
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expectations for end consumers and that allow the payment system in general
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to be able to scale.
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I think those are critical ingredients in the success of any sort of payment
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system. So definitely excited about the possibility.
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Good. Ondřej, I'm going to come back to you, and I want to talk about,
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I guess what's kind of a controversial topic, but sort of CBDC in Europe,
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which has been advanced as sort of the preferred method of
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tokenizing money by at least the European Central Bank.
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Where do you think the balance of that debate is among the very many
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stakeholders who care there on sort of CBDC versus stablecoins versus
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tokenized deposits, or coexistence? How do you see that playing out?
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Well,
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there has definitely been a very interesting development on it back in Europe
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because, first of all,
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the European Central Bank was among the most vocal stakeholder
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institutional one, but also having a huge impact on policy,
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declaring that stablecoins, there's actually no room for stablecoins in Europe.
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It was as blunt as that.
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And it was also,
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one of the motivations was that the ECB has been working on the
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project of digital euros, the digital central bank currency,
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since four or five years already now.
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So the idea of ECB,
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the thought was that first we need to launch the
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CBDC,
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and then we can actually allow for more digital and programmable money
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in the European market.
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But obviously the market developments were much faster than the ECB people.
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Not surprising, but that, this is what happened. So now, since the past year,
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ECB is actually officially saying that stablecoin...
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There is a room for stablecoins in European economy, but again,
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the digital currency should be launched first.
So interesting.
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Because they... Sorry, go on.
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Yeah.
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So there's definitely this distinction between what's happening in the US and
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what's happening in Europe.
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There will be an effective launch of digital euro in a wholesale area this
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fall, so it will happen in any case.
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And I think just to follow up on your question, to me,
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it seems at least in European context,
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as a sort of inevitable part of farther digitalization of tokenization
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of money. If you look at the two-tier monetary system,
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as we knew it for centuries, where on one hand we have central bank money,
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and then we have commercial bank money, circulating together. I think we are,
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if not in this decade, but definitely in '30s,
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we would see live basically a monetary two-tier system and
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tokenized version,
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where we on one hand will have a digital central bank money-digital euro in
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European case-and then I think most likely tokenized
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deposits as an equivalence of commercial bank money in
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circulation.
And I think this is where we're heading.
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We still have a lot of political debates about how the CBDC should be designed,
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and I think it will have a final impact on the entire ecosystem
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in Europe. But
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I sometimes totally disagree with the ECB, what they were proposing,
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but I think they right, or they may be right, on one thing:
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that the tokenized central bank money can actually help in Europe to build
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use cases for euro-denominated stablecoins.
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And this is also what is missing.
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Not only the regulation in Europe is very heavy on stablecoins,
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but we so far miss use cases like, for instance,
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John is describing in their case.
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So I think the CBDC can actually help build this, also,
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with a trust that, believe or do not,
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the ECB still has a lot of trust in the system.
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And I think this can be one of the anchors, but, yeah,
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we need to see how the CBDC debate develop,
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and how it actually works in practice once it's launched, later is here.
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But I believe as I'm optimist by nature,
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I really believe that this can actually help and then accelerate the stablecoin
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market in Europe with the right redesign of MiCA rules with it.
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Yeah. The European policymakers seem somewhat schizophrenic on the topic.
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They want to push CBDC on the one hand,
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but they're worried about harming the banking system,
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and so they want to make it really unattractive on the other. And so,
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you get policy muddle at some level. Katie, you were going to interject,
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I think with a point about the US.
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Yeah. I'm just hearing this.
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I marvel at how different the politics can be on this issue.
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CBDCs are so unpopular in DC right now that Congress is literally trying to ban
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them, even though there's no danger of anyone proposing one.
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So you've got a growing number of members who consider it to be a major privacy
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issue and compare the US to the CCP for even thinking about something like
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a CBDC.
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I think it will be a long time before someone has the courage to even propose
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one here. And I would imagine that it would fail pretty colossally in Congress.
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But I was just describing the institutional debate.
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I was not saying that the digital euro is popular in, back in Europe,
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but the debate is extremely diversified,
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and there are opposite camps,
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but this is how the institutions approach the issue.
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Yeah. All right. We've got a handful of minutes left.
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Maybe we'll start with you, John, and go down the line.
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What advice do you have for founders and builders in the audience who are either
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working with stablecoins actively, stablecoin curious?
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How would you recommend they approach the topic?
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Sure. Yeah. I would echo,
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I think one of Katie earlier points on focusing on the need that you're trying
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to solve out there in the marketplace and doing that in a way,
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expanding into this particular discussion,
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doing it in a way that you're creating an ecosystem and creating the world that
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you want to be part of in the future,
447
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and that you're partnering with others in the space who are pursuing that same
448
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sort of end goal.
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We've definitely found a lot of value in partnering with others,
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or others who are deeper in the stablecoin space than we are and are every day,
451
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to help to advocate for some of the policy that we want to see in the end,
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out in the market.
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Ondřej, any advice?
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Well, to be honest, I mean,
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I passed these two days just listening how agentic commerce,
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agentic payments, agentic world will be driven by stablecoin.
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So I don't think the question is like, what to do with stablecoins.
458
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It's there and it's actually, there's a lot of use of it for it.
459
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So I think maybe the advice to the business is just be persistent. I mean,
460
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if you see there's a well argumented use case for it,
461
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just keep using it. And I think the regulatory framework will somehow
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have to match and fit to the reality.
463
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But I think that one of the key questions that I think we touched upon
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today is how we treat this issue globally.
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And I think this should be something that once we sort of have solutions
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on the domestic front,
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let's also come together and speak what we can do about finding a
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sort of frictionless solution on global level.
469
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Great comments. I would add only that the water's warm. Come on in.
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EY released a study earlier this year,
471
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which showed that something like half of firms that are not yet using
472
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stablecoins are considering using them, which is a staggering statistic.
473
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Many of you are probably aware of Tempo,
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the payments blockchain that was coincubated by Stripe and Paradigm.
475
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There are a number of really interesting case studies on Tempo's website,
476
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and you can see how real businesses are using stablecoins to thrive.
477
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Just one example,
478
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it's as a result of its Tempo integration that DoorDash can now pay Dashers
479
00:28:20.330 --> 00:28:23.750
immediately. No waiting over the weekend, no financing schemes,
480
00:28:23.850 --> 00:28:25.350
no couple of days wait.
481
00:28:25.410 --> 00:28:29.070
You drop the delivery on Mrs. Smith's doorstep and you can immediately get paid.
482
00:28:29.610 --> 00:28:33.310
That's a meaningful difference for DoorDash's business and a meaningful
483
00:28:33.390 --> 00:28:35.670
difference, frankly, to the lives of its Dashers.
484
00:28:36.110 --> 00:28:38.490
All sorts of cool things can be done with stablecoins.
485
00:28:38.610 --> 00:28:42.790
And if you wait until the ink is dry on the very last regulation two years from
486
00:28:42.830 --> 00:28:46.810
now, you will be meaningfully late to the game. So the time is now.
487
00:28:47.650 --> 00:28:49.810
All right. Katie, instilling some FOMO in the crowd.
488
00:28:52.430 --> 00:28:52.830
Excellent.
489
00:28:52.830 --> 00:28:57.410
I think the point about really seeing real world adoption and real use cases is
490
00:28:57.470 --> 00:28:58.210
a critical one.
491
00:28:58.210 --> 00:29:02.630
And we flash the chart at the beginning of total stablecoin volume outstanding.
492
00:29:03.230 --> 00:29:05.170
In some ways, a more interesting number is just
493
00:29:06.810 --> 00:29:09.890
the actual amount of transactions being done in stablecoins.
494
00:29:09.970 --> 00:29:13.590
And I think that in 2025, which feels like a long time ago now,
495
00:29:14.470 --> 00:29:18.410
but the sort of best estimates around sort of real world stablecoin transactions
496
00:29:18.430 --> 00:29:20.010
are that they hit about $400 billion,
497
00:29:20.170 --> 00:29:23.730
which is small in the grand scheme of payments,
498
00:29:23.790 --> 00:29:26.350
but I think a very sizable increase.
499
00:29:26.410 --> 00:29:30.330
So we're starting to see lots of that real world adoption take place,
500
00:29:30.450 --> 00:29:35.130
thanks in part to many of those projects and initiatives like Gusto's.
Well,
501
00:29:35.190 --> 00:29:36.530
we are just about out of time,
502
00:29:37.210 --> 00:29:42.070
but there are no fewer than eight or 10 countries thinking
503
00:29:42.110 --> 00:29:45.930
about rethinking, reworking, reproposing stablecoin frameworks this year.
504
00:29:46.050 --> 00:29:48.710
So the regulatory picture will continue to evolve.
505
00:29:49.490 --> 00:29:51.250
We will get more and more clarity as we go on.
506
00:29:52.090 --> 00:29:55.150
Stripe will be engaging on every single one of those on behalf of our users.
507
00:29:55.210 --> 00:29:56.610
So yes,
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00:29:56.730 --> 00:30:00.490
if you're stablecoin and crypto native or just stablecoin cure curious and want
509
00:30:00.510 --> 00:30:01.570
to keep up the conversation,
510
00:30:02.110 --> 00:30:05.190
feel free to get in touch and join me in thanking our panelists for a great
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00:30:05.210 --> 00:30:05.570
discussion.