The Future of Global Treasury: Stablecoins, Blockchain, and AI

Speaker A: All right, welcome to another episode of the Headless banking podcast. We're back. It's been a little while. We haven't had any episodes, but excited to have Jared back on from Fireblocks. One of our favorite guests and good friend. What's going on, Jared?

Speaker B: Not much. Another day living the dream. It's definitely an exciting time to be in the space. Super excited to be back on. So happy to be here.

Speaker A: Cool. We were talking about a LinkedIn post that I put out about how the future of global treasury is crypto and stablecoin and basically why, why aren't corporate treasurers adopting this already? You know, if I'm a global company and I've got entities in the US and Canada and Mexico and Europe, if I'm using fiat currency, I'm stuck with other local banks. The solutions exist. You can use, you know, you could hold funds in USDC. There's tokenized money market accounts powered by BlackRock and Franklin Templeton. I think you had some good insights coming from your Fireblocks background on why that might be.

Speaker B: Yeah, for sure. I think maybe just to take a step back for a second and just assess like where the space is today and where I'm hoping it eventually gets to. So for anyone who's not familiar with Firebox, we are enterprise grade wallet infrastructure and settlements platform. We're doing about a trillion dollars a month, which is roughly 15, 20% of all blockchain transactions, uh, go through our infrastructure. So we have a pretty unique lens into what's actually happening underneath the surface. I just came from San Francisco at stripe sessions last week and the sentiment shift from a year ago where if I said I did stable coins or anything in the blockchain space, people would run away from me. This year, the opening keynote from the Collison brothers AI and stablecoins. And to me that was like the ultimate bad signal for the nerds and the engineers and the really smart people to just come and build in this space. So to me that was one of the most exciting things to see. But I think today where we're seeing real demand for stablecoin and blockchain based payments is around two different things. So one is really around dollar access. This is people who are primarily in emerging markets who don't have access to dollars today and they're basically just looking to preserve their wealth in a currency that's not going to be devalued. And then the second piece is around cross border trade, primarily from originate corridors where it's originating from an emerging market. So I think if I'm, um, at an organization, I'm trying to assess what's our stablecoin strategy? Where do stable coins make sense? I think today, if we're being honest with ourselves, it's looking at the areas where there's like the most amount of friction and not very good access to traditional banking. That being said, I think where this is heading, it could look a lot different in the next six, 12, 18 months, but at least that's where we are today.

Speaker A: Basically like a global treasury solution for their customers. But yeah, so they can accept, they can receive stablecoin, they can send stablecoin. I didn't get a read on whether there was any other kind of crypto assets like Bitcoin available, but curious to what you heard out there.

Speaker B: So the terminology that they use was borderless finance, which I think is excellent marketing. I think it's a very accurate term. And so the two main products that they announced around stablecoins were one is a USDC balancer wallet. I think that's massive. I think today a lot of the PSPS and Payment M companies that we've been seeing were almost like dipping their toes in the water where maybe they're using stablecoins as a, uh, settlement mechanism, but they weren't actually holding it or offering that as a service for their end customers to hold balances in stablecoins. So I thought that was like a huge unlock for just the industry in general. And then the second thing that was maybe a bit more under the radar, but I think has really big implications was they announced a partnership with Stripe Bridge Lead bank and Ramp M for a stablecoin wallet that is linked to a card. So basically a Spend product. And anyone in this space knows like one of the biggest areas of friction today is around off ramping. Like we could talk about dollar access all we want, but ultimately people need to pay their groceries, they need to pay their rent, their utility bills. And not everyone accepts stablecoins. And so there's always this, uh, need to go back into local currencies and cards are just really well positioned to service that. It's really, really challenging to build a global card program. We need to worry about currency bins. You probably need a correspondent bank to manage the effects and settle to the scheme in these different currencies, local bank partners, local licensing. And so being able to wrap all of that into a USD, uh, denominated, even if you make the, the C really small and it's just a proxy dollar account I think is really powerful. Going back to the theme of Stripe sessions with AI and stablecoins, I think the common thread between the two were really around enabling founders to focus on their core idea. So M. If you look at, I think it was Mike Hudak from Sling Money said he built basically Sling Money's like TransferWise built on stablecoin infrastructure. It took him and he was the. I uh, may be getting this wrong, but I think he was a chief product officer at Monzo. He said he was able to build the business with like 80% less resources than he would have needed with traditional Rails. And the same kind of goes for AI where it's like you can get so much more output with so much less. And so the core theme is like how do you, how can you break down a lot of these traditional barriers to entry? There'll be more competition, more founders, more startups and I think it's just a really exciting thing that's happening.

Speaker A: Yeah, it does feel like something's taken off basically since like, I guess it's almost coincides with the election in November. Since then crypto, stablecoin 8 and AI as well. Like it seems like it's come so much further along. I wonder like, is it just hype? Is this another, is it the cycle we are at the peak of the uh, four year cycle is in six to 12 months when crypto after crypto peaks and comes back down. Are we gonna, everyone gonna forget about this? What do you think?

Speaker B: I, I think it's both and not to uh, play the middle here and the safe route these cycles are. Anytime you see like this something that looks like, I don't even know the right term but when you see, I don't know, bitcoin go from, I don't know, a thousand bucks to twenty thousand or you see it go from twenty thousand to a hundred thousand or you see bank of America announcing stable, they'll issue their own stablecoin and the Collison brothers calling them room temperature semiconductors. Right. Like to me these are all signals and those signals attract capital and talent which brings in really smart people to build in this space. So. But it also attracts some bad actors. And I think that's why you get some of these cycles where it's like these boom busts that just seems like craziness. But I think uh, the other thing that's different and usually when people say this time is different, they're wrong. But the reason I think this time is different is you had the regulatory backdrop, now there's a major tailwind and so, uh, in the past where a lot of this was sounded good in theory and on paper, but when it came to how does a company or business actually make a decision and there's no clear guidelines for how they participate in this new ecosystem, we now have that, we're now getting that not just here in the US but globally. And I think that's what's going to be different. So I would say yeah, there might be some hype, but there's also a lot of real things happening under the surface. Yeah.

Speaker A: Uh, with you on that, hopefully we'll have four years of positive legislation and new laws that actually make it easier for traditional companies and traditional corporations to adopt crypto. And not just the crypto, uh, companies that have been using it for years.

Speaker B: I always get nervous because like they say, the pendulum swings both ways and it's. It feels like we went really far one way, really far the other way. Yeah, I'm with you on that.

Speaker A: So we'll see. Although I heard the economics point are pretty good, so I'm sure. But I don't think that helps necessarily validate the market too much. Pivoting back to the original commerce, you know, start of this, you know, based on their LinkedIn post, we just decided to jump on a podcast. But what. How would someone build? So you know, again, I think there's a huge opportunity. We see Stripe just did it. But they're doing it for e commerce companies. Right. And you know, maybe they have some big retail companies on there, but they're still like global, I guess, comm. Global e commerce companies for the most part. Not necessarily your traditional small to medium sized enterprise. Not necessarily. Not. Manu. There's a lot of companies in manufacturing, uh, and things that just aren't necessarily all more traditional B2B sales. There's a huge opportunity there I think. But these companies haven't moved off of legacy fiat infrastructure yet. I wonder why do you think they're taking so long? And also how would you build this using Fireblocks or some other infrastructure if someone wanted to build it from the ground up? I want to build a corporate treasury product that can hold funds in USDC and move them instantly in and out of uh, tokenized money market accounts. Yeah.

Speaker B: So maybe just to address the first point of why hasn't it happened already? I think the two main blockers have. Or three. There's been three things. One is before Layer. Two is before Solana. Two just the blockchain themselves, the tech. I don't think it was ready. Right. If you had to pay 5, 10, 15, $20 in gas fees for transactions. Blockchains just, they weren't really adding anything new. Now we have basically sub patty transactions because of some of these newer blockchains like some of the L2s and Solana and lots of others. I think that's one piece is the tech. I think the second piece is every bank contract pretty much for the most part. One of the first prohibited activities was, is crypto. No, uh, you can't touch crypto. You can't.

Speaker A: So if they have an account at Chase, they can't have any crypto accounts that even though it's outside of Chase, has nothing to do with Chase.

Speaker B: Well then it's which banks actually allow you to which in the past it was Silvergate, it was signature. They don't exist anymore rip to those banks but got taken out. So like basically if you're looking at it of uh, hey, I'm a global remitter. I my businesses, I have hundreds of bank accounts around the world that have a correspondent bank and my main banking providers are telling me if I touch crypto or do anything in this space they will cut us off. And so it's a ration like these are rational decisions to not do anything. If you're, if you're uh, a wise and you're doing hundreds of millions of billions in revenue, are you going to risk that for this new emerging technology that's maybe a sliver of that today? Yeah, probably, probably not. And so this is why. What about the event?

Speaker A: I'm talking more so about just traditional companies like you know, I'm not in the payments business, I'm just a tech company. Yeah, I've got operations in Israel and I've got operations in the United States. It'd be easier for me to manage my treasury if I could hold it in USDC and then just draw it down from USDC to USD or ILS and pay my local bills when I need to. Basically you just keep your treasury, for lack of a better term in a digital currency.

Speaker B: I agree with you. It's a it it yes. Aside from uh, having more control over your own assets, it's you don't have to worry about counterparty risk to the banks. You saw FTX happen, you saw Silvergate happen, you saw even Silicon Valley Bank. Right. You could kind of go through the list. But like just to get back to your point, at the end of the day most businesses don't today have wallet infrastructure. They can't accept crypto or stable coins and their Obligations are still in fiat currencies. And so there's always this component of needing to bridge between stable coins and fiat currencies. And because the banks and the traditional players from a regulatory point of view cannot participate in this, the only other venue to actually do that exchange or that swap is really from exchanges. And so if you're a corporate business and you want to move from USDC to ILS or to Mexican pesos or whatever it may be, you're then having to rely on in many cases a tier three or four or five exchange, crypto exchange. How do you then get your compliance team and your risk comfortable with dealing with these exchanges where you have no idea how they onboard their customers and uh, what kind of KYC risk that that uh, introduces? Because yeah, if you're getting like Mexican peso from an exchange that's from their users who are primarily buying Bitcoin or other assets, you don't know how they're onboarding their customers. And so the unlock is from a regulatory point of view. You have like uh, SAB121 that allows repeal, that allows banks to custody. You have basically all these agencies coming out and saying banks can now enter into this space. So once they start being able to provide the liquidity, now you have more of those building blocks that will allow you to more seamlessly facilitate cross border trade between stable coins and local currencies.

Speaker A: I think mostly these local, you have to establish the local liquidity providers in order to move the fiat or the crypto to the fiat. And that's basically the blocker. So you see a lot of these companies popping up now. There's like, I think conduit's one of them. Um, there's one that we were just chatting about, Mesta, which is trying to do this. Yeah. So how does. It's kind of like basically replicating. It's not too dissimilar to how things work for like a currency cloud, except that you have to go to all these exchanges.

Speaker B: I think the difference is a few different things. And so, and this is why I think stablecoins are so powerful. I think uh, today if you're wise and you've built out this global banking infrastructure that probably required hundreds of millions of dollars in capital and probably took you like 10 years to build, it probably doesn't make sense to rip that out at least today where stable coins are. But I think the unlock is if you look at conduit, if you look at bridge, even in under a year they basically were able to build a Global banking network leveraging Stablecoins which are basically out of the box global by default. And so I think like what stablecoins do is they remove a lot of the traditional barriers to entry for starting and launching like a uh, global payments company because again they're global by nature. The other thing that they're able to do is when we talk about a currency cloud who had maybe 100 plus bank accounts around the world they would basically leave uh like pre funded pots of capital all around the world moving those payments.

Speaker A: Still doing that. It's not going or anything.

Speaker B: Yeah, exactly. So like again that's just a much higher cost of capital to launch a global payments business because you need to pre fund these pots of money all over the world and then how do you hedge the FX risk and do all these other complicated things versus hey if I now have this instrument that's US dollar denominated and now I could, yeah I might need a bilateral agreement with an offering provider in each different country but I don't need to tie up my capital to hold them. And now I could put my dollars, my USDC to work in like an on chain money market fund so that um, I'm basically what it's doing is you're taking settlement from T 2 or 3 to T 0. You could now hold on to the float longer. Your FX risk is now only in USD which is fine. And now you can basically stream your, call it a 4 or 5% interest and then when you need to make the payment you can convert it over the weekend or whenever you need and settle in a stablecoin. And that's the unlock in my opinion at least where things are right now.

Speaker A: But the blocker is still just. There aren't great local liquidity providers I guess.

Speaker B: Yeah, I think it's something that's definitely getting better. Again parts of Southeast Asia, parts of Africa, stablecoins are making up a large majority of those flows and so there's actually really good liquidity. But where I think if you're going from USD to Euros you're probably going to get a better spread from your J.P. morgan or City. But I think again it just depends on the corridors. But it's one of those things where maybe outside of AI I think stablecoins are like the most dynamic space where you have some of the smartest people building it. Just there's an opportunity people are going to build. It would be like looking at like an early iPhone saying the screen is smaller than my TV or I could type faster on A keyboard than with my thumbs. But you're missing the bigger picture of like hey, the iPhone. The unlock is you have access to all the information in the entire world in your pocket and that is connected to every other human being on earth. Like that, that was the unlock. And I feel like that's what stable coins and blockchains are where it's like yes, today people are looking at it in a point in time as opposed to what this fundamental form, like technology is going to allow as a new form factor. And then where this could actually we could all guess about it, but I don't think anyone really knows.

Speaker A: But yeah, just a matter of time before global treasury operations are all ran on blockchains and digital assets. Crypto. It just seems silly for it not to be. But I think what you're saying is accurate. It's really the lack of regulation makes it really hard for someone who's a corporate treasurer, who's obviously naturally risk averse to want to try to take any risk. And so until these things become

Speaker B: more

Speaker A: accessible and I guess regulated, it's still going to be difficult to adopt. But I think maybe there's an opportunity for these smaller kind of global organizations. Maybe they're a little less risk averse and they want to take some chances so they can move money faster and streamline their operations. I mean also if you combine like AI on top of stablecoin treasury and so that, you know, there's a lot of these things that people have to deal with. Like you were saying is like hedging FX risk and how much money do I need to pre fund to this account and am I maximizing my interest income? Like these aren't super hard problems. It just takes a lot of time and brain power. And so I think there's, I think AI could also be huge to help, you know, companies manage their global treasury problem.

Speaker B: And it's a perfect fit or marriage with stablecoins because stablecoins and blockchains give you programmability. So if you can now program your money to be smarter, it allows you as a business to focus on your core idea where you don't want to be worrying about like you want to hire people who believe in the same things as you, who are on like the same mission and who believe in like the core idea of your business. But like today, because all of these things as you mentioned are just annoying and there's a lot of friction, you need RNAP teams and accounting teams and so on and manager, all these other things that have nothing to do with the actual core idea of your business. And I think that's what companies like what you are building and others in the space. It's like that's why I get excited about this space and I think it's powerful and a good thing.

Speaker A: Yeah, like you said, ARAP teams, collectors, these are all the cost center. You know, it's a cost of doing business, it's not bringing any revenue. And so I feel like finance and accounting is really ripe for AI disruption. But again there's still some hurdles to get over. People don't want AI to move their money obviously they're probably sketched out that it could hallucinate and accidentally moved $10 million that I didn't want them to move things like this.

Speaker B: And I think that's what a lot of what Firebox does is basically it has a policy engender off chain governance that before you go to process a transaction you need to filter through all these different uh, policies and checkpoints. Basically there, there's like definitely ways that you could program your money to be smarter where there you don't have to fully trust the AI. I think it's still.

Speaker A: Well you could also just have AI uh in know message the CFO or the treasurer and say hey, I'm about to move this. It's just like how an admin would do it. It's just AIs. You don't need admins and bookkeepers anymore. Right?

Speaker B: Exactly.

Speaker A: Well, another kind of pivoting a little bit. I also feel like obviously Micro Strategies is huge and getting bigger. I wonder is that the model for the future of every company? Like if I'm a. I just started my own company, I, I can't do it. But like what if there was. If I had the opportunity to replicate Micro Strategies treasury strategy and buy Bitcoin, why the hell wouldn't I want to. I want to do that but like I can't. There's no way for me to do it. So like what do you. Do you think that's where it's going to go in terms of uh, other companies trying to. It's and maybe not. They're not going to go as all in as much. I will

Speaker B: I'll be honest here. This is like definitely outside my domain of knowledge and I've been wrong the entire way on microstrategies. I am probably like a closeted Bitcoin maxi for sure but my whole thesis was once you get the ETFs why would anyone buy MicroStrategy at a premium to the underlying Nav or the underlying bitcoin that they're holding. And I think if I'm not wrong, I could be completely wrong. So feel free to roast me in the comments if anyone is listening. But the way I understand it is there's still a lot of sovereign wealth funds and just other really large institutions who can't get direct exposure to bitcoin or even equities. And the debt is just a different vehicle that they're able to invest in and that's why it trades at this huge premium. So I guess, like my question would be how much room is there in the market for this? And then how far along the risk curve do people go? Like we recently saw, I think there was a Solana one, is there going to be an eth one, is there going to be a Dogecoin one, is there going to be a far. Like how far do you go?

Speaker A: But as a model for corporate treasury, if I'm a public company, why I look, they just. They're killing it.

Speaker B: Yeah, maybe. Yeah, I think it's a great idea because your stock price automatically goes up and you have like this built in like crazy fan base who's going to support you no matter what. Because they love bitcoin.

Speaker A: The fan base though, like, Bitcoin's just a better asset to hold for your, for your company. Like why?

Speaker B: Yeah, you know, yeah, I agree. It's just the volatility, I guess is what would spook if I would play devil's advocate. But yeah, I agree with you. I'd rather bitcoin. I personally hold more bitcoin than dollars, so.

Speaker A: Right, right. Me too.

Speaker B: And I'm um, I think that that's

Speaker A: where it's going to go and I don't think we're getting. This is me talking about in the future. I think in 10 years, maybe, maybe less. Especially if this evolution towards stablecoin treasury happens the way it looks like it's starting to, it's going to be an obvious to be like, well, if I've got extra cash, Bitcoin's not a risky asset. Actually people still think it's risky. They think it's volatile. It is compared. But long term it's not really that risky. If you're going to hold the funds for a significant amount of time, like 12 months plus, you could easily see appreciation and yeah, I don't. I just think it's a better asset to hold.

Speaker B: I um, think the one sentence way to describe bitcoin is money not tethered to any government and so if you have political risk, with tariffs and wars and all these things going on today, there's definitely a really big case to hold an asset like that on your balance sheet. Right, right.

Speaker A: Yeah.

Speaker B: Especially if you're doing global trade and, like, trading with lots of different countries.

Speaker A: So, yeah, the whiplash from the, uh, Liberation Day and the tariffs and the tweets and the deals, I think it's been. It's definitely been felt.

Speaker B: And that's why you need some sort of system that is 24, 7, 365. Because if the president or someone's going to drop a tweet over the weekend and you are stuck because you can't move and it's outside of banking hours, that is a huge risk to your business.

Speaker A: Yeah, yeah, totally. All right, well, I think that's a good one. Good note to end on, man. I appreciate you jumping on last minute.

Speaker B: I love it. I'm just happy to be here. And, yeah, it's exciting times ahead, exciting times for you. So, yeah, happy to help. Happy to be here.