Ep 99 | A New Era for Cross-Border Payments | A Conversation with Arnold Lee*

Speaker A: Most folks don't really care, uh, what the underlying tech is. It's a dollar. Um, how it gets there, um, can be boiled down to is it fast, cheap, compliant, convenient.

Speaker B: Hi, this is Jeremy Allaire, and welcome to the money movement. Today we're going to be doing a episode in the USDC Builder series where I'm having conversations with builders that are really taking advantage of what we've been able to build at Circle. And I'm really, really pleased to have Arnold Lee, co founder and CEO of Sphere, uh, with us. Uh, Arnold, really nice to have you here.

Speaker A: Yeah, really great to be here, uh, and appreciate you hosting. It's a, it's an honor, genuinely.

Speaker B: Well, uh, I'm looking forward to the conversation. Maybe we can start, um, just at a, at a high level. Um, you know, I, I, I, I'm always interested in like founder stories and, and you know, when, when, uh, when you started Sphere, like what, you know, when did you and your, your co, founder or founders start? And, and like, you know, as people like to say, like, there's like an, an itch to scratch. Like, what was the, what was the itch that you wanted to scratch? Like what, what was the, like, spark that got you really excited about building, uh, in the space you're in? And I know your product has evolved and there's a lot to everything that you guys are doing, so we will come to that in a little bit. But just like, what was that spark and what did you kind of, what were like, the big ideas that you had that you wanted to go after that got you so inspired to start Sphere?

Speaker A: Yeah, it's a great question. And I founded Sphere with my best friend from college. His name is Luigi. Um, we've been building software together for about a decade, um, and we both grew up on the Internet. He's, uh, kind of middle from, uh, the ocean in the Caribbean. Parents, uh, originally from Guyana. Um, mine is originally from Korea, but I grew up in the woods outside of Boston. Um, so the idea of digital money always made sense to both of us, uh, playing video games when we were young. I'll spare you in the audience the full, uh, uh, lore and backstory, uh, but found Bitcoin in 2009, uh, when I was in middle school and parents couldn't speak English very well and uh, wanted to play video games. World, uh, of Warcraft specifically. Um, and the only way that I could get paid to do, uh, these online surveys was, uh, through Bitcoin. And you could make enough Bitcoin, trade it in, peer to peer for a gift card. Um, so that always left an impression on me. 45 minutes bus, uh, ride to school and back, uh, thanks to my much smarter younger brother. Um, and, you know, was a Bitcoin user throughout the years, uh, but it wasn't until, uh, 2015 or so, uh, when Ethereum started to really become in vogue, uh, within college circles. Um, and you know, the idea of a decentralized computer made a ton of sense. It was like abstractly, uh, very interesting. Um, but, you know, it was hard to explain to our parents. Uh, everyone has like an ICO story. And it wasn't until we found, frankly, what you guys, uh, were doing with stablecoins, uh, where it was explainable to my mom, uh, you know, this is a dollar on the Internet. And the initial itch, it's so much easier to just look back and kind of connect the dots. The initial itch was because we would have saved so much time, uh, if we were able to bring money from Korea to the United States. And I think it was the same for Luigi. It's uh, like years, decades of uh, starting over. Um, and in 2020 we had kind of gone down different paths. I blame him for the finance and bringing us into the world of payments because he was a bunch of asset managers and eventually startups. I went into Iot because my family's in construction, um, and we started to build on chain. And we tried for years, essentially since 2020, 21 to create products that people wanted since we had some, uh, background building software in Web2 and just kept running into the same problem of payments. Eventually this accounting, ah, labeling tool that we had made so that way international customers could pay us, uh, escalated into a global hackathon win sponsored by Stripe. Um, and you know, our timing was historically, uh, perfect. Uh, incorporated a week after FTX closed a seed round, ah, during the regional bank crisis. Um, and that was the initial, I, uh, suppose phase of Sphere, a strike for crypto. And um, we quickly realized that no one really wanted to take crypto when, uh, crypto's down bad. Um, and the only people willing to talk to us came from the same regions. There were different types of people. But it wasn't the teams that were still left, um, throughout the bear market, uh, who had strong convictions on blockchain. Uh, principally, uh, it was folks from the Caribbean, Latin America, uh, a, uh, fruit merchant, engineers, uh, from Brazil, remittance, uh, provider out of Mexico. And we just kept seeing these same threads of folks who were way more successful than we were, um, who weren't blockchain natives, but were incredibly excited by the idea of stablecoins as a form of cross border payment. And we went all in. Um, and I described this as the second. Uh, and publicly what most people recognize us for helping folks do these cross border B2B payments using uh, stablecoins like USDC. Um, so in their initial stages it was uh, a hard itch to maybe isolate. But looking back it makes a lot of sense why uh, you know, the DNA of the company eventually ended up going down the road of payments.

Speaker B: Yeah, it's um, it's fascinating to hear both like the, the sort of things that you were excited about technically and, and then obviously um, the sort of you know, finding who's got the real problem and then just like, okay, we're going to build for that.

Speaker A: Right.

Speaker B: Um, I think I can relate very much to like you know, starting a journey here and then ending up over here. And um, there's usually a through line, you know, that kind of goes through it. Um, but um, but, but it's, it's never a straight line. Um, you know, as well, um, yeah, I think as, as you know. Right. Because we talk about this a lot is um, this idea of uh, you know, an Internet, uh, an Internet dollar and the ability to just transact directly with people over the Internet, um, at the speed of the Internet with all this, you know, cost efficiency, uh, etc is really powerful. It's what we've been chasing for 10 years and like we're finally making progress. And um, you know, I think um, very often people ask, you know, what are, what are the use cases for stablecoins? And there's lots of use cases we can point to of course, but I think one that we're seeing more and more of and it's one of the reasons I was really excited to have you as a guest is international transactions, especially with like small and medium enterprises. Right. And I think what's been interesting and we're seeing more of that and I want to, I want to hear more stories and kind of how that actually works for you guys today. But um, it's really interesting because we're finding, right. Small and medium enterprises, especially in emerging and developing markets, um, you know they, they can like make decisions quickly. Uh, you know they, they depend very heavily on the Internet for a lot of what they do for their business in many cases. And um, they don't have like giant, uh, they're not public companies. They don't have like all the kind of, you know, risk management stuff. And so they're willing to basically be more early adopters. And that's been the case in software historically. Right. Like the early adopters of, of SaaS were all SMEs, right. Because no big company was ever going to depend on SaaS, um, or you know, early adopters of AWS for startups. Right. For the most part. Right. And it wasn't big enterprises, it wasn't, you know, all these things. And so I, I, I, I see that we, you know, we're seeing kind of product market fit with international SMEs who are like, wow, I like dollars, I want to settle with dollars. My counterparty want to settle with dollars. I'll keep money in this because this, this is like more convenient than my bank. And, and they start to do it. Um, so we're sort of seeing that emerge. Um, maybe you can just tell a couple stories about, you know, um, just bring it to life a little bit. Like, you know, and obviously if, if you can't name specific names of customers, that's fine, but just characterize like who's doing what, you know, how are they doing it before, how are they doing it was fear. And what are they telling you yet?

Speaker A: Um, these are some of, uh, my favorite, I suppose, ways to motivate all of us internally. Um, because the decision to go on the ground, uh, in Caribbean and latam, especially within South America, um, it's visceral. Uh, to give you an example, uh, I'm currently in San Jose, uh, Costa Rica. One of our favorite clients is coming up from Chile. Um, we've been working with him for about a year now. Uh, and he runs a very successful local fintech out of Chile. Um, you would think that he would be able to get access to robust dollar accounts, um, the ability to move millions of dollars daily, uh, just natively through say, uh, I don't know, pick your favorite big bank in the United States. Um, but because he doesn't speak English very well, uh, because all of his uh, corporate documentation is in Spanish, he doesn't have any local presence in the United States. He has to depend on his local sponsor banks to be able to give him a robust dollar account. And those sponsor banks have a degree of separation from the ultimate issuer, uh, the correspondent in the United States. And they have to justify to, uh, your point from a risk management perspective, uh, why they should give access to a higher dollar account, uh, to this merchant. Um, there is so much structural deadweight loss that we're seeing because of how intensely manual compliance, uh, and Risk, uh, is today. And it makes sense why it is the way that it is. Um, but for that client who's coming, uh, to San Jose and visiting us, um, it's incredible how, how difficult it was for him to get access not just to the dollar accounts, capital markets, um, to be able to potentially create local presence in the United States or elsewhere, expand beyond the locally successful business, uh, that he has today. Um, it's crazy how he didn't get very far along in conversations just because of who he is and where he comes from. Um, and the way that, uh, that client uses us today is we're acting as a way to naturally provide tech infrastructure, uh, for stablecoins as middleware. But until the day where the entire world economy is on chain, you still need banks for the entrances and the exits. Um, and as engineers going, uh, headfirst into this rabbit hole of fiat, we were very lucky to recruit folks with decades of experience. Along the way, we discovered that there are, uh, things within the bank messaging system, uh, that makes it a lot faster and cheaper because you can start to explicitly define correspondent routes. You can explicitly communicate with the people who are in, uh, the wire room and operating, uh, on these, uh, Swift MT103s or ISO 22s. Um, that merchant, as a result has been able to get much more robust access to dollar accounts, which has downstream effects, uh, on the local SMBs that he services, uh, the individual retail users, um, because oftentimes capital controls makes it really difficult for folks, uh, who are not businesses to get, uh, these bank accounts. And even if you are, uh, there is a very conservative approach, uh, which uh, makes it hard for these businesses to grow. Um, and that's something that was very strange for us coming from the United States, where you're a smart young person, you can maybe go to Silicon Valley, raise a round. Uh, and there's a strong culture of entrepreneurship, um, in many of the countries where we operate. Internet adoption happened maybe 10 years later, uh, and the initial infrastructure is still getting set up. There are many such cases where maybe your country, you just happened to be born, uh, in a country that had money laundering like 20 years ago, or a poor international credit, uh, rating from, uh, 70 years ago, um, and because of the circumstances of your birth, that uh, lottery, no matter how legitimate you are, no matter how regulated you are, uh, no matter how much you try to convince both your local, uh, authorities and the ultimate correspondence in the United States or Europe or what have you, um, it's really difficult to, uh, make movement, um, and stablecoins are a beautiful thing to help get rid of some of that deadweight loss. Uh, because you know, to your point it's uh, Internet money and naturally you want to make sure that it's fully compliant in the funds flow and how it interacts with the entrances and the exits. Um, but some of our favorite moments throughout this journey has been actually getting to spend time with uh, these end clients because we get to see the physical infrastructure, uh, the end users themselves that they help to service. Um, dollar exposure uh, is not and this is maybe something that we take for granted more in the West.

Speaker B: Yeah. Are you finding um, one of the themes that we talk about also and we've worked on a lot is improving essentially the blockchain infrastructure that sits behind stablecoins to make it better, faster, cheaper, simpler, safer. Everything from the multiple chains we deploy on the cross chain transfer protocol. We're seeing big improvements in M wallet architectures and stuff. So there's a lot going on and for most people that's gobbledygook. They don't want to know about it. And the whole point is to through apps like yours, just abstract that away and make it as simple as possible to make the paradigm as familiar as possible but, but still getting all the kind of technology and economic benefits uh, from that. But um, are there key kind of technology things, technology changes that have happened really over the past like say six months, nine months that are helping um, foster a better product for you, better user experience, better economics. And are you seeing traction from the evolving technology in the kind of stablecoin network space?

Speaker A: Yeah, absolutely. Um, ah, CCTP definitely stands out as a way to make the bridging across chains easier. I um, think there are a ton of uh, really strong stablecoin essentially money transmitters uh, who have been building out uh, their backends to make the latency and the fees lower. Um and naturally merchants are incredibly excited about that. Um, I think cryptography and general privacy tooling, uh, it's yet to hit market in a way uh, that may be as apparent as a no fee bridge. Uh, but the developments on the uh, zero knowledge side, uh fhe side, um, businesses as you go upscale are quite concerned uh, about their privacy protecting the privacy of their end users. Um, and I feel like that will be a strong theme as more um, I'll call it middle market fintechs and merchants start to come on board chain. Um, but your core point is exactly correct, um, which is most folks don't really care uh what the underlying tech is. It's Ah, a dollar. Um, how it gets there can um, be boiled down to is it fast, cheap, compliant, convenient. Um and I think there's a lot of extra really uh, cool ideas um, ancillary to that uh value prop of say a stablecoin on chains. Um and hopefully there's a future where merchants start to adopt those more. Uh but from what we've seen at least if you can abstract away the uh, wallet, you can abstract away the chain, uh, you can abstract away the on and the off ramp, uh even touching foreign exchange, uh, touching liquidity. Um, that's what makes it a no brainer because it's uh, easy to forget that if you are a company maybe out of Paraguay, your access to local developer talent, access to capital is going to be a lot lower and so the bar for adoption um, is harder. It uh, must be uh, simpler compared to a team of young kids out of MIT in the States.

Speaker B: Yeah. Are you in the sphere products? Um, do you basically give people like multiple chain paths that they can choose? Uh, so like they can send and receive on different blockchain networks with USDC and stuff like that?

Speaker A: Yeah. Uh, so for our Web3 users we prefer to give them the uh, optionality uh for I'll call it Web 2.2.5 users. Uh, we tend to just give them the fastest, cheapest route and if they really want to they can modify uh, and explicitly uh, you know, provide the chain that they'd like to settle to or settle from. Um but I think you know, less choice sometimes is good if you don't have the same, I suppose strong opinions on where uh, your liquidity is that makes sense.

Speaker B: Um, you know one of the things that I you know noticed about what you guys have built is and, and maybe there's a lot of history behind this but like you've kind of like you've, you've added features in a lot of different areas. I kind of think of them as like verbs of like treasury management. Right. So you have your payments obviously you have you know, mass payouts, you have uh, invoicing, you know you have a lot of different pieces and then obviously you have the kind of fiat connections and stuff but, but um, you know I'm interested to hear whether some of your customers are, are sort of beginning to think about like just keeping more of their value stored on chain and, and then actually starting to like use tools like what you've built as like you know kind of actual like treasury management applications for their small business. Right. Where they just keep their value there and they perform more and more of the different kinds of tasks with user roles and all that kind of stuff. Are you, are you seeing people sort of actually starting to just adopt that and say hey I'm going to just stay natively on chain as a business um versus like going off?

Speaker A: Yeah. Uh, I think that as you do more flow as a non uh crypto native business and start to trust uh the blockchain environment more it becomes easier to justify your employees start to over time become trained on how to interact with it um, when hopefully there's more regulatory clarity uh and there is further development on privacy tooling. Uh, I'd say there are a couple of blockers before, at least that we hear before everyone will just keep their entirety of treasury on chain uh namely within privacy uh and compliance. Um but by and large it's incredibly encouraging uh just from when we began to now uh, how much more our merchants are sending flow through chain because proof is inputting. You can do a default MT103 do multi country compliance check bounce back uh up to the person at each intermediary. What are the wire instructions. Um and there's so many fields that are left blank by default. Um and it takes weeks and maybe it's 500bps by the end uh versus USDC A to B could be 50 cents, could be 0 cents plus gas.

Speaker B: Yeah, I mean now gas is like on base and Solana and you know some of these other. It's like effectively zero.

Speaker A: Yeah, sorry. Exactly. Um, I'm very optimistic that uh we'll continue to see uh this movement uh of adoption. Um and you know there as you go down these rabbit holes, I'm sure you know this better than I do. Um these msps operate off of latency uh provided through um, uh, uh, I'll summarize as one of my favorite sayings. You start off as a payments company, then you become a compliance and risk company and then you realize that it's credit all the way down. And I think there's a whole world to expand um on uh there for them uh as they think about hedging against currency risk um or doing more of these ops entirely uh programmatically on chain.

Speaker B: Yeah I'd be interested too like um, ah, two related things actually to what you're just talking about. One is um, one of the things that we see with our stablecoin network is sort of there are intrinsic network effects.

Speaker A: Right.

Speaker B: Um, you probably chose USDC because there was liquid and there were a lot of other wallets that support it. And now you have usdc, and now your clients are using usdc. And again there's these network effects. They're like nodes on a network. The number of nodes just sort of grows the utility of the network for everybody and so everyone wins. But I'm curious if you're seeing network effects yourself. Meaning like, hey, someone started, they had a need because there was a specific flow that they had and then they're like wow, this is great. I want to convince this other business that I have or this other user that I have to adopt this. Um, and it's sort of like when email came online, right? It was sort of like some people had email, a lot of people didn't have email, some people had a website, a lot of people didn't. I um, mean every major utility, like you know, you know, even like social networks, et cetera. Like it's sort of when do you get a critical mass where enough people have it and then the utility just really grows. But like, are you seeing like some kind of velocity happening in terms of people who are saying oh, there's increasing utility, but certainly seeing it right in, in the aggregate numbers of transaction volumes that are happening on chain just keep going up and up and up. Um, but I'm curious to see what you're seeing because you've really built a tailored product that has that fundamental business payment utility in it.

Speaker A: Yeah, um, definitely seeing network effects. And I think it comes down to uh, how difficult it is in the normal world to verify the quality of your counterparty, especially overseas if you don't speak the same language, don't have any local presence, uh, how do you know about their licensing structure, their legal structure, if they're infractions, are they properly filing xars, um, or equivalent. Um, and the only way to find out in the regular world is just try and send a ton of flow through them and hope that it doesn't break. Um, whereas uh, on chain, uh, even if the onboarding requires them to uh, learn certain components of like hey, this is how you make a wallet, um, you could certainly abstract that with uh, you know, an automated off ramp flow, uh, where send money to address immediately gets liquidated. Um, I think that as people become more comfortable with just being aware of these operational flows, say a vendor who's receiving payments uh, overseas from someone who is stablecoin forward, um, even if they don't feel it immediately because it shows up as dollars into their dollar account, uh, just communicating about it and noticing that hey, uh, my counterparty has become so much more Competitive as a result, uh, there are natural market pressures that are empirically uh, seeing for at least our clients leading uh, more to adoption. Um, and while you know simultaneously an uh, educational effort, uh, and we're seeing a good degree of regional fragmentation um because cultures are different, regulatory regimes are different, um, I think across the board it's just insane how much cheaper and faster you can get these things through. Um, as a not even native crypto company who's just leveraging this ah, append only data structure as a tool.

Speaker B: Yeah. Um, do you find that like ah, that some of your customers, they increasingly know what stablecoins are and can articulate the benefits of those and they're becoming just part of the parlance of how they operate.

Speaker A: Yeah, um, they might not know the word StableCoin specifically but Internet dollar where there's some blockchain involved, uh, becoming increasingly easier to have conversations about, uh, it would be different I think if there weren't that huge competitive advantage uh, in adoption. Uh, but everyone uh, who doesn't natively have access to robust dollar accounts feels the pain uh, of neither being able to get easy dollar exposure, uh, or having to pay intense intermediary fees uh just because so much of global FX and trade is dollar denominated and you know, if you have to interact with like an FX broker uh directly or yeah depend on an intermediary bank.

Speaker B: FX.

Speaker A: Yeah, right, yeah, uh, T +1 at least and a lot of fees and

Speaker B: so yeah maybe a little bit of a, um, it ties into some of the earlier questions about adoption. But like you know, obviously one of the benefits of stablecoins is by, by existing on this kind of programmable money surface. Right. People are building more and more building blocks on chain. So they're, they're building borrowing and lending mechanisms. Uh, you know, they're, they're building you know, on chain credit models. Like there's a lot of stuff that's emerging and so when you sort of think about the building blocks of you know, corporate treasury and commercial finance and like stuff that needs to get done, you know, invoice factoring, uh, and selling the nft, uh, uh, for credit or like all these things and there are, there are companies doing all of this obviously today. Right. So there's, we know a lot of these and there's tons of companies doing this. But like do you see a world. This is maybe a little bit like looking out in the future and what you see, like do you see a world of you know, more and more of the value stored this way and uh, these businesses are you know seamlessly. They don't even know it like allocating into you know defi lending pools or they're taking advantage of you know credit markets on invoices or like this kind of stuff. Do you see like m more of the value and utility beyond this like the efficiency of payment throughput. Right. Um kind of coming uh in terms of what people will do with this.

Speaker A: Yeah, um maybe this is a bit of a hot take. Um I certainly see uh a growth uh in what you mentioned. I think that'll be hard to argue against um whether it represents a high majority of total like global uh economic activity um I feel like is somewhat intractable uh because so much of adoption from our experiences are dependent on the demographics of a given country uh and the regulatory regime in that country um which are more macro things that are harder to control. Uh I'm very optimistic that young people who are Internet grew up on the Internet uh and increasingly want uh to use digital dollars or ah native on chain uh applications uh or are eventually going to be within those agencies uh and running for office and setting policy. Uh I'm m very optimistic that future uh could happen. Um but it's uh harder to reason about uh when you think about how many different countries there are each with their own culture uh and uh, I suppose set of sovereign uh concerns uh if it's super easy as an example uh as a country without a strong currency for your citizens to get access to dollars maybe you would want to have stricter capital controls. Even if dollar pegged economies have a history of success. Um so hopefully that starts to answer your question. I think it will kind of depend on the trajectory of those two factors of demographics and regulation. Uh um if there's fingers crossed a world where uh the majority of people I suppose are used to Internet native experiences um and we see globalization stemming culturally from liberal democracies setting the tone. I'm very optimistic that more of this activity will happen natively. Um and uh what we're currently building is a way to sort of act as a connective tissue between uh, not large corporates, not banks uh but for fintechs who exist in those stricter uh jurisdictions to have a fully compliant way to be able to downstream interact um with these open loop general purpose networks

Speaker B: uh 100% yeah we definitely see that as well like basically equipping you know web two fintechs with like you know blockchain transaction monitoring and you know travel rule compliance and like the you know, you know even like the basic wild infra that's needed to uh, like deal with this and not be afraid of dealing with like the transactions and the, and signing transactions and all the fun stuff. But um, I think on your point about um, about kind of policy adaptations, right. I have a thesis and this is sort of just from my own experience over the last 30 years building Internet infrastructure is, is that um, you know, in many ways, like society decides, not policymakers, and policy is always responsive to society. Even in a fully authoritarian regime, if there's a technology that has significant utility, um, and especially software powered, that is over the top of the Internet software powered technologies, people will adopt those that give them more utility, even if it's sort of outside of the sort of defined rules that exist there. And that definitely happens. And at some point, if the utility is very, very high, um, you know, policy will adapt. I mean, and this is the story of the Internet. Like, you know, when the Internet came out, right, it was in most places, if you want to like publish something or if you wanted to say broadcast audio, like, it was very hard. It was mostly national monopolies, many of them government run, that could actually broadcast audio. And if you wanted a license to do that as a foreign entity, et cetera, it was impossible. But like the concept that you need a license, broadcast audio is just gone. Like I can broadcast audio to anyone, any human on earth, basically, with probably very few exceptions. If I'm saying censored speech, I might get blocked by a great firewall. But like basically you have that and you've had that with, you know what I kind of call over the top platforms, over the top content, over the top, over the top publishing, video, uh, communications, peer to peer communications, um, you know, all these things that have kind of been these scaled out Internet utilities. They're software powered. People adopt them and they do run in the face of, you know, kind of maybe what local laws were, even Uber and Airbnb and these structures kind of like found their way in. And then people are like, no, no, you're not taking this away from me. And so policy then responds as okay, well we've got to deal with the risks of it, but we're not going to take it away. Um, and so my own view is that over the long run, and I think very long term, there just are going to be fewer currencies in the world and there will be more countries that align against a uniform kind of. They'll have to have fiscal responsibility vis a vis global, uh, currency, monetary regimes, uh, and like you Said there's good evidence to say that's not a bad idea. But, but in any case, I do think that you'll, you'll have that and then in general I think policy will respond to social adaptation. But I also agree with your view about generationally, some of this is different. But that also plays out in the Internet space. Meaning, you know, the percentage of viewing hours of video content, uh, that is sort of like online through like Netflix, YouTube, compared to the percentage of viewing hours of broadcast, cable, satellite, terrestrial. It's still dominated by cable satellite, terrestrial, even though for us, right, we're like that's crazy. Like that's insane. But it actually is. The world is still, you know, a demographic uh, uh, that just like depends on that infrastructure. There's a huge percent that are there and these things take decades to change. And so like even though maybe whatever it is, only 15% of the viewing hours are online, uh, like it's still massive and it's a massive industry change. And the same thing with, with even E commerce, right? E commerce is still the minority, a significant minority of, of of retail transactions. But it's massive and it's changed everyone's lives. And so I think about things like stablecoins on chain finance, all the utility that comes, it's going to be like hyperscale in terms of the utility and people will adopt it and it will have these profound network effects. And then society, like businesses in a country or households in a country say no, no, this is how we're going to do it. And like, okay, there might be to be some rules that are developed but like we're not going back. Um, um, and it maybe starts out as 2% of the uh, activity or 5% of the activity, but even 10% of the activity is enormous. Right? The TAM on legal electronic money is over $100 trillion. Um, and then the TAM on all the like utility of moving that money around is trillions and trillions of dollars, right? So we don't need it to be um, we don't need it to be everything, right? We just need it to be 10%.

Speaker A: Yeah, uh, 100% I think. You know, on a long enough time horizon. I, uh, I'm surprised but very glad, uh, that you mentioned your thesis about decentralizing force on currency. I think that is very real and is going to happen even if you don't have stablecoins. Um, net FDI flows, the appetite for people to um, increase local value and shift capital over from where it's currently sitting. Um, that would take such a long time to play out and it seems empirically since uh like I don't know, the 1940s, 50s, um, it hasn't quite achieved the fruition uh that people uh would have thought. Um and you know everyone just wants a good base unit. Um and there's so much that goes into what defines the uh dollar as the reserve. Um, we could do like a case analysis of what are the alternatives. Uh, I think that is especially a strong argument. Um, but yeah I think on a long enough time horizon you are correct which is why um we also have conviction ah in this, in the decades or centuries long front uh it's hard to argue against math which is kind of what the append only data structure boils down to.

Speaker B: That's awesome. So um, what uh, maybe last question for you is, is sort of like you know what's next for you guys? What do you, what are you most excited about? What are you most excited about delivering on kind of what do you think? You know maybe in just in the context of sort of the next 12 months like where, where do you, where do you want to be?

Speaker A: Yeah, uh, so our existing sphere pay business is going quite well. Uh and so we're really excited to uh start getting uh our MSB designation and building out that business. Um however what we've realized is in the meantime uh before we get to a world where ah, more people just recognize the utility of operating on chain, uh there is a gap where the risk compliance teams at uh various companies uh within countries uh especially at regulated uh entities um, they have existing mental models of what is low risk, what is medium risk, what is high risk. And it is a very hard battle. Um and I think one that uh circle can fight because you uh guys have that leverage to be able to do so. Um but for the fintechs that are our vendors, our clients, uh I think there is a unique insight that we found while doing so much manual work in coordinating between sponsor uh and intermediary banks that uh enable cross border payments even at the fiat level uh to get cut down 10, 100 in uh, some cases 2000 uh times um, which most people don't know about because most people haven't been in a wire room and it's something that we'd love to uh ah we'll be releasing more material about it over time um, just give folks out of the box because there's no way um, a Brazilian MSB equivalent would know the intimate details of what goes into a Fedwire spec, um, or who the best counterparties are in Japan. Um, and technology here. The cryptography is a great way to provide an immutable log uh, of the things that are normally kept in postgres, uh, or only exposed to independent examiners. Um, so sir, I'd love to tell you more about it.

Speaker B: Um, yeah, no that's cool. You don't need to tell everyone. Yeah, very cool Arnold. Well, super conversation and really pleased that you could come on the money movement and uh, we'll keep tracking your progress.

Speaker A: Thank you. Uh, it was really amazing convo uh, and yeah, it's kind of crazy to have the chance to be able to talk to you about this. I used to watch a lot of flashbacks and so, you know, thank you for what you're doing at Circle and sir, love to continue staying uh, in touch, uh, keep you posted on what we're doing.

Speaker B: Absolutely.