Quadrillions: How to Win the World | Chris Maurice

You cannot get remote enough in the country to not be able to find a guy with an IMPEA stall that will take cash or give you cash for your IMPEA. It is everywhere in the country and they have built a lot of that real last mile infrastructure.

For us, we would much rather help provide the digital asset infrastructure to modernize a system like mobile money, to modernize the banking system, modernize corporate treasury management, than we would try to go solve this for four billion people at the last mile.

That's a big part of the reason that we focus so much on businesses. These guys have already connected with the users. They are already serving people every day across these regions and so we would much rather help them modernize their infrastructure, help them provide a much better service to their customers.

Quadrillions is a miniseries produced by Blockworks and is sponsored by Canton Network. Nothing on this show is a recommendation to buy or sell securities or tokens. It's for informational purposes only.

The views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in companies, funds, or projects discussed, including those related to Canton network.

All right, everyone. Welcome back to Quadrillions. Very excited about this. This is part two of a really interesting episode we're doing on crypto's adoption in the world.

We just had Yaval and Chairman Fam obviously talking about the US. Now we have probably the best person out there to talk about this which is Chris. He's the CEO and co-founder of Yellow Card and obviously joined again by Yaval's better half, Eric Sarini. So yeah, Eric, Chris, welcome.

Thank you sir. Good to be here. Thank you.

Chris, we should start with your journey because I think most of the folks listening to this will be very, very familiar with what I'd call like crypto state of the union in the US and very not familiar with crypto state of adoption everywhere else.

Maybe there's a little bit of familiarity with Asia and we do our conferences and Singapore and things like that, but very little awareness of what's happening in Africa. I would love to just hear like state of the union of crypto in Africa and probably actually the best place to start would be a little bit of context on yellow card.

Yes. Happy to. So I think high level what we do at Yellow Card, we are the largest licensed stable coin payments infrastructure provider for emerging markets.

So we work across Africa, parts of Southeast Asia, South America, Middle East, basically anywhere in the world my mom doesn't want me going. And what we do is we provide the full infrastructure for companies to be able to enter the space.

So digital asset infrastructure everything from wallets and sending receiving across various different chains to fiat payments, being able to make US dollar payments on and off ramping against 50 currencies mostly emerging market currencies and then compliance infrastructure keeping everybody safe.

So we do that for companies like Visa, PayPal, Western Union, a number of large remittance companies, and then large corporates, airlines, companies like that.

And so yeah, very much focused on real world use cases and applications of the technology. All of our customers are using us for payments, payments to individuals, payments from individuals, payments to businesses, invoice settlement, treasury management, how do you move corporate funds around the world when Swift and the banking system aren't built for your country.

And so, yeah, very practical. We're the practical side of the industry, like not a dog and catcoin side of the industry.

How many countries do you guys operate in, Chris? because there's what 50 some odd countries in Africa. So you can't just blanket say that we're like a stable coin provider in Africa. Like what what countries do you actually participate in?

So we support just over 50 currencies which accounts to about 42 countries.

Nice. Okay. What is the problem? If you had to boil it down to like one or two problems that you guys are solving, how do you think about that?

Treasury management would be the big one. So if you are a large company operating in emerging markets, operating in Argentina and Nigeria and Kenya and any of these markets, how do you reliably move money around within your organization and access dollars, pay invoices, keep flows going?

I'll give you a great example. We work with one of the largest food producers on the African continent. Some people consider food essential. I'm not going to opine on how dollars get divvied up, but these guys don't get enough dollars through the normal banking system to be able to import food and feed the country and keep the cycle going.

They import, which requires dollars. They sell locally, which is all in local currency. they need dollars back from that local currency to keep the cycle going. And so they're only able to get about 25% of the dollars they need through the traditional banking system.

That's any number of issues. It's liquidity. It's access to the dollar. It's the ability to move the dollar on time. I mean, they can get more dollars, but it will take 30 plus days in some cases for those dollars to actually settle.

So there's any number of reasons they need to go to the market writ large to find dollars elsewhere. And so stable coins are the first technology that helps these companies to be able to make these types of international payments, invoice payments, things like that without having to go to the black market, without having to go like on the street to some guy's uncle to make the payment for you.

This is yeah it brings up an interesting topic which is basically like the US dollar as the hottest commodity in the world and in the US it's just you know it's like a fish in water we don't realize that but you go everywhere else in the world and they they want the dollar what is the process for I guess pre-stable coins pre- crypto what is the blocker for getting dollars right because free market you should have if there's if there's all this demand for dollars why doesn't why isn't there the supply what's the is it regulatory blockers or tech like techn technological blockers or what what is the blocker there?

So, it really depends on the country. In most cases, it really boils down to information asymmetry. And in most parts of the world and when you think about emerging markets, one of the biggest reasons that there is inefficiency in a lot of these markets is just information asymmetry.

Like maybe I know you and you know you have access to dollars and you can help me make those payments but Eric doesn't know you and I'm not going to tell Eric about you. I'm going to tell Eric that I can do it and I'm going to make my cut in the middle and I'm going to serve a bunch of other and so like there's sort of all these inefficiencies that can come up when just information is not sort of freely available.

It's also just the system itself. When you think about Swift and the correspondent banking system, it was never built for emerging markets. It was built for the US, it was built for maybe Europe, but it was not built for the rest of the world.

The analogy that I always like to use is when it comes to money movement, you have sort of this interstate or these super highways that connect the US and Europe and Japan and other major economies and I mean you know look these I mean they might not be the audition banking system it works I know that some I look that gets people in this industry fired up when I say that moving money is not that hard to Europe They were the Patriots really get fired up at that one.

But it's not actually that hard to move money from the US to Europe. When you need to connect to emerging markets, when you need to connect to certain parts of South America, of Africa, of Southeast Asia, it's no longer an interstate system. You got to take an exit onto a dirt road littered with potholes that haven't been touched since 1985, and your car only gets three tires and half a tank of gas to get there.

That's essentially what the system looks like today for most of most parts of the world and for most of these markets. And so, you're dealing with a system that just was never set up for emerging markets, and trying to be a company working in these countries making these international payments on a system that just wasn't built for you.

Eric, how do you guys think about Well, I guess I'll preface this question with like in in my mind, Canton is very very much an institutional platform, right? You guys have done a real I mean, we've done a couple episodes on this already. Done a great job onboarding institutional folks onto the platform. How do you think about what I'd call like emerging market adoption and like is that a place you guys want to focus? Maybe potentially, but not right now. How do you think about that?

Oh, it's definitely an area of focus. The way I try to frame this is if we can build a better capital markets core system that the core of B2B that that makes B2B TOC or B2B to B TOC a much smoother experience.

So today to be able to access treasuries or convert a treasury into a stable coin or move fiat to get this or to access the FX markets that's I I won't put words in Chris's mouth but that's part of the friction that he's dealing with.

Part of it is a last mile problem locally, but part of it is also then the conversion into the products that they need access to and that would benefit them. It's not just access to the dollar. Access to the dollar is the first step, but then once I have access to the dollar, what do I do with that? Can I hold treasuries? Can I participate in money market fund ecosystem?

So, it's bringing this core capital markets world to a broader audience. And I think I've said this on your show before, but I think we've fallen in love as an industry with this false narrative that crypto is peer-to-peer. And there was a time when that was true. You know, way back in the day when I was kicking around this thing, using Bitcoin Core. Like, yeah, that this was a, you know, primarily peer-to-peer ecosystem.

But today, things are heavily facilitated by my wallet or my custodian or my exchange that I'm accessing these networks through. And really they look a lot more like B2B TOC markets. And I think it's a misconception to believe that ETH has the users. I think it makes more sense that it's yellow card has these users or a has these users and they are facilitating access to these networks and that they that they are helping design these experiences and solving problems for them.

And that's where there's really user connectivity and loyalty. So for us the motion is just make capital markets a lot more efficient, a lot more accessible, a lot more fluid, work the way that they should. Let the yellow cards of the world figure out how to express that in the regions where they're solving specific problems and together you have a better joint solution and and you have to think about, you know, I think I've said this also in your show, the back end and the front end of your product.

The front end of the product might be the stable coin, might be the wallet, but on the back end, I'm managing cash in a bank account. I'm managing treasuries at a broker dealer account. I'm participating in the repo market. I'm participating in the money market fund market.

If those things don't move at the pace of the front end of your product, then you're just eating those frictions on behalf of your users and you're a little bit handied in terms of what problems you can truly solve. So we want to give the yellow cards of the world as many tools as possible to build differentiated products and solve those problems in the markets that they operate.

Nice. Chris, what can you tell us about the infrastructure challenges kind of required to build a company like Yellow Card?

That is a broad question. There are a lot of challenges from an infrastructure standpoint depending on where you are. I mean I think you know look this is this is a big part and I mean you know look to Eric's point about you know the industry looking a lot more B2B TOC this is a big part of a reason that we focus on B2B TOC and and B2B is you know when it comes to infrastructure solving solving the last mile you have banks you have telos you have financial institutions across these regions that have done a phenomenal job of managing that.

That can go all the way to that last user. I like EMPA is always, you know, a great example that most people are familiar with now. You know, you have Impaca in Kenya where I mean, you cannot get remote enough in the country to not be able to find a guy with an IMPEA stall that will take cash or give you cash for your IMPEA.

It is everywhere in the country and they have built a lot of that real last mile infrastructure. And so for us, we would much rather help provide the digital asset infrastructure to modernize a system like mobile money to modernize the banking system, modernize corporate treasury management, then we would try to go solve this for four billion people at the last mile.

That's a big part of the reason that we focus so much on businesses is these guys have already connected with the users it's they they are already I mean they're serving people every day across these regions and so we would much rather help them modernize their infrastructure help them provide a much better service to their customers and that's what we've been able to do right I think when you look at like remittance for example I mean you know look we work with remittance companies where we've been able to in some cases double the amount money that families on the ground were receiving simply by using better infrastructure to send that money.

That's to give you an idea of how broken it is in some systems. Using stable coins to transfer that money to certain countries can more than double the amount of money that the family receives, which is which seems insane. That's a unbelievable statistic.

So yeah, it's and like it's you know again you modernize when you modernize that infrastructure these guys these big remittance companies already have these you know hundreds of millions of customers right you modernize that infrastructure for five remittance companies you've just reached you know more people than we could possibly reach on our own yeah so you won't compete with the Western unions of the world you will modernize Western Union is that right correct yeah we work with Western Union we work with I mean we if you can name a remittance company we probably work with them.

How much talk to me about like the role that stable coins have played here. I'm curious because you guys started the business I mean I I don't know the exact year but I and I I followed your journey a little bit like several years ago seven eight nine years ago before stable coins really becoming this big mainstream thing. Has it always been a business built on stable coins or was there this kind of parabolic rise in the last year or two because of stable coins?

No. So yeah, we started out we started out on Bitcoin fully. So I moved to what we moved to Nigeria in 2018, launched in 2019. It was fully Bitcoin. And when we launched, we were I mean, you know, full B TOC. It was, hey, you know, we're going to go do Coinbase in other parts of the world. Great.

And so we started out doing that. We did that until what the end of was it the end of 2019 or end of 2020 when we added USDT. And when we added USDT, we went overnight from 100% Bitcoin to about 70% Bitcoin, 30% USDT. And within 4 months, it was 99% USDT.

I mean it was just a rapid movement over to stable coins. And so you know that I mean just had us rethink everything right. We started talking to talking to customers more trying to understand better you know the use cases and and you know why why is nobody buying Bitcoin anymore right? I mean look Ethereum I mean we would have like one transaction a month on Ethereum right? I mean so it was just there was just no interest. It was all stable coins.

And the more that we started, you know, talking to people, the more that we realized, this is it's a payments use case. People are not using people were not buying Bitcoin like I don't look, you and I probably buy Bitcoin because we want the price to go up, or, you know, for some speculative reason or hedging against the dollar, you know, some reason like that.

People were not buying the Bitcoin because they wanted the price to go up. People were buying the Bitcoin because they needed to send it and they needed a better payment rail and Bitcoin was the best available option. With the advent of stable coins, it's, you know, it helped so many of these businesses adapt to this technology because now you have all the infrastructure, the ability to send this money and none of the fluctuations.

They don't have to worry about, you know, my payment is, you know, 0.00847 BTC and you know worry about the fluctuation of that right now it's just on the dollar everybody understands the dollar everybody knows the dollar move dollars around the world.

You mentioned USDT Chris what about USDC USDC is also popular in some markets USDT especially outside of like it it it really depends on who you're dealing with I find typically that like in the past it was typically American corporates wanted USDC sort of the rest of the world wanted USDT we've seen both sort of make traction like across each other i.e like USDC has become more popular in some parts of the world and USDT has become a lot more popular with American corporates ever since the election and and all of that.

And so yeah, I mean they're both I mean they're both growing rapidly. USDT historically is I mean the dominant one and still today is the dominant one. Sort of in a market. What what about on the L1 side of things? Like what chains are these transactions happen actually happening on?

It's all on Canton, baby. Every single payment. In fact, we've never seen another payment on a different chain. Um soon um uh No, I think historically it's all it's almost all been Tron. Uh why is that? I I was kind of like guiding you towards that because you know I see the I see the charts and I see the data but I've I don't know people who use Tether on Tron because I'm not in you know Africa like you are. Why is How did Trump How did this become the case? Tether on Tron very widely adopted.

Yes. Insanely widely adopted. I think more I think it passed up Ethereum a while ago. I'm sure it's still more market share or market cap than Ethereum. Simple reason, right? And I think like everybody for I think for a long time people in the industry have been racking their brains about like why is Tron popular in these regions. It's it's quite simple reason actually.

USDT on Tron was the lowcost liquid alternative available for stable coins when nothing else was available. Everything else was on Ethereum. USDT and U USDC only had liquidity on Ethereum. USDT only had liquidity on Ethereum and a little bit on Tron. And when Ethereum was, you know, $50 to send five, everybody just started using that one and it just took off.

And I mean, as I'm sure you guys know, you know, consumer behavior. It's not the easiest thing in the world to change, right? And so people adopted Tron. People built the infrastructure for it. People got wallets for it. people, you know, did all the stuff that you need to do to handle it because they didn't want to pay $50 on Ethereum and that was it.

And now Tron started charging more. And where where do they store that? Where is it what's the are they doing in like self-custody wallets or in like you know the Coinbase of Africa or what where are they actually storing that that tether?

So that varies pretty widely. I will say we do see a lot more self-custody in like I mean Africa, South America, parts of the world like that than we do typically in the US. Yeah, I think part of it is probably the lack of trust in institutions writ large. Whereas I generally trust that like Coinbase or my bank is not going to screw me over.

It's harder to trust, you know, institutions in some of these countries because people have a lot of I mean, you know, there's a lot of trauma from, you know, a lot of different examples and issues. So we do see more self-custody. But I think, you know, overall people use whatever is available. A lot of people use Binance.

Yeah. And then just other wallets, right? But I mean, we see a healthy mix, I would say, of self-custody versus like custodial offerings. Nice. Eric, how do you think about I guess this idea of like kingmaking verse just doing whatever the market wants you to have? Like in in the US there's a lot of I've seen a lot of chains make the decision of like we're just going to focus on USDC in year one or something like that, but maybe really the market wants USDT or that's a maybe too specific of of an example. You could you could use the same example with applications and you know integrations and all that kind of stuff. How do you think about that dynamic?

I think there's a really there's a really tricky trade-off between the importance of the neutrality of an ecosystem, you know, especially a general purpose L1 with trying to make sure that you get the outcomes that you want.

So in general, our attempt to try to find that balance is that anybody that comes into our ecosystem, we try to support as much as we can in connecting them to everything in the ecosystem and trying to build the tech and tools that make those things really easy for people to integrate and use.

So so an example of that is we have a general token standard. This is not any different than any other network. And so if a wallet integrates the token standard and the asset that you issue supports that token standard, then you can work in every wallet in the network or every DEX or every DeFi protocol. It's not really, you know, revolutionary, but that's, you know, the the sort of stuff that we spend a lot of time trying to make a better experience for anybody that would come into the ecosystem.

In terms of where we try to put our focus, it's really more around the experience. So we would sit down with a yellow card and say, you know, walk me through exactly through how your customer uses this and what are the friction points you're running into and facilitating that and what would make facilitating that easier, lower friction, lower cost, better, you know, value differentiated.

And then we'll go try to find the right partner or wallet or integration or build the tool or whatever it might be. It's different in every context and it's usually more than one thing. it's usually kind of a combination of things and try to make sure that we can help facilitate that at an ecosystem level.

So we're increasingly trying to define the exact experience that we're trying to make sure happens in the network and then work with all the right participants to slot them into that process. Rather than thinking about it more vertically than you might think in in something else that's more like application specific as an L1 they might be thinking a lot more vertically oriented. We're constantly trying to make sure that the partners that are there and the horizontals that are there are broadly applicable and work in very similar ways.

How do you guys think about the FX challenges to a business like this? Because Yeah. Yeah. Just the FX challenge. And Eric, I I know you have maybe some experience here from the Cumberland side and Chris obviously has the on the operator seat, but I mean actually was so long ago we couldn't even get a bank account outside of the even get bank accounts in US region. So yeah, we didn't deal with too much FX in my my days there.

But you know what I'm what I'm witnessing in our ecosystem is that there is a real opportunity in those markets where you can get both a stable coin and the local government bond and get high quality fungeibility between those two things that you can create really interesting FX markets because if I can swap bonds globally in different contexts 24 by7 and then I can convert them on demand into stables or cash out into fiat then that helps a lot with those corridors of it's not the last mile like an empaca like Chris was talking about before but at the wholesale level you know they're constantly rebalancing what they have on their balance sheet in any given time and that rebalancing the opportunity is we're seeing increasingly in the funggeability between stables and bonds and then a bond market or a repo market.

That's kind of what I was talking about before is that's a solidly B2B ecosystem. You know, you don't find a lot of retail bond traders at any size, but there's a very healthy, you know, bond and and international bond market. And so being able to bring elements of that onchain that are additive to remittances or payments or stable coins in FX context is how we're thinking that we might be able to to start to improve this experience for everybody.

Actually, I don't know if Chris thinks that that carries any water, but yes, 100%. And this is all I think about all day. I don't even have hobbies. I just think about stable coins and FX all day. And so yeah, I mean I think you know look I think that is that is key.

But I think that people oversimplify the concept of bringing FX onchain and there have been a number of companies even now there's a number of companies that are trying to bring FX onchain which sounds great right and you know you can raise a bunch of money and you know everybody loves the idea of bringing FX onchain but the actual process of doing that involves working with a ton ton of institutions in a ton of countries that are not going to do this on public blockchains and they're not going to do it, you know, with assets that they don't have some semblance of control over.

And I think, you know, this is where a lot of what I mean, you know, Eric and and you know, Canton, you know, really helps with and and a lot of where this comes in is as you think about, you know, institutions in these countries that need to be onchain for onchain FX to truly happen, right? The banks, the telos, the large corporates, etc.

I mean, look, we had a we had a call with the, you know, the the seauite of a bank, one of the largest banks, you know, in emerging markets today. These guys are not going to use a chain that they don't have control over the consensus. They don't have control over the, you know, the ledger. They don't have control over any of it. Why would they, right? They're a massive bank. Why would they give up that control?

And so I think, you know, you need a system where all of these banks have interoperability but also have control, right? And that's I mean to me that's that's really the magic of what you know Canton has built and and why you know why I think that like the the solution that these guys are working on is really the only way to bring FX onchain right I I just I don't think you can actually just issue stable coins for all these different currencies the way that you know tether and circle have I think the US dollar is a very unique currency in global trade these other currencies are going to be controlled by banks these stable coins are going to be controlled by banks they're going to be controlled by, you know, the the financial institutions in each of these countries and they're going to want, you know, they're going to want a certain level of control to feel comfortable actually putting this stuff on chain and making the stuff available.

And so I think, you know, as you think about as you think about FX onchain, there is still a long way to go because there are a lot of institutions that you need to bring on chain. And I think I mean frankly Canton is you know one of the only ways that we've seen of actually being able to convince these guys that it's safe to move on chain.

There's there's a very different last mile problem in capital markets than the one we were talking about before which is to the end user. Right? The last mile in this capital markets context is the 24 by7 creation redemption of the stable coin and being able to do that at scale.

And you know, we love it or hate it, we used to have this in the US in pieces of infrastructure like Signet. And people really don't appreciate what an enabler that was for the stable coin ecosystem when it was growing. Being able to move fiat 24x7, create this this stable coin 24x7. We've lost that in the US. We don't really have that capacity anymore.

And we need to create that capacity in every locality. And that's that's what I'm saying about the bond market, right? that that's the scalable onofframp is to be able to take a digital bond give it to the stable coin issuer in some shape or form mint the stable coin on demand or vice versa and create that 24 by7 market for the creation and redemption of this vehicle right if you think of a stable coin as a vehicle in this context right so it's not about just access and storage of dollar and that sort of stuff there if you're thinking about international remittance and FX you're talking about a capital market's last mile market and for us that's very much the interaction between a local government bond with short duration you know maturity safe you know etc same sort of genius like compliant stuff that you find in the US but you have to go create that in every locality and that is very much a capital markets controlled construct and there's absolutely no way that those entities are going to onboard into some ecosystem where they are going to make their entire capital markets business public information.

It it's just, you know, the control element is a big one that Chris was talking about, of course, but I think that there are a lot of ways to help people get comfortable with that in different elements. I really think the threshold issue here is the privacy element because you're you're going to now start to make the entire bank's operations public information, their biggest customers information, public information, the source of liquidity public information, the volumes, you start leaking an incredible amount of information that is highly sensitive and could be subject to market manipulating tendencies if they became public information.

So, it's not that this stuff doesn't work, right? If you mint a stable coin in Turkey and you create a Turkish lera versus, you know, USDC or USDT market, it can work. It's a scaling problem. I could get up into the low singledigit billions. I can't get up into the hundreds of billions or trillions of regular rotational volume and velocity.

And that's why the thing that's really killing it right now is the dollar one because access is winning. But on the back end of that product, we don't have the on and off ramps figured out, not just for for US stable coins, but also the international ones to make that stable coin sandwich or FX sandwich work reliably. And I think the strongest proof of that is how expensive in BIP's terms those on and off ramps are at the different locations.

I'd actually be really interested to hear Chris's take on that. when I look at hey 50 bips in and then 50 bips out and I'm sandwiching a stable coin in the middle are are these things really saving 100 in some instances yes so it you know there there are many of use cases where that might be enough but again how big is the total market at that sort of expense yes fortunately yellow cards on and offramp fees are so low that we're practically giving it away.

Chris anything else on the FX?

No, I mean I think I think you know Eric I think Eric largely covered it, right? I think I think that is like getting getting those banks getting banks and getting you know large financial institutions involved is the only way to scale it. And you know, I mean, he he hit the nail on the head. When you think about control, the most important thing that these guys have to control is the information, right? Is, you know, who's doing these transactions, when are these transactions coming in, when are transactions going out, right?

You can't, you know, you can't run a, you know, financial institution with everything public and expect there not to be, you know, bad actors doing things with that data, right? If I know every time that money is moving in and out of a bank, if I know exactly how much cash a bank has at any given time, you know, there's there's there's a lot that you can do with that data.

you see a bunch of dollars coming into a bank, you know, all of a sudden I know, well, great, they're about to, you know, convert all of that, right? Let me frontr run the peso, right? Let me do this, let me do that. I mean you know even look I mean I was talking to uh you know a friend that's running another company I mean quite similar to ours in uh you know different parts of the world and he was saying that like even they have this problem where when people see large deposits come into their wallets they will frontr run you know the local currency and and run it up because they know that there's about to be a conversion of you know x million dollars and in some countries it doesn't take that much money to to manipulate the market right this isn't you know this isn't USD to euro where you need billions of dollars to you know to actually make a sizable impact on the market right I mean in some of these countries a couple million bucks you can you know manipulate exchange rates you can manipulate the market and so that protecting that information is is critical if you want to reach any sort of I don't I frankly I mean look I don't even think you can get to single digit billions with you know on a fully on a fully public system right just you know when you look at like the lera again lera you can manipulate with you know I mean a decent amount of money and so I mean protecting that information is critical and having trusted you know counterparties and sources and everything for you know for that information is going to be critical to actually scale FX and those those markets I mean especially in the you know the the zones where you have difficulty getting cash in and out those are ones where the government is particularly careful and sensitive about how those rates are moving at any given time.

So you could see a real backlash to creating something that's outside of their control that would be pushing the market around. You could see a really reactive sort of response. And again that that that to me is the risk of just doing this regulatory arbitrage approach that you find in the maximally decentralized public networks first is that you know one of the biggest risks is you could just get these really um overreactive responses that would close a market down for a significant amount of time and make it