Jeremy Allaire - Why Stablecoins Open Up Financial Systems To The Masses

Full transcript: Jeremy Allaire on London Real

2:45 Brian Rose: This is London Real. I am Brian Rose. My guest today is Jeremy Allaire, the business leader, Internet pioneer and technology expert. You are the CEO and co-founder of Circle, the financial technology firm. That enables businesses of all sizes to harness the power of stable coins and public blockchains for payments and commerce. Circle is the company behind the USDC Stablecoin that has a market cap of more than 50 billion dollars with over 1.6 trillion dollars.

3:11 In transaction volume, you have more than two decades of experience building and leading global Internet software platforms. As the CEO of BrightCove, the CTO of MacroMedia, and as an entrepreneur in residence at the venture capital firm General Catalyst. You have also provided expert testimony on digital assets and monetary policy before the U..s. Senate Committee on Homeland Security and Government Affairs, as well as the Banking Committee at Circle, you believe now is a pivotal moment in the future of money that will open up global economic prosperity. Jeremy Welcome to London, Real.

3:45 Jeremy Allaire: Thank you, Brian. really A pleasure to be here with you today. Very excited to talk to you.

3:50 Brian Rose: There’s so much to go into, you know, I actually have a defy academy where I teach hundreds of students around the world. And so they’re using these protocols every day. They’re using USDC. We’re using it as a business and I want to go deep into it, so it’s fantastic to have you here. I guess we should just jump in to stable coins and specifically with the success of you exponentially.

4:11 Growing USDC, which I believe grew 10x in 2021 10 000 over the last two years. But maybe we start off by zooming out a little bit because you are old school kind of an OG in the Internet protocol space. And I think you look at USDC as less of a coin and more as like a protocol. Maybe the way would that people would look at email or a Web browser process? And maybe it’s just another way for humans to share information, and in this case it happens to be money.

4:45 So I don’t know if I got that right, but maybe tell me if I did Jeremy and tell me how you look at this whole concept.

4:53 Jeremy Allaire: Yeah, I mean, that’s spot on, Brian. I mean, you know, I kind of came to crypto and this whole space. And really just sort of thinking about the financial and economic system from the lens of the open Internet and open Internet infrastructure and protocols and sort of had have watched really since I got involved in the Internet in 1990. The sort of gradual, incremental addition of more and more of these open protocols that are permissionless and people connect to.

5:22 And that have opened up the world of information, the world of communications, the ability to, you know, transact from an e.-commerce perspective, software distribution, all of these things that have been made possible. And really, in 2012, I became fascinated by Bitcoin and then crystallized a lot of the ideas for Circle in early 2013. And that was what I saw, right? Was this idea that there’s kind of a new A new protocol layer on the Internet? These public chains are themselves almost like, you know, the TCP, right, they’re this base layer.

6:01 Now, I actually think, about public blockchains as Internet operating systems. These are essentially a new class of operating system that is a tamper resistant, incontrovertible data in controvertical transactions in controvertical code. It’s a very special kind of operating system that has never existed before, because you haven’t. You’ve always had to have centralized people running data centers and so on. So this new kind of operating system that you can build protocols and applications on top of.

6:32 And so what we thought very early on in the founding of the company was, if you, if you saw that technology develop that, you could have a kind of protocol for money on the Internet. I used to call it, you know, we there needs to be an HTTP of money, so people who’ve used a Web browser and understand what that is. It’s a way for us to exchange data in a very simple, structured way. And gave birth to this explosion. Of all you know, we can now get all the world’s knowledge instantly, at no cost.

7:00 That’s pretty cool. So if you had an HTTP for money, that could unlock so much value for people, for households, for firms and sort of money, velocity could increase, which is a key driver of economic activity, and you could actually lower the cost of exchanging value to zero. Just like it doesn’t cost us anything to exchange data on the Internet. So that was sort of the ultimate outcome that we saw becoming possible. It’s been a long pursuit to get there.

7:30 But ultimately, yeah, USDC is an expression of that idea, and it is, you know, it’s a protocol, it’s also it has a payload, as we call it. It has a format which is the dollar today, but it’s a protocol also that can support other Fiat currencies over time as well. And so that is how we think about it. And when you think about that growth, that you just mentioned the 10,000 growth. Over the last two years, we’ve added basically about 10 billion new USDC in circulation just in the past roughly 30 days, so it’s growing quickly.

8:06 You know, we, you know, we sort of think of it as like, you know? Other Internet protocols and Media formats JPEGS MP3S HTTP. These have kind of network effects to them. The more people who plug into the protocol, the more value the protocol has, the more demand to utilize it. The more people who have a currency or a media format, the more utility that has, and so you get these network effects.

8:25 Brian Rose: And I think you were even something describing some of those kind of finding their way into your own business, right? And so then you sort of say, Hey, there’s a better way to better way to transact. And you start telling other people I want to transact this way and then people go, Wow, yeah, this is a better way to transact, and it sort of has that kind of effect. Yeah, that’s a great explanation, although I’m curious when you thought of the HTTP of money in the early days, did you ever think it would morph into or and be embodied as a stable coin? Because you could have gone a lot of different ways with that, Jeremy, but obviously you ended up going with the stablecoin.

8:56 Perhaps, in hindsight, the best choice. But was that always something on your mind, or how did that happen?

9:03 Jeremy Allaire: Yeah, so very early. The concept behind Circle was that there’d be a kind of hybrid digital currency model. That’s what we talked about it back then, and the hybrid would be.

9:15 You have an existing form of money, which is essentially the liabilities of a central bank and those will continue to exist. Governments will issue debt, people buy that debt and that will be the dollar or the euro or whatever it is. These liabilities of central banks and those are going to continue to be administered on centralized databases. As I like to say, the dollar is a Oracle database running on a cluster of sun Solaris machines. That’s actually what the dollar is.

9:39 If you want to get behind the scenes right, so you got, you’re going to have that. But then can you externalize that on the public Internet and give it, you know, kind of give that the superpowers of the Internet, and that was kind of the idea from very early on, and in the first iterations of what we were doing, there weren’t. There were no, you know, second generation blockchains didn’t exist, there was kind of Bitcoin and there were some other experiments. And so you couldn’t build tokens and smart contracts, you couldn’t actually create a protocol. So we built a protocol ourselves on top of Bitcoin that allowed you to, as I would say, tunnel dollars pounds euros over the Bitcoin network.

10:19 And it had tons of issues, challenges, scalability, cost, you know, all kinds of issues. FX Right, implicitly, and so the architecture, you know, we. We pivoted basically in late 2016, early 2017, when Ethereum got to a point where you could actually build things on it. And I called it production beta right, so you could actually build things on it. And but it had the primitives and the building blocks to do this, and so we just raced to kind of build this.

10:49 And I knew that, you know, the right way to introduce this was more of as a kind of general market infrastructure, kind of utility that could be utilized by the market as a whole. And that, you know, found product market fit pretty quickly, right? And now it’s that protocol. It’s used eight on eight different blockchains right now. I, you know, these are old numbers, maybe over five million active wallets again.

11:14 I mentioned the volume earlier. I mean, now it’s a It’s a protocol that’s being adopted and used by so many people.

11:23 Brian Rose: Can you speak a little bit more on that, and why do you think it’s become so popular?

11:30 Jeremy Allaire: Yeah, I think there are a few things I think you know when, when we kind of set out to, to build this and deliver it. In 2017, early 2018, there were certainly other, you know, other projects in the market, already some very decentralized that were emerging like dye.

11:52 There was tether that existed. And our view was that if you wanted to reach mainstream scale and have something be, you’re really a standard. That could be used by everyday firms and households by other financial institutions that people looked at. As this is as good as cash, so to speak, you had to do that in a in a particular way and so one. It needed to be regulated, it needed to operate under the supervision of banking regulators and in the U.S.

12:27 We have a framework for that. There’s a framework that has enabled so many fintechs to flourish, like Apple Pay and Cash app and Venmo and PayPal. And tons and tons of others. And so we worked with the regulators that have worked on these sort of electronic money innovations. And got them comfortable with supervising what would be now known as a stable coin, and that was important.

12:56 And, you know, a kind of commitment to compliance, a commitment to transparency. Audibility like all these things. And we published it as an open source project and we worked with. I think many of the leading firms in the industry to help get this going, like Coinbase is a critical strategic partner. Getting this out there, making it simple for the average person to get access.

13:19 Now. It’s, you know, sort of broadly available across, you know, kind of every exchange and wallet and so on. But, you know, we focused on that, and I think those things mattered. You know, as D5 protocols were getting going, you know, I think people were saying, Well, if I’m going to have dollars, I want to know that these are actually redeemable, and so it. It had the benefit of being something that, whether you’re an individual or an institution that you knew, you could easily create and redeem it.

13:49 At par at no cost, and that just worked, and that’s key, right? At the end of the day, it’s, you know, the Holding the peg has. Yes, it has to do with the reserves and the transparency. But it has to do with the fact that you can always redeem it for a dollar. And so for the whatever it is 110 or more billion USDC that have been issued.

14:11 Yeah, there’s been 60, some billion redeemed. And so it works both ways. It’s not a Roach motel, right? And so people know when I go and buy a one dollar of USDC and it’s a new issue. Dollar you go and then buy a dollar’s worth of what it’s U.S. Treasury instruments.

14:32 And it’s held, like I said, in a transparent, collateralized way.

14:38 Brian Rose: Just, yes, walk people through how that process works and how they know that collateral’s there.

14:46 Jeremy Allaire: Yeah, so it’s relatively straightforward. When someone transfers dollars to circle, we will first make sure that there are that many dollars. In segregated reserve accounts, the segregated reserve accounts are in cash within insured depository institutions and 90-day, or last U.S Government Treasuries.

15:12 And so that is that is what this is. So it is cash equivalent like and but even narrower. It’s bound by that and BEF, you know, we ensure that there is that held in that segregated reserve before we’ll actually mint new USDC. Now we kind of run our own settlement and liquidity operations to always make sure that when people are coming in. And we, we sometimes will see a billion issued in a day.

15:42 We’re always making sure that we’re, you know, you know, able to provide that continuous service for people, and when someone redeems, it’s effectively the same thing. A USDC token is burnt and once it’s burnt. Then we will move funds from reserve to a settlement account and then push it out to whatever bank account or what. Not that the end user wants to receive that in and that and that’s really it. And what we, what we do is, you know, we have.

16:18 We have regulatory obligations in the United States, our banking partners, under stipulations from the Treasury Department from the OCC, which regulates national banks. Basically, this was under the prior head of the OCC, Brian Brooks, basically said. If you’re a national bank and you are providing accounts to hold reserves for a stablecoin issuer in the United States, you must get daily. Reporting on the location of the reserves, the amount of the reserves and the amount of tokens outstanding that are proven on a blockchain. You need to have that every day.

16:54 So we provide that to our banking partners, who are regulated by U.S Treasury every day. And then once a month, we work with a global accounting firm, an assurance firm, Grant Thornton, who then will go and actually examine more closely the details of the accounts and the details of the blockchains. And they’ll do their own methods to prove this is actually real on the blockchain, and then they’ll issue an assurance report every week. We are also becoming a public company, so we’re now filing with the SEC on a regular basis. We haven’t yet completed our listing process, but we are filing.

17:32 And so we are held to the accounting standards and examination standards of the SEC as well. So those are kind of the assurances that people have, and there’s a lot of transparency around it. You know, there’s going to be more around this in the future. I think you’ll see kind of federal supervisory rules in the United States around a stable coin issuer like this. That gets into a little bit more detail on disclosures, liquidity, operational resilience, kind of things like that,

18:01 Brian Rose: yeah, and I would say for anybody watching now, the devil is in the details.

18:05 I got a real education in financial markets in 1993 when I started trading fixed income derivatives at Bankers Trust. And I used to trade Treasury bonds. Out the curve, I used derivatives on the futures exchanges. And the way you would be knowing that your future would track the underline is by the settlement details. I would know that if I bought a bond future, that I know that someone would deliver me that bond at this point in time.

18:27 Or deliver me that amount of cows, or that amount of gold at this point in time. Or the euro dollar future would set against three-month Libor on this date. And because I was sure it was going to happen, the instrument would track what we thought it would track. And it’s so important that you have people thinking about those details. And again, the collateral being U.S Treasuries and not, say, corporate paper, which is again.

18:50 Jeremy Allaire: It’s, you know, it’s high-grade debt. But it’s not the full faith and credit of the U.S.

18:54 Brian Rose: That’s right, the fact you guys are doing that with the transparency, it makes you different than any other. Any other stable coin out there. And a lot of my students come to me asking your amount of stable coin questions that I’m going to ask you today.

19:07 But, you know, it’s hard to know the difference between, you know, this one and that one, so it’s, it’s, I appreciate these explanations here. While we’re at this, let’s just cover some of the other options that pop up on coin market cap in the top 25. Obviously we see USDT, we see die and we see the emergence of something like, You know, a terra, which is an algorithmic, stable coin. Again, I guess, while we’re on the fact, these are some of the choices that pop up on a uniswap or other exchanges. And sometimes students don’t know the difference, right?

19:38 The first three letters are the same. So it’s hard sometimes even my academy students to know what’s different between D.C. and DT, because it can be a world of difference. Can you comment on those three other protocols?

19:53 Jeremy Allaire: Yeah, I mean, I think there are, there are a lot of different approaches. I mean, I, I think, you know, I, I.

20:00 I feel very good about the way we’ve constructed this product and this infrastructure. And I think, Yeah, we’re really trying to be that, you know, kind of trusted, redeemable, compliant, you know, kind of very well. Well regulated and operated stable coin. And I think for individuals that are thinking about this as something to hold, spend, settle, uses, collateral, etc. There are the assurances that come along with that.

20:33 Now there are other stable coins that are not regulated that operate offshore. That haven’t had the same amount of examination, supervision, or what not now like. There’s demand for that as well as I like to say, You know there are, you know, perhaps, you know, traders in Asia like the idea of something that’s opaque and offshore. And out of the reach of the U.S. government out of the reach of the Chinese government, that’s actually ideal a shadow banking model. Maybe they like that and that serves their needs, so there’s a need there.

21:06 But if you’re thinking about, you know what are, you know, you know what are the major, you know? E.-commerce companies or financial institutions and fintechs and payments companies and corporations gonna put on their balance sheet use. As a as a real world settlement layer like the standards are gonna be higher and different. And so I think we’re positioned for the, you know, the growth from servicing the sort of native crypto economy into servicing the real economy. As those kind of converge, I think we’re well situated for that now.

21:41 Algorithmic or sort of, you know, kind of collateralized debt position. Issued stable coins and or algorithmic stable coins are fascinating. And we’ve certainly seen some of those grow because of very significant kinds of liquidity and kind of token incentives. Yeah, that are that are kind of getting people to continue to, to, to build value because they believe that. There’s a kind of virtuous circle of, of enhanced value from the kind of incentive tokens, if you will, that are tied to it, that’s an interesting model.

22:31 At the end of the day, I think you’re still you’re it’s a foreign exchange. Defend the peg situation, right? It’s it really is, is how good is, say Luna, in defending its peg for the dollar. And you know, the history of foreign exchange pegs and the like is very challenging.

22:54 Brian Rose: Are you sorry?

22:55 I think, Are you talking about us here in England? Are you making reference to?

23:01 Jeremy Allaire: There’s, there’s some history, but there’s actually much more history around the world, right in so many other places in the world. And so the sort of foreign currency reserve Peg model is an interesting one. And I, I would say in general, I’m actually very supportive of and excited about experimentation in algorithmic, stable coins. I think there’s some models that are basically using effectively kind of taking a Delta neutral position against the futures curve of USD, BTC and deriving.

23:35 In a sense, a dollar stable coin from that, because that’s actually the deepest source of price data and dollar liquidity in the market, right? So it’s actually a really interesting mechanism to do that from so I think there’s some interesting experiments that are out there now. So I think those can grow and I think there are reasons for those to grow. I also think that again, corporations, commerce firms, financial institutions are also really going to want to use something that actually is a cash equivalent. Redeemable into the banking system product Yeah, and we think that will grow really big.

24:19 We think that can grow to a trillion in circulation. And but it’s not a zero-sum game, it is definitely not a zero-sum game. And I think the ultimate aspiration of a synthetic, algorithmic, stable coin that can be a unit of account that is decentralized, and it could be used broadly. That’s a, I think, a worthy aspiration to be thinking about, right?

24:45 Brian Rose: Interesting.

24:46 So there’s room for all sorts of different types. Depending on maybe your risk appetite, maybe technology, in the future. You mentioned that one trillion dollar value. I’ve heard you say in maybe some previous interviews that you know, if you look at, you know, maybe total volume of, say, the U.S dollar. I think you pegged it around well, a hundred trillion and you said having 10 percent of that market in 10 years is maybe a rule of thumb you might have used in the past, you know, with Internet startups, which? which makes you think, Hey, the USDC could be as big as 10 trillion in five or 10 years.

25:18 It just speak on that as far as numbers because that’s a big number. Although the numbers in these markets are getting bigger all the time, right, what do we have? 1.6 trillion market cap? Now with all the coins, I think we’re over two again, two again.

25:31 Jeremy Allaire: Okay, yeah, yeah, I mean, I, I think I mean, one is just.

25:34 Monetary aggregates continue to grow every year. And so the denominator as it were, or whatever is getting bigger every year, just kind of that is the A reality that we have. But even aside from that, I’d look at this. Similarly, similarly to how one might look at the adoption of other Internet protocols and technologies, which is, you know, the they’re good examples. So when protocols like HTTP came out or protocols like SMTP for email and SMS for text messaging, all these examples.

26:19 What was so powerful about them is that they took what, in a offline world took time and expense, and sometimes capital expense and other things. And basically turned it into, you know, open, decentralized, permissionless networks, and what happened from that? And with that could just be connected to by any Internet connected device, any piece of software on the Internet. And what happened with that is the net world. Output of text-based communication exploded, the net world output of just information as a whole exploded.

26:58 The amount of, you know, I use sort of tech jargon a little bit like asynchronous communications. You know, probably ten thousand next. And as you, if you know, even just the ability to put software in a browser, which was my first startup, is sort of, How do you do that? You know, I had a theory back then that if you had, you know, Web browsers took off and the Internet grew that the net world output of software created would go exponential. And that all that all happened.

27:27 And so, and it’s interesting to ask the question What would happen if you had open protocols for value exchange on the Internet? That had good assurance behind them? That drove the cost of transacting to zero and also introduced programmability and introduced the ability to do things that you just couldn’t think of. You never could do before. And my view is it’s probably going to be like the other areas of the Internet.

27:52 The velocity of money and the sort of net world output of use of money in a system like that will grow exponentially. And so from that perspective, it’s in some ways it’s a huge upgrade over the legacy, banking and payment system into this new Internet system. And it should if it follows that history, it should, actually, you know, produce a usage and velocity of money. That is dramatically in excess. From the use and velocity of money that we’ve had in the world today.

28:29 That should also help increase economic output economic opportunity. It should help with so many different things in the world. And, you know, you kind of you have to believe a number of things. You have to believe that blockchains will scale. You have to believe that there’ll be enough regulatory clarity that everyone feels comfortable using these, you know, you have to believe that some of the vexing issues like, you know, identity and financial crime risk can be dealt with without clobbering the whole thing.

28:59 So there’s a lot of things you have to believe. But if you can see the way through those, then you can actually see. A world where this could very easily be 10 of the existing electronic. You know, M2 type money that’s out there,

29:16 Brian Rose: and, you know, you’re the perfect guy to ask this question, Will that change our lives and humanity? More so than the Internet, and more so than mobile phone technology.

29:28 And can you speak on that?

29:30 Jeremy Allaire: In fact, yeah, I’m happy to speak on that. So what’s interesting is, you know, I got into the Internet space related to a conversation we were having before we started the show. I studied, you know, kind of political economy in college, so I was always interested in sort of this intersection of politically and economic systems. And how the how, how kind of the prosperity you know, these, you know, evolution of economic systems and all this kind of stuff, so I was fascinated by that.

29:58 That’s actually what drew me into the Internet in the first place in 1990, because I was like, Holy [expletive]. There’s this system that can connect everyone all around the world. And there was no commercial Internet at the time, but it was you. I was experiencing firsthand the decentralized nature of it. I was communicating people with people behind the Iron Curtain who were doing what we now would call citizen journalism documenting revolutions that were happening.

30:24 And it was like, Holy [expletive] like this is incredible, and so my interests were always derived. From what does it look like if the world is just more connected? And, you know, I think a lot of my interest was in interactivity information communications because that was sort of the first epics of the Internet. And so when I kind of went down the rabbit hole on crypto starting in 2012 and then, you know, as I put together, circle the. The immediate intuition was, Oh my God.

31:03 If we can do for value, exchange what the Internet did for information and communications, it’s gonna be like, way bigger than the Web way, way bigger. The impact in the world would be so much larger. Because you’re talking about the Organization of Economic Activity and making economic activity more accessible, efficient, global, you know, and the like. And so I do believe that this can have a far greater impact than the on the world than the than the Internet has today. But to.

31:37 To me, it’s all sort of an outgrowth of the Internet’s role in society, the Internet’s role in the economy. It’s just a natural outgrowth in some ways it’s sort of burst out of the primordial DNA of the Internet. It’s just sort of manifesting itself in this new way, and you sort of see that from the emergence coming from Cyberpunk’s Open source communities. You know, a fundamental ethos that has sort of powered the Internet for a long time. It’s sort of emerging from that and so that makes me think it can be way, way bigger.

32:11 But it does converge with the world of mobile and the world of software and the world of devices. And all these things are, you know, mutually overlapping technology trends that you know, kind of. That’s the sort of thesis of exponential tech as you get a whole bunch of mutually overlapping things that happen at once. That then creates these exponential opportunities. So I think digital currency blockchains is a major technical breakthrough.

32:38 That kind of connects to a whole bunch of other technical breakthroughs that make the whole make the whole thing more exponential.

32:45 Brian Rose: Yeah, and I think you actually kind of walked us through a little bit of a history of Web. 1.0 2.0 3.0 1.0. Being you, I think, hardwiring into your dorm at McAllister, some Internet access and speaking with people behind the Iron Curtain. Obviously.

32:59 Web 2.0 when you’re building macro media players for browsers and allowing people to use flash pair to watch video. Which again, when Grandma watches the video, she doesn’t realize that’s pretty impressive innovation. And then now we’re seeing this Web 3.0, where we’re seeing, Okay, you know, Facebook turns into Meta. People are worried about the closed metaverse. Now we’re seeing the open we’re seeing.

33:21 Peer-to-peer Exchange Rapid Growth. We’re seeing explosions in value kind of not value creation, but value signals like, Oh, NFTS. We didn’t know that was existing, or even raising money on blockchains via tokens. That was never a possibility that it enables companies anything that you want to mention when it comes to that kind of Web 3.0 narrative.

33:45 Jeremy Allaire: Yeah, yeah, I mean, I think there’s sort of a couple of big themes that are interesting.

33:51 I think the, you know, the general theme of tokenization is one that we’ve been passionate about for a long time. And, you know, in some ways, USDC is tokenization of dollars like tokenization of short-term U.S. You know, cash instruments right like that’s kind of what it is. There’s always been this sort of concept that you could tokenize other property, other things that exist in the real world. And NFTS, in my mind, are essentially a huge acceleration in tokenization, but starting with the lowest friction.

34:28 Which is the tokenization of digital goods, the tokenization of just pure intellectual property or the tokenization of entitlements, right? It’s essentially a an entitlement layer that now can exist, that is provable. That’s crypto provable that is portable. That has all these attributes, right? Tickets What the [expletive] is a ticket, right?

34:51 I mean, I think it’s an entitlement that someone’s got a ledger of, it’s got a serial number on it, you know, whatever it is, right, yeah, but fundamentally entitlements and digital content and intellectual property, so that’s the lowest friction form of tokenization, because you don’t have the quote unquote real world that you have to reconcile and deal with, at least at least not at face value. But that theme of tokenization, I think, is one which we’re in the super early stages of right. And. And years ago, we used to talk about the tokenization of everything. And that’s really just saying it makes sense that rights and titles and ownership should be represented as digital tokens.

35:39 That could then, in turn, get the advantage of all the capabilities of these blockchain networks and all the openness of that. And that can create, you know, very, very different kind of capital market structures and create capital market structures around forms of goods and services and property that existing capital markets can’t service efficiently. And so I think it is really powerful from that perspective, so I think that’s an area, you know, very significant area, you know, I think another is, you know, kind of going all the way out on the other end of the curve, so to speak. Which is, you know, the emergence of Daos. And, you know, this has obviously been kind of religion for people in the blockchain space, at least in the Ethereum community since.

36:25 Metallics original white paper. And, you know, from my perspective, this is also a kind of a natural evolution of humanity, a natural evolution of social and economic organization. We’re moving into an era where a You know, a quote,-unquote multinational right, which exists through a legal jurisprudence system. With all these books and records and all these kind of things around them, it’s a huge edifice that you have to do to do. Something globally can now just be manifested in a set of smart contracts that govern a set of tokens.

37:02 And govern a Treasury on chain. And provide a way for labor and capital to interact on a global basis. And for that organization of labor and capital to work on a global basis with a very open form of participation. And so I think we’re seeing very nascent experimentation with new corporate forms, in a sense, which I think will ultimately become highly competitive and far superior to legacy corporate forms. And I think over a 10 or 20-year period, you know what we think of as the like the great tech companies of today.

37:37 Or this or that I, I actually believe? Over? Time will be more like on-chain corporate forms that will be far more effective at employing labor and capital and creating goods and services. So I look at the DAO phenomenon is also quite nascent. But I see a world where it’s going to ultimately evolve into something quite significant in terms of the nature of, in some ways, the nature of capitalism and then, and the nature of labor and capital as a whole.

38:11 Brian Rose: Yeah, I think that’s really interesting to consider. But then I also wonder, Do we get a USDC without Jeremy Allaire? You know, do we need a leader? Do we need a guy that’s willing to go and put himself in the front of the U.S Senate committee? And, you know, be that voice and show this vision, and that’s where I get a little blurry.

38:32 Where these, you know, these weird, autonomous dowels in the future that just run, and I remember leadership and vision too. Just your initial thoughts on that. And then I want to talk about what it’s like to be in front of the Senate, but what do you think about that?

38:48 Jeremy Allaire: Well, so I mean, just be clear, like the, using, the acronym DAO. To describe all the things that I just described is probably not accurate, right?

38:56 Because a Dow stands for a decentralized autonomous organization, right where there is no hierarchy. It’s just people coming together voting. It’s sort of like a form of market collectivism or whatever you want to think of it as it’s like, this kind of new thing, do I think that is actually the best structure for decision making and leadership, and ownership and others? No, I don’t, I think I. I do think we will see new experimentation in coordination methods that can be conducted entirely in software that could produce more effective organizations.

39:34 So I do think it’s an interesting laboratory for that, but I do. I do. I think that like that, you know, that’s going to replace the concept of having a CEO and having a leadership team, having management hierarchy and having different forms of ownership structures. I think you know, you’re kind of fusing those together if you kind of took what a corporation is today. And it’s bylaws, and you try to codify those literally in code and say, You know?

40:00 There’s token holders, and there’s series a token holders and series B token holders and series C token holders and common token holders. And they each have different voting rights, and they each have access to preferred dividend structures. So the Treasury spit out different things to different, you know, tokens. Then you got a corporation, you got a Delaware Corporation, so you can model anything and you could do anything and do it. But I think the concept for me is moving that moving ownership, governance and Treasury to these on-chain infrastructures presents an opportunity for a radically more efficient form of corporation that can work globally than what we have today.

40:41 And so it’s a little I’m. I’m looking at both the sort of technology and what it enables, as well as the kind of operating model experimentation that something like Dallas represent.

40:51 Brian Rose: Yeah, no, thanks for clarifying that. I think that’s super exciting and in a weird way. You’re almost taking that tokenization concept and then putting it into governance, which, again, there’s been a lot of talk about it.

41:04 We haven’t seen the rubber hit the road on governance yet, but we’re gonna see it in the next couple of years. I spent six months of last year running to be the next mayor of London, and I got a real dose of what politics was like. I don’t know if I’m gonna go back for any more, but I got to see how you know. Governance works where one person, one vote, or you just try to get a mass to kind of decide on something, and it’s not as easy as you would think. I always think the blockchain is, you know, one part technology, one part marketing and PR, one part governance.

41:34 Or we’ll see and then wait till politics gets into the blockchain, it’ll get a little crazy. So I, it’s very interesting to see what the future will become like. You said programming and all that will introduce lots of incredible efficiencies and it is exciting to watch. And I’ve got guests in here that go on both sides of what they see as everything becoming autonomous or not. I mentioned it and let’s jump into you, I call it jumping on the grenade.

41:59 Jeremy. You are the guy that jumps on the grenade of regulation and talks about it openly and goes up in front of the banking subcommittee. And I would challenge my viewers to find any other stablecoin leader that does that because there aren’t any. So, first of all, thank you for that. I appreciate, you know, you going up there and putting the voices out there.

42:18 What have you learned from talking in front of those committees? What can you tell us about regulation? What’s the message to the public, the American voters, people in the world and even to the government, like, what do we need to know and what’s happening?

42:34 Jeremy Allaire: Yeah, I mean, this has been, you know, part of the way I’ve thought about this since we started the company. Which is, you know, if you’re going to try and build something that has this far-reaching impact and affects mainstream lives. You kind of have to walk in through the front door.

42:51 This is not a game of, you know? We’re going to kind of go off and do something in the Dark, and it’s somehow going to become broadly useful. Now. That doesn’t mean that you, you just kind of go in and say, You know, apply the most strict rules possible. That’s not it at all.

43:10 But you have to focus on just continuous engagement in education. Because at the end of the day, whether it’s people who are regulators that work in an agency that’s job, it is to regulate or policy makers that write laws. They have a job to do, they have, they have a job to do and they have, you know, a. A set of risks and opportunities that they’re focused on. Policy makers are thinking about both risks and opportunities, economic opportunity, competitiveness, but they’re also thinking about, you know, social risks, societal risks, other things. And so just in general, it’s like, be open and transparent.

43:49 And that’s just been part of our, our kind of modus operandi since the start. Now, I think, as these technologies have grown as the, the amount of activity, you know, whatever it is, X percentage of the American population. Or pick your market around the world, just the aggregates, etc. You know, the attention gets higher and the risks do get higher. And so you know, our view is at some point, the kind of regulatory frameworks that we have didn’t anticipate digital assets.

44:30 They didn’t anticipate the uniqueness of the open Internet becoming a medium of asset exchange. I mean, so many things that just have come out that our laws didn’t contemplate. And so the answer is not just leave it alone, that’s not going to work. Because there are, you know, deep consumer protection risks, fraud risks there are, you know, there are market integrity risks. This is getting so big it could actually have a broader impact on the economy.

45:01 You got to kind of think that through. And so, you know, my view is, at least in the United States. We have gone from basically totally uneducated to, you know, curious to becoming more educated to now where we are today. And you see this in a hearing that’s happening as we speak. Or maybe just finished in the In the In the House on the topic of regulating stable coins in the United States.

45:30 This is a federal government witness the U.S under Secretary of Treasury for Domestic Finance Nellie Lang. You, you’re seeing both sides of the aisle as it were Democrats Republicans being really constructive and engaged, and I think really trying to figure this out, they see that this is a big deal. It’s not going away, it’s going to have a big impact. And there’s not a rush to come in and be like, We gotta quickly do something here. I think there’s people are seeing this in some ways through the lens that we’ve been talking about for a while.

46:07 Which is like, This is a new epic of the Internet and it is in the world of the economic system. And, wow, that’s a big deal. Let’s make sure we don’t get that wrong. Let’s make sure that, just like America, was highly competitive in the earlier epics of the Internet because it took a careful approach to regulation. And it enabled American industry and entrepreneurship and technology creators to really, really thrive and lead in the world.

46:40 That opportunity exists here. And so people are starting to tune into the national competitiveness, economic competitiveness and the risks, right. It’s starting to become a more balanced discussion. I think you’re going to see that in the coming weeks from the White House, where they’re going to give an executive order. And I think it’s going to sort of say, Hey, Hall of Government, we got to look at this, but it’s not going to be whole of government.

47:04 We got to put this back in the bottle. It’s going to be hold of government. We got to understand this because it’s going to touch everything, and that’s a real evolution. So we’re, I think we’ve gotten to a different place, and for me, at least it’s extremely well spent time because I care a lot about this. And I want to make sure that we get things right.

47:25 So it’s a. It’s a really important investment of time. And I think, you know, I, I’m, I’m relatively optimistic about where we are.

47:33 Brian Rose: Yeah, you could argue that’s a better investment of your time than even, you know, the time you invested circle. I mean, because if you can’t get this through, then a lot of this work maybe is, is doesn’t, doesn’t actually get realized. And, you know, I just had a quick flashback of something, I think, Dan Tapiero told me.

47:53 Attenti Holdings, who runs a big fund, who said, You know, America typically dominates in the tech innovations of the last 50 60 years? From semiconductors to what you were doing at the Internet Web 1.0 2.0. Let’s be honest, you know, America is dominated, and we get the legal systems in the monetary system. But Tepiero said, Look, you can argue that America’s not dominating this infrastructure, it’s actually maybe more of it’s being done off American shores. Now, with curious whether you agree with that or not, and do you think that’s a motivating factor?

48:24 In, say, the president appointed? Kryptos are whatever he’s going to do. Or the real change in tides from today to what we had 12 months ago, where Gary Gensler called stable coins the poker chips of the Wild West. And again, just want to say, I’m starting to dangerously like Gary as I watch his course at M.I.T. on blockchain. Because Gary’s very smart and 2018, when he wasn’t part of the SEC, he actually has incredible depth of crypto knowledge.

48:50 I realize he’s in a tough position, I realize he’s in an underfunded organization. But it feels like we’ve come a long way in 12 months. Maybe speak on that evolution and also speak on. Do you think the U.S feels a little bit like they might lose this market?

49:06 Jeremy Allaire: Yeah, I mean, this is this is, I think, becoming a more front and center issue.

49:11 We actually. Last week took out full page advertisements in The Wall Street Journal, The Financial Times, The Washington Post, Politico, Axios. The Hill and kind of took over the home pages. And the question we were asking is, How can the U.S win the digital currency space rates? And.

49:30 And it was sort of a editorial, in a sense, and we were making a very specific argument about, you know, the dollar and the dollar on the Internet, what’s going to be the currency of the Internet? How does the U.S. want to play this? And this is, you know, on the eve of the EC, and why becoming operationalized in China. And so it’s a It’s a It’s a sort of area that’s getting a lot of attention. And my view is that the U.S. is already winning that race now.

50:02 It could be winning it even more. It could be moving and securing that position even more. But it has a relatively open posture to the innovation that’s happening here. When you look at blockchains and currencies, the dollar is actually the preferred digital currency of this new crypto economy. That’s it’s already in a leadership position that is, it inherited that leadership position.

50:32 But it’s now crossing over into this world through things like USDC and other projects, and, you know, there’s an entire ecosystem being built around it. So the federal government doesn’t need to go do a big three-year, Four-year R D project to build a nationalized infrastructure. The Government has an opportunity to do what it’s done to Dan’s point, which is unleashed market forces free and open competition. The kind of the benefits of open intellectual property that the Internet has driven and is sort of kind of enshrined in. Sort of how the West has competed in this space, so those things are there now, there’s more to do, right?

51:13 I think there’s the kind of capital market side of this, where there is a lot of ambiguity, what is the security, what’s not a security, how do you do? Investor protection, What is? You know, What is a digital asset market versus what we think of as a traditional securities exchange. There’s a whole bunch of stuff to do there, right? What’s the legal basis for a on-chain Corporation?

51:35 You know, you know, all kinds of other stuff. I mean, there’s so, so many different, different, different things that have to be worked through. But I think the opportunity set is there to be open to this innovation path. And you’re starting to see that you’re starting to see ruminations out of 10 Downing Street. And out of the UK government saying We’re going to, we’re going to embrace this, we’re going to really, really embrace this.

52:02 And we you, you know, just like London, became a fintech center because of an explicit government HMT FCA kind of hold of government approach. I think they’re actually now waking up in the UK and saying, Holy cow. The crypto economy and all this is A is another place where we should be winning. Singapore’s doing the same thing, so I think governments are going to be in a little bit of a competition. To figure out who can regulate in and set policies that you’re dealing with the core risk.

52:33 But in so doing, create the assurances that mass society needs to feel comfortable adopting this at scale.

52:39 Brian Rose: Yeah, it’s an interesting point you make about fintech because, you know, I watched I used to work in finance here in London, and then I got to watch the fintech sector explode here. I actually had an old show called Silicone Reel, where I interviewed about a hundred of the fintech founders. And I had John Collison. A stripe on in 2013.

52:58 The transferwise guys that became wise and they were all kind of startups then. And like you said it was, it was the UK Government was proactive tax breaks. The City of London is also the capital, also located, right where we are in Shoreditch. And it was right next to it, and it became this, this nice little explosion where it didn’t necessarily happen in a lot of other cities in America. You also had a little bit of a closed ecosystem and you know other things that made it kick off.

53:27 I hope maybe that can be used as an example for the U.S to pay attention here. Yeah, can you speak about, you know, the evolution of 12 years of Regula? I mean, sorry, 12 months of regulation, and again, you know, I don’t want you to call Gary out. But when you hear a regulator, say something like that and you’re in the stable coin business, does it make your heart sink? But it’s also, is it under, is it important to understand that’s the S.E.C.

53:50 You’ve got the F.D.I.C. you’ve now got the president’s panel, you’ve got lots of things going on in moving parts. I don’t know, tell me about that to where we are today.

54:01 Jeremy Allaire: Well, so there’s been a huge amount of progress. I mean, I think, you know, a year ago there had been a lot of growth in stable coins. And you know that was primarily driven by USDC and USDT, and I think the amount of growth and there was sort of this looming.

54:19 Is Facebook doing something or not, or what you know, which is sort of always kind of gets, gets? Regulators and policymakers worked up, so you, you know, you sort of had this moment where there was this real growth. And I think leadership was new. Democratic leadership felt compelled. Like we need to really do something about this.

54:41 We need to have a view because if this keeps growing like this, this is going to be potentially a real, a real problem. and I think what’s emerged is, you know, a view. And this came through a lot of like, You know what? I kind of call like policy signaling and then eventually, the president. The White House is sponsored kind of Present working group, report on stable coins.

55:07 And kind of got to a place where I think the consensus view was, you know, stable coins that are reserved back that are designed to be, you know, redeemable and liquid and operationally sound. Have the potential to be very significant. Payment system, innovations and fit into the realm of payments and banking regulation in the United States. We need to figure it out at a national level because it’s becoming so big. And we, we as Circle were very supportive of that view.

55:41 And that’s kind of what we see happening is sort of evolving into that into that space. And there’s, I think, similarly, a view that there are a range of stable, coin like projects that are, you know, kind of synthetic instruments. Or that maybe involve a far more aggressive underlying reserve investment strategy. And those have the potential to be treated differently, treated under things that look more like money market regulations or securities laws. And so I think what you know, there is differentiation there, and I think, you know, Gary Gensler as well has acknowledged that, saying, Hey, if it’s designed in this way, that really looks like a payment system universe.

56:29 And if there’s something that is, you know not. Maybe it’s something that ought to come in and work under the SEC supervision. So I think you’re seeing a kind of bifurcation of that, and so that’s been an evolution. There’s been a lot of dialogue, and now you know, there’s been, you know, there was this multi-agency sprint that was done. They called it a sprint where all these agencies were doing sprint to understand crypto assets.

57:04 All this and what I would say is, you know, the policy community, the regulatory community is way smarter on this stuff. Now, a year later, and so a lot of the statements that maybe were kind of coming out of, you know, I need to have a point of view on this and say something are now actually becoming much more nuanced, have deeper understanding, more considered. And that’s a good sign.

57:29 Brian Rose: Yeah, I’ve been impressed. I think a lot of people have with the nuance and the understanding of some of the members.

57:36 I think some of the House subcommittees and things, and it’s been impressive. I always tell my students on my D5 academy. Contact your congressman and senator. And let them know how you feel about crypto and how you want to use it in your business or how you want to use it. And one thing I learned about politics, Jeremy, politicians care about two things money and your vote, and so they will care about this.

57:56 If you tell them it’s important and they’ll get educated, they also need to be educated. So I’m sure you do a lot of work behind the scenes as well, educating them too. And yeah, look, when it comes to the SEC, I mean, we look at, you know, they’re regulating securities based basically on, you know, post stock market crash from 29, right? I mean, I got my series 7 and 63 exam when I was in New York in 93. And I was answering all the questions that were put into place because of something that had happened at that point.

58:23 What 60 years earlier? And, as Gary says, famously in his course, If it walks like a duck and floats like a duck and quacks like a duck. Well, then it’s probably a duck. And that’s I think when he’s talking about our token securities. I.

58:37 I think it might slow down some of that velocity, and I think it needs to be rethunked. But I also understand that Gary’s trying to protect my mom, who’s 78 years old in San Diego, from buying something she shouldn’t buy. By the way, she has USDC right now. And while I’m here before I forget Jeremy, I got her on a Metamask wallet. Recently.

58:57 I got my 17 year old daughter here on the show who, if we’re lucky, might get into McAllister. And they both have metamask wallets, and I sent them some Eth, I think, to start off. And when I sent my mom some USDC. And again, she owns real estate. That’s what she’s comfortable with, and she rents out properties, that’s how she makes her living.

59:15 And she said, she said, So this is like a dollar, it’s like a dollar. And I was like, Yeah, mom, it’s like a dollar. And she was that hit her. She said. Wow, okay, I get that.

59:26 So it’s interesting to see how, you know, people get their heads around the these comments.

59:32 Jeremy Allaire: Yeah, it’s, it’s, it’s powerful. We hear stories all the time about people who are like they start, you know, using a digital wallet with USDC. And they sort of see the frictionlessness of how you can use it and move it. And they’re like, Oh my God, yeah, it’s a it’s a whole different kind of kind of experience.

59:52 Brian Rose: Yeah, for sure. And I, I want to ask you next about central bank digital currencies. But while we’re on this topic, which I probably didn’t explore enough in the beginning, let’s just briefly talk about what this massive innovation is, which is a stable coin because we probably didn’t give it enough air time, and I think it deserves a mention. I mean, I had Max Kaiser that come came on my show in 2013. Jeremy and he was screaming, literally screaming about Bitcoin and I became good friends with Max and he moved into my building.

1:00:20 And him. And Stacey actually transacted a bitcoin at my Thanksgiving dinner at the table for a thousand dollars. I’ll have to check the year. I think it was 15. and I got to know him, but at the time there was no stablecoin. And then I had Andreas Antonopoulos come on the show and talk about.

1:00:36 He was here in 2015, 2017, 2019, and he was talking about the Internet of money. But the term defy wasn’t being used, and he didn’t talk about a stable coin, at least in 15 and 17, because we hadn’t thought about that. And when I lost the race for Mayor London on May 8th, I looked at the space. Jeremy and I was like, Oh my gosh. Look at the total value locked, look at the D5 summer, look at unit swap and look at these stable coins.

1:01:01 I was like, That is next level stuff? And so maybe we can talk about this as an innovation. Last thing I got to say, I got to tell this quick story. I have students in my D5 academy and one of them raised his hand the other day. They’re on Zoom, they’re usually in, you know, 15 or 17 different countries around the world.

1:01:16 All my Aussies are up at four in the morning because I do it at one time of the day and one of my students raised his hand, he said. Brian, you know, I’m doing good, I’m making money on my bitcoin, I’m making money in my lair ones. But this USDC, it’s not moving, you know, it’s not going anywhere, and you know, everybody laughed, and they’re like, You know, Brian, why would I want to own this thing? And I said, You know what, let me give you an analogy. I got two young sons, they’re four and five years old, and when I hire a babysitter or a nanny, I like my babysitter’s boring, like my, like my stable coins.

1:01:45 I wanna come home and I don’t wanna. I don’t wanna see a bunch of people over and a bottle of tequila open. I want it boring and I want it stable and I’ll pay a premium for that stability. And this is kind of an anecdote I use for them is that you will pay a premium to have this thing pegged to the value of something that at least you can be assured of. And we can talk about money printing and Fiat currencies, but let’s argue that the dollar is super stable.

1:02:10 So just your thoughts on some of that of those things again. This is something that comes up all the time in my academy, and that’s what some of my students say. How do you talk about this innovation of the stablecoin?

1:02:25 Jeremy Allaire: Yeah, I mean, I think at a very high level, right, you know? Everyday use of money, you know, needs to be a stable unit of account that people can use to price goods and services, right?

1:02:37 It needs to be a really efficient medium of exchange. Having both an efficient medium of exchange and a stable unit of account allows economic activity to be organized. Well, I mean, this is why the Fed has an inflation mandate so that you have price stability so that people can organize their economic activity. Whether it be the cost of labor or the cost of goods and services in a well-defined way, that allows for orderly economic activity to happen. And so that’s why it’s so important to have, you know, a base level currency that can meet those attributes now.

1:03:19 One can also say there’s the need to diversify to invest, whether as a hedge against inflation or as just a way to invest. To generate returns through lending, through purchasing ownership of other things, right? So everyone’s got this basket of risk. But everyday economic activity is going to be denominated in a dollar or a euro or other major reserve currencies. And so that will continue to be the case, you know, goods and services, as I like to say, everybody’s gotta buy cookies and milk and pay rent, and you’re gonna do that with dollars.

1:04:03 And obviously people understand you have to pay taxes and so on, and you’re gonna get your paycheck and all these things. So I think having a dollar that has all of the powers, the sort of Internet superpowers, as I like to call it. Which, in a sense, are the powers that cryptocurrency gives you, which is open, interoperable, frictionless, instant, global, secure, privacy assured, final settlement, you know, irreversibility, programmability. These are like really powerful attributes. We want those for our dollars right that can improve what we can do with dollars.

1:04:45 And so for that level of economic activity. You, you want to have a digital dollar, you want to have that work in the same way. And that’s really what stable coins represent. It’s just an upgrading to the form factor and utility capabilities of a dollar that’s really useful, and it’s. It’s also useful in the context of people who are buying NFTs, or lending, or buying other things.

1:05:12 It’s useful for all those things as well, but that’s kind of how, how I would, how, how I would anchor people. And I think, you know, the ultimate success of blockchains. If we’re excited about our layer ones or our layer twos, the success of layer ones is really gonna be. Does more and more economic activity happen on top of these is more and more financial activity happening? On top of these, there’s more are more and more forms of applications that are mainstream, accessible on top of these, and all of those applications on top of these are going to be are going to require a dollar.

1:05:56 Not 100 of them, but many of them are going to require a dollar. And so it’s really important to seeing that success and you see that today, if you look at a chain like Solana, which has seen a lot of growth and a lot of success. And you have all of these different types of applications, everything from games to NFTs to D5 to other things. USTC has become a critical part of that because people need these reliable digital dollars to work in that environment.

1:06:23 Brian Rose: Yeah, while we’re on layer ones, maybe we speak on that because I, I’ve had a lot of layer ones on recently.

1:06:29 From McAlley at Al Grand to both the founders of AVAx to I Just Had Hedera Hashgraph, Justin Sonotron and again, it’s very exciting. Honestly, I feel very comfortable with that brain power behind our layer ones, and it’s something we need badly. But ultimately they’re going to have to use some type of stable coin. Is it true that stable coins are used in one third of all cryptocurrency transactions? It’s something very high like that.

1:06:54 Jeremy Allaire: Yeah, I think the numbers in terms of, you know, clearly like stable coins, are the predominant form of, you know, transaction on, say, like Ethereum on a network like that, and USDC is the biggest on Ethereum. But so, I mean, look, all of those guests are all partners of ours, right? So we, we have implemented the USDC protocol on, as you noted, eight chains. But many of these, and I think we look at it as a space where there’s incredible competition and innovation? And, you know, I think I maybe referred to this earlier.

1:07:32 I look at these public blockchains as kind of emergent Internet operating systems, and they’re competing for applications, developers and the like. And it is not a zero-sum game. You’re gonna have kind of operating environments that are well suited to a class of applications or build a very particular deep ecosystem like flow, which is one which we just launched on, is doing a really good job going after kind of the digital content NFP space, they’ve got a lot of developers happening there. You know, we’ve seen Solana get a lot of traction with Defy. Same with Avalanche.

1:08:12 You know, you’ve seen things like Tron that has a lot of traction with exchanges and things like this. So you, you see that, that kind of competition and that competition’s not going away. And, you know, I think people talk about transaction throughput and security and things like that. And, you know, we were all around for the upgrade of the Internet. From Dial-up to ISDN to, you know, the, you know, the first versions of broadband.

1:08:44 And then eventually fiber, broadband. And, you know, sort of see these capacity increases in the infrastructure of the Internet. And sort of blockchains are going through their dial up to broadband moment right now. But we’re still in like the ISDN phase, right? We’re not yet at the point where it’s like we can light up HD video, right?

1:09:04 We’re not quite there, but we’re going to get there, and so there needs to be this intense competition to get there. And that can involve layer one layer, twos, different architectures, etc. interoperability, all these things. But we’ll get there, and so that’s it’s a really critical space. And stable. Coins like USTC are extremely important to all of them because they all want to have mainstream financial applications and commerce applications.

1:09:34 Other things. And so it’s very important that something like USDC be available and transactable on those platforms.

1:09:39 Brian Rose: Yeah, because at the end of the day you got to do the cookies and the milk and you got to pay the rent. And exactly, you know, one thing I will say, I found very interesting. I talked to Michael Saylor, who’s obviously a big fan of Bitcoin and has, I don’t know, six or seven billion on his public balance sheet.

1:09:54 I guess you guys will both be public soon and, you know, towards the in the conversation, he said. Okay, he calls Bitcoin digital property, which is an analogy that works really well for me and my brain. But towards the end of the conversation, he said, You know what, Brian? You can’t transact every day with digital property, you need a digital currency. And I almost said, Oh so, Michael, you’re not totally Maxie and he.

1:10:16 He didn’t really comment, but he had admitted or acknowledged or had already thought about the fact that we need a currency that’s separate than property. And again, maximalists like Max Kaiser, who refuses to come back on my show because I’m talking to folks like you, and that’s all right. I still love Max, but the maxis obviously are kind of in their world. But you see in even a place like El Salvador, greatest national currency. But nobody necessarily wants to sell their bitcoin right?

1:10:43 And so it’s nice for me to see someone like a sailor acknowledge that. You know, there’s a real place for this currency, and I think we see that everywhere. Your thoughts

1:10:56 Jeremy Allaire: Yeah, I mean, I, I mean, I. I think the there will continue to be major sovereign debt backed currencies. Whether you know, training, sovereign debt, U.S, sovereign debt, European sovereign debt, there’s not quite a European sovereign debt, but, you know, effectively Fiat, right?

1:11:17 That will continue to be the case because it will remain relatively price stable and important for economic activity in these different regions and internationally. So that’s not going away now. Over the very long run, I am of the belief that you could. You could see, emerge synthetic digital currencies that are based on a mixture of non-sovereign, digital commodity money like Bitcoin or ether, and sovereign debt based money. And you could imagine those synthetic digital currencies, you know, having relatively stable value, especially if something like Bitcoin or ether or both.

1:12:08 The monetization of those, in terms of just value gets into the tens of trillions of dollars, which I think it will. Over time. Then the balance of those and these government debt. -based currencies together could create more efficient units of account for buying cookies and milk and paying rent, but that are more universally accepted or globally accepted. And, you know, we had gold standard Fiat for a long, long time, we had exchange ratios that were fixed for a long, long time.

1:12:41 And that has actually been, you know, a lot of the history of modern money, not pre-modern money. But, you know, just all the way through modern money, and so like, we’re not done with experimentation and innovation at all. And I am very long on Bitcoin, I’m very long on Ether and there will probably be other really compelling digital commodity monies that emerge. And I and I believe that they’ll get more and more monetized, people will hold more and more value in them. They’ll have more, you know, effectiveness in exchange and, but that’s a long road, right?

1:13:20 That’s a that’s a that’s a multi-decade road, and so, you know, they’re sort of here in the now. And how do we light up? You know, the power of the biggest currencies in the world to take advantage of what’s happening with crypto and the crypto economy and digital currency. And all that, and at the same time, you’re seeing this other phenomenon emerge. That will be a multi-decade phenomenon, and I think they’ll meet more over time.

1:13:47 Brian Rose: Okay, while we’re on this, can you speak on your thoughts on Bitcoin and Ethereum? I call them the blue chips of cryptocurrencies. You know, I think you recently called Bitcoin going to a million. Of course, I’m sure it was out of context. Maybe you could talk about that.

1:14:01 And then separately, just as Ethereum and then I want to maybe get into central bank currencies, but go ahead.

1:14:11 Jeremy Allaire: Yeah, so, you know, like I said I, I’m very long on Bitcoin and Ethereum and my, my view continues to evolve and I think I have not. I have not held the same view always. But my view today is that the demand in the world for non-sovereign commodity money, digital commodity money will grow. And I, my the comments I was making actually in that interview were that I think a lot of times the analogy of Bitcoin is digital gold.

1:14:48 You know, I actually think that’s a very limited analogy because I think the utility of Bitcoin is so much higher than gold. And because of its operating efficiency, right because of its transactability, its usefulness as a form of financial collateral, its usefulness as something that can be transacted. It has so much more utility and I think the demand for that non-sovereign form of money, that is. That has a I think a strong sound money basis in it. From a monetary philosophy perspective, I think that will be that will continue to be attractive and that will continue to be attractive.

1:15:30 In a world where governments spend more than they collect and where many governments you know are, are increasing their money supply artificially. That will continue to be really attractive. And so, with that in mind, I believe more and more major institutions will hold things like Bitcoin and Ethereum. I think more and more central banks will start building reserves in it. I believe more and more countries will subsidize mining and they’ll have other policies around it in terms of carbon offset and the like.

1:16:06 But I think we are on that path to this, becoming something that is an important asset in the world. And for that reason, I think a million dollars is not an unreasonable price target at all. And I, I haven’t like, you know, I haven’t, you know, there are a lot of analysts that’ll come. Here’s all the ways in which it’s X percent of this or that market, or whatever you can get there. But just intuitively for me, when I think of where it is today, approaching a trillion dollars right to the concept that in 10 years it could 10x, I mean, that seems totally, totally straightforward.

1:16:39 Brian Rose: Yeah, and on a separate note, Ethereum, how do you look at that? I think Mike Novogratz said. Look, he sees Bitcoin as a digital asset, play Ethereum’s a digital technology play. How do you look at them differently and again, you have a background in technology?

1:16:56 Jeremy Allaire: Yeah, I mean so, like I said, like I.

1:16:58 I’m very compelled by the concept that we have these kind of new operating system platforms. And I think, you know, Ethereum really has paved the way in demonstrating that you could have a world computer that was the original concept, right? You could have a world computer for a particular class of applications. It’s, you know, it’s. It’s a very resilient technology because there’s been so many contributions to its development and use the tooling and communities around it.

1:17:34 So I think it’s in a really strong position. It’s kind of going through its, you know, Dos to Windows 32 upgrade. If you remember the operating system upgrades where you know you just, you really needed 32-bit software to do to do more. And the DOS was like single threaded and could only do certain things. You know, that’s sort of like one to E2.

1:17:58 It’s like we gotta get there, we gotta get there, and we’ve gotta maintain backward compatibility because it’s like, you know. And Microsoft did that successfully, so I think Ethereum will do that successfully now, so it has very general utility. I think that, similarly, ETH is a I think, a very compelling digital commodity money. It’s very compelling because it has industrial use, right? It has.

1:18:25 It’s like oil, right? Gas is actually not a bad metaphor because it really has industrial use because it really is. This mechanism to both incentivize and enable compensation for the use of this global network. And so I think it has, you know, as a result, I think that it will grow as an industrial utility that many, many people build on. Top of that will continue to grow the demand for that commodity and the underlying commodity kind of issuance like oil right IT oil is known to have a fixed supply, etc.

1:19:00 I think ETH has a monetary, you know, philosophy, and that’s evolving as well, and I think it has a compelling monetary. You know, base as well. And so, I think, has the benefit of both resting on relatively sound money principles and having industrial utility, which makes it, I think, a particularly attractive asset. And so when I think about the relative gains that are possible Bitcoin versus Ethereum, I would say the relative gains ahead for Ethereum are probably higher on a percentage basis.

1:19:31 Brian Rose: Yeah, I’d have to agree with you and almost every single guest almost, you know, to 100.

1:19:37 Strangely enough, Jeremy almost says what you’re saying, you know, first of all, everybody regardless, if you’re heavy into DEFY, has a chunk of their portfolio in Bitcoin. You know, I’m not a financial advisor, but it’s usually not far off of a quarter. And then they usually have a chunk in Ethereum, not far off, usually from a quarter. Because it is again this, this technology play and an infrastructure that’s being used by everyone. And again, the biggest complaint I get from all my students by far is the gas fees.

1:20:04 And I tell them just to pay them because you can learn the protocol fast. But and again, when I asked Danny Kulachava vave when the Eath 2.0 come along, he said sometime in the next decade with a smile. And again, he, he and he, that’s the basis of a lot of his business, so it’s not like he’s not invested. Then, at the same time, I get, you know, Mance Harman of Hedera Hashgraph, who said We’re building the EVM, the virtual machine. And you potentially can plug into, you know, our chain and get the same services.

1:20:31 Yeah, and this is what you know. The Avalanche, yeah, Near Protocol and Polygon are all sort of EVM chains. But that being said, you still like Ethereum, is this a long-term investment? You don’t think the layer ones will just completely make it redundant and each eat their lunch. You still think it’s gonna be it,

1:20:49 Jeremy Allaire: I think they’re I mean, so, so my view is that this is we’re still early in the competition.

1:20:54 And I suspect that you’ll be surprised by what platforms achieve super scale in terms of applications and developers. But so this is to me, it’s not game over at all. And so to me, if I were looking at this from a kind of stored value perspective, right, I would be watching closely. What’s happening with the adoption of these computing platforms? You know, you know, back when mobile phones were exploding, right there was no IOS and there was no Android, there was Symbian and Windows Phone.

1:21:31 And, you know, all kinds of, you know, NTT, Docomo and all this sort of stuff, these things. They were all over the place, but nothing like the actual platforms that one didn’t even exist, right? So mobile operating systems, blockchain operating systems were early.

1:21:48 Brian Rose: And do you? How many layer ones survive?

1:21:50 Do you think five years from now, or how many do we use five years from now? is it one, is it five, is it ten, is it?

1:21:58 Jeremy Allaire: Well, I mean, you know. Again, you can use the use, the example I mean, devices on the Internet. I’ve got a an Android smart TV right over here on my wall. I’ve got, you know, an iPhone I’ve got, you know, a Mac OS, which is not IOS.

1:22:15 I’ve got Windows machines, I’ve got servers with embedded devices with Linux, I’ve got all kinds of stuff right. So there’s lots of operating systems that are purpose,-built and utilized in a wide variety of contexts, and I think blockchains will be similar. There’ll be enough of a proliferation, but there probably will be, over time, a power law curve. There probably will be maybe a 50 winner or a 60 winner, maybe even a 70 percent winner. And then there’s going to be a number of others.

1:22:46 And that will be a constantly kind of shifting environment because the innovation will continue.

1:22:51 Brian Rose: And do you think what we’ll see five years from now is we’ll be a player today? As in, are the layer ones of the future established because they’ve been working on for three years? Or is that not obvious? Maybe something will pop up in the next couple years.

1:23:06 Jeremy Allaire: Oh, I think we’ll see things in the next couple of years that just haven’t come out. I mean, I, I’m constantly pitched by new blockchain protocols that are that are impressive in different ways. And so it’s hard for me to, to, to, to make that judgment, you know, just, you know, a year, year and a half ago. I don’t think anyone would have said Salon is going to be like this, this huge thing, or polygon, or any of these right? Maybe the people deep in those communities had conviction, but it was still pretty early.

1:23:36 So these changes can happen relatively quickly.

1:23:38 Brian Rose: Yeah, all right. Let’s talk about the U.S. dollar because a lot of people that are jumped that have jumped into the crypto asset space of the D5 space. Sometimes they jump in the deep end. You might know what I’m talking about, Jeremy.

1:23:50 And they say, Well, they see maybe the financial system. For the first time, they start to see what you know, what governments do, what reserves do, especially in times of crisis. Yeah, you could argue. That’s why Saylor has Bitcoin on his balance sheet because he saw the printing of money, and he thought, As a custodian, I need to do something. Maybe that’s that has more integrity or a better long-term vision for my shareholders.

1:24:15 Some people in my academy jump all the way in and they say, Okay, the dollar won’t be here in the long run, and I’m just going to rid myself of that now. I personally don’t think the dollar is going anywhere anytime soon. I also know it’s, you know, the number one currency for a lot of reasons and also on the blockchain. How do you talk to people about this? This kind of strange conundrum of the dollar being super useful in utility, but also a currency that has inflation.

1:24:43 I had Jeff Booth here who has a great book on inflation and deflation, and how it usually spells the end of all currencies. How do you get that in your head or talk about it, or is that just the duality of what is our world? And right now, it’s this and the future. It might be something else.

1:24:57 Jeremy Allaire: I mean, I think that duality is real and it will be here, right?

1:25:00 I think, you know, hopefully we’re in a point where, if you do, have you know something? That is highly inflationary, that the average person has the ability to hedge that safely. And you know, to some degree, Bitcoin potentially has could play that role for everyday people. But you know, that’s, you know to me that’s it’s important that people individually, from a self-sovereign perspective, have the freedom to make those decisions. And to be able to seamlessly move between a savings instrument and a spending instrument, because, you know, we’re not.

1:25:47 I mean, look, some. Some people might, you know, go way out on a limb and say, The U.S. Government is going to collapse and, you know, we’re going to have extended civil war. And the dollar is just going to crater. And it’s going to be chaos.

1:25:58 And like, there’s a there’s a, there’s an argument to be made over there. I’m not there, but I think, you know, you can also take a another view like a regalia view, which is sort of. We’re in a super psych, we’re in a debt super cycle and we’re an empire super cycle and the U.S. is in decline. And that seems to be both at a fiscal and monetary and a broader macroeconomic level, something that is happening. And, you know, the pound sterling had ascendance, and then it descended.

1:26:31 But everyone in Britain still uses a pound sterling, right? And it’s still relatively price stable. And you still pay your taxes and you still get your salary and you still transact in it. If you’re someone who invests, you might have assets in other currencies, you might have assets and other things. So that can continue to be the case, whether the dollar is in ascendance or decline.

1:26:53 But that duality, I think, will continue to exist. I do think that digital currencies and non-sovereign digital currencies create more options for people everywhere to store value. And that’s a good thing. I think that’s a really positive thing.

1:27:09 Brian Rose: Yeah, I appreciate your analogy with a pound here.

1:27:12 It used to be the global currency. Really, yeah, and now it’s not, but it’s still here, and it’s still probably top three or four liquid currencies, so, yeah, it’s a great example. Maybe just finish on central bank digital currencies. We could talk probably for hours on a lot of things, but maybe finish with this and maybe an example because you’re at the forefront. I’ve had guests on here that say, You know, do you want the entrepreneurs like Jeremy to run stable coins, or do you want the U.S. government?

1:27:38 Which doesn’t always have the greatest track record when it comes to innovation? And then, of course, the other great example is looking at China and the digital yuan. Which is hard for me to know exactly what’s going on here. But if I believe the horror stories, it’s all locked into tracking your transactions in the digital social store and the cameras, and it doesn’t sound very good. How do you explain that to people?

1:28:00 What are your thoughts on, you know, central bank currencies and are we worried about that going forward?

1:28:06 Jeremy Allaire: Yeah, I mean, look, I, I think my. My broad view here is that the history of electronic money innovation over the last 70 years has been a history of private sector innovation. Technology, innovation, building standards, building, interoperable standards, getting consortiums to get behind those, and that has given us almost every kind of modern convenience and money that we have. It has not been government administered nationalized infrastructure development projects that has done that.

1:28:36 Governments didn’t build the card networks, governments didn’t build Apple pay governments and N.F.C. payments, governments didn’t build even the check system. You know, this was the sort of ingenuity, right? And that’s no different than what we have today, with stable coins. and 90 of the money in circulation is tiered. You know, sort of commercial bank electronic money.

1:28:55 We’re already in a world where that’s what we, that’s what we use. So generally my view is that’s even more the case now. Open Internet infrastructure, the power of open source innovation. The power of these networks is a huge argument for, you know, enabling market competitive forces to be the basis for innovation in the space. And to my earlier point, the U.S. is already winning the dollar is already winning the digital currency space race because of that very fact.

1:29:26 And so my view is, is that a government administered central bank? Digital currency has a huge number of risks associated with it and huge numbers of complexities associated with it. That I think in, in, at least in the United States, involve a set of trade-offs that I’m not sure that people want to make. And some of those are surveillance considerations. Some of those are disintermediation considerations, but also just innovation and velocity in the issue of technological obsolescence.

1:30:02 That is at stake on this, you know, the final comment that I’ll make, though, is, is that you know, when I made that comment earlier about, you know? The U.S. dollar is a Oracle database cluster running on a sun, you know, sun microsystems, clusters of computers, that’s a real thing. I talked to the CIO of the Federal Reserve and I said, What is the architecture of the dollar? I want to know I’m a tech guy, right? And so could that use upgrading?

1:30:28 Could it be useful that the actual central bank ledger could be a cryptographic form of money that uses cryptographic primitives as its core architecture? Away from a SQL database, yes, I could definitely see that as an improvement and an improvement in ultimately how other key financial institutions that are involved with the Fed interact with it. So I could definitely see the need for technological development in the core architecture of the dollar. But that’s different than what is going to be proliferating as our everyday forms of electronic money.

1:31:02 Brian Rose: That’s one of the best answers I’ve heard, so thank you for that, Jeremy.

1:31:06 Final thoughts. And how can people contact you if they’re if they’re developers or members of the public or anyone that wants to go deeper down the journey of USTC.

1:31:15 Jeremy Allaire: Yeah, I mean, absolutely. I mean, you can obviously go to Circle. .COM.

1:31:19 There’s a lot there. You can learn about what we’re up to. I’m Jer Allaire on Twitter so you can follow me there and I’m pretty active,

1:31:26 Brian Rose: fantastic Jeffrey, Just want to say thank you for what you’re doing. I wasn’t joking about the jumping on the grenade analogy, and I appreciate you putting yourself out there. You know, front and center to take on these challenges and again, for you guys going through the front door.

1:31:41 I like that analogy and again, maybe there is an argument. There is a stable coin for everybody based on your risk profiles and what you want. But you guys are clearly doing what you do best, and, yeah, it’s really great to have you on. Appreciate all the work you’ve done in tech. And now with this, I don’t know where you get your energy from, but clearly you’re having a good time too.

1:32:01 So thank you, really appreciate what you do.

1:32:08 Jeremy Allaire: Thank you, Brian. It’s been a real pleasure.

1:32:16 Brian Rose: All right, fantastic. Thank you so much. We’ll see you next time on London Real. Take care you.