Can Neobanks Break Traditional Banking? | Roundup

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I mean, I know that we're at this period of time when everyone is doubting D5. It's going to work. It's so easy to look at the new thing and point out the flaws and not recognize the flaws in the existing system and there's a ton of flaws. Hey everyone, quick disclaimer before we get into today's episode. Nothing said on Bell Curve is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only and the views expressed by anyone on the show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds, or projects discussed. All right, everyone. Welcome back to another episode of Bell Curve. You got me, Miles and Zev.

Hey yo. Hi, everyone. How's the bachelor doing, Miles? Oh, excellent. I'm back to being a human. Physically and mentally. Like, uh probably 95%. Yeah, it's a week-long recovery uh at this stage, but yeah. We'll we'll we'll not share maybe some of the photos that we that we talked about going into That's right. Oh thanks. Um All right, Zev. We were going to use uh So, we're talking So, there's a increasingly a narrative and I think um you know, as always narratives are a little bit overstated but also real, which is kind of this merging of fintech and crypto and what's going to eat what?

Um are they going to combine? But, how do how do these two different worlds bump up into one another and one of the most interesting venues where this has been happening recently is the Stripe Stripe Sessions, um which you attended over the last week and you said it was really popping off. So, maybe you could contrast that, um you know, with some of the crypto events that you've been to recently and just let's use that as a jumping off point for tackling this fintech crypto >> Yeah, absolutely. And and maybe what we can do is we can drop my tweet in the footnotes. I I described the event and sort of my takeaways from that, but yeah, in general, so I've been both at Consensus in Miami this week as well as uh Stripe Sessions in SF last week.

So, I've done a bit of conference uh conferencing around the place the last sort of month or two, and probably out of all, I think my favorite event was Stripe Sessions. I think mainly because it was really at the intersection of AI, fintech, and crypto, and I think that's really sort of the future that we're moving towards. And you know, I sent you guys earlier in the week these big fundraisers, A16Z, Horizen, and a lot of them are talking about this kind of future, which I felt like Stripe Sessions is really like a great characterization of what the future of crypto looks like. And And what the future of crypto looks like is like a lot of businesses really interested in adopting the technology. It's kind of

like what we always wanted uh when we entered the space all these years ago. We now kind of forgot what that actually looks like when it happens. And as I was describing, pretty sure I showed you guys what I think was one of the coolest things to see was Stripe Sessions had a lot of breakout rooms, and and less kind of like main stage talks, like you might get at an event like Consensus. And yeah, these breakout rooms were packed with people. You know, really couldn't get a seat. I tried going to two or three. One of them I couldn't get into whatsoever. The other one was completely full. It was like American Express talking about how they're using agents for commerce within their own ecosystem. These kind of talks were like really packed. And there was a lot of stuff on like regulations, stablecoins, like very macro things. Um

so, yeah, it was super fun. Like honestly, SF it was the first time I was there in a long time. It feels to me that SF is where it's at right now in in crypto as well. And like I think it's been in New York for a long time. But I have a funny feeling that some of it might move back towards SF, which I'm really excited about. I think at these intersections is where you're going to see some really interesting things kind of pop up. So, yeah, my takeaway was that crypto is like definitely here. There's a lot of interest on the business level. Uh a lot of interest in stablecoins, like not crypto, which is probably something we don't talk about enough on this podcast around like you know, people even consumers and businesses both accept stable coins now.

I think we're all aware of that, but maybe there's still a sort of term crypto uh in itself that people are still kind of scared of. And a founder I met actually in Miami a few days ago, I think, put it really well, which is like, you know, you talk to any kind of business or customer about something you're building. And maybe if it's a traditional business, they're already kind of scared of AI. If you mention the word crypto as well, like next to AI and you're speaking to a traditional business, they get very, very scared. So, it's better to just use stable coins, not crypto in the first place. So, yeah, a lot of takeaways, but I think overall like very clear the state that we're at in the industry. And maybe lastly worth mentioning, obviously also related to Stripe. They had a big

booth there, big presence. It was good getting to know more about their go-to-market, where they're at. I'm I'm I've always been excited about Tempo. I've signaled that multiple times in this podcast. But yeah, I think that's going to do massive amounts for adoption in the space. And it's very clear that a lot of businesses are going to come on board day one and start using it. So, yeah, cool conference to be at. And yeah, cool to see, I guess, the different intersection of people building at FinTech, crypto, and AI. I have a couple reactions and maybe a question like um I think yeah, like the the stark difference between just people like learning how to integrate, you know, stable coins there and just seeing it like directly on stage and people doing it. So different than crypto conferences in the past where we were talking about like

how to solve big problems that we haven't solved yet, like UX or interop or things like that. It's much less like uh people for this is much more like practical. Like everything it just kind of works. People want it. Here's how you get it. Um my question is like did it feel more like a you know, a bottoms-up like startup-centric community or like a top, you know, audience, especially in the workshops? Or are we talking like folks at big companies, you know, that just ready to do like much, much bigger integrations.

Yeah, I think I thought about this in Miami actually where at a conference like Consensus, it's a lot of people, a lot of suppliers, a lot of people building things, DeFi protocols, founders pitching you, lots of shilling, like very little users. If you go to Consensus, I'm kind of wondering who's actually using blockchain. Like probably like 0.5% if that. Stripe was the opposite where it was like very little people pitching me and a lot of people like entering the sessions wanting to understand how to actually use this and get on chain or, you know, on ecosystem like American Express as fast as possible. So, I think the they want to learn, they they're hungry. Like of course a lot of Stripe's partners were there. Stripe is going to top-down push, you know, blockchain including Tempo

onto their customers anyway. So, they don't have a choice. They have to learn about blockchain like right now. And they're already into it anyway cuz I think it makes sense. But, I think that people really underestimate the fact that like businesses are going to adopt crypto for the first time like very, very soon. I think even as a venture capitalist, like there's a lot of startup opportunities just there like alone like as businesses learn how to actually use and manage things like treasury on chain. Like that's a whole new product probably that you could build for these kinds of businesses. But, yeah, that was super interesting to see. Um yeah, I think as well Stripe, I guess, what they've been doing quite well is garnering a lot of interest in sort of not just the blockchain side of it as well, but also like the payment API,

AML. A lot of it actually relevant to you, Miles, that they're doing which I'm curious to hear from you about if you even see sort of Stripe and Tempos as a competitor. Cuz I I feel like now as a VC, which is also probably worth talking about, like every startup I analyze now, there's two things. You look at can Tempo outcompete you here cuz I I I personally believe they're going to own a large share of the sort of agent space going forward. And two, obviously, if you're a startup, can AI kind of copy what you're doing very, very fast. And if you can not be copied by AI and also not be added as a feature by Tempo in the AI agent space in in blockchain, then you're doing very well. But like I guess for you from Delta, how do you see it cuz of of course you're on the stage?

>> I think everybody is kind of doing like half competing, half you know, cooperating at the moment. You're not really sure where things are going to shake out. We have obviously a settlement layer like that will, you know, in some ways compete with Tempo, but we've also we also have a product that is agnostic to, you know, whatever rail is being used, whether it's hard, Tempo, things like that. And on our settlement layer, like we would want Stripe's, you know, integrations for on and off-ramps and things like that. So it's just it's it's not super clear exactly where everybody is actually placing like their bets and what they're trying what they're actually trying to monetize versus what they're just trying to like commoditize from their, you know, competitors if that makes sense. Cuz I could totally

see just Tempo being like a, you know, uh commoditize your complement um play to like the other blockchains where, you know, all the margin is taken much at a much higher level of the stack. Yeah. I think another thing worth mentioning as well, which was actually announced at the Stripe event, uh it's called Link, l i n k, maybe you can also put it in the show notes, but essentially makes it very easy for agents to transact on chain in particular with Tempo and for agents to do everything from opening up bank accounts, you know, accessing credit cards to basically be fully autonomous and and run their own businesses going forward. So I think that Tempo will do a lot to unlock autonomous agentic uh commerce on chain, which I think is

something the space also hasn't seen yet before and yeah, it is very exciting I think this is all coming. This is like Consensus, I think a lot of big announcements I've seen the last few days like uh very institutional. I'm curious to hear from you Mike, I guess like obviously how you see an event like Stripe versus something like Digital Asset Summit, but there seems to be two threads now I think in crypto. There's one thread which is kind of like institutional, lots of suits like Miami Consensus is very suit-driven. Then you have the kind of FinTechy vibe which I think Stripe is like owning right now as the winner. And I I think like to be honest from next year onwards I can see a lot more crypto people attending an event like Stripe Sessions cuz that's sort of where it's going on the more

like techy agent side. So, yeah, that's sort of the two streams I see right now in crypto. Uh those are the two streams that I see in crypto. I just think that they're at different stages of their development. Like I think crypto as a technology is quite broad um even though it gets talked about as one industry and I think that's going to continue cuz there's a cultural social fabric that holds it together like that, but really like the finance part of crypto is breaking off a little bit um and it's so dominant that it's kind of defining all of crypto at the moment. Um and that's in the scale-up phase versus what we're talking about right now is in the

uh the you know, what what did people used to say that explosion the Cambrian explosion moment of creativity phase? So, to me what it seems like is AI and on-chain state like that's all having its um like 2017 ICO moment kind of thing where there's so exciting, so many people and it's funny to watch, you know, when I even look back at the development of how crypto's worked. Um you know, there used to be even like hearing your description Dave of there's so many people that just want to learn.

Um that when I think back at Blockworks has been hosting conferences for like eight years in crypto and we used to get a ton of people that are like, "I'm just an enthusiast and I'm here and I want to learn." And now we get none of those people. Um but I think that's a that's a mark of it becoming a scale-up industry as opposed to very early stage. Um that's that's how I see the the difference. >> What I what I would say, so a good friend of mine who I used to work with at Chorus One, is now working at Itau, which is a Brazilian bank.

And I did see her at a Miami event at Consensus. And I think this is a good state of play of where we're at right now. I'm like, one of the best events I went to full suits, like all banks, particularly Brazilian, which is another insight I have. Like, I think I'm quite bullish on crypto adoption in Brazil, actually more than almost anywhere else in the world right now. And I really felt that at this event I was at in Miami. But there's just a lot of banks even now attending these events and, you know, more than ever before. And you know, companies that maybe in the past were looked down on by crypto natives for being too permissioned or, you know, bank driven and now winning more than Ethereum and Solana, really. And they're the ones that are really reaping all the all the rewards. So, and you know, even

things like Canton, etc. Like, these things, I mean, as you guys know from Digital Asset Summit, like it's it's probably the biggest event of the week kind of thing. And then the crypto natives are not even really getting in the room. So, it's it's changed completely. But what's interesting, I think, is like on the agent side, which, yeah, Mike, I know you've got your own opinions there on on where sort of value is accruing, which we'll talk about in a second. But I kind of think, and you know, even in general with these funds, A16Z and Horn were announced, I guess, in the last few days, both very very big funds. Very clear that a lot of big funds and people in the industry are looking at like AI agents coming to crypto. Very unclear on people being like how that actually happens in the first place. So, you

know, something that I spend a lot of time thinking about myself, I guess. Also speak about internally about like what this actually looks like, you know, where value is going to be long-term. I'm sure we can discuss and debate in a second with Mike where he thinks it'll be versus like myself. But um yeah, I think in general timing will be a big thing about when agents come on chain. But there is a theme across both Stripe and Consensus, which is actually agents. But again here, it's just interesting that like there hasn't been massive success stories, at least like right now in in blockchain where like agents are like proliferating super fast. I I feel like we're waiting for an unlock for that to happen, but it's still very very early right now. I haven't yet heard clear thesis. Yeah, I mean like vast majority of what we would call like

real agenda commerce, um it's all done by like cards or like on on deposits, right? Well, here like in just in I have less of a scientific opinion about this, but more of a just we're talking about this before we got on here, but this is how I have attempted to understand when everyone gets very excited about something. Like just to point out an obser- when everyone gets very excited about something, it's almost always right, but the magnitude is and timing is always off. And I I you know, I've always struggled to understand why is this? And I think it has to do with the funding environment. It's like It's like a horse race, actually. Here here Here's the analogy. It's like a horse race.

When the horses first of all, there's only so many horses There's only one horse that's going to make it, but maybe in this example there'll be two horses. In the beginning though, everyone's rooting for their horse. They're so loud. They're like, "Ah! Ah!" That's why it's all over the place. And then one or two horses wins and everyone's like, "Ah!" And then you don't hear Well, they they move on to the next race where they can they can go back to the and But someone does win after that. And so I think that we're in the early stages of the horse race, right? Billion-dollar funds being raised. Everyone's trying to back their thing, but it's still so early and still so confusing. No, I would I wouldn't say it's both. I would say it's both. Like the big funds are being raised to um do

growth rounds from the previous race that now has like winners emerging. So we're like yeah, if the Brazilian neo banks are like crushing it, we want to like see you know, get them from like a 100 million valuation to 10 billion, right? Uh to be the next like Revolut. Uh the stablecoin back cards, those guys are crushing it. Now they're expanding into like, you know, full-on ramp competitors. Like, let's give them the juice to do that. And then, yeah, they've carved out like a a good amount to make like, um, let's say they bet some horses at the beginning of the next race, which is the AI like, uh, you know, paying attention.

>> Yeah. I agree I agree with >> And it's much more fun to talk about because you don't know what's going to happen. Um, and but but you do have a sense that there's going to be massive winners. You know what though? In in an industry like yes, because it's all theoretical, but in a sense, right? I mean, what you could If you look at most of these technologies, right? They go through a phase of overfunding, um, and fragmentation, and then it consolidates. But, I mean, even if you think about something like social network or Google or search, right? As a as an analog in the internet, um, man, I can understand from a media perspective why it doesn't get the

amount of attention that a new shiny thing does. But, what if you could start covering Google in 2004 at the bottom of like, right when it won and then was about to start compounding? Same with Facebook, you know, after it won the I mean, that probably is some of the most interesting times to follow those businesses. Now, I also will say like everyone's buy Everyone looks at this from their own lens, right? But, I don't know. I just I think I think it's a it's an un- undercovered, um, cycle, uh, you know, part of the cycle that would be you'd learn a lot from. Yeah.

>> And I mean, this is >> So, to get to go back to your RWA question, Zev, that's what I That's what I think the difference kind of is. And there also might be a difference at the end of the day in between DeFi was really never for individuals. Um, DeFi was rails for companies to build on top of, and I think that's also what's That's why it feels like there's no users here cuz it's like, if you hosted a if you did a bank convention, like how many retail people go to the American Banking Conference? Like none. You know? And that's probably the the direction of travel for crypto. Or at least I industry is This is the maybe the first cycle where we have like that.

Good amount of companies, like real companies in the scale-up phase. Versus like, you know, just getting from like uh PMF to like series A, series B. And yeah, I don't know. Like it will be very interesting. Cuz we don't This is a young industry. Uh I don't think a lot of CEOs like in our industry have ever experienced like the scale-up phase. Yeah, I mean like plenty are going through it now, but I think in general yeah, it makes sense these latest stage funds are talking about categories that already are working. And I think everyone is aligned that agents will come on chain. I think it's just very interesting to note that I haven't seen a lot from almost anyone

in the industry, to be honest, around like exactly what this looks like. Where value will accrue, where it's going to happen first, demand side infra applications, etc. I I think, you know, this might be kind of out there, but I think we will have one more infra project, which is like very agent specific, which could end up competing with a Tempo or Ethereum. I'm not exactly sure, which is more open. One problem I do see right now with like agents, you know, proliferating on and off chain is that even in this American Express session I was in, they were talking about how, you know, the agents need to be open and interoperable and all these other words that we use in crypto. And I was just thinking like, why don't they use blockchain open rails for that? So like it's it's very it's very clear there's a

use case for these agents to use, you know composable programmable open neutral rails to transact, coordinate, whatever else. So I think it's really underestimated by sort of even companies right now what this looks like. Tempo is a good start, but it's still like kind of closed. and I see a gap in the market for a more open or maybe even one where it's like you have a product or an app and then you hit some API and then you can use any standard that works for you like at the right time or something like that. I think that doesn't exist right now. It definitely will come out at some stage. So, yeah, it is very interesting to think about, I guess, what this looks like in future. And also, I think what was interesting from what I got from the announcements from the funds is around,

I guess, more infra like AI infrastructure. And also worth pointing out that, you know, AI has been impacting crypto now for two plus years, probably, you know, even longer than that. And I feel like a lot of funds have been raised talking about AI and crypto for last year or two, but like actually, it'd be very interesting going into those funds looking at the amount they've actually invested into crypto and AI in the last year or two after saying they would do that, you know, for the last two years. And I know they keep telling the story about, you know, crypto AI is here, it's coming, but a lot of it is at the infra layer. I think that the infra layer, apart from maybe one thing, probably won't work out very well, and a lot of it will be like applications and APIs where a lot of value will accrue in in

crypto or apps that use crypto rails. So, yeah, I I think in general there's a I mean, obviously, we're a pre-seed fund at Fractal as well, and I see it as like an opportunity for us even of finding agent-driven applications using crypto rails. Like it seems like a massive opportunity right now, massive flexibility. Um you know, having these autonomous sort of businesses on chain transacting. I think that's going to grow massively in future, but yeah, very interesting to see exactly how that happens. And we mentioned neo banks a few times in this podcast. I know Mike's bullish on on neo banks the next year or two. I'm also bullish. I met a cool team like building a Brazilian version, but yeah, it's like ripe, I think, right now for for growth as well.

I have a I have a thought on neo banks, but actually, before we get there, just one other comment. Last um in 2024 and 25, going into that, you know, upcycle bull market, I was I thought, you know, with everything that was happening with ChatGPT and anthrop- like LLMs, I thought we were going to go through an AI altcoin cycle in crypto, which was kind of wrong, but it might have just been early, and it might I think there's at least a decent chance that this happens.

>> don't know if I see that. Cuz it's it's all fintech related. And like I just don't see like oh, this is the blockchain for AI agents. It's like, no. They can use those existing rails. And then so like what then it just becomes a question of do these companies fit the mold for like somebody who wants to token instead of an equity? And like that's that was my initial reaction, which is like just from like people I talked to in the space. Dozens. I think the one I talked to >> the biggest I know, but I think the biggest counterpoint to this actually is that the AI token cycle is already happening with random AI stocks. Um like you know, I I feel like it probably is you know, you can buy some random public company that's in the AI supply chain and

and act so why would you do that on chain? I don't know. There There are a couple names in the crypto AI side of things that you know, I don't want to shill like 30 million market cap kind of things, but I don't know. There've been a couple things I've been looking at recently where I'm like, I don't know. I could maybe take a punt on I I think it might actually come back. Um it just wouldn't surprise me if it did. Uh Like if you can But like >> all for liquidity. Interestingly, there was quite a lot of infrastructure built out for AI and blockchain the last year or two, and it all kind of failed. I can't really mention apart from BitTensor, there's not much infrastructure that's actually worked.

It also if you think about like what is working right now on the demand side, like even outside crypto, a lot of it is just like agent engineering and so much compute is used for that. But eventually it'll be used for other things, like you know, business processes, workflows, etc., where they actually need these agents running all the time. At that stage it is interesting asking yourself the question even in crypto like where are these long-running processes right now which agents could actually take over in the near term. I I think that's worth looking at and studying cuz that's probably where they're going to move the most on chain and the fastest way possible as well.

But yeah, like another thing I'm bullish on just in general is just like I guess agents coordinating between themselves across ecosystems and counterparties. Like for me, that just feels like very obvious that's going to touch blockchain and especially open public blockchains. But I feel like if you look at all the blockchains where they're set up, like no one's really targeting that as like a niche and you've seen like hyper liquid target a DEX, you know, a lot of chains that work out like Solana's like trading. Ethereum maybe is more like yield and arbitrage. I feel like there is room for like a specific chain that targets this, but it's interesting to see that none of that has worked out so far and there's been many many attempts before. So maybe it was too early. Maybe we didn't know the demand side or maybe yeah, just wasn't there in the first

place or not enough attention on it. But it seems to me that it's going to be something this cycle. Is there a chance that Base becomes this chain? I mean, that would be the bull case. That's my point. Like if there's if there's no real difference between the chains that you use this thing on, it's just like where does the where do the apps with the best distribution decide to settle, right? Um like I I don't And and there are teams like like Radix is a chain that like is trying to do like, you know, ultra ultra scalable basically for like Cloudflare level, you know, like uh payments. Imagine every time an agent called a webpage paid like a fraction of a cent. So like there will be something like >> I think that's a good point, Wallace.

And like, you know, the apps with distribution wherever they settle. Like at least right now, it's very clear they're going to settle on Tempo in the next like 12, 24. >> Yeah, or or sure, or Visa and like these kinds of networks. But in blockchain specifically, you know, maybe Visa is their own chain and that could definitely also happen as well. But um it seems like these incumbents are capturing a lot of value in the crypto and AI space, which I think that's another reason why potentially we haven't seen yet crypto AI really take off cuz we've been waiting for the incumbents to show us like how to actually do it and build a good products that get distribution. So, it is interesting that like a lot of these big funds raised that talking about crypto AI, but like the value capture at least at the infra level to me seems like a

lot of that is going to be tempo. And so then the question is at the app level like where are the opportunities? Can I maybe make a hot take like um if you're a payments chain, I think it's in your incentives like not to monetize based off of fees, right? Like so there could be there is like an outcome here where if you don't have trading, like real trading, and can competition for block space, like you're just the chain itself is not going to make a lot of money. And because like the more money it makes, the worse the product is, the less competitive it becomes, right? So then there there might be a world there where like you don't have like uh you know DEX MEV, that you're just the the chain itself is like more of like a

utility, and it ends up looking like a It's a very multi-coin thesis. Well, I mean I'm coming around on that a little bit because like the Costco thesis has always been that's always been like, you know, cheap block space right? Yeah, we're still waiting to see like that. Well, maybe there's a [clears throat] the Costco analogy though is they basically make no money on retail and it's their $50 a month membership or $50 a year membership fee or whatever that's all that. >> that's actually like a point like maybe the way to monetize is if you want to be like it's like buying a medallion, right? To be able to like actually settle on this or like to to to be, you know, um a validator or something like that. I feel like that. We did a podcast episode

on the medallion taxi analogy like three years ago. >> know. I don't that was the way back file. Um I want to Um we we need an uh Blockworks thing. We do, yeah. We should look We should look back at some of these old episodes, but um one You know what though? I One thing that this makes me think of cuz So, looking at uh looking at L1s in general right now, that sector-specific block as opposed to gen purpose app-specific, I feel like where we're coalescing around is blockchains that are optimized for a sector.

Um and I don't know, even like Ethereum, if you look at what's working on Ethereum, I mean you know, DEX volume is dying out on Ethereum, but borrow lend is I mean, borrow lend is dominant on Ethereum. Uh you have Camino and Solana, which is carrying the torch for RWAs, but like a lot of the natural I mean, even the EF was like openly not super supportive of this for a long time, but still uh it's taken off there. And then if you look at Solana they've really leaned into kind of trader culture and a lot of the upgrades of that chain are around it's almost not exactly like this, but it almost is the vision that like Sei put forward like three or four years

ago, which is a DEX chain. And that's kind of what Solana's becoming. And I'm I just I wonder if there's in the future, if you if you accept the idea that most chains will be around one use case then maybe the idea of settlement is a little bit just saying what a blockchain does is settlement is a little obsolete because if you were a blockchain that was completely centered around DEX trading or borrow lend, wouldn't you start to build features in in addition to settlement that you know, that would be helpful for that use case. Like you could do more.

I I I feel like that's the direction of travel for these chains. >> That's the way to go. I mean, I think uh I would be skeptical though to say like they're going to stay in their lane after establishing that bunch. Like um yeah, Canton wants AI agents making payments too. They know that they're the RWA chain, right? They're not going to win that, but they're going to try to like get that. And Tempus going to try to get DeFi. Like This is a little bit of a discussion around timelines. I mean, everyone tries for everything in the beginning and then they win one thing and Oh, I'm actually saying the opposite. I'm saying like the the the the curve now is to try to win one thing in the beginning.

Ah. Yeah, yeah. The the trying to general purpose like approach to go to market is failed quite frankly. Like as we've seen by now. Okay, can we talk about neo banks for our last 10 minutes or so here cuz I this is simultaneously one of those categories that first of all, I'll I'll just it's an obvious it's an obvious win, I think. Banks are going to drag their heels. They're not going to build entirely based on like stablecoin first rails. It would be too directly disruptive um to banks. And I I think that comes from banks being the one that can actually, you know, in the traditional financial system,

banks are the only ones that can actually formally move money and really settle. Um so that's too much of an advantage, a strategic lever. So neo banks that are built on stablecoin rails which are more open is an obvious obvious category. That said, I think every everyone would assume this, but not all of the stablecoin banks that are being funded right now are going to be winners. There are going to be a couple. But I think what you get to at the end of that is super bullish for this vision of DeFi because and even just using things like crypto assets as collateral. I mean, I just I just went through the mortgage process, so this is a little bit fresh in my mind, but oh my god. I mean, I know that we're at this period of time when everyone is doubting DeFi and it's it's

a it's it's going to work because you know, it's so easy to look at the new thing and point out the flaws and not recognize the flaws in the existing system and there's a ton of flaws. I mean, starting from the fact that if you own crypto assets, you're essentially invisible to the financial system, which is insane. That's insane. That's an antiquated idea. That's No, that you got to wake up and smell the smell the coffee on this. I And I think it's I think I mean, Morgan Stanley this week rolled out um crypto trading on E*TRADE, which is great. Uh that's all I think they're going to become a much bigger player.

But I think it's going to take direct competition and disruption from the forms of in the form of neo banks to get existing banks, you know, with it. So, I don't know. I think that it ends up being a huge distribution channel for things like DEXs, borrow lend protocols. If you if you think about building on stablecoin rails first, it's the actual it's the end state of the DeFi mullet, right? Banks as a front end that leverage DeFi on the back end. I mean, that's that's the dream. I mean, I think that's actually what's been really missing from from everything. So, it's going to take years for a couple to win, for them to get scale, for them to be accepted, but man, when they do,

that's the the light at the end of the tunnel for DeFi adoption and steady up only is that. That's what it is, I think. So, anyway, that's my hot take. I have no idea what Bill Bird said. Yeah, no, I think uh well said, and look, what's interesting for someone based in Europe is you can ask any European what their favorite app is, and I think eight times out of 10 they will say Revolut. And so, I I think really in terms of fintech and crypto, like Revolut is the clear winner right now. You can actually buy and you can even send crypto directly at Revolut, like with a wallet address and everything.

Like it is pretty advanced. I think in the US, actually, for for some reason, I'm not sure exactly why, like fintechs are not as smooth as something like Revolut is for us in in Europe and I do think actually something I feel quite strongly about is like what you were saying Mike, like there is still room for more of Revolut. You know, Revolut is already a massive company. It's going to be a big IPO whenever that is, but like there's probably room for even more than just Revolut. Things that allow you to do other things outside even just banking. So, yeah, two of our portfolio companies that are, you know, doing pretty well right now are both in that kind of Fintecky space. And I think actually a lot of like the AI agent demand we're talking about in this podcast episode, a lot of that is going

to come from Fintech apps actually, I think, to be to be completely honest. I think there's going to be some massive Fintech app winners that use agents on the back end to do things that are like very hard for users to do themselves, uh which they also can't do with their own agent kind of long term that will end up performing extremely well. We already like see this within our portfolio. So, one is called On Chain City. It's like it's a bit like Revolut, but it's like your ID as well. So, you have visas from across the world all in one app. Plus then you have financial services on top. So, you might end up using that for a different reason to even Revolut itself. Then we have another one Miles already knows called Archa Money, which is more like business banking. You have Fintech consumer and

business cuz Revolut is actually technically both. I use that as a consumer, not as a business. Then you have the business side of Fintech, which in my opinion actually also lacks quite a bit, especially in US. Like I think they serve US customers very well, but another kind of thesis we have internally is that, you know, as all these businesses start going live with AI, etc., there's more and more founders, more and more need for these Fintechs, etc., more and more startups. Uh it's very clear that things are going cross-border and jurisdictional as well. I think yeah, you can just tell that there's a need for some of these Fintechs that are also global. And obviously crypto here is perfect for for global Fintechs, which I think probably Revolut can't even cover itself in the near future. So, I'm very bullish on like actually quite a few winners in

this category. Like Brex and Ramp obviously are very popular in in US as well and getting more popular. They're probably the only thing next AI growing as fast as what AI is, which is very clear, which means that in crypto as well, there's so much room for this. I just think that what crypto lacks the most is just like good products that are polished. It doesn't even feel like crypto, the design looks good. I think this is coming in the next 12-24 months, but in the past like you can't compare Mercury, Brex, Ramp like a crypto neo bank cuz they're just so far from it. But I think this will change. And like what you were saying Mike, I think they'll use DeFi on the back end and obviously that would be good for DeFi bros as well.

You know, I've thought about this a lot too. For what it's worth also and not to be overly critical of our space here, but the team there is a crypto has evolved uh to optimize for a very specific set of skills, which is essentially knowing and understanding the crypto industry and technology. Partially what's allowed that to flourish is two things. It's an immature fragmented market. So one, selling a product into a fragmented market is not as difficult as selling a product into a mature market. So you haven't There hasn't been a forcing function for great products to exist yet. And the second is obvious, which is tokens have launched so early and people have been willing to bid them and there's literally no actual incentive to

create any value. So yeah, a lot of these teams and products need ma- uh many are not going to make it. Um but there will be a lot of pressure that creates like a diamond in the rough opportunity. I also would just say you know, finance is a little bit different from a consumer category where if you think about how you, independently of just zoom out, just think about yourself as a person, how often do you interact with finance? It is kind of an invisible technology in the background that you don't notice if it's working properly. And many of the big financial products that the average retail person interacts with like a mortgage or a car loan happens pretty infrequently. So there is just something So anyway, I'm I'm agreeing with everything that you say

that you're saying Zaven. And I do think that the fintechs are the category to watch here. And I think the banks are going to take forever and drag their feet. And I think it's going to be really disruptive to them at the end of at the end of the day, the long end of the day here. Um that would be my cuz if you just zoom out of the details and you you forget for a second the amount of customers that banks have, crypto is directly disruptive to their not only their income stream, but their strategic place in the value chain, which is being at the base. And it's hard to fully get around that. Um I mean, it's just such a wildly competitive space right now. Um I was writing this down. You have I think in Zave you covered these a bunch

like consumer neo banks like, you know, um the Revoluts of the world and all of the startups that are trying to be the next version of that. Um I think Ramp is eating a lot of like regular like they're they're just turning into a full-on like B2B banking service, right? Uh with like modern treasury they're competing with all the regular banks. Um you have the brokerages, right? The Robinhoods of the world that have like great positioning to be your, you know, basically your financial provider for everything. Um and then you have things that are, you know, vertical plays like Waze, right? You didn't start to use Waze like to, you know, you wouldn't weren't thinking of that as like a banking play, but you can you can just turn any app into like extend into

finance really really quickly to your point with your portfolio, Zave. So, I think it's like a it's an unbundling moment and then we'll have like a you know, a ton of consolidation probably in like 3 years. Yeah, I think a big thing about fintech is like, you know, I use a lot of fintech personally as well as with the business and there's a lot of problems still in in these fintech apps and the market is huge and growing. And I think even if you just solve a niche problem within this stack, like there's probably markets there as like a wedge you can really get into and start growing from there. So, yeah, like I mean, we backed Arch money originally cuz we've had problems with business banking as a, you know, across US and non-US. And I think again, I really want to iterate this

point, I do think that as we go more cross-jurisdictional cross-border more global, like more businesses interacting with US and non-US, like massive opportunity for crypto founders that can actually, you know, build a startup that uses crypto rails. And the last thing I'll say here, which is also relevant to our earlier discussion, is that imagine you're a bank, like you're not going to use, well at least probably not, you're probably not going to use agents to deliver better services to customers and like get them what they need in faster time much more efficiently. Whereas like FinTechs can do that. And agents at the end of the day are just better services.

So I think financial services are in a lot of trouble here, like full stop. I think, you know, eventually they will be, you know, probably shrinking in size and then FinTechs will will grow in size, e.g. Stripe, e.g. like agentic services. So, yeah, great time to mix crypto rails with agentic services. >> you saw Did you see Anchorage's announcement? Like they're going, you know, full full agentic banking. Um, you know, Arab Wars the dude, that's all like very AI-native. There's a couple of competitors coming up. So on top of all the things I just listed, there's like literally new banks like, you know, launched.

I don't think Arab War will be the last of this like class of, you know, AI like a modern bank, right? No, not the last, but actually on Arab War like I think people in crypto are also underestimating that this is going to impact uh crypto businesses and startups and be actually a bullish thing for this space and get people on board with the crypto, which is great. Yeah, that's a sleeper. I also think Lightspark, I don't know if you guys saw it there, like launched last week. That's why I'm so impressed with the product. Like right off the bat, you have off-ramps to 65 countries, you have card access, and it's all like running on the Bitcoin L2. So like that's the closest thing to Tempo out there. Yeah, I've heard good things about Lightspark as

well. Yeah. Okay, guys, I think that's all the time we have for this week. Um but this was a fun one and we'll see you guys next week. Awesome guys. Easy. See you. See you next week.