Haseeb Qureshi: The Next Bull Market Is Here (It’s Different Than What You Think)

Transcript

If you're an ordinary person, you should be doing that unless you have a good reason to be self- custody. And there are good reasons to be self- custodying. But just, you know, because some Bitcoin maxi on Twitter told me to is not a good reason. Just like the streets of Manhattan, I'm going to keep this quick. Over 70% of our viewers are not subscribers. Yes, you. Every week, we interview some of the best entrepreneurs and investors in the financial industry. The easiest way to support our channel is to hit the like and smash the subscribe button. Now, sit back, relax, and enjoy today's show. All right, we're back. We got HB and we got Air Horns playing in the background. Uh this is our Stabled Up segment with Hase. Uh powered by Fracks, our stable coin partner for Stabled Up and it's also clarity week. So we've been talking

about clarity uh this entire week. Uh it's been a little while. How you holding up, man? >> I'm doing good. I'm doing good. Um obviously a lot going on and uh clarity is starting to look a little bit dim, but I'm still feeling optimistic, but that's kind of my MO, you know. >> Yeah. I uh I mean I feel like in this industry or any industry really you got to stay almost perma optimist in order to just kind of make it through especially these times feels do would you would you consider this like the apathy like the classic apathetic market conditions we kind of face >> yes uh very clearly you see a lot of market apathy things are moving pretty slow markets are sluggish the thing is markets aren't really reacting that much to anything

>> right >> so it you know people people say oh it's terrible that clarity is not passing the reality is that market doesn't react to clarity almost at all. So if you remember in February clarity was at like 80%. Then it was at like 50/50 a couple weeks ago. Now it's at 15%. >> You cannot see it in the charts. You can't see how markets are reacting to clarity odds. So like if you just if you if you just regress poly market against the Bitcoin or ETH price or or alts doesn't predict anything. >> Uh same thing happened if you remember there was bloodbath in the Korean markets. Uh just a few weeks ago, Cosby, you know, roundt tripped like 40 50% whatever it was.

>> Um you couldn't tell that was happening in crypto. >> Normally, Korean retail is like the index of crypto, but we're kind of in a world now where like, yeah, they're all busy trading memory stocks and getting their faces ripped off, and crypto just it literally didn't make a blip. >> Yeah, they took all the liquidity and all the volatility with them uh over there into the Korean markets and the AI equities. Um, and so I mean, yeah, I think that's uh that's effectively where where we find ourselves. Um, you know, I've heard a take just on clarity is that uh the the market doesn't like uncertainty. And so if clarity act doesn't go through and that's it or the clarity act goes through and that's it.

Either way, we're going to get more consensus, more certainty than we have today. Either way, the market's going to perform well going from a position of uncertainty to certainty once this thing ultimately crosses the finish line one way or the other. I mean that's a very simple story. If that were true then you would see the poly market odds predict okay you know when it was at 80% it's like okay well this is going to pass therefore like markets should pull the outcome forward and say okay well we have the clarity therefore you know markets should be positive um so as uncertain so like look right now the odds are 15% right if your theory is true then that should mean 50% is the worst 50% is like we don't know if it'll pass or not so we don't have certainty when the odds go down to 15%

that should be bullish because now we know it's not going to pass Obviously that's not that does not describe markets at all. So so I I think this story is not true. Um I think the answer largely is that look clarity is nice to have. Does it really affect the asset prices of almost anything? You know like to what extent does clarity affect the value of Bitcoin? Almost pretty much nothing. Bitcoin has no relevance to clarity. Um what does it affect for stable coins? Not really anything. Okay. now that they can't pay yield, but they're already kind of, you know, like that wasn't a big part of why stable coins are are growing. Um, and aside from that, you know, ETH, well, ETH is already a commodity. We already know what ETH is supposed to be. Um, most of these things, and the reality, of

course, is that we know there's going to be rulemaking such that the SEC and CFTC are going to step in and do this stuff anyway. The last thing I'd say, so um Khi has markets on clarity going into next year. >> And what you can see from the Kali markets is that actually they're pricing 30 plus% that clarity passes next year >> and more than 50% that it passes by 2028. Meaning that, you know, everyone who's telling you like, oh, it's now or never. If clarity doesn't pass now, it's over and you know, kiss this stuff goodbye. That's not actually what markets are saying. markets are saying like look there's going to look if Democrats win the House the bill is going to get marked up again there's going to be a recompromise lines are going to get redrawn it's not going to

be as favorable of a bill to the industry as the current version looks but likely there will still be some kind of compromise and some kind of bill because at the end of the day both sides want there to be a bill it is a bipartisan bill in the sense that you know there's there's some basic stuff that everybody agrees on like hey there should be some kind of regulatory regime >> I think everybody agrees on that there you know exchange changes should be regulated in a clear uh way that's written in the laws. Yeah, we all agree on that. You know, when when a exchange goes bankrupt, the assets should belong to the customers, not the company. Yeah, everyone agrees on that. You know, there's a lot of stuff like this that like clearly there should be a bill.

>> Yeah. >> So, it's ultimately just a matter of okay, if there's a new Congress and there's a different set of power constraints that have to get navigated, that's going to change the face of the bill. But at the end of the day, it's more unlikely than not that there's going to be a bill that gets passed at some point within this administration. >> Yeah. Um like you said, there's a ton that everyone agrees on. Uh yet the bill is 600 pages and we throw a lot of other stuff in there that people go back and forth on and form compromises. Um, you know, we we saw some similar situation play out with the Genius Act and, you know, that went through much more smoothly than the Clarity Act is going through. Um, and recently we've been

talking a little bit more about the Genius Act because it feels like we're going to get some rules actually and that was passed a year ago, but we still haven't quite gotten the the rule making that people expected from the Genius Act. Do you have any sort of update on on you know given this is stable coin segment for today you know what the Genius Act where is the status today does it have any relevance do you see stable coin companies sort of preparing for the rules that could come out of the Genius Act >> yeah I mean the reality is that the rulem has been delayed and the rulem is you know a lot of the text in any bill is going to delegate to an agency that is an expert right so lawmakers are not experts and they also know by the time

they write the bill and by the time the bill goes into effect a lot can And they don't want to say like, okay, well, let's just put it from, you know, uh, clay tablets from on high of here's exactly what everybody should be doing. What we what they kind of do is they say, okay, well, the Fed should be responsible for this. SEC should be responsible for this. OC should be responsible for this, and so on. And now, okay, now they're responsible. What do they do? What are the rules? That is up to them. And they got to go do the work. And, you know, it's the government. So, stuff moves slowly. You know, people miss deadlines. And that's kind of what's going on right now with with uh uh Genius. Now, at the end of the day, like the most important question is not when do the regulators

make the rules. We kind of know at high level the contours of what the rules are supposed to look like. And more importantly, the signal has already been sent. And the signal is you can do this. It's okay to do this. It's okay to create stable coins. we want you to do so and you will be safe to do that within the guard rails of you know the American economy and companies have heard that and so they're launching stable coins and they're and they're and they're basically going to say look I know that the exact regulatory regime is a moving target but this market is so big I don't want to be late so that's why you're seeing OSD it's why you're seeing you know these these banks starting to get into the game it's why you're seeing stable coin consortia all of these players are entering into this

market you know and that includes like you know CLA and you all these other uh fintexs that are starting to get into stable coins, including Stripe. The reason why they're here is that they know I don't want to be late. If I'm late, I'm going to lose market share. I'm potentially not going to be able to compete. Um and so I'm willing to take on some degree of regulatory uncertainty because I know where the puck is going. >> Yeah. >> That is most of what you need to galvanize the market. So it's not that big of a deal that the regulators are a little late. >> Yeah. And Genius was a lot narrower and so people can think of themselves as stable coins. They can launch these things. they, like you said, know generally where the puck is going. Uh even if it's not specifically, they can

remain nimble enough to adapt a little bit later. Um the the one that comes to mind here, uh recently announced that they're uh doing their stable card powered by Rain is Western Union. Um not that they're launching a stable coin themselves, but they're building on top of Dragonfly portfolio company Rain. Maybe you could just describe like what the value proposition is for a Goliath like Western Union to now come in and build on top of infrastructure like Rain. >> Yeah. So, if you're Western Union, I think you're well aware that stable coins are starting to eat your lunch.

Um, you know, they're not stupid. They're not that stupid, I should say. um like they they they know that hey you know the margins the intermediaries using the um uh you know basically using the banks and the correspondent banking system in order to move money is getting out competed in a lot of corridors by stable coins right they see the writing on the wall they realize that look our advantage as Western Union is not necessarily this infrastructure that we spent all this time building that is our advantage but it is increasingly getting displaced and out competed in a lot of corridors and we need to have some way to compete with them because at the end of the day our you know our brand our value is not just the infrastructure of you know the money changers and the

routes and and all that stuff. The other thing is that we have we have the trust we have the brand we have the customers we have the brand awareness people know us and they know they can trust Western Union. So, you know, it's a little bit like when you see the sports books announce, I'm going to create a prediction market, right? Like, why are they doing that? Because they realize, oh [ __ ] this is where it's all going. But at the end of the day, you know, I'm DraftKings. I'm FanDuel. I have the brand. I have the credibility. I have the customers already captive on my platform. I might as well use this as a way to potentially allow myself to not go quietly into that good night. So I I suspect that this is a lot of what they're seeing is that they're probably

focusing I mean I don't know I'm speculating. I'm assuming that they're focusing these cards in corridors where they already see a lot of stable coin adoption and they see their market share decreasing and they're saying okay let me let me go get a piece of that. And the advantage of course of rain is that by using rain infrastructure for stable coin back cards um they can split some of the interchange. So it might not be as lucrative for them, I don't know, um as it is for them to be running their traditional Western Union payments. Um but it's a lot better than having dwindling, you know, market share going to zero. It's like, okay, well, you know, I I it's still pretty good economics to be able to be a card. It's the reason why you have all these neo banks who are, you know, launching cards

on top of Rain is because they keep a huge chunk of the interchange. It's a it's a pretty good business model. Um and so it's it's very much um it's it's the business model of Rain has been such that they actually allow by their nature and by the economic split that they offer to these uh uh card issuers that actually you can build a business on top of Rain. It's not one of these things like, you know, it's very hard to build a business on top of Western Union, a scaled business, you know. Um, but you can absolutely build a business on top of RAIN. It's part of the reason why they've been growing so fast is that they share a lot of the economics back to the neo bank or the or the issuer.

>> Yeah, it it feels like there's this value acrruel story. Part of the value acrruel is or the value proposition is the efficiency element that might create some sort of productive value and then they're going to charge some for that value. But if they leave a little bit or enough then another business can come in. They can also take a share of that productive efficiency and charge their own spread and then therefore you know then the entire productivity gets monetized accordingly. Um and it's smart for Rain to do that because then they end up with a whole market on top. It's like I I was I forget where I was the other day, but you've got sports cards, you got all these Pokemon cards where now there's markets on top of the underlying, you know, infrastructure, if you will. Uh, and it and you know, it

creates a whole secondary market effect as a result. Um, and so I I I also want to just check, we don't have to spend a ton of time on this, but I've been hearing more about it. The most recent one was Wells Fargo because a lot of like bigger institutions, specifically banks, are getting into this game and a game I use broadly with like tokenized deposits, stable coins, feel very similar in the way that these institutions are entering the market. How different is a tokenized deposit to a stable coin? What does that allow a bank to do versus just, you know, why are we seeing banks go into the tokenized deposits route versus launching Wells Fargo stable coin?

think that tokenized deposits are basically completely uninteresting. >> Okay, >> so what is a tokenized deposit? A tokenized deposit is, you know, normally if you, let's say I'm a Wells Fargo customer, you're a Wells Fargo customer, I can send you money instantaneously. And the reason why it's instantaneous to you as opposed to, you know, a customer of JP Morgan is because it's just moving money around on the internal bank ledger, right? No money has left the bank or entered the bank. So there's no interbank communication that's happening. So in that world, if I'm sending an intra bank transfer, it's instantaneous. Okay. Um, so now instead of with a tokenized deposit, instead of going to my Wells Fargo thing and typing in your number and then sending you money and it going to you instantly, now

I can do that on a blockchain. But a tokenized deposit, every single holder of a tokenized deposit must be a customer of that bank. >> Okay? So it's simply a different database for the intra bank uh transfers >> of a bank. That's what tokenized deposits are. >> Okay. Do you I agree with you that specifically is totally uninteresting. But do you think that this is potentially a stepping stone to an interbank transfer if we get some sort of interoperability between a Wells Fargo tokenized deposit network and a JP Morgan Kexus?

still private permission chains but not coconut just intra bank. >> So if you're doing that if you're doing intraank settlement instantaneously right if banks are settling instantaneously with each other um that is potentially more interesting for increasing the efficiency in the correspondent banking system. However banks can already do that they choose not to. It is not it is not a failure of technology that the banks cannot settle with each other instantaneously. Right? The fact that banks settle up at the end of the day with each other is a choice they are making in order to make their grossing of transfers between each other more efficient, right? Like they actually prefer to allow transactions to accumulate over the course of the day

because they sort of net against each other. It's like, okay, I would have sent you some money, but then you would have sent me some money. I would have sent you some, you sent me. We're essentially extending credit to each other effectively for like the net payments. And then at the end of the day, okay, well actually I sent you, you know, 4,000 transactions. you send me 5,000 transactions and the net actually is that I only send you you know a couple million at the end of the day because you know there's debits and credits on both sides. That's what banks do with each other, right? They don't have to do that. They could be settling with each other instantaneously. They're choosing not to because it's more capital efficient. So the interbank settlement system like you know are they going to be willing to settle with each

other using each other's tokenized deposits? It's not obvious that they would. They might say like, "Well, actually, why don't we just keep doing what we're doing and instead of like sending each other tokenized deposits, instead we just keep kind of netting each other on a piece of paper and then at the end of the day, then we settle with tokenized deposits." >> But if you're settling at the end of the day with tokenized deposits or with actual bank deposits on over Fed wire, who cares? At the end of the day, you haven't improved anything. You haven't made anything more efficient. So, it's a choice that banks are making to settle this way. So I I can imagine this convoluted story of tokenized deposits as stepping stone to interbank blockchains and then tokenized equities and tokenize everything, right? And then everything's on chain. Everyone's more capital

efficient. What and I can kind of picture that endgame. I don't know exactly what it looks like, but it sounds like a nice story. >> When you think when when you think of an endgame, like what what do you think of? I mean, capital wants to be free. It wants to, you know, move and and and whatnot. Do you have an endgame as far as like how these things if we do move just more capital onchain steadily over the next 5, 10, 15, 20 years? What is that what does that look like? >> I look I would say tokenized deposits are not really moving capital on chain.

>> Um tokenized deposits are not free. They are not open. Not everyone can interact with them. Only customers of a given bank can interact with them. In which case, what can they do with a tokenized deposit that they couldn't do on the Wells Fargo website? The answer is basically nothing. >> Basically nothing. It it enables no new functionality. It doesn't enable programmability. It doesn't enable, you know, almost anything that you would care about. You can't create borrow lend market. I mean, maybe if it's internal to the users of Wells Fargo, but there's a good chance that Wells Fargo would be like, "Wait, you're creating your own money markets on our deposits? Well, we have a money market product that we have, so you can't do that, so stop it."

Um, so like the reality is that this is just not where you should be looking for, you know, the the the kind of open permissionless innovation that blockchains create. This is intentionally a kind of middle ground. You know, it's like an intranet. It's like a it's like a, you know, it's like a walled garden. It's like, okay, you can go on, you know, JP Morganet and look at websites that JP Morgan created. Who cares? That's not what the internet is for. that you you've enabled none of the value creation that the internet makes possible, right? Like if you think about oh I can ooth off into this website using JP Morgan you use plaid to like connect this to my okay that is using the connectivity of the internet that's kind of more like what stable

coins are okay >> than what tokenized deposits are. So stable coins are permissionless. They're open innovation. Anybody can build anything on top of a stable coin. They settle instantly no matter where they are. They're non KYC. They're not a walled garden only closed to the the users of this particular bank. That's why stable coins are so disruptive. So there's all look there's always been this kind of like fake crypto stuff you know whether it's like enterprise blockchains or whether it's you know uh you know ins you know insert all the various you know corda and R3 and all these cons you know consortium chains from the past there's always been this kind of weak version of the technology >> and the answer it's it's this compromise

that never goes anywhere never works never built anything of value so in the long run. We all know the answer at this point. Even the US government knows the answer, right? If you listen to what Secretary Besson is saying, you listen to what Trump is saying, they know the answer is stable coins. >> The bill, the Genius Act, is about stable coins. It's not about tokenized deposits, not about CBDC, not about any of this other stuff. It's about stable coins. I I think we're at the point now that the industry understands it. Even the government understands it. The banks are the last ones to get the message because it's not in their interest to do so.

>> Yeah. I and I want to talk about uh OpenUSD from Tempo and there's big consortium around open USD and whether or not you think it it it you know has a real shot at becoming a a majorly adopted stable coin. The last thing on on this that I I I just want to talk to you about is like how the permissioned blockchain ecosystem that you're absolutely right. We've seen time and time again. It never creates anything of value. How that complex has evolved because I agree things like tokenized deposits totally uninteresting in their current state. Maybe they change probably they don't. But then you've got something like a DTCC network. We don't know exactly how this is going to look but it feels a lot more interesting. it feels a lot closer to the reality that

we all know is ultimately the winner here, which is the public internet of blockchains. How do you parse through like the permissioned institutional chain consortium that seems to be doing something of value versus the ones that aren't? >> So, to be clear, I don't know what the DTCC is doing. So, I I really don't want to comment on something of which I have no knowledge. Um, and I'm not trying to say that every consortium chain is worthless or every single enterprise chain is worthless. Very clear there's been a phase shift over the last, you know, three, four, five years of people realizing that the value of a lot of these enterprise chains is the connectivity to the wider market, right?

It's like, okay, if you are creating assets that are then exportable on other public chains and you're connected to other public chains and you're interoperable with other public chains, that is where value is created, right? It's through the communication, through the openness, through the sharing of state and information that you can actually get some value from putting something on a blockchain. Um, if you were just putting something on a blockchain to say, "Hey, our old system sucks. Here's a new system. It happens to be a blockchain." That may be an improvement, but it was not necessary to use blockchain to get that improvement. You could have just created a brand new database, and maybe you couldn't get the funding for it or couldn't get the budget for it. You know, in principle, obviously, it's possible to have a real-time growth settlement system without a blockchain. There are many

real-time growth settlement systems around the world. They don't use blockchains. >> So, or they don't all use blockchains, I should say. Um, so all all of that is to say, you know, I I um I do think there is a changing of understanding from a lot of the enterprise about why about how you need to architect these systems to create value. So that's why I I don't want to claim that I'm blanketly bearish on all of these things, but I think tokenized deposits is kind of the apotheiois of the wrong answer. >> Yeah, makes sense. Um Yeah. And and you know, as as we're sort of I mean then then just to contrast that with like Robin Hood, right, which is obviously, you know, one of the largest financial institutions at this point, but is able to do this in a chain that has

interoperability and composability with ETH. It's an ETH L2. Would you say Robin Hood has gone about this the right way? >> Yes, decidedly. And it's very obvious from the way it's getting adopted, from the way developers excited about it, the way you see TVL flowing onto that chain. Like that's the right answer. And I think increasingly people are going to start taking their cues from that. Same thing with Tempo, right? Tempo obviously the right answer is that it's open, it's permissionless, everything's built out in in open source. And when people see that, oh, they see, you know, Stripe, this hundred billion dollar plus company, Robin Hood, hundred billion dollar company, they're doing it the right way, and this is why they are good at what they do, and they have their finger on the zeitgeist.

>> Yeah. Um, and since you mentioned Tempo, uh, OpenUSD from Tempo and Stripe, uh, I mean, they had a massive, uh, backing of partners, um, at least on the initial announcement. And then there was actually uh some there was a friend of the show from Lorenzo from Arc Invest who who has some great uh kind of like medium-sized Twitter posts as of late uh commented on the Visa earnings call. Someone asked him about OpenUSD and uh he said, "Well, we're sort of, you know," he kind of took a step back and wasn't really gung-ho about OpenUSD.

We're incredibly neutral. We want to support all of our stable coin partners. And so it kind of seems like all the partners that were listed on this grandiose announcement, you know, they support it, but just as much as they support Circle and Tether and some of the other stable coins out there. And so how real do you think >> OpenUSD is? And how much of a shot do you think it has at unseeding the du the stable coin duopoly? >> So I I've I think I've echoed the core point that it sounds like Lorenzo made um is that very bearish consorcia. I think you know if you remember way back in the day USDC was supposed to be a consortium and it was basically just a consortium of two at the end of the day

which was Circle and and Coinbase. Um but originally center which was the the organization that issued USC was supposed to be a consortium with many different players and that went away. Um so what you're seeing with this consortium if you remember early on there were a bunch of Korean companies that were supposed to be part of the consortium and they're like what the hell is this? We didn't hear about this. We didn't put our name on this. please remove us. Um, and you're you're hearing increasingly from a lot of the players that like they kind of it's like signing a petition. You're like, I guess I'll sign, you know, like why not? Obviously, I'm not putting any money up. I'm not doing anything. Um, so it's a free option, right? And you're always going to exercise the free option. So, I think the reality is that, you know, this

thing is basically being quarterbacked by Bridge uh or slash by by Stripe. That seems to be the reality as we've, you know, the dust is cleared. Um, now look, Stripe is a real player. Uh, but of course, you know, Bridge already had a stable coin, didn't get a lot of adoption, wasn't really a significant player. And lastly, look, you just think about base rates, right? Like the um the duopoly is really, really powerful. Most duopolies do not easily get displaced. That's why we call them duopolies. So, of course, it's long odds for anyone, no matter how successful you are, to try to displace that. Um, does OpenUSD have a shot? Has, you know, it's not zero, but we kind of got to see the game get played. So, like, what do they, you

know, it's not live yet, so let's see it go live. Let's see what they have up their sleeve. It's hard to bet against Stripe. They're obviously very good at what they do. Um, but it's pretty clear that like, you know, this is right now it's giving Libra vibes is what I would say. >> Yeah. Yeah. Um, you know, Circle and and uh well, USDC and USDT had some very early mover effects and, you know, kind of grew with the industry as it grew over the last few years. OpenUSD very, very new. But I do just find it I find it cool and and sort of a nice experiment that we have Tempo which is fundamentally a payments company putting this forth into the market. Whereas USDT was born out of Bitfinex and USDC sort of born out of Coinbase. Both of those

exchanges aren't really coming at it from more of the payments angle. Now USDC and USDT are trying to get into the payments game whereas Stripe already has such a big piece of the market share in the payments game. It feels like there's going to be a different path to market. What what do you think there, you know, kind of path dependency is going to play a a role here? >> Possibly. Um I think the reality is that very little payments in stable coin settles on Stripe. Um Stripe is predominantly a card processor. So, uh, you know, obviously they're very bullish on stable coins and they are trying to skate to where the puck is going as as, uh, as they should. They're very very bullish on stable coins,

>> but it's not a meaningful part of their business right now. And it's just not, you know, these are not the merchants that are trying to integrate stable coin payments. These are just, you know, they're just card processors. That's that's most of what why they integrate Stripe. So, um, I I think we should also be wideeyed about the ma there's there's often a lot of magical thinking about large companies. You know, Stripe is a large company. Obviously, they're betting hard on stable coins, but they're not betting that hard, right? They have a core business. They're doing really well. They're crushing it. Um, they're not looking to disrupt their own business. They're not looking to push people away from credit cards. they're not look, you know, like they'll take the market share if it's there, if it's presenting, but for the most part, like this is just not how stable coins are

mostly moving. Um, it to some extent, if you're talking about stable cocoin payments, most stable coin payments are happening through something like RAIN rather than people trying to settle at like some kind of stable coin checkout. That's why Rain is growing so fast. That's why the stable coin park business and all these neo banks are growing so quickly. this is a an affordance that consumers are very comfortable with and that they like and that merchants already adopt. So this is a big part of the reason why okay if that's where we're going that this is basically these stable coin back cards where most of the settlement is coming from then Stripe doesn't have to do anything right they're already processing a lot of these cards so you know whether stable coins in the back end or not from their perspective it's just you know Visa

cards a Visa card >> and so maybe you can just help unpack this are are Rain and Stripe competing with each other it doesn't sound like it it sounds like more so Stripe is helping facilitate the processing of cards. Rain cards. >> Correct. So, Bridge does have a competitive product with Rain to try to issue cards out of Bridge. So, they have a competitive product. They're very small player relative to where Rain is today. Rain is growing and has probably I don't know certainly more than 50% market share in this in this uh space. Uh whereas Bridge right now relatively smaller competitor in that space. Um so they are competing directly on that front. But on the processing side, I mean, you know, RAIN is, you know, ultimately used to issue the cards and,

you know, it's like the kind of technology and the and the program manager for the cards. Um, Stripe is what the merchant integrates to process the cards. So, if you're, you know, some Shopify or whatever or some, you know, checkout thing, you integrate Stripe and then you use that to process the cards, right, that you're getting. And it's all the cards, not just grain cards. >> So, issuance is a totally different game. That is where rain is probably predominantly playing and that's the space that's growing like crazy within stable coins, not stable coins at checkout. >> Yeah, got it. Um, yeah, make makes sense. Um, hib got a couple more minutes. We got a couple questions in the chat. One of them's on uh all of the cold storage self-custody debacle things that have been happening recently. Um,

>> do you believe that cold storage devices are dead? This is a question from our friend New Type Trader. Is it now unfortunately better to keep your Bitcoin in an ETF uh or sell your Bitcoin for something that is quantum resistant? >> That that third question sounds totally different. But uh >> yeah, that's a very that's a very different uh question. Um okay, so number one, I would say look, if you are an ordinary person, you should almost certainly be using some kind of third party custody. Um the reality is that there's just too many foot guns for ordinary people to be self-custodying.

Um this has nothing to do with cold card. This is just a general rule of thumb. Um if you own Bitcoin ETF, obviously they're very low fee load. Um or if you just hold assets in an exchange or whatever. Uh I mean look, if you own the Bitcoin ETF, basically you're holding it with Coinbase because you know Coinbase custody does the custody for the for the ETFs. So um the answer by and large is probably if you're an ordinary person you should be doing that unless you have a good reason to be self- custodying. Um and there are good reasons to be self- custodying but just you know because some Bitcoin maxi on Twitter told me to is not a good reason. Um so now the reality is that Cold Card was a very small vendor in the Bitcoin hard hardware wallet space right so clearly they had some very very bad

security lapses. There's been a lot of reporting now about, you know, their coding practices and the fact that they did probably almost no AI hardening given that this vulnerability was found for a couple dollars of AI spend. Um, so that tells you this was kind of a delinquent vendor. Um, they have like 1 to 2% market share of the Bitcoin hardware wallet space. Like this is not this this is not a major player. So probably what it does mean is that you should only be using the biggest vendors when it comes to security critical stuff because they can afford to spend the money to make sure that their stuff is absolutely robust with the latest generation of of uh you know kind of cyber security scanning from AIS. Uh, but you long story short,

you're probably pretty safe use holding the Bitcoin ETF, but that doesn't mean look, throw away your your ledgers and your treasures and like all this stuff is [ __ ] I don't think that's true. >> Yeah, you make a good point on the uh, you know, the the largest custodians are the ones that are the most battle resistant because they have the most resources deploying their cyber security, ammunition, and artillery. So, makes a ton of sense there. Uh other question is how big do you think Rain can get guess in terms of TAM or market cap?

>> Yeah, look I mean we're investors. Um I think Rain it can potentially be one of the biggest companies in crypto. Um I I I don't say that lightly but I think if you just look at the TAM of how much of payments can be potentially run through rain cards obviously you know card is a huge business and um if you just think about you know once upon a time we imagine that stablecoin payments were going to be happening through you know you go you see these images in like Venezuela or Turkey of like you know some some corner store has like a we take tether sign in the window right >> that only really happens in the most [ __ ] up countries you you know, there's places where there's very high inflation, very low state capacity, you know, basically like failed states are

where you see this kind of thing happening out in the open. Um, the reality is that most places even that have high inflation, they're they don't have merchants openly taking stable coins and it may not even be legal for them to do so. Um, it's it's it's in these places where you don't require the two-sided market to cohhere where instead users can decide, okay, I have stable coins on the back end of my card, but every single merchant takes this. Every e-commerce platform takes this. You know, if I'm buying something from from uh, you know, AliExpress or Alibaba or I'm buying something from Amazon, I can still use the same card and the merchant never has to care. Nobody in the middle has to care. Stable coins in the back end, but everything on the front end is exactly the same. And the reality is like that we've learned, you

know, it's not it's not like an ideological thing. We have learned that like that is just way more effective for adoption for the stable coin stack. Uh and still maintains a lot of the efficiencies of stable coins create. So I think the reality is that look at least in the beginning this is the thing that is going global that is papering over the world. Um you see it growing almost everywhere but the endgame like what is the endgame? The endgame that I imagine is that look, at some point, let's say you are Amazon, right? And you see, okay, here's here's a card that somebody just typed in. Um, you know that a lot of people use rain cards, right?

>> So, you see this card come in. Um, and you ping Rain's API. You say, "Hey, I just saw this card. Is this a rain card?" And Rain's like, "Yeah, yeah, this is a rain card." They say, "Okay, cool. Well, um, why don't we just not run this through Visa? Why don't we just run it directly like just settle in stable coins? you send me the stables and we don't bother with all the Visa stuff, right? In that world now all of a sudden you are actually using stable coins as an alternative settlement rail. >> Mhm. >> That is the endgame. That's the endgame. The endgame is that stable coins actually disintermediate the payment networks once you get big enough, ubiquitous enough, and you have this alternative payment system. Now, we're very, very far away from that. And to be clear, that's not going to happen

anytime soon. But you know, back in the day, we used to talk about how like, man, why don't Apple Pay and Google Pay just run on stable coins and cut out all the traditional payment rails, right? Like that's why it's there. It's open. It's permission. You don't have to charge. There's no gatekeeper. There's no nobody charges rent on using stable coins. >> It's actually neutral infrastructure. Um, Rain is the first thing I've seen that can get close to that. >> And that's a big part of the reason why I think it can be an absolutely enormous company. >> It's huge. Uh very cool to to actually see this get uh put into fruition. Um see man, absolute pleasure as always.

Last one I got for you actually is uh we got Jesse from uh from bass coming up next and I'm just curious if you have any questions that I should ask Jesse. >> I my biggest question is how's he feeling? I know it's been uh he's gotten he's gotten his ass kicked over the last month or so. So um I'm hoping he's uh you know got his uh got his mojo back and he's feeling positive. >> Yeah, same here. Cool. Hib, you're the man. Appreciate you coming on as always and uh we'll see you again soon. Thanks team.