Reimagining Money Movement: Open Financial Rails for India

Transcript

[music] [music] Hi Sundep. >> Hello. Hello. Welcome to India and I would like to proudly say uh everyone to I mean I I mean I welcome you all to India and to listen to us and we will be discussing a lot about payments and how things can be made easy by Polygon or maybe any other platform. So welcome sep welcome to India.

>> And uh are you guys sleeping? Okay. So as you as our moderator introduced SEP as founder of Polygon. So he is the person who introduced first Indian cryptocoin that is by the name of Matic but now known as Polygon. and he has been doing a lot of uh he has brought a lot of initiatives to the world of crypto and now payments. So we'll be discussing a lot uh discussing about the same to sep and we'll have a lot of answers from him which will give us a lot of clarity about the payments. So sep to start with I would like to ask what is polygon

doing today and uh why polygon is moving to payments. >> Yeah. So, you know, Polygon's history has always been trying to get like real world use cases like you know, we started obviously like in the blockchain space and you know there's crypto involved and you know all that stuff like you mentioned about Madic Paul whatever but uh primarily we like the you know the goal for the organization and personally for me also has always been to bring mass adoption to blockchains and How do we make blockchains mainstream? And due to that like Polygon's name to fame or claim to

fame in the in the global markets has been um always related to the large institutions like you know from biggest of the banks to uh you know the the the consumer applications Reddit, Instagram like they you know doing their web three um you know kind of journeys on Polygon. So um and then finally in the last like 2 years uh the stable coin um regulation has uh you know cleared up in in US. Uh the uh genius act in US allows now stable coins at a regulated level. So we finally realized that okay now we we have one use case which is actually

going mainstream globally and uh we should go head first into this and just like you know build very deep over there. So that's what polygon uh you know strategy wise we decided one and a half years back and since then we have made major strides in that like we are now a regulated US payments company. We acquired MTL licenses which is not like you know the MSB license like are pretty pretty light level licensing. MA MTL licenses uh are very serious money transmission um you know rights that gives uh that gives you and we are now working with some of the largest institutions in the world uh fortune 500 companies to to to you know enable them to move money uh you know across the

globe. To give you an example uh you know think like a company like Ford or Ferrari right and they are selling their cars in 100 countries probably right at least 50 countries and their treasury is managed at one particular geography they want to like this simple use case where they want like when they sold let's say uh 1 million cars in Nigeria but they want that money to be converted into dollars and moved to US right how do you get this or get them like this central level control on treasury. Apparently in the in the traditional banking system it's super hard and you know this crossber money movement is something which stable coins solve very you know

very nicely and that's the use case we are uh you know focused on. So crossber money movement is is the core focus area for polygon right now >> and very quick as well. Yeah, absolutely like it it's almost instant right like uh you know all so what we are like now our product is called open money stack right uh so it's the polygon's open money stack where basically where which is chain agnostic you know it has multiple chains integrated obviously polygon chain is the is the is the highest priority but we want to meet the customers where they are right so if a customer has money on let's say solana or ethereum or any other chain we are we allow them to interact with the system uh seamlessly and all these large

institutions have to do uh or even like the fintech apps neo banks where customers or they themselves they say that okay I have money in this form whether it's bank cash whatever form they have and I want this money to move from point A to point B right and you know the open money stack facilitates them you just hand over the money using APIs to open money stack and then open money stack moves that money across the globe at a much faster rate. >> So it is something like we have UPI in India but your product is cross border.

>> Yes. >> Yes. So UPI for example and and stable coins have not been able to penetrate domestic payments that much. >> Okay. except like you know few countries where the currencies have been really severely hit by you know their inflationary pressures like in Latam or some parts of Africa but generally stable coins uh have not been able to you know like they are not that that much of a utility especially in a country like India for example where UPI is so smooth and you know you can do all the domestic payments from small amounts to higher amounts um so that's why like so so for domestic IC payments the stable coins uh don't work as of yet like I believe that u we will see a time

where uh we we will have uh you know local stable coins across the geographies and u most of the countries will start focusing heavily towards creating their own stable coins at least CBDC's also some of the countries we already know we are also working >> also working on >> that you know they will allow CBDC's But uh so so because you know there is a heavy amount of dollarization that is happening of the economies and average individuals in many of these countries are now thinking in terms of dollars which is which I believe that the you know the local governments uh and jurisdictions will stand up against the dominance of the US dollar. Um agentic AI you know is enforces that uh

dominance even further. So I do believe that you know in the next 3 to 5 years in fact much earlier than that we'll see this resurgence of government standing against the st dollar stable coins and saying that you know we are not allowing this or this is disallowed in the country and then you use uh the local stable coins um uh and all that. So then maybe domestic payments, stable coins can pick up. But right now the stable coins most uh you know kind of use case is barring the crypto native people uh is around the is the around the crossber money movement.

>> So you think that as you know UPI is already there. So blockchain will add some benefits to it. So not directly to the domestic payments of UPI but let's say you want remittances like right now like for example India's all uh you know top rem remittances apps are generally talking to us [clears throat] even the banks are talking to us and uh you know right now in many corridors um it it cost you around 2% to 5% to you know send your money from one jurisdiction to another and plus it many times it takes uh a long time especially if the B2B payments if they are coming via swift swift route uh it can be 3 4 5 days and you don't even know the state

status like it has happened for me in the last uh you know 2 months where I sent two payments uh one into India itself and then you know for 5 days the you don't even know what happened to that payment and then you know 5 7 days later you you realize that the receiver bank rejected the payment because of some you know compliance uh thing for the local partner, right? So um you know with stable coins that can be much more transparent like what exactly is happening on that plus it can be much more instant right like so >> but many times when we send payment through swift we use we need to use a intermediary bank as well >> correct correctly >> so it it is also taking some time and as

well as consuming some money from the remittance >> 100% and uh swift is essentially a messaging system only right between these uh intermediary bank and definitely uh many times it u you know it obviously all of these middleman gets added and then you know the money or the fees that the users have to pay. So for so coming back to your original question that uh the how this can enhance UPI is not inside India but the when the money is coming for people from outside like people are getting paid like there's so many >> import and exports this will help payment coming across borders. Yeah, import export and we India has a large number of foreign you know workers who basically work for the foreign companies

for them payroll so many other things it can uh you know make much better. >> So how do you see the stable coins they are still they still sound like cryptos so will India be also encouraging stable coins in times to come? I think like the India's you know movement in the stable coin direction has been very slow. I'm talking from the regulated regulated regulators perspective. Locally a lot of stable coins are used like you know I mean uh if you I keep hearing that there are specific industries for example uh somebody was mentioning textile industry is very heavily using stable coins uh

you know for for payments but then obviously they are in the gray area and um so you know like yes like the stable coins have a big branding issue and I think crypto industry as a general has a big branding issue right like you know when you say like you know you you yourself mentioned at the introduction that he launched the first crypto coin from India right so first of all like you know I did not the first cryptocoin but then the crypto coins crypto coins are also associated primarily with like you know some sort of like you know scammy stuff like all that whereas these tokens are like ex you know network governance tokens so so you know yeah I mean uh the whole space has a branding

problem everywhere like it's kind of like hedge funds right in US for example a lot of hedge funds have had like a big break you know kind of fallouts and all that right like that Bernie no not the uh what's his name that the biggest Ponzi scheme guy right I'm forgetting his name so huh >> yeah yeah yeah yeah so Maddov uh so you know due to that like the hedge fund industry as a whole has like little bit bad branding right like in the in in Wall Street similarly crypto globally has this bad branding and plus we keep getting hacked right like you know we saw Binance and before that like you know all the top exchanges keep getting hacked everywhere so the branding is a

very big issue with stable coins also yes because in India for example they are like you know we want to do it I have heard like some top regulators saying this that we want to do it but this is this stable coin like find me a different name so you try to say like to this is tokenized INR tokenized currency you try to convince them but yes branding is a issue. Uh there is one question which most of uh us want to listen because all the GenZ's are carrying some amount of uh USDT or maybe stable coins whatever you name them. So they are getting freezed because maybe some wallet maybe layer 1, layer 2, layer three is okay but layer 8 is also part of that chain. Maybe some gray money or some black money is coming. So

how to save yourself from that? How to protect your wallet? But I mean that is something which a lot of people are facing these days. Tethers are getting freezed. >> Yeah. I mean I would [clears throat] this is a tough question because I think that the the tether that are getting frozen are like most likely they interacted with some cash network or something something uh shady there has to be in the chain or like you know if they had money on Binance and whatnot maybe that uh you know because Binance also has like very strong travel rules so exchanges also ask for that.

how to save it's it's a hard question to ask like if you have like a compliant money then it will it should not get affected but uh but yeah like that that's that's a that's an issue especially the gray area I think like the only possible outcome or you know it could be better is like if India has like better regulation so people know what they are doing what they are allowed to what they are not allowed to that might be a little bit helpful but yeah >> uh sep you have been talking a lot about open rails. So what does that mean in practical in practice?

>> Yeah. So I talked about the open money stack, right? Like you know being polygon like we recently like for example added both Solana and Tron into the open money stack, right? So the the purpose is that we want the customers basically to feel you know extremely smooth uh you know transition into this journey right and then with them if they if somebody already purchased some stable coin on Ethereum main chain or Solana or any other electron and all that like they should not be like okay we cannot use open money stack like you know we have to bridge our money from this to this. So we want to have them like very seamless experience meet the customers where they are and provide them the money movement and uh you know obviously we being polygon like you know

we are the liquidity syncs that we are creating the uh you know kind of all the uh the chain level uh advancement that we have done in terms of like increasing the TPS reducing the uh the block times and all that like people will get like much smoother experience also on on polygon and hope is that uh you know more and more of this activity moves to the polygon chain. >> Uh so out of your what conversation we are having regulators worry about losing control. So how do you address that?

>> I mean the only way is is generally globally that has worked is uh is education. Um you know in US basically people are able to do lobby lobbying also. So a lot of large organizations have done a lot of lobbying to get it sorted. In India unfortunately that system like that is not there and you know in India for example a lot of you know regulated institutions because it has been suppressed so heavily. So the regulated institutions have not uh you know ventured into crypto also. So it's it's a little bit harder I think like in India the only way is uh and uh uh is is for the regulators to have their own journey into it and you know admittedly

that journey and the experimentation has been also slow. You know what I would expected what I expected from the government is that you know they will build sandboxes and allow u you know these things in incremental stages and as they get confidence then they then they increase. I'm happy that like for example government of Maharashtra is uh looking to do uh something in the tokenized real estate that is also a good uh beginning. I think stable coin and currency we are very protective about it. So you know it's it's very hard that you know we'll be able to get a consensus you know in short time maybe another thing that we have tried uh especially for example in India is to

make CBDC open loop right so so that like you know they see that okay there is adoption coming in from here and it is getting used as almost like a stable coin and then their confidence builds up and they allow it so yeah I mean it's going to be a longer journey for countries like India where regulators are going to learn you know slowly on that. >> So what do you think what uh role can India play in shaping global financial infrastructure? >> I think India is already playing a very big role in that like you know UPI is a very big example uh in some time back I was in Bhutan and I could like actually tip the the driver with UPI right and so you know many of these countries uh are

adopting UPI. So India as a whole is playing India has a very good image for example in the in the fintech sector like I think our banking and finance sector in terms of credit card protection and all that we are much better than uh you know other countries for example in India I think it's very rare that you can use the card without like you know this your OTP and multiple other checks are implemented on top of it so uh India has a generally a very good reputation on that and I think like the biggest contrib contribution from our side is is the is the talent uh that is working across the board in in large companies like you know from the stripes to you know uh polygons and solas and everywhere. So I think that

that talent is the biggest contribution and um and I think like uh remittances for example is a very big corridor and if somehow stable coins as stable coin providers or the stable coin payment providers uh especially on the regulated side if we are able to crack the remittances sector u in some form with stable coins in India I think that can give the government a lot of confidence. Why? Because remittances is bringing money in. So government is has very low guards in bringing money in. Bringing money out, taking money out is a very big issue right like that you cannot touch. But that's what we have been also thinking that you know can we create like uh some even if sandboxed experiences where we can power some

amount of remittances into India uh and the government sees that okay this money is coming in a compliant way uh with proper regulations and everything and then maybe it gives them some more confidence. So I think uh I have a final question here. Uh what are what you think is the opportunity for people sitting in this room? Okay. Maybe in terms of blockchain, maybe in terms of remittances or whatever you may like to address. I think for the people who want to be specifically in uh crypto I I would say that you know the payments and uh the tokenized uh you know as RWAS

have a big uh you know area um but generally youngsters don't want to get into these like regulated uh businesses because that requires like experience and all that but if there are experienced uh you know kind of like entrepreneurs I think they should try to explore how they can tokenize different kind of stocks and commodities in India. Um and and and you know try to but but admittedly it's it's harder. I have always said that you know from India it's very easy in crypto space it's it's probably the best space to build for the world. Um and also like for for for very young crowd like I think I don't need to you know tell this but AI for example is like a very very big space. So intersection of building crypto

experiences, reducing crypto complexity with AI uh and and you know going after core AI use cases also like I think you know India Indian entrepreneurs should do you know more on that. So I think I'm through with all my questions. If anyone in the audience may have a question we still have two minutes to address. So any one question will be answered. Uh gentlemen please introduce yourself first your name and then please ask your question.

>> Yeah so my name is Rahul and uh I'm from Ledger Pay and uh we uh ledger pay is basically we let users on and off stable coins. So as you mentioned that uh test textile industries is gaining a stable coin traction. So I had so I just wanted to know which other industries in India are having like are going through crypto adoption.

I mean from text apart from textile specifically industries like you know these are all like local payments that people are using but I would I would say that these payment generally are in the gray area like you know I mean they are not like uh people who are trying to bypass the bank banking system so when you are doing this uh you know on-ramp off-ramp also I would very strongly suggest that uh you know you you do self-compliance even though you you know you might not have uh the specific rules provided by you. You do like self-regulation very heavily on that because recently also last two weeks itself like we have seen that uh the enforcement directorate has uh you know

kind of like uh taken action against some of the some of the providers. So you know the government is very sensitive on this. So my recommendation always is that when you are doing anything related to on-ramp off-ramp you know my suggestion is you do stuff where money can come into India like especially you know if you can get some regulated and compliant money from external companies countries to India but don't touch too much uh you know where you are moving money out of India that could be uh you know big red flag um and uh you in terms of industries like a lot of people who are doing export imports and you know especially

people who are running businesses in in in different geographies Africa um and Middle East and all that they do uh you know they they use it but I still don't know of like formal channels uh where uh you know this can be done in a compliant way there are like two three you know compliant ways like you know SNRR and some other like you know banking kind of systems that are there which you can do it with which you can do it. We are also exploring one of the paths to you know get money into India in a compliant way into a regulated like bank like you know large bank like SBI or SDFC of the world and all that and then only touch that because it's a very sensitive topic like I I I would say so even if you want to

go after those uh industries uh you know be very careful on how you are doing the compliance. >> Thank you. We have time for one last question. Hello Sibai, I hope you're doing good. uh after listening all this and uh being a content creator who's talking about web 3 and finance, we really celebrate how tokenization uh genius act and all the clarities act and whatnot is paving way for cryptos and everything in America and uh you have been very uh aware and you've been talking all these things that maybe this is a zero sum game because in India there is on the other side of the of the scenario there is a there's a very there's attention about the crypto cards

and the gift cards and whatn not. So is there a way where both the nations and the industries and the economies can find a common ground or is it a zero sum game where one will lose another will not I don't think it's a zero sum game uh but you know the best the only way out for this is like the regulators will slowly uh you know learn and and implement these things uh you know US doing this and then Japan following the suit uh and then many other countries like I think Middle East and countries are also uh doing it. Latam is very positive towards it. So I think that

will change the scenario but it will be a slow diffusion into the mainstream system. I think China being very anti-crypto also gives uh you know India a lot of you know kind of like um kind of example that okay they have been able to control it but China is also like using Hong Kong as like a sandbox uh to allow this you know India also has gift city so India should ideally do more to allow uh stable coins over there um so yeah so that's the only way is like is like a slow uh you know grinding and learning uh into the space and then you know maybe some things will happen but it will happen the thing is that when it will happen we don't know whether it will happen in in 5 years or it will it

will take 10 20 years you don't know in India but there's no stopping stable coin that I think that much everybody can agree >> all right thank you >> I think we need to [music]