Sveinn Valfells: Monerium – Regulated On-Chain Euro (EURe) #503

Transcript

welcome to epicenter the show which talks about the Technologies projects and people driving decentralization in the blockchain revolution I'm Sebastian I'm here with fadeka Ernst today we're speaking with Spain valve house who is one of the founders of monarium monarium is an issuer of Euro e which is in the authorized and regulated Euro token for web 3 and it's available on polygon ethereum and gnosis and it's an interesting product because it allows you to very easily onboard and off-board to any Euro European bank account and so we're really excited to talk about monerium how it works the regulatory framework in which it exists stable

coins and all kinds of other things so it's fine thanks for joining us today thank you so before we get started maybe getting a little bit of background on yourself and how you became a founder of scenarium well uh I was always fascinated about technology and science when I was young so ultimately I wound up doing a Physics degree in experimental physics but I also complimented that with uh an engineering degree at Stanford essentially and when I was a Stafford I it was back in the late 90s it was the um you know.com there's a.com uh boom and then a subsequent bust I I was messing around

with cryptography for various reasons I was just really really curious about so I had the foundation in cryptography and then um going back to Europe uh started working for uh companies there in Tech and starting my own companies there I was really curious about the financial system and living in London it 2011. I'd been agile investing and investing in various tech companies in Europe I I was came across Bitcoin accidentally I came across Bitcoin because I I did I went on holiday to California I met somebody in California asked me what I thought about Bitcoin and I was I became very curious and started looking into the Bitcoin and I immediately grasped the potential

relevance of Bitcoin from the financial system thanks to the preparation I had in cryptography and also the fact that I'd been involved in some activism tried to rebuild Icelandic Financial system after 2011. so Iceland was the epicenter of the 2008 crisis um almost everything that could go wrong went wrong in in the Icelandic Financial system there was a systemic crash for all the backs uh the UK the British Financial system almost went the same way and so it draw me to start thinking about how to build more resilient Financial system and one of my friends had just been appointed to the Board of

Governors of the Central Bank of Iceland following the crash of 2008 to help rebuild the International System and we started talking about Bitcoin when ethereum came out with unfortunate enough to meet natalic at one of the early Bitcoin conferences we took note and we started thinking about how it could put us on chain like metallic anticipated but metallic um predicted and what it should do in his white paper we we very very soon came to the conclusion that the key dependency of implementing metallic tradition or putting acids on blockchains was to put a reliable form of fiat currency on check now together with two other Founders we joined up uh to uh to start

monarium um based on the the premise that uh that Fiat was a reliable link to fiat currency was needed to essentially help vitalik's Vision to unfold into the mainstream economy and to build a more resilient Financial Services so what year was that when you founded monarium so as we said my name started in stages it started as a commissioned report for a financial institution there was a completed in six months starting late 2015 uh into early 2016. we started with by meeting with the back of England the research Department Harvard Bergman Center but also consensus in New York uh people uh who were actively hacking in

the system as they were back in the day Robert Sam's in London so we started with this uh by doing like a thorough research report on the on the implication systemic and also the implementation as it was envisaged at the time we we started mining ether we started writing smart contracts a due diligencing they did the entire stock as it were from the regulation to the technology and we came to the conclusion that ethereum was a viable system on in some way shape and form or some Fork of ethereum would be a valuable system but at the same time we came to the conclusion that needed to be a licensed regulated institution in a major jurisdiction to be able to put

Fiat money on chair so in a way um I mean you you guys have been around in blockchain terms you know almost since the get-go right so basically if you look at kind of like uh the stablecoin system today um I mean there's kind of this clear dominance of uh tether and usdc um and then kind of in the decentralized space we kind of have die so Yuri the Sable coin that you guys have launched never really made it into the Limelight sofa I mean often that's kind of just because people are late to the party but you weren't lay right you were there from the get-go so we were there from

the get-go but we we started with a very different approach we do diligenced all the regulations relevant regulations in the major jurisdictions because we we are fundamental premise was that uh Fiat Monet has to be regulated and will have to be regulated in major jurisdictions um in some worshiped what so so we we we looked at all the relevant licenses in the major jurisdictions we came to the conclusion there was only one major jurisdiction with relevant license that is Europe uh and that's called the e-money and that's now been enshrined with my car so our regulation first approach took us inside the system so we can scale now inside the system uh

whereas the the other stable coins have come up against various regulatory Wars and then in my view I think will be very very difficult for them to overcome that uh those obstacles unless they try to retrofit themselves onto regulations or try to restart themselves as regulated entities so the other thing that we we discovered as well after we got our license is that um we started close trial beta settlements on chain um using various tokenized assets uh primarily invoice is working with the Danish company back in the day and uh trade shift which uh transacts hundreds of billions of dollars globally in Supply chains and we're thinking about always how to disintermediate the same way as Satoshi thought about

disintermediation of italic as well it's like how do we put money on trade to settle invoices uh so they can move and be financed all the way through the stack of the supply chains and how do we put money on chain so we can uh help small companies in Supply chains factor or get borrow against their invoices that they are able to issue against a much bigger more credit worthy uh companies so so discovering going through these these stages and these trials uh we're using Euro Sterling dollar and and Iceland krona even we discovered all so it made no sense to us that we should issue money through an exchange why would you

ever go to an exchange to buy money let alone uh unregulated proxy format so so we we we we came to the conclusion that the only way for Fiat money to reach on chain in a in a major way in a scalable way would be to link a blockchain to a major currency payment system so when the pandemic and suit instead of issuing the negative interest rate environment for cryptocurrency speculate this bless them I'm one of them we we set about to build a connection to the sepa systems in Europe because we're licensed in Europe and we're authorized to Europe at the main

currency of Europe is the Euro and so we we've figured out a way to essentially mint money directly from a bank account on chain and redeem directly from on chain back into the backup so with the first company arguably properly regulated in a major jurisdiction to issue Fiat money or chain and also with the first copyright uh that that essentially does away with the onra because our money is the money that we issue is transferable directly back into the back account there's no Rock there's no way to get this I think that's an important distinction that that your your your money is regulated and that it it transfers directly into a bank account

and I think looking at monarium so just kind of describing the way monarium works is you have this uh Euro stable coin that Euro stablecoin uh uh stands as a balance on essentially a Euro sepa account and you can transfer those Euro stable coins it's immediately into the sepa payment system and vice versa so you can send money to this iband account and then you know e-years euroes uh stable coins pop up on your ethereum wallet so but but what's important here is that this stable coin is actually a payment instrument that is also regulated it's

not like a usdc or something like that that you're that you guys are having to do that that kind of onboarding when you use Euro e you're using a regulated payment instrument no exactly we because we discovered this secret hiding in plain sight the fact that Europe has had the stable coin regulation since 2000 it's called the electronic money it's been used for prepaid cards it's been used for mobile wallets it's been used for online payments it's been used by transferwise it's been used by PayPal it's been used by revolu to provide services all we did is is we we sought a license to issue that form of regular Fiat money on chain

with first company authors to issue that type you know of money on trade and there's one to one exchangeable for bank accounts it is intended to be fungible with cash it's an electronic circuit for notes and coins that's what it says literally in the director it's just plain old dough that's what it is so um because we're licensed as an electronic money provider our AKA fee at stablecoin provider then we are inside the system and we can Safeguard inside the system we can be onboarded by all the regulated financial institutions to safeguard and also to perform payments we can link up to the system the sepa system in a way

that unregulated companies will never be able to do so and so we issue these what we call web3 ivance to our customers and these web3i bands are beautiful they what they do is that they they essentially uh receive funds from inside the banking system and they route them to web3 wallets and then you can go the other way around and so what we've in principle done is that we have linked the European banking system with 11 trillion euros worth of cash to blockchains Two web three is almost like the biggest wallet that's out there is you can go back and forth seamlessly

absolutely I've actually onboarded a few people into monarium myself because when I started using it I'm I'm an avid monarium user um when I started using it it just basically before malarium when I kind of wanted to go in and out of crypto you had to go via centralized exchange right so be it kind of like Kraken or binance or coinbase or whatever you want but basically you send money there like it takes two uh two days to kind of appear in your account then you kind of buy crypto from it and basically it's it's a terrible user experience and it's also quite costly right so basically this magic of kind of just having this eye band you send money

to and it shows up in your wallet basically other kind of crypto natives I onboarded to this their mind was completely blown and uh I think that's super beautiful because it's such Invincible in the way it works it's such a simple offering for the user and the the functionality is so limited but I can only imagine kind of other kind of parts that you needed to kind of get in a row in the back end to kind of make it such a good user experience no I mean and that's part two my deaf colleagues um hacking away during the middle of covert uh making sure that you know double testing and triple testing all these interfaces that you have to

connect with uh because we we indirectly connect to sepa we are currently two providers in in Europe uh inside the Euro store and getting that straight is is it was a major uh development achievement also it's not just the concept of moving the money in and out but also uh you have to build on top of the trade fire interfaces and um provide with a beautiful experience on the other hand um to make it easy to use in D5 so I I I my hats off to my deaf colleagues who were uh Nautilus call but but my uh it was a Chernobyl achievement on their behalf I'd like to talk a little bit about the

the zero stable coin this uh Euro e or Yuri uh you know how you pronounce it properly but uh yeah and in the this this like this e-money regulation so it's it's a directive that I'm not super familiar with so maybe let's talk a little bit more about this directive and how it applies or how it can apply to stable coins because you know what what's striking about what you said earlier that this we effectively have this regulatory framework in Europe since 2000 well in the conversation about Mika and the new crypto regulation and certainly Mika too there's a lot of talk about stable coins so you know well how is it useful to have another piece

of Regulation when from your from your perspective we already have the the required regulatory framework for this electronic money has served as a technically neutral and I'm quoting this from the relevant directed it's a technique you're supposed to be a technically neutral standard for digital cash that's what it's supposed to be and that's how it has served for over 20 years uh on prepaid cards and mobile wallets Etc right now Along Comes Satoshi and then metallic and then a number of other people who Who start who come up with these uh you know phenomenal shared Ledges where you can read and write uh and issue your own tokens right so so e-money is is is in financial terms is is the same

whether it's on prepaid card or is it on a letter it is always safeguarded in the same way and it always has the same requirements which essentially it has to be over cholesterolized by two percent it is safeguarded and segregated uh accounts so so it's really the user's money is your money on trade and the spirit of D5 and it's it's it's it's it's so so it's a principle is the same regardless it's supposed to be you can say good either with bags it's your choice as an issue or in high quality liquid assets in AAA we Safeguard the fourth customer funds in AAA short duration instruments with a global asset management company so

essentially it's your money it's your own chain in the same way with your money on plastic card if you had like a prepaid card right so all the main difference which is is the interface it's it's a token on chain as opposed to the plastic card so so we're just we think it's you know there's no need to change the e-money regulation in any way shape or form just because there's a new technology and the original uh legislators didn't think that either now microcomps are locked and micro resolves a lot of the certainty in many ways it brings under the regulatory umbrella of a traditional consumer production uh in financial services like the the service providers

and the asset issuers uh which is great and then it recognizes the e-money as a way to issue theodon check so that's World strike for micro uh just recognizing e-money is the way to go inside the European Union number two however it poses some additional constraints on e-money which are not in place in the original e-money directive so it fragments the e-money standard and makes it more difficult to issue even your blockchains than other technical mediums which in our view is wrong it's not a big showstopper but it is Instead at the competitive because it requires for example e-money issues that issue

e-money as token or chain to safeguard at least 30 with backs which is not the stipulation in the original drift so it's Artic competitive because it's forced the managers to rely on the backs and it introduces them as intermediaries where they're not really necessary uh which increases the cost also ultimately to to the issue because the banks take their spread so so I I think there's a lot of things that need to be redone in my car in the second iterational marker including uh removing the additional restrictions that I post on email issuers by Micah now this is something that the UK hopefully will has not or

will not uh uh repeat or replicate in their uh digital asset rules so I haven't been able to look at the the final outcome of the UK legislation but uh they they're typed hm how much this treasury was going to build on the robust framework of e-money they said uh going into the legislature process uh and and America does not have to repeat that mistake either so uh Europe was almost I would say uh they've made an own goal not a massive own call but a a a little bit of a wrong call by imposing additional restrictions on e-money issues under my car a lot of other things are really great for example the consumer protection uh

Clauses that are imposed on the um on the service providers and at the same time uh putting uh like asset reference tokens into a very clear umbrella of how they should be licensed and authorized Etc so I think overall Mica is very good for Europe but when it comes to issuing money or blockchains it deposites in restrictions which are in my view totally unnecessary why do you think uh Mika 2 and imposes these additional restrictions and effectively breaks from its technique from the technical neutrality of the e-money directive is it for political reasons or are there other reasons you think

I I would want to hypothesize but I I would suspect that it's number one it's a knee-jerk overreaction to uh what what legislative spheres and and and perhaps lack of understanding of this new technology and number two possibly the the incumbents bless them are lobbying for their own interest so would be high percents I Bank on on the on that second uh on that second assumption pretty hard so what do you guys do with um the money that you have to hold um in custody for your customers we Safeguard in AAA are bonds short duration with a a global asset

management company that is a a a based in Ireland and authorized regular regulated in Ireland so so if use um reissue e-money to you uh are you and you sell this money you said there's a hundred Euro from inside the system we meant to 100 euro to Euro on chain we sent the bulk of it because uh to This Global asset management company which has AAA uh short duration uh assets uh packing it and then we hold what we think we need for redemptions with uh a back uh inside the uracil we haven't disclosed the these packet Partners but uh we will

discuss them at some point so I assume this is also monariums business model right so basically for for the customers I'm kind of moving money on chain is free there's no there's no fee on kind of having the account and basically you can do separate transactions from the account for free basically for the user there's no charge but you kind of get the yield from the assets that you put in custody with um the Irish provider so our customers we have direct customers our companies individuals such as yourself but there are main go to market is to arm the builders is to make what we've built available to all all

the web 3 Builders out there we want to share it with them so they can use it to build services in D5 we believe that D5 is this phenomenal technology that that essentially enables open banking in a way that's never been possible before we think it's essentially D5 is is open banking or steroids that's what we call it so so we're our main go to market is to serve the builders including Builders such as you know the closest pay for example and and and whoever's building in hypnosis court so the monarium offering as a user is free

yes right so basically yes I sign up for an account I don't pay a fee for that yes um I can do separate transactions for free I can on an off-ramp for free which is typically um points that exchanges take a major cut right so basically all of that is free in monarium and I assume your business model is that kind of the you you get um the interest from the assets that you put in custody with your Irish custody provider um is that correct that that is correct I mean do you pay when you move money from Deutsche to um I mean it just moves inside the sepa system and maybe some it depends so basically if I think for on most private

accounts you don't pay but on business account it accounts I think there's different tiers and I think we pay something like nine Euro cents per transfer there you go so so uh our thinking our model of philosophy is the same uh moving money on chain and off chain should be as seamless as the experience inside Trump so so we make money uh holding your money safeguarding your money while you move your money around on chain so we collect the interest just like the backs do we're making our offering uh currently free at some point we'll stop thinking about uh imposing or uh or start charging for some of these these

services but it will be in the same way as the bags to try to um make it as light and and and burden less for the user as possible uh and I'd like to add also our main go to market in that sense is to arm the builders uh we want to share what we've built with all the web free builders up there um so we want to make it as easy for that to import their customers and for their customers to use our services as possible why do you think that's not taken off so far right because basically in my View kind of monarium on and off ramping is kind of definitely Best in Class um and in my view kind of in in it it

seems like a super solid offering but if you look at like the total um Ure on chain um it's you know on the order of like 10 million or so it's not not huge amounts compared to say uscc or Ted uh and what do you attribute that to because we're really really early um what three is just like any technological innovation uh as is going through waves of adoption we went through several ways of adoption and then we hit the pandemic which massively distorted the monetary system and totally uh gave rise to a speculative bubble like we haven't seen since since very long time ago not since 2008 at

least so all the focus uh in Webster building has been on supporting speculative activities which means unregulated stable coins which means exchanges uh centralist exchanges uh we we've never believed in that future we always believed that D5 would be the way to go um and so we've always been building for the Builders of D5 now that there's the last speculative bubble is over and the technology stack is maturing and we're seeing all kinds of services coming up there that there are try to remove intermediaries than we think are the time is right for our regulated authorized stablecoin with the direct

connection to a payment system to serve the builders that serve the mainstream economy mainstream individuals and masonry companies maybe let me push back a little bit here so let me talk about usdc right so basically I don't want to talk about tether because kind of tether redemptions are notoriously difficult and so on so maybe let's kind of not talk about that let's talk about uscc I understand they are not regulated but in a way they are an extremely um serious company um that is taken seriously in the space that kind of custody's user user Fiat in various bank accounts and kind of then issues them on chain I

totally understand they're not regulated but why do you think they have kind of they have gotten so much adoption while you guys haven't went kind of your offering is similar well we just launched officially uh about you know under a year ago number one that's number one we didn't launch until we had uh the connection to set by in place in the scalable way so that's level one I know but two I think the I mean there's waves of adoption there's different types of um instruments that will show the community in different ways at different stages of the adoption cycle so usdc was and paxos bless them both

good enough for the speculators but now it turns out that number what that they're building on licenses that are being challenged by the US government and I'm not saying that um you know that's right or wrong I'm just saying he but it goes to the extent that even the issues themselves like Jeremy o'lear of circle is calling on Congress itself the main legislative Federal body in the United States to remove the regulatory uncertainty of these tokens that he's been issuing on track so um this does not surprise me because we did our due diligence on the regulatory stock before comes a conclusion that European e-money license

was the way to go we spoke to lawyers in the United States we we spoke to the OCC even at some stage there there is no federal license in the United States for stable quiets um and it turns out that these these license that they have been building on paxos and usdc are not really intended for holding other people's money and reflecting all people's money in the way that the European licensing regime is so that means that you guys have issued a Euro stable coin right but in the interface I also get given the option to kind of hold

um a krona and uh British pounds and USD on chain how does that work we decided to focus on the Euro because euro is the main currency of Europe so we built an interface between the separ and blockchains and and we're our main focus is on serving our customers that want to use your own check but the actually the first currency which don't chain uh I'll draw email license in 2019 uh was the Icelandic chroma that was in July of 2019 a month last week got no license approved by Iceland Regulatory and then um so officially the isolated Chrono is the first fully authorized uh

fiat currency on check we followed shortly thereafter with uh with trials using euros and dollars in sterling and we're able to issue both dollars in sterling at scale when we decide to focus on dollars in sterling um the European e-money directive allows the issuers to issue emulate denominated in any currency that qualifies uh uh in a way that you can Safe Keep It In the correct way that's one thing that Mike also breaks is deadly because Micah is actually makes it more difficult to issue non-european currencies uh on track which we think is is not really necessary uh at all

of course I'd like to talk about about cbdc's I know a lot of our listeners are probably gonna like roll their eyes at this topic but it's uh it's it's an interesting topic because it I think for a lot of people they see it as a concept that is at best useless in the face of like cryptocurrencies and other stable coins and that worse a very Sinister uh attempt by governments and central banks to fully control the flows of money and and particularly in the hands of their citizens and there are some some fears there that cbdc's become a chinese-like social scoring system or

become integrated in like very uh uh very pervasive system of of surveillance so your your co-founder Yan was previously the chairman of the Icelandic Central Bank supervisory board and you know he's talked about the right approach for for central banks as they enter this world of uh digital money and a in a world I I think where we could qualify as having a broader diversity of money like assets and a a greater East to create money-like assets you know what are your thoughts on on central banks entering this space broadly back in the brick and mortar day did you

ever go to the High Street or Main Street and and make a depository withdrawal at Central Point central banks are not set up to serve non-financial institutions or uh consumers if they want to do so online it will require a major policy change it's not really up to them to do the kyc AML uh experiment and explore with the interfaces that are needed to serve uh you know different market segments I I think cbdc is not going to happen I I I think it's a really bad idea and it's not not just me who thinks this it's like senior economists at the IMF have actually argued for the opposite that

instead of a central blacks experiment in the CDC what they really should do is to take these non-back decentralized issuers like e-money companies and give them full access to Central Bank facilities and issue digital currency through that I think that's by far the best way to go this idea is articulated in a beautiful paper by two senior IMF columnists called the rise of digital money issued in 2019. I I encourage everybody in E5 to read this paper because coming from the opposite side from the technology stack this is they they I I think this this is the

canonical paper in trotfire which explains how the trot5 field system should be set up to make a decentralized resilient robust so uh cbdc shrimp toppen and it's not going to happen in mind but the ECB has announced a cbdc project and as far as I know people like Casino they're very bullish on this idea uh and you know very fairly uh have offered fairly bearish sentiments on on the on private stable coins uh do you think that at the highest level of EU policy

makers there is a desire to want to control more of the monetary stack and and get into you know uh doing kyc and you know is there is there something more Sinister here that people should be concerned about are we called Sinister I would call it diligist and a fresh Spirit right it's there is a tendency always a government uh to to expanded to approach on the private sector to a short degree and vice versa there's this cost attention between private public in these these countries that we call democracies and and free market uh countries in the world I think there uh the ECP is totally overreaching I think it's

totally uh misunderstanding it's mandate and I I think this should just back off and instead of trying to compete with many of the companies that they're supposed to be serving and in some cases regulating they shouldn't uh instead uh support them uh so so I think they're absolutely in the wrong track and they should totally uh cease to uh experiment with CDC so in the um ECB foray into the cbdc um Ram um the kind ideas that every citizen will only be allowed to hold a limited amount of Euros with um the ECB uh to

Pro to protect the um the remaining banking sector Legacy in non-legacy um because basically the the fears that citizens will just want to hold um their assets with the Central Bank rather than with the retail bank how do you see that No actually that's also what the economists have proposed is that you what you can do is you can give um non-backs and Banks separate research facilities at the EC ECP running on the central bank so you could you could control the influx and outflow of money in a way that's similar to how you

incentivize the bags to um to hold or not hold money with the central bank right so there's ways of managing um that uh risk of flight as it were away from the backs but what is also important to understand is that I think introducing a non-back alternative for holding money and and issuing money on blockchain on or any other technological medium is a way to essentially put checks on the backs and make them more responsible in their behavior uh so so that they're more mindful of the outflow at risk as they were if they may uh in the case of laws the backing system is

is not going to go away and it should be a core part of the International System but it is highly inefficient it is very inefficient because number one it transmits liquidity really really inefficiently and number two it's very expensive to set up a back and maintain so so it's it's the packs need an alternative as it were to to to keep them competitive and but of course you you have to experiment with the Alternatives in responsible ways also not to increase systemic risk now I think the way to do this is to open access to Central Bank facilities to non-back issuers but you know of course you have to be

mindful at the same time that you you want to uh perhaps put caps on how much they you know back issues could Safeguard with these sample bags Etc um but but that's that's that's more of a deep macro discussion that I'm prepared to do on the epicenter at this stage let's maybe kind of go to the smaller realm of I bands and EU banking kind of on a practical level right so what have been your biggest challenges working from within and out of the sapper system there's a lot of challenges step a system is you would think separ system is standard but it isn't and each financial service providers has

different types of reputations of sap art so it's getting separate to work the building on an interface that is stable and consistent uh and it is supposed to follow this episode as it takes a while so so maybe just sorry sorry interrupt maybe just describing what the sepa system is could be a good starting point here because I realize that probably a lot of our listeners are in the states and or not in Europe and don't really know what sepa is server is essentially at the core it's just a bunch of XML files so it's one one back says I want to credit something to your account and debit from

my account or vice versa they set an XML file to be centralized intermediary and boom it then it clears so one back there that's another by credits and and and your money so that's all it is but it's relatively new way of moving money in that sense because euro is a very new currency so so the the main payment systems for the Euro got built relatively recently so it's XML files as opposed to something even more okay um so um but all that it is able to do setback is to uh dab it from your account and credit to somebody else's account inside this system of European

uh Euro supporting backs right so but what we do is essentially built on top of a payment provider inside that system we accept that whenever there's a sepa payment instruction that comes to us we receive money from inside the system it's credited to an account that we hold on behalf of the customers and then we issue in return uh a token corresponding to the inbound on the blockchain now going the other way we receive a burn instruction essentially from a blockchain and it burned you know 100

euros from glosses for example and then what we do is that we we send into the separ system okay we know where it's coming from this is a 0x address so we're on our chain that is linked to a customer that we support and and then we send it back to where it's supposed to go the magic here is that you're used to start that a customer that has r13 iBot in their lab can receive not just from their own account but from any account inside the system so if you hold a web3 iban there's linked to your watery wallet you could receive from any of your

friends from companies that you Bill in or or from any account that that is inside this system euros and then you can send also outbound to any ipam using our uh web3 service iPhone Services as well so you can send back to your friends uh uh and suffer whatever you want or pay a bill wherever you like we actually have a customer that paid their tax bill recently uh in the Netherlands uh using our Yuri orche they burnt the money from uh the blockchain they set it into the setup with a string uh separas I I wait

for you to sound like a comment or or a string along with the payment into the Dutch black Dodge tax authorities uh bank account and then next time they had a statement uh of the tax uh that that payment was reflected I said so my monarium iban um is a Spanish iban how do you determine kind of who gets what nationality of iban or does everyone get Spanish no we we're about to support more eyebots Ibis were set up in the days but everything was kind of regional in in Europe so so the iPad is constructed to have first the country prefix and then

uh you know a institution identifier another bank account identifier and a bunch of other stuff so so but it's it's really Irrelevant in the modern day and age because we ultimately Safeguard the money inside the Euro Song a Triple A in Ireland in the back in Estonia so so it doesn't really have yeah yeah the prefix that you use has nothing to do with how the money is safeguard it is true totally archaic and and it reflects the the Europe as it existed before the Four Freedoms and the European Union and his modern uh form uh came about well I I I agree that it's archaic uh I

I don't know if uh I I think it does make I think the the the the iband prefix I think to to certain institutions does make a difference my feeling interacting with supper and like Neo Banks and traditional banks in Europe at least in France it feels like there's a multi-tier system where you have traditional National Banks at the top you know like the Deutsche Bank or BNP or you know Santander or whatever like these big National Banks that effectively control most of the banking sector and then there are um sort of second-tier Banks and payment service providers uh who are you know

the Neo Banks the n26s the revolutes uh who are operating in this episode but are very much relying on the traditional banking system and what I've experienced is I've experienced a lot of what we call iband discrimination which is a um either an institution like your or or a company like it could be your cell phone provider or your electricity provider refuse to withdraw funds from an iband that doesn't start with the country in which you're in and I've actually recently encountered a situation where I tried to withdraw funds from uh sort of like a life insurance policy type you know investment account to you know a a

bank account outside of France that I own where it was outright refused by by the French financial institution so I think a lot of people experience this iband discrimination which is actually illegal in Europe you know article 9 of the sepa regulation prohibits it um is this something that your customers have encountered and how do you think people how do you think we should combat this because like it it's contrary to everything that I think um the European Union or the sort of ethos of the European Union stands for uh we intend to offer more eye bonds uh you know it's the market let the market decide if you want a German I ban we'll we'll provide it to you eventually uh it's in our

roadmap to support More Country I files uh iPad is to start with the exist not only Europe but also in in some places outside of Europe so it would be happy to support whatever country I've been essentially that our customers uh would like to have I mean do make your own iPad is almost our philosophy in that way shape or form but at the same time I think uh long term uh with Fiat in gradually we're going to move on chain we will start stop thinking in terms of iPads we'll stop thinking in terms of uh also zero X it will just be there will be some something seamless there will be something like that there on top of all of that that masks all that identity

it's like we we don't really care about IP number Stewie I mean and they're hierarchical and in another way shape before and an iPad should you know not really be an issue inside the common market of Europe uh and I regret that you know but it's still a fact that in people's heads that that they the Europe is not yet United enough that people uh think of in European terms as opposed to culture terms do you think that this iband discrimination is motivated by political uh for political reasons or is it compliance pressures that banks have

like what what's the reasoning behind this we all have our prejudices uh about which are which are biases are built in based on our experiences and uh I think regressively it's it's just a manifestation of the fact that Europe is not integrated enough yet that people still think in terms of of country codes there's some I would say perhaps there's cultural divisions that that people are more comfortable dealing with people of the same type culture um so so it's just a reflection of this human trait and and the way to counter it is number one okay give people what they want and if you want the Spanish album or Estonian iPhone or Danish iPad

then you know that's it you could have whatever you want but at the same time realize that you know with with respect to Europe it it Four Freedoms should make it irrelevant where you hold your money um and whatever the prefix of your right about account is which um countries outside of Europe use the iban or maybe which other countries don't use the iban system well uh the European you know the Americans for example um and it's Fourth of July are happy fourth for July uh the Americans don't use ibots the Americans have their own way of doing things in many ways and and and they have their own routing systems routing number account numbers which is uh more archaic than the European system

because it's older it's it's been built more um European systems are built more recently I I'm not aware of uh the backing systems I've not looked deeply into many biking systems outside of Europe but I know that parts of the Middle East and I think part of South America use iPad which is the European Standard so European standards in banking are actually a relatively widespread not as widespread as the European mobile standard GSM but but which became the dominant standard in the world but but they're they spread it seems naturally to countries that are affiliated with Europe through traditional ties or something like that

okay and um so basically to kind of um onboard as the use of monarium and to get an iban you have to go through light kyc do you have jurisdiction constraints so kind of say I mean I'm I'm very obviously a German person and I I was allowed to go through it but say if I were a U.S person or an Argentinian what would I be allowed to get a monarium account that the way it works in Europe is that we have common European laws that uh support the Four Freedoms which means all our Regulators are supposed to uh operate in the same way realizes in Iceland we are passported across Europe

so we can serve anyone inside of Europe we can onboard anybody that's inside of Europe uh but not outside except with the permission of a regulator and except the permission of the the local regulatory the place where we intend to serve there's something called reverse solicitation in finance which means that if you're not really seeking uh to serve somebody outside of your jurisdiction they can come to you but well right now we're still a very small company and and Europe is a big Marketplace for us we we focus on European customers meaning uh and the European member states and the UK and Switzerland

okay so now we've talked about nation states for a while let's talk about the D5 equal system and Stables that that we've seen there right so basically there's fundamentally different Sable Concepts that we see on a daily basis so yes like the uh fully off chain backed kind of like you guys and circle and probably also tether and so on um and then there is um overcollaterized on chain so kind of the maker dies um of the word um and then there is um the algo Stables right how do you see this landscape a lot of what is happening on chain actually uh will eventually come inside

regulatory umbrellas because it seems to be new but it really isn't new uh what is really new uh on blockchain for example like Bitcoin it is an asset that is truly virtual but by energy consumption proof of work and it has no representation in the fiscal world but the qualities of Bitcoin nevertheless um are are similar to another uh traditional currency called in a way that that the European Union recognized that so it brought the big corner to the same uh value-added tax umbrella as gold so UB unit has already recognized well

look we have this phenomenal virtual thing called Bitcoin which is backed by essentially entry consumption this is called the same properties and qualities as as good so so so it's a pure virtual commodity and a Bitcoin might be a beautiful construct uh the technical ways and and always as well now on other hat you have these come from the other side assets that are trying to replicate what already exists like traditional money theater money like what we're doing and there's different ways of doing that so our view on that was to go using a vehicle and a regulatory license that was already proven in test battle

tested over two decades in a major jurisdiction in a set you could say e-money that we built on which is the an argue the ultimate stable quiet is algorithmic in a way that there is a there are there are constraints on how you can Safeguard the assets you must only Safeguard with high quality liquid low volatility assets and you must over cholesterol us you have must have a buffer of your own couple to protect against fluctuation in the value of the underlying assets right so so it in some sense that's an algorithm so to speak

uh and we which is which is proven and tested because e-money has been very robust over the past two decades coming from the other side you look at you know if you were to construct the logarithmic stable coin that's supposed to reflect something then would you start would you start well if your premises are how do you back and and where do you back and when it comes to Fiat regular money and stable coins the safest way in my view is always to back it up with artists which are high quality low volatility highly liquid and denominated in the same currency so so I from all these other experiments

for Fiat stable coins algorithmic role-wise less than you know good luck to them but be mindful of the risk if you try to back it up with something that's denominated in another currency something that is not even denominated in the currency like a commodity because it always just increases the volatility sometimes it decreases the liquidity uh so just be mindful of what you've tried to reflect and and try to connect it with the way you're supposed to act how do you see um the onboarding of real world assets into kind of collaterals yeah that is the big wave ahead real world assets on trade uh that's what we're really seeing in our pipeline today it's

uh it's not just it's equities it's all the Securities like uh asset back that uh in my view that that will be the big main wave of adoption we're seeing some of the early mainstream adopters coming to us now and starting implementing such projects ranging from carbon credit tokens to ask it back that and ETFs of equities so so it's it's just brilliant that's the big wave of adoption that's coming out and that type of asset or Che needs number what a regulated Fiat token on trade to South against

and number two it needs a direct connection to the uh payment systems of the major crisis because the these use cases are not going to Common line unless there's reliable theodong chain which has is directly redeemable in to back out we provide just that very cool I'm I'm uh I just onboarded monarium uh like today and so I'm like really excited to start using it and I can see all kinds of use cases for this uh including personal but also like business use cases so what can people um expect in the coming months and how can people start using maneer oh well mate go to Marcus always been to

arm the builders we have this direct uh consumer direct company offering almost as a showcase so if you come to us in awkward as a user uh directory or for your company that you'll find will serve you and please tell us about what we're doing uh we just love to imagine still discovering what you could do with money on chat uh but when it comes to the the the the builders the what three Builders are uh it's for them we're almost like listening to what they're telling us what can happen and and the the main builders that are coming to us now are these uh tokenization platforms uh uh that are bringing real world assets on chain and that's going to be a huge wave

of adoption it'll be much bigger than the crypto speculative bubble that we just went through and I unlike also the speculation these are recurring um use cases that they're not going to go away if you should take down a crypto today and you know a few speculates would be out of pocket and they would be you know hurt but if you if you take down pay polar stripe a lot of people mess your business with cease to exist so the the challenge for D5 is to get into the economy and start serving the economy in a sustainable repeatable way and uh which brings real value to to real companies and and real users great well I think that's a great note

to end on and one I think we certainly agree with son thanks you for coming on the podcast today thank you thank you Swain