We are playing a game bigger than us (Costanza Gallo)

Transcript

Okay. And this is what I have to use. Okay. This one? That's okay. I can I can move it from here. It's fine. I will will Yeah, yeah. All right. Um next up we have Constanza from Safe Labs. We just had a awesome talk about Euro stable coins, but we're going to listen Constanza's point of view and a little bit of regulatory aspect of the stable coins and crypto.

So, please welcome her. Thank you. Thank you. So, the title of this talk is code is power and it's going to be a little bit more about the regulatory and legal framework on stable coin. So, before I start a little bit of disclaimers, so this is not legal or financial advice. Views are on my own and I do not represent any project that I am or I was affiliated with.

And like always, do your own research. So, the title of this talk is code is power because like so many people um a couple of years ago, I started questioning why I was in this space. I've been in this space for a while and I remember that in 1990 No, I don't remember. I know that in 1993 or in 2014, depends where you see the genesis, whether with the Cypherpunk Manifesto or with the beginning of Ethereum, we couldn't wait to be taken seriously and to have actual power, to have an impact,

to build something that people were using. Um except that today in 2016, we are building meme coins. And we have on the one hand people that were building people that are building stuff with things tools that have an actual impact and a use. And also very little money. And then we have people that are building stable coins. Stable coins meme coins that have no purpose.

So, what are we doing? The question is are we fulfilling the promises of why we came in the space? So, here is the thing about technology. Technology doesn't happen in a vacuum. In 1993 right after the fall of the Berlin Wall we got the Cypherpunk mailing list. Very few people that thought that privacy was a basic human rights. And immediately after in 1994 the US government classified encryption like ammunition.

So, basically exporting encryption was the same as exporting a small nuclear bombs. That's big, right? They understood the power of encryption long before anybody else did. And then in 2008 we had a financial crisis. Right after we had the balances of Bitcoin. With that we had Ethereum. So, what about today? What are we building today that matters? So, here is the thing.

The The early Cypherpunks and the early Ethereums were right about infrastructures. They were right about the implications of what we were building. And tech doesn't in a vacuum. Because when you're building small, nobody's paying attention to you. And here is the thing. When you are small, like the Cypherpunk in 1993, you can get overlooked. Not always, but sometimes you get overlooked.

But then when you go big, like today, everybody starts paying attention, and I mean everybody. Everybody? Well, we got state actors that are using crypto to fuel bribery in infrastructures where finance is the enforcing mechanism. We got governments treating the blockchain as a tool for expansion and for power. Um we got a government that launches stable coin that launched a meme coin to give preferential access to them.

So, this is what crypto is right now. We have governments treating the blockchain infrastructure for expansion, control, and protection of power. So, basically, we built a something to help people. We actually built something to empower the powerful because we got hacked. So, crypto right now is too big to fail. That we know. Um and with that, uh we got even more needs. Because on the one hand, the Cypherpunk tools are more needed than ever.

We have people that actually need what we're building right now. Except that to what's happening, our response is a meme, a childish aesthetic. We don't really want to engage with institutions. without really want to compromise and talk with those that are in power and that are actually using our infrastructure for their own gain. So, let's talk about the thing that matters the most, stable coins.

Like the amazing talks we watched before me. So, what are stable coins? Like if you take everything out, they are the go-to-market strategy for for the government that is controlling the underlying power underneath them. Because thing is that when you build a stable coin and you peg it to a fiat, you are importing the entire architecture of that government. You are importing the sanction regime. Who can have Who can have access and who cannot.

You are importing the the political agenda. How can my fiat get even more adoption? How can I expand? How can I make sure that my own currency is getting adopted all across the borders of my countries? You are importing the freeze mechanism. So, who can have access and who is not allowed to use it? And the compliance obligation. So, everything is on chain. It just has a crypto wrapper. And a stable coin now with its like value, I'm not sure if it's still the same values. That number

was from 2025. It's huge. And like we said before, everything is pegged to a single fiat. 99% of stable coin are pegged to the US dollar. So, that means that we do have a single point of failure. And that is not decentralization, that's the opposite of it. We will never accept a single point of failure at infrastructure level. So, why do we accept a single point of failure at jurisdictional level?

So, that's the interesting part because we are debating but the US Treasury said the said that out loud. They said as stable coins US backed stable coins will be used to expand the reach of the US government. And that's the thing, this is not just about America. I don't want to be like anti-American. This is not about the fact that the stable coins have a flag. This is about the fact that stable coin have only one flag.

Only one person. So, we're building a decentralized financial system that runs entirely on a single currency. Well, a single stable coin so a single currency. And so, this is not decentralization and this is why Europe should enter the conversation. And here is something where I want to be precise because once again, it is not about being anti-US, it's more about being pro-decentralization, so pro-diversification.

So, a DeFi ecosystem that runs entirely on a single currency, on a single peg, is a DeFi ecosystem that is exposed to a single point of failure and that is literally one decision away from regulatory framework from being stopped from failure from a financial crisis. It is it is not a resilient um ecosystem.

So, this is the question that we should be asking ourself. And here's the thing about being right. You can be right and be completely relevant. And the Cypherpunks in 1993 were completely right. They were right about everything. About privacy, about surveillance, about financial freedom. But they were being ignored. And adoption is not a compromise of value.

If you get adoption, you're not compromising on your values. It is actually the opposite. Adoption is how values can win because we can adopt and we can build things for everyone. So, we can make sure that stablecoins are actually getting used in a good way. So, right now we got institutions coming at the door. We got um like in the previous call the Euro CBDC that is being developed right now by SCG forward.

We got so many different players, institutional players that are coming and are knocking at the doors. And we can either engage with them and we can build the regular the regulatory framework for stablecoins with them or we can just like keep on making memes and talking to each other without engaging with them. So, we need to decide what our answer is going to be. So, this is why Europe needs the Euro stable coin and why DeFi needs a diversified peg.

Because we have two people here. We have the idealistic. So, someone I guess a little bit like us that is all for building cyberpunk tools uh to not compromise with anything and being sovereignty and ownership. And then we have the extremely realistic person that is about building only what gets adapted, compliance or nothing. But guess what? A diversified pegs is actually helpful for both.

Because it makes DeFi more resilient. So, they both want the same thing. This is not being either or, it is and. So, this is what hasn't been captured yet, what can be legislated away, self-custody. Self-custody should not be the advanced option, should not be the cyberpunk option, should be the baseline condition for any financial instru- instruments that it is about ownership.

Because the hard problems have been solved. We got account abstraction. We got social recovery. We got multi-signature. We got usable UI for teams and for organizations. So, here's why Safe is the baseline. So, Safe today is securing over 60 billions. And you can have a Euro denominated stable coin in a wallet that actually belongs to you without having to memorize a free seed phrase without having to be a cryptographer

without having to be a hardcore cyberpunk. So, what we should do right now is to make it the default option. Because every time we make self-custody something premium, something a little bit too complicated, something that you have to go on the setting manuals we are making a political choice. We are deciding that people that needs the most uh self-custody are the people that are not getting it.

So, what we should do right now is to make sure that everyone has access to self-custody in a safe and secure way. Because otherwise uh if we make it the the advanced option we are building we're not building financial inclusion, we are building financial exclusion just with a nicer marketing wrapper. So, the euro in stable coin is not about idealism is the euro in uh self-custody is not about idealism, is being extremely pragmatic.

So, yeah. Here we started as kids that couldn't wait to go to school, grow up, and become adults. And now we did grow up. Now we got institutional money, we got the tools, we got the infrastructure, we got so many users. So, the question is what are we doing with that? Because we do have the tools. We do have the alternative. And the tools are not in a white paper, the tools if today in production securing over 60 billions in asset.

So, the Cyberpunk in 1993 write about everything. They were advanced too early, too few. And so today we are not too early. Today we have on chain institutions. We are not too few because I didn't expect so many people this early in the morning. So, the question is are we too comfortable? I hope we're not. So finally there is one thing about Europe is that it is asking the right questions.

We are asking about digital sovereignty. We are breaking the dollar dependence. We are having the right conversations at the right levels with the right people. So, the answers cannot be another fizz function. The answers cannot be a conditional Europe. It's Europe Yeah, I don't remember how they were called, but the European digital currency ECBD.

So, the answer cannot also be a meme. The answer has to be something that users that people can use, can implement, and can finally stop using Revolut, Stripe, Apple, or whatever. And this is not idealism. This is not oh, you're so idealistic. This is about being extremely pragmatic for what we want and what we need. Because we built this to help people. We built this to help ourselves. And we built this because we believe that financial freedom was a human rights and not a product feature.

So, right now, the governments are weaponizing our tools against us. So, the question is whether we can let them do that or not. So, when we have the entire DeFi rails on a single peg, we have the same infrastructure, we have the same freeze function, the same financial exclusion systems. We have the same sanction and compliance.

So, the question is whether we want to let that happen or we want to move forward and build something that it is for actual financial freedom. So, code is power, and we should build like we know that. Thank you. >> Um any questions? >> Please, no.

Joking. >> We still have 5 minutes to use, so if anyone has a question, sure. >> Thank you for the presentation. Like I I think I took most of the slides in pictures. >> I can send it to you later, but thank you. >> Very funny. Um I what I don't know much about the the regulatory environment in in Europe for stable coins, but it seems like it's very expensive, only a few will be able to make a business or make it sustainable to have a euro stable coin it with this regulation.

This self-custody and no like freeze contract uh in in a euro stable coin more cypherpunk as as you were mentioning. How do you see it becoming a reality if the at the end of the day, if you're going to have a Euro stable coin that people can use and trust will be issued by who exactly? It's like if it's not a financial institution doing it. I don't know I made a very bad question. I'm sorry. But you understand what I mean? It's like if big financial institutions are issuing this Euro stable coin that you think it's not good enough because it's still has the freeze function for example.

If you want to have the other stable coin that it's more self-custody and and and and freer and more free who will be issuing that? And how can I make that sustainable? Not a plan, just your vision, your idea. >> That is one of the most important questions that we need to address right now. That is actually the point because if you build a stable coin, a Euro stable coin that can be freezed by the European Union, then it is the same as stable coin that can be freezed by the US government.

So, this is one of the questions that we need to address right now. And that's why I fully agree with Rock Tech Rock. Uh when he says that we need more competition because more competition means that we do have more innovation. And with that we can find a way to build something that it is actually useful. But I mean for starter, making sure that we have self-custody and without relying on from Revolut to Coinbase and it's a start.

So, in these things I like to be optimistic. Are DAO still a thing? >> I have my What are DAOs? So, that that's like the entire question is what are DAOs? Because they can be a Telegram chat, they can be just like a fancy coordination mechanism.

But I have yet to see a use a good usability of a DAO. Let's put it this way. I'm I can also like go on a full rant about that because the entire way that you engage with a DAO is the same way that you engage with normal bureaucracy. You need to know someone and that person needs to explain to you how it works and there's still politics behind it. So, it is not actually decentralized. Like the decentralized DAO is not It's maybe diversified.

But there is so much politics underneath like what looks like a nice proposal that Sorry. Um very cynical about that. >> Hello. Can you hear me? >> Sorry? >> Can you hear me? >> Not really. >> Can you hear me now? Yeah. >> Yes. >> Cool. Um I had a question, right? So, envision a world where USD stable coin is not uh the biggest player. We have other players, other currencies. How does that like for example, a Stripe or a Revolut that you were mentioning, can't they just adopt that stable coin and move all their payments to those rails? At the end of the day, we won't be removing

these players. They would just be adopting these new stable >> second. I cannot hear her. >> Um yeah, what I'm trying to say is in this world without USDC domination USD domination and we have other currencies. How is that going to be better if the big players just adopt these new currencies? >> Okay, so in my opinion, what's happening is that right now the US dollar and the US government are losing influence on the geopolitical agenda.

So, the reason why they started um investing, regulating, deregulating a lot into crypto is that in this way they can have a borderless payment system, and they can expand the reach of the US dollar. They can also expand it to, let's say, countries that normally wouldn't be. So, in this way having only one uh one peg to stable coins means that we are de facto giving the keys of the financial world to a single government.

So, having also an European stable coin means that we are diversifying our risk. And then hopefully on top of the Euro stable coin, something else will come up. And then hopefully in a few years we're going to see also a stable coin that is not actually pegged to a fiat, but it is pegged to a basket of goods, and it is not centralized by a government. >> What you are saying is even now that you have then a Euro stable coin that's controlled by the European Union, that is even better than only having a uh US dollar dominated stable coin.

>> Yes. >> It's controlled by the US government, right? So, to have at least something against the US dollar, even if it's fully controlled by by Europe. >> Let's get to the the decentralized stable coins uh pegs little by little, but yes. Because right now we have a single point of failure. Imagine if there is another financial crisis in the US without like assuming any bad intentions. There is an extremely inflation rate in the US with an extremely bad financial crisis. The entire DeFi ecosystem is going to go down together with that.

Um I had I met someone that was saving to buy a house and was keeping the saving in USDC maybe. I don't remember. Anyway, the USDC versus the euro lost 10%. So is down payment for the house lost 10%. So for this reason having only one peg is not helpful. Like very pragmatically, like my friend lost 10% of what he was saving to buy a house because there was no European stable coins.

And well, he lives in Berlin. >> Right. I had a question. We're talking about a world I guess where the where euro stable coins or at least the Europe where your euro stable coins are prevalent, let's say. What do you see is the biggest uh use case for a euro stable coin? Is it more for payments? Is it more for savings? Is it more like an investment vehicle for that people use? >> I am not a right person to ask for financial advice.

So I'm definitely not going to see to to say for financial investments. Um but yeah, I mean paying with stable coins would be amazing. We saw it in the I'm not sure if you were before for the talk from RockEx that was illustrating how yes, blockchain is the best way for payments that we are still using every other system and every other tools. So, personally, I would like to save instead of putting my money in a bank to put my money in European stablecoins.

Um little known fact, I don't remember when, like 30 years ago, um the Thailand government overnight decided to tax every bank account like 5 10%. They were in a deep financial crisis, so all the bank accounts got taxed without any warning. So, that could be a pretty good use case making sure that nobody can tax you in like without you knowing that because taxes are good.

>> All right. I think that's good amount of questions. Thank you so much, Constanza. It was amazing talk. >> Thank you. >> Private