The Web3 Bank Of The Future | Bill Barhydt, Abra

Transcript

basically answers the question you asked before which is am i going to use a bank where where the protocols are in the background or am i going to access ave and compound and whatever directly right and the answer is in our opinion the former for 95 probably 99 of people you're gonna access abra bank and within average bank you're going to earn yield you're going to be able to trade you're going to be able to borrow and you're going to basically be using something similar to metamask in the background you just won't know it [Music] this episode is brought to you by circle the creator and issuer of usdc with over 1.5 million holders globally usdc is the

preferred stable coin of not only d5 but our entire industry you'll hear more about usdc later in the show all right everyone we're going one on one mono imano with bill bar height one of my favorite folks in crypto ceo of abra founder of abra real i think we tossed around the word og a lot i think bill you gave the first ever uh ted talk back in the day like 2011 on bitcoin so been here for a while uh welcome to the show my friend thanks man so great to see you congrats to you guys as well and all the success it's been awesome to watch i appreciate it i am i'm repping bill and i are twinning today i'm repping my average shirt as well got to represent um bill yeah you uh you yeah we got i know i know people got to watch this on

youtube we're twinning out here we we give good swag exactly you guys do have good swag you do have good swag so um before getting into crypto i want to talk about macro you came on the show uh in april of 2021 i think it was like april or may of 2021 and you basically laid out kind of like your thesis and some predictions and in your view what you saw happening in 2021 was market was going to get crazy there was still a bunch of excess liquidity in the system look out for big bull market in 2021 but you said look out for 2022 things could get a little scary inflation gets out of control interest rates hike up market comes down and i will i got to give it to you got to give credit where credit is due you've done pretty well with those

predictions but one of the big themes that you were talking about is what ray dalio talks about for the fourth turning macro fans out there what uh who's it neil howe talks a lot a lot about which is like this 80 to 100 year debt cycle that's coming in and you tweeted out don't try to trade the end of an 80-year debt cycle uh back in july so i just want to get can you explain high-level this concept of the 80-year debt cycle bubble and where you see us at today in relation to this bubble sure um ray explains it better than i do but but my my simpleton explanation is based upon this idea of human frailty uh commingled with uh idealistic economic theory right so so monetary theory in my opinion should be based upon this idea of sound hard money where human beings

shouldn't be able to interfere with the definition of that money and traditionally we've we've always tried our best to do that at the beginning of these cycles right the last cycle was no different right we i think i think pre-world war ii we were maintaining 40 gold reserves and basically post bretton woods it was 100 and you know the western powers all agreed to let us hold their goal uh and and basically peg everything to to the dollar so uh for for foreign uh settlements and so what happens over time is is that human frailty comes into play and uh because this isn't mathematically set in stone you know politicians are allowed to more or less change this whenever they want and they do so in the current debt cycle right nixon took us off the gold

standard in in 71 uh after we couldn't afford to finance the the vietnam war anymore uh without running up massive debts and that continued and we all know what's happened to the purchasing power of the dollar ever since but what people don't realize is we didn't invent this concept this has happened many times in the past as a matter of fact it's happened you know 10 times over the last 750 years right so so it does appear uh again dalio his his changing world order book is phenomenal he does a very good job of laying out the reasons why we appear to be in the late stages of this current debt cycle which we talked about uh when we when we last met and this is continuing um all the macro stuff that we're seeing now really

really supports my thesis unfortunately uh and um yeah you know this this new term of the fourth turning is is getting traction uh with uh with a lot of folks now and it seems that we're we're you know headed in that direction yeah i i i it's kind of crazy to see a bunch of the fourth turning like the macro folks uh the you know the lynn alden camp and the uh dollar who is a dollar milkshake guy um like a lot of these folks i've been listening to for years i'm like oh man i'm like probably too sucked into your guys's macro bubbles here and like to bought into the like macro podcast scene but man you guys seem pretty smart right now um i'm just curious like where you see us like what is that what's your framework for like how you're viewing it

september 2022 like how do you what's your framework for viewing like where we are almost right now yeah it's tough uh and the reason it's tough is that i think that uh you know ralph powell has this comment cryptos macro macros crypto and that's one of the reasons why um as kind of a a reformed fixed income guy i i do feel like i get the basics and crypto has enabled a lot of that and and and it's become part of my day job to understand where this is going the the challenge is that we're in this environment because crypto is macro macros crypto where we're very dependent upon what the fed does and at the margins when when you're in a leveraged economy

where everybody's been dependent upon 30 years of falling interest rates when that breaks it's ugly and it broke okay uh the the bond markets are are basically have been crashing uh since more or less late spring and that has to stop at some point because our economy is completely dependent upon that not happening okay so we're at this kind of essential tension right now in my view where you know interest rates are are going up the markets expect that that has to stop because things are breaking the yen is tanking it's in free fall it's becoming worthless um the tide has gone out in russia and europe because of russia now we can see who was naked and it was the entire european economy all along right the

lack of the zero growth in in europe since more or less the late 80s as opposed to negative growth was more or less predicated on a combination of cheap energy and u.s exports to to the u.s uh and and the exports of the us aren't going to work in a model where the dollar is skyrocketing and you know russia is basically we basically said you can't buy russian oil anymore so so so europe is going to have an abysmal winner unless it becomes the warmest winter in history europe's in trouble right uh and and you know you can just look at a series of policy blunders that we've made over the years the last years that have led us to this point

but to a certain degree it was kind of inevitable just because of the dollars positioned in the market so now the question is the fed has become a horrible trailing indicator for the current state of affairs they look at um inflation core inflation data cpi and you know things you know anyway like things like rent okay which are always going to come last right inflation has hit a brick wall the economy in the u.s has hit a brick wall right and and they will admit it probably when when we're month five of the recession you're going to basically hear them hear them kind of pat themselves on the back where they basically say okay mission accomplished we see that the core data is now aligned

with our stated goal of getting inflation under control and we're going to pause and watch what happens when they say that what they actually mean is we're all the economy hit a wall months ago and we don't know what to do next right but we're certainly not going to keep raising rates and we're actually pretty close to that right if you look at the the ims data it's it's basically going to like it looks like it's ready to fall off a cliff um supply chains are basically saying you know factory orders are are basically where whacked with reality and that you know inventories are going to go through the roof and it's going to be an ugly christmas so i don't know but if that's all true but that's kind of my it's kind of my base case right now

is that the economy is hit a brick wall and the next four months are going to be ugly economy hits brick wall next four months can be ugly you tweeted last week uh look for short-term weakness in risk on assets but then look for the big fed pause in q4 after that it's game on what what does the what does that mean so so the big fed pause is what i just said when they basically um you know have no situation but stop ranking interest rates up right now now the market is is is is basically assuming that that's going to happen now and it scares me a little bit but but for the most part the path of of pain uh as raw likes to say for most assets right now is up and and i think the markets are going to seek the path of of optimum pain here

and and i do think that the fed is going to have no choice but to pause i thought it would come in september now i think it's going to be either november or december um i think the markets are pricing in high threes maybe four percent before the pause comes at that point and maybe even leading up to that i think we're going to see a big fast move up in risk on assets now i'm not day trading this that's not my job my most of our clients don't want to day trade this so the point for them being that hey we can accept the fact that there may be a little bit of short-term volatility you know at slightly off the lows uh from the summer but

you know the the 30-year kind of downward channel and interest rates is going to get back on track because the fed is going to have no choice via this pause but to admit what they've done and even if they don't use those words and it's going to be game on for risk on assets at that point uh interesting so you you think that this all happens that this all comes to fruition probably like latter half of this year maybe early half of next year oh i i'd be shocked if it took until next summer but i i i would say you know the last shoe to drop will be unemployment and the rate of job openings is now plummeting and i think we're going to basically see actual uh full employment percentages of plummet going into the q1

and we'll see if they wait until then my guess is is that we get the pause in sometime between november and january um you know we'll see where is the so like if you read dalia's book you've got this like the the big cycle behind like empires rising and falling you've got like new world order kicks it off then you've got like prosperity debt big debt bubble uh and then like it's kind of like peeks out with this like big wealth gap which then like tips over into this debt bust i think dalia would argue that china's like going up right now they're in the big debt bubble big wealth gap is coming u.s is on the other side of the debt bus so us is like they've start we started printing money and credit the next phase would be rep obviously what dalia would say is revolution in war

which then leads to debt and political restructuring and then new world order sometimes i um i one of my issues maybe that i take with uh like the bitcoin the the like very core like hardcore bitcoin crowd is that to for bitcoin to have success uh or it's almost like the worst the us does you're almost like rooting against the us you end up like when you are having disproportionate amount of your wealth in in bitcoin you almost end up rooting against the us and you're like yes like war like revolution like the failure of the u.s dollar like that would mean bitcoin would go up to a million dollars do you like i'm curious how you just uh i get your point i have a lot of i'd call them crypto friends who are at their core hardcore

anarchists and and you know i i don't root for the dollar to fail i don't root for any economy to fail i i think i'm a realist and i recognize that when you're basically creating a a bond market driven debt bubble like the one that we've been creating for the last 45 years that it's unsustainable it's just it has nothing to do with your political ideology it's mathematics and so so i have this this kind of you know visceral reaction to like yeah it's finally going to fail to know you know we can still fix this right we could adopt a hard money

standard gold or something else or or do something else or adopt a digital money that you can inflate now i don't think it's going to happen i think i think they're going to let it fail and and they'll figure out a way to restructure debt and you know and the us won't be the power that it was because we won't be able to settle transactions in dollars by global scale like we can today and maintain reserve currency status and i think we're 15 years away which is not a long time i think we're 15 to 20 years away from that happening and the question back to your original point is is there going to be war i don't know i don't want it to happen i have no reason to believe that this time is any different since you know it's like the matrix or in the 23rd

version of the matrix well we're on the 15th version of trying to create sound money and we keep failing but we keep failing for the same reasons and there is an out this time i just don't think that the powers that be feel any incentive whatsoever than to continue the course that we're on yeah it's funny when i see things like um uh tornado cash and like the us sanctioning tornado cache this feels like um i just went uh white water rafting so i'm thinking i'm gonna use a rafting analogy here which is like i feel like the u.s has fallen out of the boat they're going down these like class four rapids they've fallen out of the boat and they're like grabbing onto the shore and like grabbing onto these like twigs and the twigs almost just like they can't they can't hang on and like

that's what it feels like when i see them doing things like trying to sanction tornado cashmere you guys have fallen out of the boat you're just trying to hang on sure i don't know sure there's so much wag the dog politics that goes on right now and it's it and again this we didn't invent this if you go back in history in these stages it's happened many times i mean all of the kind of focus on you know sec enforcement of of crypto companies and like you said you know let's sanction software sanction software how do you sanction software it's out there you know like the riaa tried to sanction uh a bittorrent it didn't work out too well right and this is more resilient than that so what is your plan well obviously the plan is we don't have a plan except to basically divert

attention from the eye of mordor towards you know something else and i guess tornado cash right now or something else i'm not saying that tornado cash isn't to to to the to the dog concept it's not used for anything nefarious but any technology tool is used for something nefarious anything i don't care what it is right are we going to outlaw pencils because i could if you would stand next to me i could stab you in the eye with a pencil you know so obviously this has not been well thought through and but the bigger point is what's the plan what's the broader plan here and there is none remind me to take a look to see if you

have a pencil in your hand next time i uh stand next to your desk i'll keep an eye on that but i do want to get your take actually i want to go a little deeper into crypto here um speaking of bitcoin one thing i've been kind of debating on uh on calls with mike recently and we've been trying to talk through this is like uh almost just like what is the narrative for bitcoin and what is i mean narrative's kind of a fluffy word but like the investment thesis you know the ethic bitcoin correlation is like uh it's going back to what looks like highs that we haven't seen since like 2017 like the height of the bull market but we're also in the in the depths of the bear usually in the depths of a bear uh you would see the bit you know

bitcoin uh doing much better than than eth um but you're not seeing that this time around and like we're we're heading into the merge uh you've got like all the narrative the conversation is around ethereum and it just kind of makes me think about like what is the thesis for bitcoin right now in your mind yeah so i have a very clear vision in my mind about where bitcoin wants to go and where ethereum wants to go and why and and they will i'll explain that but your comment about about the the price movements and and correlation i do think they will diverge at some point i don't know whether it's going to be three months or three years or 30 years i don't really care that much because my macro thesis is points that both of them going higher for

different reasons over time for me bitcoin is basically fully committed to be the base layer of a hard monetary system and ethereum is fully committed to being you know the decentralized internet the application layer for a decentralized internet and so so as hard money it's very hard to change you know you can't change the atomic structure of gold for example and it should be not equally hard but but extremely hard because it's software to change that base layer of this new monetary system that bitcoin wants to be and hence you know no no appetite obviously for anything other than proof of work which i totally understand there should have been an appetite for for increasing the block size i i was on the wrong side of that that debate i still don't think i was wrong i just lost there's a

difference and and and so you think bitcoin should have increased the should have increased there's zero there's still there's just as little doubt about mine today as there was back then oh really because wait can you can you tell me more about that oh outcomes razer the the simplest answer to scaling bitcoin is not by the way taproot is an amazing you know uh innovation and an upgrade for bitcoin uh i have no problem with store signatures and all the other things that that that prove bitcoin over time even though they're hard and they are a little complex the path of least resistance is to increase the block size which satoshi herself himself wrote about many many times in very clear terms how moore's

law supports the scaling of bitcoin to a certain degree at the base layer completely ignored no one is interested in it and so i i it's fine i've forgotten about it for the most part and i move on but as the base layer of money it needs a modicum of scalability at the base layer but we've put all of our eggs in the kind of bank slash lightning uh basket for scalability of of bitcoin with the base layer being relatively small um and and you know it is what it is right and but but that's independent of of how a billion people can access bitcoin it is sound money it's past the you know gavin used to refer to bitcoin as a test

uh you know in in 13 14 maybe even up to 15 nobody refers to bitcoin as a test anymore and so since it's here since it has real world use since it is used in ukraine and in you know venezuela in turkey and people are reliant on it it's incumbent upon us to make sure it has zero downtime is secure uh and it just works and it does why didn't can you take me like the i don't want to get too sidetracked by the block size wars there's probably a whole podcast oh an entire show that you could do around this like several different episodes but i mean this was kind of a war that ray a battle that waged on from like what mid 2015 to the end of 2017 uh concluding probably like november

december 2017. why didn't yours like what what what happened here can you just kind of conclude the story for folks who are maybe newer to the space there's a really really good book on it i don't agree with the way the book was written in terms of like it's very supportive of the site that won but ultimately in my opinion what it came down to is there was this it was a corporate faction of exchanges folks like myself wallets and then there was the developer kind of anarchist faction okay and the corporate faction wanted the block size increase they recognized that the utility of bitcoin over time was going to decrease um the the fees for on-chain transactions were skyrocketing i i

remember when um when when mining fees or network fees you know per transaction were averaging like 40 uh in in late 17 and you know you at that point i mean everything just changed in terms of the utility of bitcoin and and you know then there was this kind of backdoor agreement to uh you know basically increase the block size after we uh activated segwit and that agreement was really only done with the this kind of corporate side of of of bitcoin supporters and really had no kind of deep interaction with the core developer community node operators some miners were involved and so you

know people felt like hey because bitcoin has no ceo because bitcoin is not a company how is it that you group of corporate types are thrusting this solution on top of us and and and who are you right you're not bitcoin and and they're 100 right in that regard right the way that that the corporate part of this community tried to to hammer the upgrade on top of the rest of the world was its fatal flaw and that never should have happened and my guess is is that if if we had figured out a way as a community to have an intelligent discussion um we would have much bigger blocks today and we wouldn't be having this discussion because it wouldn't have been a corporate driven thing but anyway there's a there's a couple of actually

pretty good books on this already yeah we'll put a show i think it's jonathan beer wrote a book on this we'll throw a link in the show notes that's that's i mean let me not about the block size words but does that make you skeptic if you think that the community made the wrong decision here bill does that make you skeptical on like dow decision making no no because it's competition right so so the difference is that you can have a million dows trying to do the same thing and all basically come to different conclusions via vote on what they should try and and over and it's like um you know it's the same as evolution right over time you know different changes give you different uh benefits and depending upon what environment you live in and hopefully the cream rises to the top and and and the strongest

survive bitcoins is a little bit different because it has network effects as hard money without a lot there's not a lot of competition for that right now and and so um that leads to this this prevailing perspective that it shouldn't change it should be as close to its structure for all time and changes are are slow and hard and i i conceptually i do agree with that um but but the idea of changing the block size is not about changing bitcoin itself it's not and and and so it's um the ability to change a block size is actually a built-in feature uh and and and so so there's a there's a two different so your question is is a little bit of a non-sequitur because i'm not really

talking about changing the structure of bitcoin yeah interesting so what i'm i want to get back to ethan bitcoin bill because what i'm really leading to here is i'm almost pushing us down this like proverbial thought funnel into this like huge announcement that you guys have coming up which i don't want to unveil yet i want to i want to hold back on that for a second uh but i do want to get your take on just make i just want to make sure i understand your thesis here it sounds like your thesis is that uh crypto is the future of like future of banking and and finance will be built on crypto rails uh crypto based banking is the future of financial systems in this system bitcoin is will be used as collateral eth will be used as like the transaction layer in the token layer

and things will get built on top of ethereum am i am i like understanding your thesis correctly fantastic i need to record you totally agree yeah you nailed it i mean in the so in this system like when you look at things like uh you know we talk a lot about maker dow on the show or like compound or ave or some of these like blue chip tier one d5 protocols the the collateral is it's not bitcoin it's it's eth right so do you think that like eventually bitcoin gets like all bitcoin gets wrapped and moves on moves on chain like i almost want to talk more tactically about how that actually happens yeah so so that's a fantastic question that's why i think you know products like like thor chain are really interesting uh because then you can start to to do things like cross

chain in a way that don't break the core tenants meaning if you have to basically wrap bitcoin and trust a central custodian in order to use bitcoin as collateral in d5 you're you're defeating the purpose of having d5 because now you've created an unnecessary weak link in the chain which is the trusted third party holding all the bitcoin right and and so you know i think some of these kind of cross-chain protocols will be able to deal with bitcoin collateral uh using smart contract based models over time and that's that's the promise of some of this stuff to me for composability and uh and and other you know we'll see but but it's very complicated it's very early

but i also think that there is a case to be made that for certain types of transactions using eth as collateral is okay right so so the two aren't necessarily at odds with each other um and and you know ethereum i think is going to go up in in price because of all the use cases because of the fact that it's really become deflationary ahead of where bitcoin is uh et cetera et cetera but it's never going to be sound hard money the way the way bitcoin is or is becoming simply because of this philosophy that as the future application layer of the internet it needs to evolve to meet all of the requirements of the application layer of the internet and those requirements are changing over time and we haven't even

gotten to scalability yet that's coming next after you know after the uh after the merge as an empire listener you know the power of stable coins these dollar digital currencies that transcend borders banking hours and legacy financial rails circles usdc has quickly become one of the most trusted and widely used stable coins in our entire industry it's simple people use usdc because of its composability stability and reserve transparency and uscc isn't only adopted by us empire d5 degens daos nft marketplaces crypto companies leverage usdc to diversify their treasury asset management and ecosystem-wide

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the show let's let's tie abra into all of this right this we've got global macro we've got the end of this 80-year debt cycle we've got your thesis on bitcoin as collateral eth is this transaction layer we've got d5 that's getting built and then obviously we have abra it's been a really rocky uh time and crypto for some of the like central centralized platforms and there are some that honestly didn't make it through this through and won't make it into this bear market you guys have done incredibly well it seems like through this i mean you guys have you've uh processed over like 7 billion in transactions i think you're in 150 countries you've got like i'm these are probably old numbers but like 2 million users a couple billion under management you guys seem to have done incredibly well i'm curious how did you guys

do so well through the bear market when some of your competitors not only struggled but a couple of them went under sure so so this is something that i predicted was going to happen if you go back and look at other interviews i've done and it wasn't just me trying to slam competitors it was me watching kind of you know cowboy-ish banking practices uh with no sense of risk management and and you know ethical practices and unethical practices in many cases but but let me take a step back so we built abra as the crypto banking service that we wanted for ourselves so i said okay i'm going to do one of two things i'm going to build the service i want or i'm just going to basically make it work via

hardware wallets and defy and do a whole bunch of stuff that i don't want to have to do um and and so we basically designed abra to have the you know ability to earn yield the ability to trade the ability to borrow against holdings we're launching a credit card my my goal for this year was originally to be able to turn off my bank account and have abra become my default bank account we're coming we're inching closer uh the credit card that we announced with amex is getting us very close and then there's some other cash features that that we'll be adding later but we're getting closer to that on top of that you have the response responsibility as a crypto bank for you know tried and true risk management practices which aren't crypto specific

there are pieces that are crypto specific when you're doing things like defy to generate yield but collateralized lending has been around for decades this is not a new concept right i mean look at long-term capital management in the 90s what happened in the last few months and over the spring and summer looks and smells exactly like that the fact that it was crypto versus equities makes no difference right so that's why abra has managed to thrive in this environment because we recognized from the beginning that these risk management practices were going to be necessary in order to have a long-term view of where crypto is going as the future of

banking all right so we've got abroad set up you've got you've had amazing success in all these different areas you've got the private wealth management division you've got the retail side of the business what i would call like the prosumer you've got the institutional side up and running you have this goal to create to basically unbank yourself which i think is a good goal uh it's a good product vision i would say to be able to use it yourself where like what was the missing step to unbanking yourself uh because i think a lot of folks have had that a lot of you guys might have had that for years your competitors might have had that but there's always this like missing link of having uh i'll i'll let you fill in the gaps but like what has been missing and i guess lead us into what you guys are launching

so so i i think this idea of kind of unbank yourself is not really realistic we it also nobody really the average consumer anyway doesn't think that way the average consumer says okay am i getting a high quality service am i getting access to my investments if i want to invest in crypto do i trust my bank first of all right are they doing right by me and i think the issue with the banking system is that a lot of people don't trust the banks the banks don't want to have a certain type of customer because of all these kind of you know draconian compliance and risk issues that they felt that they're faced with and dealing with constantly so what i wanted is i

want to basically have a crypto centric service for managing my money making payments because i believe that's the future of banking and we want to lead the way in that and so that's how we've kind of looked at this you know unbank yourself model i wanted to be able to turn off my bank account not because i want to live in a cash economy i want to live in a crypto-centric economy because i believe that's the future i believe it gives me more choice around lending it gives me a stable monetary asset to hold my money in over time it gives me access to be able to have a single kind of source of truth for everything that i do versus you know the current system

and i'm not gonna i'm hopefully not gonna have my account turned off because you know i'm buying bitcoin with my debit card which i hear every day right so so that's what it means to us to be crypto first cryptocentric so what what's the like what was the blocker basically because i know a lot of folks have tried to do this but what was the blocker to actually becoming like this crypto centric bank that you know i'm sure like if i'm using wells fargo or bank of america like i do still you can put more and more capital onto platforms but like i still need to have a bank account uh for a lot of different things it's a combination of embracing the the right regulations uh we're a global company so it's not just in the us but embracing embracing

the right regulatory models globally putting the services in place that deal with what 80 percent of a user needs to do with their bank account right so you need to be able to pay your bills get your deposits um you know buy stuff at the point of sale get access to credit when you need it school loans car loans mortgage etc etc so those are all the pieces that you're going to see over time we have people using crypto's credit today to take out you know million dollar loans at very low interest rates or in some cases zero percent interest using bitcoin as collateral we announced the american express card which we're going to launch uh targeting q4 that will allow you to make purchases using either crypto as

collateral or your existing credit report or both right so so all of these things needed to be very well thought through to kind of get abra to the next step you know which we're which we're obviously announcing today and and it's a it's a never-ending game meaning meaning we're going to be at this for years and and i think we're going to leapfrog the traditional banking system uh in in the next few months is my prediction so is your goal to have folks like right now again like for me i have traditional like i would call them traditional bank accounts like a bank of america or a chase or a wells fargo account and then i've got my you know my aber account and and others is the goal to basically help folks move away from the wells fargo and bank of

america and chase eventually yeah i think when you see how stable coins work now how you can earn yield on stable coins how you'll be able to use stable coins for for a combination of cash payments uh with with finality right where you might as a merchant offer a discount where there's no reversal to something like credit based payments where you can borrow against bitcoin where there is you know the opportunity for reversing a charge per normal american express visa mastercard network standards all of that is possible with crypto and not with a traditional bank now some of that you can do with metamask and defy today if you're not only initiated but you're very technically astute um you can deal with key management we call you know if you

have a phd in metamask and you can deal with the madness that's fine but the the opportunity for a billion people is to become the bank that does what metamask enables with a simple user experience key management built in so that you don't have to know anything about it but one of the core tenants should be i can take my stuff offline whenever i want even if i'm trusting the bank for when they are managing my stuff and their right size in terms of regulation and and and that's what we're moving towards right i see you know abra's future as basically the crypto bank that basically says we're going to do what metamask does but we're going to make it trivially easy you're not going to see all of this nonsensical

you know what's my backup phrase you know how do i sign this transaction to move forward all the stuff that people don't understand and that's going to become the bank of the future it really so it feels like there's one of the biggest santiago and i talk about this a lot there's this big dichotomy in crypto between like leaning in becoming regulated kyc aml like basically setting up your your uh your company for success like in the united states and capturing as large of a market as possible the other side of it is like staying as decentralized as possible creating a very censorship resistant system at the expense of users and like i would honestly say a good example of this is like fellow og uh eric voorhees who um i'm assuming you you know decently

well we know each other quite well in the space like he opted for the censorship resistant decentralized route lost probably 98 of users but like kept the like i don't know like the tried and true like crypto ethos so i i'm just curious like how you that when you like i just i don't know i'm trying to figure out the question here like how do you measure those two uh yeah i think trust is a spectrum and i think the need for trustlessness is also a spectrum and that need goes from venezuela ukraine turkey to u.s singapore you know switzerland on the other side and and

within that entire spectrum of the need for trustless systems and the need for decentralization there are going to be pockets of users all the way on my right here that are still going to want to be you know their own bank via hardware wallets because they can and they understand what i just said whereas the vast majority of people have no idea what a hardware wallet is what a private key is even with bitcoin at 600 million market cap they have no idea okay and and so the role of a crypto bank should be to provide those on-ramps and off-ramps provide high-quality services that i can get myself via a hardware wallet or metamask if i know what i'm doing via defy and you know other lending compound

and other protocols but to eliminate the complexity of having to understand how those protocols work from my user experience all i'm saying is you want to borrow here's the interest rate here's the collateral requirements here's the contract sign it you want to earn yield here's the product here's what we do with your with your collateral that you're depositing here's how much you earn here are the terms here's the contract sign it okay so so and we can disclose what protocols we may be using if you want to dig in to either you as the consumer or the regulator who's overseeing that space on your behalf because in banking there's no such thing as caveat emptor right the regulator plays that role whether we like it or not that's what it

is that's what they do right so so you're now disclosing those things to the regulator who's saying yes we accept that it's okay that you're using this d5 protocol to generate yield for example or that you're basically doing collateralized lending to generate yield or that you're lending to consumers who have deposited collateral with you and you're doing xyz with the collateral right so so that's the future of banking in my opinion some people are calling it now like a web two five approach where where web3 protocols are used with a web 2 interface which gets you you know 75 of the way there from a decentralization perspective but the key in that point part of my point is is that you still have to be able to take possession

of your stuff whenever you want that's that assumes of course you haven't given it to somebody as collateral in which case that's fine i mean you you accepted that risk when you did that but but if it's a savings account or a trading account or a liquid yield generating account i need to be able to take that stuff out 24 7 whenever i want and if i'm not able to do that there's something wrong with your service yeah so when you look at the d5 right now like you look at the compounds and aves and makers and unisops of the world do you see them eventually getting mass user adoption do you see them competing with the the fintech companies the neo banks the traditional banks or do you see them sitting in the background enabling services like like abra to generate yield and et cetera yeah i i

see it at scale as the latter uh because they'll never be able to reach the the the billions never with the use because of their care because of the right because of the complexity right so so i don't i think it outside the u.s the u.s is is is three hundred three let's round it up 400 million people out of eight billion right so so the vast majority of of the planet does not worry about regulation as it relates to using all the services you just mentioned they don't okay so so that's not the issue that's not that what's hindering the population what's hindering the population is okay hey mom i'm going to get you set up to basically trade some crypto first go uh

open up chrome oh you don't use chrome okay install chrome what's chrome okay she knows what chrome is now now you need to install this metamask extension on your chrome browser okay great what's an extension you got it you understand what he said okay what's metamask you know you see where we're going with this right so so that's step two by the way i'm not even at step eight nine and ten so so you've already lost 95 of joe and jane public all right so so the question but my mother uses i think she uses bank of america uh i have a bank of america app can i use that that's probably what she would ask me right now you can laugh at that question and and it is funny but the reality is when you think it through it's a very

logical question i have a bank account why can't i use my bank account to do all the stuff you're talking about right and and we we know why she can't but it doesn't make sense to her okay so so we want to be that bank of america for the next generation and and that's going to need the services you just described now to your question i don't know if it's going to be sushi or ave and are they going to have competitors that kill them are they going to scale are they going to are other companies that we have protocols we haven't thought of going to rule i don't know that's that's one of the things i love about our space but but those protocols whatever they become are the protocols that are going to be the future banking what you guys just rolled out today was this a tech

challenge a product challenge a a licensing challenge a regulatory challenge like how did you go about well what like why almost like all of it i'm assuming yeah so so let me explain uh what what we did uh in in clear terms and what's what were you know what we're announcing and um and and then i'll put put it all in in context if that works um so so today we're we're announcing uh a couple of things we're announcing the formation of abra bank average bank is a u.s state chartered depository institution it's in the process of being formed and it should be live either late this year early next year

all u.s users retail and our private banking and probably our institutional will be migrated to be customers of aber bank to my knowledge it's the first it will be the first depository institution dedicated to crypto live in the united states there are several trusts that are that are live but there's no uh full uh depository institution true bank live today in the united states i believe this would be the first okay something we've been working on for a couple years and then we have an international version of this which is also actually going to be live sooner probably in october and most of our non-us customers will become customers of abra international which is this new um international

license holder which more or less mirrors the capabilities from a licensing perspective as its u.s counterparts and to your question this is a legal challenge which we've worked on and are working on now for a couple of years it's a technical challenge um it's a marketing challenge because we have to explain all this uh and and every you know where i think we're like 165 people now every one of our employees is involved in some aspect of this from support to sales to technology to our big legal and compliance team etc etc etc let me i'll maybe give you a layup then on the marketing side of things what is because i i'm assuming a lot of your users will

be asking the question that i'm about to ask which is depository institution congrats sounds really really hard i'm assuming this took multiple years what does that mean for me the user like how is how does that make the user's experience different okay this go this basically answers the question you asked before which is am i going to use a bank where where the protocols are in the background or am i going to access ave and compound and whatever directly right and the answer is in our opinion the former for 95 probably 99 of people you're gonna access abra bank and within average bank you're going to earn yield you're going to be able to trade you're going to be able to borrow and you're going to basically be using

something similar to metamask in the background you just won't know it right that's the promise of d5 and and web3 for the masses right in a with a very usable experience that is compliant with local laws when you need a trusted third party in the middle because i have no idea how to use all this metamask stuff and you know use these protocols that you you and i were talking about earlier right and so abra wants to be that web three bank for everyone that's it the the ultimate d5 mullet right do you find the back fintech that's it that's it it's a composability system to

put it back in defy terms today that basically gives you a compelling user experience where we'll curate most things for you but not everything will actually give you uh at some point a full web browser inside of the average experience that lets you go to any site on the web today that would require something like a meta mask or other service but automatically uses your average bank account so you don't need that deep that that webmaster web you know metamask like experience which everyone hates right and so that's where this web three bank is headed and we'll be there you know most of that will be there this year and some pieces of it will continue

to launch over the next year including the credit card and nft support and reward points as tokens vr cprx system et cetera et cetera et cetera right it's all coming together under this banking umbrella now and it's it's just us giving our customers what they've been asking for yeah now that you have these licenses i mean what obviously it takes six to 12 months to roll all these products out but what comes next do you guys make acquisitions do you guys uh do you look to go public yeah well good question so we're in final formations of these entities now um the bank will be live we hope in q4 possibly q1 um the that's about u.s uh version of average bank and then the international

version of our bank amber international should be live in october and that will come first and and so um there'll be lots of changes to uh we're we're now calling abba earn abra boost as of today and that will be live in the app i think by the end of the month and and there'll be announcements around that and so there's going to be a whole bunch of changes to have more ways of earning yield that are now compliant with local bank regulations so all of this question all of these questions about how do i legally pay yield it becomes a non-issue in some cases we're using defy some cases we're using centralized lending but a bank can pay interest right so so you know we're basically going to be

paying you interest as abra bank or abra international and so you'll see debit products credit products in addition to the amex card you'll see cash products for getting your salary it just it's just going to keep building on this for both for for all three legs of our school for our retail clients for our private banking high net worth clients and for institutional clients what do you think about after this obviously it takes time to roll this out it's a big it's a big headache today to roll this out you should pat yourself on the back but what's next do you guys do do you look to go public in the states what is what is the big goal there's two things that really matter to me coming out of this the first is transparency and so as a bank we do have to make certain disclosures

public you'll be you'll be seeing all kinds of reserve statements and you know all the things that you would want uh in terms of transparency for a company that is effect that is a bank okay and this is something that you know we we looked through each other in the eye and said okay you know there's a lot of work from a systems perspective from a regulatory perspective from a board oversight perspective and we all decided we were ready to sign up for this okay this was a while ago right we're just now able to talk about it and then the second is you know how do we future proof the business right so what's what comes after nfts well you know what comes after icos well it was defy and nfts thank god it was something else something better

right and so well what's next what are the next type of contracts that may feel similar to nfts but really evolve the space and and we're putting the pieces in place for it not to matter what comes next so that you can automatically use abra regardless meaning if it's ethereum based or solana based or polygon based dramatic it doesn't matter you'll be able to use abra when you go to that webpage or download that app abra will work as your web3 bank with that app that's what matters most to me post aberbank okay because that means that i have no reason to leave i can trust abra i know abra's got my back no matter what comes next

i think part of that is being public it relates to both issues as a public company you're fully committed to transparency disclosures um you have access to capital uh we want to be global and you know we've always been committed to that and so so i think being public and a public-facing bank greatly increases our chances of of owning that web three banking space this is great bill we're we're uh we're rooting for you i mean it's really cool to see so i think i think a lot of others will fall in your guys's footsteps but it's cool to see you guys uh paving paving the way here yeah i think you're going to see a lot of companies take this approach going forward um i think it's the future of banking and uh you know i'm we just we're fully committed to doing

it now yeah agreed anything else bill before we wrap this up anything else you want to you want to share it's been an awesome conversation yeah i mean look um right now it's business as usual forever customers you'll still see the the the changes over the next few weeks and months with with um the aber boost um the formation and rollout of abra international for your listeners outside the us uh is is is coming very very soon just a few weeks out and then you'll have more more and more um announcements about um about average bank as we get closer to flipping the switch on that amazing well we're looking forward to seeing it um what's the what's the action for folks should folks just go to abra.com yeah yeah and if you're already an average customer if there's nothing

to do it's business as usual uh you'll see you know the announcement obviously when amber bank is fully live but in the meantime you just go to abra.com follow us on twitter you get all the great updates and yeah business as usual easy enough bill we're rooting for you congrats again on everything exciting to see it all develop and um yeah thanks again for coming on the pod thanks brother great to see [Music] you