zerohash CEO: Why Stablecoins Are Setting The Stage For The Next Massive Boom (Trillions Are Coming)

Transcript

And you start to change the way that we think about payments as opposed to for example being paid every two weeks, potentially could be paid every day or even after every service that you provide. And that adds enormous value that people don't need to for example take out loans because they can be paid more quickly. >> Just like the streets of Manhattan, I'm going to keep this quick. Over 70% of our viewers are not [music] subscribers. Yes, you. Every week we interview some of the best entrepreneurs and investors [music] in the financial industry. The easiest way to support our channel is to hit the like and smash the subscribe button. Now sit back, relax, and enjoy [music] today's show.

>> Welcome to our Stable Up segment of the Rollup. Today we are going to be chatting with Edward Woodford. He is the CEO and co-founder of Zero Hash. And so we are excited to chat about stablecoins on Visa and Zero Hash today. These guys just announced a partnership with Visa. We're going to be getting into it. Stable Up is sponsored by our friends at Frax. They are doing incredible things with Fraxnet and their FRX USD stablecoin. Let's go ahead, bring up Zero Hash CEO and co-founder Edward Woodford. And we're going to get into the newly announced partnership with Visa. It's his first time on the show. Edward, you're up live now. Welcome to the show.

>> Yeah, great to be here. >> Absolutely. Thanks for coming by. And I actually remember Zero Hash. You guys have been around a long time, but I kind of think you're flying under the radar as most people in the crypto world might might not really realize the the type of work that you guys have been doing for such a long time. Because it's your first time on the show, maybe you could just give us a little bit more of an introduction into Zero Hash and you know, what you guys have been up to over the last few years. >> Yeah, thank you. And it's nice to be a a participant as opposed to just a viewer.

So yeah, it's great to be here. And just a little bit of context on Zero Hash. So I founded the company in 2017. So in crypto and stablecoin years, you know, a long time. And really the commonality for us is just that we believe that on chain is the way that value will fundamentally disrupt the way that everything moves globally. And so today we power some of the largest banks and FIs such as Morgan Stanley's crypto product is powered through us. We have a number of stablecoin partners using stablecoins in and out and that's obviously where the Visa announcement comes and we power others like Stripe Gusto lots of different applications and use cases really viewing stablecoins as an

alternative money movement business. So we're about 220 people based globally and yeah, like you said, in the quadrant of of crypto and on chain businesses, we've been one that has been doing a lot but potentially not making as much noise and so it's great to be here to talk about the partnership today. >> Absolutely and and you guys really skated to where the puck was going, front ran a lot of the industry on partnering in a more regulated fashion with some of the banks financial institutions that you mentioned. Let's dig into the stablecoin work that you've done helping to set up some of the infrastructure for stablecoin partners. You mentioned that you support several of the stablecoin companies that are out there today. You mentioned Stripe and Bridge and you know, other ones as well, also helping Morgan

Stanley with their crypto offering. Maybe you could just get into how ZeroHash works. Understandably a very very cool and and notable partnership list but underneath the hood, what is it that ZeroHash is doing? What is the technology at play here? >> Yeah, so in terms of what we seek to provide, we seek to abstract away the complexity of stablecoin and on chain finance both from a technical perspective as well as a regulatory perspective. And so ZeroHash has always taken a compliance first approach and we're licensed to operate in all US states, in Europe, in Brazil, in Canada, so all over. And so we effectively want to be that one-stop shop to allow partners to scale their on chain strategy with ZeroHash. From a technical

perspective, what that means and just maybe just from a strategic perspective, we're living in a world with greater fragmentation both at the chain level and at the asset level. And our view is that it's only only going to get more complex, which means that for example, there's now OUSD to complement USDC, PYUSD. And then each of these assets is also on many, many different chains. And so ZeroHash abstracts away that technical complexity of spinning up addresses on-chain file and anything related to on-chain movement >> Yeah. >> um from start to finish. And in particular, we're solving usability challenges for partners as well, making it a simple experience for customers to move stablecoins in a way that feels very native um and simple in terms of an account-to-account movement. So, we

abstract away that technical and regulatory complexity for partners um and, you know, today we have close to 10 million end customers um and, you know, by the end of this year, we'll actually be providing access to about 3/4 of US households will have access to our technology through the partners that we service today. >> Well, that is fantastic reach and scale and it makes sense given that you've been in the space for a long time. You can serve as a trusted partner, whereas a lot of these financial institutions are just sort of on the outside looking in. They're sort of learning, educating themselves, doing some R&D to understand the space a little bit better. You guys have been around a long time. You know a thing or two about the space. You can come in and help to educate these larger players. Um let's talk about Visa. You guys have a

ZeroHash Visa Direct partnership and you're going to be advancing the real use case of stablecoins around the world. Can you just talk to us about Visa? Tell us how this ultimately came to fruition and what is Visa looking for in a partner like you and and what are you looking for in a partner like Visa? >> Yeah, and I think your context and framing is is exactly right. And I think what's really exciting is maybe two, three years ago, these were financial services companies that were dabbling their toes into these spaces. Now this is the core business adopting this infrastructure. This is not a proof of concept of Visa. This is a true GA application to all eligible um customers. And the scale of Visa is just extraordinary when you look at the number of endpoints that they service

over 12 billion endpoints over 190 countries. And so, stablecoins for Visa are a way to effectively move value instantly real-time global um in a very cost-efficient way. Um and really there's two applications that we've announced so far. The first is what um is termed merchant pre-funding. So, this is a merchant that wants to uh do a payout, for example, a two-sided marketplace. And conventionally, you would have to send money or you need to hold money at a partner um like Visa Direct. Stablecoins allow that for effectively that just-in-time funding, which frees up capital for partners. And if you free up capital, it that's very, very efficient from a cost structural perspective, allowing people to continue

to invest in their business as opposed to effectively parking that capital. So, that is the merchant pre-funding use case, which is extraordinarily exciting. The other is payouts to people globally. So, for example, paying out a freelancer in the Philippines um takes seconds, not days, via the Swift network. It's more cost-efficient. And I think what's really exciting there from a from a just a what it means for the world is if you can move money more quickly, more easily globally, that allows people to get access to those funds. And you start to change the way that we think about payments as opposed to, for example, being paid every 2 weeks, potentially you could be paid every day or even after every um service that you provide.

And that adds enormous value that people don't need to, for example, take out loans uh because they can be paid more quickly. So, that payout use case is the second thing that we've announced that we think is going to change the way that two-sided marketplaces in particular move money globally. >> Yeah. We uh we had a guest on the show uh who described this market as well, this idle cash market. put it at the scale of $27 trillion. Um not sure the source of that info, but I believe uh that that is the scale at which we're talking about when we're thinking about idle cash, making that more efficient. And I also just want to, you know, as we kind of think big here about the potential of liquidity unlocked, the capital unlocked that could come as a result of just-in-time

uh you know, capital deployment through stablecoins and this partnership with Visa. You know, it it also just leads me to think about the the kind of scale as we start to increase monetary velocity. Because there's a lot of people that come on, they like to talk about the basement trade and the increase of liquidity and these sorts of things, but I think a real sign of a healthy on-chain economy or economy at large is going to be increasing velocity so that we're always turning these things over. Maybe you could just speak to what you think the potential positive consequences of unlocking this liquidity and then also increasing capital velocity. What do you think that could end up leading to?

>> Yeah. So, velocity of money is is good for for everyone. Um it ultimately is the lifeblood of an economy. And just look very practical example, most SMB businesses, the biggest cost they have, 60 to 70% of businesses' cost is payroll. And so, if you're a business in Brazil that's looking to pay out people across 100 different countries, the need to pre-fund could be, for example, 4 5 days of working capital, which can be very very meaningful. So, as opposed to opening up a new uh a new product or a new factory, you're spend using that money to effectively float, and that creates inefficiencies.

That is incredibly powerful in terms of what velocity of money ultimately means on a global scale. It allows for people to invest that capital as opposed to effectively that money at rest. I think you also raise a really great point in terms of the metrics that matter. I don't I think this is going to be a have to be a conversation that shifts. Today, most people's metrics that matter effectively assets under custody. How big is a stable coin? I think that's the wrong metric. I think increasingly you need to be looking at total process volume on chain. And you need to be looking at the connective tissue that exists. We, for example, put that there's 2.5 billion stable coin enabled accounts globally. Meaning that if you had an account at Revolut or Robinhood or GCash um or PayPal or Cash App, you have access to a stable coin today. And

that is what is incredibly powerful and that's why we're now at this point where this we've seen this distribution of technology and now the applications and use cases can be built on top. And that's where we see we are in the journey. And that is the metric that should start to matter. How many nodes do we have available on stable coin enabled accounts and how much volume are we putting through? I think we need to move away from the AUC number. >> Yeah. I I completely agree and I I tend to harp on this velocity number so that we can ultimately unlock all this idle cash. And you're absolutely right, AUC, TVL, these are becoming antiquated and there are metrics that are a better indication of what the status, the landscape of this transact these transactions look like today. Uh and so I I encourage uh some more of our fellow

researchers to dig into some of those metrics. Um Edward, because, you know, you've got a unique vantage point. You've gone into the offices with banks, with financial institutions. I take it you're in the room. Sometimes there's several stakeholders that are ultimately coming forth with these deals. These are multi-department decisions that are made. And you're sometimes in these rooms with people and companies that their business is built on providing these loans. They know there's idle cash. They know there's idle capital. They loan to to people that are, you know, making some sort of payday uh pay payroll. They're they're facilitating these loans on a regular basis. That is their entire the entirety of their business. And so when

you're in, you know, an office building with a bank and you're sitting them down and you're saying, "Hey, stablecoins could completely eliminate, you know, the potential of bank loans, you know?" And and that is a real hit to their bottom line. What is the reaction to that? Do they say, you know, "You're you're, you know, you're crazy. That's not really what's going to happen." Do they chase you out the block or do they do they listen to you? They they take the opportunity to to understand what is coming? Maybe you could just talk us through the re action that you get from some of these large financial institutions as you see them learn about stablecoins in real time.

>> Yeah, so I really think it's about people reassess the business that they're in. And I think that people now are actually as as opposed to operating from a place of fear, they're operating from a place of being aggressive in terms of what this can mean for them. And so, for example, um look, one very tangible example is stablecoin backed cards. We had an announcement uh with Marqeta 2 weeks ago around the ability to issue cards uh globally. And in some sense, the stablecoins can threaten an existing business, um but equally if you lean in, it can allow you to go global more quickly and it can allow you to change where do you make economics today? But I think when you look at the largest FIs, they know that this is happening. This isn't a question of if, it's a question of when. And so most players are

starting to assess where can they start to potentially where they've been potentially relatively narrow in terms of their own business application, can they potentially leverage the stack that they have in this new technology to potentially make more money and to actually expand what they do. So I think increasingly FIs and large enterprises saying "What is the service that we ultimately want to offer customers?" Potentially today we have five different players in the money stack and that's very very common when you actually look at money movement or for example, card issuance. There's lots of players downstream.

Is there the potential for me to cannibalize somebody else downstream? That is ultimately where they're coming from. Um and so this is why groups are leaning in as aggressively as they are um because they view this as a convergence um between companies that have started on chain native and themselves in traditional finance and the two worlds are converging. And ultimately it's about how quickly you can get and grow. And that is what we're starting to see um across across the largest enterprises. >> W- Was there a tipping point where you saw this institutional apprehension turn into aggressive, you know, research and development and implementation?

Can you Can you remember Was there anything that happened in particular that signaled to these larger financial institutions now is the time to act? >> Yeah, look, I I think obviously in terms of what I would call on chain money, um I think that you've started to see obviously the genius act being passed and now obviously the rules being finalized and then obviously clarity from regulators around the fact that ultimately the technology on which deposits are built on doesn't change the underlying. Um and then you've obviously seen vast growth and proof points such as for example BlackRock's BITO fund in terms of what that means for the space and how asset managers and players can start to think about what does it mean for on chain money ultimately in terms of the velocity of movement. So I you know, the

the growth and the acceleration of the last two years has been extraordinary. I don't think there's one silver bullet in terms of what ultimately caused it. There's obviously regulatory regulatory pieces. There's obviously been the proof points that we've seen. And then my point around just the distribution of this technology has ultimately shifted it. And I often use the example of the iPhone. You need the iPhone to be distributed and then the App Store could be built on top. I think we're still at that early stage of the App Store being built on top because now you've distributed this technology broadly and widely and made it very simple for people to access. And I think you're only going to see an acceleration of where we are today in terms of the utility of on chain finance.

>> And this is what we're extremely excited about because obviously here the the predominant focus is stable coins. But stable coins are a building block from which several forms of utility and further asset classes could be tokenized and combined with the same infrastructure that is available today. This has been a thesis that we've been talking about on the show. It is this tokenization thesis where you tokenize all these asset classes, cash has been a predominant one. But, then once these things are on chain, that is when like the real party gets started because this infrastructure is able to facilitate all sorts of functionality that wasn't previously possible. And so, as you're thinking ahead, obviously a big focus on the stable coin front because this is the

precipice for the entire development and evolution of the space. But, as you look forward to stable coins, tokenized equities, tokenized deposit deposits and these things continue to evolve and accelerate, how do you think the landscape will look maybe, you know, after a lot of this infrastructure is laid, this foundation is laid? How do you anticipate some of the banks and financial institutions and and individuals fitting together? What is their trans transaction landscape look like when all these things are tokenized on chain?

>> Yeah, ultimately for the user it should be no different, right? The The technical piece should be abstracted away. But, in terms of the utility that should scale enormously in terms of what can be done and and the value proposition of that. I think, you know, we've obviously seen enormous growth with stable coins. I think now you're going to see other forms of on chain money accelerate. So, bank deposits are going to accelerate, on chain yield bearing instruments are going to accelerate in large part because of the driver of uh in terms of collateral. And you can look at a payments business that needs to post collateral globally, you can look at a brokerage business. And what we're starting to see just generally is that the velocity of money matters more in part because customers are increasingly expecting it because communications are global, instant, real

time. But, also if you look at the capital market space and you look at tokenization that you mentioned, Tokenization goes hand-in-hand with on-chain money. The value prop of tokenization is instant, real-time, global. You need the fiat rails that keep up, and that's where on-chain money starts to play play play in. And, you know, last week we announced, for example, our expansion of our partnership with BlackRock, who have built, obviously, the largest one of the largest on-chain yield-bearing instruments, which is BlackRock's BUIDL fund. They're expanding the number of tokens, leaning in, but stablecoins are an incredible proof point and accelerant of that strategy because they go hand-in-hand in terms of the value prop.

So, for us, we see these things as not they they're obviously separate from an asset class perspective, but they're very intertwined uh just in terms of how they reinforce each other. >> Yeah. Um Edward, you mentioned uh BlackRock, you mentioned Morgan Stanley, you mentioned Visa. I mean, who's against you guys? What's next? Who's left? Have you guys already reached all the all all the potential partners? It's just about leveling all them up and scaling, or is there anyone left that you're still hammering, helping them understand the value proposition here?

>> Yeah, look, we're we're incredibly ambitious. Um we kind of have a Pokémon mindset internally, which we we want them all. Um but I think in terms of just in terms of this technology, we're still incredibly early in terms of the use case and applications. So, look, we started off as a business very focused on crypto, and we ultimately believe this was a technology that could be applied across other assets, in particular dollars, and that's why we've seen the growth of stablecoins. And you started to see, you know, just the the the markets that are interested in this scale enormously. So, large banks, prediction marketplaces, brokerage platforms. Um where we're particularly interested in is, again, where this technology can be applied to with this kind of commonality and proof points.

And in particular, we're interested in the agenic uh finance space. We released an agenic finance suite uh just under 2 weeks ago to service that space. So, again, we see this technology um as an ability to effectively touch the way that value moves globally and instantly. And we're still at a very, very early stage in terms of where this technology has disrupted and where it can go. >> Yeah. Um I'm not sure if you caught any of the previous segment, but we actually just had uh the director of product at MetaMask come on, talk to us about the MetaMask agent wallet just before your segment. Um and so our our audience is fully prepped and and ready for this topic. Um I'm just curious, you know, given that uh we already kind of have a conversation about maybe the early

majority, how retail individuals are approaching an agentic wallet experience. We also talked about Cloudflare and how they're getting into this game as well with uh giving AI agents an identity and a wallet. I'm curious from your perspective, you got the vantage point communicating with these institutions, how are they approaching an agentic wallet experience with Zero Hash? >> Yeah, so what we particularly focus is on agent to agent or agent to communi- or agent to creator communication. Um and so obviously when you look at the Cloudflare uh you know, sets up, I think it's incredibly exciting. But you know, there's some assumptions that have been made, principally that one entity can effectively control access of billions of disparate agents uh to billions of um

information sources. And that's more akin to say the Spotify model in music where Cloudflare can effectively control the the two sides of the marketplace. Um I think that's certainly going to be part of the future of the way that agents um communicate and pay um ultimate creators. Um but I also believe in a world where we are increasingly I think increasingly starting to believe that we're going to all be multi-agent. Um and so we're going to have, you know, dozens if not thousands of separate agentic uh models. And equally, we're going to have billions of data points.

And how do you create that in a fragmented global world? I believe in a global uh distributed payment mechanism which is on-chain money. And so that's where we fit into the stack is providing the stack for two-sided marketplaces to, for example, stream payments, hold money, and move money in a more fragmented world. Cloudflare's obviously coming at this in a more centralized way, ala Spotify. We're coming at this for potentially the other 80% of the internet that isn't powered by Cloudflare, or potentially the way that the internet is rebuilt starts to change the way that that that the world starts to to evolve as well. So that's really our positioning. Um there's a slightly different strategic approach, which I think is very complimentary to Cloudflare. The two are not mutually exclusive.

>> Wow. Well, Edward, you've given us plenty to think about here. Um this has been a fascinating uh fascinating chat. I mean, we spanned all the way from, you know, stable coins, tokenization, agents as it pertains to, you know, the the global on chain world with some of the largest institutions at play. Maybe just a final closing thought, what can our community and our audience expect from ZeroHash coming down the pipeline in the near future? Uh any anything that uh that we missed here that you want to make sure that we stay aware of? >> I think we're going to continue to see just more and more acceleration. Um and like I mentioned, for us, we view our role as a distribution game, um providing access and abstracting away complexity. And so continuing that thesis with more and more big

announcements of um household names and servicing more and more players around the world and abstracting away that complexity such that this looks and feels um just like a better product without needing to think about the technology and underlying infrastructure. >> Yeah. Absolutely. It certainly seems like it's progressing that way. Congratulations on all the success so far, Edward. Thanks so much for coming on. And uh we are going to pay attention here going forward to ZeroHash. Uh would love to have you on again sometime soon. >> Thank you. Great to be here.