Circle IPO: Jeremy Allaire on building stablecoin infrastructure for the internet financial system

in a quiet nailed this one and we're so excited to have Jeremy on the show. Welcome to TBPN. How are you doing? How are you feeling? Congratulations to you. Congratulations. Thank you. Thank you. Uh I'm I'm feeling good.

It's it's been a it's been a a really intense couple weeks and um obviously uh a really exhilarating last couple days. Um did you get any sleep last night? I did. I did. I I managed to my my family was able to join me great for the uh for the ceremonies here in New York and got dinner with my family and got some rest.

Yeah. Uh we we talked to Brian Armstrong about uh the initial roll out of the circle partnership years ago. This has been uh a classic overnight success very clearly. Probably your overnight success. Yes. Yeah. But uh overnight success. We love an overnight success on this show.

uh but can you give us a little bit of the the the history and the story you told about the company when you were taking Circle Public? Yeah, absolutely.

I mean, look, you know, my my background had, you know, prior to this been building internet software platforms and infrastructure from like programming language, developer tools, digital media platforms.

And I was always interested in sort of how the open internet and open networks could could change the way different parts of society work. That was what animated me. And in 2012 I got deeply into the technology behind crypto.

in 2013 really formulated this idea that um you know it would become possible to build a protocol for dollars on the internet where you could issue a what I thought of as a full reserve dollar digital currency that could be made accessible in a protocol like HTTP.

So you could have a a protocol for dollars on the internet and I believe that we could do that on these blockchain networks which were super nent at the time and there was no legal framework for any of this and it was like you know totally crazy.

Um but we believe we could do it and um you know I think the the the the belief was that over time these networks would become scalable, the infrastructure would work.

We could come up with laws and regulations and that once we achieve that that basically the storage and transmission of value would become like a commodity free service on the internet and money velocity would explode.

And then in particular, um, I was really excited at the founding of this idea of programmable money and smart contracts, which was like ideas on napkins at the time.

Um, and that ultimately not only would you just sort of have this explosive way to and and lowcost way to move value around, but actually the utility of money could increase dramatically and that you could actually rebuild the financial system into a internet financial system, which is how we founded the company, a circle internet financial um, originally.

and and so um you know we've just been pursuing that and and now like it's actually happening like the infrastructure works. There's laws and regulations.

We have these full reserve digital dollars that have like central banks and credential regulators looking at them and and the technology is sort of starting to kind of go into the background. It's no longer crypto. It's stable coins and it's digital currency.

And so um and we've you know we've built I think right now a really interesting business uh to to to bring that. And so that's sort of the origin of it. And so kind of um it's been you know it's been a long road for sure. Congratulations. I have like 12 more questions.

I know we we don't have a we don't have a ton of time. Um I you know I I want to get into you know some of kind of two angles. How you're thinking about partnerships on a go forward basis with institutions and partnerships with you know other large you know public companies.

It seems, you know, we saw Uber in the last 24 hours in the headline talking about, you know, exploring stable. Talking about payroll companies potentially and and I feel like this gives every, you know, I uh my last company was a fintech company.

We enabled us uh stable coin investing with USDC and uh so I've been a big, you know, believer for a long time. But you know you guys being public now, the market reaction to it, it feels like it gives every single institution in the world permission to say, "Hey, let's adopt this technology in a meaningful way.

" And so it truly feels like you guys are on day this is I hope so day zero. Yeah. I mean, look, I think I think this is like a mainstream moment for the adoption of this technology. We're classically crossing the chasm, right?

from early adopters to like mainstream acceptance, the technology usability, the laws and regulations and and you know having a publicly traded company like this I think it really does matter to trust, transparency, compliance, governance, things that really matter when when other major companies want to figure out who to build with.

But you know at the core of our business our whole model is we're a market neutral infrastructure company. We're like a platform that people can build on top of.

We have banks and neo banks and payments companies and and fintexs and exchanges custodians like every type of institution we work with already and they face us as a mar market neutral platform and that's really really important. We're not competing for end users. We're not competing for businesses.

We want to let other people build on top of both the kind of public utility that we put out on the internet like our public protocols and like the the kind of market infrastructure of the money issuance side of it.

And so it's now it's definitely getting to a point where um yeah I think major public companies um commerce firms internet firms financial institutions of of all types really can you know build on this now it works it's it's it's it's liquid you can connect to it around the world and and we have the ability through innovations like CPN a recent product that we launched to abstract away from an enduser perspective a lot of the things that are are you tend to be barriers to entry and and and make it work compliantly as well.

So, it is a really I think significant moment and I do think that um you know lots of mainstream companies can now really feel like they can do this and there's a and there's a great platform company to work with. I'm wondering about other real world assets on change pro programmable money.

A lot of the conversation around I want something that's low cost, high speed, programmable, and stable supply. That makes me think gold, stable gold coins basically. Uh I'm sure you've gotten this question before, but why didn't the market evolve that way?

Or even uh that original like 1999 Peter Teal talk about you're going to be able to transfer $1 worth of S&P 500 to someone else. And uh there seems to be some demand for that type of stuff, but we the market didn't just break that way. Okay. And so what's actually going on? Yeah.

Well, I mean look, I mean the the dollar itself has has extraordinary network effects. Like 65% of trade is settled there. Sure. And and frankly like a huge a huge driver in in our business right now is demand for digital dollars around the world.

People, households, firms want to hold these safe full reserve digital dollar instruments that have the utility of the internet. It's like when people woke up and said, "Hey, I can use WhatsApp and I can communicate with others. I don't have to pay my carrier these SMS fees. " And it's over-the-top internet money.

And so people have figured that out and um and people want dollars.

Um even though there's a sell America trade or whatever you want to talk about or there's a fiscal cliff or whatever it is like all these things that are there, people still want a unit of account and they want the power of the internet as a medium of exchange and and relative to almost every other fiat currency, the dollar still remains super preferred.

And so I think that's that's certainly going to be the case for uh for a while. And um and so I think that's there, but the programmability piece is the really exciting next step, right?

You know, how can you intermediate financial arrangements, commercial arrangements, labor arrangements, arrangements between AI agents, like all of these things that can be machine mediated with provable code, you know, tamper resistant provable code on the internet, which is what smart contracts give us.

We're just starting to see the unlocks there. Um, and it's going to be an entrepreneur and developer driven phenomenon for sure. That's amazing. You you mentioned AI agents. Uh, Ben Thompson was reacting to the uh the MCP standard and the lack of a payments layer in there at least in this version of the specification.

Uh, is there is do we need a v2? Is this something? Well, you know, you know, it's it's a great question. We're working with all kinds of teams on aentic payments. And I'll tell you, you know, we worked on a new um a new uh standard. Actually, it's reusing an old standard.

Uh we worked on it with Coinbase and a couple of others, which is X42, which is essentially an un it was a it was a protocol extension of HTTP, which was originally a protocol extension to support payments native to HTTP, and no one ever did anything with it.

And so it is essentially the payment request like uh feature of HTTP. So that's been reincarnated and where stablecoin is the payload. And so now you actually have built into HTTP an extension which is a stablecoin payload. And so it's like literally designed for AI agents. Yeah.

Uh that need to basically you know handle these and and it kind of abstracts away what chain you'd use underneath. And so it's it's pretty cool and we're pushing it into our dev products. So host Coinbase and others.

And so I think actually like that was part of like you know early on Mark Andreasen complained I was about to say yeah I mean that's the famous thing hey we had this thing there no one did anything with it.

Well now we have something to put in there and now we have the demand which is like machines that talk to each other and so um it's it's interesting how a lot of these things kind of come together at the same time. Yeah. Do you have a view on uh that idea of micro payments on the web?

It just feels like we have microtransactions that happen across APIs. They just get bundled and reconciled at the end of the month. There's still a ton of value in in stable coins. I'm not saying that like, oh, the narrative is bust because that might not be the endgame.

But we saw this with Bitcoin where people were saying, oh, there's four different ways that this could break privacy blah blah blah. It wound up in having a very strong narrative. It it kind of narrowed down the focus, but it's still a wildly successful technology. Well, I mean, look at at a high level, right?

We think about the the TAM here as legal electronic money. And then narrowing that down a little bit, you have cash and non-inter non-interestbearing demand deposits, which globally is like $60 trillion of the money supply.

And so if you can have a digital cash instrument that has the superpowers of the internet and and the like that can basically move and transact at almost no cost, there's an enormous amount to to grow into.

Now the other part of the TAM is all of the different utilities that we have for storing it, moving it around and those are being reconstituted on chain and so you you start to think about like okay you know crossber payments is one that we talk about a lot and we're seeing a lot happen there.

The kind of point I like to make is like when's the last time you sent a crossber email and sort of like well that doesn't make any sense. We're we're like we're entering that era with money, right?

Where basically like stablecoin money and that could be a business that's got a $10,000 payment to buy something from someone in Asia to, you know, get product in Latin America. It could be an investment, right?

I want to make a $10,000 investment in a startup in in in an emerging market or in the US or it could be and as we see today like the biggest electronic trading firms in the world are moving hundreds of millions of dollar transactions over blockchains using USDC to settle bilateral trades.

The exact same transaction is being used to do buy a 25% digital a 25 cent digital object in a web 3 game. And it's the same, right? Just like if I send you an email with a picture of my breakfast and you send me an email with a CIA dossier. It's it's it's the same payload.

It's whatever it is 25 byt or you know a bite of data or whatever. You know, it's the same thing. And so, you know, that's the cool thing about this. Very very scalable. And so you don't need like streaming payments or micro payments as like a like killer use case.

you just need to be able to support all these different kinds of of of value exchange just in an internet native architecture. Can you talk a little bit about the the geopolitical environments internationally that are most receptive to stable coin adoption?

You could see demand for crypto products track or correlate with authoritarianism. But then you have the push back of a lot of authoritarian countries might want to ban or restrict or make something illegal.

So, so will we see more count almost counterintuitively or like as a second order effect, will we see more stable coin adoption adoption in more democratic countries first? Yeah.

Well, what's interesting is the the demand for for stablecoin money is very global and and we do see it for example in in in um countries where there's weak regimes or the banking system isn't as adequate or there's not as as effective access to dollar banking. Sure.

Um, and and so that's a that's a valuable thing for the people and businesses in those markets, but but it is sort of this again this over-the-top phenomenon like you know WhatsApp came over the top and like all of a sudden everyone was a Facebook customer and then dealing with Facebook for whatever issues in in your country or you know the Arab Springs were an example of like hey everybody could like share media with each other and like whoa we just lost control uh you know of things and so I do think there are geopolitical dimensions to this.

I think we're in the very early. But then you guys have have partnerships in Japan that allow you to launch USDC there, which is that's our philosophy, right?

Is if a government is going to have rules around, you know, stable coins in their in their society, you know, we we want to make sure that like those rules are are fair obviously and and and we want, you know, that stable coins that are allowed to be used to be held to really high standards, right?

high standards of trust and transparency and compliance and governance and and things like that. So that's important. And what we're now seeing is in markets where stable coins have exploded, Korea, Brazil, Turkey, South Africa, Kenya, um like all of those governments are working on stable coin rules right now.

And you know, so I I think it's it's a it's a space where that's intersecting and and so yeah, we've dealt with this in the history of the internet, right? It was when the internet started like you needed a broadcast license to have a radio show in Italy, right?

It was like a or there were national monopolies that were the only entities that could actually do radio shows in Italy. Well, now here we are, right?

So I think there are these kind of transformations and society ultimately votes you know on on what they want to adopt but it is still a political economic negotiation and monetary sovereignty is not something that the internet has really faced off against uh you know uh in a big way but you know people talk about bitcoin as doing that like as this non-s sovereign store value but then when you have kind of exportable digital fiat then it it it it does become a slightly different issue.

Can you talk uh quickly about the competitive dynamics on a go forward basis? This IPO was massively successful. It seems like they're at at right now from my point of view infinite uh excitement for for Circle and USC.

That's obviously going to inspire a lot of different groups whether it's early stage startups to other institutions to uh compete and and I can imagine myself why you guys will continue to dominate. But I'd be curious to hear from you.

I mean, look, I think um the way we think about our business is that we've built um a stablecoin network and it's an internet scale platform and network utility and we take very much like an internet platform mentality. We want to build open public infrastructure.

We want developers to build on it and developers build applications that integrate it to it which adds utility which then expands interoperability and so you create these really great classic developer flywheel effects and that's what we've done and we've done that with liquidity as well like it's got to be available the digital dollars etc.

So this is a um you know it's a business that has network effects and um and and and those are I think strong network effects and then it's it's a business that there are these very significant hurdles we've had to work on for 10 years to become licensed to become regulated to become supervised to become trusted to integrate into these different government regimes and and and and the like and and that that's a lot of work and it's definitely work other people can do.

So I have no doubt that given the TAMs that we're talking about that there are going to be a lot of great you know companies and the what I've sort of said is I think this is a winner take most not a winner take all market and you sort of see that in the market structure a little bit today and I expect that market structure to persist and I think 3 to 5 years from now within that you know set that market structure there's probably a couple players that don't exist yet but will exist and will be double digit players right so it's just hard to know exactly you know who that's going to be.

But I I think at the end of the day like we want to build things that are useful for end users, for developers, for businesses and and and and provide that and and keep innovating. We're a productled company, a technology-led company. So we want to just keep doing that.

And as long as we do that, I think we can we can continue to grow and thrive. Yeah, you guys are in an incredible position. Personally, John bought a car uh this week and uh were the dealer able to accept stables, he probably it would probably be getting delivered today. It'll be Monday.

I look forward to people internationally with stable coins years ago. It was fantastic experience. It was in Argentina. I have one last question. Once once you once you've had stables, you'll never go back, right? It's like, oh wait, I can't believe this. Yeah. I I have one last question then and then we'll let you go.

Sorry for going too long, but uh I I I want to understand the shape of your business, I'll give you some examples. There's the the Silicon Valley muscle, there's the there's the Washington DC muscle, and there's the the Wall Street muscle.

And when I think about the Bitcoin project originally, it was almost entirely technology, no regulation, no financial work. uh the Grayscale Bitcoin uh ETF was uh very little technology, almost all lobbying and regulation and Wall Street financial. Are you a perfect blend of all three? Is there is there some focus?

Has it shifted over time? Are you out of the woods on the DC stuff and you now it's just finance from here on out?

Well, I mean, look, I mean, um, you know, the best way to look at a company is to look at its opex and within its opex, you know, the largest piece of it is labor and so when you look at the labor opex of circle, like approximately 45% is product and engineering.

So we are we are very technologydriven and that is leadership from amazing uh you know engineering and product leaders mostly out of Silicon Valley mostly based in Silicon Valley and um and so that's that's by far the biggest because we're operating this infrastructure and platforms and software and and the like and then the second biggest which is you know maybe 20% is what I'll broadly call like our control functions and so that's like risk governance compliance you know uh you know financial controls because we're like this digital currency, you know, market infrastructure, right?

So, the control piece is really really key. Yep. And then and then you have like Yes. We have we have a a a legal policy and regulatory team that is much larger than a tech company. Yeah. And and and and is expanding because we're now needing to work with and collaborate with governments world. Yeah.

So, so that part doesn't slow down. I think as this as this scales like the work the work that we need to do with governments only increases the control infrastructure the product and engineering should kind of kind of chug along.

Um but um yeah that's that's yeah I I think about the compounding advantage of yeah you you can compete with us just you know get uh you know hire a team that can interact with every government on earth. It's perfectly regulated and and perfectly well. Well, you know what though?

I I I say this which is like, you know, I I've done the Yemen's work of like legal bills for like a decade. Uh and so like you know, everyone gets to ride on top of all the legal and regular it so easy algorithm had no legal bills. Well, thank you so much for coming on. Congratulations. Excited for you and the team.

Classic 10ear overnight success. Love to see it. Have a great rest of your day. We'll talk to you later. Awesome. Cheers, Jeremy. Come back on soon. We have Anastasios from LM Arena.