Privy's Henri Stern on Deel's stablecoin launch, global corridors, and the explosion of institutional adoption

transformer.

Yeah. Theodore.net. What a good domain name for just a an individual like solo uh creator. It's a generative pre-trained uh transformer. Penrained transformer of course. Uh we'll go check it out. Um, but we have our next guest in the waiting room. We have Henry Stern from Privy back on the show. Welcome back. How you doing?

Are you at the Rainforest Cafe?

Are you at the Rainforest Cafe? I'm

at the Rainforest Cafe. Um, I'm I'm in Europe because in fact TVPN is the TVPN of Europe.

But I'm calling in from Amsterdam.

Uh, yeah.

Fantastic. What What brings you to Amsterdam?

Uh, money 2020.

Okay. Uh, and uh,

this is a fintech conference. Yes. And I imagine you're speaking networking.

I Yes. All of the above. We uh we we we we launched a few products. We had a great launch with uh with deal today to enable contractors to basically receive stable coins globally and do a number of things with them.

Uh and then uh speaking, meeting customers, all that.

Yeah. Yeah, that makes a lot of sense. Deal's been really ahead of curve on that.

Been so dealing with stable coins for quite a long time.

Oh, yeah. Did they have their own like in-house solution? Like what what Yeah. What what what is the nature of the partnership? How does it change? Like what what what was the what was the before era like?

So I I think the before era they they they had done a few products to enable people to um I believe uh they'd experimented a lot in the space but this is basically the coming together I think of uh the full package where they're doing three things really. One is enabling any business to pay out their contractors in stable. if the contractor so chooses, they can receive basically stable assets as a payment no matter where they are. And they're starting roll out in Argentina, but moving a lot from there. Two is they're basically putting out a wallet app. Doesn't look like that at all. It just looks like an account where you can receive um your payment, but that allows you to basically hold a balance, earn on the balance, so really a savings account in many ways.

Um and then basically spend uh uh from the balance. Uh and so this is you know sort of the whole package coming together in an exciting way. And then the third thing is um is that they are actually issuing their own stable coins so they can have a lot more control over how the underlying treasury is managed and so on and so forth. And so um from the previous standpoint I've been very focused on the wallets and how do you connect all of these pieces together but then obviously across Stripe we've been we've been working with them on a number of products. So uh it's been kind of fun to watch all these products coming together really well.

Yeah. So I imagine

this is like the announcement from their side is really they have they're in consumer fintech now.

Exactly.

Very cool.

I I imagine internationally there aren't like spending the stable coins. I I understand uh you know receiving for contractor payments makes a ton of sense. Earning on the on the money that's in the account that makes a ton of sense. But I imagine actually living your life in uh any country even in America it is still hard to go and spend stable coins or is it not because there's credit card infrastructure that can be tied in very quickly like what does it actually take to like run your life if you're a contractor in Brazil or Egypt or Thailand and you make money from deal they pay you in stable coins you winds up in a wallet you're very happy with your uh your interest that you're getting But then you want to go live your life. You want to pay your rent. You also want to you effectively want to be able to send wires and and pay peer-to-peer payments and also buy food and buy, you know, get money from an ATM at some point. Like what how does that all work?

Yeah, it's a great question and I think this is the part that's very exciting is is kind of how the whole space is is getting stitched together. Um so it's at a high level at this point there's just a huge explosion in the usage of uh stable coin cards that enable you basically to settle directly on uh you know traditional rails like Visa and Mastercard uh from your stable coin balance directly. So for the you know merchant accepting it uh they don't have to think about this at all. It's a same experience as if they were getting a purchase from anyone else. And then obviously in reverse we're doing a ton of work at Stripe to make sure that merchants can also accept stable coins directly if the user has you know the balance and so on. So we're kind of working on on uh the platform from both angles to make sure it's completely multimodal.

How high is the great wall of great firewall in China? Like is there any stable coin penetration in China? Are people doing VPN stuff or is it because there were some tech Apple obviously wound up working with China effectively Airbnb was over there for a while as if you wanted to rent a place because you know it's not like the countries are actively fighting it's you know it's a tense rivalry but uh there are companies that have been successful there at the same time Facebook not successful Google not successful uh Uber sort of uh you know was unable to get a foothold there Tesla doing very great model Y sell over there. So what is stable coin adoption? Does China have their own ecosystem or is there some crosspollination?

No. So today I I I think the situation has has changed over time but basically today um very much verboten in a sense and uh and not an active part of of what's happening. So we don't um for for this particular you know speaking for privy um we we don't have customers that that that we serve there in terms of stable coins because very specifically um it isn't something that's running. So it's a it's a it's a you know the approach is very much the technology itself in a sense this is a file format for money right you're kind of sle your your fiat into uh a digital asset and the way I like to think about it is like different you know stable coins are like different formats so you know we accept JPEGs and PGs just the same uh but then ultimately uh getting currency on the ground in every country uh depends on the local regulation and in this case uh China is is is very much not open stable coins today.

Interesting.

Yeah. More and more and more capital controls.

Yeah. I mean, yeah, makes makes a ton of sense because you load up a bunch of stable coins and then you transfer all your money out of the country. Uh are are you tracking any like uh is there like an a mirror industry like an indigenous Chinese like digital yuan effort that's getting traction? Because like there's been a whole, you know, open source AI movement. I'm wondering if there's, you know, Chinese versions of crypto projects that are actually maybe, you know, six months behind.

It's a great question. I mean, to to be honest, I don't know. I I think the the the honest take is is is twofold, which is one, we've seen a ton of adoption um in the US since uh Genius and and and and you know, with with a lot of what's happening around clarity. And so that's kept us quite busy. Likewise, you know, in Europe, and then the adoption in Latam and other parts of Southeast Asia is huge. There's a really vibrant set of communities in Singapore, in Korea. So, there is a lot happening um in the region generally, but uh but I just haven't seen that much by way of companies um working in mainland China um doing this sort of thing. So, I I couldn't tell you to be honest.

So, in terms of maybe other countries that are uh the the fastest adopters, it feels like America is on the frontier here. uh clear regulation, some more coming down the pipe. Uh a lot of the companies are based here. Uh is there who's in second? Like what what country is leaning in the most to stable coins broadly?

It's a it's a great question and I think part of it is that today by nature at least it's a very crossber technology. So it ends up being pairs basically as you go along and so there's very good corridors. For example, um US to Mexico, we serve a company called Felix Bago that's doing like 5% of the US to Mexico remains corridor. I think that's like $60 billion a year. Um, so it's a really meaningful the the the entire quarter is $60 billion a year, but it's a it's a really meaningful uh pair. Likewise, I talked to a company not too long ago that was trying to help with instances from the UAE to India. Uh, and so you've basically got these these pairs as you go. Uh, the most leaned in though, Mexico is doing a lot and there's a lot of clarity uh there and then we're seeing just generally a lot of activity in LATAM. So that's where a lot of the the the the the volumes are happening.

Very cool. Well, what does uh new startup formation look like uh in uh in stable coin in in the stable coin market broadly look like at this moment in time? Uh, I'm sure you get pitched all the time as an angel, but for a lot of these, it feels like in a lot of these categories, there is now a category leader and maybe less opportunity even though we're getting so much adoption.

Yeah, it's a great question. I I think basically there's like two types, right? there's very pure software uh plays and I think I think privy was was was such a company in that we run you know cryptographic uh infra to to enable people to do things and then there's a lot of people who want to take care of like the data piping on the ground in various countries so I you know I think of these as money pipes in a sense and you've got the software layer and then you've got the uh uh connections into local banking systems and so we are seeing a lot of uh things happening trying to build like better APIs better abstractions on top of the huge gap in localized partnerships. So that's one and then the other frankly is we're seeing a lot of stuff around aentic commerce with people basically trying to build better control systems for agents to actually uh take these assets and uh and pay with them. So this isn't actually stable coin specific. There's a lot happening in fiat as well and and Stripe's doing a ton in the space, but it's you know broadly around like service discovery. how can you find what you can pay for um and actually connecting to it. It's around the actual protocols for uh delivering payment really easily via you know sort of agenic interfaces, LLMs and so on. And it's about um being able to actually sort of meter spend so you don't get wrecked if your agent hallucinates. So those are probably like two of the super active areas that we're seeing. Um and then we're seeing just a lot more adoption is something that struck me at this this this you know money 2020 in Amsterdam which is uh a lot more institutional adoption including from like larger banks and and and players who historically have been uh have been kind of waiting to come in.

Amazing. Well, enjoy the conference. Thank you so much for calling in. I'm sure it's late there.

Enjoy the Rainforest Cafe.

Enjoy the Rainforest Cafe and we'll talk to you soon.

Great to see you, Henry.

Have a great rest of your day. Goodbye.

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It happens to the best of us sometimes. Well, our next guest is Alexander Good from Post Fiat. Welcome to the show. How you doing?

What's happening?

Hey, what's up?

Not too much. Great to have you on a Wednesday.

Man, I can't hear you guys.

Okay, we'll try and fix that. I will tell everyone about MongoDB in the meantime.

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Alexander can hear us.

We can hear you.

We can hear you. He can't hear that. We need to put up text on the screen that says that we can hear him

and then he will know. We need to update the Chiron. We can hear you.

Joe Weisenthal is tracking the popularity of various running shoe brands. He says on r/running shoe geeks, one out of 18 posts mentioned a major Chinese running shoe brand. Just last quarter, it was one out of 40. Lee Ning is the big one.

Uh Lee Ning, of course, signed a shoe endorsement contract with uh

Golden State Warrior star Steph Curry.

Uh very interesting. I mean, haven't the basketball shoes been made in China for a long time? That was like the whole Nike thing, but I guess it's like the brand now is is bigger. Yeah, that's a big that's it's it's it's uh

Chinese companies have acquired you know a bunch of brands like Arcterics things like that

uh and the next step is to actually get meaningful brands

consumer brand in America the one that Americans like the most that comes from China

it's got to be DJI right

y

drone videographer was like

Bernie was using

I know it's a controversial company because People see it as industrial capacity, but if you're just like, I I my only I don't think about geopolitics, but I like that my wedding video had a drone in it and it was a DJI drone, you think about that very positively. Has sort of a GoPro aspirational brand. Is there anything else that pops up as Chinese brands that are loved in America? I can't really think of anything in particular. Obviously, tons of stuff gets made there, but anything on the top of your mind? every product on Amazon that has a name that

Yeah, but that's not Yeah, I I was going to say hoverboards, but they didn't have a brand. Uh, and a lot of the cars aren't here. I believe that they would be popular if you could get a hyper car for $20,000 like that they make over there.

Kimu or Shien?

Are those like really loved brands in the same way like DJI feels a lot closer to like a Nike brand or an Apple brand than Shien or Teimu? Uh, Teimu seems more like a Walmart brand. I I I agree with you. It's popular. Like it's certainly brand recognition is there, but in terms of brand admiration, I don't know. Can we play this video from Instagram explaining the new Call of Duty map format? They're getting into generative level design. It's not Gen AI. It's not fully Transformer based, but they're they're creating a whole bunch of different pieces of the pie and they remix them. Let's play it.

Any other like slabs and we're able to randomize that at runtime when you're playing

three slabs on the map. They randomize them every time you load into the map.

We have that is 100. We have the content to do upwards of 900.

When you play a multiplayer game for a while, like you have this sense of discovery each time you play a new map, but that kind of quickly fades, right? You've played that map maybe 5 10 times. You're like, I get it. I know all the places. that never fades with Kill Block.

I I I see this as an existential risk. I think this might be the end of TBPN. I think that once this goes live and we're playing this in the Ultra Dome, we're not going to remember to go live because we're just going to be gaming too much. It's entirely possible.

I don't know. I keep coming back to Rust.

Yeah.

If it ain't broke, don't fix it.

I'm so happy.

Okay.

Like Rust for me is like a vacation