Circle CEO Jeremy Allaire on the Genius Act, USDC dominance, and building a labor market for AI agents

Speaker 2: Would say that like the the next generation of enterprise buyers associate the BlackBerry name with just losing

Speaker 1: the smart home market. Yeah. Yeah. Yeah. Sure. Yeah. Oh, well. Well, our next guest is in the waiting room already. We have Giamatteo from Circle. He's been on the show before and he's back in the TBPN. Are doing, Jeremy?

Speaker 2: I'm great.

Speaker 4: Great to

Speaker 7: see you. Absolutely.

Speaker 1: Thank you so much for taking the time to come chat with us. Give us the update on Circle. Give us the update on on stablecoins broadly. I want to go into sort of the knock on effects, how the AI error is helping. But let's start with the state of the business.

Speaker 7: Yes, absolutely. We reported our Q2 earnings today. I won't go through like all the numbers, but I think one of the things I talked about at the beginning of that is like, we're going through a pretty interesting moment right now, and and that's really being driven by the fact that stablecoins are now becoming part of the actual dollar financial system. So the Genius Act passed, This this new law is going into effect. And really, the big trend that we're seeing is that, you know, all of the traditional players in the financial system from the big technology companies to the payment companies to financial infrastructure companies, they're all starting to build on this. And so we're really poised, obviously, for that moment. USDC is today, like overwhelmingly, the most widely used regulated digital dollar in the world. Visa reported at the end of June, 70% of real world stablecoin transactions happening with USDC. We saw record numbers in terms of minting and redemption of USDC. And so it's of the backdrop is like stablecoins are working their way into kind of everything. And at the beginning of next year, it's sort of officially part of the financial system. So that's been going on. And I think the other big shift that's been happening, and we talked about this earlier as well, is that we're kind of exiting what I like to think of as like the speculative phase of crypto, and we're moving into like a more mainstream phase. And actually, there's a tipping point data point that happened last week, which is that close to 75% of the volume traded on hyper liquid was actually real world assets, tokenized stocks, tokenized commodities, other things. And it's no longer people who are, like, you know, kind of going leveraged betting on Bitcoin. It's actually this infrastructure being used for traditional assets, and that's obviously, I think, pretty interesting moment in time as well.

Speaker 1: Interesting. Wow. How have you been processing the moves in the traditional finance rails world? There's this talk of a new payments network that might compete with Visa. A bunch of the banks are working on this. Are they fighting the last war? Is this not a threat to you? Is this irrelevant? Is that is this maybe beneficial to you?

Speaker 7: Yeah. I mean, like, I think our philosophy, you know, basically for the last thirteen years is like all of the financial system is going to be moving to being run by software on the Internet. Mhmm. It's going to run on open networks. It's going to be open source infrastructure. It's going to be machines that are that are running that. And as obviously we see this convergence with AI, it's actually machines building machines that are running the financial system on the Internet. So I think that's looking backward. I think looking forward, this is about programmable money all on open infrastructure. These new, you know, software created money like stablecoins itself is actually software generated money. So I think that's where where where the world is going and and where the velocity is gonna happen as we go forward.

Speaker 1: How are you thinking about the, I mean, software created money, the AI agents, there's been a whole bunch of different sort of concepts. We were just talking to Harley at Shopify about the Yeah. Like the growth in agentic shopping, but it's mostly research and then it's handed off at Shopify. And I'm wondering, do you have any visibility into where the near term killer use case within a very broad AI world that can do everything from probably figure out how to mail you a gold bar if you try hard enough to microtransaction at streaming USDC, right? There's such a broad remit there.

Speaker 7: Totally. I mean, this is a huge focus for us. I know we talked about it in the past, but right now, there's these agent payment protocols like X402 and MPP, machine payments protocol. Right now, like over 99% of the transactions that are happening are happening with USDC, are happening on blockchains. So we're leaning pretty hard into that and lots of companies from Amazon to Cloudflare to Shopify to, you know, Stripe and others are building on this. And so that's sort of happening. But I think our our conceptual model, and I actually talked about this earlier today, we we have a whole road map we're publishing on this is, we actually think that the real opportunity is not necessarily like agents that are out doing shopping. It's actually agents as as actual, you know, units of labor. And so really looking at agents as, you know, cognitive workers and looking at agents that are actually the supply side of the agentic economy, which is essentially agents that you can discover, that other agents can discover, that can provide and conduct work. Really, that's a whole infrastructure that has to be developed, and that includes things like identity and reputation and marketplaces where these can be discovered. We've launched a bunch of pieces of this. There's over 900 services now that are available. It's across a huge range of things on the Internet that you can now do with agents and agentic payments. And so I think from my perspective, the agentic economy in some respects is about the transformation of cognitive work into agentic execution and then how all that gets orchestrated, not just inside a firm. There's lots of people talking about agent harnesses and orchestration, but it's like cross firm boundaries. If I'm building a startup and I've got two or three people and I want to employ agents to actually work on my behalf and build things, we need an infrastructure to do that. And so I think it's actually that's the looking forward model. The looking backward model is like, yeah, there's like research and shopping. The looking forward model is there's work that's executed. It's a labor market for agents that has to be established. That's what we're excited about.

Speaker 2: What does stablecoin adoption actually look like in a large financial institution? Because these institutions are using them in some ways, but there's all these different, like, flows of money. And I imagine that when you're talking to CEOs or your BD team is talking to management teams or or, individuals at these companies, you're probably identifying different flows and saying, like, this is a good use case for stablecoins. But I imagine there's a lot of basically payment flows that have been set up and maybe running for, like, twenty years. And Yeah. There's a system that works. And so, like, are how much of adoption is, like, net new flows that are being set up stablecoin native versus, like, historical, you know, basically payment processes that are getting, you know turned over to stables.

Speaker 7: Yeah. I mean, it's it's really interesting. I mean, I think we're sort of seeing this, like, incremental upgrading that's happening. And, you know, you you see this with, pretty much every payment company and every neo bank in the world now has some kind of stablecoin strategy. They're integrating it into how they can receive pay ins or make payouts. You're seeing that with companies like Meta who are like making payouts to creators in far flung places around the world. You're seeing global treasurers who are starting to realize like, wait a minute, I can actually move my capital around all around the world 20 fourseven. I can make payments into hard to reach places a little bit more efficiently. We're seeing big ERP systems and treasury management systems adding stablecoin rails as an additional option. So I think we're basically seeing the rails get added in all over the place. And a lot of where it's starting is is sort of where it's been hard, you know, internationally

Speaker 1: Yeah.

Speaker 7: Cross border Mhmm. And where there's demand for dollars. Right? I think there's also this sort of shift that's taking place. Digital dollars are very attractive. People want to hold them, and so you see more demand side, you know, people who want to receive funds this way and want to keep it in that as well. And then within, like, the financial infrastructure, like, the financial markets, etcetera, I mean, basically, you know, what what we've seen happen is digital asset markets got all the big Wall Street trading firms beginning to, you know, trade crypto and then they learned about twenty four seven, three sixty five collateral and the ability to move and settle stuff instantly around the world. Now that's starting to penetrate into traditional markets. And so you're seeing more and more the DTCC, the big kind of clearing infrastructure for securities standing up infrastructure where the cash settlement is actually happening with USDC because it's sort of an on chain system. So we're seeing it work its way into the core of the financial system, and we're seeing it out at the periphery of the way global payments happen. My view is obviously is like this is like a superior medium of exchange. It's programmable money, and the unit economics are better, the user experience is better. So eventually, we think this will obviously absorb sort of like digital media slowly absorbed and became a much, much larger thing compared to non digital media.

Speaker 1: I feel like you're using infrastructure, financial infrastructure in sort of the ephemeral sense, in the metaphorical sense, not in the literal like we need server racks that are running the rails, Yes. But I'm just interested even if it isn't the most crucible moment for the business, what does the physical infrastructure side of the business look like? Is that fairly turnkey at this point? Has most of that engineering been done? Or is there still work to be done to keep the network even moving faster and even more uptime?

Speaker 7: Oh, it's a it's a great question. So I mean so so two things. So one is like Circle is a software company basically. Like, we're a bunch of people with laptops. We make software. We deploy it in clouds. It it runs and it powers like all this stuff. Mhmm. But critically though, you know, a lot of this money and and the and the and the smart contracts, they run on these blockchain network operating systems. So you do have this new layer, which is these blockchain network operating systems. And actually today, you know, we announced with Arc, which is the new blockchain network operating system that we've been building and launching, that essentially the actual physical infrastructure is which are often called the validators. These are the firms that run the nodes that actually run the compute, run the transactions, store the data. The validators are actually we had a number of them around 10 or 11, which included the largest asset manager in the world, BlackRock the two largest payment retail payment systems, Visa and Mastercard the largest securities clearing and custody firm, DTCC global banks, a whole bunch of others basically are running that infrastructure alongside us. That is actual infrastructure. These are data centers. These data centers have SLAs. They have uptime requirements. They have information security requirements. And so these new networks, these new network computers, which are these blockchain network operating systems, you have to run that infrastructure. And so we've actually built a model where there's, like, very high service levels where actually that infrastructure can kind of withstand the scrutiny of like a central bank that's saying, is this real money? Are these real financial market transactions that are happening? And can it meet the kind of assurance that is required to do that? And that is going to continue continually evolve. Like, we're pumping a lot of transaction volume and stuff through this, but it it's going to you know, with AgenTic, with money velocity growing much much larger, like, we're we're going to need to continue to see that scale. But it actually is, like, there is a physical infrastructure layer to support these new operating systems as well.

Speaker 2: What concerns do you have for the the blockchain and crypto industry broadly with new powerful AI models coming online that have cyber capabilities open Yeah. And closed? I imagine that Yeah. You guys have been super super on top of this as Circle, but there's so many, you know, small Yeah. Companies and and blockchain organizations that have already been the target of various cyber attack

Speaker 1: a 100 bitcoin in a wallet and said like, AI labs, go hack me. Come get it. I mean, it was like a challenge.

Speaker 7: This is, you know, crypto is cryptography. Right? And so at the end of the day, like, the the whole concept is in code we trust. I mean, that's literally the motto of crypto is, like, we're we're trusting cryptography, we're we're we're entrusting mathematics, and smart contracts and the execution environments are very, very sensitive types of code because they actually intermediate money. And so it is like high stakes. It is super high stakes. We saw, you know, a hardware wallet that had not actually, you know, had had not used the best encryption methodology for its seed phrases, actually has been drained. People thought it was in a hardware wallet. It's been drained over the last week, over $100,000,000 of losses. So it's a very serious issue. We're taking it very, very seriously, not just for our own operations, but as like we bring Arc online and we put out this new operating system for economic activity, it needs to be hardened in a different way. The attack surface, the attack vectors, the kind of security that say, I'm a startup builder, I'm developing an app that's going to deploy on one of these networks. What do they need to be able to have some level of assurance that the code that they're deploying on these new types of network operating systems is going to work and be secure in light of these kind of new cyber capabilities? So it's like a whole new problem space. We're very actively working on that. Like it's it's now like a critical part of our our engineering

Speaker 4: Yeah.

Speaker 7: And and what we think actually is needed for builders too. Like builders, you know, have to kind of take this into account and it's a very different world and that's changed.

Speaker 2: Yeah. And I I I do think that, you know, the the industry's overall problems effectively become your problem as 100%. As a regular 100%. Single point provider because it's just it it you know, the more hacks that you have, the more trust issues that people have technology and and

Speaker 1: Even if it's on a completely different architecture

Speaker 7: completely different

Speaker 2: It could have even been a social engineering hack. Yeah. It's still badly on

Speaker 7: We've we've seen we've seen, you know, real increase in in attacks and even the social engineering attacks are often AI orchestrated now because it used to be you get these shitty e mails that like had broken English, but now the e mails are actually well written and they have a better contextual understanding of who they're targeting. So everything is just a different risk surface. Yes, we think about the whole of the ecosystem, not just our own infrastructure because we kind of have this broader role that we play.

Speaker 1: If I go back to sort of the early Bitcoin days, there were fight the small blockers versus the big blockers. I don't really remember all these details but the Ethereum wing. Yeah. You know, all these different people with really really strong philosophical differences. Yeah. Huge economic interest stake. It feels like over the last twelve, eighteen, twenty four months, the crypto community has sort of come together loosely, and there's been some regulation that's been laid out. Yeah. What do you think the AI industry can learn from the journey that the crypto industry has been on from a regulatory perspective?

Speaker 7: Yeah. I mean, look, I think, you know, monetary infrastructure, financial infrastructure has always been pretty heavily regulated. I think, you know, we've always, like, tried to walk the line between, you know, infrastructure, open source technology, all this stuff is built around those themes and that thesis that's fundamental to the DNA of crypto is open networks, open protocols, open source software, all of that, doing things out in the open. And so that's that's just sort of philosophically there. I actually think it ultimately helps from a regulatory perspective. The more the sort of more open that you are, the more that everyone can kind of see what's going on. I think, you know you know, so so I I think that's certainly something that can be learned and that has to do with this sort of open weights discussion vis a vis, you know, kind of kind of labs and other things like that. But I, you know, I have my own views on on AI and regulation and I think, you know, you know, very clearly, like, these are these are foundational utilities for society, and and they're now cyber weapons, if not other types of weapons, and so the the regulation Yeah. There's going there's going to have to be regulation and supervision and registration and other stuff because the stakes are so high for society right now.

Speaker 1: Yeah. It's interesting that you mentioned the the openness being a like it it it sort of correlated with like a bigger tent and we saw that with Jensen from putting out that open letter and getting so many names to sign on in a way that that has not happened with other little regulated ideas of, oh, should this state law or law or federal preemption, all those little things that the labs have been doing. Jensen was able to just come out with something that was very broad. Some people disagreed, some people didn't. But Yeah. A lot of people sort of were like, okay, we're going to band together for this particular vision, which is interesting. Yeah. It does correlate to what you just said. Love it.

Speaker 6: Definitely.

Speaker 1: Well, thank you so much for taking the time to come chat. Of course. Awesome progress.

Speaker 2: Great hanging. We'll talk to soon.

Speaker 1: A good rest

Speaker 7: your day. You.

Speaker 2: Cheers.

Speaker 1: Cheers. Goodbye. Let me tell you about the New York Stock Exchange. Wanna change the world? Raise capital at the New York Stock Exchange.

Speaker 2: Just do it.

Speaker 1: A couple of quick hits before we bring in our next guest. Google, we missed it with the Demis news. That's obviously steamrolling the timeline, but there's also a story in Business Insider. Google is in talks to buy a coding agent startup called Mechanized for $1,500,000,000 Do you know that?

Speaker 4: Yeah. So it's an RL environment company. So they basically build a bunch of these environments and sell them to labs.

Speaker 1: Yeah. So Sean Cai Sai says, The first RL environment major acquisition outcome mechanized for $1,500,000,000 Makes a lot of sense when it's been in the data discourse for a long time that GDM's synthetic capabilities weren't up to OpenAI and Anthropix. Many of the recent departures from GDM and the other labs cited this. Certainly, Mechanized is one of the four players in RL environment markets that I would even consider to have some modicum of good synthetic data scaling. And you know, identifying a problem with the organization, with the build out going and opening up the checkbook to the tune of 1,500,000,000 to potentially solve it. Still in the rumor phase. The other news we didn't really get to yet is Ilya Sutzkever's company, Safe Super Intelligence, is allegedly rumored to maybe be releasing a model in August. That's this month. Chubby here says, I took a look at their website. They stated very clearly their only goal, their only mission is to develop super intelligence. That's their sole focus. In that sense, this model release will be far more than just another model release. In some form, they must have achieved super intelligence if we take their statement seriously. So very interesting to see what happens there if it's

Speaker 2: Pressure's on.

Speaker 1: Five or if it's something that just sort of sits within all the other benchmarks. But we'll we'll see. Good luck.

Speaker 4: Yeah. I mean, this was like very briefly touched on in the Gavin Baker and Wrestling Fest episode. Yep. So it's like unclear. You know, we'll see what actually happens.

Speaker 1: Yeah. It's not like Ilya came out and said like, we're launching. Get ready. They did announce some fundraising news with NVIDIA, and he did say that it's time to scale. The sort of the age of research might be over, and so we're thinking that maybe a product is coming, maybe a a demo, maybe some evaluations, maybe some benchmarks.