**A** (0:00):
Sa.
**B** (0:41):
Hello everyone. So we are here at the panel. So let me introduce you who's going to be speaking for the most part today. So we have Sanya, VP of for Europe for Circle and we have Sunny who's the co founder of Osmosis and Cosmos as well. So let's start with sort of context as well. So I'd like to give each of you one minute to speak a bit about what the company does and about your experience for the sake of this panel as well. So perhaps starting with you Sanja.
**C** (1:12):
Yeah, sure. So hello everyone, my name is Sanja, I'm the vice president of Europe at so Circle is a global tech financial company. We enable always on commerce, payments and custody and we are also the issuer of USDC and Eurocoins, stablecoins and prior to Circle I was the CEO of X Money. So it's great to be here with a different hat, wearing a different hat and still having meaningful conversations and you know, driving the ecosystem forward. So thank you so much for inviting me.
**A** (1:48):
Thank you. Hey everyone, my name is Sunny. I've been a member of the Cosmos ecosystem and co founder of a project called Osmosis Cosmos. We are a blockchain ecosystem really focused on a concept called App Channel which is the idea that like most, most big applications, especially fintech applications are going to need to have their own custom blockchains to achieve the scale and customizability that they want to achieve their product goals. And so you know I helped build the Cosmos stack for a number of years and then eventually started building a decentralized exchange called Osmosis built on that custom app chain stack.
**B** (2:44):
So because today we're going to be speaking about the future of fintech and why it's on chain, I think it would be good if we start with trying to compare both of these sides and consider the pros and cons basically. So what would be the pros and cons of the on chain financial system versus the traditional financial maybe starting now with you Sunny?
**A** (3:05):
Yeah, I think actually one of the biggest sort of under talked about benefits of on chain is the composability by default. This idea that like APIs are supposed to be open as the default of how systems work today in like when you build in web two, you build in isolated systems and then you have to say open up APIs and say oh I want to these sorts of things to be able to integrate with my product and you know it's the rate of innovation is much more slower while with on chain stuff with smart contracts And IBC and you know, cross chain interoperability you can, you know, you build applications and by default it's permissionless for anyone to plug into your stuff and people will start to be able to build products and applications that you might not have even expected. And so this open APIs nature of onchain deep fintech I think is one of the killer features.
**B** (4:09):
Thank you Sanjay. What would be the pros of the on chain financial system?
**C** (4:15):
I think there are many but for me it always comes back to think about sending a payment like anywhere in the world today, even domestically, but specifically internationally or across border that payment is not immediate. So the best we have is what we call T plus 2. So it's two business days for the payment to be settled and if you're sending that cross border to an individual or a company it can take more than a week. So I think the biggest advantage is the fact that these intermediating middlemen, that payment can be almost too immediate depending on what kind of payment we're talking about. We are not depending on banking hours, holidays. So it's a non chain financial system. This intermediated the cost of transactions is much lower. So I was looking at some interesting stats this morning and when we talk about remittances, so those are people like sending money back home and the value of the market is $800 billion like only last year. And these are like migrant workers sending money back home. So on average per transaction which is 200, $300, the average value they pay in fees is 6%. So that's $50 billion spent in fees just on remittances and with an on chain technology and in particular with stablecoins like USDC we can reduce that cost more than 80% and there are many other advantages. But I think just for the sake of time, I think for me personally why I'm here in this industry is the potential for financial inclusion. We're very lucky here today. But There are almost 2 billion people. There are unbanked or underbanked, not having access to a bank account, being excluded from global trade, not having financial freedom. And here I see the biggest opportunity because most of these people, they have a device, they have Internet and therefore with technologies like stablecoins and digital currencies they can have money transact money, they can spend, they can save money and they can participate in the global economy.
**B** (6:42):
Thank you. Now picking from the perspective of the cons or perhaps the challenges of one system versus the other and doing a follow up on you Sunny. One of the things that you mentioned is the open APIs and that open perspective, but also in a way can be perhaps challenging the fact that it's very fractured and that there's different systems. For example, do you have any other cons from these or any immediate perspectives of this specific con?
**A** (7:13):
Yeah, I think the fragmentation, I think is a good point, but I think the goal is to build. Part of the point of open APIs is then you can have things like aggregators come along and plug into everything and provide this unified experience and you have this sort of modular stack that emerges where now you have it, where, you know, if you wanted to build an exchange in the past, you had to go build a trading engine, you had to go build the ui, you have to build everything, right? Well, now you can have like, hey, some people are going to focus on just the order book mechanism. Other companies can focus on a UI layer that then integrates with multiple back end liquidity systems. So you get this. That's the power of the open APIs, where you have that modularity as a benefit. Actually, one of the other big cons I think that my team, we spend a lot of time thinking about is the privacy side of things. That's really where our team, our original origin came from, where we did a lot of work with privacy. And then we were like, wanted to bring privacy to the masses. We realized privacy is a feature, not a product. So we're like, okay, let's build a dex and then use that to push our privacy ideas. But basically you have this situation today where like on chain you have very, very bad privacy, right? Like you centralized systems today actually have much better privacy. When you're trading on a centralized exchange, no one can see which trade is, which account is making which trade. But on DEFI today, everyone can see, oh, this account made this trade, this trade, this trade, it's leaking it to everyone. The benefit of blockchains though is you have this transparency, right? You say like, oh, you can see as a system, this is how much overlevered the entire system is, or this is where the risks are piling up. And I think that's actually what you don't have in tradfi, right? You don't have systemic transparency. No one could see how overlevered FTX was. No one could see how overlevered the Wall street was in 2008, right? No one could see like, oh, the things that were, like these insurance companies that were supposed to be insuring things had their own, the very things in their own balance sheets, right? There's no transparency into the system. So I think the goal of what we spend a lot of time on is like building the privacy primitives that give our motto that we focus on is like, privacy for the individual, transparency for the system. And so using like novel, you know, the industry is originally, you know, now we call it Web3, but you know, it is originally the crypto industry. Right. And like, how do we use new types of cryptography to allow that privacy for an individual, transparency for the system?
**C** (10:07):
Yeah, I think maybe to add on that, I think you're talking like more of a perspective everyone in Web3, but we need to sell it to the customers. And I have a lot of conversations with what we call Web2, whatever customers or institutions. And I think the main issues today are one, regulation, so we need better regulation and the lack of it make sure that people are scared. And institutions and companies, they don't know how to treat digital currency. They don't know how to save it on their balance sheet. People don't know if they are protected or not. And that creates a lot of friction. And the second thing, I think we all need to address this. It's still very complex for an average person to understand what they need to do. The user experiences. It's difficult. So I think everyone here really, we need to address usability and user experience for people to be able to have more intuitive, like more easy to use experiences. When entering into Web3 and knowing this.
**B** (11:24):
How do you see the system being integrated? So on chain being integrated into traditional finance, do you see that happening and how do you see that happening?
**C** (11:34):
Yeah, definitely. I think to give an example of Circle, we collaborate already with many traditional companies. So Visa, MasterCard, Stripe and MoneyGram are examples. So maybe to touch base on two real, real case examples with utility. So Visa is already using us to settle USDC payments directly to merchants. So Visa already processed millions of dollars in transactions by settling USDC to the merchants directly through WorldPaid and Nuva, which are payment service providers. So that's a great example of how on chain can bring more utility into the traditional ecosystem by lowering the cost of settlement for merchants. And the other case is MoneyGram. So we actually have a partnership with UNHCR and Stellar where in crisis situations like war, we enable money and USDC in this case to be transferred directly to people in their wallet, on their phone. And as we know, when there's a war, when there's any type of crisis happening, access to money on the ground might be compromised or not existing. So in this case we enable direct disbursement of usdc, but people can cash it out directly in thousands of MoneyGram locations on the ground. So these are just two examples, but I think they're very representative of how we can collaborate with more traditional companies.
**B** (13:19):
And on your side, Sunny, do you see how this could be improved or increased adoption between these two systems? Or do you think that the traditional space and the on chain space should stay entirely separated?
**A** (13:33):
No, I think, I think blockchains and open systems will end up providing the back end for traditional systems to like run on top of. So you know, I think USDC actually is an example, right. It is a more centralized thing, but it's running on decentralized platform blockchains as the back end to power them. Right. And so, you know, I think the same thing will happen with like exchanges, right? I think eventually centralized exchanges are going to not be where the order books live. It's they're going to focus more on like being the fiat on ramp as well as the user interface, the UX side of things. But then they're probably going to actually plug into like more decentralized liquidity protocols and then you have all the exchanges sort of plugging into the same unified liquidity layer which is running is going to be most successful on a permissionless, decentralized open system.
**B** (14:33):
So picking from one of the points that I believe both of you already mentioned as well, one of the challenges or disadvantages currently of the on chain seems to be a lot about the user experience and the simplicity. So if we consider that the traditional space has a lot of areas in which for many people it's quite intuitive. But in the case of on chain that's not so how do you think we should be improving this experience in the sense of what are the areas that we need to focus down on to boost more adoption or even afterwards I'll make a follow up question of some examples or specific ways or use cases that help get more people into the on chain. But first of all we need to focus obviously on the user experience and overall simplicity. So what are the things and perhaps starting with you Sanjay, that you see clearly need to be improved.
**C** (15:26):
So I think like on a broader perspective, as you say, as I mentioned before, to attract more people, one, we need to solve for better regulatory framework so that people know that they are protected and whatever happens there is someone that can take care of them. The second aspect is, and that's what we're all doing here, we need to educate people that hey, there is real utility. This is not only about speculation anymore. We have entered into a utility phase. And, you know, these are the real advantages that you as an individual or a business can experience. So it's not only about, you know, buying an altcoin to have profit, but there is real utility. And usually when I talk to people about that, that's really interesting. And as USDC we have, with USDC only, we have transacted more than $12 trillion so far. So just to give you a perspective of the utility in payments and I think in terms of like the complexity of the user experience, we need to abstract blockchain concepts. I think, you know, in the end, in the future, the way I see it, like people will not even know there is blockchain behind it or there is a digital asset. They will just use a service and it's better and faster and cheaper, but they don't necessarily need to know that there is blockchain there. And that's where I think we're all aiming to go if we want to have mass adoption.
**B** (17:01):
In your case, Sunny, what are the things that you see that clearly need to be improved? I think one of the interesting points, by the way, is that both of you are aligned in the sense that blockchain is meant to be used more in terms of mass adoption as a back end. But in terms of experience, perhaps they don't need to know. But in your case, have you had some situations where there were clear challenges to bring people, like some use cases to bring people into the on chain solution and such are examples of where it could be things that we obviously need to improve.
**A** (17:34):
Yeah, so we actually do spend a lot of time also thinking not just on the back end, but also on the front end side. So we do maintain our own. You know, there are multiple interfaces for the osmosis decks, but we do maintain one of them and we kind of use it as a sample, like, you know, reference implementation of what we imagine the interface is looking like. And we also have a wallet that our team maintains as well. So, you know, I think the big thing for us is we need to actually fix a lot of the infrastructure around account management. So I'm actually gonna be giving a talk tomorrow in the innovation stage about this. But like, a lot of focus on now on account abstraction and like today the world where you have to go download a browser wallet and stuff is just like kind of crazy. And, you know, one of the actual reasons, you know, what am I doing here at Multiverse X conference, Right. Like, I mean, I've known this team for a long time. But I remember back in like 2020 if you. They showed me their mobile wallet and like today there's a lot of mobile wallets. But like back when they showed it to me in 2020, I was like this man, this is like the best mobile wallet I've seen in all of crypto. And so I think that like you know, really improving, you know, on the, on the mobile side, making it easier for people to use. Like a lot of the cryptography that we use in blockchains today was like what Satoshi chose to use like 12 years ago with the SEC P256K1. But like the types of cryptography have iterated a lot since then. There's a lot of new cryptography that's like built if you have an iPhone. It's like in the secure enclave signer you can be, you know, you don't need to have a wallet app anymore. You know, you, there's ways, as long as we support the right cryptography in the blockchain, you, you can use your phone as a wallet without needing a special wallet app. And so what we've been spending a lot of time doing recently is advancing the state of cryptography. And just in Web2, there's been a lot of iteration in the last 10, 15 years with Caskeys and privacy paths and all these sorts of things and bringing some of those Web2 innovations into Web3 to improve the UX.
**B** (19:56):
And I think everyone here ends up already have used onchain. So for the most part web3 users in a way. But based on what we were discussing, we started with pros and cons of advantages and disadvantages. And we know that in general users tend to be or people in general tend to be quite attracted first when it comes to crypto in the more volatile aspects in terms of making money, for example, especially when we consider the developed countries, for example, it might not be the case so much in the others, but we discuss in general, from the perspective of industries and from the perspective of companies, what are the advantages? But if you're discussing and for sure you've had those situations where you're talking to someone that only uses traditional services, what are the actual advantages that help you convert them into onchain? Is it the cross border for example, that was mentioned in terms of transaction? Is it the open APIs that actually get someone that's currently only using financial systems being converted into start using on chain? Perhaps starting with you, Sanya?
**C** (21:06):
Sure. I think it really depends who we talk to. But overall the cost aspect always is the main one. And what I usually try to explain to people is like the comparison of what happens in a traditional payment versus on chain. And whenever you pay with like a card or you send a wire transfer, actually there are so many middlemen in the chain and people might not be aware. And just an example is like there's an issuing bank, there's a receiving bank, there's the acquirer, the payment processor, there's a credit card scheme and like on top of all of that there is like the FX conversion as well. And so it's surprising why it's so costly to transact. So I think you know, the first thing that people want to understand is, you know, what, what happens on chain and you know we eliminate most of these intermediaries and that's like up to 80 or 90% cheaper and everyone wants to, wants to save money. So that's the main argument for individuals and companies. And I think everything we talked about like there is real utility. So as you say, it's not about speculation anymore. There is real utility. And what is that utility? It's cross border payments, it's remittances, is disbursing aid on the ground and there is already a lot of things that we can do and improve. So I think these are mostly the main advantages when we talk to customers and especially when we talk to companies that might not be accustomed to use digital assets.
**B** (22:54):
What about you Sunny, what was the question again? Yes, so when it comes to actually converting users that only use financial systems, what are the key advantages that help you convert them into on chain users?
**A** (23:09):
Yeah, I think it's usually like things around. I think you're right, Sonia is right. Where it kind of depends on the, which user we're talking about. If it's for the developers. It actually usually is a lot of the open API stuff. I think like long term, I think the answer is mostly comes around like in medium term it's a lot of like, oh I can pay anyone anywhere. Like you know today if you go to people who like mostly like in the US or something, you know they're fine paying their friends on Venmo, but like once you start traveling and stuff, it's like paying friends, you know, having to deal with different currencies and all this kind of stuff. Stuff. It's like if you can minimize as much of that as possible, I think the speed of that settlement is like really what wows people there and then I think though like long a lot of this is Mostly just like technical, technical arbitrage and like a little bit of regulatory arbitrage happening. Right. Where it's like, you know, the tradfi systems have been, you know, invented. A lot of them like are 30, 40 years old and like, you know, there's a world where these tradfi systems can, will just like iterate and eventually like match the settlement speeds and stuff of blockchains. Right. I do think, like I mentioned at the beginning, the selling point of blockchain is the privacy stuff. That is what you fundamentally cannot do with centralized systems. You know, most of the privacy stuff you need. A lot of the technology techniques involve something called multi party computation mpc and fundamentally to coordinate multi party computation, you kind of need to have a blockchain style system to do that. And so, you know, when I'm pitching my crypto skeptic friends on like why crypto is exciting, I'll, I'll tell them about the scalability and the settlement speed and they're like, yeah, yeah, that's, you know, a lot of the work in fintech, like, yeah, we can do that too. Right? Like Venmo settles in a minute as well. But like when I pitch the privacy, that's when they're like, oh, okay, yeah, that makes sense.
**B** (25:20):
So now trying to shift it more towards institutions and the traditional finance. What Obviously know that this integration and based on the discussions we've just had, there's more and more integration potential for both of these services. But what advice do you have for traditional finance companies or individuals to actually start speaking and getting on board into onchain? Is there something that they should be taking care of because exactly. As we just mentioned, there's skepticism in general about some of the situations that have happened. So do you have sunny, any advice for the traditional space to start entering more from an institutional point of view?
**C** (26:00):
Yeah, sure. We talk with institutional companies every day and really the main message for them is like, actually, you know, the time is now. This is not a new technology. You're already late. So if you don't have knowledge within your company, like go and hire someone that can bring it into your organization and that can educate your organization. And it's not only about the knowledge, but like really what are the use cases for your business where blockchain and digital assets can be used so that you can already start to innovate? And really the main message is really like don't do it yourself. Because for traditional legacy payment companies it's really difficult for them to innovate on their Own. It's not fast at all, it takes many years. So don't do it alone. Can you go and partner with a Web3 startup, a Web3 company and pilot projects together so that utility, you can bring it to the market in a faster way. And really I think it's our role as well to educate traditional companies and we have a responsibility in the ecosystem to do so and to help them. And what I find now versus five, six years ago is that it's easier. Organizations are very interested, everyone wants to know and everyone wants to understand. So there is a lot of openness actually and it's our job to educate them and to help them navigate the complexity because I think there is real value that we can bring to each other if we actually collaborate together on pilots that will become actual programs.
**B** (27:51):
What about you Sani? Any advice for the financial companies of the traditional space to start interacting and entering the on chain space?
**A** (28:00):
Yeah, maybe I'll take a second to promote Cosmos a little bit. Where one of our biggest investors is called Ribbit Capital and they're like a well known crypto but also like very big fintech investor. And the reason that they are so interested in Cosmos is that they think that at some point their entire fintech portfolio is eventually going to want to like go on chains in some way but they think all of their fintech portfolio is going to want to have their own app chain. Right? They want to have a little bit more control over like customizing their stack for their use case. Robinhood is probably not going to build on an existing blockchain. They're going to want to go build their own blockchain, you know. So I think if you, I guess my advice to like a traditional company would be like don't be over focused on what the, what you hear about as the limitations of blockchains today. Like oh the gas costs are so high or the speed is so small or like you know, you can go build custom blockchains to fit your needs and I think that's the way that like fintech companies are actually going to become blockchains.
**B** (29:12):
Any final words regarding the topic Sani? No, that's fine. What about you Sandy, for the future of fintech?
**C** (29:26):
No, actually I'm here unfortunately I need to go back to but I'm here in the next couple of hours if anyone is interested to talking to me about, you know, if you have an interest about what we do, if you're interested in partnering, very happy to have a conversation.
**B** (29:44):
So thank you all for paying attention to this speech, and thank you for.
**A** (29:49):
Our panelists as well.