Circle CEO On How The US Can Win The ‘Digital Currency Space Race’

I hear that you've been uh excited about regulation of stable coins is that like a hot thing for you right now uh yeah absolutely uh you know we we're the purveyor of usdc which is the largest regulated dollar stable coin in the world and uh and rated much higher than tether right yeah yes I mean it's it's uh no quite sort of obvious right it's regulated and fully reserved with Bank of New York melon and black rock and uh and sort of w widely used and uh you know many applications around the world so so what's going to happen when things are regulated how is that going to change the world of uh Commerce just generally not just crypto yeah so I mean I think and you know my interest in and in particular in the AI topic related to this as well is um what we're seeing happen is the building of a um essentially a new internet-based Financial system and it's internet-based Financial system where uh value can be exchanged effectively at with the same speed and efficiency and cost Effectiveness as data and there these new networks blockchain networks that effectively provide an execution environment for money and the really powerful thing about this is that in the next few years we'll reach a point where essentially the marginal cost of moving around money will go to zero and at the same time these blockchain networks are essentially trust machines they provide a way to have trustworthy data trustworthy transactions trusted compute and it's the combination of that the kind of smart contracts the programmability of money and the frictionless movement of money right that that makes this makes this really exciting and so I think from you know what what make what becomes possible well once these are essentially treated as legal forms of money which is happening around the world right now right um and you have this kind of infrastructure it makes it possible for effectively for machines to um enter into contracts on our behalf so AI agents that can uh transact with each other transact with others uh over a medium of of exchange that is itself machine programmable and so I'm I'm interested in and and looking forward to this convergence of machine intelligence machine code generation verifiable data verifiable compute and the ability for economic contracts to actually be both generated uh executed and enforced by machines and I think that's the convergence that I'm excited about here so one of the things you you might not know about is we coach chair ITF uh committee on exactly this so there is now going to be a standard so that you know that it's trustworthy to move things from one network to the other uh because currently it's a source of a lot of fraud a lot of like half of the North Korea's uh ICBM uh program is from hacks from hacks of stable cour of bridges of bridges yeah so so we'll get rid of that right yeah so we we and we we have something called the cross chain transfer protocol yeah now your protocol is really pretty good which got to make that everywhere right yeah absolutely yeah so one of the questions that comes up with the people that I talk about talk to is are people like Swift who are moving to a blockchain like system it's a distributed Ledger system put on top of their existing system uh well how does that interact with what your vision is well I think we're we're really focused on how to build new fundamental building blocks and protocols for the public internet so um public protocols uh that are public apis that any developer who wants to build an application to that that uses programmable money that wants to build an application that uses web three native Primitives for them to be able to do that in a permissionless way and uh and to do that on a global basis um I so so I think our our vantage point is just very different we're looking at this as has an internet platform utility that is an open infrastructure for people to build on top of um underneath of course the the actual stable coins are you know increasingly highly regulated form of digital Fiat money and and so it sort of has kind of bank-like credential regulation uh around it but the the actual uh technology layer is not a an infrastructure that's tightly managed and controlled by a small set of private sector actors it's actually the public internet and and I think we've seen that when you have open networks and open platforms uh that are widely available that any developer can build on top of that we see the most Innovation and so we're we're just very focused on how to build this as open infrastructure on the internet uh as opposed to kind of augmenting and adding on top of um kind of Legacy closed networks no no understood so one of the the problems or the the concerns that people come up with is that you're not the only person in this game and the open internet is really the Western internet and that China Russia other entities are building a quite separate internet on on top of tcpip but their for is talking about bricks coins having a very different thing which means the dollar wouldn't be a reserve currency the same way anymore the rules of the road might be different in different countries yeah I mean I I think this is a critical National Security and National economic issue for the United States and certainly for other Western countries I think that um the way I look at it is that we we're in a digital currency Space Race and the future of currency competition is actually technology competition right and what values do we want in that system do we want values that are grounded in open free market competitive uh you know you know full full access and I think that's largely what the world wants and so the United States needs to lead there it needs to obviously enable the private sector to innovate in this space and it and it should be you know driving essentially digital dollars like usdc as a major export product around the world because this essentially has the reach of the internet I have to agree with you I just like if this is a point of real competition because you have Bel and Road you have other sort of initiatives and those are competition right and and individuals and households will get to choose with their smartphone what global economic system they want to participate in and uh and so that's a choice people will make now there will be you know uh uh great firewalls that attempt to enforce a baniz internet as there already are but um I believe for most of the world it will remain open and in a world that is largely remains open that's a tremendous opportunity for this kind of digital currency compe comptition to to take place and to thrive so so people wonder about uh sort of a race to the bottom so I could set up a system that doesn't have quite the overview that say the Western system does it's a little cheaper as a consequence uh and wouldn't all the consumers go to that one even though in the long run it's a bad choice well I think um this comes back to a fundamental attribute of of of money and and the use of money which is it is grounded in trust um and it it is grounded in an individual or an entity's understanding of the fun fundamental safety and soundness of that instrument it's why every person in the world would rather hold US Dollars than almost any other currency because they understand that there is you know the the the most creditworthy relatively speaking uh hopefully for a long time uh we hope yes economy and so but that is that is you know there are many many dimensions to that trust um and so I I don't think it's as simple as you know here's this cheaper alternative go use it I think that um you know you know digital dollars and and and other you know other currencies digital euros and the like um have Network effects have embedded trust and I think if you can build the technology infrastructure in a way which is also something that people can depend on and Trust as well uh that you can certainly have a situation where you can uh you you can Prevail yeah I mean so one of the things that as a uh as someone who advises some very LGE Sovereign wealth funds and does things like that I noticed that in 2008 we had a problem and the problem really at its heart was the math was wrong we used the wrong distributions in the models so that you could get the head of Leman out there are saying this is a 26 standard deviation event which is on the face of its stupid uh we don't have events like that what we have is bad models and so when you get something that's a very liquid Network where you can move things around where you can have essentially defi it becomes hard to know that you're doing it right well this is a fundamental um I wouldn't call it a paradox but it's one of the really fundamental things about this blockchain infrastructure emerged in part as a reaction to the global financial crisis both to establish more sound forms of money to avoid some of the pitfalls of Leverage and fractional Reserve banking um and and that's actually embedded even in full Reserve dollar stable coins which do not seek to take money and then reh hypothecate it and lend it but instead hold it in full Reserve but I think importantly is um you're going to have I like to call the new physics of Money blockchain Networks essentially gives money the physics of internet data and so when you have the physics of internet data you're going to have the highest velocity money that the world has ever had and you're already seeing that and so I think you're right with this incredibly High Velocity money doesn't that doesn't that allow just an unprecedented amount of risk to proliferate but the flip side is that if Done Right everything is can be built on provable verifiable realtime auditable networks and and you can build you know uh uh effectively a level of visibility into Capital risk liquidity and and flows and you can have a a real-time visibility into it that would be unbelievable from a regulatory perspective uh as well and so properly designed you should be able to have a radically more larger Financial system a radically a financial system with significantly more reach than we have today that increases IC velocity and something that is fundamentally safer so I I believe that it's possible to build something like what you're saying but if I look at current highfrequency trading I see crashes regularly so things but the crashes only last for a millisecond right what that means though is that somehow the equations the strategies that are being done which are you know mathematical they're they're things that ought to be solid have these bugs and we're just fortunate that they recover really quickly so so there's worry that as you make that across the entire world and you make the amount of money trading large you're going to get those sorts of things also and then the other thing is is it like you look at high frequency trading the only people can do it are really really wealthy people who have special access to the you know they're they're half a millisecond away from the central service that does the resolution the rest of us just have to live on the chromes how how can you s so so I believe you about the infrastructure but then there's this other sort of thing of like what's actually happening and who's able to actually put the resources together to get at it in a competitive way well there's a lot going on in the onchain finance space and um even even something like an automated Market maker which is a an invention of dii uh allows an individual to basically provide idity to what is effectively a market Mak strategy uh that can be very very sophisticated you're also actually seeing um you know Ai and and and and crypto convergence in the sense that um you're you're seeing protocols that effectively allow people to pull behind highly sophisticated you know automated Market making strategies and and effectively fund those almost like an LP funding Citadel or you what what what have you and so you you you do have you know uh I say green shoots of this kind of democratization to access to hyper efficient market structures so one final question because we're running out of time so given that there are these concerns about the algorithms and the math not the infastructure how would you start off in a way where we can sort of sandbox this or be cautionary before we sort of release it on the world well I Think It's Tricky um you know clearly public blockchains are are a public Computing surface and there's just a constant amount of innovation that's happening so there are options protocols derivatives protocols lending protocols all all these things that are being built uh and that is the laboratory that is the sandbox okay well I think a lot of people would like to see a smaller sandbox that's a little safer thank you very much thank you Sandy

Channel: Forbes

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Keywords: Forbes, Forbes Media, Forbes Magazine, Forbes Digital, Business, Finance, Entrepreneurship, Technology, Investing, Personal Finance, Circle CEO, circle and AI, new AI developments, jeremy allaire, davos technology panel, technology advances, digital spaces, public digital spaces, information centers, libraries, technology infrastructure US, USA technology advances

Id: uvkz6UQLUtA

Length: 14min 29sec (869 seconds)

Published: Tue May 28 2024