Ep. 139 - BYO Global Stablecoin Bank - Could stablecoins finally make global banking as seamless as domestic banking?

Liam Gray (0:05)

Hello, and welcome. My name is Liam Gray, co-host of The Payments Shed Podcast. Coming to you live from Fintech Meetup Europe in Lisbon. Today, I am joined by Bivu Das, General Manager of PWS Payments and UK CEO of Kraken. Welcome to the show, Bivu.

Bivu Das (0:19)

That's right, Liam.

Liam Gray (0:20)

So before we dive into everything, could you give everybody a quick intro of yourself?

Bivu Das (0:24)

Yeah, I'm aware that job title is a very long one. So it covers two main areas. One of them is being the lead for the Kraken business in the UK. And secondly, I am also the lead for our payments and banking as a service infrastructure.

Let me start that again.

It's a long job title, I'm aware. Thank you for the introduction. It covers two main areas. One of them is being the lead for Kraken's business on the ground in the UK. And the second one is leading our Payward Services infrastructure as a service business for payments and banking. And what that actually means is over the last 15 years, we've built fantastic infrastructure for supporting Kraken as an exchange product, as a payments product. And now we're externalizing that infrastructure to enable other banks, fintechs, neobanks, or wannabe fintechs to access the power of digital assets and the technology that supports it.

Liam Gray (1:26)

Amazing. And talking about the infrastructure, we've seen what banks and other technology providers have been able to do over the years in terms of building incredible infrastructure. But at the same time, we've noticed that that's often stopped at the border.

Why has that been the case?

Bivu Das (1:43)

I think the primary reason is that neobanks have built a fantastic app and user experience on top of legacy rails. And the legacy rails in this infrastructure stops at the border itself. So being able to cross borders with payments still requires a number of corresponding banks, a number of high fees, high payment failure rates, and so on and so forth. And so accessing currencies across borders is still really difficult no matter if you put a nice front end on the top of it.

Liam Gray (2:15)

That makes sense. And if we look at one currency in particular, for example, dollars, why is it so difficult for a consumer or an individual to get access to dollars in other sort of countries?

Bivu Das (2:27)

Yeah, so the big banks in the US are the ones who are, let's call it as a private members club, they control the access to the dollar.

And other Fintechs are on the list. Wise, for example, created this membership card and allowing some of their clients to access it, but it's still a very short list. And so, if you think about the real use case from emerging markets, where the currency fluctuates significantly and they won't access to stable currencies, or they settle with their suppliers or staff in dollars, they can't access the dollar in a safe way or a secure way today. And it's a real requirement and it's a gap in the market that has been filled, I would say, by stablecoins.

Liam Gray (3:17)

And talking about stablecoins, that's a nice segue. So how are stablecoins actually solving some of this problem, or even all of the problem?

Bivu Das (3:25)

It breaks down the borders. So, whereas before I mentioned a cross-border payment would go through a number of correspondent banks, that's akin to a letter, and now we are enabling it to something to be sent via email.

So a stablecoin is borderless by definition, and blockchain technology enables that. So now anybody can access the US dollar denominated currency via a stablecoin. They can hold, they can earn on it in certain GOs, they can spend it, they can send it, make payments with it.

Liam Gray (4:00)

And I suppose the big question here from a consumer standpoint is, what does it look like for them? What does it look like holding a stablecoin or being able to transact in stablecoins versus using fiat currency?

Bivu Das (4:13)

It should and does look exactly the same as spending a traditional fiat currency. The beauty of a stablecoin from the right issuer is it's one back to one to one, and so the exchange rate mirrors that of a traditional FX. And so you can absolutely, with the power of some of our infrastructure, hold and spend and send as if you were holding an actual dollar.

Liam Gray (4:39)

And I suppose this is a similar question that used to come up when we were talking about just the crypto industry in general. It's a new industry and therefore the trust isn't always there.