How yield bearing stable coins may democratize the risk free rate in the same way that stable coins democratised access to the US Dollar? With Charles Cascarilla, CEO of Paxos.
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The Future of Money
Interview with Paxos CEO, Charles Cascarilla
Welcome to the future of money podcast. As you may know, I recently launched my first TV show called Crypto Weekly on CNBC Arabia. We have the opportunity to interview many of the movers and shakers in the crypto industry. To ensure that you can also get the latest insights, I also intend to share the audio of some of these interviews on my podcast channel so that you can listen at your convenience, whether you're driving to work or at the gym. This interview was recorded last week and I hope that you will find it insightful. Enjoy and see you all soon. We're here Abu Dhabi Finance Week with Charles Cascaria, the CEO of Paxos. Charles, great to have you with us today at the event. Charles, I want to talk to you about a lot of things, especially stablecoins. Obviously recently, you guys issued a yield-bearing stablecoin. What do you think is the potential of yield-bearing stablecoins within the global crypto ecosystem? Yeah, we're really excited we launched a product called USDL, the left dollar. It is right here out of the Abu Dhabi global markets and is regulated by the FSRA. This is a great regulator here and the product is very innovative. I think the cool thing about stablecoins is they democratize access to the dollar and what the USDL is doing is democratizing access to the risk-free rate. It's a stablecoin that moves like a normal stablecoin but it pays interest at the rate of a T-bill. This is a really powerful mechanism so that you can have the risk-free rate available on-chain to anybody anywhere in the world. I think you're right, the USDL product is ideal for collateral. As you have collateral today, sitting in stablecoins, on exchanges, other places, not generating any return, that's a high cost of capital. Instead, you started to be able to earn 4.5%. That's a game changer for otherwise idle collateral that needs a higher return. What I think will be the catalyst sport to be used as collateral, as you mentioned, is it demand from clients? Is it the exchange is becoming more welcoming? Or is it just a natural evolution of the ecosystem where we'll see these yield-bearing stablecoins being used as collateral. I think it's a little bit of all of those things. You really have a network effect that needs to come into place where you need to build momentum in users and utility and liquidity. That's never one thing because it's an ecosystem and so you have to have multiple things that come together and we're in the process of doing this. We have six regulated stablecoins that we launched over the history of Paxos and that's very unique. We know how to launch stablecoins and build them, but it's not something that happens overnight. I think that's maybe the fallacy. People think you launch something and they'll come. No matter how great your product is, the launch date is simply the starting line, even though sometimes it feels like the finish line. Talking about starting line, there's been a lot of recent initiatives on AED stablecoin with the DRAM here in the United Arab Emirates. What's your view on the rule and the place that AED stablecoin can play in the global crypto ecosystem, especially in the market where 99% of stablecoins are US dollar buck. I think almost every asset is going to end up on-chain moving around, but that's not the same thing as there will be today. There's always an adoption curve and it doesn't move linearly. Almost rarely does it move linearly. The dollar is what has really become the breakout product on-chain for real-world assets, but I think all fiat's are going to be on. It just has to happen because it's about a rail. It doesn't have to be blockchain. It's just the idea that money can move instantaneously in real time, 24/7, moving at a very low cost, that's programmable, it's available to everyone. That's what a blockchain-based financial system is about and that's why you need to have fiat currencies on there. I know the UAE has been very innovative in thinking about how to get an AED stablecoin in place. We've actually looked at a number of projects and partners that we could help that with, but you've got to experiment. It doesn't mean it's always going to work the first time. We've got to get out there. That's what I really applaud about ADGM, the UAE in general. Is it really thinking about how can we experiment? How can we be the center of innovation? How can we grow? I think that ultimately means that when you have a breakout product, this is one of the locations it's going to come from. Talking about locations, you're based in the US and it's always a lot of activity now. I hope, let's say, with the Trump coming in and the policies can come up on stablecoins, what's your view on the changes we may see when it comes to stablecoins specifically with the new administration in the White House? Well, I think the past administration, obviously, was a tough place for a crypto. It's exciting to have an administration that is explicitly pro crypto and pro relaxing. I think that stablecoins are a very logical thing for administration to get behind because it improves the distribution of the dollar. The dollar is a product that everybody in the world wants, but you can't get it. The last thing you want to do is be tied to old distribution mechanisms. We live in internet age, you need to have internet dollars. If you make the dollar available in the right way, it democratizes access for everybody around the world. While central banks are selling dollars today and they're buying gold or they're buying other assets, everybody, all retail people want dollars and stablecoins allow you to be able to go direct to the end user in a very powerful way. That is good for the dollar. That's good for the US ability to be able to sell the dollar, which is ultimately just T-bills. I really think that this administration embracing the concept of blockchain and stablecoins is going to be good for Paxos, but it's really good for the United States. My last question, I mean, we're heading into 2025. What's exciting you about 2025 when it comes to the beautiful and fascinating world of crypto? Well, I am so excited because we think really this is the crypto golden age that's about to unfold here. We shouldn't overdo it. It's kind of easy to do, but this is going to be a really fun time. It's the opportunity to embrace this innovation. It's gone from something that was considered a bit of a side show or a cul-de-sac to now being something that's going to be mainstream and change people's lives every day. I think that breakthrough element is not just Bitcoin, which kind of had its IPO last year with the ETF, but really it's also going to be around stablecoins, which is going to completely transform the financial system, transform how payments work, imagine having an always-on dollar. Lots of other currencies are always on, but the dollar isn't and the dollar is used everywhere. The possible innovation that can happen here, the way you can create new types of banking products and services, the way you can really reach people that have never been released anywhere in the world. I mean, that is really exciting. We're launching products to make it happen. I know that this is going to be something that's a whole industry-driven thing, and we're really proud to be part of it. Exciting to look at that for 2025. That was Charles Cascuria, the Seal of Paxos here at Abu Dhabi Fight As We. Are your children prepared for the future of money? Order decoding crypto with Henry and Hodler, the number one new release kids book on Amazon.