Choke Point 2.0 & Stablecoin Adoption with Nic Carter | EP 61
Sep 26, 2024
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Nic Carter, a cryptocurrency expert specializing in stablecoins, joins the hosts for a deep dive into current crypto challenges. They explore Operation Chokepoint 2.0, examining its impact on regulatory pressures. Nic shares insights on the fallout from Silvergate Bank's collapse and discusses the shift of innovation to international hubs. The conversation also touches on stablecoin adoption in emerging markets, particularly in Nigeria and India, and the role of banks in supporting this digital currency revolution.
Stablecoins are projected to reach $500 billion, highlighting their increasing acceptance and potential routine use in corporate finance.
Regulatory scrutiny causing banks to limit exposure to crypto-related deposits is challenging access to financial services for crypto firms.
The varying adoption of stablecoins in different countries reflects local economic needs and contributes to a trend of financial empowerment through crypto.
Deep dives
The Future of Stablecoins
The supply of stablecoins is projected to reach $500 billion, indicating their growing acceptance in corporate finance. Many companies are expected to start holding stablecoins on their balance sheets, making it a routine practice. The improved efficiency of global payments through stablecoins signals that as the world becomes more interconnected, the cost of financial transactions will decrease significantly. This shift emphasizes the potential of stablecoins to transform corporate finance and payment systems.
The Impact of Regulatory Actions
The demise of banks like Silvergate and Signature reveals a troubling trend of regulatory scrutiny on institutions servicing the crypto ecosystem. Following the collapse of FTX, regulatory agencies implemented measures that forced banks to drastically reduce their exposure to crypto-related deposits. This led to banks facing liquidity crises due to fleeing depositors and falling asset values, ultimately resulting in voluntary liquidations. The impact of these actions has created a challenging banking environment for crypto firms, significantly limiting their access to financial services.
Innovation in Cross-Border Payments
Stablecoins are emerging as a solution to high remittance costs and inefficiencies in cross-border payments. They have the potential to reduce costs from the average 7% to around 2% within the next decade. Small and medium-sized businesses engaged in international trade are particularly benefiting as they opt for stablecoins to mitigate currency risks and expedite transactions. The growing acceptance of stablecoins can create more efficient and accessible payment networks, further integrating emerging markets into the global economy.
Global Shifts in Stablecoin Usage
The adoption of stablecoins varies significantly across different countries, driven by local economic conditions and financial needs. In countries like Nigeria, stablecoins are primarily used for savings and as a hedge against inflation due to an unstable local currency, while in Turkey, users often seek high yields through DeFi platforms. The trend indicates a growing trend of 'crypto-dollarization,' where stablecoins serve as a safer alternative to local currencies. This shift reflects a broader narrative of financial empowerment through crypto, especially in regions with weaker financial infrastructures.
Challenges Facing the U.S. Crypto Sector
The current regulatory environment in the U.S. is pushing many crypto startups to relocate to countries with more favorable frameworks. The decline of U.S.-based startups, from 80% to just 20% in recent applications, highlights this trend. As regulatory pressure increases, entrepreneurs are finding better opportunities in jurisdictions like Singapore and Dubai that embrace crypto innovation. The resulting talent and capital exodus from the U.S. could threaten its status as a global financial hub unless regulations evolve to support the burgeoning crypto economy.
Imran and Qiao sat with Nic Carter to discuss stablecoin adoption and Operation Chokepoint 2.0. No BS crypto insights for founders.
Timestamps
(00:00) Intro (01:10) Nic Carter’s Fights (03:19) Operation Chokepoint 2.0 (09:38) SBV (21:57) Who's Really Behind of All This? (24:51) What's The Real Threat? (25:43) Scenarios That Could Happen Post-Election (27:21) How Nic Sees Banking Infra (31:45) Innovation Pushed Outside of the US (37:18) Stablecoin Report (44:30) Surprising Survey Results (48:32) India's Low Stablecoin Penetration (49:41) Stablecoin Report cont. (53:28) Different Causes for Stablecoin Adoption (55:35) Banks Running to Provide Support for Stablecoins (56:48) Where Are the Assets that Underlies USDT? (58:04) USDT vs. USDC (01:00:50) Stablecoin Adoption Among 18-24-Year-Olds (01:02:46) Cross-Border Payments (01:04:43) Small and Medium-Sized Businesses (01:09:30) Crypto Trading Related vs. Payment Related Percentage on Stablecoins (01:12:09) Five Perspectives on Stablecoins (01:17:30) Products/Startups Nic Would Like to See Use Stablecoins (01:21:52) Final Thoughts
DISCLAIMER: The views expressed herein are personal to the speaker(s) and do not necessarily reflect the views of any other person or entity. Discussions and answers to questions are intended as generalized, non-personalized information. Nothing herein should be construed or relied upon as investment, legal, tax, or other advice.
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