Stablecoins Become Real Money When the Rails Actually Work

I mean, it's pretty hard for me to be braggy. That's not how I'm wired. But I'm the co-founder and CEO of Lightspark. Previously, I was at Meta. Tried and failed to launch this Libra thing, which was like, you know, probably too early for its time, stablecoin and blockchain network. Maybe also from the wrong place at the wrong time. We can discuss that or not. And previously before that, I ran messaging and Messenger at Meta. And before that, I ran PayPal, and before that, a bunch of payment startups. That, you know, my last startup got acquired by PayPal, then ended up running it for a bit. So, that's me in a nutshell.

Yeah, look. I mean, I've done this a few times in my career, which is like get really obsessive about how broken something is and then feel like it's my kind of mission to actually go try to fix it. And like I tried to steer away from payments for a little bit after PayPal, like, you know, and I had a blast doing that, like, just running non-regulated businesses when I was at Facebook building Messenger. It was a lot of fun and it was fast-paced and like, you know, not regulated, which was kind of a reprieve from the crazy world of money movement and payments. But like that, I had lots of hopes and dreams for PayPal when I was there. Then got frustrated with, you know, the bureaucracy, the whole eBay thing, and all of those things, and that prompted me to go try something else.

But I was hoping that in my time doing non-payment stuff, like the 4 years I spent on messaging, that like someone else would have solved how money moves around the world. And during that time, no one did. So, I'm like, okay, like, you know, I'm at Facebook, like, we can actually probably do something that actually can carry the whole world with us. Meaning, like, we have enough distribution that we can bring all of the largest companies and banks and financial services players and platforms to actually adopt a platform that we're not going to own, we're going to share with the world to make money move in real time. But unfortunately, you know, we did that at a time where the regulatory clarity wasn't around. The fact that Facebook touched 3 billion people every month like really was a very scary thought. Like, someone told me one day and it clicked, which was like, you became systemic even before launching. And so every regulator in the world wanted to kill that thing and successfully did. And I think, you know, I left with kind of this sense of unfinished business. And a little bit of, you know, I need to actually go do this thing because like during that period of time, like everyone else that tried also failed. And the state of the world when it came to global money movement was still in a pretty bad place. So, felt like a good opportunity to go assemble a world-class team around Lightspark and try to do that. And it's been great. Like, you know, startups is really where I belong. I feel really at home in this environment. And it's great to build zero to one again, you know, outside without like overhead or anything. And it's just been a lot of fun in the last 4 years building Lightspark.

Yeah, sure. I mean, it's been 4 years. But yeah. I mean, look, we started Lightspark and we had a lot of bruises and a lot of scar tissue from the Libra journey and we decided we needed to build on top of the most un-saleable thing ever built, which is Bitcoin when it comes to money movement. And so, you know, at the time the only thing that could actually work for real-time money settlement using Bitcoin in the background, like, and bear in mind, like, our view was never that people wanted to actually use Bitcoin to move money that they use for everyday purchases, but rather that we could use Bitcoin as TCP/IP packets to net settle between domestic payment systems that themselves are real-time and virtually free.

A TCP/IP packet is basically the backbone of the internet. Like TCP/IP is the protocol that actually carries like packets of data that enables us to have this conversation over video right now or enables like websites to exist or apps. It's the transport layer for data on top of the internet. And so we're like, okay, like the same way that TCP/IP moves packets of data on the internet for information for everything else. We can use Bitcoin as TCP/IP packets, the equivalent of TCP/IP packets for value, for money. And it turns out that no one controls it. It turns out that it's censorship resistant, it's fully decentralized, etc. And so you know, we started on building on top of that and on top of Lightning and basically connecting domestic payment systems to enable them to be interoperable with something else than Swift and correspondent banking, which was kind of, it's still kind of the default.

And so we started the journey there and the thought was, okay, we're just going to go talk to banks and we're going to give them the capability to actually move money between them in real time on top of a network that no one owns and we're going to build the network that way and it's going to be great and it's going to be a straight line, it's going to be fantastic. And of course, as it goes in payments, it's never like that. Like you know, you actually go and talk to banks, they're excited, but they want to see who else is going to get on the network. You have a two-sided cold start network problem, right? And so we realized, okay, we're going to have to do this the hard way. And instead of actually building the best settlement network in the world and having all the banks come on, we're going to have to go build interoperability with the entire payment systems and banking systems of all the countries in the world that has a real-time payment system, which is virtually every country now. And so we started that long road of building redundant connectivity into every single payment system that we could. We're now at 62 countries going on 70 by the end of the year where we can move money in real time 24/7 at a fraction of the cost of any other network.

And then like stablecoins became like really a bigger thing. Not, you know, there's a lot of hype in stablecoin that like I really didn't love like in the early days of stablecoin which like everyone comparing the volume of stablecoins to Visa's volume where like the stablecoin volume was just DeFi swaps and nothing to do with payments, right? And so like, you know, the real volume of payment last year like of stablecoin is growing really fast, but I think it's about $400 billion according to best estimates, right? Which is like good. It's nice, but like, you know, like, you know, JP Morgan global money movement does like an order of magnitude of that every single day, right? So we still have like ways to go. But stablecoin regulatory clarity changed the game in a way that enabled everyone to actually touch and interact with them and use them. And so we started building compatibility with every stablecoin, with every stablecoin other network, etc. because like we want the network and the balances that are on the network to reach as far and wide as possible. And so over the years, we basically built a number of different capabilities that live under this platform that we call Grid, Lightspark Grid. And basically with Lightspark Grid, you can now reach 62 countries in real time. You can do payouts. You can create accounts. Now, as of this half, like you can issue debit cards, like stablecoin-backed debit cards with a partnership with Visa that we have. And we're also principal members now like in Europe of Visa. And here in the US, we announced this week a partnership with Lithic and Lead Bank to actually have the program run here in the US.

Like we have a set of capabilities when it comes to global money movement that I think are unparalleled at this point and we can serve banks and financial institutions that are regulated in a really good way to replace like correspondent banking and all the non-real-time batch process like 50-plus years old like architecture and infrastructure with something real-time and internet era-like. And on top of that, we can enable platforms to create global accounts and beam dollars in real time and give people ways to spend those dollars in ways that are better than any other account in the world. So, you know, I mean that's a super long-winded answer, but like, you know, that's kind of the arc of what we built over the last four years.

I mean, first of all, like, you know, there's a lot of naivete if you haven't been in payments and like you go and build a product. And so, you know, there's lots of people who think they can just like build a nice self-custodial wallet with stablecoins and then like give it to people and design it well and that's it, right? And unfortunately, you know, people or businesses using these accounts, they need to use those balances for their everyday needs and to buy things and, you know, whether it's goods or services in the markets and economies that they live in. And so, if you can't move that balance to your local payment system or your local banking system, if you can't have a card that you can use to actually pay at, you know, in this case 175 million plus merchants around the world, or go to an ATM and get cash for those purchases that still require cash. If you can't do all of these things and you can't do them really, really well, then you're stuck with a wallet that has digital money you can't use. And no one wants that, right? So, you have to go and do the work of integrating into the domestic payment systems and it turns out that like, you know, if you're relying on third parties and aggregators that only do that, like the vast majority of them fail miserably at delivering a high-quality service because they work with a number of different banks that have different risk appetites, that have different types of API stacks and connectivity and availability time. And so, lots of payments failures and all of these things. And if you want to replace the current payment system, it not only has to be real-time and faster, but it has to be as reliable or more reliable in terms of payment success rates than existing payment systems. And like that requires a tremendous amount of work to have redundant routes into every single domestic payment system to ensure that you can meet local and global regulatory requirements, that you do that in the system and hide away all of the complexity behind a beautifully designed API, which we take a lot of pride in. Like I think, you know, everyone that we work with, our partners, our clients love our documentation, our API, our agent-forward development frameworks that enables you to unleash an agent and build really, really quickly on top of our stack. And we take a lot of pride in hiding all of that complexity away. It's magic money movement, basically, and we're just like, don't worry about the sausage making, we worry about that, and we eat glass and do all of those things on behalf of our partners and our clients so that they can build the best possible apps and services for money movement in the world.

Yeah, for sure. So, we bought a company called Stream Payo. It was a YC company ran by a fabulous team like that really built a lot with very little, very scrappy. The team like, you know, figured out like Europe was kind of the highest leverage thing they could do. They moved to Estonia because it was like they thought the best environment from a regulatory standpoint, cost standpoint, etc. and built there. From people like, you know, Prashant, the founder of the company, never spent any time there before he moved there. And, you know, he spent his time in India and in the US and never spent time there and just like moved there, spent like the last like 5 years there or so, built a team and built a fabulous company and big fan of those guys. So, we bought the company, we acquired the company and now the team is Lightspark Payments Europe, Lightspark Europe. And so they had a vast license in Europe which they worked with us on upgrading to a CASP and EMI license. And that enables us to now not only do all of the activities that relates to digital assets in Europe like, you know, stablecoin issuance, transmission, custody, etc. But also have direct access to the SEPA real-time payment network that covers 32 countries in the EEA zone straight through central bank connectivity. So, it doesn't get closer to the metal than that like unless you become a central bank yourself. So, you know, that's an example of how we like to do things. We like to get as close to the metal as possible. And in some cases we do it differently like in the US for instance like we decided not to apply for an OCC charter and we can discuss why that is and rely on really solid bank partnerships to do that and to have connectivity to RTP and FedNow and ACH and do that really, really well. And we think that's the right decision but like wherever we can we try to get as close to the metal as possible.

Well, yeah, I mean, I'm a bit of a contrarian. So, when everyone is doing something, I try to like question whether this is like actually the right thing to do or whether like there's something that other people don't see. And I personally like, I've been through so many cycles of craziness, right? It's like when I took over at PayPal, this was when the CFPB was like actually created. And we had lots of issues with them and I had to go like solve that. We had like a regulatory nightmare in Australia with Austrac. Like we had like all kinds of different things that, you know, we had to deal with. And then, of course, with Libra, I lived like the most high-profile scrutiny ever, probably, from global regulators and central bankers. So, like I've seen this movie play out in a number of different ways. And I think when you see who's getting those licenses right now and how many in the volume, etc., and you see how politically charged this is becoming, my expectation is that at some point in time a new administration is going to come in, new leadership at the OCC is going to come in, and they're going to look at all of these licenses, these charters that they've actually awarded to companies, and they're going to be like, 'Wait a minute, like do you really have a business running a bank? Do you know really what you're doing?' And then a lot of them are actually going to be in some sort of penalty box is my prediction, where you have capped deposits, like you can't launch new products, etc. And I don't want to put ourselves in that position. I feel like, you know, we're in the business of money movement, which is really hard. We have MTLs almost everywhere we need to have them. And so, we can do what we need to do from a payment standpoint at the state level. And we rely on phenomenal banking partners that like have built a really good stack. And I think, you know, we want to build this company for the next 100 years, right? It's like it has to be around in 100 years, right? And so, if we do that in a way that actually doesn't enable a single regulator to actually really throw a wrench into our journey, then we're going to do that. And if we can't, we can't. But like if there are like in this case alternative paths that enables us to do that without giving away such leverage, then you know, we'll do it.

First of all, I love to compete. Like I think, you know, competition makes everything better for everyone and it's fun. And so look, I think that the competitive set is getting broader and broader by the day. And it's kind of interesting because what we want to do here is to really present an almost like a single API-based integration for our partners that can do all the things that multiple companies can do for them. So if you look at like the set of capabilities we have from global money movements, whether it's fiat, it's stablecoins, it's other assets, all the way to the edges of local payment rails and local currencies in 62 countries, soon to be 70, soon to be 100 after that. If you look at the ability for us to issue accounts, like self-custodial wallets, like best-in-class self-custodial wallets that don't require seed phrases and private key management and all of that stuff. The ability for those accounts to hold a variety of different stablecoins across all kinds of different chains, the ability for those accounts to have debit cards, the ability for those accounts to actually move money locally and globally on local and global payment networks in real time, and the ability for these platforms to actually earn yield and interchange on card swipes, on card transactions, and FX, and global money movement.

And you look at all these capabilities. If you want to build that today across like competitors, you have to assemble a bunch of different companies or capabilities together and stitch them together. And so that you don't have a single, you know, you don't have a one-stop shop that you can go to with a super like well-designed API and documentation and easy-to-build surface that enables you to do that in that many countries with one partnership, with one stack. Like it just doesn't exist, right? I mean, you can partner with a bunch of other players that can do that for you, but like then you have to stitch all of the logic together and stitch all of the things together, and then you have like different billing capabilities, different billing and feeds of funds that are coming in that you have to reconcile on your end, etc. So, I think we have the best platform in the world right now. I honestly, I would not say that, I would not have said that like 6 months ago or 9 months ago. 9 months ago or 6 months ago, we're playing catch-up on a number of dimensions. If you look at the capabilities of every single one of those companies, the way that they provide them, like you have a bunch of companies doing stablecoin-backed cards as the only thing they do. And like, you know, we weren't there. Now we are. So, there's a number of dimensions like that that I think we weren't best in class at each of these things like 6, 9 months ago. But I feel really good about us being best in class across all of these dimensions at the moment, and I think that makes a difference when companies choose who to work with.