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Hey D New York, how is it going? Tom, Constantine, really glad to have you guys here on the main stage today to talk about payments. Maybe before we dive into, there's a lot of excitement around payments and agentic payments and all these different things going on, but I'd love to maybe just start with a quick background. What you're doing at Swift, what you're doing at Blockdaemon, talk to us a little bit about background and kind of where things are going for you.
Great. Well, thanks for having me and congratulations on a really successful event so far. It's quite a turnout. I'm Tom Shack. I'm the chief innovation officer for Swift. I've been in that role for just over six years now, based in New York even though we're headquartered in Belgium. And I guess for us in the last several years and kind of leading up to the announcement that we made at the end of last year, really the focus has been on digital assets and how can banks and traditional finance companies step into digital assets in a significant way. And we announced the ledger last September. We're going through the process of kind of explaining what that is. We're not changing what Swift is, and that's probably a pretty good context for this conversation. And Swift's a network. You know, we don't issue tokens. We don't hold value. We're not a custodian. We don't do settlement. It's really kind of the trust fabric that's used globally by over 11,500 banks and financial institutions in 200 different countries. So, really interesting time, lots of things happening and looking forward to this conversation.
Yeah, I'm the CEO and founder of Blockdaemon. Blockdaemon is a sort of quasi crypto-native infrastructure company and really what that means and why I'm on this panel is we sell two distinct products. The first is on-prem wallets that we launched in '21 that have not been very popular really up until the Genius Act passed. And so we have on-prem wallet and signing capabilities for institutions and really what that means is it allows institutions to sign digital transactions and have multi-party policy encrypted on-prem. And so suddenly we find ourselves with a wallet that is uniquely positioned to support agentic payments and transaction settlement. And we also sell nodes that you need for liquidity sequencing and monitoring and all those other things that come with any sort of agentic-driven payments and transactions. And so I think the last thing, what's unique about Blockdaemon is we also have JP Morgan and Goldman and Citibank as major shareholders and public customers of our service range from all those to the Fidelities and Bank of New Yorks and so forth. And so we're sort of all over all these different institutions trying to explain to them how crypto-native infrastructure relates to existing financial rails.
Awesome. Thanks for the background guys. I think maybe what we can do is start with a hot narrative right now. Agentic payments I think is on everyone's lips right now. But I think it's pretty questionable and maybe up in the air what that actually means today. So maybe Tom if you could start off and just explain like what are the caveats? What does agentic payments mean? Where do you see that really impacting maybe like what Swift does and large institutions?
Yeah, I mean the signal to noise ratio on agentic payments is probably off the charts at this point, right? There's so much hype and so many stories that are out there. I mean, what we're really talking about is instead of a human making a decision directly, it's going to be done by an algorithm, right? In kind of really simple terms and you can apply that in a retail or consumer environment or you can apply that in an institutional environment. I think we're probably a ways away from kind of full automation in the institutional environment just especially when we look at kind of cross-border, but I don't think it's a completely new topic. You know, having spent a lot of time on trading desks for example in investment banks and knowing how the hedge fund industry works, they've been trading automatically, you know, for taking positions and placing orders and doing hedging and moving cash for decades. And so we didn't call it agentic AI at the time but we called algorithmic trading, right? And the banks have been offering that for decades. And so, I think what comes along with that is, you know, do you have the control structure in place? Can you manage the risk? Are you going to, can you deal with that time where something goes crazy? You don't end up doing a fire sale of the institution as a result of that. But I do think we have a ways to go in that. But I think it's going to move probably faster than people think in practical ways like the way liquidity moves, the way things are hedged, cash and treasury management functions. I think those are going on a path pretty quickly to start to be automated in the not too distant future.
Constantine, I'm wondering, do you have a different perspective maybe from where you sit with interactions with your customers? Is there, do you see a credible and near-term path to agentic product offerings?
Yeah, I mean the way I think of agentic payment, it's really software-driven payment orchestration that uses, and the really the only difference to existing systems is really the encryption and tokenization of pre-approved credentials, right? And so if I get a little technical here, that's kind of really what this means. And so I think but the biggest gap that still needs to get filled is how this actually relates to what an institution really needs to do. We touched on this really briefly, but that is one simple part, but it needs to tie into the liquidity sequencing, into the settlement, into all the different components of security as well as there's conditional settlement and all these other things, reconciliation that still need to occur that need to tie into existing frameworks. And so I think in the short term, I think we're at the stage where everyone's moving around POCs waiting for regulatory clarity and then to really come up and currently actually building a stack that connects to those respective systems. But I do think it'll be a carefully selected few workflows initially that will get tied to agentic payments at scale.
I think that makes sense. I want to go back to something you mentioned Tom around going from human-led signing to machine-led signing. How in this sort of future world do you build those systems then with accountability intact? You know today you might have a human kind of reviewing a large transaction. What does that look like if it's all machines?
So I mean you're right accountability is not going to disappear. You're not going to be able to say to your risk manager or to an auditor or to a regulator, I'm not sure why that happened. The algorithm did it, right? There's no black boxes in finance. So, that's not going to happen. I think a couple things to think about. And I've spent a lot of time thinking about this and I have a really interesting vantage point with talking with the builders and regulators and banks and fintechs and everything else. I think if you think about the intersection of models and programmable money is super interesting to me. And it's not going to be a factor of I can do a thousand payments a day. You might get a million payments a day, right? So this idea of bilateral compliance and doing things on a bilateral basis in institutional finance has to change and you can't be in a situation where you kind of reconstruct the problem after it happens. And so the analogy that I've been thinking about lately and kind of testing with some people is kind of the shipping container, right? Because a token's a digital representation, and we've been able to kind of put assets in a container. Shipping didn't get faster because the container was invented in 1956. Trucks didn't go faster, ships didn't sail faster, they didn't get unloaded on docks faster. What really actually changed that was when it became programmable. When the container was sealed, when it had all of the information on the manifest about what was in the container, is it compliant, can you hold it in this jurisdiction, how do you settle it, now that I have the container in the port, how's that payment made in trade finance for example. So this concept of which doesn't exist today of a programmable container where all of the details about what's in it and the compliance with it that as it travels across chain, I think we're going to have to get that and I think we're going to also have to get to the point where that's checked at execution time or the time when the container hits the port if you want to stay with that analogy, that's going to be done at execution time because the reconciliation if you have problems when you go from thousands to millions maybe billions, it's just not something that humans can keep up with.
I think if I just look at this, the question of humans versus machine differently, I think it's really important to understand that you basically have to separate accountability from execution. And so the execution layer is going to be fully programmable, that's going to be done by software. The accountability layer still requires humans. It's just the activity that the human engages in looks very different. Meaning I give you a concrete example. Like for our product, our on-prem wallet has an encrypted policy engine. And if you're an institution and you're a customer of our wallet, you have to make these decisions around what are actually the roles and permissions, who can actually engage with this respective wallet. What does the multi-party approval flow look like? Who needs to approve what transactions and what are the transaction limits that these individual roles can do? The logic needs to be developed by a human. And then once it's in place, then you can have programmatic execution against it. And so, I think what's so important and that's why crypto is so interesting and why we have this interesting sort of collision forming between AI and crypto is like ultimately all this web3 stuff wasn't really built for humans, it scales perfectly against machines, but it still needs the human architecture and the physical implementation of rules basically.
Can I just build on that a little bit because you just heard from BlackRock in the previous session? And so if I'm looking at, if I'm an algorithm and I'm looking at where should I place money, where do I want to actually invest the balance that I have and I have the authority to do that and it's in a structured environment. When I get that token from BlackRock, I'm going to say, well, first of all, what is it? Is this a 40 Act fund? Is it a USIT fund? Is it like what from a compliance point? What is this? How does it settle? When I give you the token back, what do you, oh, you give me USDT in my wallet. Okay. And we agree on what the wallet is. So KYC is covered, right? Hey, can I hold this thing in Brazil? I don't know. I'm not going to call BlackRock or take a 50-page PDF file and parse through that with AI to figure that out. I think all of those things have to be in that programmable container because humans are not going to be able to keep up with this. And BlackRock's going to want to get that right because they're going to want the distribution and they certainly don't want their token or their fund to end up in the wrong place, the wrong hands. Of course, they're going to comply with the law. And the people who are receiving it don't want to buy something they shouldn't be able to hold whether that's by law or their perspective. I think all of this stuff is going to have to be done upfront.
Yeah, I think you guys are both making great points and leads me down this pathway to talking about regulation and how that has an impact. Obviously, you talked a lot about the technical implementation versus what are the compliance requirements of something and oftentimes those aren't, it's not so simple as just we can technically do it but what are all the other pieces that come after that. Where are we now at a point with, you know, the Genius Act passed, we're looking for some more clarity from regulators. Are you still being held up in terms of the development of large institutional solutions for onchain and payment rails for customers or can we be moving along with those and offering them?
