Key takeaways
- The financial system is moving towards tokenization, with stablecoins poised for significant growth.
- Currently, only 1% of US dollars are in stablecoins, indicating massive growth potential.
- Stablecoins offer a faster, cheaper alternative for cross-border investments compared to traditional banking.
- Crypto-native businesses face challenges in spending their assets due to being underbanked.
- The lack of utility and usability of stablecoins is a significant bottleneck for their adoption.
- Leveraging networks like Visa can enable stablecoins to be accepted globally.
- Banking challenges for crypto businesses have led to the development of essential infrastructure.
- The crypto space is expected to grow significantly, presenting opportunities for infrastructure providers.
- Interchange revenue is generated from merchant fees, shared among issuers and partners.
- The company experienced rapid growth after launching its infrastructure and APIs.
- Visa has been proactive in forming partnerships within the crypto space.
- Stablecoins can reduce inefficiencies in money movement, benefiting consumers.
- The upgrade in payment systems will happen under the surface without changing consumer habits.
- Tokenization of assets can streamline complex processes like home mortgages.
Guest intro
Charles Yoo-Naut is co-founder and CTO of Rain, a stablecoin infrastructure company valued at $2B. He co-founded Rain in 2021 after selling his previous startup to Intuit, where he spent four years scaling financial products. Under his leadership, Rain raised $250M, partnered with Visa as a principal network member to issue crypto cards, and built infrastructure enabling real-world crypto spend.
The inevitable rise of tokenization
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The financial system is inevitably moving towards tokenization, with significant growth potential for stablecoins.
— Charles Yoo-Naut
- Only 1% of US dollars are currently in stablecoins, indicating massive growth potential.
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More and more of the financial system is gonna become tokenized that’s like inevitable.
— Charles Yoo-Naut
- The tokenization trend is expected to transform the financial system significantly.
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There is still like a 100 x growth possible from where we are now.
— Charles Yoo-Naut
- Tokenization is expected to enhance the efficiency and accessibility of financial services.
- The transition to a tokenized system is seen as a natural evolution of the financial landscape.
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I just feel like more and more of the financial system is gonna become tokenized.
— Charles Yoo-Naut
Stablecoins as a solution for cross-border investments
- Stablecoins provide a faster and cheaper alternative for cross-border investments.
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You could invest in a founder anywhere in the world and have it settle in seconds for a fraction of a penny.
— Charles Yoo-Naut
- Traditional banking methods are limited in facilitating international transactions.
- Stablecoins offer significant advantages over traditional banking in terms of speed and cost.
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Stablecoins are the best way to have access to dollar savings.
— Charles Yoo-Naut
- The efficiency of stablecoins in global investments is a key advantage.
- The use of stablecoins can significantly improve the remittance process.
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You just send someone a stable coin and it’s instant.
— Charles Yoo-Naut
Overcoming challenges in crypto banking
- Many crypto-native businesses face challenges in spending their assets due to being underbanked.
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They couldn’t really spend the assets that they had especially in that time.
— Charles Yoo-Naut
- The development of infrastructure has been driven by banking challenges in the crypto space.
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We ended up building a lot of infrastructure that became really valuable for other use cases.
— Charles Yoo-Naut
- Regulatory challenges in the US impact banking relationships for crypto businesses.
- The need for better banking solutions for crypto-native businesses is critical.
- Infrastructure development is essential for overcoming banking challenges in the crypto industry.
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It was difficult for them to open up a bank account in the US especially if you had anything in crypto.
— Charles Yoo-Naut
Enhancing stablecoin usability through existing networks
- The lack of utility and usability of stablecoins is a significant bottleneck for their adoption.
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If I send it to my mom, it’s just like a nice souvenir.
— Charles Yoo-Naut
- Leveraging existing networks like Visa can enable stablecoins to be accepted globally.
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If we can figure out a way to make stablecoins spendable on a Visa card, you instantly unlock hundreds of millions of merchants.
— Charles Yoo-Naut
- Improving usability is crucial for the mainstream adoption of stablecoins.
- The integration of stablecoins into payment networks can enhance their accessibility.
- The strategic approach to enhancing stablecoin usability is essential for adoption.
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Leveraging networks like Visa can enable stablecoins to be accepted by millions of merchants.
— Charles Yoo-Naut
The role of infrastructure in crypto growth
- The challenges of banking for crypto-related businesses led to the development of essential infrastructure.
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We ended up building a lot of infrastructure that became really valuable for other use cases.
— Charles Yoo-Naut
- The crypto space is expected to grow significantly, presenting opportunities for infrastructure providers.
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We started making the transition to become more of like this infrastructure provider empowering other companies.
— Charles Yoo-Naut
- Infrastructure is crucial for supporting the growth of the crypto market.
- The development of infrastructure can drive innovation in the crypto space.
- Infrastructure providers play a key role in the expansion of the crypto market.
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The crypto space is expected to grow significantly, presenting opportunities for infrastructure providers.
— Charles Yoo-Naut
Visa’s proactive stance in the crypto space
- Building a partnership with Visa requires perseverance and networking.
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You have to really navigate the behemoth that is Visa and like pull the right press the right buttons.
— Charles Yoo-Naut
- Visa has been aggressive in forming partnerships within the crypto space.
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They’ve been pretty aggressive in their crypto partnerships.
— Charles Yoo-Naut
- Visa’s proactive stance is relevant for understanding market dynamics.
- The strategic efforts required to establish partnerships in the crypto industry are significant.
- Visa’s approach to integrating with emerging technologies is noteworthy.
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Visa has been aggressive in forming partnerships within the crypto space.
— Charles Yoo-Naut
The seamless integration of stablecoins in payments
- Being a nonbank principal member allows for direct settlement with Visa, crucial for stablecoin operations.
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It allows you to settle directly back to Visa… we control the settlement.
— Charles Yoo-Naut
- The integration of stablecoins into the payment process is seamless for end users.
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Their end users don’t even know stablecoins are powering the program.
— Charles Yoo-Naut
- The combination of principal membership, on-chain infrastructure, and compliance is essential.
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All these pieces together allow us to offer this product in a way that’s resonating with our customers.
— Charles Yoo-Naut
- The seamless integration of stablecoins enhances user experience.
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The integration of stablecoins into the payment process is seamless for end users.
— Charles Yoo-Naut
The potential of stablecoins in emerging markets
- Stablecoins provide a crucial solution for individuals in emerging markets to access dollar savings.
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A lot of our customers don’t see this as crypto or stablecoins, it’s just dollars.
— Charles Yoo-Naut
- The next year will see more mainstream use cases for stablecoins in existing financial flows.
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This next year is gonna be more mainstream use cases.
— Charles Yoo-Naut
- Stablecoins facilitate instant, cross-border transactions, improving remittance processes.
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You just send someone a stable coin and it’s instant.
— Charles Yoo-Naut
- The practical utility of stablecoins in addressing financial needs in volatile economies is significant.
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Stablecoins provide a crucial solution for individuals in emerging markets to access dollar savings.
— Charles Yoo-Naut
Tokenization’s impact on traditional processes
- Tokenization of assets can streamline complex processes like home mortgages.
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Everything’s gonna be tokenized and everything can be done programmatically.
— Charles Yoo-Naut
- Partnering with established companies is more effective than going direct to consumer.
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It’s way better for us to power the best in that market.
— Charles Yoo-Naut
- The majority of their revenue and growth comes from markets outside the US.
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I would say majority is outside the US right now.
— Charles Yoo-Naut
- The potential of blockchain to simplify and modernize outdated financial processes is significant.
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Tokenization of assets can streamline complex processes like home mortgages.
— Charles Yoo-Naut
The evolving landscape of crypto cards
- The crypto card market will see more niche products targeting specific customer needs over time.
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You’re gonna see more niche products come out and targeting more of a vertical.
— Charles Yoo-Naut
- The crypto market is evolving similarly to traditional fintech.
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Crypto’s just behind like the traditional financial markets.
— Charles Yoo-Naut
- Past trends in fintech can inform future developments in the crypto market.
- The emergence of niche products is a trend in the evolving crypto card market.
- The comparison between crypto and traditional fintech highlights the market’s evolution.
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The crypto card market will see more niche products targeting specific customer needs over time.
— Charles Yoo-Naut
