A highlight from Visa's CEO on Crypto: 'This Is a Space We Are Leaning Into in a Very, Very Big Way'
Crypto industry now have prices that go up or down more or less based on things like broad trajectories macaroni arif's and market structure based reasons does is pure play on a me that means that the relevant game isn't what should happen. It's what do you expect. Other people think will happen right now. Alon tweeting about doj. Sending dodge's price up is the easiest reflexive medic bet in the market and it just keeps working does was up twenty percent over thirty one cents per coin and as an aside apparently does coin mining revenue is up like forty five hundred percent this year as well so anyways one other ilan related thing. Yesterday's episode was all about alternative takes on tesla's bitcoin selling well. I read another great one yesterday evening. From our sarah's who describes themselves as an ip slash corporate attorney who recently became a bitcoin maxi. It's a quick thread. So i'm going to just actually read right here. A short threat on tesla selling ten percent of their btc. The sale in order to demonstrate liquidity is a totally legitimate action. On their part. It looks as this move may have been premeditated by elon. Musk defanged shareholder derivative lawsuits. Master had the ability to announce their intention before buying and give their shareholders. Time to be bought out at a premium. This worked for michael sailors since their initial announcement was unlikely to move bitcoin. Much their shareholders were a much smaller group than tesla. And at the time there were lower-profile company than tesla if tesla where to pre-announce like master did the media hype would not only move the bitcoin price in advance of their purchase. But that alone could be seen by some as a breach itself since it would clearly move the price against tesla. Of course tesla could have huddled but given the negative attitude. Still present towards. Btc anything that could be done to weaken. The case for a shareholder lawsuit would be worth it because the bbc has sufficient liquidity to freely trade like usd. They've weakened one of the biggest arguments that could be used against. Tesla would not be surprising if this was part of their initial plan was priced into their initial purchase. One could also consider that by taking this action. Tesla has done a great service to all future companies. That put btc on their balance sheet. I could be wrong. But where to be in the position that i'm trying to minimize lawsuit routes in the score. This is how. I play it next up on today. We've got the details of biden's plan. That is his one point. Eight trillion dollar american families plans. It includes one trillion dollars in spending plus eight hundred billion in tax cuts and credits for middle and lower income families. He would make pre-k and community college free across the country it would extend the child tax credit on the other side are of course the wealthy and in case it wasn't clear that this was the central rhetorical device of the by the administration. Here's a quote from a memo obtained by bloomberg by a white house senior advisor. This morning the president has been clear that our tax system is broken. A hedge fund manager making hundreds of millions of dollars his paying taxes at a lower rate than the janitor working in his office or the housekeeper at his mansion and he's going to take steps steps which are supported by the american public to address the fairness in the tax code. The big part of this of course would be making capital gains more akin to wage income raising the top rate to nearly forty percent. And this is where the big fights going to be. The chief opponents are actually not just going to be republicans but are going to be moderate or conservative. Democrats like joe manchin of west virginia. Who has been opposed to most tax increases favoring in his words to focus on closing loopholes. Instead one note the plan does not include an expansion of the estate tax. So get ready to hear about this a lot more in the months to come finally speaking of governments. Let's do a little mini regulatory roundup for this third section of the brief two stories from the us. The first is that the sec is pushed a decision on the vanik. Bitcoin to june at the earliest. This surprised precisely. No one the can take up to two hundred and forty days to decide and most think it will exercise that full window. No matter where it's leaning next square is buffing up their regulatory game. They've added a bitcoin policy. Lead in julie still who is formerly at the. Us chamber of commerce in their announcement they gave a pretty generic description. Julie will advise teams within cash up on the evolving bitcoin policies. Fear we'll help square advance our strategic and long term. Thinking on crypto issues. Yada yada it's clear. What's here is more anticipated regulatory discussion on the way to more from abroad before we wrap this brief i will be allowing financial institutions in the country to use bitcoin. Mind from minors. They approve in paying for imports. This is on the one hand. Basically an acknowledgement of bitcoin is a currency or at least a settlement currency by a national government. It is also on the other hand the type of thing most likely to trigger animosity from the us government and fuel to those who say that bitcoin adjusted tool for aiding us sanctions and control of the global economic system. The second global regulatory story comes from turkey and turkey has just been supremely weird when it comes to crypto to exchanges are currently being investigated one with the c. O that's missing. The central bank promised ban crypto has a payment method starting in a couple of days but then had some weird walking it back on state tv and now they're actually discussing creating a central bank crypto custodian to eliminate counterparty risk in other words. A central bank actually holding crypto. This is a pretty amazing evolution. And something that i'm going to keep my eye on closely looking for the best way to unlock your cryptos. Liquidity naxos dot. Io is what you need borrow against your digital assets. At just five point nine percents apr earn passive income with yields of up to twelve percent and swap between more than seventy five market pairs with the instant next so exchange. Try the next wallet app to get the whole three hundred. Sixty degrees of crypto banking get started at dot. Io did you know. Nearly three hundred and thirty eight million dollars worth nfc's were sent last year and in twenty twenty one. That number is growing faster than ever looking to make your first. Nf t checkout nears. Fast scalable low cost open source platform learn why near is the infrastructure for innovation at near dot. Org that's n e a r dot. Org to learn more today with that. Let's shift to our main discussion. Earnings call season and of course earlier this week it was an earnings call where we learned about tesla sale about ten percent of its bitcoin. Yesterday on their earnings call visa chairman and ceo. Kelly discussed crypto where it got really interesting was in the qna section dandala from mizzou securities. Asked you spoke a little bit about bitcoin. Earlier in about the use case for crypto and bitcoin on cross border transactions. Can you talk a little bit more about that. And the kind of progress you're making on settlement and stable coins in the steps you've taken on a theory. I think there's a lot of interest out there and what you guys are doing there. And how it's positioned al kelly. Positively jumped out of his seat to answer that question and interestingly it wasn't your standard couple of lines. This was a full framework. So let's go through to see how they actually see this market. First of all they split the market into two broad segments. The first is bitcoin. They say primarily assets held by people not us much in payments we think of them as digital gold the second or what they consider digital currencies which interestingly they include within both cdc's and stable coins basically anything directly backed by existing fiat currencies. It's clear that visa as a payments company is a little more focused on the second area. Indeed kelly said that this area is quote definitely emerging as a payment option. And they're running a public blockchain which is really in essence an additional network. Much like an rtp or ach might be kelly. Then goes on to articulate five different opportunities. They see in the space. The first two super simple enable customers to make a purchase of these currencies or bitcoin. They said they're working with wallets and exchanges to make sure they're facilitating acceptance and people's ability to use their visa cards to buy the second opportunity is enabling digital currency cash outs to fiat and this to me is really interesting. The idea here is converting digital currency to fee on a visa credential which quote then makes those funds available for shopping at any one of the seventy million visa merchants and gives immediate utility to the digital currency this is akin to pay pows work to make crypto viable for its network of twenty nine million merchants. There's a race to make crypto payment accessible to merchants but this time it's an automatic in the background thing. What's more it's clear positioning for the cdc era and more on that in just a little bit now kelly also mentioned that more than thirty five digital currency platforms. Wallets have chosen to work with them. Including coin based crypto dot com block. Fivefold bit panda and more the third opportunity that kelly mentioned is the fruit of the regulatory changes at the occ last year. I've said a bunch of times. One of the big battles this year is going to be for who gets to provide the underlying infrastructure for traditional financial companies to offer crypto services to their end users. Here's how kelly describes their third opportunity quote enabling financial institutions and fintech partners to be able to have a crypto option for their customers. He discussed how they created. Api's for financial institutions to purchase custody or even trade digital currencies and also mentioned their partnership with anchorage as the first federally chartered digital asset bank. On this area. They talk about their first rollout with i boulevard. Which is as kelly puts it a digital neobanks focused on building generational wealth for the black community. I don't know about you guys. But i'm pretty excited to see a company. No less than visa. Connecting the dots between crypto and building generational wealth for the black community the fourth opportunity area is around settlement and again. This is another something that i've previously reported here. They've upgraded their infrastructure at visa to allow financial institutions to settle with digital currency stable coins. Starting with uscc now visa transacts in one hundred and sixty currencies every day and settles every evening in twenty five. Uscc is now among them in his comments. Kelly said that it similar settling in usd but obviously with some new integration work required custodians and other partners last on the opportunities list is central banks central bank digital currency specifically. And this is the silver tuna. So let's just read his full comment quote. Central bank digital currency is being explored in many nations. And i think could end up proven to be quite valuable. In countries where the infrastructure to distribute cash is either unavailable or limited. And it's one of the factors that hinders these one point seven billion people. I referred to in my remarks that are outside the financial mainstream for being in the financial mainstream. So we're talking to central banks about the criticality though of public private partnerships and in particular the criticality of acceptance because for these central bank digital currencies to have value. They're going to have to be secure in the minds of consumers this is i think in many ways driving all of the rest of this the last time. There was a battle for crypto payments. It was twenty seven twenty twelve twenty thirteen and it was just about bitcoin. There really wasn't much merchant demand in early hodler's didn't super wanna part with their bitcoin either. Which is why that faded away. What has changed our. They're really more people who are desperate to pay with their crypto. Not really what's happening. Is that more or less. Every central bank in the world is walking down. The cdc pat that means a total retrofitting of the financial piping. This will be for a company like visa. The single biggest and most important transition in the company's life they either win and carve out their place in the new regime or they'll be relegated to the past. It sounds bombastic to say that. But i would hundred percent believe it to be true. The advantages that digital currencies offer in terms of things like settlement time and assurances are simply going to be too big for them to be anything but totally ascendant now. Visa naturally has a lead right now right. It's a brand that people already trust. There is a world in which everything i over to a central bank digital currency system but the end user experience remains largely the same that will work if and only if companies like visa lead the charge. If they don't do it however if they don't rebuild their rails to accommodate crypto in digital currencies and in the process position themselves to be part of the bold new future. Someone else will. This is the he fintech race of the next decade. And it's going to do nothing but get louder from here and was guys. I appreciate you listening. I hope you're having a great week until tomorrow. Be safe and take care of each other piece. We're witnessing the greatest paradigm shift in finance in modern history. Join thousands of newsmakers influencers talking the future of money at consensus by coined ask alive virtual experience of leaders change makers virtual reality meetups keynotes from ray dallaglio gary vannatter chuck and much more. Get an up close. Look at the boom in crypto. 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