Circle CEO and Founder Jeremy Allaire sat down with Forbes Assistant Managing Editor Diane Brady to talk about why the upcoming year for crypto markets and how mainstream financial institutions may begin to accept crypto as a mainstream financial instrument.
0:00 Introduction
0:14 Experience in Davos
2:36 Distrust In Technology
4:42 Benefits Of Stablecoin
6:03 Are Regulators Getting It Right?
8:27 The Fate Of The Dollar
13:08 Where Is The Optimism?
14:43 How Is The Political Environment Affecting Crypto?
16:54 Do The 2024 Elections Affect Crypto?
19:00 How Are People Exchanging Money?
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0:00 Introduction
0:14 Experience in Davos
2:36 Distrust In Technology
4:42 Benefits Of Stablecoin
6:03 Are Regulators Getting It Right?
8:27 The Fate Of The Dollar
13:08 Where Is The Optimism?
14:43 How Is The Political Environment Affecting Crypto?
16:54 Do The 2024 Elections Affect Crypto?
19:00 How Are People Exchanging Money?
Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1
Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:
https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript
Stay Connected
Forbes newsletters: https://newsletters.editorial.forbes.com
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Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.
Category
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TechTranscript
00:00 (upbeat music)
00:02 - Hi everybody, I'm Diane Brady.
00:04 I'm here with Jeremy Allaire,
00:06 who is the co-founder and CEO of Circle.
00:08 Nice to see you, Jeremy. - Thank you, great to be with you.
00:11 - This is your eighth Davos, you said.
00:13 - I think so, yes.
00:14 - So let's start with how the conversations
00:17 and the tone has changed from the time you've been here.
00:20 - Yeah, it's fascinating, right?
00:21 I started coming in the late 2009, 2010 kind of timeframe.
00:29 And I think as you went into the mid to late teens
00:33 of the World Economic Forum,
00:35 there was a period of time,
00:38 it was maybe peak globalization,
00:41 and so much of the focus,
00:44 Klaus had organized around this idea
00:46 of we're entering the fourth industrial revolution,
00:50 and there's all of these very significant kind of--
00:52 - The world being more connected than ever.
00:54 - More connected, and these rapid advancements
00:57 in technology and that that would kind of fuel
01:00 this next phase of improving the state of the world.
01:03 And I think I sort of, all of us saw,
01:07 both because of the acknowledgement of the climate crisis,
01:10 but also because of political instability,
01:13 nationalism, balkanization, all these things post-2016,
01:17 really even starting before that with Brexit,
01:20 you really saw the nature of the focus shift.
01:24 And so obviously then we went into pandemic crisis,
01:27 and it was dealing with all of the aftermath
01:30 of the pandemic crisis.
01:32 And so here we are, I think this week,
01:36 and while there is some focus
01:38 on fundamental technology breakthroughs like AI,
01:41 like you said, you can't miss an AI panel
01:44 or every enterprise company's now an AI company
01:48 kind of thing.
01:48 But I think there's the kind of optimism
01:54 around how can industry and the public sector
01:59 be driving significant technological change
02:05 and societal change that comes from that.
02:08 There isn't as much of that as there was
02:10 during the earlier period, and it reflects
02:12 the political and economic reality of the world
02:15 in many respects.
02:16 But as I was saying, as a technology entrepreneur,
02:20 that is very focused on the way internet technology
02:24 in particular can improve the world,
02:28 I certainly would love to see more dialogue
02:31 that's forward looking in that way.
02:32 - Well, what's interesting, and I take your point,
02:36 what's interesting is a lot of the conversation here
02:39 is about what's happening with the rise of populism
02:42 and this distrust of technology.
02:44 A lot of it is around AI, but you're in stable coin,
02:49 the crypto space, talk about how the conversation there
02:52 has changed because certainly in the US,
02:55 we're paying attention to Bitcoin again.
02:57 I think there's a lot of confusion about what's happening
03:00 on the regulatory front.
03:02 What are the conversations you're having?
03:05 - Well, it's been a significant evolution.
03:07 I think there was a lot of noise during the huge
03:12 kind of bull market as it were previously,
03:16 and now there's a lot more signal,
03:18 which is the companies that focused on building trusted,
03:23 transparent and compliant offerings
03:29 are the ones that have survived
03:31 and in fact are thriving.
03:33 A huge difference is in fact, in many parts of the world,
03:37 in fact, almost every major financial market center
03:40 has either enacted or will enact comprehensive regulation
03:45 of this market and especially the stable coin market.
03:48 And so it's really shifting
03:50 and it's shifting towards this is here, it's here to stay,
03:54 it's being integrated into the traditional financial system,
03:56 even the Bitcoin ETF, which is, yes,
03:59 it's about people who wanna invest and trade
04:02 in that particular digital commodity,
04:04 but it's also about major regulated
04:08 traditional financial players
04:09 integrating into this ecosystem.
04:11 And so there is a real shift,
04:15 an understanding that this is lasting
04:18 and I think that's creating more curiosity around,
04:23 okay, I need to double take on this technology.
04:26 I need to really understand
04:29 where the application's happening and what is driving it.
04:33 And for us, that's exciting because without any doubt,
04:36 the killer app of blockchain technology is stable coins,
04:40 which brings the power of dollars everywhere.
04:42 - Yeah, remind people of the benefits of stable coin
04:45 for those who don't know.
04:48 - Yeah, the basic idea is that you can take
04:52 traditional fiat money, like dollars,
04:55 and you can essentially connect it to blockchains
05:00 and issue digital currency versions of those dollars.
05:03 And unlike traditional electronic money,
05:07 these digital currency dollars
05:08 get the power of the internet.
05:10 They have the ability to be transacted and transmitted
05:13 at the speed of the internet with the cost efficiency,
05:16 essentially, of just sending data and to do that globally
05:19 and to do that in a way which is open and accessible
05:22 to anyone with a device connected to the internet.
05:25 And so really what the internet has done
05:28 for information exchange, for media, for communications,
05:32 stable coins do for traditional money
05:34 and bring the power of open internet infrastructure
05:37 to traditional money.
05:39 We like to call it open money.
05:40 And so that's what stable coins really bring.
05:44 In particular, stable coins like USDC,
05:47 which have been designed around kind of a reserve model,
05:52 a transparency model, and a regulation model around them
05:56 that allows the holders and users to know
05:58 that these are in fact fully backed digital dollars.
06:03 - Talk a little bit, are regulators getting it right?
06:05 What are you seeing on the regulatory front?
06:07 Because there are still, I mean,
06:09 are you often lumped in with crypto, first of all,
06:13 and fairly, and secondly,
06:14 when you look at the regulation happening in the US,
06:17 especially relative to the rest of the world,
06:19 how are we doing in making it competitive and safe?
06:23 - Well, I'd say, I think broadly
06:25 in the major governments in the world,
06:28 in the markets that are the largest kind of
06:32 financial markets and trade markets,
06:35 we're seeing really positive developments overall.
06:39 So you're seeing really the twin pillars
06:42 of regulation are, if you're going to be
06:45 a kind of intermediary, a financial intermediary
06:48 that deals with digital assets,
06:50 whatever kind of digital asset,
06:52 you need to be properly registered, audited,
06:57 have the right security, the right anti-money laundering,
07:00 the right controls, like fundamental things
07:03 to being a financial institution.
07:05 So it's defining that,
07:07 and that's now getting broadly put in place,
07:09 which is very important.
07:11 The second is specific to stable coins.
07:13 And interestingly there,
07:15 2024 is the year of stable coins
07:17 from a regulatory perspective.
07:19 Already have laws that are going in effect
07:21 for the entire 800 million people in the Eurozone.
07:25 We have laws in effect in Japan.
07:26 We have laws that are going to go in effect in Singapore,
07:29 Hong Kong, the UAE, the UK,
07:33 and then advanced legislation in the United States.
07:35 And broadly, those regulatory frameworks,
07:39 in many respects, reflect the operating model
07:42 that Circle has been under now with this business
07:44 for over half a decade.
07:46 And so I think this is good regulation overall.
07:51 There's some differences between them,
07:54 and so that creates its own set of challenges,
07:56 kind of normalization, standardization, that kind of thing.
08:00 But very significant solid foot forward.
08:03 And I think the outcome of that is at the end of this year,
08:09 society and corporations and others will know
08:13 these digital dollars or digital euros
08:16 that are issued under these kinds of stable coin laws
08:19 will be an integrated part of the global financial system.
08:23 And that's a huge evolution from where we've been.
08:26 - You know, there's been a lot of discussion
08:28 about the fate of the US dollar,
08:29 especially as you've seen countries like China,
08:33 India, Russia start to basically
08:37 to nominate some of their debt away from the US dollar.
08:41 What are you seeing and what do you think?
08:43 I mean, I know you're not necessarily
08:46 in the maw of that world,
08:47 but dollarization is something
08:49 that very much impacts your business.
08:52 - Definitely, and I like to call it digital dollarization,
08:55 which is actually a phenomenon
08:56 that we're seeing happen right now
08:59 in our new state of the USDC economy report for 2024,
09:04 when we look at what's happening
09:05 with USDC around the world.
09:07 We are seeing demand for digital dollars
09:10 in emerging markets all around the world,
09:14 where individuals, households,
09:16 and small and medium businesses
09:19 want to hold dollar stable coins
09:22 and transact in dollar stable coins
09:24 instead of their local currencies
09:25 or instead of their local banking systems.
09:27 And that reflects, one,
09:29 that dollars are still what people want,
09:32 even if their governments might be saying something else
09:34 from a political strategic perspective,
09:36 on the ground, people want dollars.
09:38 And then secondly,
09:39 I think what's really interesting about it is
09:42 it really brings light to this issue
09:44 that the currency competition
09:48 is increasingly a technology competition.
09:51 And so a lot of times people think of currency competition
09:53 as having to do with your ability to pay debts
09:57 or your monetary policy.
09:59 Well, it's also about your technology strategy
10:01 and what you're doing to kind of give your currency
10:06 internet superpowers.
10:07 And so this technology competition around currency
10:10 is a very real thing.
10:11 And that's a message that we certainly have
10:14 brought to Washington, which is to say,
10:17 if there's going to be a digital currency space race
10:20 and the United States wants to win,
10:22 it needs to enact legislation that empowers
10:27 regulated financial industry participants
10:30 to issue and operate and run
10:33 this kind of digital dollar infrastructure.
10:35 And that's the best thing that the United States can do
10:37 to accelerate its currency competition
10:40 in this new era of internet-based financial systems.
10:44 - Can we unpack that a little bit?
10:45 Because I think about China
10:47 as often being a major competitor of the US.
10:50 I don't know a lot about what's happening
10:52 on the regulatory front there
10:54 in terms of what you're talking about.
10:56 Where do they rank relative to us in that respect
11:00 of actually creating a vibrant digital infrastructure?
11:05 - Well, China as a whole has invested massively
11:09 in building a vibrant digital infrastructure,
11:11 both in the public sector and the private sector.
11:13 - But for Yuan-denominated?
11:16 - So today, you really have digital money in China
11:21 is dominated by the private sector.
11:24 So Alipay, WeChat Pay,
11:28 these are the dominant kind of mediums of exchange.
11:31 And the government has put forward
11:34 a government-run digital yuan as kind of a third way.
11:39 And in some ways, it's kind of a feeling like
11:42 we have to make this available
11:43 'cause we don't want the only thing that's available
11:46 to be these private sector forms of digital money.
11:49 Now, that has had limited uptake.
11:51 We'll see how that evolves.
11:54 But my belief is that the Chinese government
11:57 is not gonna be the first to move on this.
12:00 They may be the last to move on this.
12:02 And so I would expect that they're very closely watching
12:06 all of these other major countries
12:07 that are making stable coin laws,
12:09 that are enabling the private sector
12:11 to kind of issue and operate using blockchain technology.
12:14 And I think that ultimately they will lean in hard on this.
12:19 And they have some extraordinary companies
12:23 that could compete in this space.
12:25 So I think that there are certainly,
12:29 my estimation is that they're watching very closely.
12:32 And in fact, they have some very major efforts
12:37 around blockchain technology.
12:38 So government-backed efforts
12:40 around blockchain infrastructure
12:42 across all forms of industry,
12:45 in cross-border, in the Belt and Road.
12:47 And so blockchain technology
12:50 is a strategic imperative for them.
12:52 And that is a weakness for the United States.
12:54 It has not become a strategic imperative
12:56 for the United States government.
12:57 And the United States government needs to respond to that.
12:59 It is a national competitiveness, national security,
13:02 and national economic question.
13:04 - Anytime you say the word national and policy together,
13:06 it rarely goes with the US.
13:08 So how optimistic are you
13:09 that we will get our house in order in that front?
13:12 - You know, I remain optimistic
13:16 because the United States plays such a pivotal
13:20 and central role in the global financial system.
13:23 And if there's going to be a major new technology innovation
13:27 in the global financial system,
13:29 the United States will come in and have its role.
13:33 I think similar to China, it doesn't need to be first.
13:37 It doesn't need to be last.
13:38 And so I think as these standards have emerged,
13:43 and the US, by the way,
13:45 through the US Treasury Department
13:46 and the Financial Stability Board
13:48 has absolutely been pushing
13:50 for comprehensive regulatory frameworks.
13:52 And so at a government strategic level,
13:55 they've been pushing for it.
13:57 How we enact laws,
13:58 the difference between the administration
14:00 and agencies and Congress and the courts.
14:04 And there's a lot of unique sausage making
14:06 in the US policy apparatus.
14:09 And so we're going through that now.
14:11 This has become a bipartisan issue.
14:13 This has become an issue which many stakeholders
14:16 from financial technology innovators like Circle
14:20 to the biggest banks and asset managers in the world,
14:23 all, and the biggest payment companies,
14:25 we all have a stake in this.
14:26 And so I think it's moving along.
14:28 I'm optimistic specifically around stable coins
14:31 that we're going to see payment stable coin laws
14:35 passed in the United States
14:37 because I think it's too challenging
14:40 for the United States to not do that.
14:42 - So can we step back a second, Jeremy,
14:44 the political climate right now with regard to,
14:47 you mentioned bipartisan,
14:49 just there's almost sometimes
14:51 there's a weaponization of innovation
14:53 and there has not been a lot of coordination.
14:56 How has that impacted?
14:57 Can you talk a little bit about the political environment
15:01 and the degree to which,
15:04 what advice you would have for those policy makers
15:07 given where we are right now?
15:10 - Well, I think there are topics
15:15 which are just non-partisan topics.
15:18 And I didn't say bipartisan, I said non-partisan.
15:21 They're not about what your political affiliation is.
15:23 They're just facts on the ground.
15:26 The emergence of generative AI is an example of,
15:28 this is something that's a non-partisan issue.
15:31 Now there may be partisanship in terms of heavy regulation,
15:34 not heavy regulation, et cetera.
15:36 - Fear versus FOMO,
15:38 I think it's quite a political issue actually.
15:40 - For sure, but what I find is in these is,
15:44 it is not really what your political party is.
15:48 You're seeing an incredible number of
15:52 very innovation focused Democrats
15:54 that are very focused, for example,
15:56 on the digital asset industry.
15:58 And you're seeing also, I think very pro-markets,
16:02 pro-competition, pro-US competitiveness Republicans,
16:05 very focused on that issue.
16:06 You're seeing national security hawks on both sides
16:10 who are coming at this and saying,
16:13 hey, we've got to deal with
16:14 kind of illicit finance uses of this.
16:16 And so that's what I mean in the sense that
16:20 there are kind of pockets of interest
16:22 that don't have to do specifically
16:24 with your party affiliation,
16:25 have to do with your point of view
16:27 about what's important to the United States.
16:29 And so that's where I see more and more of that happening.
16:33 And I think you'll see that
16:34 as we go through this electoral cycle as well.
16:36 I think you're going to see lots of candidates
16:39 on both sides of the political landscape
16:44 who are kind of stepping in
16:46 and having a strong point of view about this
16:48 and wanting to be proactive about making sure
16:51 that the US doesn't lose its leadership position.
16:54 - Does it matter the outcome of the US election?
16:57 - I personally believe the US election
17:00 has extraordinary implications for the world.
17:03 I think there's a lot on the line
17:05 in terms of the ultimate position of the US
17:08 and how our allies in the US
17:10 and how our economic partners in the US.
17:14 And so I think there's a lot at stake.
17:16 - I mean, could you,
17:17 I know these things are personal,
17:20 but what are the consequences
17:22 that are being talked about here?
17:23 I don't know if people have asked you about it
17:25 as a US Silicon Valley technology entrepreneur.
17:30 What are some of the issues we should be focused on
17:35 as we head into what's an important year,
17:37 as you mentioned, and also an electoral year?
17:40 - Well, I think in the United States,
17:44 there are these big issues on the economy.
17:47 There's big issues around the border.
17:50 I think there's big issues
17:53 around some of these major technology changes,
17:56 what's happening in the labor force.
17:58 Obviously a very large issue that's on everyone's minds
18:03 is the affordability of the US government debt.
18:08 So those are all key issues that people are focused in on.
18:13 I think, I'm not having a lot of US domestic
18:18 political conversations here,
18:20 but I think a general theme is,
18:26 I think for many of the participants here,
18:31 there's really a strong desire to kind of move outside
18:36 of the severe partisanship that we've seen.
18:39 And I think be in a place where the US
18:42 can speak with one voice and face the world
18:45 in a unified way, given the complexity
18:48 of what faces the whole world
18:49 and what faces the United States.
18:51 - Are you optimistic that's likely to happen?
18:53 - It's very early in this electoral cycle.
18:56 So I think it's completely unknown what could happen.
19:00 - Let me, I just wanna step back to,
19:02 I've lived in Asia, I've lived in Africa,
19:05 and I know that the way people trade currencies
19:07 very much reflect about their level of trust in government.
19:11 Sometimes they trade money in the street.
19:13 Obviously we're in a different world now.
19:16 What are you seeing, since you also get some insight
19:18 into terms of how people are,
19:21 in essence, sort of exchanging money,
19:26 are you seeing any interesting trends
19:28 that you think are emblematic of that level of trust
19:31 or lack of trust?
19:32 You mentioned it a little earlier.
19:33 - Well, I mean, there's not a lot of big surprises there.
19:36 I think in markets and in countries
19:39 where there's significant currency devaluation,
19:41 you see a particular behavior.
19:43 I think in markets where there's significant capital controls
19:48 you see certain behaviors, and those are not surprising.
19:54 But you're also seeing, I think, interestingly,
19:57 in markets that have significant amounts of cross-border,
20:02 internet-driven commerce behavior,
20:06 or where the labor market participants
20:10 are more remote and distributed internationally,
20:14 I think what's interesting is we're seeing more firms
20:19 and more households, as it were,
20:23 that are trying to adopt these new technologies
20:25 like stablecoins.
20:27 Not because they're trying to flee their currency
20:29 or this or that,
20:30 it's that they've actually determined
20:31 this is just a better way to operate.
20:34 It's sort of like when people realize,
20:35 like, "God, I can do a FaceTime call
20:37 "instead of paying the phone company however much."
20:40 - Yeah, why wouldn't you?
20:41 - So I think that people are kind of seeing,
20:43 "Wow, this is just a better utility,
20:45 "so I'm just gonna start adopting it."
20:47 And it's not the General Motors of the world
20:50 that are choosing to do that first,
20:51 it's sort of the individuals and the small
20:54 and medium enterprises that have more degrees of freedom
20:56 to move faster, they're starting to do that,
20:59 and that's really exciting to see.
21:01 - One other question,
21:03 which is getting back to sort of your roots.
21:06 There's a lot of discussion here around trust,
21:09 and I was seeing the Edelman Trust Barometer,
21:12 and one of the things that's interesting is,
21:14 in some ways, the weaponization of innovation
21:17 and how Republicans in particular
21:22 don't trust that innovation is working in their favor.
21:24 I don't know if you see that,
21:26 or if you feel that there is a risk
21:28 that politics is starting to get into the realm
21:31 of what in essence should be just a growth engine,
21:34 what you're doing and what others are doing.
21:37 - Well, I think people care about their purchasing power,
21:42 is it up, is it down?
21:46 They care about whether they're maintaining sustainable jobs,
21:51 are those jobs, are they seeing wage growth
21:55 in the face of inflation?
21:57 I think people care about the stability of benefits,
22:01 and I think, so there's a lot
22:03 that kind of households are tuned into.
22:06 And so it's very easy to sort of say,
22:09 hey, there's something happened technologically,
22:11 or something happened where that changed the mix on that,
22:16 and it's very easy to blame the technology there.
22:18 But I think that, rather than a failure of technology,
22:23 in fact, those are often examples of policy failures
22:26 of anticipating and adapting to that.
22:28 I think we're facing a pretty massive inflection point
22:31 on that with AI, which I personally believe
22:36 has the potential to mass displace
22:39 a huge number of professionals.
22:44 We're not talking about people who work in manufacturing.
22:47 Professionals at an extraordinary scale,
22:51 but it also has an extraordinary potential
22:53 to empower professionals to take on and do things
22:57 that were inconceivable to them in the past.
22:59 And so that's obviously incumbent on the private sector,
23:03 I think, first and foremost, to navigate.
23:06 But that also should be framed as a backdrop
23:10 of public policy objectives as well.
23:11 - Yeah, and communicate too, right?
23:13 Because you get lumped in the same bucket, to your point.
23:16 I mean, you're talking about a lot of nuance
23:18 that doesn't always come out in terms of the discussions
23:20 of how this plays out.
23:22 Is there anything else on your radar
23:23 you wanna put on ours from here or otherwise?
23:26 - Yeah, I think, I like to believe,
23:34 and I think I see, despite all of the complexity
23:40 and turmoil, I actually think there are a lot
23:46 of tremendous green shoots in terms of the global economy.
23:51 I think there's a lot of interesting green shoots
23:53 in terms of breakthroughs in carbon reduction,
23:58 in energy technology.
23:59 There's obviously, I think, some very significant
24:02 breakthroughs in the development
24:03 of this new internet financial system, the application.
24:07 So I see a lot of green shoots,
24:08 and I think it's up for grabs, sort of conceptually,
24:13 whether five to 10 years from now,
24:16 we're in a kind of renaissance of kind of global dynamism,
24:21 or as some would say, we've descended into chaos.
24:26 I'm certainly more on the former than the latter.
24:28 - That's right.
24:29 Here's to renaissance as opposed to chaos.
24:32 Thank you for joining us.
24:33 - Thank you.