#701 Stablecoins, Yield Generation, and Regulation w/ Jeremy Allaire and Kevin O’Leary

Jeremy Allaire is the Founder and CEO of Circle, a digital currency company. Kevin O’Leary is an institutional investor and star of ABC’s Shark Tank. In this conversation, we discuss stablecoins, yield generation, regulation, USDC, institutional investment interest, and corporate balance sheets. ======================= BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Jeremy Allaire is the founder and CEO of Circle, a digital currency company. Kevin O'Leary is an institutional investor and star of ABC's Shark Tank. In this conversation, we discuss stablecoins, yield generation, regulation, USDC, institutional investment interest, and corporate balance sheets. I really enjoyed this conversation with both Jeremy and Kevin, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is BlockFi. BlockFi provides financial products for crypto investors. Those products include a high-yield interest account, a US dollar loan product against

• 0:45Anthony Pompliano?

  your crypto collateral, and a no-fee cryptocurrency exchange. BlockFi also just released their Bitcoin Rewards credit card. It's a brand-new credit card that works like an old credit card, but it pays you in Bitcoin as a reward rather than airline miles or cash back. That's right, it's a regular credit card, you swipe it and you earn Bitcoin back. I have mine, I'm an investor in the business, and I absolutely love the Bitcoin Rewards credit card. It's almost like a game. I just keep swiping and swiping and swiping and swiping and earning Bitcoin back. Go to blockfi.com/pomp today to start earning yourself. Blockfi.com/pomp. Next up is Choice. It's time to stop paying capital gains taxes on your Bitcoin, and Choice is here to help. Choice is rebuilding the way Bitcoiners approach retirement by

• 1:29Anthony Pompliano?

  making it possible to invest in Bitcoin and 19 other digital assets inside your IRA. Right now, every time you make a trade, you have to pay capital gains taxes that can be as high as 37%. Choice enables you to trade real Bitcoin, other crypto, and stocks without having to pay a dime in capital gains. The best part, they just released an iOS app, so you can open an account in less than 10 minutes and take control of your future from the palm of your hand. Join me and the 20,000 other Bitcoiners who have started their tax-efficient stack and open your Choice account today. Search "stack sats" in the App Store or visit choiceapp.io/pomp. That's choiceapp.io/pomp.

• 2:10Anthony Pompliano?

  Or search stack sats in the app store. And one more thing, if you want to hold your own keys, choice lets you do that, too. Start stacking tax efficient sats today and visit choice app.io slash pump. Again, choice app.io slash pump. Last but not least is circle. Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stable coins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD coin, USDC, which is the fastest growing, regulated, fully reserved, double stablecoin in the world, now standing at more than $30 billion market cap and is adding nearly $300 million of net new digital dollars in circulation

• 2:55Anthony Pompliano?

  every single week. The free circle account and suite of platform API services bridges the gap between traditional payments and crypto for trading DeFi and NFT marketplaces. Learn more at circle.com. Again, circle.com. Hope you really enjoyed this conversation about stable coins, yield generation, regulation, and institutional investment interest with both Jeremy LaRue, the CEO of Circle, and also Kevin O'Leary, the hit star of ABC's Shark Tank. All right, let's get in the episode. Hope you guys enjoy this one.

• 3:26Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:50Anthony Pompliano?

  Jeremy, how are you?

• 3:51Speaker 02

  Hey, I'm really good. Nice to see you, Pomp.

• 3:53Anthony Pompliano?

  Nice to see you as well. Kevin, how are you?

• 3:55Speaker 02

  Very good. Very good to see you again.

• 3:56Anthony Pompliano?

  Jeremy, let's start with you in terms of, uh, give us an update just for those that don't know, what is square, uh, or I'm sorry, what is circle? And then talk to us about the suite of products that you guys have built, uh, for

• 4:07Speaker 02

  Various financial organizations to use. Yeah, no, no problem. Thank you. Yeah. So Circle is a global financial technology firm. We've been operating in the crypto and digital currency space for about eight years since 2013. Have built a number of platforms and products. You know, today we operate the largest regulated dollar digital currency in the world, AKA Dollar Stablecoin, which is USD Coin or USDC, which is about 33 billion in circulation and accounts for a huge amount of the kind of payments and settlement activity in blockchain transactions and payments and DeFi and markets and more and more other types of activities.

• 4:50Speaker 02

  We operate that. We also provide accounts for businesses that want to be using dollar digital currency and other crypto as a core part of how they hold value their treasury accounts as well as payment utility through payment account functionality. And we offer that in a number of different ways, but you know, we fundamentally offer it as a set of APIs and platforms that developers can build on top of. So whether you're a startup that's building an NFT market or you're an established fintech that wants to build in support for things like stable coins and crypto into your own products and services, we offer that set of APIs that connect the existing banking system, the card networks, the bank networks,

• 5:34Speaker 02

  things like that into blockchain native digital currency, you know, payments, settlement and treasury kind of services. And I think the last piece here that I would note in that area is we have a treasury product, which is Circle Yield, which provides a way for businesses specifically that want to allocate dollars into USDC-based lending markets and generate high yield on their dollars and USDC. And then last but not least, we also operate one of the largest fundraising platforms for startups in the United States, a product called Seed Invest, which has grown quite a bit over the past couple of years. And we're excited about continuing to help startups build and grow their companies, also increasingly using more and more.

• 6:19Speaker 02

  Kind of digital native approaches. Got it. And Kevin, last week when we talked, you talked a little bit about kind of using these stablecoins to generate yield like Jeremy was just talking about. Talk to us about what are you guys actually doing with USDC and how does that work?

• 6:33Speaker 03

  So I'm actually one of those business accounts on Circle, probably one of the earlier ones. The biggest problem most, let's call them institutional clients have with USDC is a compliance infrastructure that locks into their systems. So, you know, in my operating company, I'm no different than many millions of businesses. I have a compliance officer because I'm an investor in all kinds of financial services that are issuers. And so I have to be able to mark to market at four o'clock. My compliance officer has to see the positions and then send that report off to the auditors who are external that would sign those docs and then report to the regulator in the various geographies we operate in.

• 7:17Speaker 03

  The trouble with USDC or any stablecoin for me just, you know, a year ago was what platform can I plug into my compliance department with? Is it going to be a bunch of decentralized systems where I'm trying to convince my auditor that this is compliant? And I wasn't able to. I simply wasn't. I could not get them on board for using the traditionally decentralized. It was only when I met the team at Circle and Jeremy down in February in Florida that we started the dialogue with my own internal compliance and then eventually our auditors. And we're still in the startup test phase. We were actually, you know, putting more and more dollar amounts in to prove that this works

• 8:00Speaker 03

  and that you can actually do it on a daily basis. You can open up your accounts, you can see your positions, you can see where you're on or offside. And right now, you know, currently, we're waiting for the regulator to rule on USDC. I'm trying to convince my own compliance department that if you don't want to treat it as money market, then treat it as a stock and put the same weightings on it. So the good news is the potential for this, and the only reason I'm doing all this work and that I'm involved with this is I have a lot of cash sitting around now. Because we took, we drew down our, our commercial real estate portfolio materially over the last year and a half.

• 8:41Speaker 03

  And our alternative for cash is 21 basis points, which doesn't even beat inflation. So we are looking for a solution like this. And all the rest of this work is working with compliance and regulators and infrastructure and, and getting this thing on side. And so. I'm, I'm trying to, you know, drag my compliance people and auditors out of the dark into the light on this thing. And that's the good news, but the even more interesting news is how much of this USDC has grown even since I started. I mean, Jeremy, correct me if I'm wrong, but you're closing in on $30 billion here. And that means there's a lot of people doing the same thing I'm doing.

• 9:23Speaker 03

  And we're not even, you know, we're not on side yet. And, and that means the potential is 100, 200, 500 times bigger. So that's where we're at. And I think the potential of Circle is huge. I intend to become a shareholder as soon as. Uh, the already disclosed SPAC, uh, these SPACs, I'll be part of that pipe. And it's a great business and I think it's a great solution. And I think, uh, we'll know more in the, in the months and years ahead on how USDC grows into a payment system.

• 9:55Speaker 02

  Jeremy, talk to us about how big it actually is right now. Yeah. So, you, so USDC, I mean, just to give you some perspective, the beginning of 2020, right as the pandemic was coming. USDC was about, you know, 400, 500 million in circulation. We 10x'd last year. So we grew from 400 million to 4 billion in circulation. So January 1st, literally of this year, there were 4 billion USDC in circulation. Today we're nosing up against 33 billion USDC in circulation. So on track again for roughly another 10x year of growth this year.

• 10:32Speaker 02

  And, and we've seen over a trillion dollars in transactions done with USDC on public blockchains. That's not including all the volume that happens on exchanges and things like that. So. Um, we really have seen. Extraordinary growth in that. And as Kevin was saying, you know, people are seeing that stable coins are an extremely efficient way to settle transactions around the world. In the same way, we can exchange data on the internet. We can now exchange value. But it's also tapping into these crypto capital markets. And the demand that exists for digital dollars in these markets to obviously create,

• 11:15Speaker 02

  you know, these kind of fixed income type opportunities for people with their stable coins. Got it. And when you guys start to think about this, obviously individuals is kind of a no brainer. They can move quickly. They can determine, hey, I want a higher yield. Businesses seem to be becoming interested. Kevin, you're doing a great job kind of highlighting how your business is thinking about it. Is this something where we believe that every corporation that's publicly traded, you know, large sovereign wells, large endowments, foundations, pension funds, et cetera? They will all start to kind of get in the game here as well? Or is this something that is more so private market companies and individuals? And that's where we think really kind of the addressable market is? I mean, I'll touch on part of that. I'm sure Kevin's got great perspective on this too, which, you know,

• 11:58Speaker 02

  my view here is that the shift to digital currency based payment and treasury infrastructure, which is essentially to say, businesses that connect to the internet are going to increasingly, not just with their digital content and their software and their information services, they're going to move their financial services entirely to internet native infrastructure. That as that happens, every single internet savvy business in the world is going to store value in digital currency, is going to transact in digital currency, and is absolutely going to use it as a cash management and a treasury type infrastructure. So we think the total addressable market is every internet connected business in the world,

• 12:41Speaker 02

  from startups to the biggest public companies. To more precisely though, I think today we're seeing, you know, it's an interesting bifurcation. When I look at the kinds of businesses that are signing up for this. In the early access period, which Kevin has noted, he was the very first customer we signed up, which was pretty cool for this new capability. It is everything. It's from startups that are crypto native to significant financial institutions and public market companies and others that are looking at ways in which they can diversify some of their treasury assets. So it's both institutional asset allocators, but also businesses,

• 13:26Speaker 02

  mainline businesses that see this as a way to augment what they do with dollars as well. Kevin, how are you thinking about sizing it for your business? And then how do you think other folks will think about sizing this type of product? If they've got large pools of capital, but have kind of different structures from a company standpoint?

• 13:46Speaker 03

  I'd like to put a lot more into USDC, but I can't get my guys on board yet for getting past a mandate that we have up to a 5% weighting in an equity. And they keep pointing the finger at me saying, let the regulator rule on this thing.

• 14:03Speaker 03

  Because there has been some discussion in the market regarding stable coins. And I don't really think that all stable coins are created equally. But that's a different debate. You know, there's a lot of noise within the crypto community about Tether and other situations. You're well aware of that, Pop. I know that.

• 14:22Speaker 03

  What I would love to have happen frankly is that the regulator, and I'm not speaking for Jeremy, I'm just saying what I'd like to see happen, is simply turn them into a bank. And I can use this as cash alternative to what I would hold on my balance sheet. Because I'm not making anything on US dollars. I'm able to lend this or stake it if you wish, whatever you want to call it, and make between 5.8 and 6.2. And in other cases, if I wish to leave and use other platforms even more. But my bigger problem, and I can speak to this from any institutions that I service the more Traditional equity markets and indexing, we need a plug and play solution.

• 15:06Speaker 03

  So that, you know, we can just say, okay, let's open an account with Circle. Let's put in, you know, 20% of our cash holdings into USDC. Let's use it as a payment system. Let's stake it and get some yield on it. It's also an USDC issued, I can convert that back to fiat if I want. And I, but I don't need anybody hassling me. I want, I want the regulator to tell me I'm okay with it.

• 15:31Speaker 03

  You know, Jeremy's well able to deal with them and solve it. I'm basically betting his horse is going to win this race, I guess. And I'll be already set up and then I can turn the spigot on and put some real dough to work. And because it's, it's, it's small right now. As we're learning the systems and how it works and how the reporting works. But the demand is, is going to be huge. And I'm happy to be, you know, the first business account. I'm happy to be the guinea pig, whatever you want to call it. I just wish that we would get some clear, some clarity. Even if it doesn't, even if the regulator didn't have to deal with Bitcoin, let's leave that alone. Let's just deal with stable coins. Let's get a ruling on that.

• 16:14Speaker 03

  Let's get that worked out and let me get to work on that because, because there's no, the train has left the station. This isn't going away. Let's get on with it. Let's rule on it. Let's tell us what the rules are and let's get moving. And, and I'm, I'll, I'll speak on behalf of Sovereign Index and every fund. We're all in the same boat on this.

• 16:33Speaker 02

  I've got two, my, my brothers here with me. Uh, or go ahead, Jeremy, what were you gonna say? Yeah, I was just gonna, I was just gonna chime in on, on, on, on a point there, which is just to say, you know, as I think a lot of people know, we went out of our way to, you know, to, to build USDC as a sort of electronic stored value money transmission technology. That was sort of the, the state of the art in terms of how regulation applied to digital currency firms that were doing this kind of activity. And that's how it's regulated today, which is well understood. Uh, it's like you're balancing a PayPal account or, or Stripe or Square or, or others. And I think it's Now really getting much, much larger. And so you've got, you know, the US Treasury Department,

• 17:15Speaker 02

  you've got the Fed, you've got others sort of saying, okay, at scale, this actually is, is, you know, ought to be kind of supervised as a banking activity, as a, a, a special form of banking activity, stablecoin banking activity. And we agree with that. And as you know, we are preparing to file for a National Digital Currency Bank Charter. And we believe that is the right approach to the kind of cash side of this. And then the other, which is, you know, the lending of stablecoins either can be a bank activity, or it can be, you know, structured as securities that are purchased and entered into like other fixed income, you know, products. And that's also

• 17:57Speaker 02

  how we've structured Circle of Year. It is structured as a note purchase agreement. It is structured as a security. And I think that's an understandable instrument for corporations that are utilizing their cash and capital in different ways. Got it. I've got two of my brothers here. What questions you guys got? Hey Kevin, nice to see you again. Jeremy, nice to meet you. Jeremy, so my question would be, people can earn on USDC somewhere between 6% to 7% yield, kind of depending on the length of the term. So my question would be, how are you able to do that versus traditional lending instruments? Yeah, it's a great question. And there's actually a good amount of info out there on this,

• 18:38Speaker 02

  on our website and others. So the way to think about this today is the yields on USDC today are driven by demand in the crypto capital markets. And when I say crypto capital markets, I mean, all of the different investing, trading, lending, other capital market activity that's happening in digital asset native infrastructure, whether that's on centralized exchanges or on DeFi. And within that arena, there is a very significant amount of dollar stablecoin borrowing demand. There are principally, from our perspective, very high quality institutional borrowers.

• 19:20Speaker 02

  And these range from asset managers and other forms of asset allocators to hedge funds, to OTC firms, electronic markets firms, you know, many, many other institutional market participants who want to borrow dollar stable coins and put those to work in these markets. And they're willing to pay high interest rates for that. And if, and they're willing to pay those high interest rates because they're actually generating significantly higher returns. And they can't go to JP Morgan Chase, or they can't go to Goldman Sachs to borrow stable coins. And so there is this intrinsic market demand that exists. And this has existed for

• 20:01Speaker 02

  years and years and years. I operated one of the largest OTC trading desks for a long time. And we borrowed all the time. And it was a really powerful way to augment the working capital that you had as a firm. And so that, that's just going on. It's going on at a much, much larger level now. There's also a retail dimension to that, which is a lot of the borrowing against protocols like AVE and Compound and others. That's very much individuals. We exclusively lend on a wholesale basis to institutional borrowers. And I think what also makes the, the approach that we're taking unique is, A, it's, you know, certainly it's these high interest rates that are, that are, you know, you know, being paid. But secondly, we actually

• 20:45Speaker 02

  over collateralize every single, every single loan. So if you're lending a million USDC through us, we're actually, we're getting 1.25 million dollars in Bitcoin collateral against that. And we're constantly adjusting the amount of BTC based on intraday price movements to ensure that we're always in that 125% collateralization. So not only is it a, you know, a, a high yield, it's also a secured, over collateralized, you know, you know, asset as well. So I think that also makes it pretty interesting. John, what questions you got? Yeah, nice to meet you both.

• 21:26Speaker 02

  Hello Kevin again. Um, so there's about thirty two billion USDC in circulation. Can you talk about what actually backs that? Um, and then going forward, will that change at all or be consistent? Yeah, absolutely. So, um, just at a high level, the way to think about this is when we launched USDC over three years ago, we did it and have operated it under, as I described to you earlier, the regulations that exist by banking supervisors throughout the United States. So state money transmission regulation. So the same regulation that applies to the roughly thirty five billion dollars that PayPal holds on its balances, the however many billion that Square holds and so on, same regulations.

• 22:10Speaker 02

  And those regulations have require us to maintain a one for one reserve in dollar-denominated assets that are liquid such that we can always provide that dollar, uh, in, in, you know, that, that dollar, uh, in exchange for an electronic monies for value instrument. So there is a regulatory framework around this. We've been examined, audited, uh, constantly report that both with the banking regulators and our, and our public company owners. And then we took another step, which was to basically every month, provide a report, not, not an audit, because you don't get audited, uh, every month, but a, uh, uh, an attestation on that. In fact, we're meeting those obligations

• 22:53Speaker 02

  and it's on a one for one basis with the digital currency units or tokens outstanding. So we've been doing that for several years. Um, the, the state laws, um, essentially bound you to a very conservative underlying, uh, set of permissible investments. So you're bound to a very, very conservative base of permissible investments. And if you go outside of that, you're breaking the law. Uh, and so we've always been inside of that. Um, we've based on market feedback as well as sort of, I think, where we think regulators are going on this. And this is through what I'll kind of call public sector signaling, policymaker preferences,

• 23:33Speaker 02

  proposed regulations on stable coins that we're seeing in the UK and Europe and Singapore and other places. Where this is going is that stablecoin reserves, if you want to call it that, should be in kind of cash and cash equivalents exclusively. That is what we're seeing demanded. And that's what we've moved to. So we are 100% in cash and cash equivalents, and we're committed to remaining in that position until we see regulations say otherwise. I mean, I think this is going to be a moving target over time as these get to, you know, if it's, you know, half a trillion or a trillion dollars of value in these dollar digital currencies.

• 24:17Speaker 02

  What is the underlying kind of risk liquidity fiduciary model that the Federal Reserve, US Treasury and others will want to see? That will evolve, obviously, significantly over time. But today, just to, you know, take a long answer and make it very short, it's 100% in cash and cash equivalents. Awesome. Kevin, when you think about USDC, we've talked a lot about the yield component and thinking of it almost like an investment asset that you can drive that yield on. Is there a world where if you could convince the partners or the customers or your kind of business transaction participants to take USDC, would you move a material part or 100% of all of your wires and kind of legacy banking infrastructure payments to something like USDC

• 25:01Speaker 02

  where you could do it more instantaneous, cheaper, faster, et cetera?

• 25:05Speaker 03

  Yeah, of course I would, but I can't do that now. I mean, let me explain what the potential, from my point of view as a user of the product. One of the greatest frustrations that I've articulated over the last couple of years is what I do in foreign markets on equities. I have an index that involves 50 large cap European stocks that unfortunately, or fortunately, whatever you want to say, are in three different currencies, in Swiss francs and euros and British pounds.

• 25:33Speaker 03

  One of the largest friction points for me in rebalancing these indices is the fact that I have to go back and forth through FX costs for Friction of FX trading. If if regulators could get behind a a digital payment system that would allow me to own the securities in, let's say, USDC at a price that's completely transparent and liquid. I could avoid that friction in in perpetuity and and it would be a much more efficient way to do business to settle in in a universal digital currency. Now, I know that sounds, you know, euphoric, but ultimately we need to get there. And and the US dollar today is that currency, it still is.

• 26:16Speaker 03

  You know, many people speculate its future, but for hundreds of years, it's been the currency that people settle on for all kinds of commodities and services.

• 26:25Speaker 03

  It it's very inefficient for what I'm doing in these markets to to pay these these these FX costs, which vary by the hour. And I see no value added. And so to me, let's let's get moving. Let's let's lead the world in this in this process and this efficiency. I hate the idea that our regulator would hold us back against innovation when clearly it's needed. And and on the baseline of USDC, which, you know, there are rules for money market funds. When you go to cash in your, you know, brokerage account, you get swept, if you wish, into a money market account that has rarely broken a buck. And there are rules. I see no reason we can't apply that kind of regulatory environment to USDC

• 27:09Speaker 03

  and, you know, have that settle that way. And of course, I would put more into it because I don't know where rates are going to be once the regulator, you know, rules on USDC. They probably go down. You're not going to get 6% anymore because there'll be a flood of institutional demand. But it's going to be better than what I'm getting on US cash, is my assumption. And in addition to that, could be far more efficient as a payment system across a wide range of different uses. I mean, the use cases here are are very broad. And so, you know, one way to look at it, and I've tried to convince in my own conversations with regulators, and most of us have these ongoing Dialogues in our day to day business to start thinking about USDC as software, really efficient software.

• 27:53Speaker 03

  If you're willing to invest in Microsoft, and I've said this before in Google, why aren't you investing in software that has such promise? And that's basically what in my view, it's a personal opinion, but when I invest in Circle as a business, I'm investing in software that provides tremendous productivity and efficiency. In a business I've been in for decades, financial services. And the same for the chain, for all of the other investments I'm making in cryptocurrencies, coins, tokens, and blockchain itself. It's software to me. And I think it's a necessary investment. And I hope that our regulators see that we should lead the world in developing these protocols and these standards and help us do so.

• 28:35Speaker 02

  Jeremy, one of the big questions that people have in the chat is, how does Circle make money? And how does being in cash and cash equivalents 100% until you get that clarity from regulators? How does that affect your ability to make money, either positively or negatively? Yeah, so there are really a few buckets of income for Circle. The first is that USDC infrastructure. So we're the principal operator of that market infrastructure. There's, as noted, 32 going on 33 billion. It's in a very conservative posture. And the best way to think about that is, yes, we generate income from that, and it's highly interest rate sensitive, right? So like other financial services cyclicals, if interest rates rise, there's certainly more income potential from that piece.

• 29:19Speaker 02

  But we think of that as really like, we're trying to operate a market infrastructure that everyone can take advantage of. The second piece is through Circle account, we monetize in two ways. One is people who take advantage of our yield services and who are lending USDC and generating income from those interest rates and spread capture. And that, the second is through what we call our transaction services. So more and more businesses want to integrate the existing financial rails with things like USDC and blockchain.

• 29:55Speaker 02

  So we have a broad set of transaction services that connect all those provide platforms and APIs people can build on top of and we monetize that based on essentially usage fees. How much are you using those transaction services? How much are you using that the wallet infrastructure, the storage infrastructure, the blockchain infrastructure and our fiat rails? So that's another big category of income. So you've got the treasury services, the transaction services, you've USDC, you know, interest income. And then the third is basically we have a take rate for every dollar of capital that we raise for startups. We've helped startups raise hundreds of millions of dollars. That's growing really nicely. That's a really exciting business. Our investment platform, our seed capital platform.

• 30:40Speaker 02

  And so we have a take rate in that as well, which is another source of income for the company. Got it. So you got kind of a diversified revenue stream here, which makes a ton of sense. Kevin, when you think about investing in Circle and that pipe, and I know some of this thoughts to play out over time, but equity, I'm assuming that you as an investor are thinking about getting that kind of crypto exposure like we talked about last week. That would be an equity investment, which doesn't go in the same bucket as let's say your stablecoin cash position that's generating yield, which may not go in the same bucket as let's say your minor position as well. And so you're kind of actually in some weird way, not thinking of crypto as one single bucket, but it's actually your stocks, bonds, currencies and commodities.

• 31:22Speaker 02

  You're actually getting it infiltrated by these companies and technologies across all of those various buckets. Is that a fair way to look at it? It is fair, but there's also a personal philosophy at play here. You know, when I started my wine business, I didn't own any vineyards. Now I do. I like to eat my own cooking. I like to own the vertical. I like to own the infrastructure that supports the business. So why wouldn't I want to own a piece of Circle if I'm using USDC? To me, it's just, it just makes intuitive sense. And as opposed to making, you know, five or 6% interest on USDC as I, as I lend it out over a long period of time, if USDC becomes a standard, I hope it will, I'll enjoy the capital gains associated with owning part of the infrastructure.

• 32:05Speaker 03

  I have been a stalwart on this. If you're going to get involved in Bitcoin, that is simply one asset. And I am very diversified now into miners, their equities, some of the coins they own. Certainly, why wouldn't I want a piece of Circle if I'm going to be using USDC, as I said earlier. But you have to make a binary decision. And there are many in the financial services market that haven't done the 180 that I have, that have convinced, they continue to try and convince themselves that there is no future in this software technology. There's no future in cryptocurrencies. There's no future in Bitcoin. There's only regulatory hell ahead. I don't feel that way. I have a completely different view of the world. I see the efficiency,

• 32:47Speaker 03

  the productivity potential. And for me, if I look at my, just the time I spend today at our 10 o'clock deal meeting, 40% of that hour was just looking at the crypto deals that were being shown. We have a, we're very fortunate to have very, very large deal flow. And it's almost half of what we look at now, placing bets on all kinds of different approaches of some, you know, in recent times, Immunable Holdings, and WonderFi, and hopefully Circle soon, and some of the coins that we've talked, the miners we've talked about that I own now. This is going to be a 20% weighting in our operating company as an, and I've said this before, and I'll say

• 33:29Speaker 03

  it again, call it the 12th sector of the S and P. That's what this is. And in my world, in my compliant world, I can own up to 20% of this sector and be compliant. And that's where I'm going. End of this year, seven. We'll see what happens next year. But Paul, included in that 20% are equities, coins, tokens, chain developers, you name it. You know, it's just, it's the 12th sector of the S and P, but nobody's called it that yet.

• 33:55Speaker 02

  You come on here and you tell us in flex, you got a winery, and then you tell us the 12th sector. I mean, you are all time. We're gonna have to bring you on like once a week if you're gonna drop bombs like that. Jeremy, last question for you, and then they'll wrap up, is talk to, there's a bunch of folks here who they either run technology startups, which means that if they're in the private market, they probably raised a lot of capital over the last 18 months or so. They got big balance sheets. There's a lot of small business owners that also have driven and gotten a lot of capital on that balance sheet. How can they interact with Circle in terms of starting to get yield or use any of the products in terms of like protecting? Balance sheet or participating in some way. Yeah, absolutely. I mean, look, I think it's pretty straightforward.

• 34:37Speaker 02

  You can you can sign up for a circle account, which is available for businesses. It's like opening a business bank account. So you you need to provide some information. So our compliance organization can onboard you. And then you can sign up for the treasury, you know, the treasury account offering, which is the yield service. And that allows you to select, you know, one month, three months, six months, 12 months tenors. And it's weekly adjusting rates. I think I think, you know, a three month is now, you know, seven and a quarter or something like that. And you can, you can elect to essentially wire funds into USDC and then lend them through that treasury account offering.

• 35:21Speaker 02

  We have some pretty exciting new product capabilities on that front coming through the remainder of this quarter. But that's the basics. And so if you're a startup and you want to utilize this, both from a working capital management perspective or for the efficiencies of USDC as a payment rail. I think, you know, a lot of people who have used USDC to send and receive funds, it's it's like night and day compared to a wire or traditional bank transfer. It's it's sort of what we've all become accustomed to and using the Internet is now functioning for dollars and dollar transactions on the Internet. And so I think, you know, start using it with partners, with vendors, with others. And and there are kind of network effects that go along with that in terms of bringing other people into this ecosystem. Awesome. I appreciate both of you.

• 36:04Speaker 02

  I this is me publicly saying I screwed up and I sent you guys the wrong link. So this Kevin was late last week, but I sent you guys the wrong link. So everyone knows that if someone's late, it's usually my fault because I did something. But I appreciate both of you guys coming on. Thank you. Thank you. All right. See you, guys.