Key takeaways

• The stablecoin market is still in its infancy despite its rapid growth.
• Building on stablecoins is costly and fragmented, but innovative solutions are emerging.
• Stablecoins have reduced friction in payment systems, extending their utility beyond crypto and DeFi.
• Parabolic growth in stablecoins is driven by their utility in cross-border payments.
• Stablecoins are now operational technologies moving significant value globally.
• Regulatory clarity has increased confidence and trust in stablecoins.
• Simplified stablecoin infrastructure will drive adoption across various sectors.
• Blockchain technology addresses core issues in traditional finance, such as settlement times and costs.
• Stablecoins’ primary utility lies in payments.
• Interoperable systems are being developed for seamless stablecoin transactions.
• Stablecoins enhance cross-border payments by increasing speed and reducing costs.
• AI will significantly impact payment transactions for retail and institutions.

Guest intro

Mohamed Afifi is Chief Operating Officer and co-founder of HIFI, a NYC-based payments platform that uses blockchain technology and stablecoins to enable instant cross-border money movement. He previously worked at Uber and Quadpay, where he focused on money movement and payments infrastructure before recognizing a gap in crypto payment solutions. Under his leadership, HIFI has grown to 25 employees and processes billions in transaction volume while building interoperable systems that allow seamless transactions between different stablecoins.

The early stages of the stablecoin market

• The stablecoin market is still in its early stages despite significant growth.

  — Mohamed Afifi

• I think the message of this episode should be we really only just begun with stablecoin.

  — Mohamed Afifi

• Building on stablecoins is currently expensive and fragmented.

• A lot of the difficulties building on stablecoins which today is super expensive it’s super fragmented.

  — Mohamed Afifi

• Innovative platforms are emerging to address these challenges.

• Cool platforms that are out there today… are really building sort of unique solutions.

  — Mohamed Afifi

• Understanding the current state and potential future of the stablecoin market is crucial.
• The ongoing evolution presents significant growth opportunities.

Stablecoins’ impact on payment systems

• Stablecoins have significantly reduced friction in payment systems.

• It’s removed the friction from the payment systems today.

  — Mohamed Afifi

• Their utility extends beyond just crypto and DeFi.

• There’s actually real utility with regards to cross border payments.

  — Mohamed Afifi

• Parabolic growth in stablecoins is due to their increasing utility.

• Stablecoins have just have seen this parabolic growth.

  — Mohamed Afifi

• The trend indicates a shift in acceptance and use in broader financial contexts.
• Understanding these trends is essential for financial ecosystem insights.

Transition from experimental to operational

• Stablecoins are no longer experimental technologies.

• They’re in production today, moving immense value around the world.

  — Mohamed Afifi

• Regulatory clarity has built confidence and trust in stablecoins.

• Getting clarity from a regulatory perspective gave confidence and trust.

  — Mohamed Afifi

• Broader adoption is enabled by this regulatory clarity.
• Infrastructure companies are simplifying stablecoin use.

• We’ll start to see more of that adoption happening.

  — Mohamed Afifi

• Increased adoption is expected in various sectors.

Blockchain’s role in traditional finance

• Blockchain technology can solve core issues in traditional finance.

• Slower settlement times, high cost, and network fragmentation are solved by blockchain.

  — Mohamed Afifi

• Stablecoins have real utility primarily within payments.

• Stablecoins’ real utility was within payments.

  — Mohamed Afifi

• Understanding these solutions is crucial for financial system improvements.
• The technology offers significant advantages over traditional systems.
• Blockchain’s impact on finance is becoming increasingly evident.
• The role of stablecoins in payments highlights their importance.

Interoperable systems for stablecoin transactions

• Interoperable systems are being developed for seamless transactions.

• Building out this interoperable system where you can swap stablecoins.

  — Mohamed Afifi

• The development addresses challenges in stablecoin transactions.
• Two main cohorts are serviced: financial institutions and large corporations.

• We service financial institutions and large corporations.

  — Mohamed Afifi

• These solutions enhance cash management systems.
• Understanding the target market is crucial for stablecoin solutions.
• The development of interoperable systems is a significant advancement.

Enhancements in cross-border payments

• Stablecoins enhance cross-border payments by increasing speed.

• Increase your velocity on transaction time and reduction in cost.

  — Mohamed Afifi

• Traditional payment companies must innovate with stablecoins.

• If not, they will be left behind.

  — Mohamed Afifi

• The urgency for adaptation is highlighted in the evolving market.
• Stablecoins offer significant advantages over traditional methods.
• The role of stablecoins in cross-border payments is expanding.
• Understanding these enhancements is essential for financial strategies.

Future predictions for stablecoins

• Every company will be powered by stablecoins in the next five to seven years.

• Every company will be powered by stablecoins.

  — Mohamed Afifi

• The market will become hyper-fragmented before consolidation.

• There is going to be some aggregation or consolidation.

  — Mohamed Afifi

• Understanding these predictions is crucial for future planning.
• The stablecoin market is expected to undergo significant changes.
• The integration of stablecoins into business operations is anticipated.
• These predictions highlight the evolving role of stablecoins.

Global interoperability and experimentation

• Every country will likely have its own stablecoin, leading to global interoperability.

• Every country will have their own stablecoin and global interoperability.

  — Mohamed Afifi

• Stablecoins allow companies to experiment with incentives.

• They allow experimentation with ecosystem incentives.

  — Mohamed Afifi

• Understanding these developments is crucial for global finance.
• The strategic advantages of stablecoins are becoming more evident.
• The role of stablecoins in global finance is expanding.
• These insights highlight the potential for innovation and growth.

User experience and blockchain evolution

• Not every tech company should create their own stablecoin.

• Stablecoins should be invisible in their end application to users.

  — Mohamed Afifi

• The evolution of blockchain networks is breaking down vertical silos.

• Networks are breaking down vertical silos into more horizontal services.

  — Mohamed Afifi

• Understanding these trends is crucial for enhancing user experience.
• The focus on user experience is driving blockchain evolution.
• The strategic approach to stablecoins is becoming more user-centric.
• These insights highlight the importance of user experience in adoption.

Privacy and strategic approaches

• Canton’s stablecoin strategy emphasizes neutrality and privacy.

• Neutrality and privacy while enhancing connectivity to capital markets.

  — Mohamed Afifi

• Privacy is essential for enhancing stablecoin use cases.

• Privacy benefits international remittance and corporate treasury.

  — Mohamed Afifi

• Understanding these strategies is crucial for competitive advantage.
• The focus on privacy is a key differentiator in the market.
• The strategic approach to stablecoins is becoming more privacy-focused.
• These insights highlight the importance of privacy in financial applications.

Balancing permissionless access and control

• The USDC x initiative aims to balance permissionless access with Circle’s involvement.

• Finding a middle ground between permissionless and Circle’s involvement.

  — Mohamed Afifi

• HiFi operates as a distribution layer for stablecoin issuers.

• We are a distribution layer for stablecoin issuers.

  — Mohamed Afifi

• Understanding these initiatives is crucial for stablecoin ecosystems.
• The balance between decentralization and control is a strategic focus.
• The role of HiFi in the stablecoin market is significant.
• These insights highlight the importance of strategic positioning.

Privacy in financial transactions

• Privacy is crucial for financial institutions conducting transactions.

• Why would a financial institution want public transaction visibility?

  — Mohamed Afifi

• Permission-based blockchains allow controlled visibility of transactions.

• Counterparties and regulators can have controlled visibility.

  — Mohamed Afifi

• Understanding these privacy concerns is crucial for adoption.
• The balance between privacy and compliance is a strategic focus.
• The role of permission-based blockchains is significant in financial transactions.
• These insights highlight the importance of privacy in financial systems.

Blockchain integration and compliance

• The ability to use blockchain technology at scale is crucial for businesses.

• Blockchain can be part of your strategy while being compliant.

  — Mohamed Afifi

• The ecosystem is still fragmented, leading to customer pain points.

• The ecosystem is fragmented, leading to customer pain points.

  — Mohamed Afifi

• Understanding these challenges is crucial for blockchain adoption.
• The focus on compliance and integration is a strategic priority.
• The role of blockchain in business strategies is expanding.
• These insights highlight the importance of addressing fragmentation.

Fragmentation and user experience

• Fragmentation in blockchain ecosystems hinders seamless user experiences.

• Fragmentation is hindering the development of seamless user experiences.

  — Mohamed Afifi

• The tribal nature of ecosystems prevents a unified wallet experience.

• Ecosystems are tribal, preventing a unified wallet experience.

  — Mohamed Afifi

• Understanding these challenges is crucial for user experience improvements.
• The focus on interoperability is a strategic priority.
• The role of user experience in blockchain adoption is significant.
• These insights highlight the importance of addressing fragmentation.

AI’s role in payment systems

• AI agents will play a significant role in executing payment transactions.

• AI agents will swallow up payments for retail and institutions.

  — Mohamed Afifi

• AI can enhance user experience in payment systems.

• AI can enhance onboarding and compliance processes.

  — Mohamed Afifi

• Understanding AI’s role is crucial for future payment systems.
• The integration of AI in payment systems is a strategic focus.
• The role of AI in enhancing user experience is significant.
• These insights highlight the potential of AI in payment systems.

Blockchain network configurability

• Many blockchain networks lack configurability, limiting corporate use.

• Chains don’t offer configurability at important layers.

  — Mohamed Afifi

• Building a network is different from building a product or platform.

• Building networks and network effects is tricky.

  — Mohamed Afifi

• Understanding these challenges is crucial for blockchain development.
• The focus on configurability is a strategic priority.
• The role of network effects in blockchain is significant.
• These insights highlight the importance of addressing configurability.

Market consolidation and customer priorities

• The market may not need another layer one blockchain.

• We’re going to see consolidation with specific use cases.

  — Mohamed Afifi

• Customers prioritize speed and cost over specific blockchain technology.

• Customers want the fastest and cheapest method to move money.

  — Mohamed Afifi

• Understanding these priorities is crucial for blockchain adoption.
• The focus on speed and cost is a strategic priority.
• The role of customer preferences in blockchain is significant.
• These insights highlight the importance of addressing market needs.

Ethereum’s fee structure and stablecoin workflows

• Ethereum’s fee structure creates downward price pressure.

• Universal pricing model creates interesting dynamics on chains.

  — Mohamed Afifi

• Early stablecoin workflows set the stage for broader acceptance.

• Early workflows prime the pump for acceptability in ecosystems.

  — Mohamed Afifi

• Understanding these dynamics is crucial for stablecoin adoption.
• The focus on fee structures is a strategic priority.
• The role of stablecoin workflows in adoption is significant.
• These insights highlight the importance of addressing fee dynamics.

Opportunities in tokenized treasuries and remittance corridors

• There is a significant opportunity for tokenized treasuries between Japan and the US.

• Japan into the US for tokenized treasuries is a huge opportunity.

  — Mohamed Afifi

• The UAE’s approval of durham backed stablecoins unlocks remittance corridors.

• Durham backed stablecoins unlock unique remittance corridors.

  — Mohamed Afifi

• Understanding these opportunities is crucial for market growth.
• The focus on tokenized treasuries is a strategic priority.
• The role of remittance corridors in stablecoin adoption is significant.
• These insights highlight the importance of addressing market opportunities.