Building Europe's Default Euro Stablecoin

And we have Martin from Schumann Financial. Thanks for joining us, Martin. How are doing today? Welcome to the show. Great to be here. Thanks, guys.

Excited to have you in Likewise.

Well, I'm Zach. This is Drew, in case you've never, never met us or never seen us around. But like I said, euro, stablecoins, euro, p. We've seen this as kind of a growing growing trend throughout the years, but kinda give us a maybe a brief introduction to to your background and also what you're building specifically at Schumann Financial, and then we can we can dive down all the all the various rabbit holes around around Euros table coins.

So I'm the founder and CEO of Schumann Financial. We have become by now the main, and I would say, most advanced euro stablecoin issuer infrastructure and payments provider. And my background, you know, we can speak however long or short about it, but short TLDR is I've been an entrepreneur for most of the past twenty years, mainly in deep tech, but I've progressively gotten into crypto and blockchain since 2013 when I bought my first bitcoins.

And previously, also spent some time in government including as a minister. You know, I was innovation minister in my country where I come from, Slovakia. I was deputy finance minister. I was part of the Euro Group, which is basically the group of the EU finance minister that pretty much runs European economy. Because these days, most of the key decisions when it comes to European economies are not no longer done at the national level, but really within the Euro Group and, you know, by the ministers jointly.

So, yeah, I think that's kind of a brief end. Originally, Slovakian, as I mentioned, but US educated and currently living in France, which is sort of the main place out of which we're building Schumann.

So that that's why the defense team likes you so much then.

Oh, we love them too. They are great.

Well, Martin, maybe as we kick off, where when and you know, you started your your journey here with with Bitcoin. When did the idea of stablecoins really hit your your radar? When did you start thinking about them in terms of policy, government,

building one? Like, when when did that journey start for you? So so I'll go a step back. Right? So I was first introduced to crypto by one of the real crypto OGs in Silicon Valley. We had a breakfast in 2013 in September. And he was trying to convince me that Bitcoin is going to replace money because, like, money is like, government run money is bad. And I was basically telling him, dude, as a Harvard trained economist, let me tell you about money and why this thing will never replace real money.

And sure, you're Argentinian, you know, we officially have the world's shittiest central bank, so you think money needs to be replaced, but, like, dude, this thing is never gonna replace money. And so I was a cryptosceptic to my disadvantage because, actually, Ethereum was partially launched literally out of my office in London, not by me, but by somebody else who shared that office with me.

Surely, now I didn't put any money into Ethereum at the time because, I mean, I didn't really believe in this blockchain BS all that much. But what really changed it for me was indeed when stablecoins came around. Actually, two things. One was the ICOs because, actually, then it became really interesting that you can build effectively an entire micro economy around your company where Yep. Your share is basically your asset. But the thing that really changed my mind was stablecoins because then I saw, okay.

This technology is really powerful. And the reason why I wasn't really a believer in, like, Bitcoin replacing money was because you can't have something whose value changes plus minus 15% in a single day, which was the case at the time. And number two, like, I just don't believe until now. They have a lot of money. Yeah. It's been yeah. The good case. Right? Where it went up Yeah. It's good today. Yeah. Yeah. Yeah. So so it's good. But but yeah.

But, basically, I realized, look, the government money is here is here to stay, I think, forever or at least for very, very long. And this thing really combines both of them. And so I actually was asked to join as a as an adviser the very first actually, with the third stablecoin ever, and it was the first euro stablecoin. They launched it I think it was just after Tether and Circles USDC. It was called EuroS at the time. So, yeah, 2000 and late two thousand seventeen, I think.

Wow. So what do you think that was a that was a good example of, like, right idea, just completely wrong time for the for the product?

Yeah. Totally. Super early early ahead of each time. I've you know, I think the guys already also made a bunch of mistakes or at least strategic mistakes. Maybe not the law. They were great team, by the way. Like, super smart guys, also both technically and financially. But yeah. But I think in principle, they're probably too early. Yeah.

For sure. What what mistake what mistakes did you see them make that it may be influenced the way that you've brought your OP to market?

So, I mean, this was almost ten years ago. Right? So I think the world was a different world. We'll get to it in a second. When it comes to the stablecoin, for sure, we were in the first era of stablecoins, and now we're moving into the second era of stablecoins. Well, I'll touch on that in a second. But, basically, the mistake they made at the time was well, actually, you know, what was they were in the first era of stablecoins.

And in the first era of stablecoins, stablecoins served one purpose only, which is crypto trading. And that's that's been the case, basically, until now. And that also explains why virtually all euro stable coins, instead of plating supply, are dollar stable coins or have been until now, which is basically because they've been just used for crypto trading. And crypto trading has been denominated in dollars and no another currency.

And so the mistake these guys made at the time, they were offered to be listed on Binance, like, early, two thousand seventeen or '18. And they but they were asked to pay a listing fee, and they said, dude, like, they're gonna need us. We're not gonna pay this fee. They'll come back to us. And sure enough, that Binance didn't come back to them. And so I think if they were listed on Binance that early, and it was a very well around stable coin, I think things would have been different.

But what has happened in the meantime, we are now moving into a second era of stable coins, where stable coins are not going to be really primary about crypto trading. But in the second area of stable coins, basically, stable coins are going to be the settlement and payment instrument for tokenized financial services. I think we all here are very convinced that financial services are moving on chain.

And in order to be able to execute financial services on chain, you also need the currency on chain in which these services are tokenized. And it also explains why we are building, Schumann because if you the whole world, you know, when you come from US, it might not look like it, but the whole world doesn't run on dollars. And, actually, the second largest currency is euro. It's typically, like, pretty much any financial market you look at, it's about third of the size of the dollar denominated market.

I mean, the euro denominated financial market. So it's it's not as big as dollar, but the third is a very, very, very large market. And certainly, orders of magnitude bigger than crypto trading. And so as these markets these financial services get tokenized, they will need a strong euro and euro stable euro stable coin and infrastructure around it, and that's what we've set out to build.

We are on our way to become the the the main, the number one, the best provider for of infrastructure for anything that touches euro in the era of tokenized finance.

Yeah. So interesting. We I'm messaging Zach here on the on the side, and we both were, like, thinking the same thing. We wanna we wanna really dive into these two phases that you're talking about because Yeah. From our vantage point, you know, we've been covering this space for nearly two years regularly, meeting with builders and founders, and, it does feel like we're entering a new phase, like this phase two that you're talking about.

Can you paint the picture here again of, like, phase one and then really the the orders of magnitude bigger of an opportunity that phase two is? Just, define that a little bit.

Yeah. For sure. I mean, look look so, again, the phase one was just crypto trading. Right? And, like, it just so happens that we've ended up in a situation where the crypto trading is done in dollars denominated in dollars, just like oil trading or gas trading is done in dollars. But if you look at a crypto market, it's a rounding error within the broader world of financial services.

And just to give you one example, if you just take one single product in financial survey traditional financial services, like, of probably, you know, tens of thousands or 100 of thousands product, granted, it's the largest product. It's euro dollar FX, right, product. So the daily trading volume on this one single real TradFi product is about an order of magnitude bigger than all the crypto trading of all the crypto trade pairs on all the crypto exchanges in the world. Right? It's just a single product.

And so now imagine what happens if not just this one product, but basically most of the financial services get tokenized. Right? And so that that the world we're talking about, the universe we're talking about of these financial products, is literally orders and orders of magnitude bigger. And again, for that to operate to work, I mean, you need to have also the currency in which the services are denominated. It needs to be tokenized, which is basically a a stable coin. So this is the opportunity.

This is why we're I mean, actually, SMP had a study published, like, six months ago, and SMP Standard and Poor's. Right? They don't have a horse in these rates. And so their estimate is that by 2030, the euro stable coin market they're actually so their median estimate is going to be about €570,000,000,000. Right? So I don't know. In today's dollars terms, like, $700,000,000,000, which is, like, double the size of the current Wow. Dollar stablecoin market. Right?

But, again, mostly driven by real world financial services. And so, again, this is the this is the market for which we're building, where we we intend to be the number one.

Martin, can you define these tokenized financial services and really how they differ from trading? Because I think when you when you may talk to, you know, the average person or maybe somebody who's kind of financially savvy, they may think, well, what's the difference between a, you know, trading activity that we bundle in a vault and now that's a, you know, that's a tokenized financial service? How would you how would you define that term? And the I would actually say,

yeah. I mean, for me, token as financial service, like, what's going to happen is that any product that you have right now in financial services, instead of being run on the current infrastructure, will be run on the blockchain. Right? So stocks, bonds, payments, lending, borrowing, whatever you you can imagine. Right now, it's run on these legacy technologies.

And it we're now moving into a period where, you know, instead of stocks being traded on these, you know, trading books using old style ledgers, they will be run effectively in a tokenized version, you know, being on the blockchain. And we will have, you know, really kinda move to the next era when people will not even realize that these things are run on the blockchain. Right?

I mean, just as right now when you're moving money, you're you're sending dollars and you you wanna wanna pay someone in euros in France, you don't really think about, like, what, like, technology ledgers, blah blah blah, your money is going through. Right? The way you're thinking about it, I'm sending money out of my bank account, and I want my friend or the company I'm paying in France to receive money into bank account in France.

Right now, it's being done on these legacy technologies, but we're now this is now in the process of being moved onto blockchain rails. And I think really in the future, when this is all kind of said and done, people will not even realize this is run on the blockchain. And, you know, this is also how we're building our company.

Like, I think if you need to talk about stable coins, and the stable coin technology, you know, we were still very, very, very early, because at the end of the day, what people care about is money in their bank account. You know, it's it's it's euros or dollars in their bank account. They don't need to know. They don't care about, like, what form, etcetera, they have. And one example I use, you know, here in Europe, we have a company called Revolut.

I don't if you've I don't know if you heard about it, but it's basically a neobank. Right? And that neobank very, very, very large. It's been around for a while. And so, technically, if you had an account revel I mean, I was one of the first users of of of very early or whatever ten years ago. And, technically, if you had an account there, whatever, six, seven, ten years ago, the money that you had in the account with them, there was not quote, unquote real or technically speaking, scriptural money.

It was electronic money. Right? So they were not quote, unquote real euros. I had no idea they were not, quote, unquote, real euros because to me, they were real euros. Right? Because when I wanted to make a payment out of that account, you know, it showed as euros. I made a payment. Euros lending on the other side. And so the fact that this was not, quote, unquote, traditional money, but electronic money didn't matter. I didn't need to know it. And I think this is also how we wanna think about stablecoin.

You don't need to know that this happens to be a tokenized euro, I e, a stablecoin because you don't care ultimately. Right? Ultimately, it's it's it's it's euros or in, you know, in dollar case, it's it's a dollar.

Martin, help us now. We've we've kinda laid that foundation. Help us. How is this coming to life now with Europea? And I'm I'm looking at your website. I see a few different products. I see Europayments. I see named accounts, instant settlement. Where where do we start? Sounds like, yeah, we have we have the stablecoin. It's just it's issued, but once the stable coin issued, the job's not done. Like, what people do how do people use it?

Help help help help us understand how people are using your what products exist so that they can use it, and how this is actually coming to life.

So you can think about it in several layers. But, I mean, at the core of it is indeed Europy, which is the Euro stablecoin. Right? And it's like just just like any other stablecoin. It's a stablecoin. Now the really interesting thing is, you know, what what can you do with a stable coin. Right? And, again, if you take a normal, you know, dollar stable coin, you know, well, you can trade within crypto, but maybe you can do some other stuff. What we're building is that that real other stuff. Right?

So one area that we've been, like, developing very early because that's kind of the most advanced right now when it comes to stablecoin usage, it's it's payments. So we basically have built a platform for global payments. And so what does it mean? Well, I mean, simply put, if you need to make any payment that touches the euro, so either either starts or ends with euro in a bank account. We now have the fastest, most efficient, and cheapest way of making these cross border payments.

So if you were to make a payment today, using normal bank account from whatever, a bank account in Lithuania to a bank account in a dollar bank account in whatever, Montana, it's probably gonna take three days until the money arrives. And you will probably pay, including the FX spreads, at least probably, like, a 1% cost. If you do it through our platform, the money arrives in your bank account in in The US in less than ten minutes.

So not three days, but, like, hopefully, three minutes, but certainly less than ten minutes, and it's basically free. And why is it basically free and not 1%? Well, because this technology that we build, it's so much more superior, and it we're very much enabled by, you know, very advanced, traditional financial licenses that we also have. So we basically turned a stable coin into something that is now almost equivalent to money in a bank account. And so yeah.

So that's that's that's you know, payments is one good example. What we have what we're really building is a more broader infrastructure for anyone that's providing any kind of tokenized services so that when they have customers on their platform that keep money on that platform, They will need to be in a tokenized form, that money in a in a stable coin. And somehow, they need to get that money on that platform from their bank account.

And, I mean, just like if you're trading now on e trade, you still need to send money to your e trade. We are providing that entire platform in putting all the KYC, etcetera, so that people can move money out of their bank account instantly onto your web three platform, and it appears they're basically in a tokenized form, I. As a stable coin and vice versa. If they basically decide, okay. I've sold these shares. Now I want money in my in my bank account.

Basically, it's a plug and play system where instantly it ends up they can receive it in their bank account. And maybe to example explain why. Right? So our thinking again is we really want to unleash the full power of blockchain. People will tell you how blockchain is amazing because it's twenty four seven, it's instant, no borders, etcetera. Right? And then you ask someone, okay.

So if I sell you a tokenized bond on Friday 7PM, you know, you said it's instant, so that means that I get my money instantly in my bank account. Right? And pretty much every other platform will tell you, you know, well, actually, you know, we're still using a bank and the bank has a cutoff, like, to process the payment and we have a cutoff and so and it's, you know, it's Friday evening already, so it's probably past the cutoff. So you get the money on Monday, you know, worst case on Tuesday.

Well, then what's the point of tokenized financial service? Right? It's supposed to be $24.07 and instant, and I can't get my money in a bank account instantly. This is the problem we've solved. We have built basically this instant automated API based platform where if you're using us, you sell my you sell this token as one year platform Friday 7PM or for that matter, Sunday 3AM, you get money in your bank account the next minute.

Where do you see this specifically, like, in the first few phases of growth here? The addressable market for these types of services and and products are massive. But where do you where do you really see and where is your focus really in this first inning phase where that, like, Friday night use case really becomes painfully so, like, the the pain can become so obvious that someone is

wanting to use this thing today. And maybe in a youth case, they're, like, real examples would be awesome. Yeah. I mean, right now, it's cross border payments. Right? Because right now, like, you know, most most people, like, most financial services, you know, bonds, equity, they're still not run on chain fully. Right? But, like, one example is cross border payments for sure. There, it really matters. Right?

Because if you and for example, if you're a global corporate, let alone if you're a money remittance business. Right? You know that you are sending money from Africa to Europe or from Europe to LatAm or whatever. Like, that you know, you send the money today while you also or maybe put it differently. If the money is needed on the other side of the world today, let it you know, you so you send it today, but with current systems, the money doesn't arrive today.

It arrives three days later, which basically means that you need to keep very, very large working capital on the other side of the world so that you can use this buffer while you're waiting for the money to arrive. And that, you know, capital that you need to have is working capital that cost money. With a system like ours, which is instant twenty four seven, you completely remove the need for any kind of working capital for cross border payment. So cross border payments is one very, very clear area.

The other, you know, like, kind of the web, you know, tokenized services platform is basically it's it's a crypto trading platforms. You know, until recently, you could only trade

traditional cryptos. Now increasingly on a lot of platforms, can also now trade bonds in a tokenized form. And the problem that probably we've all of us seen who have used or or, you know, ever sold or bought cryptos, like, you see, oh, man. Like, Bitcoin is now really down. I I really should be buying today, but you don't have Fiat on your platform. Right? It still sits in your bank account. So, like, shit. I wanna buy it now. Now.

Like but, you know, with that legacy systems, you go to your bank, you send the money to the platform, the Kraken or whatever you're using, Coinbase, Bitbynas, and then you're waiting. And you're kind of hoping that the money arrives tomorrow. And by maybe by the time the money arrives, it's already too late. Right? Because the the price already went to where you're no longer interested in buying it.

So, again, with system like ours, like, that bank to crypto to bank integration is so advanced that, you know, money, the stable coin, and the crypto becomes synonymous, and you can move between the banking system and the web three platforms instantly.

Martin, I'm curious. We've we've we talked to a lot of neo banks. FX is a hot topic right now, but, you know, obviously, most of these neo banks are are dollar centric. Have you have you is there anything that really jumps out at you to what neo banks should be thinking about?

How they should be thinking about maybe integrating euro stablecoins, and how even some of especially some of these b two b banking platforms should be thinking about integrating you know, points like Euro p for FX and and all these all these various use cases.

So the way so and we have this product now. Right? And we're already integrating with and have integrated with a few neo banks. They should really think about this as their replacement for cross border for correspondent banking infrastructure, for the cross existing cross border payment infrastructure.

Today, if they want to, you know, realize a bank in, let's say, Slovakia, where I'm sitting right now, want to realize a a local bank, a payment into a bank account in Palo Alto, it's gonna go through a whole number of of banks through this, you know, intermediary bank. It's a costly and timely and time consuming system. Right?

And so if they integrate, we can actually provide them now with the whole infrastructure that they can now run these cross border payments through us, effectively through these stable coin rails. They can run it, as I said, instantly. So suddenly, the customer no longer has to wait three days. It can run, you know, the it it's instant.

And the cost to them is gonna be much, much lower, and so they can certainly pass some of the savings onto their customers and therefore become much more competitive vis a vis the traditional banks.

Drew, you're muted.

Yeah. I gonna say Can you speak a little bit to the commercial relationships that Xuemen has been able to when when building the system externally, like, we've seen, you know, the relationship with OpenFX, defense, Speak a little bit to some of these key pieces that that you have that you've worked with to make this come to life in a way that's really productive and and helpful. Like, how what what are some of these key partners in the in the early days?

So so, look, when we started, we were still kind of thinking in that first era of stablecoins

type of thinking, which was, okay. We need to be in all the crypto exchanges. So Yeah. We actually you know, by now, we're also the most distributed or listed euro stable coin across all the key exchanges. So that was the first thing. Let's make sure that we're all on all the key crypto exchanges in Europe, and particularly those that are actually have a lot of euro flows. And, you know, a good example

most significant euro flows coming from right now, like, exchange wise? So Kraken

is has been historically probably the most important one. There is a Dutch exchange, you sitting in The US, you probably wouldn't have heard of, but very important in Europe called Bitfafo. And so I think these are the two most important one, and then you have, you know, like, kind of each country locally has, like, its champions. All the German speaking countries, there's a exchange called Bitpanda, for example.

So so these these would be so some of them are global, as I said, and particularly Kraken being, I think, the most important one. A lot of them are local. So we, you know so when we started thinking about it so we have relations with all these exchanges. Kraken actually even invested, you know, so early on.

And one of the things we're doing now, like, this is not yet publicly announced, so I can't give you details, but there is the I would say, European crypto industry has not realized they need to have a strong euro stable coin that everybody should be using because everybody has kind of realized, I think, among them for a while that, oh, we could you know, this is Europe. Things are euro denominated. We should have a euro stable coin.

But everybody was sitting on the fence and waiting until that really leading euro stable coin emergence. Right now, there's a few of us, but it wasn't very clear. They decided to basically rally behind one or potentially build one of their own. And so maybe I should stop here because I'm not supposed to announce anything. But so let me stop here. I think you you already have enough of a teaser here. I guess you get where this is going. It will be announced within the next couple of weeks.

But then in terms of, like, other partners, you know, as I said, you know, we have like, on the FX side, we're working very closely with OpenFX, which is now emerging as the leading global company for on chain effects. We have a very close relationship with Ripple as a company. You know, again, this is one of the crypto OG companies.

What we like about them that, you know, they've been around for a very long time, but their vision always has been a focus not on crypto for crypto sake, but using that kind of blockchain infrastructure as the next level, you know, future of finance type of infrastructure. So that's an example.

And we're now actually starting to talk to more and more large corporates, you know, precisely these you know, those that need to be doing cross border payments from telcos, large global top consulting firms, advisory firms, etcetera. So yeah. Look. I mean, we're still a fairly new company. We only started I mean, we got a license and launched basically January of last year. So we're we're still pretty early, but I think we're still we're already quite advanced.

And I would say at this point, we're probably now one of the we're not probably we are one of the top four players in the Euro stablecoin space and but realistically, we're one of the top two now. So and we would just wanna make sure that very soon, it's gonna be clear we're not just one of the top two, but we are the the the top one. And I think in terms of infrastructure distribution, for sure, we're already the the leader on the market.

Martin, last question from my side. When when you think about phase two, as we've talked about, and becoming just continuing to to grow and cement the the the stable coin and this the business more broadly in that phase two, what are well, what's the main thing that you really need to get right? Like, what what is the the the really key priority, like, crucial priority for you? What's, like, the main what's the big idea or the big Yeah. Task that you're thinking through?

I think the big idea is that you really need to have this comprehensive infrastructure that is not just, you know, separated crypto system from today's financial system, but that it's sort of real time integrated with the existing financial system and particularly the banking systems. So I think we've already build that build that product. This is why, you know, with us, you don't need to wait to mint and burn for, you know, minutes, let alone hours, or let alone the next day. Like, everything is just in time.

It's fully automated. So that's one. Number two, we are starting also to work on agentic payments. We really believe that this agentic economy is, like, going to be really huge very quickly. And so we wanna make sure that as payments move and become more and more agentic, like, are the number one player for this in Europe.

And number three, we just really need to make sure that initially all the kind of key fintechs, digital asset native companies rally be rally behind us, behind our stable coin and start using our infrastructure. And so that we become basically the default. Because if we achieve that, then also all the traditional financial services, they will kinda have no choice. Right? I mean, without naming anyone I mean, today, if you are doing something dollar denominated, you probably have one or two choices.

Log you try logical ones. Right? Who you're gonna use. I mean, the choices there's many choices, but you're likely to rally behind one or one or two because they are by far the biggest one. Everybody else is using them. This is the goal for us to make sure that as quickly as possible, when you think you're a stable coin, and you're a stable coin provider, you always think you're a p. Who else?

Yeah. Awesome. Martin, thank you for the time, man. This is fun to to get inside your mind a little and hear how you're growing the business. Likewise.

Thanks, guys. Great to be here. I really appreciate it, and, best of luck. Speak soon. Cheers. Thanks, Martin. See you. Bye. Ciao. Ciao.