MoneyGram Went All In on Stablecoins

Luke, how are doing? Welcome to Stable Ash Live Modern Money Show. Appreciate your time. How's it going?

It's going great. Thank you for having me here. It's a beautiful day to be talking about stablecoin and Yes.

We love stablecoins.

Beautiful day. We we love that we get to cover this topic and meet with just product leaders like yourself. And, really, what gets us most excited is being able to understand what's going through your mind, how you're thinking through this stuff. We meet with a lot Yeah. Founders and investors

on the tech side.

Yeah. Getting a chance to be like, okay, MoneyGram's been especially after what seems like a really great kind of season of rollouts and launches and things that you all have been doing, it's like, what a what a what a gift to be able to kinda get inside your brain for twenty minutes. So appreciate appreciate the time. You also have an article you just released. We haven't had a chance to read this, but we can use this as like a guide as for our chat a little as we were talking.

So I was like, well, we've kind of gone over this. So, yeah, maybe let's lay the groundworks. Like,

answer, why why launch MGUSD?

Why launch MGUSD? Because we love to create products that solve consumer problems and enable our consumers to live a better financial life. So it's really about the customer and the problems that they have and extending the service we already have. So MoneyGram has been moving money for a very long time, helping customers and providing additional service, especially a balance that can be part of the MoneyGram app, improves the ability for that service to be executed.

And we found that using our own stablecoin, MGUSD, was just a great way technologically to build that in a very different way than companies have been able to support a balanced product in the past. Lucas, we kick off here. I just I gotta ask, like, what when did even the word stablecoin,

like, hit hit your radar? When when when you were working professionally, you've had an amazing career of of building products across a bunch of different tech companies. Like, when did either crypto or stablecoins really start to become a serious thing to to learn about as a product leader?

So I think the first time I heard about really crypto in a professional setting was in Stockholm, Sweden. And it was at an all hands at Klarna. So I joined Klarna back in about 2015 and was leading product in The U. S. And I was at a meeting in Stockholm with all hands. And somebody asked Sebastian, the CEO, and said, why aren't we doing Bitcoin? And Sebastian said, we're never doing crypto. And I was like, I don't even know what crypto is.

So that that began a journey of kinda curiosity in it, and I've held some in my own accounts and have done a lot of tech support myself. But from a how is enabled business has really been something that has come to my mind since I started at MoneyGram and was looking at some of the problems that we have to solve as a company. But the thing that really made it so much easier to discuss is the change in regulation.

So the Genius Act in particular made it so folks who haven't been in this crypto journey all along, so our owners and board members and other executive team members that have long traditions in finance, now had a framework that they could discuss it and understand it as something that can work in a complementary way to

other ways of already moving money. So Things like the Genius Act, like, even getting to this place would be pretty just almost like off limits or just not possible. Like, things like that give you the confidence.

Yeah. MoneyGram did has been a partner of Stellar's for several years. We go back to even the early days of Ripple and working with them in the early days. So MoneyGram has been exploring it, and that exploration for MoneyGram has helped us so quickly to develop and roll mdUSD out. But I think it's not just about us. Like, key story about Stablecoin is the ecosystem. It only is meaningful if you have a complement that can work together. And that's somewhat really what the Genius Hack has enabled, is that.

So more investment coming into companies that are supporting the ecosystem, partners that want to use the exchanges that have it. But all of that past work really set us up well to be able to take advantage of this moment. When you when you think about the approach that you've taken here,

walk us through the just this a little bit of the context here. So, like, you you you mentioned the really important relationship with Stellar. Tell us a bit about what MoneyGram has been doing and then really this huge launch with MGUSD and bring us into, you know, how you've architected this, what decisions you were really thinking through in building it.

But, yeah, give us a little bit more I think a lot of big companies right now, part part of the reason we're doing this show is we really wanna help people understand, like, getting to the place that you've gotten with issuing a stablecoin like this doesn't seem like this is the first move you've made. So, yeah, what were some of these key steps in the journey? And then would love to get into MGUSD after that. Great.

So the first step and product that MoneyGram was providing was the Ramps product, which is the ability for

crypto native wallet to be able to offer to their customers an ability to off ramp from crypto to cash. So that's been in the market for more than a few years, and it's the largest crypto to cash on off ramp network in the world. So that's worked quite well with some wallet partners that we have, and it was using USDC as one of our partners along with Stellar. We have a public API. So that's been working in the market.

So that was an enablement of using our network to enable, again, that crypto native customer to get cash and take advantage of this very large agent network we have. So we have nearly 500,000 agent locations around the globe that can be leveraged in a new way. So it used to just be for money transfer with the Ramps product, with that API. Now a wallet holder with USDC could offer empty cash. So that's been going on.

When I joined MoneyGram and I was looking at our app that we had, we had a balanced product in The US that was implemented with a sponsored bank. So very typical pattern for a fintech to work with a partner bank, and it had a connected debit card, it was integrated in the app. But as I looked at that and thought about how do we expand our services globally, you immediately see that, well, this only works in The U. S, for one.

And two and I even dealt with this when I was at Klarna they have a partner bank that bank is really deeply embedded in the decision making that you have about how you build your products and services, your risk and compliance posture, because it's their license. So as we looked at that product that we had in The U. S.

And said, Well, the balance is a good idea, but I want to deliver it in Colombia and El Salvador additionally, where MoneyGram has not traditionally had a customer, then you have to think about, well, do I, as a company, need to buy another bank? Do I need to get another license in another market? Who are the different partners? The integration choices are different. It was like, hey, wait a minute. We've done all this work with Stablecoin, or Stablecoin and with Stellar and blockchain.

Why don't we look at how we can use a non custodial wallet infrastructure to provide a balance in a consistent way globally? So it's a combination of technology. So with one technological platform, we can provide the same balanced service across the globe. And then based on within the regulatory framework, because it does vary by country, we could then roll a noncustodial wallet as the underpinning of the MoneyGram app into countries.

So we chose to deprecate our really TradFi based balanced product and go all in on a non custodial wallet. And we'd done some work on that before, but we hadn't integrated it together with the MoneyGram app. So to be able to do that, though, we had to do other things like rearchitect our MoneyGram app. So we're currently rolling that out. We completely rebuilt that in React Native. That's in the process of rolling out. Woah.

So that's a big effort too, but that allows us to more quickly iterate the platform, add the balance in, and launch new countries. In Colombia and El Salvador, the two most recent launched. So a wide combination of things went on to get to that conclusion, and I can share probably your next question on how we got to MGUSD. But the first piece is the decision of, do we wanna do this the way everyone's done it before?

Which I think is really hard, every single new license, buy a bank, different partner, different regulation. Or do we have one consistent technological stack and one consistent perspective

on noncustodial wallet, stablecoin infrastructure that we roll out into as many countries as we can. You know, there is a part I'm just looking at this article here about how you built up startup speed. And I think, you know, this is something when you talk about the general, you know, crypto community and they may get look at some of the more, you know, legacy institutions. These may be you know, there may be a term that doesn't feel like it it aligns.

So walk us through, like, more of this, you know, working in within domains, working within these pods to to bring this mark to market quickly. I think I especially like you call out here working with teams that are small enough to be agile, but, you know, senior enough to to get the job done. And then maybe maybe even a second part of that is highlighting some of these key partners. You know, we've we've talked with m zero quite a bit, and I'd like to even go in a little bit more to even, like, why Stellar?

That was something else that stood stood out that we, with most teams that we're we're talking to. It's an ecosystem we haven't really dove too deep into, but it's such a, you know, foundational choice for this product.

Yes. And shout out to if you're watching this live, go check out at MoneyGram why we launched MGUSD. This is kind of where we're pulling this from.

Just released this morning. I appreciate you sharing the the article. It's quite long, but it it gives us an opportunity to, in detail, talk about the journey for MGUSD. And and as you mentioned, part of the article is about how we built it. And I was very fortunate. I was employee number seven in The US at Klarna. So Klarna, buy now pay later company based in Stockholm, had already rolled its product out throughout Europe that's coming to The US.

And Sebastian, the CEO, became frustrated at the speed at which the organization was operating because he founded it, and now you've got several thousand people. And the feeling was that things just had slowed down, and you start making these prioritization decisions around things like, do we launch a new product in The Netherlands, or do we do a payment method in The US? And they're not things that are you're like, well, I'd like to do both. It's like, no. You gotta pick one. Like, there's 3,000 people.

Do we really have to just pick one of these things? Why can't we work on it at the same time? Nope. You can only have one one. And it frustrates Sebastian. It frustrates me greatly as a leader that wants to, serve the business. And the way to have more than one number one is quite simple: eliminate the dependencies amongst the people and processes that are working on those work items. So when I joined MoneyGram about a year and a half, I had the opportunity, and it was great when I was at Klarna.

So I finished that story. Klarna evolved to a team, a domain and team based structure themselves. That's how Klarna got its agility, was to go from a standard hierarchical structure to this domain and teams where you do eliminate the dependencies, but you also put leaders in charge and say, you're responsible for this very specific thing. Define what those metrics are. We'll resource you independently. And now you can have a whole host of leaders running in parallel.

When I joined MoneyGram, it had a very traditional organization structure. It had processes that were in place that worked really well in an era where you had data centers, you had separate people that needed to plan for infrastructure planning, whereas with AWS and other services, you don't need all of the advanced planning and forethought in some areas. You can be more agile in most of the things that you do.

So we took the opportunity to restructure MoneyGram product, technology, design in particular, to move people around so that we had these domains that were in very specific areas like pay in. So there's a domain. Every morning they wake up and think about, How do we take a debit card payment? There's another group that does pay out. They're thinking about, do we, from the user interface to the rails that send the money to our payout partners, how does that work?

And they built an SDK that can be leveraged within the money transfer flow. We have another domain focused on the app itself. So by making these different groups independent, you can have many number ones, and you can do many more things in parallel. So when we announced or I just took to the board and said that we wanna start rolling out a new feature for receivers, it went from that conversation to the the feature slide in ninety days. And now ninety days later, it's in 150 countries.

So restructuring the organization is is foundational, but then you also need to work with partners that can work at the same speed that you can. So Crossman is one example. They made some comments that working with MoneyGram is like working with a startup, which for me is is one of the best reference I've gotten. It was huge because I was like, that's exactly what we were trying to accomplish with these changes. And I think it makes everyone happier.

It gives greater purpose to folks to give them that level of accountability. So so it's been a lot of work to do that, but we're we're seeing a lot of the benefit from that in the way we can deliver at speed. And and, again, that includes rebuilding the entirety of our app stack in the last twelve months.

Yeah. That's huge. So MoneyGram roots back to 1940. Looks like the I mean, the company's been around for a long, long time. What would be your advice to any other, like, key leaders or executives who might find themselves in, yeah, these these very prominent, well known business as usual type of organizations. What advice would you give them as they they are looking to update their systems, make hard decisions?

Like, what would be your you you you guys are starting to, you know, roll out some of these key things now. That's super validating what Crossman has said to you. Seems like you're now on the other side of maybe some really hard decisions and and key things that you've been building in the last year or two? Like, what would be your advice to other leaders? They they need to go read the book The Innovator's Dilemma as a starting point, which is around

recognizing that disrupting yourself is a necessity to staying in business. So being conservative in today's world is not an option. You need to be advancing into these technologies because others are. And the advantage will come to those who start using it, learning it, educating their organization with it. And with the blockchain, again, with Stellar, yes, why Stellar? Because they were interested in working with a company like us several years back.

So we've grown together in that relationship where we've had learnings, they've had learnings in developing that Ramps product. So that timeline matters, right, in terms of institutional knowledge. But there is a real need, though, for every company to think about how that they can innovate and disrupt themselves. So, yeah, we've been moving money for eighty five years. We know how to move money with traditional banks extremely well, but a startup today can move money on chain very easily too.

So we need to think about how do we continue to take all of our advantages, which in particular our compliance, brand, our distribution? We have operations in nearly 200 countries. How do we continue to take all of those advantages and now just make it better with the plumbing of Stablecoin? And not only are we using MGUSD for our own ability to store a balance for consumers. Like, that's that's a real differentiator in in why we built MGUSD. It's part of our, I'll call it, our balance infrastructure. Mhmm.

But we also have a treasury function that right now is trading at nearly a run rate of $2,000,000,000 a year. Doing currency trading with stablecoin, that's within our Fireblocks platform as our crypto treasury. So we use the right tools in the right locations. So MGUSD is very, very purpose built to be used inside our network to start. It gives us greater control over that coin.

It allows us to earn the maximum yield that is possible from that coin since we're the ones who issue it, and we're doing that with Bridge as a partner. But we use other stablecoins to wherever the economic advantage is. So it depends on the exchange. It depends on the currency that we're trading. And in today's market, there's different value that might be had from different stablecoin assets that you might choose to trade.

So we use the one that's the best advantage at that day, that, you know, point in time that we can.

Yeah. I I'd love to understand more about how you think from a product and technology perspective about mZero specifically. We've had a we did a great season with them in the past for with our with our podcast. But this is, I think, a infrastructure layer that's misunderstood among the greater community. I think a lot of people lump them in as a stablecoin issuer. I think you even called out in your, in your article this this yes.

There's the economic benefits of the stablecoin, but from a compliance and programmatic standpoint, there's a lot that people overlook. So how do you think about mZero, and what role does it play within the the MGUSD architecture?

Yeah. So for us, it was important as we built the stack to ensure that we continue to have optionality in how the stablecoin was delivered. So the bridge is an extremely important partner for that issuance. By layering m zero on top of the bridge issuing capabilities, it gives us additional optionality in terms of how those contracts are managed and how we might be able to evolve those over time, how we think about yield, how that yield's earned, where that yield can or the reserves can be stored, for example.

So it's additional optionality for us that because it's very important when you put a technology in that you don't box yourself into a corner. So we see M0 as a way continue to evolve with the market as it evolves in a way that that benefits us. Wow. So so in theory, it gives you that flexibility.

So, yeah, it can continue to feel modular. You can bring things in and out as you see fit, and m zero is kind of that, like,

universal platform that helps you helps you do that. When we look into the future, what would be things that need to be brought in? I think even at the end of the article, you know, this is this is essentially, like, ground zero right now for for MGUSD and being an on chain. I think a lot of us are trying to think through in this space, like, where do we go next? So I think part of the next is is how the reserves,

in particular, are stored. So I'd say we started in a traditional way with the reserves in terms of the funds that are used there, but there have become many more ways to use assets on chain for reserves of the stablecoin, additional interoperability options with other chains.

So it's it's hard to forecast what those might be, but that's part of the benefit of working with someone like an mZERO in combination with Bridge is that I'm extremely confident that we won't have to rearchitect the platform if there's a situation on a particular chain or as we think about reserves or other kind of features and functions that come out that allow us to evolve what we've already issued versus having to think about how to issue a different coin and swap things out, I'm very comfortable that we can evolve with any new requirement as they come.

And particularly with a regulation that's new, what does Genius Act look like in a year or two years? What other different kind of regulation might come into other countries, in other jurisdictions? Maybe there's interoperability that we think about with other coins in other ways. So it's the optionality for me that was a critical piece of the decision making to use m zero in combination of bridge. Yeah. It's so interesting. When you when you think about just in summary here, so

the the balances on the app side and the treasury side is really interesting. I feel like we could just, like, spend a whole another thirty minutes talking about, like, how that works and how that's architected. But as we kind of look back and look at the summary of why you're doing this, it seems like there's a couple key pillars around access to new markets and being able to, like, serve new markets and give new markets access.

You've mentioned the economics of, like, having having new new revenue streams with these things like the yield sources and the capital of actually issuing your own stablecoin versus maybe partnering with one specifically issued by someone else. What are what are some other, like, key pillars for why it makes sense to do this that maybe we haven't covered yet? Or how you think about the key points here.

From a product perspective, one of the things that we want to enable at MoneyGram is the two sided network, so the ability for MoneyGram user in one country to send to a MoneyGram user in another country. So our partner networks will continue to support banks and wallet partners globally. Every company cannot serve every segment. We believe there's a segment of customers that will prefer to receive money into the MoneyGram app and then from that app be able to save and spend directly from that balance.

And the launch in Colombia and El Salvador represent those. So the MoneyGram MGUSD, though, makes that a better product both from a technological perspective, but then also, like, a consistency in how we manage those funds globally. So then you can imagine we're growing this balance of consumer funds. It's in the MoneyGram USD. We're we're owning and managing the yield from that, which is quite important.

But but it's really about how do we, as a company, evolve a set of services in our app, and that blockchain infrastructure makes it efficient to do that in

dozens and dozens and dozens of companies or countries around the world. Random random question. Sorry, Zach. I'm I know I'm cutting you off here. Do you have I'm not plugged in with more like, the like, my my background in network is way more focused on, like, go to market sales and, like, revenue stuff, and I'm I'm probably more plugged in with a lot of the communities around that.

Do you find as a product leader and builder that like, are you aware of or integrated with, like like, key product executives and leaders? Like, do you find that in the community and, like, the broader, like, digital asset space, there's there's a strong sense of, like, unity or community or support for

other chief product officers or CTOs that can, like like, help you make decisions like this? Like, is that how I think about this?

So going to conferences is a great way to meet people like minded people. So I feel like there's quite a lot of support because the the community that has been growing crypto, blockchain, stablecoins, etcetera, is a very passionate one and fighting against a lot of other countervailing, you know, wins for many years. So I feel like those conversations, we bring an important part of the conversation, which is we're not trying to be a crypto trading app.

There's a lot of great crypto wallets, And the crypto community has been very focused on topics around crypto trading, which provides a lot of benefit. Where it's a great back and forth in these conversations is around, hey. We see it as a way to continue. And and I think the crypto community has been about financial inclusion as well. But part of financial inclusion is the trust piece. So there's been major trailblazers out there technologically. There's been wallets that have been very successful.

But I would say not on a broad based perspective with our segment of customers. Our segment of customers who've worked with us for decades is they develop a lot of trust in us to take their money and trust that's going to get where it's going to go. So in these conversations with our partners and other folks in the space, they see the halo effect and the benefit of working with us of, hey. We've we've built all this technology.

Part of the issue is we just can't communicate to people that it's as trustworthy or that it can contribute to a company like yourself who has that trust and can provide a better service.

So Do you feel like you have to do that, though, to the current users, or does it feel very embedded and kind of native and familiar in terms of how you've built it, or does it still kind of feel right

now? It's as native and familiar as the as we can make it. So there's still the important disclosures that when you send money to someone, disclose that they're receiving it in a USD denominated, but the the currency, in this case, it would say MGUSD. Today, it says USDC. But our our intent is is to discuss with the customer what the value is, which is to hold their money in a USD denominated account.

That's trustworthy, but that protects them from currency volatility or just enables them to have an account that they can't get through any other means. Like, that's, like, a significant differentiator again in that the decision about whether somebody gets a wallet from MoneyGram is with us. And we're governed within a regulatory framework that exists in each country. But within that framework, it's our risk, it's our compliance, it's our commercial decisions around what customers can have access to our balance.

And we believe we'll be able to provide a service to more people, invite more people to be financially included because of these choices that we've made, somewhat because it's cost efficient. So our cost to deliver a balance on blockchain is much less than somebody who's doing it in a more traditional way with a partner bank. So cool. We got we got a unfortunately, I know. We were we were both

Yeah. It was biting our biting our tongue a little bit. But, Luca, was great talking with you. And one best best quote I think I've heard in a while, we had to disrupt ourselves. That was So good. That was a really, really great framing. So we appreciate you carving out the time and and coming on stable dash live. Love to have you back. And we'd love to have more of these, like, product like, closed door product leader.

Like, I'm I I think what you've gone through in the last six to twelve months is extremely valuable and could help so many people, and we'd love to showcase and highlight some of your own personal learnings and can because we're we're in touch with so many people who probably are asking those same questions, talking to the same infrastructure providers, going through a lot of that, hey. Should I go with this one or that one, or what what the hell do we do here?

So we'd love your partnership in that, and we can think through that together.

Yeah. I would love to do that because I think, you know, in particular, just to get a final point here with the organizational changes, the the difference of how we reorganized and this is true with AI too. We don't have a chief AI officer. We don't have a chief data officer. We don't have any other kind of chiefs because my belief is those are all component or chief those are all components that need to exist in all of these different domains that we built.

So when we chose to implement Stablecoin, the thing I told the team is when a customer pays us, it has to update our financial systems the exact same way, whether it's a stablecoin payment or a fiat deposit into our account. So the organizational transformation that we did, much of it was necessary so that we weren't bolting on teams that are building adjuncts to the core of the system. So our crypto treasury, it's the treasury, and there's kind of two boxes within the treasury.

One has a stablecoin set of accounts, and one has a fiat set of accounts. But the cash management system, if you say, How much cash do we have? It's looking down at that. There's not two reports. It's not two teams. So I'd love to talk much more about how the team transformation is so critical that you're not building these separate fiefdoms. You're not innovate. You're not disrupting yourself if you do that. You're just creating a new Creating

more fragmentation. What I imagine is, like, when you're working with partners, you want your partners to, like you said, operate at the same speed you do. And to do that, they need to have similar organizational structure. There's a lot of knowledge outside of just, you know, the product and tech itself that operationally, you know, you need to lean on each other for. Correct.

Cool. Love to have that. So appreciate you having me on and letting us share a bit of our story today. It's been a lot of fun. Yeah. Yeah. Shout out to Nick on your team and Sydney too. Been great working with them. We'll see you we'll see you back soon. Alright. Thank you so much. See you.