Paxos Labs Wants Every Brand to Have Its Own Dollar

What's up, man? Thanks for joining. Going on, guys? Thanks for having me on. It's great to be here. Good to see you guys. It's been a big week for you guys. How are you how are you feeling on your side about it all? I'm feeling great. I think, you know, it's exciting to be out in the market with our newest product, which is Amplify, which enables, enterprises and platforms to integrate, utility on top of, digital asset, via one integration. So that's yield borrowing, branded issuance, and more.

And so it's it's great to be out in the market. We've been working on this head down for a while now, and so it's great to be kinda officially out in the market with what we've been working on. Yeah. It's cool. So Amplify is the you know, you have the issuance that you guys have been really focused on. Amplify is sort of the now what after that, like building building utility into these types of things.

Maybe walk us through, if you can, like, a example or, like, the phase one versus now with Amplify, what's possible. Sounds like you've packaged up a lot into a single thing, so would love to break it down a little bit. Yeah. Yeah. Yeah. And, like, and and, you know, a little bit of the origin of Paxos Labs and Amplify maybe is helpful context here. Right?

But on the Paxos side, the team has been focused on stablecoin issuance has been this year of PYUSD, USDG, other tokenized assets, including PAXG, tokenized gold over the course of the last decade, as well as the kind of premier crypto brokerage as a service provider in the space. Right? Actually, Charles Schwab just announced today that they're rolling out crypto trading, and that's actually powered by Paxos as well. One of the things that we were looking at while while I was at Paxos was, hey.

We're seeing a lot of these platforms start with one of these two steps. Right? Either something to do with stablecoins or crypto trading. Right? And so one of the things that we started to talk about was, hey, there's gonna be a step that comes next for a lot of these platforms after they take this kind of initial step in the crypto. And so what we started building and developing was kind of this this product stack within Paxos Labs, which operates as its own kind of spin off entity here from Paxos.

And and it brings everything from, hey, if you want branding on your on your stable coins, but particularly, how do we add yield on stable coins and digital assets to your platform as well as enabling the ability to borrow. I think this is just the start, though. Right? Like, I think our mission is really around how do you build utility around the digital assets that are now on your platform. Right?

I think for for anyone that's been in crypto or in the space for a while, I think it's well understood that you don't just kinda get these assets, stablecoins or digital assets, just kinda sit on them. Right? You you wanna actually build build off of them, get financial services on top of them. And so that's what we're working on at Paxos Labs. That's what we're really excited about.

I think you're seeing more and more enterprises, institutions, platforms take their first step into crypto, and we're very much here to help them take that second step. Yeah. It's cool. The new site looks great. This is the first time I've seen it. So do do you find that the the evolution here is typically in this order? You go mint, earn, borrow. There's kind of like a natural evolution there for the partners you work with. Yeah. So I I think, like, the the the journey we typically see, right, is, hey.

Either you already have an existing stablecoin that you work closely with, whether that's USDG or USDC or PYUSD. And if so, like, you kinda just skip to the second two. Right? Let's how do we turn on earn and borrow for you, as part of that suite? If you're a platform where you're like, hey. Actually, I really want a branded asset, as kind of, like, the core of my platform, we can help you build that and then take you along kind of the rest of the journey on yield and and on borrowing.

So it is kind of a natural journey that we see there. I think the other place we see enterprises start, and as I mentioned earlier, the Charles Schwab announcement just today, right, sometimes people start with crypto trading. And so when you start with that, then it's like, okay. Like, how do I think about other things around yield on those crypto assets? And so or borrowing against them. And so that's kinda what we're focused on. And and for us, it feels like a very intuitive next step for a lot of our partners.

So And that's what we've been working on and building. Can we can we dive into huge, the Charles Schwab announcement.

This is big.

And think that's, you know, $12,000,000,000,000

of assets now have access to crypto. So, you know, it's Spot a crypto trading, this means that is this sort of like a white labeled user experience natively within Schwab?

Yeah. So and, again, I the announcement just came out today, and so I, you know, I think they're probably gonna share more in the coming days. But the idea is that any anyone with a Charles Schwab account can go into their native experience and get access to crypto assets. And, again, like, you know, we think this is just the start. We think more and more platforms are gonna come on and start to kind of make crypto a core part of their business. Right?

And and what we're seeing, right, is different platforms are now seeing crypto access and stablecoins with kinda like table stakes features they need to add. What we're helping them do is, like, kinda look ahead and say, hey. It's great that you've kinda gotten to gotten across the threshold on starting with crypto.

If you wanna stay competitive in this space and your platform wants to stay competitive, you're gonna need to keep innovating and building and offering kind of financial products on top of these crypto assets. Right? If you go look at all the things, like, someone that, like, a like a Coinbase offers directly in their app, right, like, you're gonna wanna offer kind of all these services on top of stablecoins and and crypto if you're if you wanna keep your platform competitive.

I'd love to look at this like a more of a practical lens we talked about earlier in the stream with BUSD.

And I think in the first week, there was about 1,000,000 in deposits, and I think this is kind of one of the first first examples we've seen of a Paxos Labs issued asset. Can you kinda walk us through, you know, how is Hyperbeat using BUSD and kinda what is what do they do for maybe the people that haven't haven't heard of them? Because for me, personally, I see them as great. We've seen neobanks.

They're really leading the charge and trying to take this a step further with the earned products, with the credit markets all integrated into their ecosystem, into their app powered by and Stablecoin that that Paxos Labs is issuing.

Yeah. So, yeah, Hyper V is is kind of, their strategy is to become kinda like the neobank of the Hyperliquid ecosystem. Right? And so, and I think what you're gonna see with a lot of these kinda neobanks that start with stablecoins as kinda like their, like, their the central atomic unit of their platform, they're gonna be able to add, a bunch of additional financial services very quickly. Right? Whether that's stablecoin yield, transfers, access to borrow, maybe access to prediction markets, other kind of markets.

Right? I I think you're gonna see these neo banks kind of get to feature parity very quickly because they are building from day one on a modern modern stack and modern rails and, you know, partnering with folks like ourselves. And so I I, you know, I think there's a bunch of others, that we're working with that kind of have a a similar perspective of, hey. If you build a neobank from the ground up, using stablecoins, you can actually add these financial services and and kinda utility points much quicker.

And, you know, I spent before Paxos, was at Cash App, and so I was very close in, like, the neobank space and seeing how people think about building features into these apps. And, I think the heuristic that a lot of these neobanks use, right, is, hey. How do I make sure that my customers can live more and more of their financial lives off of my platform? Right?

So that that's really how they think about it is, like, what are the things that they can't do on my platform today, then they need to go somewhere else, or they're taking money off platform to go do somewhere else, and how do I add that? Before before Stablecoin rails, adding kind of these incremental features was such a huge task. And I think you could see it from, like, fintech one point o, the pace at which some of those early consumer fintechs were able to add features, it was much slower than what it is today.

Right? I think, like, you know, Hyperbeat has reached recently launched, and they're kind of, like, speed running all these features. It's because they're building on modern rails, and and, you know, now we have they're using our our Amplify stack to help them do it right.

It's also exciting. Do you see the the neobank Hyperbeat use case? I I think for for me, the the thing we're trying to do is identify where the specialization is, and that's always tough because issuers and partners like Paxos Labs, you don't wanna, like, limit your possibilities because there there are many, many, many of them.

But something we're trying to think through is, like, with the really interesting and emerging stack of stablecoin issuers that we cover and that we see in the market, we were just talking right before this with Sam, Better Money Company. We were talking about the fragmentation of them and some of these dynamics. Like, where do you see Paxos Labs really winning and focusing? There's so much opportunity ahead. Like, how are you guys thinking on the go to market side of who you really wanna work with?

Is it is it HyperBeat like companies? Do you see those as, like, beachhead markets for you, or how are you thinking about that? Yeah. So I I think there's there's a little bit of staggering from a go to market standpoint. Right? Because you kinda have to look at who is ready today. Right? Who is building new applications or platforms that are very stablecoin native? And I think the platforms like HyperBeat and and others are are ready to adopt kind of all of the features of our Amplify stack today. Right?

And then when you think about some of our other customers that we're talking to are, you know, more on the institutional enterprise, the bank side,

right now, I think we're still in the stage of, like, kind of education. I I kind of see this next step capabilities as around, you know, like, where where stablecoins were two or three years ago. Right? Right? We were spending a lot of time with enterprises kind of helping them understand the value of stablecoins, helping them to understand the value of adding crypto to their app.

And so now I think for the enterprises that are just now starting with stablecoins, we're still in, like, the education phase of saying like, hey. Here's how you should think about what comes next for you. And so I think, ultimately, our, you know, our target customer, is more on the enterprise side.

But the way we're building this stack and this this product, our our infrastructure is really meant to be kind of this neutral infrastructure layer where, hey, even if you're a small startup to you are a large enterprise, you can build on our stack. Because, you know, kind of our experience building within the Paxos organization, we've kind of been building with this kind of, like, enterprise rigor from day one, even on the Paxos lab side. And so the benefit for a smaller company is like, hey.

I'm getting, like, an enterprise grade product out of the box. Like, that's awesome. But we are really building it in a way so that, you know, the largest institutions in the world can adopt this as well. Do you think the education is around more around what can we do or how can we do it? Like, do they have an idea I'm just imagining

I don't know. Let's just take, like, Chase, like a massive bank. Like, are they gonna look at HyperBeam and be like, we haven't thought about doing it this way, or is the bigger gap oh, we thought about it. We just haven't had the technology.

I think it's a little bit of both. And and so it it's what can we do and why why should we do it? Right? I think it is helping them understand the value that these additional features bring to their platform. Right? Adding something like embedded yield on crypto assets or the ability to borrow against your crypto portfolio, it's not just kind of a nice to have feature. It is a real revenue driver. It has a real potential to be a revenue driver for these platforms. Right?

I think, Coinbase recently put this out in their s one. Right? Like, their their on chain lending and borrow products have surpassed a billion dollars in origination and are nearing to be nine trigger revenue business lines. Right? So this is, like, not just like a, hey. You should do it because, you know, someone else did it. It's you should do it because this is has the potential to really, drives the serious bottom line for you.

And so helping them understand the what and the why, I think, is much more relevant today. And then and and, you know, we've figured out a lot of the how. Right? And so I think it is a little bit of, like, hey. When you're ready,

we we've been building this stat for you. What do what do you think is the thing that what's the opportunity that typically gets underestimated most in your view? Like, you've you've spent a lot of time building financial products. You were at Square for a significant time. Like, what where where are the opportunities that people aren't really thinking about in terms of what things like these primitives really unlock or could unlock.

We've noticed that some of these businesses who think of themselves in one way are actually, like, pretty close to opening up, like you're saying, entirely new opportunities that they had never thought of before. Where are you seeing those types of topics come to come to life? Yeah. So I I think there's two things that

when I speak to some of these platforms that maybe resonate the most. Right? One is maybe around kind of the Stablecoin side around understanding that, hey, if they are using or or do end up issuing their own Stablecoin or have kind of branded Stablecoin in a certain ecosystem, they have the ability to earn economics on it off of their platform. Right? I think that's, like, a very unique perspective. Right?

In in, like, the old world of, like, financial institutions, you kind of monetize what's on your platform, that's it. Like, once it leaves your platform, it's kind of, like, you know, it's gone. So I think kind of branded stablecoins kinda open up this, like, off platform monetization opportunity, which I think is, like, very unique and probably hasn't existed before.

But the second piece I think that ends up being really interesting to people is when you think about how existing kinda credit products or lending products might work in this ecosystem, right, before kinda stable coin rails and before kind of on chain markets, what you would do is you would go find, like, a partner bank. Right? And, like, the Square example. Right? When Square launched Square Capital, where were they sourcing their capital from?

Well, they were sourcing it from a couple community banks, right, that they had partnerships with. Right? So now you're saying, okay. I'm sourcing this capital from kind of a couple counterparties. But the interesting thing ends up being is when you're plugging into on chain markets, you're actually plugging into this, like, global liquidity pool. And so you end up getting much better rates, much more efficient rates. And so that that runs through to your business, right, or to your users to say, hey.

Like, action actually get you better rates, better borrowing terms, deeper liquidity pools. I think that's something that people haven't quite wrapped their minds around yet, where it's like, hey. Instead of picking one banking partner, I get to plug into this kind of massive on chain pool of liquidity. That's only growing by the day. Right? Only growing by the day. Wanted to ask you about

the news Tuesday. This was big. I actually wasn't expecting this, but you guys raised was it it was 12,000,000? What does that unlock for you? What's the what's that feel like internally? Was that something that was sort of yeah. What is that what is that unlocking on your side? And when you're thinking about those funds, where where are they going, and what's the priority there? Yeah. Yeah.

So, you know, this was kind of a unique fundraising round, right, where it's kind of a strategic fundraise for us where, you know, we had been been incubated within Paxos and and and we had been kind of funded in that way for a while. What we had kind of looked at and we were like, hey, this the moment

in the market has come a lot faster than we expected. Right? I think when we started incubating Paxos Labs within Paxos, were like, hey, some of the things that we're thinking out might be a couple years out, but that has accelerated. And with the with the growth and adoption of Stablecoins and I think the some of the regulatory clarity that's come in with the current administration, that whole timeline has accelerated. And so, you know, we decided that it was time to kind of pour some fuel on the fire here.

And specifically with the $12,000,000 raise, there's a couple of things we're gonna focus on, right? So one is kind of really ramping up our go to market efforts, both across kind of the existing crypto native ecosystem, but also on the enterprise side. But the second piece where we're really starting to invest more and more is really around r and d. Right? So we talked a little bit about these on chain liquidity markets.

One of the things that we're finding as we talk to customers, especially enterprise customers, is some of the limitations they have today engaging with existing protocols. Right? Whether that's compliance or risk concerns. Right? So we're doing a lot of r and d around what are the things we should be looking to build down to the protocol level that meet some of the requirements of these enterprises. Right?

So, like, an example I'll give is, you know, you might have an enterprise that wants to to borrow from on chain, on chain liquidity markets. They're like, hey. Actually, I don't necessarily want my competitor to know that I have a loan out or a liquidation threshold. Right? And so, how do you actually build around these things? Or they might say, hey. I wanna lend out my stablecoins, but I only wanna lend it out to a a KYC counterparty or a KYC counterparty. Right?

And so some of the existing kind of primitives in DeFi don't allow these enterprises to do that easily. And so I think a lot of what we're spending our time on is what do we need to build at the kind of primitive level to enable some of these things. Right? And so because it's one thing to make it easy to integrate, but it's another thing to say, like, hey. We can actually configure this to meet your risk and compliance requirements.

And I think that's a lot of what we're bringing from our our DNA of building for enterprises for for the last decade within Paxos. Incubating process alike. I mean, we're kinda seeing this trend a little bit more more frequently, I think, where there's some I think your process might have been a little bit different with an acquisition to incubation to fundraise. Correct. You think we're gonna see more and more teams and

kinda spin off? You know, I'm thinking of, like, the Cyclops team was incubated within shift four. That happened recently. We've seen the SBC was incubated within Braille, then they spun out and and, know, raised separately. Do you think there's what are some of the pros and maybe what are some of the cons to to this model? Because I think I'm we're just seeing it more and more. Yeah.

So, look, I think when you're you're within an existing organization that has, you know, a significant customer base and and and has been around for a while, such as Paxos, I think you get to get an opportunity to look around the corner a little bit. Right? When you're saying like, hey. Like, the business as it is today is doing great. You get some space to look around the corner and say like, hey. Like, how do we think about making investments that are maybe, you know, a few years down the line? Right?

So I think I think that's one. Like, within a larger organization that has had some success, you get the space and time to kinda ask those questions. And then I think the reason you end up you know, I I think you end up seeing a lot of these spin offs, right, is it it ends up being, especially kind of with, like, some of the AI tooling today.

If you really, like, carve out a team that's fully focused on this and is not competing for any internal priorities or resources, it is incredible how much progress you can make. Right? And so I think a combination of those things where you get the space to kinda really incubate and pressure test a set of ideas that you have, and then being able to kinda, fully launch into into the market with a very focused team.

And especially with the tooling today, you can make you can really make a dent in the in the market very quickly. It's been really cool to see the the developments here and the relationship and the the dynamics between these two entities. I I I think given the I think what Paxos has been most well known for, the regulatory history, the breadth of like, the

track record of success through such a I don't think people realize how long Paxos has been around, and that just holds so much history, weight, relationships, forward momentum, and now having the ability to work with your team and have this, like, lean, innovative, related, but external entity that can really go and push push hard and be agile. Like, it's a really cool makes a lot of sense.

So anything, though, that we've missed or or things that get you excited, things that you wanna shout out, new things on the way before we wrap up here? I know we've been kind of drilling you with what we what we find interesting, but what what what are you thinking about? Yeah. Look. No. Thanks so much for having me on, guys. I think it's been it's been awesome to catch up with you as always. Look. I yeah. Look. We're super excited.

I think we're in a really great place to to go cap to the market that we see developing. Right? And I think the the thing I would

care is I think there's so much energy around stablecoins today, and it's amazing, and it's been a long time coming. I think what we're working on at Axos Labs really is kind of this, like, what's next that I don't think a lot of teams have asked. And I think it's a function of, like, you have to have been working on stablecoins for five, six, seven years to, like, have gotten to this point of thinking about, like, what comes next.

And so I'm really excited to see kind of the market wrap their heads around kind of, like, this set of questions, right, of, hey. You don't just get to supporting crypto assets and stop. There's a whole set of financial services and utility you wanna enable on top of that. And so, we're super excited. We've got a great team behind us, you know, especially now with our funding round. We've got we've got the resources to go after it, and we're pretty excited for what's ahead. Awesome.

Congrats, Bo. Appreciate you taking the time. Excited to continue following the journey. And if there's anything that we should be covering that we're missing or around the corner, let us know. We'd love to amplify all the cool stuff you guys are doing, so keep us posted. Will do. Thanks for having me on. Alright.