Why Agora Filed for an OCC Bank Charter: Nick van Eck on AUSD, GENIUS Act, and the Charter Race

To see you guys. Good to see you too. I was looking I was looking yesterday. You were at the New York Stock Exchange. Was this was this today or yesterday? You were rolling around there. How was that? It was great. It was so I've only

well, the New York Stock Exchange is beautiful. All my interviews that I've done there in the past have been between, like, 08:30 and 10AM, which is when it's extremely busy. My interview yesterday was and so it was, like, the quietest that I've seen the the stock exchange, but it's a great it's a it's a beautiful venue, and and so it's great to be there. What did you not talk about yesterday that you wish you did that we that you wanna cover cover on this show?

So I think yesterday, a lot of what we spoke about was, you know, how banks are trying to slow down genius. Right? I think what I wish we'd, you know, gotten time to chat about a little bit more is, you know, the opportunity for banks in stablecoins and maybe more of what we're doing because we're gonna engage in what we see as the opportunity. Right? And so yesterday was, like, very much like, why are banks trying to slow things down, which I think are very obvious reasons.

Why are banks trying to slow down new technology that might threaten their business? Right? But I think there's, you know, a lot a lot to talk about around the opportunity, you know, if banks and folks like ourselves really lean in lean into this. Yeah. Let's start with maybe just the news that you guys came out with late

last week around some of the the the filing and and what you're going after here with. We were actually popping this up here in the news section.

What specifically are you guys filing for, and what where does that fit in the context of Agora's vision with licensing and the state of regulation right now? Yeah. So, obviously, the the backdrop is Genius passed last year, which gave the OCC federal oversight of stablecoin issuance in the in The United States. And so we have been hard at work building the product to support, like, what is our our future vision.

And, really, the first quarter of this year, we're we're doing a lot of things to get us ready to file for a National Trust Bank Charter. And so that's what we announced last Friday. We filed for Agora National Trust Bank. And so what that will do is it give us unified federal oversight, you know, assuming we secure the charter in The United States as well as expanding our product set. So today, you know, we've had our stablecoin issuance for almost two years now.

You know, you and I have chatted a lot about this, but ultimately, I think being the issuer gives you a lot of margin and economics to play with in other aspects of the stack. You know, our mission has always been to bring businesses on chain. Right? And there's really three things that they think about, you know, when when saying, okay. Do I wanna get into stablecoins? It's how do I touch and manipulate these assets, right, which is broadly speaking, wallets or custody.

You know, how do I move from my existing perimeter, financial perimeter, right, to this new world and vice versa? Right? So they often, you know, are using, like, you know, banks or maybe some some payment businesses already, but this is a whole new world, right, from a cybersecurity perspective, from a tax perspective, audit. Right?

You know, stablecoins still aren't recognized, you know, under, like, you know, cash, you know, as cash, right, or or defined until Genius goes into effect, which, you know, is problematic for a business, right, if you wanna get an audit from PW. And then, you know, what asset am I am I using? Right? And today, we really solve, you know, what asset are you using.

And and, you know, what we say is you should use AUSD, you know, one, because we'll pass the rewards, but also because we'll give you free mint and redeem against fiat. And so you could imagine that a lot of what we're gonna be doing, you know, moves us into the offering everything out of the box for businesses and companies that are trying to move money faster, earn more on their deposits, deposits, and really build a global business. Has this always been kinda like the vision for Agora?

You know, did you know, like, when you started two years ago that this was the route you wanted to go and you were waiting for the regulatory environment to, you know, catch up, or has this really developed recently? I I know I know this this conversation kinda accelerated with the hyperliquid USDH stuff. Yeah. But help us walk through the yeah. To help tell us about that. So we've always had this vision of really owning the whole stack

from before starting the business. And so the product vision has always been there. There's a lot of things that we have planned, right, that we haven't, you know, announced announced yet. I would say some the the sequencing changed a little bit. Right? Like you referenced, like, the hyper liquid proposal, you know, which was towards the end of last year. White labeled stables was always, like, on our road map, and we accelerated it because it was in vogue last year. You know?

But from my perspective, it's actually not super economic accretive to the business, and it was always, like, a feature, not the platform. Right? We've always had this platform view, and what can you what other features can you build on top of this platform? Core issuance is, like, is the platform. You know, I would say when when I was starting the the, you know, in the company, did I ever think that I would file an application to become CEO of a federally chartered bank? The honest answer would be no.

We didn't we started in a very different era, right, the Biden era. I would say genius happened much faster than I would have expected, to be honest. It's great because it, know, pulled forward, you know, I I think the sort of demand horizon. And so last summer, we said, okay. Look. This is gonna you know, we're gonna have to get ready for this. It's happening faster than we thought. So we turned inward for a period of time to get us ready for this launch.

But I think it's very exciting for us is, you know, having clarity. Right? You know, being, you know, being and what it takes to operate in The US, right, in in one unified federal framework, that's great. Right? A lot of people previously were, like, stitching together 50 different MTLs plus maybe NYDFS. California had its own thing. And so, you know, Genius is really just gonna accelerate the adoption of of stablecoins.

I mean, to think that we're at 300,000,000,000 today and there's still no, you know, active regulatory framework in The United States is crazy. So this is gonna be a year of, like, a lot of preparation, and I think things next next year

and the year after. So 2027 and 2028 are really gonna start to go gangbusters. Yeah. Can you you know, when you were thinking about going bare metal, I think this this is an idea that or be the metal. I'm looking at the agora.finance blog here. It was you said we have a saying at Agora, you are the metal or you lose. I guess, one, speak a little bit to where that conviction came from and what that means for

for you all. It sounds like you've you've held that close for for some time. But then I'd also love to step back and kind of see what options exist for actually being the metal and what that looks like and the approach you decided to take. Yeah. So I, you know, I think something that's been popularized over the last year or two sorry, month or two has been all the explosion of stablecoin neobanks. Right? Whether they're consumer oriented or business oriented, pretty much all of them are using, like, the same stack.

Right? It's like, you know, let me stitch together, you know, a wallet company, you know, on an off ramp, cards, etcetera. And then they're basically just competing to death on CAC. Right? And, you know, our view is that you actually need to, like, be the core infrastructure because it gives you the margins to play with. I you know, if, you know, I'm, you know, 50 you know, there's 50 stablecoin neo banks. They're all using, like, you know, Bridge or something else, right, you know, for on and off ramps. Okay.

Well, they're all gonna have to charge three basis points or five basis points for USDC, USDT. They have no control over, like, the core product itself, like the stablecoin or the on and off ramp. And so what we said is, like, we need to go build where we can make a difference for the long term competitiveness of the product. And so that obviously starts with the stablecoin, which is why we started with it. What we're gonna be able to do as well is say, k.

Not only, you know, will you be able to earn the highest rewards on AUST because we control the stablecoin, coin? But we also are on an off ramp by nature of being an issuer. Right? And we'll say, hey. AUSD is, you know, for free. So while you're going to all these platforms and you're you know, it's it's like as if when you sent money from Venmo to BofA, you you'll pay three basis points. That's insane. No one would ever use that platform. That that has sort of always been our our view.

And now with the charter, you we are directly engaging with regulators on, you know, what is gonna be possible. Right? And so there's we wanna, like, have as few middlemen between us and the end customer where it makes sense. We will, of course, not build everything from scratch. And so we we've picked and choo chosen where we think the strategic moat is over the long term, and that's where we wanna be the metal. Right? Yeah.

And there's a number of other, like, fantastic third party providers for some of these services. Right? Like, you know, I don't think we need to reinvent custody and key management. I think that's been been solved. But what we do need to do is go get the license to do it, right, so that we have more control over that that offering and that experience for for the business. So Speak a little bit to the just wanted to get go back to the different different types of of charters and filings.

It's a little for someone who doesn't come from the world of, like, regulation or legal or compliance, it's it's a little bit hard to know, like, what what is the difference between, you know, a national trust versus a

NYDFS bit license or or something like this. Yeah. Is there like, what is the, Like, how do you even when you were thinking about the options that existed, maybe this is a better way to ask, what options did you consider?

Why did you go down this route that you chose? So it's funny because when you or I or I think most people think of banking, they think of traditional deposit banking. Right? I give you my money. You know, you go lend it out. Right? I have money in a a dollar checking account. Right? And and that core business really is, like, you know, fractional reserve lending. Right? That's not what we are. But my view is as an an issuer is you need to have global liquidity and access to fiat rails.

And so issuers are actually really good complementary partners to banks, to, like, the traditional deposit taking bank that that one thinks of. And so we are not engaging in that activity. Right? You know, Mercury announced that they got conditional approval yesterday to be a deposit taking bank. Right? So if you're a Mercury customer in the past, they've been actually using Choice Financial as the as, like, the the bank under the hood. They're now saying, okay.

We actually are gonna go take deposits ourselves and, you know, and lend out money. Right? Very similar to Eribor. You know, we're actually very good partners of Eribor. We use we use them, you know, as well as customers and a number of these other leading banks in in the technology sector. And so we're complementary to them and not engaging in that activity. And so we recognized and said, hey. Like, this is really, like, a fundamentally core different business. We don't wanna do that.

All we wanna do is have the ability to issue stablecoins as well as custody digital assets. And then we can partner with banks in The US or Europe to offer dollar or euro accounts, right, in our customers' names and not actually have to build that infrastructure as well. It really would have been just too much. But, again, I think as an issuer, you need to have your global banking infrastructure, and no one can build that from scratch, like, not even, you know, Circle. Right?

When we think about I guess we're we're I'm trying to

piece this in now. Like, say everything goes smooth, AUSD. Like, what is the upgrade to a a AUSD? How does this change the way people are using it, can using it? Well, I mean, I always love asking just the question of, like, what do you want to see built? Obviously, there's there's what people are coming to you to build now, but, you know, there is this what what is your view of, hey. You should go build this for AUST. Yeah. So today, right, a lot of our usage is third party app based. Right? It's it's Yeah.

You know, people that are building perp decks, money movement apps, right, you know, are active in lending markets, you know, and and are building around AUSD.

I would say what the Charter does for AUSD itself is it now enables us to serve US customers directly, which we do not do today. We're currently we have an f license out of Bermuda. We made that decision, you know, in a different era, right, because there was no unified legislation in The US. Right? And Genius is now encouraging us to come home. And so from day one, you know, we'll be able to offer direct MentorDIMM to to US customers. But beyond that, it's the other products that will now be licensed to engage in.

Right? And sort of I skirted around some of those things. What this really will enable is instead of just AUST being used in third party applications, it really enables the application of Agora itself. Right? Where if you're a business that is trying to adopt stablecoins or earn more on your deposits or have a global dollar account, you can now come to Agora. You're gonna move be able to move money faster and cheaper than any other stablecoin neobank.

You're gonna earn more in terms of rewards, and you're gonna have the safety and security of this being done in a national trust bank. And so I think that's killer. You know, really, like, you know, if you think about you know? And I I really wanna walk you through this because it is crazy. If you're a business today in The US and you're like, I wanna adopt stablecoins. Okay. What are the things that you need to do? You need to get a Fireblocks account.

You need to get either, like, a Coinbase Kraken or Circle Mint account. You need to get Cryptio for, like, you know, audit and reporting, and, like and and, you know, depending on what you you wanna do, a variety of other applications. That is crazy. Right? And so, you know, by stitching everything together out of the box, you know, in one solution that offers, you know, businesses an experience that they're familiar with in a in a trust bank setup, like, we think that that's gonna be a killer app.

Did not know about the relationship to to Erebor here. I'm curious how that that seems like a real like a perfect kind of lighthouse or hero use case for the the future of where you see Agora fitting in and and how you could work with others like them and banking partners like them. How did that relationship come to be?

What's the core way that you see the the give and take here between what Agora is giving and providing and the specific unique value adds that are kind of out of the box that we're speaking to now, maybe we just double click on on Arabor and and that specific

go to market recipe, if you will. Yeah. So we we got introduced to Jacob and Ellen, yeah, I wanna say, like, maybe, like, a year ago now, quite a long time ago. And issuers are really sought after because we have very large you know, we're a large concentration of deposits, right, which is what banks want. But, also, you know, both of our teams are trying to think about how we can push the frontier of money movement and stablecoin adoption. Right?

And they themselves are are doing the deposit taking side and have the RTP and Fedwire and international rails of the old world where we're sort of the new the new rails. We're using the new rails. Right? Ethereum, Monad, Solana, and that's a really complementary pairing. Additionally, as an issuer, you need to be operating twenty four seven. That is not how the banking system works today, right, for, you know, pretty much everyone.

The reason why so many folks in crypto were members of Customers Bank is because they had their twenty four seven CBID network, book transfer network. Right? And so, you know, when we first met them, they're really trying to push the boundary of, you know, what I would say is, like, legacy banking, and we're on this, you know, frontier on the stablecoin side. And, you know, using or looking into the APIs of all the leading technology banks and said, hey.

It would be great if we could collaborate and give you feedback as you design your APIs and and your setup. Right? Because this is a very synergistic relationship, and that was now probably a year ago. And it's you know, funnily enough now, I have many good friends who are actually working there. And so, yeah, they're, you know, they're a great team, and we're excited to continue working with them and and supporting,

you know, their growth as they get things off the ground. How difficult is it to go through like, I've never filed for US federal charter. Like, what is that process? How hard is that? I think there's something there that's, like Yeah. Really important to understand as you think about at least historically, it's has, I mean, when when I was with Bastian and looking at the MTLs and kind of the v one of, like, playing by the rules in The US, like, go get all your MTLs, like, that was very difficult.

Like, extremely hard. Every state is different. Every office is different. You gotta deal with all that stuff. What does the experience practically look like? Timelines, complexity? Do you have you have people internally doing this full time? And and most importantly, in my mind, do you see that complexity continuing to exist in the future? Because I'm imagining as a founder, there is a sense of, like, defensibility here if that complexity is there. How how do you see that? Yeah.

So we actually originally decided to, like, you know, just avoid the 50 state MTL route because we wanted to just do one

you know, you know, working on one unified framework. Right? Like, the you can probably test with that. You know, 50 different states with different regulations is a very challenging This is crazy. To manage. And, like, in some of the states, you don't actually even need the MTL because, like, they don't actually provide oversight. There's, like, six or seven states or so. You know, I think with Genius, having a unified framework is, you know, is excellent. It's extremely challenging. You know?

Not only do you have to have the talent density at your organization and the experience because they look at that, you know, at the at the board level, the management team level. You need to have a tremendous amount of capital on your balance sheet. You're right. We raised you know, it's a large raise last year, but we spent, like, zero money on growth to date. Right? We hired our first person in marketing, you know, two weeks ago.

You know, we have no, like, dedicated, like, Salesforce yet, and so there's a lot of capital that you have to have, you know, available. And then it's, you know, the body of work to build the business plan and and and the pro form a and constantly interacting with regulators. Right? It's a very different motion than, like, a software business. You know, we have four people on our compliance team already. Right? We have an an entire accounting and FinOps staff.

It's very different motion than a traditional software business or companies that are building on top of, like, software or license rentals. Right? And that aren't actually doing the work to get the license themselves. And, you know, that's why we we turned inward for a bit is, like, we need to, you know, one, build, you know, internal infrastructure. Right? But hire hire the team and get the application in. And I think over the next few months, you're gonna see us focused really on growth for the the first time.

And I think the team is extremely excited. You know, there's still a long road ahead. Just filing the charter doesn't, you know, mean you get it. Right? And so we're still actively working to secure it. But that that first filing is a good chunk of the work is out of the way, and we're very excited to continue engaging with regulators. Think, you know and too, if you're a regulator, this has gotta be an amazing time for you. Like, this is one of the most important pieces of bank regulation in American history.

Like, it's super it's, like, super exciting. And you I think, you know, there's gonna be many books and probably movies and shows about, like, how much this is gonna fundamentally change financial markets, the capital markets, but also payments, not just in The United States, but globally. And so as a regulator too, I think it's a super exciting time. And I know that they've been working twenty four seven as well.

And so, you know, this has been a busy year for us, but it's, you know, been a busy year for a number of other folks as well. Drew, it sounds like we need to start preparing for, like, the the Stablecoin

Genius era documentary.

Start for this Sounds like like a riveting film. I'm I'm surprised there isn't one on Tether yet. Right? Like, Tether alone, I feel like Yeah. Got a and, you know, you have to beat on the bottom of someone to choose. No. I feel like that would actually be a really good, like, YouTube YouTube documentary, and it'll probably age very well.

We definitely gotta make it ourselves as, like, an industry, though, because we can't you know, I I like, the Netflix one that they made about, like, you know, Robin Hood and whatever, they're just gonna, you know, rip us to shreds. So we gotta, like There's some propaganda pretty

first. Yeah. There's some pretty cringe, like, crypto related movies and media out there. We'll take the the Brian Armstrong approach with Coinbase's, like, create your own create your own documentary before someone else creates one about you. That's that might be the approach. There's one there's one about Bitcoin going around project Satoshi. I don't know if that's the name of it, but have you either of you guys seen that new Bitcoin related movie that came out? Coinbase is pumping it right now. I'm sorry.

Not not. But sounds like it's gonna be my afternoon listening one It looks it looks high quality. We'll we'll we'll revert back. I guess last question from from my side. I mean, I get fired up hearing about the moment of regulation that we're in and this this kind of it it seems like the stakes have never been higher, but the excitement is that is is never been higher as well.

What is your from Nick's point of view, what is your perspective on your your guidance or your, like, key like, the risks that exist of getting this wrong, really. Like, what what are the things that we need to get right here that regulators need to get right from your own standpoint that are currently still kind of up for debate or up for grabs? Yeah. I think Loaded question. I think a lot has been

a lot has been going on with regards to, like, rewards over the last couple months, you know, and, you know, how banks are trying to use clarity as a means to change change some things. I think, ultimately, issuers being able to distribute rewards in a as unfettered a way as possible will be exceptional for consumers and businesses, not just in The United States, but globally, and attract people to the dollar. And so I'm hoping that, you know, we get that right. Zach, any final any final Yeah.

Yesterday, when they were asking me about what I thought about, you know, the banking group saying, yeah, I had to keep my mouth a little bit shut on, especially at the New York Stock Exchange.

Yeah. 100%. For me. I think it's it's an exciting time to be. I mean, I I was thinking about, like, okay. If we had to go from, you know, zero to a 100, what percent are is Agora at right now? And it sounds like you're still in the early stages, which I think is actually a good thing. And with the progress you're able to make on the regulatory front, we're excited to see what you're able to do once you kick in the growth and, obviously, the the work that we're doing together. So Yeah.

We're we're and on that point, we're grateful more conversations

to come. Many more. We're grateful to work with you. We're pumped to have Agora as a sponsor of the show. More more highlights and more to come on that. But, yeah, we're pumped to be building top notch programming around this space, and we're excited to work with you guys to bring us in the room and, like, kinda know where to spotlight. You guys are doing so many incredibly foundational parts of this, and just grateful to be in it with you. It's been fun. Yeah. Thank you guys for having me. Awesome. Thanks, Nick.

Thanks, Nick. See you. See you.