Why Canada Needs a Stablecoin

Right. Welcome to the show. Thanks. Thanks for having me. Absolutely. We've we've, on chain FX, non USD stablecoins definitely has been a big focus over the last three months, and I've seen you on my timeline quite a bit. So, yeah, we're interested to get the get the perspective on you said CAD? What is that how you would the the abbreviation for it? Yeah. So great. I mean, I think just, to open it up, I see you have some background at at RBC.

Maybe give us about your background of maybe in TradFi and what you were seeing in the space to kinda lay the ground level for for TETRA, for CAD, and then we'll kinda do the we'll kinda do the the contextualization

of where does a Canadian dollar stablecoin fit into the on chain FX world and why do we need it in the first place. Yeah. Amazing. Thanks thanks so much for having me. Yeah. I mean, my background's in traditional finance, which I think is, you know, a few years ago might have not been that interesting, but now with the colliding of both worlds, I think, provides a lot of value in context.

I mean, I grew up on trading desks, not dissimilar to what you see on Wall Street and, you know, public equities, foreign exchange, and then pivoted at some point in my career to go more around asset servicing, treasury, and custodial services for for RBC. It was very interesting to see how large banks work, how decisions are made, but also the technology behind financial services and, you know, I would say how old it is.

So when the opportunity to come and start TETRA and and join the company and really creating digital asset infrastructure at the institutional level in in Canada, became very interested in that very quickly. My timing was probably pretty poor. I mean, it was early twenty two, and then Celsius and FTX and all of that happened. So the first couple of, couple of years were rocky, but, you know, we're in full flight now.

You know, there's so much adoption, so much excitement in the space, and, you know, we're very excited about stablecoins and specifically non USD stablecoins and what it will bring to the market, as a settlement layer and a payment instrument and and really as a tool for for the digital economies. That's been a long journey, but so so happy to be here. Awesome.

You know, funny, Drew, a little Lauren. I'm having, like, vague flashbacks. Before Drew and I met, I was I was writing a newsletter. He was just leaving Bastion and was ideating this podcast. And and I remember doing a newsletter of and this would have been late twenty twenty one, early twenty twenty two maybe of, like, non USD stablecoins. And I I remember seeing Cat on there. Man, that was a rough era for non USD stablecoins.

I think it was, I don't know, maybe half a percent of the total addressable market for for stablecoins. So so we've kind of heard the pitch for, you know, we've had Dave from e Etherfuse on, talking about the Mexican peso stablecoins. We've we've obviously seen a lot of the hype around EuroC, but, you know, why Canada? Why CAD? Where where does that fit into the puzzle that maybe most people wouldn't wouldn't realize?

Yeah. I mean, I would probably lean on the traditional markets to to just dictate a sense of why CAD's important. If you look at Canada, we're about 2% of global GDP, but g seven pair in the currency market. What does that really mean? It means that a lot of flow naturally goes through the Canadian dollar in terms of traditional FX execution. We punch way above our weight when it comes to the currency side of things. We're about five to 6% of global flows.

And some of it has to do with some of the institution that Canada has. We we essentially call them the Maple Leafs, but we have very large pension funds that are allocating globally, and we have large institutions as well, and we have some GSIB banks. So so there's a lot of movements that happen on the Canadian dollar side of things.

And if you are a believer that money is essentially gonna change and stablecoins are gonna be the fundamental layer as to how money moves globally, then there is a natural place for CAD to take a similar portion of the market in terms of transaction. And, you know, it's still very early days in the adoption of stablecoins. And and while that's accelerating, what's also accelerating is the the use of non USD ones. And we see a huge opportunity there, and we see a huge opportunity on on chain effects.

And when we speak to protocols or various, you know, service providers, they are already signaling that there's demand for CAD. There's just not a valid product in market. So so that's really what we're solving here. Yeah. It's super interesting. What is the

maybe just to frame this up a little bit too, I know TETRA Digital is doing there are a lot of different parts to this business, TETRA Digital Group. Help us as we frame how we think about the business. You have the trust, TetrUnity.

Walk us through the different different parts of the ecosystem. Yeah. Of course. And we really started as the regulated trust company. I mean, that's the inception story of TETRA. And and for those that were around at that time, it's it's really on the back of a Quadriga CX failure. So for those not aware of the company history, Canada had a large crypto trading platform. I'm gonna call it a failure, but really the founder left with the keys.

So he left with about $200,000,000 worth of crypto that was never fully recovered. And that forced us to look at the problem around third party regulated custodian in Canada. The US was slightly ahead again on that on that side in in 2018, but Canada really didn't have a product, and that led to the creation of the trust company, which was the first in the country, which was, a dedicated regulated vehicle to safeguard assets.

We very quickly learned also our partnerships with various players in the ecosystem that there wasn't a lot of sophisticated solutions as well in terms of software, aggregating data, moving data around, doing controls, governance, compliance, finance. So really what ended up we ended up looking at is how do we create value for ourselves first and then eventually for the ecosystem in terms of software, and that was really the creation of the Unity product that we are now offering out to clients.

You know, really think about it as as an orchestration layer. It has a lot of has a lot of connectivity with with the various providers in the space. And, you know, there's been a lot of excitement around this product. And finally, when we looked at the stablecoin problem in Canada, and what I mean by problem is the lack of regulatory clarity and and where players could essentially insert themselves. We worked with a couple of our partners to establish a new framework using a prudentially regulated issuer.

So what that really means is a regulated trust company. Our trust license is fundamental to us being able to issue our Canadian token. It really puts us in a category of our own in Canada, very similar to how US players are essentially issuing. So it's three products. They are all complementary. We have a lot of partners that use our entire product suite.

But, ultimately, the way we look at it is Tetra is just really trying to solve the problem of digital asset access and regulated infrastructure in the Canadian market. And we're we're quite excited about the products we we have. We see actually ourselves issuing a lot more product in the future, but the the CAD is just so fundamental. Right? Like, the stablecoin is just such a fundamental

piece of infrastructure to get right, so we're very excited about that. Yeah. Do you do you when I see this business model and how it functions in Canada and where it's how it's structured and where it's focused in that in that part of the world, it reminds me in some ways of Anchorage here in The US and the role that they've taken as just the regular the regulatory side. Is that is that a good comparison mentally to think through? It's, like, the the business model. I think it's a good comparison.

And, you know, the the reason why it matters is the regulated

trust company is your backbone or your fundamental layer of infrastructure, the same way that Anchorage has that bank license. And now, like, everybody's heading into that direction because they've seen how valuable that is. That essentially makes you a very trusted partner in the ecosystem. You're regulated. You have capital requirements. You know, at some times, it allows you to move a little bit faster. Most times, it may be a little bit slower, but it's just a very solid base to grow on top of.

And the other example I would also give is, you know, Brian Armstrong talks about this very publicly. When FTX was grabbing share and accelerating, he would get frustrated because, you know, he's like, well, we can't move that fast. We're regulated. And it's it's a little bit you get challenged in so many different ways where you see competitors enter market in different frameworks. But, ultimately, the regulated stable players survive and thrive. Right? And we have this very similar approach in Canada.

We believe the regulated framework is fundamental. And now as we become an issuer of a stablecoin, we have five years of track record as a as a institution, You know? And and, candidly,

no players have that in the country. Yeah. So it just brings a a different framing to this to the problem. I I wanna go little bit of change of direction here. I think Drew and I were both looking at your LinkedIn, and you had a post go out, I think, earlier this morning about Stripe. First, were were you at the Stripe sessions? Yeah. I'm there right now. I'm in my hotel room. It's different. I I was gonna I was gonna kinda guess, but, yeah, I didn't wanna make any assumptions.

You know, I think when I just read this first sentence, still in doubt about the value stablecoins can provide to payments and financial infrastructure. I think Drew and I can both relate. We talk to people that you know, we're so engulfed in this ecosystem that there's almost no doubt in our mind. For 95%, maybe even more of the population, professionals, there's there's still a lot of that doubt lingering.

I mean, what did you hear yesterday that really obviously, you are gonna assume that there's little to no doubt in your mind, obviously, four years ago going to the start with Tetra. But what did you hear yesterday that really solidified this for you and made you wanna bring it to your peers as well? Like, what are those conversations for the people that you may be known for fifteen, twenty years in the industry

that haven't gotten on board yet. Yeah. I I mean, this post, just to give you a little bit of background, it really obviously, there's the excitement of the product launches and the announcements yesterday, but it also comes from a a roundtable I was at last week where I would describe them as, you know, old school financier that are, you know, sitting on top of the Canadian financial ecosystem really challenged me last week around the validity of stablecoins as a as a real product.

And it made me realize that there's still a lot of education that needs to happen in this space, and people really still don't fully understand the problem that stablecoins are solving. And, you know, you can talk about it. Right? You can say it's cheaper. It's faster. It's programmable. But then all of that was demonstrated yesterday by Stripe. And I think it was a world's first in terms of, you know, really matching the velocity of agents and token usage with payments. Right?

So in a traditional model, what they essentially demonstrated is you give an allocation to an agent, and they go through it, and then eventually, you know, you're out of tokens. Under the new model utilizing stablecoins, you know, your agent can essentially use as many tokens as it needs in virtually the same time. Right? So the speed of execution is massive. And what you need is you really need stablecoins because you need the speed, you need the cost, but you also need the programmability.

So the post was really a signal that, listen. This is live. This is really happening. This is you know, here's the best example that you could possibly give. And, sure, at the margin, agentic commerce is still relatively small as a percentage of, you know, transaction volume and overall flow of money, but this is growing really, really fast, And people are very excited. And when you're walking strike sessions, I mean, the word agentic

is pretty much everywhere.

We've heard it quite a bit recently. Drink every time you hear agentic is is Yeah. Exactly. So this the video we're watching here, if you're just for context, this was the link that you had on that LinkedIn post. What was specifically being shown here that we're kind of that we're looking at? This is a demo of it looks like one of their new was it a new product that they announced? Yeah.

So so, essentially, they're announcing you know, there's a wallet technology called CallLinks to essentially deploy with your agents so you can use Stablecoins and payments for AgenTic commerce.

But, essentially, what they were showing is, you know, how stablecoin can be utilized by agents to do payments. And, again, it was around tokens. So they deploy a bunch of codes. The agents were out essentially doing API connectivity validation, says they need to use tokens, you know, with with the agents and the AI, and you need to pay for your tokens. So you can either, again, allocate capital first or then you can allocate as the agent needs it.

And the second scenario is where stable clients come in, and then they went on the explorer here, and they basically showed, like, all the micro transactions that happened, which is really cool and really interesting. Right? Because, like, you're talking about, like, a quarter not even a quarter, like, a a third of a a microcent. Right? And there's just thousands and thousands and thousands of these payments that are happening. And this was live. So this is in seconds. Right? And it's on their Tempo blockchain.

So Stripe obviously launched Tempo. Tempo is now live. Tempo is purposely built for, you know, stablecoin infrastructure and and modern money.

And there's just just such an eye opening moment that I had to share it. Yeah. We're so for you guys bringing it back to to TETRA and CAD and the world that you're living in here, where do you see the overlaps of streaming money, streaming payments? How is this becoming personal to you as you think about building the business? Like, where does this type of streaming of money what use cases are you thinking about? You're obviously very excited about this. So how does this relate with what you're doing?

I think probably, like, most crypto companies, like, we all have a deep banking or can't move money around story. Mhmm. And for us,

story about stablecoins really showed up about two years ago when we were trying to do cross border, and all of a sudden, our corresponding banking partners, like, shut us down. Right? And then we had trapped capital in a market that we couldn't get out and consent to. So we started utilizing stables, and we never looked back.

So when we go now into companies and they're talking to us about their problems around settlements, you know, extended post banking hours or on the weekend or, you know, accelerating settlements so there's not as much treasury demand and pressure on their balance sheet. We're quite familiar with that with that problem because we've done a lot of that activity ourselves. But, ultimately, there are things that I like to geek out on. Like, I think micropayments are super exciting.

I think the, you know, the creator economy is an example, and the capacity to get paid royalties in real time as music's being streamed or anything of that nature, I think it's great. I don't necessarily want a Wall Street Journal, for example, subscription if I can just read one or two article a year and pay a a buck for them. Right? But, like, we're not set up for that stuff today. Just technology enables it. So Genetic Payment is is really fun and cool and exciting. Everybody's talking about it.

But I like the concept of micropayments. I like the concept of, like, paying as you use, and you need to be able to fragment

the flow of money to really make that efficient, and this technology enables it. Yeah. You know, it's funny too, and it's like we we talk about these. I think we become so accustomed to starting to think about it. It was almost like, okay. We were early to thinking about stablecoins. The space has finally caught up, and now we're, like, looking ahead to the next thing. Kinda going back to your example on you're sitting at this table. You're trying to demonstrate stablecoins.

Like, how does this gap get how do we bridge this gap? And we think about this a lot in media. It's obviously part of the reason we do this show. You know? We want people to see clips that spark their interest, and then we want them to go watch the live show and go watch the podcast. But there is always that question of is is this enough? Do we need to be doing more? Is it the Stripe sessions? Is it going to a dinner?

Are they really only gonna learn when they sit down with with somebody like you face to face for an hour and hear your personal conviction?

What's been your approach maybe educating people in your circle, whether personally or professionally? I mean, listen. We try to have an open mind, and we try to bring constructive, inclusive dialogue to all tables.

You know, as as a first to launch a lot of products in Canada, it's always important for us to understand educational component of it and going out to market and making sure, like, the regulators, the government, the the various actors in the country really understand what we're doing and why we're doing it. I've also learned that I'm not gonna convert everybody. There are some people like the gentleman last week who's in his seventies, who's just probably never gonna have a positive view, and that's okay. Right?

And Yeah. You can preach to others and, you know, I'll use the example of, Jamie Dimon. I mean, he was anti crypto forever, and now he's done a, you know, arguably a one eighty publicly, at least acknowledging its use cases, and they're deploying quite aggressively as an organization. I think with education, there's that, and then there's also the risk of being disrupted.

So as the technology scales and grows and adoption is accelerating, these nonbelievers end up being converted naturally when they're at risk of being disrupted. So we just gotta continue to build, keep our head down, deliver what we need to deliver, scale, educate, and then I think a lot of market's gonna come our way. You said continue to deliver, continue to build. What what is that for for TETRA and CAT? Well, again, like in Canada, currently, there's just no valid options in terms of Canadian stablecoins.

So so bringing the product to market, creating the connections with the various partners, enabling those rails to flow, demonstrating the volume and the growth and also the benefits that institutions are are gaining from deploying the technology. I mean, for us, that's really our focus over the next little bit. There's also the whole component around the rest of our business. Like, you know, some companies just don't have digital wallets. They just don't understand digital assets.

So enabling them in this space to run proof of concepts, you know, I I think the Bitcoin the Bitcoiners have this orange pilling argument. Right? I don't know what the stablecoin word is, but, like, giving them a stablecoin pill so they they get converted in terms of believers and and enabling that that conversion. For us, that's that's what head down, keep delivering means.

We add a lot of values to institutions that are willing to let us enter, and that's that's really what we're focused on at the moment, trying to be as broad and as deep as possible into the market. What do you think people get wrong about non UST stablecoins?

Because I'm thinking about pilling. Right? And even within this, call it, stablecoin center centered worldview, obviously, we have this belief that it's the future of money. It's modern money. Even within this sec, there's a divide right now on the role that non USD stablecoins are actually going to play and where the space is gonna go with on chain FX. What would you say to somebody that gets the stablecoin argument, but with non USD stablecoins, like, ah, just we just need to stick to the dollar and call it good.

Yeah. I I think the main thing I would I would say is that they believe that there's no market. I think that's completely wrong, and that's

that view comes from my time in foreign exchange. I've seen how money gets transacted globally at scale, and the reality is it's not one currency everywhere all the time. And there's you know, like, again, like, the infrastructure is currently relatively immature and stablecoins, but growing rapidly. And over time, the markets will the market's dynamic, I just believe, will prevail, and that means that there's non USD players that will enter at scale.

So it's really that argument that there's no market for it, you know, specifically given the macro environment globally. Like, not everybody wanna be dollar holders. Right? And that's not necessarily a bad thing. That's just a reality. And companies, you know, have foreign exchange exposure to think about as well if they're playing in the dollar space only and their revenue and their users are in CAD. So there's a hedging component that shows up if you're not able to deploy the right tools.

So I just I think that's where they're wrong. Yeah. Well said. I feel like what they announced yesterday and presented is gonna be tough to beat, to be honest with you. Today's today, my focus is really on, like, partners and and possibility of partnership. I think yesterday, people really absorbed what happened, and even overnight, after the day, there's been a lot of incoming opportunities for us. So it's it's, you know, going to have those conversations.

So so my goal for today is is really to talk to as many partners as possible and preach them on the validity of non USD stablecoins

as part of their architecture or infrastructure. So What are the ideal partners for you? Like, who are you trying to meet with right now? These are more, like, infrastructure partners or are you, like, usage partners? I would say both, but very much focused on usage adoption primarily.

So people that are in this space already doing USD traffic or play a fundamental role and converting them to the usability of of CAD. Right? I I think that's that's really great. Have you talked to Tanner from StableSea? Yes. Yeah. We actually met him at Dass. He's a great example. You can ask him about it. Right? He has a great business. He has a couple of Fortune 500 companies,

but he's restricting currently his product to US. So it's like we're in discussion with him around, like, how can you blow that up? Right? How can you make sure that your clients have access to all the markets they operate in, not just US denominated markets? Yeah. We will we're actually bringing him in next, so we're gonna we'll we'll have to have that conversation. So you really when you're selling this and positioning this, it's, hey. We're opening up the entire market almost.

It's like, functionally, you you're not able to serve businesses who operate natively in this way. You're essentially unlocking new markets by integrating CAD into platforms like this. Is that effectively what you're going in with? Yeah. It's really cool. Well, Didier, thanks for the time. Have a great time at Stripe Sessions, and we'd love to have you back on the show. Keep us in mind if there are, yeah, announcements or anything that you wanna have us cover.

We love seeing more different use cases for stablecoins around the Yeah.

Great. Thanks for having me, guys, and happy to be back on.