Thanks for the clear thoughts Samora. Even though I'm investing in this space, I share a lot of your concerns and it makes me worry about the long-term success of many of the new entrants. Ultimately I believe one set of winners will have a direct relationship with consumers and will look very similar to neobanks, differentiating a lot on experience and very importantly pricing. That way when regulations ease for the traditional players, the new guys don't lose all their mojo.
Another set of winners will power the rails especially around liquidity on/off ramping and KYC/AML.
I had to pause a USD/USDC custody startup that serves emerging markets in 2022 for one of the reason you mentioned. i.e The Central Banks don't like dollarization (esp those with high capital control) and failure of a Trustee we used.
However, we shouldn't also undermine that the young tech savvy generation already uses NeoBanks that enables them to access Virtual U.S. Bank Accounts (decaf.so in Argentina for e.g) , can swap to USDC, and use local peer to peer exchanges like Binance to cash out to local currency.
Imo both founders and authorities need to work together. Non KYC approach by startups or CBDCs by CBs by prohibiting stablecoins seem too extreme on each side.
The risk is that regulators see stablecoins as a form of de-facto dollarisation and they step in to limit their use locally
Yep, it's a risk that the industry shouldn't underestimate.
Thanks for the clear thoughts Samora. Even though I'm investing in this space, I share a lot of your concerns and it makes me worry about the long-term success of many of the new entrants. Ultimately I believe one set of winners will have a direct relationship with consumers and will look very similar to neobanks, differentiating a lot on experience and very importantly pricing. That way when regulations ease for the traditional players, the new guys don't lose all their mojo.
Another set of winners will power the rails especially around liquidity on/off ramping and KYC/AML.
Definitely exciting times ahead.
You're spot on. Neobanking using Stablecoins as underlying rails could be the play. I know a few players doing this.
I had to pause a USD/USDC custody startup that serves emerging markets in 2022 for one of the reason you mentioned. i.e The Central Banks don't like dollarization (esp those with high capital control) and failure of a Trustee we used.
However, we shouldn't also undermine that the young tech savvy generation already uses NeoBanks that enables them to access Virtual U.S. Bank Accounts (decaf.so in Argentina for e.g) , can swap to USDC, and use local peer to peer exchanges like Binance to cash out to local currency.
Imo both founders and authorities need to work together. Non KYC approach by startups or CBDCs by CBs by prohibiting stablecoins seem too extreme on each side.
Yep, it requires real engagement and empathy on both sides