Joining me is Stefan Richardson, chief strategy officer and head of banking at Fireblocks, and MFTA corporate member.
Stefan, welcome to Wall Street to Mina.
First, Fireblocks now has over 160 live accounts here in the UAE.
What does that tell us actually about where this market is right now?
Yeah, thanks for having me today.
Um, I think for us, it's, it's that within the MIA region, it's a very dynamic market, right?
Um, what we're seeing is a lot of growth in terms of real full enterprise build and product infrastructure that's being developed to solve the problems of institutions and retail alike.
And I think that is a very progressive move in terms of the utilization of things like blockchain for solving problems that we see in financial markets and payments today.
And so, for us, it's exciting to to see the kind of growth that we're seeing within the MIA region.
It's also exciting for us to see the shift in the type of players that we're seeing.
I think when we looked at the region, probably 2 years ago, There was a heavy dependency on crypto native firms, trading firms, etc. that were in the space that were moving to the Middle East, um, given the regulatory clarity that was there in terms of operating.
But now we're starting to see a change in the dynamic or the makeup of our clients towards larger payments companies, banks, um, corporates, and that's a really exciting shift for us.
Banks are spending, but most are not yet in production.
So what is actually holding them back?
Yeah, look, I, I wouldn't say it's really something holding them back, but, you know, banks are highly regulated institutions, right?
Um, they have significant businesses outside of blockchain and digital assets, um, and innovation at the bank is something that is carefully thought through.
Um, they have to meet the regulatory burden that happens by their regulators.
They have to meet the trust of consumers, and not break that.
And so, any new innovation in any new technology is something that takes a bit of time.
And so what you're seeing is that banks are allocating budget towards the progression of blockchain and embedding blockchain into their products and into their services.
But they're going through the process of really setting up the right infrastructure to be able to approach this correctly, right?
They're engaging with regulators, they're understanding the use cases that are allowed, they're understanding the impact to their commercial models, and then they're really building like the operating model around things like risk, compliance, and security to ensure that when they deploy.
Products and services that leverage blockchain, they're doing so in a safe and scalable manner.
And so, what you see really in this 2026 year, and I think it's the beginning of 2027, is banks setting up the right infrastructure to be able to engage, and then deploy use cases at scale over time, right?
And, and so, you know, this is an exciting thing for us is the progression of technology.
That we expect within banks, and so, you know, we're ready for that kind of long cycle, or at least a longer, a bit longer of a cycle for banks to broadly engage and to push things from, you know, commercialized pilots into real full scale production.
And Stefan, stablecoins keep coming up as the first bridge for banks into digital assets.
Why stablecoins specifically?
OK, I think the stablecoin ecosystem has evolved outside of banks, right?
I, I think when you look at the utilization of stablecoins, it was the first real utilization of blockchain technology at scale for solving a problem, which was money movement.
Uh, by institutional players and retail players alike, right?
There's a lot clearer regulation around stablecoins as a first use case, and so banks are able to understand their role within the space, how this asset class will be regulated, and what their interaction models with it might be, right?
And the truth around stablecoins is, is a highly global model that we're seeing in place, right?
Firms like uh Tether, firms like Circle, all have built infrastructure that allows.
Corporates, PSPs, um, smaller fintechs, um, and the like to be able to engage with this asset class and utilize it to drive value for their customers.
And so, I think for a lot of banks today, there's a real conversation or discussion that's happening between, you know, should they be operating with things like tokenized deposits that are, you know, fit for purpose for a bank in terms of their traditional, uh, models, monetization models, or should they expand into stablecoins?
Given the proliferation we're seeing in the usage that we're seeing of stablecoins by, you know, ecosystem partners and by players.
And so I think this model of like how they think about digital money is something that they're comfortable exploring, because the regulation is clear, and they're starting to see monetization in a real way by firms that are not banks, right?
And so, it's gonna be imperative for banks to be able to compete, to be able to basically leverage their trust within.
The ecosystem, uh, the types of products and services that they have, and to then think about stablecoins as a new, uh, tool for facilitating and helping their corporate customers, retail customers alike, uh, engage in this new financial system.
And neobanks, uh, also, they're already offering crypto to customers through infrastructure like yours.
Does that mean that traditional banks are already being left behind?
Look, I, I would say, Left Behind, um, you know, it is a bit harsh, right?
I would say that they do have to drive towards, uh, real scale, right?
Because at the end of the day, what you're seeing is institutional clients, uh, enterprise clients become familiar with alternative ways of moving money that exists outside of a bank.
Now, This is not happening at scale, but what you're seeing is infrastructure being built by ERP providers, PSPs that are looking to uh engage with enterprise customers and corporates, you know, the likes of Stripe and others that are building models that say, this is how you can move money dynamically outside of a bank, right?
And if that new model sticks, it's very difficult for banks.
To then push things back into the, into the bottle, right?
To, to force the traditional mechanisms that they do today, uh, for how people might move money and interact with money.
So, I think they're not being left behind.
There's still a bit of time, right?
I, I think when we look at our survey, corporate customers still expect for their banks to be able to provide services utilizing digital money, right?
And money on chain.
Um, but the question is, if they wait too long, then you'll have new embedded models that might move away from banks.
And I think that's where banks are starting to ask themselves questions, in terms of, should we be thinking about tokenized deposits?
Should we be thinking about stablecoins?
Should we be thinking.
About both based off of, you know, what provides the most utility to our customers and really engaging in a model that doesn't dis intermediate the bank from the corporate or the retail customer experience, but actually embeds the bank in that experience leveraging a new technology.
And now to move forward with that, still security for banks is the number one.
Uh, concerns moving into digital, um, assets, uh, here now what does institutional grade, um, security actually look like in practice?
Look, if you're a bank, you have a business that is significant, right?
And you can see it's, you know, any large bank within the MTA region and globally, um, their first priority is mitigating risk, right?
And the fact of the matter is, if there were a negative event, or malicious event, malicious event that were to happen, Uh, because of digital assets by a bank, there would be significant scrutiny on that bank by regulators and by their customers.
And so they need to ensure that security is imperative.
The great thing about working with banks is there are security models today that banks utilize to govern the activity that they do today.
And so, when we talk about security guarried infrastructure, it's one.
Things at the cryptographic and wallet level, making sure that the algorithms, the technology, the capabilities are highly secure and highly scalable.
But 2, that it operates within the risk frameworks of the bank.
Things like 4I principles, things like policy and governance control, things like KYT and AML checks.
All of those need to be integrated into the technology solution that integrates with blockchain and digital assets, right?
And so, when you're able to develop a comprehensive platform that it encompasses all of those things, I think that is the kind of infrastructure that banks are looking for, and are expected to provide to their customers.
Yeah thank you Stefan for joining us today on Wall Street to Mia thank you so much.
Thanks for having me.
