JD Durkin: Say hello to Markus Veith, partner at Grant Thornton. Really grateful for your time. Markus, good to see you here today.
Markus Veith: Good seeing you too. Thank you very much for having me.
JD Durkin: I got a lot of busy news in the world of crypto and blockchain to talk to you about today. The New York Stock Exchange just said it will settle tokenized stocks on a blockchain. Why is tokenization seemingly everywhere all of a sudden, Markus, right now?
Markus Veith: Thanks for the question. I mean, tokenization is one of the hottest topics right now in the industry. It offers the opportunity to settle instantaneously, 24/7, right? If you’re the New York Stock Exchange, right, you earn commission when the market is open. Right? If you trade tokenized stock, it’s 24/7. So you give investors the opportunity to trade beyond the typical trade hours. And it’s just a great opportunity to expand the business.
JD Durkin: How are you thinking about crypto, and specifically crypto regulation, in this environment? We had the CLARITY Act stall on Capitol Hill a few months back. Democrats [unclear: “defiantly”] winning both the House and the Senate. That’s a new world, maybe regulatory environment, come January. What happens next?
Markus Veith: Yeah, it’s going to be an interesting discussion. Fortunately, we’ve seen the GENIUS Act pass. The GENIUS Act was the first piece of legislation we’ve seen that brought security and clarity to the stablecoin payment business and industry. However, clarity would have been the more important act to pass. And since it’s stalled, it’s going to be difficult to predict. Is it going to happen? Is it not going to happen? In any case, businesses will continue to operate. And I think part of the solution is going to be that a lot of companies are seeking out OCC charters, which gives you some kind of a regulatory framework as well.
JD Durkin: Yeah. We’ll see what the congressional appetite is after January to maybe reconsider the CLARITY Act, maybe on the back burner for the time being. Let me get your take on stablecoin payments, up 45% this year, even as the market size itself has stalled. Where are you seeing the momentum? What does that momentum tell you?
Markus Veith: Yeah, I mean, the momentum is really coming from larger institutions and banks that are finally moving into the payment space, given we have a regulatory regime with the GENIUS Act. Right before that, it was that the large players stayed on the sidelines. Now all the large banks are moving into the space. They want to have a piece of the pie, and even the credit card companies who were reluctant to adopt blockchain technology have now acquired stablecoin issuers and are moving into that space. So I think it’s a shift from the traditional payment rails to more stablecoins. So even if the market has overall not grown, there’s a shift from traditional payment rails to more blockchain rails and stablecoin-based payments.
JD Durkin: And how about the shift from traditional finance more and more into DeFi? Now more than 20 different banks, here, Markus, Goldman Sachs, [unclear: “Beauvais”], Citi, you name them, they’re all planning a joint dollar stablecoin. Why are all the big players in the big bank world getting more and more into this game?
Markus Veith: Yeah, I think they want to keep control over their own fortune. Right? If you use third-party stablecoins or third-party providers and rails, you just give up a lot of the incentives. Think about the traditional payment rails. Right? If banks process payments, they keep like [unclear: “an overnight slice of the money, make piece of that”], by launching their own stablecoin product and offering. You can retain some of it for the time being.
JD Durkin: I’m asking you a lot of different topics. As if all of that weren’t enough, Coinbase now just the latest major crypto firm to win a federal trust charter from the OCC. What is behind the rush, the renewed interest in bank charters specifically?
Markus Veith: Yeah, as I mentioned before, right? So with the stalling of the CLARITY Act, right, a lot of the companies are seeking [unclear: “protection from the in the of their business”], from a regulatory regime. Right? And an OCC charter gives you the opportunity to conduct, safely and under a regulatory regime, business such as custody, stablecoin payments and stablecoin processing. So until we see the CLARITY Act passing, OCC charters are a safe bet and a safe harbor, and it legitimizes your business as well, which is a great benefit as well.
JD Durkin: Markus Veith, partner at Grant Thornton. I always know it’s a great interview when I’m out of time and I have more topics I wish I got to, and you got to come back and see us. Outstanding interview. Good to see you today.
Markus Veith: Thank you very much.
JD Durkin: Of course, we’ll do it again soon.
