Bitcoin Rebounds as Stablecoin Competition Heats Up 

New York morning trade, we are looking at Bitcoin extending gains higher by 6% and hovering right around the 77,600 level.

Now this does come as the crypto major is on track for its best weekly gain in nearly three years.

At the same time looking at the stable coin market, it is experiencing fragmentation from PayPal and Circle to Robin's consortium, as well as World Liberty Financial.

Every fintech exchange as well as Bank is launching its own dollar-linked token.

And the OCC has declared America open for business again, conditionally approving charters for crypto giants as well as prompting dozens of traditional banks to offer digital asset products and as liquidity scatters across hundreds of tokens on chain capital allocators, Spark is betting that the real value lies in connecting them.

Well joining us to weigh in on what we're seeing in crypto and co-founder.

And CEO of Spark, good morning and happy Friday, Sam.

So first and foremost, let's talk about the price action we saw in crypto this week.

So it's hard to believe, but right now we are looking at Bitcoin hovering right around the 77,500 level.

But what do you make of what we're seeing in open interest as well as funding as well?

Yeah, um, it's definitely been a bit of a wild week.

Uh, crypto tends to go through these cycles of, uh, you know, off interest, on interest.

And it seems some interest is uh starting to return.

Um, I won't speculate on to the exact reason of, of what, what is causing it this week.

Um, but really this is, um, marching along to the drumbeat of uh institutional adoption within Tradfi, and stablecoins is really the big driver of a product-market fit with, within this.

Industry.

Um, for all the things that you mentioned, uh, there is regulatory clarity with genius and hopefully, uh, the Clarity Act, uh, being passed as well, um, so that institutions can really, uh, get all the benefits that come from blockchain rails such as, uh, 24/7 global markets and, uh, near-instant settlement.

Uh, blockchains just are proving that they're a much, uh, much better fit than the traditional finance system.

Uh, for just opening capital and making it more accessible.

And while I have you here, Sam, I do want to expand on what you just mentioned.

So we are looking at a flood of new dollar linked tokens from some familiar household names including PayPal, Robinhood, Coinbase, as well as Chartered Banks.

But with seemingly every issuer trying to keep reserves inside their own ecosystem, explain to us what your stablecoin FX layer on Uniswap actually does for the layperson out there.

Yeah, so, uh, as you mentioned, uh, we're seeing a Cambrian explosion of, uh, stablecoins, and I think this trend is just going to accelerate, especially with Genius coming into effect, uh, next year.

Um, and so we'll see, we see like PayPal, um, OUSD, uh, USDG, various stablecoins, uh, that have launched to, um, compete with, uh, USDC, USDT.

And so, uh, yeah, we do expect this to accelerate.

Now, where Spark sits, when the issuing and uh issuing a new stablecoin is just the first step.

Um, to get on chain, you also have to build liquidity, usually with the uh more incumbent stablecoins.

And so this is where Spark sits.

Um, we are able to uh bootstrap these stablecoins up to uh Scaled size in quite a rapid amount of time.

So for example, Spark uh partnered with PayPal to uh deliver about 500 million plus of uh of deposits into their, into the Pie USD and then deploying that into um market-making operations within.

Uh, on chain.

So this allows, um, newer issuers to be able to get access to the very deep liquidity that exists on chain and this is absolutely essential for people who are going to be holding, um, and using uh the stablecoin.

Um, you need things such as on-chain clearing, um, and, uh, sort of reliability of liquidity so that holders are able to exit on chain.

Going through the banking system is still quite slow and so on-chain is The new, is the new place where you need to be, uh, have settlement there.

So, Spark really provides this, um, the tools for these stablecoins to bootstrap up to scale, um, and, and start contending with the bigger players and gaining distribution.

And Sam, while I have you here, I do want to get your perspective on infrastructure as well as integration.

So in simple terms, can you explain why supplying backend yield as well as liquidity to existing consumer apps is a better longer term strategy than say trying to own the customer relationship directly?

Yeah, so this is known as the Defi Mullet uh thesis, um, and I am a believer in this.

So we, uh, I believe that the sort of consumer apps are where the users are going to remain just because they, they do provide a very strong user experience.

You have like Coinbase, uh, Robinhood, and then on the merchant side, uh, strike with uh Tempo.

They're all own the user and I don't think this is going to change.

But what blockchains uh really unlock is, is this access to this global uh liquidity on the back end.

Um, so you see recently, uh, Robinhood, uh, launched an earn program where users in the Robinhood app can, uh, deposit, uh, stablecoins, USDG in this case, and then, um, this earn program is able to tap into the very deep liquidity, uh, that exists on chain.

And we believe that as the network effects build um and as we have uh regulatory clarity now, this is just the beginning.

We see the stablecoin market cap at 300 billion right now.

We believe this is going to grow to something more like 3 trillion by 2030 and this is going to be largely driven by um payments coming on chain.

So as this uh network effects of liquidity continue to build in um on chain, each of these, uh, fintech exchanges, um, and then increasingly banks are able to plug into this global liquidity layer and the, um, the ease at which you can access this and the permissionlessness, openness of these blockchains really, um, just is, is a, is a sea change in sort of uh how you can move money, uh, in finance.

Sam, we have less than 60 seconds here, but as charter banks prepare to launch their own crypto products, what specific infrastructure do you think they need from digital asset firms to make their stable coins work at scale?

Yeah, so as I mentioned, uh, like the, the big thing is liquidity.

This is something that, so issuing a stablecoin is not that difficult.

Building liquidity and building a distribution in the ecosystem, that's the hard part.

And that, that's the whole thing.

And so, while Spark can't do all of this, we can really help to bootstrap them into Contender in this space.

And so this is really one of the essential things that uh stablecoin issuers are gonna need to think about.

And um so if any, any stablecoin issuers are out there, anybody thinking about it, uh, please get in touch with us.

Uh, this is what we've been doing for 5 years and we know the space quite well.

OK, Sam, well, we will have to leave it there.

Thank you so much for joining us this morning and have a great weekend.

Thank you.