How Stablecoins Help Credit Unions Cut Cross-Border Costs and Boost Member Trust

Opening & Episode Setup

Doug English: [00:00:00] Welcome listeners, welcome back to C.U. On The Show. Today we’re talking about one of the most talked about innovations in financial services stablecoin, uh, in the world of digital assets and what specifically that could mean for great. For credit unions. My guests today are Becky Reed with Bank Social Cooper Thompson from Fiserv, both deeply involved in bringing new technology and payment solutions to the credit union movement.
Welcome, uh, both uh, Becky and Cooper. I’m delighted you could join me today. And I was hoping, uh, as always, uh, the credit union movement is a special place full of wonderful people. How did you, Becky, how did you get started working with credit unions? I know you were a CEO, but how’d you get started? Way back.

Guest Origin Stories

Becky’s Path Into Credit Unions

Becky Reed: So way back in the nineties, I mean, oh my gosh, the nineties, way back in the nineties I had Beautiful. It was amazing. I know. So, uh, to be perfectly honest, I was working in the retail space. I [00:01:00] was a manager. For a retail record store. Yeah. I remember when you could go to the mall to buy records.

Doug English: Wow. So I

Becky Reed: was a, yes, I was a retail store.
Retail manager. Explains the headphones.

Doug English: It makes sense now I get it. Y

Becky Reed: there you go. The pink headphones. Um, but I, I was honestly tired of retail hours. Right. I worked till 10 o’clock at night. I worked on the weekends. The holidays were like nightmares. And I was like, you know what? It would be really cool if I could just have banking hours.
And so that’s really how I got started. A credit union hired me, a bank did not, and the rest is history.

Cooper’s Path Into Digital Assets

Doug English: Right on. All right, Cooper, how about you?

Cooper Thompson: Yeah, so I started my career in, uh, fi the financial, uh, services space as, and this is kind of quite the mouthful, anti-money laundering, quantitative analysts, um, really, uh, in the, in the banking area.
Quite, quite the mouthful. Um, essentially building out [00:02:00] financial models that would catch, uh, financial crime. Um, and then I saw an opportunity at a company called FIN Act. A uh, next generation, core processing system of record, uh, designed for, uh, financial institutions of all shapes and sizes, banks and credit unions and large banks.
And, um. I joined the company, uh, within a few years. We were acquired by Fiserv, um, which really broadened the toolbox. Uh, so I kind of went from the startup world to the large corporate world, um, but it really broadened the toolbox that we have available to us. Um, also the, the client base, right? We, we had the full spectrum of different financial institutions that we had relationships with.
Uh, and then, uh, I moved from Finac into the larger Fiserv space, uh, as, uh, now VP of innovation for embedded finance and digital assets. Uh, and I have the, uh, privilege to work with, uh, all [00:03:00] sorts of different financial institutions. We have been. On calls with, uh, credit unions of all shapes and sizes that are looking to use stablecoin and kind of more broadly digital assets in different ways, all the way up to, uh, large regional banks.
So, uh, really excited to talk here today about what we’re doing in the digital asset space.

Setting the Agenda & Definitions

Doug English: It may be tough to keep you contained. Cooper, I can tell you got a lot of stuff going on. Well, a lot. Neat. Well, well, so you know, day in and day out, what do you spend your time doing, Becky? Like what is the CO like as a.
Uh, digital assets, uh, uh, kind of, uh, you know, I don’t know what, what you, you title yourself, but it’s, it’s a big gold right, to help the credit union movement to understand, decide what action to take, uh, and begin to take that action. So what, what, what do you spend your time on in the stable coin world these days?
Like specifically that, I know there’s other things you do, but in, in regard to stable coin. Maybe we ought to ask you first to [00:04:00] define it for our listeners, assuming that they don’t understand. Uh, and then what do you end up doing with it on a daily basis?

Becky Defines “Stablecoin” & Her Role

Becky Reed: Well, I call myself a payments futurist, so I’m looking, uh, all the time at, uh, at the future of, of what this new, uh, technology’s going to be going to enable, because when I first understood blockchain back in 2015.
And I noticed how a Bitcoin worked on a blockchain. I immediately saw that payments were going to be disrupted from a traditional sense, and so fast forward to today, what I spend my time doing is looking at. All of the different ways that finance can work in a decentralized world. So Defi, the decentralized finance movement.
I’ve written a book about how the credit union movement and the Defi movement are very closely aligned, but the capabilities that are available. [00:05:00] To financial institutions and anyone in the finance area, uh, on chain is really unprecedented. And so I get to spend my days really working with my partner and CEO John Wingate on use cases.
For how we can use this technology moving forward. So we get to do a lot of ideating, talking with credit unions about their ideas. Hey, is this possible? Is this something we can do? And then answering their questions about what it’s really all about, but a stable coin. I think that was your question at first.
A stable coin is a digital asset, a cryptocurrency that maintains a stable value, a stable coin, or as defined by the Genius Act. A payment token is a token that rides on a blockchain or a distributed ledger, which is a generic term for blockchain. Um, and it has a stable value. So it’s backed by fiat currency.
So fiat currency is something that a government stands behind. In this case, in the [00:06:00] Genius Act, we’re talking about US dollar back stable coin. So a stable coin is worth one US dollar. $1 in stablecoin is worth one US dollar. It’s not volatile like a lot of cryptocurrencies are.

Cooper’s Day-to-Day Focus at Fiserv

Doug English: Very good. Uh, thank you Becky.
Uh, and Cooper, uh, tell us and, and all those titles, what do you actually spend your time doing every day?

Cooper Thompson: Yeah, so, uh, right now my focus is on, uh, building out our digital assets platform here at Fiserv. So here at Fiserv we, we, as I mentioned, we, we serve all, uh, shapes and sizes of financial institutions.
Anything from a, a, uh, credit union on the corner to a large regional bank that might, uh, serve, you know, uh, hundreds of thousands of of customers. And my focus with our digital assets platform is to enable all financial institutions to be able to be brought on chain, uh, and to be able to interact with the digital asset [00:07:00] space in new and innovative ways.
So, uh, think about it as the glue, uh, as Becky said, kind of the defi space. Uh, my objective is to be the glue between traditional finance, tradify and Defi. And be able to facilitate that fiat settlement that might need to happen in order to be able to issue out stable coins as well as to tokenize, um, other forms of assets or liabilities to create tokenized deposits.
So you could think about Fiserv’s digital assets platform as a asset agnostic or digital asset agnostic tool to bring customers on chain to be able to leverage the 24 7. 365 settlement capabilities and programmable capabilities that decentralized ledgers offer.

Separating Stablecoins from “Crypto Volatility”

Doug English: Yeah, I can’t wait to unpack that. Cooper.
I, I, I, I, that’s, that’s pretty, yes. Yes. We’re gonna talk about that. So, uh, in my research for this, uh, this interview is a couple of things that we, we need [00:08:00] to, to, I think we need to first, uh, do away with the notion of, uh. Crypto, uh, and how this is not that, and how the, the, uh, uber volatility of, uh, Bitcoin, uh, and its brethren, uh, is not this.
So I’d like, I’d like you guys to talk a little bit about that. Uh, then I wanna, uh, read this quote from, uh, McKinsey study. I, I, uh, read in, in preparation, uh, coins have now become a geni, a genuine contender to satisfy new payment needs, achieving the first true market fit for digital assets. In particular, stable Coinbase payments are nearly instant incur.
They said lower cost from my research, massively lower cost for international, uh, payments increased, uh, end-to-end traceability, visibility on chain a hundred percent near, a hundred percent up upside, uh, of the system, uh, and expand [00:09:00] access to payments through wallet based rather than account based infrastructure, which is.
Whoa, there’s that, that’s a whole concept that I, uh, I frankly don’t understand the wallet based versus account based infrastructure and how that would work for credit unions. So I think we have a, we have a lot to, to unpack there. So, uh, uh, let’s see. So the next thing I was hoping to, to cover about is the Genius Act.
So, Cooper, why don’t you tell us a bit about the, the Gen Genius Act. Like, what, what was it? Why does it affect, how does it affect credit unions? What choices are, are now present? What, uh, has been clarified? All that sort of, uh, stuff. And then if, if you wanna add to it, Becky, feel free.

Policy Context: The “Genius Act” & Related Bills

Cooper Thompson: Yeah, great question.
So, um. The, the Genius Act was one of, uh, the, the first of three, uh, big acts that are being worked on right now in terms of the crypto space. Uh, there’s the, the Genius Act, which covers, uh, stable coin issuance. Then there’s the Clarity Act, which [00:10:00] covers kind of more broadly the crypto digital asset space, especially things as it relates to.
What is going to be regulated by the CFTC? What do derivatives mean? How does staking work? Um, what does that mean from a regulatory perspective? Uh, the defi space that Becky talked about is really covered by the Clarity Act. And then another one, which is really interesting. Is the anti CBDC Surveillance Act, which is the, uh, central Bank Digital Currency Surveillance Act.
Um, that is, uh, designed to, uh, kind of, you know, halt the Federal Reserve’s ability to launch a central bank digital currency without approval from Congress. So these are the three big acts that are kind of being worked through right now with the Genius Act being the first one. The Genius Act brought the, uh, clarity, and I hate to use that act name, but brought clarity to the stablecoin space as it relates to what is required to issue a stablecoin.[00:11:00]
What is the definition between a, a non-financial institution issuer and a financial institution issuer? The requirements for high quality liquid assets, um. Uh, backing the, uh, stablecoin in the form of short term US treasuries and, and cash and what can qualify there, uh, as well as the audit, the transparency requirements.
And then another really important part in there is this provision around, uh, stable coins. Being able to, uh, yield interest back to the users where they cannot, stable coins cannot have, uh, yield bearing capabilities. As a payment stable coin. So the Genius Act is very specific on calling them payment stable coins, not just stable coins, because they’re designed for movement, money, movement, settlement, kind of like a digital cash layer.
And so, uh, the Genius Act had that in there. That way the, the stable coins will not be a replacement. For traditional [00:12:00] banking products like demand deposits and, and yield bearing accounts like savings accounts, money markets, so on and so forth. Um. And so that’s kind of where I see the Genius Act being. I think it was, uh, well-crafted.
There was a lot of thought that went into it. Uh, there’s additional, uh, uh, regulatory clarity that is going to be coming out of that as the regulators start to, to, uh, put the regulations around the Genius Act into. The requirements that that, uh, credit unions and banks and non-financial, non-financial institution issuers were out to follow.
So there’s gonna be more to come still from the Genius Act, but it did bring a lot of clarity around what a stable coin is and the requirements to issue one.

Early Adoption: What CUs (and Banks) Are Doing Now

Doug English: Becky, you wanna take an add anything to that? Especially with, uh, maybe it’s, uh, maybe it’s time to kind of slightly start into some of the examples of, of, uh, your interactions with credit unions in this space.
Are there any credit unions that you know of that are actually, [00:13:00] like, how, how far down the path are credit unions with, uh, stable coins? Like where, where, where are they so far?

Becky Reed: Well, there are some fast movers mm-hmm. That have already, um, tokenized. And banks have done this too. So they’re already looking at, uh, tokenizing.
And, and just to be clear, financial institutions have to use a stable coin issuer. They have to use a third party issuer for, um, a stable coin. And so, uh, there is a little bit of ambiguity around tokenized deposits and stable coin. But, but for the, um, for the sake of this particular, uh, uh, podcast, let’s just talk about.
The stablecoin, the payment tokens as the Genius Act, uh, describes. And so, and it can be publicly issued. So a stablecoin issue would, would issue a, a publicly available stablecoin that people can, um, buy and use for payments. Um, there’s also [00:14:00] privately. Uh, issued, uh, stable coins that that may not actually be in compliance with the Genius Act ’cause they’re not publicly available.
And so, um, I know some credit unions who have done some private tokenization, um, where they’re just trading amongst themselves. Banks have already done this. I think, uh, JP Morgan issued a, uh, white paper on it actually before the Genus Act even came out. And so this is not something that, I mean, yes, it might be something that is, is newer.
It is not something that’s completely new. Uh, these transactions have been happening on chain. Financial, trans transactions have been happening on chain. Cross border transactions have been happening on chain already. In fact, globally. $4 trillion a month is happening on stablecoin rails right now today.
And a lot of that is institutional, right? Huge amounts of money moving, uh, in between financial institutions, uh, finance companies, uh, [00:15:00] where as it relates to securities, all kinds of. Things, uh, are happening. And there’s some consumer activity too. It’s just that here in the United States we’re not seeing as much consumer activity as we do see in other parts of the world.
I think that might get to, um, Doug, some of the things you wanna talk about, financial equity and inclusion. Mm-hmm. And cross border, we can talk about that in a little bit. But most credit unions are curious. Some credit unions are moving quickly. I can tell you banks are moving even more quickly. Um, and so what I don’t hear in the credit union space is, eh, this is gonna blow over.
This is something that’s not a big deal. We’re not gonna pay attention to it. Right now, no one is saying that.

Cross-Border Costs & Member Impact

Doug English: Yeah, I, my, my, when I. As a result of this podcast, when I dug into the cost savings for international payments, it absolutely blew my mind. So I talk about that after. I wanna hear from Cooper. Do you have any, uh, [00:16:00] examples that you can share about, uh, what’s happening in credit unions with the stable coin space?
What are you seeing?

Cooper Thompson: Yeah. So, um, a adding on onto what Becky said, and we can stay focused on stablecoin, but something that’s really interesting that I’ve noticed is that, uh, credit unions were some of the first ones to actually express an interest in blockchain and decentralized ledgers. Um, because of its way to create a unified ledger, uh, between multiple different entities, multiple different parties, and multiple different financial institutions.
Um. So, uh, you know, they were, they were looking at ways to have multiple credit unions come together and kind of form a consortium and be able to do things even beyond stable coins, like being able to do loan securitization on the chain, being able to do, uh, participations, like all sorts of stuff. And they were trying to figure out how they could use the blockchain to facilitate some of that.
Um. But we are definitely seeing a, uh, a lot of [00:17:00] interest from our credit unions around how to leverage stablecoin specifically for, uh, cross-border payment optimizations, especially as it relates to more of the exotic corridors. Uh, there’s a lot of solutions out there that can, uh, uh, you know, uh, kind of do.
The whole cheap, fast, good triangle, if you will, of being able to send payments to, uh, more of the, more, uh, more popular international corridors like USD to Euros. Um, but then as it relates to getting to more of the exotic corridors, say for, uh, some countries and, and, uh, in the, um, uh, AMEA region or in latam, uh, being able to get, uh, uh, funds down there.
Um, that’s where Stablecoin brings a lot of power with this concept of the Stablecoin sandwich. Uh, which is kind of the, uh, most popular menu item that I’m seeing today from our financial institutions is they all want a bite of the stablecoin sandwich. Uh, and, [00:18:00]

Doug English: and, and listeners, it is 11:56 AM on the East Coast Cooper Thompson, clearly hungry, uh, have to move right along in this podcast so that he doesn’t have to eat any more stablecoin sandwiches.
Very good. Well, uh, you know, the, um. So I, I did, I used my, my Good friend ai, and I said to ai, if I was to send a thousand dollars to Mexico by Western Union, what would that cost me? And I need you guys to tell me if that wasn’t a very good test, it was the one I could think of just.
To, to just, to, to say what’s, what’s the cost?
And what I was told is it was about, uh, about a hundred dollars in, uh, total cost to get a thousand dollars to, uh, uh, someone in Mexico. Uh, and, and so that’s what I used as the, all right, so here’s the competitive, uh, cost, uh, to, uh, a stablecoin payment, uh, and the timeframe for Western [00:19:00] Union. I, I, I actually didn’t think to ask that.
Uh, do you guys know how, how quickly is that processed? It can be days. It can be, yeah. I, I, I saw one to three days for normal payments. I didn’t know if theirs was a little bit faster. Uh, so, uh, let, let’s contrast that with, uh, stablecoin if you had done the same transaction, but first, you know, I think maybe first let’s talk about the cost and then let’s talk about the how.
How would you actually go ahead and do that? ’cause maybe some of our listeners don’t even know. How it could be done. So, so, uh, uh, open floor. Either one of you,

Wallets, On/Off-Ramps & Member Experience

Becky Reed: I’ll take it. Um, because one of the things that, that really amazed me and, and cemented my belief that this is the future of, uh, payments, and this is where e we need to be moving as a financial system here in the United States was when I very first experienced.
A wallet to wallet and a digital wallet is where you hold digital assets. Okay? A digital wallet is what is connected [00:20:00] to the distributed ledger rails. Those rails are what is used to perform the transaction. At the end of the day, a distributed ledger or a blockchain is just a database. It stores information about transactions that happen with cryptocurrency that rides on those rails, and that cryptocurrency can be a lot of different things.
But in this case, we’re talking about a stablecoin, and when I very first witnessed a wallet to wallet transfer, I was sitting across from my partner John Wingate, in a hotel on Friday night at 9:00 PM We were at a conference and he was like, um, I was like, how does this really, how do you send me, how can people use it to spend?
And he said, here, let me send you. Um, some, uh, crypto right now. And I was like, really? Okay, cool. So opened up his wallet and said, I’m gonna send a token, $5 worth of whatever it was at the time. It might’ve been Ethereum at the time, and I’m gonna send $5 of [00:21:00] Ethereum to Becky. So he said, open up your wallet.
I did. And, um, I hit a QR code to receive Ethereum. He scanned that QR code, which was my Ethereum wallet or my account that held Ethereum. And I had the funds right there immediately in seconds. Mm-hmm. And I was like, whoa. Well this is crazy. And what was even crazier is it didn’t matter. Where I was in the world at that time.
Mm-hmm. It still would’ve happened that fast. Now, he wouldn’t have been able to scan that QR code ’cause I wouldn’t have been right next to him. But it would’ve happened that quickly. And so for the first time ever, people around the world are able to. Be part of the US dollar financial ecosystem as long as they have internet access, which is required to have a digital asset wallet, and it’s something of value to trade, that’s all you need in [00:22:00] order to have a US dollar backed stable coin and to participate in the dollar economy that we have globally, that is unprecedented.
That is a human rights issue. That is, is one of the greatest issues that we’re facing in our time with people having access to fair and faint. Fair and equitable financial services, which is what credit unions are all about, right? That’s why we were created in the 18 hundreds in Germany. And so, so sending money cross border, because it doesn’t matter where you’re sending it, it doesn’t matter.
You can be sending it to Mexico, you can send it to Ukraine, you can send it to, uh. The UAE well, anywhere, right? That’s right. And it’s going to be A-U-S-D-C on the other end. And that is incredible. And yes, it’s much, much cheaper and yes, it’s um, uh, much quicker. And safer. But let’s

Venmo vs Wallet-to-Wallet

Doug English: just say I was sitting next to you and, and I sent you a Venmo payment at the Yeah, at the same moment.
Uh, I, I, I, I’m, I’m sending you a Venmo payment [00:23:00] con. Can you contrast those two? Yeah. Me, like the, is it I don’t, yeah, yeah. What’s the difference?

Becky Reed: So, in, in my Venmo, right, so Venmo is just. Looking at a custodial account that Venmo holds on your behalf. So when you have money in your Venmo wallet, it’s just sitting at the bank that Venmo uses earmarked for you.
Okay? Very similar to Coinbase actually, but. That’s all it is. And in order to spend it, you have to get it somewhere, right? You have to to, unless you’re using another, uh, Venmo wallet to send it to, you have to, how are you gonna get it to your bank account? But it’s a similar experience from a Venmo to Venmo.
Mm-hmm. The difference is the off ramping it, putting it into your, your own bank account. But it’s a similar experience, which also, uh. Is about instantaneous, because at Venmo they just say, okay, now this goes from Becky’s Venmo wallet [00:24:00] to Doug’s Venmo wallet. But at the end of the day, it’s all sitting over at Venmo.
It’s all their money at the end of the day. And so, but. From a consumer experience, it feels almost exactly the same.

Doug English: So I have to, when when you’ve sent me that Venmo money, then I have to transfer that to my credit union, and that’s how I gain access to it. Right? But if you had sent me it in, uh, in a digital form, while that Venmo is a digital form, that becomes a, uh, how, how would I have, uh, turned it into cash if I want actual green?
Yeah. How, how would I have done that if it was, uh, if it was done in, in your example?

Off-Ramps & Merchant Acceptance

Becky Reed: Right. So in your digital wallet, if you’re holding, let’s say USDT, okay, and I’m going, I’m gonna tell you why I’m using that example here in a moment. So Tether is a dollar backed stablecoin, USDT, and it’s, it’s most notably used around the world, not so much here in the United States.
We mostly use, use USDC here, but, um, but let, let’s give an example of [00:25:00] a tether. So if you had tether in your wallet and you were adding merchant that would accept tether. Then you could use Tether to pay for something right there, right then and there. It’s the exact, uh, merchant transfer tap to pay. It works very similar to, um, using your Apple wallet today.
Yeah. And you can actually use Tether to buy things. In an airport in Latin America, you go to, there’s several airports in Latin America, and the only form of payment they take is tether. So that’s why I used that particular example. Now, if you were here in the United States and you wanted to turn that tether dollar back into a dollar that you could hold in your bank account.
So that you could earn interest on it. In a money market account, that’s called an off ramp. So the, the USDT token goes back into the world and the dollar goes back into your bank account, which is why there has to be reserves mm-hmm. That are backing [00:26:00] the stable coins so that when you wanna turn it back into a dollar, the funds are there in order to be able to do that.

The “Stablecoin Sandwich” & Timelines/Costs

Doug English: Very interesting. Cooper, let’s go after international payments can. So, uh, again, in the, in my. Example, um, it was gonna cost about a hundred dollars to get a thousand dollars to Mexico. I didn’t, uh, I didn’t think of other places in the world. I don’t, I don’t, I don’t know what it cost to send money other places.
Uh, can you contrast that? If, uh, if I had the ability to do that with Stablecoin, how long would it take? How much would it cost? And then if you have information about other places in the world especially that are significant. Demographics for credit unions. I know credit unions have lots of Latin American members, so this is an underserved community.
They can have a massive cost reduction from this initiative. So, uh, please, uh, tell us about it.

Cooper Thompson: Yeah, so that’s a wonderful question. I’m gonna go back to that stable coin [00:27:00] sandwich and yes, it’s because I’m a little bit hungry. Um, so the, the way the stablecoin sandwich works is. You have on ramp, which is where you go from, uh, let’s take the example of, of, uh, us, us, like a US dollar, uh, denominated stable coin or back stable coin, because a stable coin could be a US dollar stable coin.
There could be a euro stable coin. Any kind of government fiat currency, uh, can have an associated stable coin or even a, you know, any kind of asset, right? From a, from. Fiat perspective. Um, so you have the on-ramp where you go from USD to a stable coin, and that’s kind of a, a minting process where you mint the stablecoin on the chain, so you’re taking collateral, converting it into a stable coin, and you have the digital representation of it on a blockchain or a decentralized ledger.
And then you could send, and then there is, when you’re in the the wallet world, you’re in the crypto address space. So rather than being in the account space like a DDA account number, an a BA number, now you’re in a wallet space and a wallet, uh, address, the public address [00:28:00] is this long string of characters that represents a unique address or account within, uh, a blockchain.
Um, and so you can send that stable coin then to another address. And what’s really interesting, and there is pros and cons to this. Is that in the decentralized ledger space, payments are borderless. A wallet does, and there are, there actually, there’s no concept of time as well in, in a decentralized ledger.
They’re sequencing, but no concept of time. There’s no 24 7, 365. It’s just all the time, and it’s just sequencing of the transactions. Now this is great from a a movement perspective. Really challenging from a compliance and regulatory perspective. So just as Becky said, you can move funds to, uh, Ukraine or to Europe or to Japan or to Mexico.
That wallet could also be in a country that might be sanctioned, uh, like North Korea or Iran or one of the other [00:29:00] sanctioned countries. A wallet doesn’t really care where it is. Um, and then on the other side of that stablecoin sandwich, you have the off ramp. Now, here’s what’s really interesting when you talk about time.
It depends on if you are off ramping into the local currency or if you were just sending a stable coin amount to somebody in that country. Because many times if you have a country that might have a more volatile currency for their fiat currency, they’re going to. Hey, I don’t wanna off ramp it, just give it to me in stablecoin and I’ll hold that and I hedge against inflation in my, my local country.
So the timing depends. Um, and also depending on where you can find that liquidity in that country. So, uh, you know, you might have countries that have more established crypto exchanges that will have deep liquidity. And what I mean by liquidity is you have a trading pair, so you have. Us DC on one side, say for, uh, the circle stablecoin, and then you have the local currency on the [00:30:00] other side, and you have that trading pair to go, uh, there.
And so finding that liquidity is important. You might have countries that have deeper liquidity and then you might have countries that have a little bit less liquidity and you might, it actually might take a bit of time to off ramp into that, that country. But at least the holder of the funds has them in their possession and full control of that USDC.
So there’s no, they know that there is settlement finality, um, and they have the funds that they can then off ramp. So I know that was a, a long-winded, uh, answer, but yeah, hopefully that helped cover kind of the compliance side of things as well that need to be taken into consideration with, uh, with Stablecoin.

Doug English: What’s it cost? How long does it take?

Cooper Thompson: So if you don’t, uh, if you, it depends. So if you already do my, do my thousand

Doug English: bucks in Mexico, just gimme that 1000 bucks to Mexico. Uh, assuming dollars, dollars, dollars, sorry, dollars.

Becky Reed: Instead of, yeah, [00:31:00] and it could even be sub dollars depending on what chain you use.

Cooper Thompson: Right. And especially if you are sending just to another address. But if you’re sending to a, a account in Mexico that is addressed by what’s called the clave in, in Mexico, which is kind of the equivalent to routing number plus account number in the us, it could take a little bit longer. Based off of the exchange or the off ramp that you could find there and could add a little bit more onto the dollars because there’s an off ramp component to that.

Doug English: Yeah.

Becky Reed: But if you keep it in stablecoin Yeah, then, then you wouldn’t have those fees. But seconds and sub dollars generally is, is the answer for cost. Yeah. Well, would I Right. If you’re

Cooper Thompson: not off ramping. Right, right, right.

Adoption in Families & Everyday Use

Doug English: Yeah. So are, are families doing this? Is this like when, when folks are sending money to are, and so where are they?
Like are, are, is it all on your phone? Like are, are, are, is that happening now where, where families are like getting a wallet on their phone and sending it to their, [00:32:00] their relatives that are in Latin America and they just receive it on their phone and then off ramp it when they need to? Is that happening now?

Becky Reed: Cooper will say, but I’m gonna say yes. Cooper,

Cooper Thompson: uh, I’m gonna say there is, in the US there is still pretty low adoption. Uh, the, the adoption curve has been, um, pretty shallow when it comes to, to, uh, crypto, unless you are a crypto native, uh, individual. And, and what I mean by crypto native is, Becky talked earlier about defi.
Uh, individuals who want to get into the various speculative tokens and coins, that’s typically where people get into, uh, crypto.

For example, MoneyGram has done some work with the Stellar blockchain for optimization there. Um, and so they kind of use it behind the scenes. I would say adoption in the US is still, there’s still a long ways to go.
When it comes to using it as a payment mechanism rather than as a speculation or investment mechanism.

Doug English: Right? Yeah. And [00:33:00] that’s what we’re trying to, to, to do today is to kinda, uh, talk about the, the non speculative side of this, which is a right tremendously low cost, instant, completely transparent method for the, uh, underserved communities and credit unions to be able to send, uh, funds as needed internationally, really quite a.
Quite an incredible innovation that that is, uh, you know, when you have that, when you have that many wins, when you increase cost, or excuse me, decrease cost, massively increase transparency and increase speed. Adoption is just a question of when. Right.

Fraud, Traceability & Compliance Benefits

Becky Reed: Well, and I, what you didn’t mention in that is, uh, the anti-fraud capability that lives on chain, that is not something that, uh, that has quite of a robust.
Uh, capability on other payment rails. So fraud is rampant in financial [00:34:00] institutions on all the existing payment rails that we use today, regardless of which one. The existing payment rails we use today are siloed. They don’t speak to each other. Uh, you know, even though a CH and wires are both at the Fed, the, the two payment rails don’t speak to each other.
And so if you know a person A is sending a wire and they’re sending an a CH. Um, the two, uh, mechanisms don’t know that that’s happening and, uh, what you can do on chain with traceability. So you talked about the transparency, right? And Cooper talked about those wallet addresses, those public addresses that are a string of, of letters and numbers.
Um, and, uh, if you have that wallet address, you can. You can trace anything that goes in and out of that wallet. And not only can you trace what goes in and out of that wallet, you can see any other wallets that that wallet has interacted with to infinity, forwards and backwards. And so, you know, there’s a lot of, of, uh, talk about anonymity, [00:35:00] right?
So I may not know that Cooper’s Wallet is 1 2 3 A, B, C, but I can see. What is happening in 1, 2, 3 A, B, C? And if I happen to know because of digital identities attached to it, maybe I have the keys to unlock the digital identity, then I can see that what Cooper’s Wallet is interacting with. So.

The, the traceability and the functionality, uh, there is, is really, um, unprecedented.
Now. You have to have the tools in order to be able to do it. Those tools are, uh, exist today, but, uh, will continue to be, uh, more robust. But there’s. Definitely, um, things that, that we can do there, uh, from a even a compliance perspective that Cooper talked about, you know, to make sure that wallet’s not touching OFAC sanction, you know, wallets, even though we might not know where in the world it lives.
Yeah. We would know if it is, you know, touching something that’s been flagged. So there’s some interesting things, uh.
There. Um, and, and your use case question just so [00:36:00] that, um, uh, that, that, you know, we do have crypto natives at, at our company as you can, uh, quite imagine. Um, but one of our employees sends USDC to his mom in Mexico.

Speaker: Ah, perfect.

Becky Reed: And so she, she prefers to, and she does exactly what Cooper said. She holds it. She doesn’t put it in her bank account until she absolutely needs to spend it so she doesn’t off ramp it. So she keeps that, uh, stable coin that US dollar, um, until she actually needs to use it to spend.

Taxes & Reporting Considerations

Doug English: Yeah, I I, I don’t even know if I wanna open the can of worms of how does taxation work with this stuff?
Nobody knows, right.

Cooper Thompson: There are. Yeah. And there are certain companies that are working on doing that. Uh, too. Becky’s point about transparency when it comes to fraud and traceability and all of that, there are companies that you have full access to the ledger, right? So there are some companies that are, are working on tracking that, and then you associate your crypto [00:37:00] addresses and they can track taxes and all of that.

And then those same companies are getting contacted by the likes of the, the IRS and government entities to be able to track it themselves. So, and, and this is what goes into that, that anti CBDC surveillance act that I talked about that was a big concern was that if you have A-C-B-D-C, you have full transparency.
And it’s like cash that the government can track anytime. Who, who o who owns it? Who’s sitting to who. They can clot back if they wanted to. Uh, it, it’s, it’s really interesting.

Headlines, Perception & Market Education

Doug English: Yeah. 1, 1, 1 of the things that’s gotta be hard for stable coins is the headline. The headlines have not been flattering, right?
There’s been, you know, uh, and, and not, not about stablecoin, but about digital assets, about, uh, theft, about criminal activity, uh, about, uh, things being lost and, and, uh, and people searching to try to find the digital assets. And my, my sense, uh, my uninformed sense is this, this is not that. [00:38:00] What, what would you, uh.
How would you address those, those issues, those risks?

Becky Reed: I’ll let Cooper answer that. I’ve talked a lot. Go ahead, Cooper.

Cooper Thompson: Um, yeah, so when it comes to, to the, the, the risks and, and what stablecoin a lot of, a lot of that sentiment is, is actually. Free, like this regulatory clarity that’s come out, right? And so there, there’s been a lot of that, that negative sentiment.
My, my hope is that, um, as the regulatory clarity comes out, as companies start to offer to traditional financial services as banks, that, and credit unions that people trust, right? That people trust to hold their money start to be brought on chain. It starts to, to, uh. Mitigate some of that negative sentiment.

And that’s what I think is going to happen is the, is the traditional finance world and the defi space start to merge, and the blinds start to blur [00:39:00] between them. That negative sentiment will be mitigated.

Doug English: Mm-hmm. Yeah. And, and again, the, the transparency, speed and ultra low cost is gonna drive a lot of interest.
Uh, particularly folks to like the, your, your fellow bank social employee. That’s the perfect example I was hoping for of a, a reality, a real life. Uh, um. You know, thing that happens for thousand, millions of people, uh, all the time, right? There’s lots of folks that are sending money across border to help their families, and this, yes, this could just make a massive impact.
This will make a massive impact. It’s just a question when, so if you’re a, a credit union, uh, and, and you’re kind. Paying attention to this a little bit, trying to decide like, where, when do we start to pay more attention? When does it enter our, enter our strategic, uh, plan? What, what are you seeing? What are the first steps that, uh, credit union should consider, [00:40:00] uh, with regard to this, this initiative?

Getting Started: Practical Steps for CUs

Becky Reed: So two things that I tell them to, uh, start with, and one of them is to educate yourself. So listening to podcasts like this, learning about, uh, what it means. I don’t think it’s super important to get caught up in the technology behind it. You know, Cooper and I have thrown out some acronyms and, and some things that might be unfamiliar.
Yes, you do. Uh, to, to people. So, I mean, it’s important I think, to understand what those mean, but, uh, but one thing that I say all the time is, um, people ask, well, how am I gonna get my grandma to use stablecoin? And I’m like, well, does she use a CH? Today? Yes. Does she do remote deposit capture today in her mobile banking?
Yes. And so you don’t really have to understand, we, we tend to get really enamored with how does the blockchain work and all that. And that’s less important than the end user experience. And so educate yourself. But then the next thing is use it. [00:41:00] Use it. And you know, some people might go, well, I’m not gonna buy Bitcoin.
I’m not telling you to go, um, buy any kind of speculative asset, but buy, there are stable coins out there that you can buy. Download a digital wallet of your choice. There’s many of them available. Buy some stable coin and then just send it to somebody. Just get, you know, buy $5 and move it back and forth so that you can actually see what the end user experiences, because that’s the future that we’re moving towards.
So those are the two places I tell people to start. And include it in your planning to in integrate it into your payments, uh, platform. In the next 12 to 24 months.

Doug English: So, Becky, if our listeners sign up for a digital wallet and send you a request for a 1 cent, are you, are you willing to, you’re willing to send them 1 cent across to

Becky Reed: Absolutely.
Sure. Yeah.

Doug English: You heard it first. Here on, see you on the show. Becky Reed. Good for 1 cent for all of our listeners.
Uh, [00:42:00] Cooper, did you wanna, uh, add on to that? To how to get started? Uh, idea what to watch for, what? A conference to attend, what to be reading? Like, uh, just may, maybe you’re not ready for action yet, but you’re trying to figure out where that inflection point is, where that, uh, market awareness is gonna come from, so you, you will be able to go to action.

Cooper Thompson: Yeah. I think education is, uh, the most important part because this is a completely new.
Concept. Right? It is, it is like what AI is doing. It is, it is going to be a completely different paradigm shift, um, in the world of financial services. It has been going on for a while. We’ve had these, these, you know, peaks and troughs, these, they call ’em crypto winters, where we go through a crypto winter, and then we have these crazy things where you have NFTs that are trading on chain, and you have these JPEGs that cost thousands of dollars and it’s like.
What is going on and then all of a sudden you have stable coin, which is like, how does this one thing do all of these? So I think it’s [00:43:00] important to become educated. Um. Don’t get caught up in the, the quagmire of the craziness, like the NFTs and everything. Try to see how it, uh, could fit into the, uh, the your, your strategy.
Another thing is to, uh, uh, question and challenge your, your vendors that you work with, if, especially in the financial services space and the, uh, you know, you know, hey, ask them. What are y’all doing with stablecoin? What are y’all doing with digital assets? Like start to ask them what, what their strategy is, how they’re thinking about it, how they think it could positively impact you as a credit union.
I think that’s, that’s super important to do, is to, uh, just keep questioning, you know, what’s in it for me? What are you all going to do for me with digital assets? Um, but education by far is the most important part of this.

Credit-Union Collaboration & Close

Doug English: This seems like the kind of thing that, uh, you know, one of the many magical things about the credit union movement is the cooperative nature of it in a, in a very large CUSO, I would think would be a great, uh, place [00:44:00] to have some, uh, activity started.
I, that, that, that was not meant to be anyone’s softball. I just, you, I love the cooperative nature of the credit union movement and, and, uh, that, that just makes sense. That, that some of the risks, some of the research, some of the staffing, the expertise and the technical aspects would need to come from a very scale place.
So with that said, Becky Reed and Cooper Thompson, thank you so much for joining me today. Uh, thank you for your work, uh, in, uh, digital assets for the credit union movement. Uh, I think we’ve got some work ahead of us, and, uh, maybe we’ll do this again and, and, and, uh, Cooper, maybe we can get like 2 cents from you, maybe next time.

Cooper Thompson: 2 cents. Wow. Okay. So

Doug English: I love

Cooper Thompson: it.

Doug English: Cooper’s gonna be hard to reach. I’ll double

Cooper Thompson: ahead and give it to the next person. Yeah, right.

Doug English: Exactly. Thanks so much. Enjoy your lunch, Cooper. Okay, thanks Becky. Bye Cooper.
I.