Stephen: Happy 2025. This is actually our first recording of 2025 for the Around the Coin podcast. I'm your host, with the most Stephen Sargeant. Today we have Marcos Viriato, co founder and CEO of Parfin. What an amazing, amazing conversation. We go deep about investment banking, real world asset tokenization, and actually real use cases of how traditional financial institutions Are using this technology, how regulators and authorities around the world and governing banks and central banks are using this technology to have privacy and scalability when it comes to their blockchain solutions, we talk a lot about what's happening in the Latin American region, especially around remittances and, you know, a hedge against things like hyperinflation.

We talk about what's really happening at the ground level there, but we also go into discussions around stable coins. The huge phenomenon of stable coins, especially going in to 2025. This is a great conversation from someone that's technical focus that has a really good understanding of the traditional financial ecosystem and how his company Parfin their solution rails is going to completely evolve the global financial ecosystem.

This is no better way to start off 2025 with a real conversation and the even. Slips out some tips and tricks of what the real techie people are playing with on the weekends that could help benefit your organization and your career. Hope you like it. Reach out. It's 2025 reach out. Let me know what you guys think. Talk soon.

Stephen: This is your host, Stephen Sargeant, the Around the Coin podcast. This is actually our first recording of 2025 where we are recording and you'll hear it later, but we have the CEO of Parfin. We have Marcos Viriato. Marcos, you're the co founder and CEO of Parfin, a leading fintech company based out of Latin America.

Tell us a little bit about yourself, and then we're going to dive in, ask you a bunch of questions of what's going on, especially when it comes to real world token, asset tokenization in that region.

Marcos: Yes. Thanks, Stephen. Happy New Year, everybody. Again, it's the first speech of the year. I might be a little bit slow, but you know, let's move on. So, we founded the Parfin like five years ago. The view was that, you know, and I come from a financial markets background, but I saw that, you know, crypto blockchain would transform financial markets as we know. So, but there was a lack of techy companies serving institutions. So we start building, you know, infrastructure to allow financial institutions to adopt crypto, to adopt blockchain and the benefits that comes with it. So here we are five years later. It's been very exciting. I think the market is turning to, you know, very good momentum with the new election in the new ass with Trump and all this Pro crypto momentum. So we're very excited to be here. Thank you.

Stephen: I'd love to actually just, before we go into your background, you mentioned Trump, you know, you know, we're in, I'm in Canada, so obviously the Trump election, I think Trump is making a lot of jokes now on Twitter about Canada becoming, you know, the 51st state and becoming part of the United States. Which I think is scaring many Canadians altogether.

What is the impact in the U. S., you know, with the landscape that you see in Latin America? Are you watching that election closely? Or is it just, you're just watching as you know that the U. S. is the gateway to digital asset adoption around the world? And, or is there a huge influence of what happens in the U.S. to Latin America's region?

Marcos: Yeah. I think, you know, again, us has been lagging behind regulatory framework for crypto tokenization and so on. Obviously, there are some. Elements at state level or that you can play, but you know, and I think, you know, and what we've seen in Latin America the regulators broke it, though, incentivizing the usage of you know, blockchain technology. So I think with the Trump election, there will be a huge catch up, you know, huge catch up and and the market in us is. Generally speaking is 100 times bigger than any other market in the world. So, the potential is enormous. So you cannot miss this opportunity. So I know for us, it's it's going to be very important to see how. This you know, new administration run effectively, right? The crypto legislation, I think there was an alignment between the Congress and now the SEC and the regulators. So I think it's going to be a once in a lifetime opportunity.

Stephen: Yeah, like regulation by guidance sounds a lot better than regulation by enforcement, which seems that the U. S. has kind of adopted over the last few years. And, you know, people are like, Oh, you know, why is it so important? Well, it's hard for companies to build if they don't know if they're going to be penalized until after the fact.

And, you know, that kind of siphons or at least stifles innovation here in the U. S. and other places. I want to talk to you about, you know, your investment banking background. If you're in Latin America, 2007 to 2019, working with one of the biggest investment banks. What was happening, especially around the global recession in 2008, 2009.

What was happening between that 10 year span? What was the evolution of investment banking, especially in the region?

Marcos: So, what we've seen is that, you know, The investment bank, obviously it's very regional because again you've got the global investment banks in us you know, Goldman Sachs JP Morgan Morgan Stanley and a few others obviously they're massive, but it's quite difficult to enter into other regions. They have a small branches and offices, but, you know, I think what we've seen with the BTG was a super we sort of expanded to Chile, Colombo, Peru, Mexico. The bank grew a lot and there was a lot of innovation happening, you know, on the cross border payment on, you know, you know, equity capital markets, debt capital markets. And I think the region in general past. Quite well through the 2008 crisis. And then we got a very good momentum after that, where there was a bull run. But going back, well, you know, we've seen some like, I know that the bank is set up a trading desk in crypto, which was very advanced.

The bank issued an STO back there, a secure token offering. That's 2017, 2016. So it's very innovative, you know, whereas banks in the US couldn't even touch it, you know, like, so, I think that opened a lot of doors. And now we've seen some banks even holding you know, crypto investments in Bitcoin, like for instance which is you know, unheard in other places around the world.

So it's super exciting.

Stephen: That's amazing. When did you first hear about the concept of Bitcoin? Was it in your banking stage? I know you have a mechanical engineer background. So I'd love actually to know before we jump into your Bitcoin story. What were you planning to do? What was your career plans when you were in school?

Getting that mechanical engineering. I feel like you're probably, you know, would have your eyes set on something like a SpaceX or a Tesla with that background. I know those companies may not have been invented back then, but what was your plan in university? What was like the dream job when you were taking that program?

Marcos: You know, I thought that would be a mechanical engineer and build you know, a car in jeans and so on. You know, that, that's what my, my, my uncle was a mechanical, a very famous mechanical engineer design in jeans, et cetera. And but, you know, generally speaking, and especially in Brazil and Latin America, engineers go to financial markets.

So I, as a very first year, I start my internship at the financial markets and I love it. You know, I love it. So I jumped to that, but that was very linked to technology. I always, you know, start programming since I was a kid. I start like, you know, understanding computers and building computers in like, you know, back in the day. So how I got to crypto, it was a funny history, you know, in 2013 I was at certain point, I was the CTO for the entire bank, you know, globally running technology And basically 2013, we implemented the first ever production system in AWS, you know, back there 10 years ago was forbidden to talk about cloud for banks was like, Oh, it's lack of security, you don't control..

Stephen: Not have anything out there. If it wasn't in a server within the basement of a bank. It did not exist in real life.

Marcos: So we put a very strict. First production system into the AWS. My view was that, you know, why we would have a data center. It's forget about it. So, we want to price and AWS invited us to get this pricing, their annual conference in Las Vegas. So I flew there to Las Vegas. It was a big show.

It was a big, you know, event. A lot of innovation happening. And I went with this my guy that used to work for me my head of technology in US. He was a very geek guy, you know, he was like, Hey, Marcos, you should buy this stuff. Obviously, I heard about Bitcoin before, but he convinced me to buy my first Bitcoin, so it was 2014.

You know, and I didn't, I, you know, you're curious, you're a tech driven guy. So it's like, okay, I'm going to buy, how do I do that? I opened my account. And there was a, an exchange called Poloniex back there open my account, swipe my card. I bought 2, 000. I said, how much I buy? He said, 1, 000, 2, 000, whatever.

I bought 2, 000. It was 620 plus dollars each. It was, I remember it was 3. 21 bitcoins, you know? And then I said, Oh my God, this is interesting. But more importantly, he sent me the Satoshi white paper. And I remember when I read it. I was like, Oh my God, this technology is so powerful because it involves cryptography, involves, you know, all, you know, on chain transactions and transactions are immutable. And, you know, it's decentralized, it's processed. I said, Oh my God. Then I fell in the rabbit hole. I tell people that I got married to Bitcoin

Stephen: It's probably a lot cheaper that way to get married in real life. I'm interested because, you know, you're already forward thinking at the bank, right? Getting into AWS 10 years ago is not the AWS that everyone knows today. Did you think a, this would be, you know, something that will actually challenge your job and the bank, or did you think of like, this is more of like complimentary to what you were already building in the bank and would just expand the suite of services that you could offer in the future?

Or do you think like when a lot of, you know, investor banking thought like, Hey, I don't want to get into this asset class. It's going to take away from all the commissions I'm making on these other asset classes that we're getting paid on right now.

Marcos: Yeah. The thing is the bank, investment banks generally are risk takers, right? You see, the nature of the business is to, you know, leverage clients to lend money to do complex transactions. So investment banks are, you know, as a nature is a risk takers, right? So, and when we run a technology, you need to be ahead, you know, it's like, I tell, I keep telling like, banks are, you know, technology companies that provide financial services. You know, cause if you take like, the amount of money, those banks, like JP Morgan, Bank of Montreal Scotiabank, all those banks invest millions and millions of dollars in technology to support, you know, there will be no longer branches around, you know, it's like so the technology is driven the way the banks move with AI now with, you know, all that's happening.

So back there, you know, we. We should test other technologies, we should, you know, otherwise you stay behind. So, my view was that, oh, testing AWS or, you know, blockchain solution, it was a must, otherwise you lag behind. And that's the mentality. Obviously. You have to measure the risks, but I remember from a career's perspective, you know, we were very, you know, we're living in a meritocracy environment at the bank, so you had to do things differently. You have to think out of the box. You have to deliver, you know, more with less in terms of resources investment. So you have to, you know, innovate. And that's that's the beauty of it. A lot of people criticize the bank sometimes, but, you know. Banks that are the, they use the technology, right?

You take like those big banks JP Morgan and Goldman Sachs, they invest heavily in technology.

You know, like, it is amazing.

Stephen: I love it. You mentioned AI. You were taking AI and machine learning courses in 2017. So right around this blockchain, crypto phase, what prompted you to get into that? And then secondly, are you surprised over the last two years, how much this technology has grown from when you were learning about it almost seven, what feels like decades ago, really only seven years ago, Okay.

But then AI, you know, like, just like dog years and AI years, you know, we're evoluting, we're evolving, you know, within minutes versus, you know, the years it takes for like blockchain technology. What do you, what prompted you to get into it? And are you kind of shocked about how quickly it picked up, especially, you know, looking at what AI was into 2017 versus what you're seeing and what people are using it for now.

Marcos: Yeah. I think there the reason I, I did the course I, it was like I had been like 10 years since our last program and I said, I want to learn. In that, how to build, you know, the algorithm, algorithm for AI. So I start, you know, coding you know, and to realize that, you know, the combination of the different models.

Could be very powerful, but back there you didn't have a lot of libraries. I remember Python you know, was just starting and I said, Oh my God, this could be very powerful, but it was very immature. It was very immature. And what happened, I think over the last two, three years, especially with open AI. You know, the models are coming out of the box. You just need to, you know, use it. And I think also, obviously, storage of data decreased in price. There is a combination of factors, right? Processing capacity increased, storage of data decreased. Models got more advanced to work with unstructured data.

Because back there, you have to have very structured data to run models. Now, they work very well with, Unstructured data, you know, it's unbelievable. So I think that's the evolution. And now, you know, people are combining different models. I think it's going to be very promising, you know. Let's see how it goes, but I'm very excited about it.

You know, I think we're still going to see a huge wave of adoption. There's still at the very beginning, like, if you compare the internet of late nineties to, it's the very beginning of this AI revolution. I think 2025 is going to be the year, you know.

Stephen: Yeah, and I think it happened so quickly. Like, I don't know your age, but I, you know, I started on the internet when AOL had CDs that they used to mail to your house. You'd have to put the CD in to even log, to even log on. And then, like, the internet connection, the book a jooch, like, that's, and then, like, to today, where we don't even think about the internet, we just assume that it should load within seconds before you'd have to wait, like, an hour just to log on and hope.

That your mom didn't need to use the phone. Otherwise, you'd have to break your connection. Let's get into Parfen 2019. You know, you obviously have the technical chops to start your own organization. You know, talk to me maybe about your, even your co found, how do you find that business person that's like, Hey, I have this concept, I know I can probably build it, but I also need to be able to sell and, you know, or did you have those sales chops as well?

Or were you looking for somebody that could kind of, you know, fill in the other gaps that would need it to build a successful business?

Marcos: Yeah you know, back there, what happened again, it was quite funny. I decided to leave the bank. I was living in London for like five years and I decided to leave the bank. I said, Oh, it's enough after, you know, I have 25 plus years of financial markets, but 12 and a half years at the bank. And I said, okay I'm going to do something else.

So it was early 2019. but the funny thing was that back there I used to invest a little bit, you know, investments in in startups and you know, crypto, I was 14, was deeply investing to all the ICOs or crypto. So we are going crazy, you know, and I invested in a few companies, Parfino was one of them.

It was funny because. You know, the guy came with an idea which is a co founder Christian to build a regulated stable coin in UK and my thought back there and the stable coin market at the time was like 50 million market cap. There was a little bit of Paxos, Circles, just the beginning.

Tether was like very tiny, you know? And I said, okay I think it makes sense to have a regulated stable coin. And I invested a little bit of money. And. Three months later, I left the bank and I started helping the, you know, I had like five, six investments. I started helping some of the founders you know, being the sounding board.

And at a certain point, the guys at Parfin said, why don't you come? And I said, okay, if I come, I will run the company. So, then six, I took a sabbatical, six months later, I joined full time. I was actually the first full time employee, and then I took the CEO. Then we found Alex Bulao, which is our CTO.

He's a brilliant guy. Alex started mining Bitcoin back in 2013. He, you know, did a. Bunch of wallets and block explorers for protocols back there. I, and I think more important, Alex also build a, you know, a site called Christ cattle, which was the largest ICO portal with 10 million visitors a month back in 15, 16. And it was super famous. So when we got together, it was funny because we had the same vision. We said, Oh my God. This blockchain technology and we'll transform, you know, markets, as you know, you know, especially financial markets. And so we start building we get to go, we got together and we start building. It was kind of challenging because the 2020, effectively we started we got together Feb 2020 to say, okay, this is the kickoff of the company. We hired developers and. Then a month later that, you know, pandemic came and we were like, Oh my God, we're going to go broke. Cause you know, we didn't have funding.

We're paying ourselves, the developers and, but it was worth it. You know, it was quite funny.

Stephen: me about the stable coin angled was it more so that you saw the you didn't need for stable coins like even tether was More so for trading. I think that's where it was really originated for traders sophisticated traders But you're coming from an region like Latin America where it's like remittance heavy.

Did you see the need for something like a stable currency where, you know, it wouldn't be devalued overnight? You know, it could be sent, it can be paid, you know, you can get access to paying people overseas. It's hard to run a business if you can't get access to fiat dollars. At your own banking institution, which we see in places like Africa and Latin America.

Is that why the stable coin, you know concept resonated more with you? Was it more on the remittance or you just thought like, Hey, this is not a huge market, but it could be huge. Maybe we should dabble in it early.

Marcos: No, it was more towards the remittance and the easy access to this. I remember back in 17, 18, you know, again, there was like 17, 18, the ICO boom happened. And it was fantastic because he proved that the technology could hold tokenized assets in a global scale and being distributed to millions of people.

That's what happened. Obviously, 95 percent of the ICOs were. Fake or didn't, you know, bet and remember there was a 35 billion invested globally through, you know, the technology, you know, you had tokens, you had everything. So then 1718. What triggered me that a stablecoin could boom, it was that Ripple did a partnership with a lot of banks like

Santander, JP, all the banks invested into Ripple with the promise to use their technology, their protocol, for instantaneous payments around the world. What was the problem? It was the volatility of the XRP. And that created the, you know, goal, no goal, meaning,

oh, we invested into Ripple, but you know, why I'm going to transfer a hundred thousand dollars worth of Ripple and it could get there 50 or could get 150, you know, how come they tried to create the later, you know, the Ripple settlement network, et cetera.

And now they just launched their stable coin, right. So, but I think. If that time they had their stable coin, the history would have been different because, you know, the size of the banks that invested back there. So my view was, wow, they have the protocol, the infrastructure to

process global payments, but, you know, the asset is so volatile that, you know, It doesn't happen banks, you know,

banks, clients, the clients of the banks, they don't want to buy a 100, 000 equivalent running the risk of getting there on the other side to, to like half of the price, whatever it is, you know, so. That's why I thought that, well, Stablecoins will be a killer app, and the de facto has been a killer app. In Latin America, you know, they use the software Stablecoins to do two things. To protect against their, the country's currency devaluation, and To do a cross border payments. That's unbelievable. You know, you see, you mentioned El Salvador.

You, there's Chile, Colombia, Peru, Mexico, Argentina, especially is booming in terms of the usage of stable coins for payments and to protect against the peso devaluation. Brazil is the same. Brazil, you know, people buy keep stable coins. To use for cross border payment. I think this is just the beginning of, you know, you know, a big shift into the, you know, global remittance and cross border payments, you know,

Stephen: Yeah, and you know chainalysis shows the chainalysis geo report shows that you know, I believe it's the fifth you know company growing when it comes to crypto adoption. It's been you know, the growth of it I think it says here growth year over year 42 percent. Talk to me a little bit you're in the region Like what is the real, like, give me some horror stories of what hyperinflation really looks like.

Like, I think we hear about it in other countries, like, Oh, a hundred percent interest and it doesn't really hit home. Like, what does that mean? Like, can you give some scenarios of what, like a worst case hyperinflation? Like, Hey, I bought a home. And all of a sudden my mortgage payment went from 1, 000 to 10, 000 a month.

Like, talk to me about what hyperinflation looks like and the importance of having digital asset tokenization in these

Marcos: Yeah, on the late 80s, early 90s, Brazil had a 35, 40 percent inflation a month. I remember, I give an example, you go to a gas station and then you say, okay, I'm going to, you know, fill my my, my car is like, I'm going to be, you know, a hundred dollars. The next day you go for the same amount is 135. And then two days later, it's like, and that's the scenario. You know, the money you had in your pocket cannot buy the same stuff, you know, the following day, you know, it's like a, it's unbelievable. This is again, it was crazy. I remember there are many companies that broke you know, people. We're you know, killing themselves because, you know, they don't have money, enough money, you know, your paycheck is just nothing at the end of the month.

And that was very crazy, like a country like Argentina, you know, there are months where the inflation was a 70%. It's like, imagine you have a paycheck of 10, 000 and you buy X the next day. You can buy 30 percent X because there is a 70 percent inflation. Your salary will not follow, you know, this increase.

So

It's,

Stephen: is not going to keep up with it. And then obviously, like, if they can't pay people and nobody's spending money, then obviously that eliminates a lot of jobs. Just from like a macroeconomic thoughts. Is that why a lot of these countries ended up getting into, I don't want to say into the drug trade, but it turns into like violence and theft because there's really no other option.

You really just can't buy anything. You're not getting paid enough. Is that why you feel like maybe some, a lot more of that criminal intent happened in these jurisdictions?

Marcos: a structural problem of, okay, of lack of education in most of those countries. And then people with less education cannot get better jobs. And then without good jobs, they cannot, you know. Have a better standard of living, you know, meaning, you know, they, they cannot extend into the chain of, you know,

if they don't have opportunity, they will never have opportunity.

So, and that's a vicious cycle because, you know, the sons and the daughters of those people. will not have opportunities either and then their grandsons and, granddaughters will not have the opportunity. And then, you know, when you see the population grows in poverty, and that's very bad, you know, that's fair.

So you need to break the cycle. And again, that's not on the hand of our politicians. It's quite difficult. They have their own interests. So you see in Argentina, I think the poverty level. Reached like 60 percent of the population, which means that no 60 percent of the population makes less than the minimum wage you know, in a monthly base. So it's very bad, right?

Stephen: Have you seen any changes like we see a lot of gig work where you know people in the Companies in the US and all over the world are now looking in places like Latin America the Philippines For you know remote work has that helped the economy in any way where? Now, even if you're, you know, living somewhat in poverty and if you can learn how to do video editing now, all of a sudden now a thousand dollars us is like crazy money could, you know, change your entire life.

Do you see a lot more gig work, that type of work where people are trying to get into remote opportunities?

Marcos: especially in your shoring. There are a lot of, you know, we've seen after the pandemic, one

thing that changed a lot is the remote. Work, obviously and Brazil and Argentina and a few other countries, they have a good, again, it's not that because of the poverty is high, the level of poverty is high is that you don't have good professionals, you have very good professionals, you know, especially for programmers and developers, there's a, you know, huge opportunity because you can make yeah. U. S. salary not being in U. S.

And that's fantastic because you, you bring money to the country and you spend it. So, it generates a little bit of a, you know, a good economic momentum in the country. But, you know, it's not for all because, again, there are some people that don't speak English fluently

and that comes with a few other problems, right?

Stephen: Awesome. Now tell me about Parfen, you know, you're attempting to revolutionize the global financial system. What are some problems that you're trying to, like, what is the one issue with this process that you're seeing that you think Parfen and, you know, digital assets can help change the way that we do finance across the world?

Marcos: Yeah. So banks in general are very conservative in terms of security, taking you know, risks for anti money laundering and know your customers and, you know, they are afraid of, you know, being part of a scam and et cetera. So, so when we we start building Parfin, we said first, you know, And again, that's different because blockchain technology is a completely different landscape.

You have to deal with private keys. You have to deal with, you know, different protocols. It's a different, you know, programming language. So, it's a skill that currently most of financial institutions don't have. So what we see, okay, we need to build technology that will ramp up, that will allow those banks to use you know, crypto blockchain technology to improve their financial services.

What, you know, which financial services? Oh, there are many, like for instance, you could and we've done some proof of concept and implementations where, You know, a bank, you know, had a very, you know, inefficient, you know, process to provide, you know, car loans to their clients. So what we have done, we have tokenized the title of the car, we've tokenized the deposit of the bank and the loan contract.

So, there's a huge efficiency on, you know, doing a delivery versus payment. Delivering the car, the token that represent the car title to the, you know, buyer I guess that the tokenized deposit deliver versus payment. And again, attach it to a clear, you know, tokenized loan agreement. And that's something that, you know, the bank had three different systems to do that.

And all of a sudden they had one single process integrated. And they say, Oh my God, this improves us. Tremendously the settlement life cycle, the control of the title, the car and so on. So. I, you know, that's one example, but, you know,

commercial receivables, you know, we have a big bank tokenizing commercial receive for their clients.

And what's the benefit of it. They tokenize the commercial. Let's say I have a factory. I sell 100, 000 a month of goods to my clients, but they pay me in like 60 days, 90 days. So basically I have a receivable, a commercial receivable. I sold the product. You know, so you got it, you tokenize that representation of the receivable, and all of a

sudden the bank sells it to investors that want to buy with a discount.

But this is very centralized. So we're using lending pools. So you tokenize the commercial receivables. collateralized in the lending pool and their investors and other people, you know, lending money against that, you know, collateralized receivable. That's fantastic. You cannot do this today through normal circumstances.

So, and I think that's the revolution. That's how we are bringing together the beauty of what's happening into the DeFi world. You know, lending pools taxes and so on. In a more sort of regulated, sophisticated way to allow banks to leverage this technology and provide new services, new ways of doing, you know, old things, let's call it.

Stephen: And I think that's important right because I think you know early you probably know better than me in 2017 they're probably trying to sell you at the bank blockchain blockchain all these new ease use cases in terms of saying hey These are some of the traditional examples where we're struggling This is how we can leverage blockchain technology to expedite those services, expedite those processes versus like, Hey, let's use blockchain to invest in NFTs where I think a lot of the blockchain consultants try to get the banks on board and then you're providing them like, Hey, this is an actual use case you have a problem with, we can now fix your car loans, but this will also go to personal loans.

And as you said, when it comes into lending pools, it's But talk to me about, you know, the stable coin infrastructure. We saw BBNK just released a report, a decade of the digital dollars, you know, Tether just had their 10 year anniversary, but we saw in that report the flows from places like the U S and Europe into Latin America when it comes to stable coins like, can you explain why this is driving such an international phenomenon when it comes to stable coins?

And why, like, Latin America is at the center of this hub.

Marcos: I think, you know, especially when, it comes to Latin America the regulatory framework is a little bit more open. You know, what's not prohibited is allowed. Right, specifically. So which means that you can do to the opposite. You're not committing a crime or doing any fraud, but you know, I think that incentivized people to innovate to think out of the box.

So you have a small importer, importing goods from China, from Colombia, in Brazil, Latin America, and then all of a sudden, You know, they have difficulty to close you know, to buy dollars, to pay the goods. They have difficulty to, you know, open accounts with banks and then to that. And then they say, okay Chinese or whatever, you know, provider of the goods say, oh, you can pay me in in stable coins. And they say, oh, how do I do it? Oh, we go to an exchange, buy stable coins and remittable. And that's how things started. And again, it's billions of dollars being transacted a day because of that, you know, and again, it's, it is you know, prohibited from a legal perspective. No so people start doing this people that travel abroad all of a sudden have their, you know, digital wallets with their, you know, debt cards.

So they are traveling to Europe, to us, whatever. Why not get you know, a wallet that they can, you know, have a debit card they use and that the stablecoin. So I think that was you know, huge over the last few years here. And I think this is what will grow much more because that was used by small companies, individuals, et cetera.

Now we've seen a big shift in the big you know, companies looking to to use the same process, you know, using stable coins for payments and so on.

Stephen: And why would they use Parfen's infrastructure? Was this maybe, you know, expanded because of what happened with FTX and using centralized exchanges, adding intermediaries between these transactions? What's the benefit of using Parfin versus them going directly to a crypto exchange and then facilitating the payments that way.

Marcos: We have you know, one of our products, so it's connected to more than 25 counterparties and have like post post trade settlement controls and limits. So, it gives you a lot of flexibility. You know, to execute transactions you know, USDC, USDT, whatever it is, in a very seamless way and getting it out of the liquidity providers bringing to the internal custody and process payment in a secure way.

So I think we allow the banks to have full flexibility to control which counterparty they want to use. And I think after, you know, the FTX will happen is. The, counterparty risk on crypto has been you know, especially for banks has been you know, let's call discovered, you know, because everyone used to. Trust all the liquidity providers. Now, you know, after FTX, you say, okay, what's your balance sheet? How you know, do you have a proof of reserves for your exchange? How do you control anti money laundering? So banks are much more when they trade and they open accounts with the exchange They're much more rigorous in terms of knowing your counterparty Assessing their credit risk and I think that what's improved and again You know, even on the traditional financial markets, you never trade with one single liquidity provider. You have more than one broker. So that's the beauty. We allow them, we're neutral. We're not a counterparty. We allow them to use all of them to manage, you know, their settlement flows instantaneously. So it's, it helps them to transact with crypto.

Stephen: Now we, you know, we fortified the necessity for stable coins, but we see Brazil and I think even Rails has helped them with it. Introducing central bank digital currencies, they're experimenting, going through different phases. What's the, you know, dichotomy between stable coins and central bank CBDCs here that you're seeing and how are you facilitating that on both sides, you know, whether it's working with regulators working with private sector that are like, Hey, the last person or the last entity you want creating its own stable coin is a government, right?

Like leave that to the private entities. The joke I always hear going around is from Circle, like, you don't want the regulators to build the planes. You want the regulators to regulate the building of the planes. And it seems like in this scenario, where the regulators are trying to build the plane, right?

They're building the digital asset technology to use. What are your thoughts on this?

Marcos: Yeah. I think there will be different purposes for, you know, when it comes to CBDC. Obviously. There are countries in which the payment infrastructure is very inefficient, meaning if you, to process a payment in some countries, it takes two, three days. For the payment to get to the receiver and that's unheard of, right? On both wholesale and retail, meaning to individuals or in between banks and financial institutions. So there are some CBDC projects that they are looking to improve their payment infrastructure, which is not the case for Brazil because it's very efficient. You know, we have peaks, which is the instantaneous payment mechanism. I just. Pics you is seconds. It's in your account. So Brazil was looking to build their CBDC and the central bank is very innovative in that regard, much more to improve financial services, to use the five protocols. So when the central bank of Brazil did the first CBDC sandbox two years ago, they invited Av. I was one of the participants. Why? Because they want to see a decentralized landing pool, you know, in a more regulated framework. So that's how innovative. You know, developing countries are looking to the users of CBDCs, you know, it's not to control because you can enforce privacy protocols. That's what's the strength of Rails.

So, Rails, which is this our blockchain ecosystem is is providing. One of the privacy solutions for the Central Bank of Brazil when it comes to CBDC transactions, you know, guarantee that, you know, the parties that are looking at the the blockchain cannot identify who is sending the money, who is receiving the amounts and so on.

So I think that's the vi the evolution. Even Vitalic Arian says you know, in one of his speeches that, oh privacy within blockchain would be. The next one of the next frontiers. And I think again central banks will look to that in some countries, central banks will say, Oh, I'm not going to do the CBDCs. I will therefore focus on a legal framework for a legal and regulatory framework for stable coins for private issues. And again, I think there are countries that will be both. The view is the view we have is, you know, either stable coins or, cBDCs, they will record the infrastructure we build.

Stephen: That.

Marcos: for a massive.

Stephen: a lot of sense. And we're gonna jump into rails, but before we do, tell me a little bit about the regulatory. You've mentioned regulation. You know, you've mentioned that the regulators in Latin America are a little bit more you know, not lenient, but they're a little bit more innovative than what we're seeing in the us.

But we also see places like UAE the EU. They're coming out with comprehensive regulatory frameworks. We see now Singapore, Hong Kong following suit. What are your thoughts? Where would you rank Latin America when it comes to regulatory framework, especially around stable coins, which is receiving a lot of scrutiny from regulators in places like North America?

What are your thoughts on the regulatory framework to build on stable coin or even CBDCs in your region?

Marcos: Yeah, I think Latin America is obviously is is getting more and more advanced when it comes to stable coins. But, you know, I think you with Vara and you know, even the central bank. It's is leading the globally, I think is leading the pace, you know, for clear regulatory framework. There will be, you know, yesterday, actually, the famous Mika marketing crypto assets, it's live. Right, in Europe you know, what does it mean? It means that now, you know, every institution, financial institution, or, you know, a crypto player can offer services regardless. If they are regulated, they can tokenize assets, they can issue their stable coins. Obviously, there are a lot of control, a lot of things that are happening, but, you know. I see that there will be a mass adoption, like similarly to U. S., we've spoken about U. S. I think with the clear regulation. Every single regional bank in the U. S., every single payment institution, every single, you know, remittance companies, broker dealer, will start offering, trading crypto, tokenized assets, and so on, and issuing their stablecoins, you know, I think that's that's the way I see regulatory framework coming, again, Latin America, you know. For the lack of regulation up to a certain extent has been, you know, creating a lot of innovative companies, promoting, you know, new services. And that's, I think it's where we're going to see the global markets going the coming two, three years, you know,

Stephen: What are your thoughts on MECA when it comes to things like Tether, right? We're seeing already that, you know, Tether is going to have to be delisted if they're not following certain MECA protocols and requirements. Do you think that's a, you know, a good thing that they're strengthening the market, or do you think that they're, you know, cause there's other options, I'm assuming circle is going to be regulated in the region.

Do you think this is good or should there be more competition? What are your thoughts on, you know, something like Tether that has such a massive. You know, breadth of coverage around the world now not being able to be offered to you, which is somewhat of a small market for them compared to their global domination.

Do you think that's a good thing for the EU or probably not a great thing for the

Marcos: Listen I think the usage of that air for 98 percent of it's very valid and it has created a lot of innovation. But we know that there could be some, you know, not good usage of the stablecoin. Okay. You know, and that's where regulators are willing to have a better view.

You know, they don't want to, you know, something to be used for money laundering, for instance. Right. And again. I think we will see in the future, most likely, my view is that, you know, data will get regulated or will support. In some countries they will because they have a huge volume and, you know, if there's a clear regulation, they will need to comply with that for the time being, and I don't think that would preclude innovation to happen, you know, it's just that will create a more massive option let's say I know. My grandma uses you know, Tether, no, but in the future, you know, probably she will because it will regulate their bank, her bank could you know, provide services with Tether. So that's the way I see it. I think it's not the exclusive excludent. That they, now they are not regulated in Europe, that they won't be, they said that they want, but I don't know, we will see, you know,

Stephen: Yeah, they're focused on probably on the, I think they just released their stable coin in connection with Phoenix group there in the UAE building out in, Durham backstable coin. So there's other jurisdictions, which seems like, you know, UAE is picking up a lot of the pace when it comes to leading the regular leading the, you know, innovative race around the world.

I'm curious about rails. Cause you mentioned the privacy acts, but. But you also have been focusing on scalability. We've had a lot of privacy protocols on this program where they talk about the more scalable, you know, their protocol gets, the less privacy that they can afford to their users. How are you able to balance both of them?

And how are you able to still keep the need for privacy, but also scale that technology so that people aren't losing the privacy the more user adoption the protocol gets?

Marcos: yeah that's interesting because we've been you know, the way we solve this scalability through a more architectural approach, so we we've created this It's called Rails Nodes. Rails Nodes is a fork of the Ethereum client with highly modified where you can tokenize assets there. And we've reached that like 10, 000 transactions per second. And. And that's the way we see the first wave of adoption by financial institutions. Sometimes they want to tokenize assets internally and to offer to their own clients. That rails note would allow that you to do that. But if you were using a rails note. isolated, you are not in a global system. So we connected those into a Rails public chain and we generate proofs is using zero knowledge to allow you know, the validation of the transactions that are happening within a Rails node. And again, at the public chain, all the users will be KYC'd. So. If a bank or financial institution wants to pour tokens from their Rails node to the public chain for the aggregation of liquidity or for other services, it's seamless integrated. So we've seen this as allowing again. Both private and you know, scalable transactions at the same time connecting to a liquidity aggregation pool, which is the public chain.

And that's the uniqueness of what we're doing at Rails. We approaching a different angle. We say, banks, you don't need to go to the public chain.

At the very beginning, but you can have your own infrastructure and then you can seamless move tokens around to the public chain or to any other chain.

So that's the approach again coming from banks. We understand sometimes that what how they approach this and we try to create an infrastructure that would allow them to. The first off wave of the option, I want to tokenize that internally. Then I move to a broader scale. Oh, but I am already connected to a public chain, to Rails public.

So I can port tokens over, you know, to export different services. That's how we're approaching it. And we're very excited because the acceptance has been quite quite good.

Stephen: With all the sophisticated phishing attacks, how do you protect that permission environment from keeping bad actors, from infiltrating one of the, you know, entities that do have permission to be in there. How do you protect that? You know, it doesn't get compromised in any way. Through a sophisticated phishing attack on one of the banks or the other partners within this permissioned ecosystem.

Marcos: Yeah. Again what will happen is the Rails node runs. Within the bank's premises. So they have full control of it. And again, if there's a phishing that, you know, entering to the bank, you know, frontiers of security, then there, there'll be other problems. Right.

So,

Stephen: Yeah, yeah, the decentralized checkpoint will be the probably the least of their worries.

Marcos: Exactly. So that's why the approach we've done is that we would allow the banks to run things as they are used to. And again the connection obviously with the other let's call global network, then you have to keep the gates, right? You know, the bridges in a very secure way. We're going to now soon, we're working with some you know, interoperability protocols.

Which are looking towards more of this the usage of their interoperability protocols within financial markets. And there are a few like, Chainlink has been leading layer zero. And I think that's the next to me, that's the next let's say evolution of banks adopting blockchain when it comes to a better interoperability.

You know,

Stephen: actually want to talk to you because you're talking about future announcements, but you just recently announced. Your partnership with JP Morgan's blockchain business unit. They selected rails to participate in this epic ecosystem. Maybe talk a little bit about how they're exploring, you know, privacy.

And we heard a lot about identification and decentralized identification and, you know, identification tokens. Talk to me a little bit about your participation and maybe your thoughts about decentralized idea as a whole.

Marcos: yeah, well, JP Morgan had onyx. It was used to be called onyx. They renamed it to Kinexus. It's they've been investing into this infrastructure for the last 10 years. It's run by JP Morgan. I think the first use case was repo infrastructure. So banks could borrow money against you know, government bonds in a easy way, you know, the repo to me is one of the best cases for gaining efficiency in the financial markets. The, you know, still very inefficient, especially for post trade settlement. And, you know, when you look what Kinexis wants to do you know, Kinexis by JP Morgan, they want to start, again, decentralizing, bringing more partners to use the network. Okay. The blockchain is a permission, but. What they need to guarantee that more partners come to use our clients and other banks, they need privacy within transactions, right? So they test rails notes for the private transaction. And basically it was a case where. They were tokenizing funds, and funds are distributed to banks and clients through the RTAs, registered transfer agents. And it's currently is one of the most inefficient process ever, you know, very prone to errors, etc. But, you know, to do this within Kinex's network. You need privacy. So Rails nodes was set up to, to provide privacy within the, this fund, you know, life cycle. We also built very cool things using attestation services, which is on chain KYC and on chain suitability. What's on chain suitability for those that are not familiar with is suitability is the process where I can Assess the risk for Stephen and say Stephen can buy those products and cannot buy those other products because of his risk profile.

So what we've done using attestation services, we have, you know, created a way that without disclosing who is Stephen

and your data to, to say that Stephen can buy or not this fund, you know, and we did also a privacy auction where. You know, people were bidding for the, to buy that fund without disclosing you know, how much you bid, but making sure that the winning bid was effectively the winning bid. So, so there are a lot of innovation that we put together. So we're bringing attestation services, zero knowledge you know, privacy solutions within. Blockchain to allow you know, a very complex use case within financial markets, and that's the beauty, and the paper is available at Kinex's you know, website for those who are interested you know, it's a very detailed and our solution scored pretty well on the requisites of of uh, JP, we're super excited.

I think there's, you know, when we, yeah. We envision to build this solution back there was to solve those sort of problems

that banks face and by being selected by JP Morgan to run this was was the sort of validation that our technology and what we're building really is a very good momentum.

Let's let's

Stephen: you know, if I understand this correctly, like does it make sense? Like this makes a lot of sense. So, especially in the places like the U S where you need to be an accredited investor. I want to be known as a credit investor, but I don't need to release my net worth and all this other information, you know, the bank just needs to know, Hey, you can make an investment in this product because he is as accredited, but we don't have to release all that other information that goes along with his net worth, his source of wealth, all of that's been covered.

Would that be a particular example where you can use this technology?

Marcos: That's exactly what we've done with JT, that's exactly what to, you know, and again, when we see it, we say, Oh my God, we, you know, when we built the technology we're seeing, Oh, that can be used for this particular case or that particular case. And now it's becoming reality, you know, and I think, you know, you don't want to, you want to buy a certain product, but you don't want to disclose your data, your information,

but, you know, you are a credit investor in, and again You just need to you know, you just need a trusted party. To

Stephen: To verify.

Marcos: validate you, you know, before

Stephen: I'm, I'm curious, like, and I say this half jokingly, is there any assets you see people pushing to be on the blockchain and become a real world asset tokenization that you're like, this asset probably shouldn't be on the blockchain? You know, this could probably be left off the blockchain. Is there anything that you see people pushing?

Like I've seen carbon credits, I've seen so many different assets Being pushed to be on chain. Is there any assets that you think are better left off chain?

Marcos: Listen, I always hear about real estate. I think real estate. It's quite tricky because you know, you have to um think of it, you know, if it's a commercial building where it's being rented and you want to receive the renting proceeds in a distributed way, it's okay. But tokenizing a house, you own the house, you don't want your house to be, you know, you know, to collateralize your house, to borrow money, I guess. So there are things that you know, people say, oh, there's a. Trillion dollar market for real estate. Yes, there is but you know, depending on the case to me doesn't make sense to create a Tolkien, you know Most of what I see is that every single financial instrument will be tokenized because they're much more efficient.

It's like stocks, bonds, derivatives, you know, you know, insurance policies, everything. So I think that's the way I see the first sort of wave of adoption. But you know, people are creative. People wants to, carbon credit, it's fine. But the problem with carbon credit is not tokenizing it. It's to guarantee that the, you know, it's capturing the CO2, you know, reduction is like a so I think, you know, trying to solve you know, every day we say every day there are some, someone willing to tokenize something..

Stephen: Right.

Marcos: ...and it was okay, but does it make sense? Maybe not. And I think the market will get, we gain mature, even regarding regard to that. Market will stabilize. People say, Oh, it doesn't make sense. This doesn't make sense. You know, let's not do it. And, you know, let's see.

Stephen: I love it. We're ending the club, you know, coming closer into this conversation. What are your thoughts? We're in early 2025. This is the first podcast we're recording. It won't go out for about a month. I'm curious. What are your thoughts? I see a lot of NFT projects pushing their own tokens. Do you think that's wise, especially with the market that we had with NFTs, but we see the rise of mean coins and everyone trying to find innovative ways.

You know, to, to get more investment into their projects. What are your thoughts around this?

Marcos: I think I love the usage of NFTs for cases like Fidelization of clients or creating a sort of a reward scheme. And even representing art, whatever. But you know, some of the Memcoins projects are just like you know, speculative and doesn't add any value. Obviously within the crypto community, that's great because people are making a lot of money and that's natural part of the business. But I think in the future, this will, you know, We'll mature. I see, you know, and that's a benefit for the crypto industry. Why, you know? In a way, it's generated a virtual cycle of self investments, you know,

if you look what happened into the crypto, there are some like unique protocols that got a lot of traction back in 16, 17, and they went self funded because the token gained a lot of value and therefore they had enough money to invest in other protocols, in other innovation.

So that's something that you haven't seen, you know, back in in, especially on the venture capital or any history. So protocols that were created. That, you know, grew in, in, in a market cap and a full diluted value, and they had enough money to finance themselves and to create more and more innovation, even through many coins and those many coins, technologies or interoperability and stablecoin, they now are. Can be ported over to create new solutions. So that's a beauty. You know, you talk about PayPal mafia, that's, I think, you know, the guys invented the PayPal sold for hundreds of millions of dollars. And that got the money and start investing in venture capital and in other startups, which create an atmosphere within

blockchain the protocol itself, it is a meaningfully successful. It generates enough value that they invest in, in dApps and defy protocols and innovation. The protocol, you know, is a self funded mechanism to invest in innovation. That's to me is the beauty of crypto and blockchain, you know. Obviously, there are some protocols that are just, you know, buzz and blah, blah, blah.

But,

Stephen: it's

Marcos: they're real

Stephen: point on ICOs, right? 95 percent were BS, but those 5 percent changed the entire landscape. For the industry. I'm curious before I let you go what other features you talk about, you know, partnerships with interoperability, anything new coming for rails or anything else that we should be looking forward for in 2025,

Marcos: Yeah, we we're launching the testnet next month. Then it's super exciting because we're endeavoring this the KYC on chain KYC with a very sophisticated you know, without people need to disclose their ideas and so on. Then we're planning to launch the public chain on the, on the second quarter. And the difference is that we already have some big banks and financial institutions using our technology. And we want to port. Then over to the blockchain. So we hope to bring a very good traction. And again we're very excited because we know we're, we hope to, you know, lead the way on bringing a new user base from banks and financial institutions to the crypto web tree ecosystem.

And that's that's what we were, we're doing.

Stephen: Challenging was it to build on a theory? I'm like, you know, I'm assuming with two pretty tech focus, you have a CTO, you've been the CTO, why not build your own blockchain? You know, I think that's, that's the question I asked for people that actually build their own blockchain. Like why bother? Building your own blockchain. For you, was it challenging to build on Ethereum?

Is there thoughts about building your own blockchain ecosystem in the future?

Marcos: Yeah. The failure is like we we using you know, Ethereum because it's the most, let's say, mass adoption of developers around the world. I think, you know, EVM is becoming the standard when it comes to the tokenization of assets real world assets. So we the way we see it, we evolved the EVM ecosystem within Rails to allow, you know. You know, financial markets and financial institutions to adopt blockchain. That's why we're bringing, you know, unique primitives to the protocol that can be leveraged by financial institutions and those primitives, as I mentioned, attestation services for suitability, on chain suitability, on chain KYC, without disclosing the data, you know, privacy options for financial instruments. Privacy, you know, landing pools. So there are a lot of cool stuff that we're doing. Yeah. That's why we call, you know, unified bringing defy innovation to a transfer markets, unification, unifying those concepts, you know,

Stephen: I love that. Before I let you go, you talked about how you and your friends are playing, you know, with Bitcoin very early on. What are your seriously technical people doing now? What are they playing with on the weekends? Whether that's gadgets, you know, drugs or treatments, you know, like Brian Johnson, like trying to change his whole life spending 2 million on supplements.

What are the things that the tech focus people, the one percenters are doing that you see that seem quirky now, but might have, you know, more mass adoption as we go further and further into this year.

Marcos: I think, you know, we always discuss, but I think there are, I think that. The staking landscape is getting quite interesting. I think there will be a lot to happen there. Lido is leading the play, but I think there will be a lot of So everything that has to do with yield farming and lending, I think it's going to be a lot happening there.

I know some of us and our folks, we try to, you know, to leverage our portfolios and because we don't want to sell, I don't want to sell any assets, I just want to keep, but, you know, if they're generating some you know, returns even better, you know, I think there are some interesting stuff on the interoperability side. I like quite a lot you know, the hyper liquid that was just launched. So we're playing around it. So there are a lot of cool stuff happening, you know, I think, you know, next this year, actually, 2025 will be the year where we see. More consolidation of the L2s you know, and see if it really the ZK roll ups will take place you know, more strongly.

So there's a big bet there. Oh we'll

see. I think there, there are lots of happening, you know, we're excited about it. So we like to. To follow those you know, sort of, so, you know, place around the staking. And then there's this interoperability play and then the L2 plays. That's the way I see, you know, and that we want to test and see how we allocate some capital, you know,

Stephen: I love it. What was your thoughts when you saw Stripe acquire Bridge? You know, like one of the bigger, actually one of the smaller, not smaller, but not the biggest, you know, stable coin ecosystems. When you look out there at BBNK and other players what were your thoughts on that? Is that, are you going to see more M& A here in the next year?

Marcos: I think. So I think that was a very strategic and important move because Bridge had a year and a half or so, right? There, I think their technology still had a lot to mature, but, you know, they're you know, they were really solving a big problem. You know, we were talking about the usage of stable coins, et cetera.

So, give me like you're in a developing country, there's liquidity on you know, USDC. Running on Ethereum and then you receive a payment on USDC Solana. How do you convert that to convert to your local currency? You have to, you know, it's chaotic, you know, it's not seamless done.

It's, there, this I see two things. One is at which bridge source start solving is, well, deliver me FIAT. I deliver you any stable coin in any, running in any blockchain. That's one thing. So

If you want to, you know, stable coins let's say you have, imagine that in the West, banks will issue their stable coins, their USDC for end user. I have a thousand dollars on my wallet. It doesn't matter if it's USDC, USDT, you know, some banks stable coin. I have a thousand dollars and I need to pay. And in you know, a hundred dollars to someone. And which problem is requesting to receiving USDC polygon, whatever it is, you know, so in your app, you don't care what's behind.

So that's the problem that you know, you know, bridge was solving and again Stripe is a payment infrastructure, right?

Not traditional payment infrastructure. So if you didn't wanna really be at the ahead of the curve. On this stable coin infrastructure play, they will need that, that infrastructure.

So that's the way we see there are still a lot of friction for, you know, for the usage of stable coin in some case, obviously we think that defy. Space, it's easy, but if you're trying to bring to the real world, uses, usage, then you know, Exactly.

Stephen: Run into the same challenges that the real, the real world has with their traditional financial ecosystem. Right. I love it. Marcos, where can people find you if they want to dive a little bit deeper on what you're focused on? Where I'm assuming you're on Twitter, maybe LinkedIn, where's the best place for people to find you?

Marcos: LinkedIn I can, send me a message I, you know, sure I will reply, and if you want more information, you can go to for Rayls or Ray ls.com with R A Y L S dot com. And and then Parfin is the core contributor to building Rails and we are, you know, we're bringing other partners to help developing the ecosystem. So if you're a builder join us on this new venture. It's been quite exciting.

Stephen: I love it. I think rails is one of the best names for like a payment infrastructure, whether you're in defy or traditional, I think that's one of the best names I've heard so far. Marcos, thank you so much for joining the around the coin podcast. We hope to maybe have you back at the end of the year and we can see my predictions that this was going to be the year of the stable coins and we saw BBNK just raised 50 million.

Your company just raised 10 million, which is awesome. So I think we're going to see a lot of innovation in this space over the next 12 months. Thank you so much for joining us.

Marcos: Thank you, Stephen.

‍