FinTech Chat (FTC) – Episode 1 – CEO, Gilded | Kory Hoang

 

Note: This transcript was automatically generated by artificial intelligence (AI) and therefore typos and grammatical errors may be present.

00:00

Wayne:

Hello and welcome to Fintech Chat, brought to you by Stably. I’m your host, Blockchain Wayne and today we are joined by CEO of Stably, Mr Kory Hoang. Kory is part of Stably, CEO. Stably is a fintech company out of Seattle, stablecoin fintech company that’s really making some waves in the space. They’re also the sponsor of this show so… Kory, thank you for joining us today. I appreciate you taking the time to sit down and share some of your insights about Stably, about crypto and anything else you want to talk about.

 

0:47

Kory:

Yeah no problem. Thanks for having me on the show, Wayne. 

 

0:50

Wayne:

All right, awesome man, so I want to jump right into it, man and tell me about your history in crypto, what brought you into crypto and why personally did you jump into the space? 

 

1:02

Kory:

Yeah sure! Do you want to hear the long story or the short story? 

 

1:05

Wayne:

It’s up to you. We got time. 

 

1:08

Kory:

Okay well, I think I have a little bit of time today. Maybe let’s go with the long story, huh? So let’s see, let’s go back to 2016. Not too long back, right? But that’s forever in crypto. That’s when I met my co-founder David. He’s our CTO now but back then he was an engineer for Amazon. I was working for Pitchbook as a data analyst. On the side, we did a lot of algorithmic trading involving ETF, stocks, a little bit of crypto, too but we didn’t trade crypto heavily until 2017. So anyway I met him at an algorithmic crypto trading, algorithmic trading meetup and then we got to talk about crypto and I’ll go trading and I found out he was a really smart dude. He taught me some new tricks that I didn’t know about, so we became really good friends. We started trading algorithmically together on the side. 2017 came, I was working at Pitchbook, one screen was like me punching data, the other screen was like my Bitcoin chart and it was like going up like this, right. So our algo did really well that year. I’m not sure it was the algo or just the market going up but our algo did pretty well. We made a bunch of profit and then by the end of the year we decided we wanted to go do something ourself in this crypto space, something that we would really enjoy doing. So one of the issue that we had while we were trading crypto in 2017 was there was no other stablecoin other than Tether. And you know Tether how a scandal issues with it way back then and we didn’t want to you know concentrate all of our assets into Tether once when we weren’t allocated to Bitcoin or Ether. So we decided that hey maybe there’s a hole in this market right that needs to be filled. Someone could go out there and make a more transparent, more trustworthy potentially with regular financial institution that does audits, right? That’s much more better than something that we don’t know whether or not is actually backed by dollar. And so we went ahead and wrote a whitepaper. We quit our job at the end of 2017 and we started talking to VC investors in Seattle and Singapore and San Francisco. And within three months, four months, we got our first seed round completed for half a million dollar. And among our investors were 500 startups, Beenext, a lot of angels from Seattle as well. Ao yeah we were off to a good start. Within eight months of funding we built and launched a USD-backed stablecoin in partnership with Prime Trust which is based in Nevada. So that’s a Nevada regulated trust company that we partner with and they’re actually one of the top players in terms of being a custodian for crypto and being regulate trustee for financial services. They’re doing quite well in this space, shout out to Scott Purcell who’s the CEO. We had really great relationships since years ago, even when before Prime Trust wasn’t as big as it is today. But anyway, so we had a good relationship with Prime Trust, we built a stablecoin. Within two months of launching it, we got listed on Binance which is you know the world’s largest exchange and also Bittrex which is also based in Seattle which is where we’re based. And you know we got the traction, the momentum. We start building integrating with more wallets in the ecosystem and that’s pretty much how we got started ever since. 

 

5:03

Wayne:

Nice nice! So many people don’t really understand the implications of stablecoin and why it’s important to have stablecoins so besides trading, what other role you know cryptocurrency adoption do you see stablecoins playing? 

 

5:24

Kory:

Stablecoins help in a lot of various aspects from not only trading but anything that involves settlement, transferring money, remitting money, payment. If you need the transaction to be done really quickly, I’m not talking like within hours or like days, I’m talking about within seconds or minutes, right? It’s that kind of speed near instant. If you need transaction to be that fast, if you need transactions to be cheap and very low cost meaning it doesn’t matter how much money you send, you can send one dollar, you can send 100 billion dollars, the fee that you pay for the transaction would essentially be the same, right? So low cost. If you want anonymity, right, you don’t want people to know who you are sending this money like what’s other people’s business knowing, right, so you can use stablecoin. Nobody would know who you are and you can send that to anybody in the world. And really when I say anybody in the world literally is anybody that has Internet, right? A stablecoin is a borderless. You can send them anywhere anytime 24/7 and no one can stop it unless they shut down your internet which I guess is like how they stop your stablecoin. But I guess if you get onto a wallet, a key wallet first, maybe you can take it offline before they shut down your Internet. But anyway that’s a whole another story.

 

6:49

Wayne:

Yeah there’s some stuff in there. We get Internet access with satellites, too. So that’ll be unstoppable Internet. All right, so what do you think like with Stably’s platform, how can businesses and customers use Stably’s platform to unbank from those traditional financial institutions? 

 

7:15

Kory:

Yeah absolutely. So not only do we offer a USD-backed stablecoin that anybody can you know open an account and purchase or redeem. Literally anybody in the world that passes KYC verification and AML screening as well, if they pass that then we can do business with them, no problem. We’re also working with large businesses and enterprise that already have their existing customer base to help them build their own brand of digital money, meaning their own brand of stablecoins. I’ll give you an example. Imagine like an e-commerce website that does a lot of selling products and they take a lot of payments via card online or Paypal whatever. If customer pay with cards there’s usually a two three four percent whatever transaction fee that would go to Visa or Mastercard or Amex right. And who pays this fee? Well the merchant has to pay this fee but you know who ultimately has to pay this fee? The consumer, right? They mark up the price of the product to pay for that fee. So if the consumer had stablecoins, right, they can send that payment to the store or the e-commerce or whoever selling them the product literally instantly. It doesn’t cost anything, cost like a few pennies or maybe 10 20 30 cents depending on the traffic of the blockchain network at the time. And yeah then you eliminate payment processor completely from that equation. And two or three or four five, two or three or four percent per transaction, that’s a lot of money a year. Imagine like someone like Amazon or Walmart, right? You know how many billions of billion trillions of dollars that all these guys combine process every year? So yeah two or three four percent is a lot of savings and savings are earnings, right? Speaking of earnings, if a business were to issue their own stablecoins, they generate new ways to earn revenue. Because if they have their own stablecoin, well, think about it, right. A stablecoin needs to be backed by a reserve of either fiat or various investment assets, right? Those are going to generate a return for the stablecoin administrator, right? So if a bank was to create a stablecoin for one of these companies and run the back end for it, the bank could lend out the reserve and generate interest on that, right. Just like what normal banks do. And on top of that, stablecoin could be lend out on a various crypto lending platform to earn six seven eight percent interest a year. But there’s a lot of ways to monetize stablecoins, so we’re talking about savings, earnings. There’s also marketing benefits to this. If our Amazon, you create the Amazon dollar and if it’s a stablecoin, you can send this Amazon dollar anywhere in the world. Guess what, people are going to start using it as money. It’s worth a dollar at Amazon. You can go buy stuff on Amazon with it. You can probably buy stuff cheaper on Amazon with it, right? They’ll give you a discount or something. Why would I not want to stock up on the Amazon dollar? In fact that’s probably the only dollar I would need because that’s the only place I shop, right? So businesses with a lot of existing customer network and loyalty and whatever and they’ll benefit a lot from this marketing and loyalty aspect of the stablecoin blockchain technology. In terms of analytics, like consumer analytics is huge, right? Like seeing how people spend their money, seeing how people move their money across various places and for example an Amazon stablecoin, if consumer would use that to pay for stuff on Amazon or like to send it to pay for various services and whatever, that would provide on-chain analytics. That then not only Amazon can use, literally anybody can use that on chain analytics so like okay, Amazon customer is like doing this they’re like they like red paint this season for some reasons, right. They like to spend their money on blue paint for this season, I don’t know what happened with red paint, no. Things like that and then what else, put some analytics… There’s a lot of potential applications. You can build on stablecoin really has programmable money, so literally anything that you can think of to improve it, you can build on top of it. And that’s the advantage of programmable money over regular fiat, dumb money I guess, smart money versus dumb money. 

 

12:10

Wayne:

Yeah well I think so. It seems, and so many people when they think of stablecoins and having that ability to do other things with it. I guess people don’t realize how much you can do with that. So there’s a lot of stablecoins out there, right? So what separates Stably’s stablecoin offerings from other stablecoins? 

 

12:36

Kory:

So our USD-backed stablecoin is called a USDS. This base in the US with Prime Trust. In terms of what makes it stand out from other stablecoin, it’s pretty much similar to other stablecoins and all the stablecoins are pretty much similar to each other in terms of backing. This is what we refer to as generation 1 stablecoin, where you have a token that’s backed by a reserve of fiat money and the reserve is probably transparent, audited, regulated or managed by a regulated institution. And there you go, you have a stablecoin. You can issue it, you can redeem it one to one, any business day. And that’s really all it is, right? And whether it’s USDC, USDS or Paxos or True USD or whatever out there, all of them are pretty much similar. Even USDT but USDT is a little bit different like Tether, they don’t operate under any regulated with any regulatory or oversight. And there’s been a lot of controversy regarding their reserves so I just leave it there for the audience to kind of do the googling and research themselves. But yeah most stablecoins right now are similar to each other, so where does you know differentiation comes in, right? The stablecoin industry is very young when it just started like what I would say 2015. That’s probably when Tether first came out, it was the first stablecoin. The second stablecoin in the world like truly second, like wildly used stablecoin, it didn’t come out until like 2018, so three years after that. And from 2018 to now, it’s only been two years so even though there’s a lot of stablecoins now, the industries are still very young. Most of them are generation 1 stablecoin or decentralized stablecoin like Maker Dai or a synthetic stablecoin, I like synthetics, but that’s about it. What we’re creating at Stably right now is we’re working with other enterprises and partners to create what we call generation 2, generation 1.5, generation 2 stablecoins with additional features and benefits built into them. For example, the ability to stake the stablecoin with us in order to earn very high yield like maybe six to ten percent APY a year or even more than that, right? The ability for us to identify the original buyer of each stablecoin in order to incentivize them to be our wholesaler, right? That’s something that I don’t think anybody in the world has published like a technology or patent over it. We were having a patent pending for it, for that technology. And various other features that I don’t want to bring up, right now. Just because I get a decrease our competitiveness. I’m sure other players out there are creating their own unique features that they’re gonna program into these so-called you know 2.0 3.0 whatever generation that’s going to come out. So we’ll just have to see I mean imagine what the Amazon stablecoin is going to be like, right? Imagine Black Friday rolls around, what’s going to happen to the Amazon stablecoin, right? Or you have the Amazon stablecoin and you have Best Buy stablecoin, Walmart and then Black Friday rolls around. All of them are like giving out little bonuses or whatever, who knows, yeah discount whatever, right? I can’t wait until the Amazon one comes out, I’m telling you. I know that much for sure. I mean we’re based here in Seattle. Maybe we gonna hit up Jeff Bezos and see what he thinks. I’m pretty sure they already have a team internally looking on this as soon as Facebook came out talking about it, everybody on the block and quietly like hmm… working on it. That’s just not talking about it yes, areas where nobody is like talking about it. But you know Facebook just talked about it. That’s when you know everybody’s working on something secretly. 

 

17:06

Wayne:

Yeah that’s what I’m going to say they’re the companies, big companies. They’re probably all exploring cryptocurrency and blockchain. They just don’t want to mention anything publicly so you know by the time they mention it, it’s going to be long in the works, right? 

 

17:20

Kory:

Exactly but hey I mean, if you read the news and you follow like what’s been developing, you can kind of see the writing on the wall. I mean what the the federal government just allow banks in the US to custody crypto. You know how big that is? That’s huge, but not only huge in the sense that banks cannot custody Bitcoin Ether and what not, it means that every single bank can now be connected by stablecoins 24/7. So that’s kind of like the writing in the walls that I see already, and there’s got to be if I see that I’m pretty sure all these wiz wizards over at Apple and Microsoft and Amazon, Alphabet Google. I’m pretty sure they have somebody working on similar stuff, too, so we’ll see. That’s why you know and that’s why we’re in this space. I think this is a very huge space. There’s so many brands out there, any brands that has their own uniqueness, value, features, benefit, whatever it might be. They have their own reason to create their own stablecoin. Their stablecoin has its own edge like why would you use like regular money inside for example Walmart when if you use Walmart money, they’ll give you like three or four or five percent back, right? Because they used like a Walmart stablecoin, they’re already saving two or three percent from not paying to a Visa or a Mastercard. They’re already earning extra interest from the deposit. Yeah they’re gonna give you extra benefit for using their token. They want you to use their token. Anyway, the future is very exciting and I hope we have the opportunity to work a lot with a lot more enterprise partners in order to help them tokenize their balance sheets and create their own brand of digital money. 

 

19:11

Wayne:

All right, thanks, great. Let’s talk about that if banks get into the game with central bank issued digital currencies, how do you think that’s going to affect or do you think it’s going to affect at all the viability of stablecoins? 

 

19:27

No, it’s just put more oil into the machine, make it more efficient. Because right now we’re already using digital money from the US dollar. I mean I’m not talking about cash. I’m talking about your bank, your numbers, the digits that you see in your bank that’s already digital. If the US government create a Fed coin for example a federal stablecoin, first of all I don’t even know what blockchain they’re going to build that on and I bet you but they’re probably not even going to build on a blockchain. So there’s always reason to tokenize something that’s not on a blockchain, right? So right now I’m already digitizing like digital dollar in a sense like whatever clients deposit money to create stablecoin with us. They don’t give us a chunk of cash. They wire that in. That’s all digital, right? So we’re already dealing with that. If there’s a fed coin that they can wire in 24/7. Great! We can mint stablecoin 24/7 for these guys even better. And then these stablecoins would be on the Ethereum blockchain or on the Qtum blockchain or Zillica whatever, right? Whatever blockchain gains the most market share and adoption later on and the government cannot dictate that they can’t dictate what the free market wants. And I don’t think the government is going to be able to outmatch the technology of private companies away. I mean at least in this space, right? Just like if they create a stablecoin, private sector is going to create a higher one. And if they make the federal coins or federal digital dollar very like restrictive like a lot of KYC AML and a lot of authoritarian measure. Guess what the free market is gonna like tokenize that thing and create a free version of it, a more open version of it. That it’s just gonna be out there. It might even be private, you can’t even trace it, right? No matter what they do, there’s always going to be a better solution that the private sector is going to offer so. Anyway, yeah the government should definitely do it like I said. It would just help the machine be better oil. Actually this is already happening in the Bahamas. We know this because we’re working with some partners over there. The government over there is looking to issue a digital Bahamian dollar. They call it the Sand dollar. They actually just had an announcement for it recently but the Sand dollar is not going to be based on any public blockchain. I don’t think it’s going to be based on a blockchain so we’re working with partners in Bahamas right now that are looking to create a blockchain base Bahamian dollar token. And if the Bahamian government create a digital Bahamian dollar, well, great. It makes our job easier to tokenize that thing. 

 

22:26

Wayne:

True. Don’t even look at it. Think about that potential that because so many people think if they come out with their own central bank issue digital currency, that’ll kill the need for stablecoins but actually no. I mean the way you turn it around, it actually creates that more demand for something like that. Because one thing we can guarantee and I’m sure you agree those if a central bank issues a digital currency, even if they do it on the blockchain it won’t be open, right? It won’t be an open blockchain. It’s going to be closed. 

 

23:05

Kory:

Highly monitored, highly regulated. People are going to want more free version of that. That’s the market you can’t stop it 

 

23:11

Wayne:

Absolutely, so talking about that, what do you think is right now with Stably, what is your target market with your product offerings? 

 

23:21

Kory:

Yeah I came from asset management background so my vision for Stably in the future is basically the 21st century version of today’s mutual fund or ETF companies where those companies securitize assets or basket of assets or strategies that trade various assets, right? And they turn it into funds into ETFs that could be traded on exchanges and stuff. I see our company Stably as basically the 21st century version of that and we utilize the blockchain in order to tokenize these assets and put it on the blockchain. So you know one day when where we’ve grown a little bit more, perhaps beyond just US dollar, you’ll see another portfolio of products. Things like precious metals, like gold, silver, platinum, palladium, other fiat currencies. Even emerging market fiat currency like Vietnamese Dong or Indian Rupees or Filipino Peso etc to real estate to even securities and we would only do this in certain jurisdiction and making sure that we’re abiding by securities regulation and all these countries and stuff. But in terms of equities and debt, there’s private company share that could be tokenized, there’s debt that could be tokenized not just like bonds, fixed income but like even account receivable. There’s a lot of account receivable all over the world and people go to a factoring company to get liquidity to turn those account receivable into cash and they have to pay interest for it. Well guess what I could create a stable coin backed by account receivable, I could unlock that liquidity for you probably for even cheaper. So tons of potential, right? And then we’re just talking about tokenizing the asset themselves. There’s the management you can tokenize the management of those assets, right? You can tokenize the trading of those assets so I can have like a like an index strategy for these assets or like a moving average strategy for these assets and I could tokenize that as well. So there’s a lot of things we can do. Yeah, I think one day you know. Hopefully we’ll have a lot of various products, tokenized assets and we’ll have hopefully hundreds of millions if not billions of dollar in asset under management 

 

26:01

Wayne:

All right, so let’s get back to cryptocurrency in general, kind of this one. Where do you see cryptocurrency adoption five years from now? 

 

26:11

Kory

I think last year, actually not last year, earlier this year, I told my team right before we head over to Vietnam to open our second office over there. Most of our team are back home in Seattle now. We have a second office there with local employees, but right before we head over there, I was giving everybody what my kind of like vision and kind of like a prediction for the future might be. I was like in the next one within the next five years, there’s gonna be a major crisis. We’re gonna go through one and it’s gonna drive crypto adoption like immensely. Two months later, I was like damn that was quick. It happened so quick I wasn’t even prepared. I was like damn a lot of my products are up and online for this. So now you know we’re busting our ass off trying to build all these products. A lot of clients coming in asking us to build various crypto products for them. There’s a lot of demand. We raised another round earlier this year but I would say the Covid and the recession that we’re going through right now is I think for the crypto industry it’s very positive. Unfortunately do I want it to be that way? No, it’s just the way things are, right? Market goes down somewhere, some other markets go up. That’s just the way the world works. And it just happened to be my industry right now. A lot of people are going into crypto assets, especially the younger generation. Gold has been going up. Why is that? Bitcoin’s been going up, dollars losing value. US government printing trillion trillions of dollars. And when you print that much money, no matter how much containment you’re trying to keep it, it is eventually going to leak out into consumers. Once that happens, you’re going to have like consumer price inflation. Right now you already have asset price inflation. The money, all that money they print is concentrated at the top. It doesn’t float to the bottom 99%. No inflation and consumer prices. Guess what, asset price inflation. Houses are up, stock up, bonds are up, golds are up. So eventually though, that is going to start trickling down to the 99 percent. When that does, right, we get consumer price inflation. Well, guess what, gold is going to go up even higher, anyway at least that’s. I don’t want to be too pessimistic but that could happen, right, and so that’s the trend right now, over the past several months. And the market has been responding accordingly. Bitcoin’s at 12 months high, I think it’s eleven thousand twelve thousand dollars now. Gold is all-time high, two thousand dollar an ounce, holy shit, like I never thought that would happen this year. So I think within the next five years, we will see a lot more crypto adoption. And I think that’s why there’s a rush of investor capital that’s pouring into this crypto space right now and to decentralize finance, into custodying digital assets, etc. I think it’ll be exciting, yeah. 

 

29:14

Wayne:

Yeah, it’s definitely with the pandemic everywhere. The funny thing is I see so many on social media that are I’ve been dripping information about cryptocurrency and blockchain on them for years. And they’ve never really been but now they’re all sharing these posts about how bad a cashless society would be if all the cash was controlled by governments, and I’m like aha now you see what I was talking about. So it’s definitely speeding up the process putting more attention on crypto. You’re right there. It’s so many people are doing. That’s why we’re seeing values rise is because it’s getting that attention and people are taking a look at it as a viable option. And I always teach people about what’s happened. Look at what’s happened in some other countries that have already experienced that hyperinflation. 

 

30:07

Kory:

Look at Turkey, look at Argentina, look at Lebanon. Do you see that explosion in Lebanon, holy cow, dang. We’re also going crazy in 2020. I don’t know what’s gonna happen next. Next thing you might see Bitcoin a hundred thousand dollar, no lie. 

 

30:24

Wayne:

Yeah I mean at this point I don’t think anything would surprise us with 2020. Just ready to get this year over with it. Those countries where Bitcoin or crypto in general is more widely adopted because they’ve experienced hyperinflation. I’ve heard several talks in the past and for them it’s not about speculative investment, it’s about a matter of life and death, being able to survive, being able to thrive. So having the ability to utilize crypto, it can really help. I agree with you, I mean one of the things I’m excited to talk to you about is because I’m starting to see all the different things where stablecoins can drive more adoption. Many businesses if they operate on razor thin margins, they don’t want to take an asset that could devalue quickly, right. As much as I love Bitcoin and other cryptocurrencies that their values can fluctuate but in a business, they may want to take something in that’s relatively stable to the currency they’re dealing with the rest the remainder of their business. 

 

31:32

Kory:

Yeah the standard for stable right now is the US dollar. Some people are starting to question it. Me personally I’m still bullish US dollars, to be frank. I think the US dollar is strong because of many factors. A lot of it has to do with our military, giant military force. And that’s still around, that’s not going anywhere. We still control the Pacific Ocean, so at the end of the day, dollar might go down a little bit. I’m pretty sure it’ll rebound at some point, even though we’re you know going through a lot of printing. There might be some inflationary pressure sure, but at the end of the day, I think we’re still a long way from getting dethroned as the world reserve currency. The US is still doing pretty well despite all the negativeness, all the Covid and everything. I’m still bullish dollar long run. Short run, I’m long Bitcoin and gold, not investment advice, not best advice, personal personally. That’s what I’m doing. 

 

32:36

Wayne:

Absolutely, well, Kory, look hey you’re joining us today. Appreciate the insight into Stably and stablecoins and your crypto journey and we look to have a lot more talks like this in FTC fintech chats, so any final thoughts for people that are watching as far as what do you think they should be doing right now at this time when it comes? 

 

33:02

Kory:

Absolutely. Man, I hate to be giving what could be construed as investment advice but I’m gonna disclaim this as educational and informational advice or purposes, right? This is not investment advice, do your own research Investing in crypto is highly risky. You can lose more than your principle that you begin with. So there I saved it. With that said, we’re going through some trying times and even if you don’t keep up too much with financial news, you don’t keep up too much with technology or crypto news or whatever, one thing that you definitely should pay attention to is what’s going on with how governments and central banks are managing their monetary policies and how that affects the prices of cryptocurrencies because that’s an opportunity that you could potentially be missing out. And literally this technology allows anybody in the world to to have a chance to participate in this. So you know, look into it, research about it and whatever you’re comfortable with, maybe make your decision that best fit your financial situation. But what was Bitcoin right now? Twelve thousand dollars. I don’t think anybody who’s bought Bitcoin at lower than twelve thousand dollar right is at a loss right now. It’s only people who bought more than 12 4000 dollar and that period was only like a few months, in like 2017. So literally in the past 10 years have existed minus those months, anybody that bought Bitcoin anytime else are in the green right now, so which is in that time period, if it goes down I could say the opposite there’s some time in the future. But all right, there’s both sides of the equation. 

 

35:01

Wayne:

Thanks for that answer and Kory, thank you again. Thank you for watching Fintech Chat brought to you by Stably and we will see you all on the next episode. 

 

35:12

Kory:

Awesome, thank you so much for your time and having me on the show blockchain, Wayne. 

 

35:18:

Wayne:

All right, thanks Kory. Take care everybody, see you in the next episode.