David Schwartz Talks Ripple XRP Ledger, AMM, Metaco HSBC, CBDC & Stablecoin Pilots & Tokenization

David Schwartz is the CTO at Ripple. We discuss:
– SEC Ripple XRP Ruling
– Crypto disruption of money and Governments reaction
– Ripple Metaco & HSBC
– Are Banks more open to Crypto and blockchain now?
– XRPL AMM
– CBDC and Stablecoin Pilots on XRPL
– New XRP Ledger use cases
– PolySign

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⏰ Time Stamps ⏰
00:00 Intro
01:13 David’s outlook for 2024
02:27 SEC Ripple XRP Ruling
06:34 Crypto disrupting money
10:27 US maintain reserver currency status with CBDC or Stablecoin
13:55 Banks more open to Crypto and Blockchain?
18:28 Number of Banks Ripple is working with
20:41 Ripple Metaco and HSBC
26:37 CBDCs and Stablecoins on the XRPL
33:45 Banks don’t move fast
35:00 AMM
39:29 NFTs on XRPL
43:35 New Use Cases for XRPL
46:50 Blockchain to solve AI Deep Fakes
50:54 PolySign
51:47 What is David most excited about for 2024?
54:20 Favorite Desert
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We knew we needed some sort of a custody solution you know trying to Ripple trying to be like a sort of One-Stop shop for institutional adoption of crypto and trying to provide a platform that would provide access to the xrp ledger to tokenization to payments particularly like there had to there had

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In the description welcome back to the thinking crypto podcast your home for cryptocurrency news and interviews with me today is David Schwarz who’s the chief technical officer at Ripple David welcome back thank you T so David we’ve been talking for years um and there’s been a lot of new updates around the

Xrpl and ripple I got a lot of questions for you um but I would love to get your thoughts on how the year is kicked off for you and you know with the ETF approvals and you know the market seems to be happy about that and a lot of excitement

Around those things yeah it’s it’s been a really it’s been a really mixed year I think um some extent development’s been a little bit slow there haven’t been as many of the sort of big breakthroughs technically as there have been in past years but I think on the regulatory

Front there’s been a lot of a lot of progress the ETF approvals like like like you mentioned so um I I guess I guess for me when it’s quiet we’re just sort of build we’re just sort of building and then there’s when it’s when it’s exciting it kind of sucks some of

The oxygen out from like some of the people who are just trying to like build constructively so I guess it’s kind of nice that there haven’t been any of the sort of crazy arguably less useful Trends there’s a lot of consolidation um I don’t know except on

The regulatory front it feels a little boring right now to be brutally honest so obviously on the regulatory front though that you know that’s been super exciting so yeah um well let’s talk about the ruling in the SEC versus tripple lawsuit uh you know judge Torres

Ruling xrp in itself not a security how are you and the team feeling about that I’m sure it’s a big win I know personally for Brad and Chris there’s also some big up wins there yeah I mean that ruling particularly was was was huge for us I mean and I think and I

Think pretty big for the industry I think you can see a sort of trend I mean truthfully like there was a lot of Ripple hate when the lawsuit first came out and before that historically and so I think at first a lot of people people were like well good like the SEC is

Going after the bad guys I mean there really was a lot of that you know in the industry and I think I don’t think anybody has that view anymore think they’ve looked at the case they’ve looked at what the SEC has and they’re like wow that’s that’s what this is

That’s what this is about like they did this investigation and that’s what they brought forth there have been three big wins for ripple there was the ruling like you mentioned that xrp was not inherently a security which is Big not just for ripple but the entire crypto

Industry it’s been cited in a number of other cases then the SEC was denied an interlocutory appeal um and I think what was interesting about that was the SEC having to essentially argue that this is a comp This is complicated and it’s not straightforward and reasonable people

Can disagree which obviously is a big change from their position that this is just a very simple run-of-the-mill this is just a straightforward you know kind of had to change the tune on that and then the SEC voluntarily dismissing the charges against Chris Larsson and Brad garlinghouse personally I think they

Realized you know that was a strategic error I mean from our point of view the SEC lost on everything that that was important and hopefully that Trend will continue in the remedy phase you know there’s still proceedings going on over the next couple of months and we hope that you

Know I guess momentum is sort of mythical but I certainly hope that things continue to go in our Direction and I think that our lawsuit wins and some of the others are showing that the sec’s policy of Regulation by enforcement just isn’t working you know

As far as what that means for the space generally and more broadly I think the SEC has had a lot of losses in court and they sort of lost that presumption that they’re regulating you know when you when you when it’s like when a policeman testifies in court there’s like this

Assumption that they’re just doing this to for to be good good citizens and that they represent the interest of everybody and of course no private litigant gets that benefit in court and I think the SEC has burned up a lot of that uh a lot of that sort of presumption of good

Faith that they have you know I’m not super happy with the composition of the Supreme Court a lot of people aren’t but one good thing about the current Supreme Court is they are very skeptical of the sort of administrative State proceeding without clear Congressional Authority so I’m more optimistic regul about the

Regulatory front in the United States than I H than I have been recently I guess the one thing that I do worry about is that if it’s if it does push Congress to act there’s then that variable if does Congress pass a really good law or a really bad law or

Something in between so that’s the that’s the my the only possible Dark Cloud is is it’s possible that Congress could make things worse and that’s why I think like engagement on the part of the industry with Regulators is is just so important just to make sure that they

Understand that you know that there there are bad there are scams there are bad things go like we don’t want the government to do absolutely nothing um but also like we don’t want to choke out Innovation enforce it overseas so but I still tell people if they’re like should

I start my crypto business in the United States I’m just like if there’s any way you could not you know I feel bad say I feel bad saying that but the reality is if you can avoid regulatory contact with the United States you probably should yeah I’ve spoken to quite a few

Innovators and entrepreneurs and same sentiment you know they are worried they are worried that if they come and start something here in the US are they going to get thrown under the bus you know and and the SEC in itself has shown it doesn’t act in good faith you know it

They’re supposed to be the good guys if you want to put it that way and respect the law but we’ve seen things come out and their actions uh just don’t align with the law and you know going back to what you were saying the industry aligning with ripple I was really happy

To see that a lot of am’s briefs a lot of folks started rallying behind Ripple and uh the xrp community and uh a lot of great case law came out of the rulings that the rest of the industry can use now so uh we’re heading in the right

Direction and but to your point hopefully Congress can act and do the right thing and get some balanced um regulations in place not to get too philosophical but I I would love to get your perspective on this is it that the internet this new layer that exists what

You may call maybe the metaverse um and then on top of that sits blockchain and because of blockchain we can move money and information and all these things faster without a middleman where the start of a new Industrial Revolution and maybe just like the horse and buggy

People and the candle makers right the electricity and automobile and the and the start of that Industrial Revolution was so disruptive um that that’s what’s happening here these these companies these people are struggling to keep up because it’s moving at such a rapid Place yeah the funny thing is it doesn’t

Feel all that rapid while you’re in it um what tends to happen is like from year to year things look pretty much the same but if you look back 10 or 15 years you know you see these these radical disruptive changes AI is probably going to bring on some of those radical

Disruptive changes blockchain I I do think there are definitely some people who would sort of like to push pause I mean so obviously people who have jobs that are going to be disrupted but also any anybody who’s sort of on top of Industry you know Sony owned the music

Industry at one point until Apple ate it you know and and Tech has eaten a lot of retail business Tech has eaten a lot of other sectors and I think there’s a concern that this is Tech trying to eat Finance um and potentially you know with AI possibly eating all kinds of other

You know taking over all kinds of other areas um I think definitely are forces that would like to push pause you know one of the things I discovered at Ripple when when working working with banks is that the very that like the big Banks who everybody thinks like the system is

All set up to favor the big Banks and they’ve got the whole system rigged and everything that’s true but there’s like five big Banks sure and then there’s 2,000 like your local Community Bank feels the same way about big Banks as you do you know what I mean like because

They are they’re because they they they are like constrained to use you know finan a financial system that’s rigged in favor of the very very largest but if you’re not one of those small hand fold you know they’re not super happy with the way the system is either they would

Obviously prefer to be higher up in the sort of financial pecking order and so that’s a that you know that’s something that can that’s something that you can kind of you can kind of exploit you have it’s surprising who your allies will be um they’re very very there there there

Are some groups who are very happy with technology exactly the way it is and they’ll pay lip service to new technology and they’ll try to you know the United States for example has a very good position with the dollar where we enjoy a pretty significant boost to our

Economy from the fact that other countries are using the do using the dollar we can produce dollars very very cheaply you know and if they value them at a dollar that that’s that that that’s a huge you know post World War II that’s been a massive boost to the US economy

We would love for that to stay as long as it could possibly be and so that’s a four against anything that threatens dollarization but also to some extent there’s a recognition that that’s not going to last forever and then it’s like well we would prefer the next thing not

To be some other country’s currency sort of taking the role so there’s there’s sort of room in there to say like yeah you would even for the very biggest who would prefer that the world not change you would if the world is going to change and it’s going to you’d prefer it

Not to change in ways that sort of benefit your biggest competitors so there’s leverage there tough question for you because we’re talking on the US dollar and being the world Reserve currency and we benefited significantly from that um do you feel as some would say look every great Empire has its

Great run and then it ends right and part of that is relate to the currency and how that affects the economy and wars and all those things but does the United States have the opportunity here to continue its dominance by moving to either a stable coin a USB stable coin

That is moved push penetrated to other markets or a cbdc I don’t know what are your thoughts on that that it can continue this run and and look there’s competition China building their digital Yuan I think there’s a digital Ruble what are your thoughts on that hi everyone pardon the interruption I’m

Tony Edward the founder and host of The Thinking crypto podcast I have a huge favor to ask you if you haven’t subscribed as yet on YouTube or the podcast platforms hit that subscribe button hit the Thumbs Up Button hit the notific if ation Bell on the YouTube

Platform and on Spotify or apple or wherever you get your podcast please leave a festar rating and review it supports the podcast it allows me to bring great quality content to you thank you for your support and I’ll let you get back to the content I think that’s a

Good argument to make to Regulators that like if you want to stay on top you’re G to have to be agile you know the analogy that I used of of Apple eating music business Sony could have made the iPod they just didn’t right they didn’t have the vision they didn’t have the

Foresight um whatever it took whatever Apple had you know Sony didn’t have and you can kind of make you can imagine someone making a pitch to Sony basically saying hey if you want to stay in the top of the music industry you’re going to have to evolve you’re going to have

To support these digital downloads and of course they didn’t they didn’t do that um but you know you mentioned that like great empires have their run and then they fall but of course they don’t fall until they fall and of course and there could be any number of points

Where you could think well that could have been the end of the Empire and it wasn’t the Empire continuous or or has a Resurgence and there’s definitely opportunity and that’s the pitch that’s kind of like that you know you have a seat at the table if you get up there’s

No guarantee that seat will be there it’s kind of that same pitch um you just have to make those you have to make that pitch to the right people so if you have somebody who’s like an enforcement person and they’re just trying to stop bad guys from doing bad things that kind

Of argument is just just not going to that’s that same thing with like the day the day at the day at vincen where like there was one group who was trying to criminally punish Ripple for for what they thought was a violation of Law and another group was like hey can you help

Us like continue to fight money laundering in this techn and it’s like you know it’s that that dichotomy in mindset and you got to find the people whose mindset is how can we continue to grow and how can we continue to fight the legitimate crime you know there are

Bad people doing bad things out there you you need to fight them how can we continue to do that and and it’s a balance you have to find you have to find the right the people who that will resonate with and I’m not sure who the

People that I mean who in the US government would that argument resonate with who are the right people to take that to you know it’s it’s it’s a it’s a difficult argument to make also there sort of like your personal credibility in doing it is is is Challen no matter

Who you are and that’s one of the reasons industry groups are helpful so like that’s an AR that’s an argument that’s more credibly made by an industry group than really any individual company now you and I have been talking for years and we’ve talked about look

It’s difficult to get these big Banks uh which are deep rooted in the Swift system and the way things have been going for years and decades right um however with the growing adoption of blockchain and crypto and ETFs getting approved and cbdcs are coming and stable coins being issued have you seen a

Change in interest or demand are they now more open to listening to the folks at Ripple and seeing how we can do pilots and working together and things like that yeah way more way more so in the early days we almost had to pretend we weren’t a crypto

Company I mean you know like we basically said hey we have this payment system that’s like something better than that’s like it’s an alternative to Swift like was necessarily I wouldn’t necessarily have said that it was better in the very early days but like it’s a it’s built on Modern Technologies and

Has the potential to you know to to provide Spirit experience for your customers lower cost all these other advantages if nothing else it’s an alternative and so Swift does because nobody wants to rely their business business on on they being only one game in town and they’re like well don’t you

Have this crypto thing like ah don’t worry about that like pay no attention to the man behind the because they they it was to I mean it was toxic at that time and then I think one of the key pivotal moments that changed that believe it or not was coinbase’s

Ico believe it or not um that was a p I think people underestimate the importance of that um inside the industry but one of the things that quickly changed for a lot of banks was first of all they looked at they looked at bit at coinbase’s market

Cap and they’re like wait a minute like some there there was some small banks that were like hey there like we’ve been a household name for 30 years and these guys are worth more than we are overnight we need to have some kind of St we need at least and they were

Hearing from their Boards of directors like how did this like creep up on us why are we not is there opportunity here and they couldn’t say no there’s nothing here like pay no attention like ignore this this is just a like that that that was that made it much more real for them

And they needed some sort of they needed at least to be able to tell their at a minimum even if they thought nothing of it they at a minimum needed to be able to go to their board of directors and say don’t worry we have a crypto

Strategy like they at least needed that and then they they would come back to us and they would say so what is our crypto strategy like what should it be and so they came to us and they were they were much more receptive to un to at least

Thinking at least like thinking about how how that would how that would play out and now I mean they’re they’re they’re much more receptive to exploring it than they were one of the nice things about the way Ripple networks you know the payment side of of Ripple that’s you

Know not the xrp leder side but for that payment that rippl net payment system although it will use cryptocurrency to settle the uh the customers who are making the payments are not exposed to the crypto in anyway like they just make a Fiat to Fiat payment and so it’s nice

For regulators and it’s nice for the banks that that you know sometimes we’ll have Regulators will say hey you can’t you know Joe’s paying Mary you can’t like use the cryptocurrency like well Joe never owns the cryptocurrency Mary never receives the cryptocurrency then the volatility is is only only the

Institutions are exposed to the volatility and effectively from the point of view of The Regulators the crypto was sort of like an internal treasury management function of the payment company and so that made that made Regulators much more comfortable which of course makes Banks much more comfortable but of course there’s the

Separate problem of like okay that’s great that they’re using cryptocurrency for their payments and inter and it’s making things faster and cheaper but that isn’t really pushing too many of the benefits the cryptocurrencies can provide to the customers and so figuring out how to do that is going to take them

Continuing to get more comfortable I think the Bitcoin ETFs will probably help with them getting more comfortable um and then there are some countries where the regulatory environment is much better and so there’s that level of comfort and you will start to see financial institutions sort of pushing cryptocurrency services to customers um

Particularly small to mediumsized ones that are looking for some Edge like the larger ones don’t you know don’t feel like they have to do that and I think you’ll see the same thing with the Bitcoin ETS I think we already saw one of one of the largest broker saying like

We’re not gonna touch these things yeah it’s funny how that work have to yeah right but imagine if all the big guys said that well then all the small guys going to be like come to us you know it’s a it’s a competitive world they’re not going to be able to keep their

Customers from getting the financial products and services they want if their competitors are offering them so it’s going to be interesting to see how that plays out um now I know the community is going to want me to ask and um you probably can’t give names or whatever

But if you can give numbers maybe as far as um how many banks you’re working with and I don’t know if you know this number to the top of your head because you guys are constantly growing and so forth um but you know maybe how many banks are

You’re working with and are there new banks that have been brought on board recently um you know I don’t have I don’t have that information off I know that we do continue to you know constantly contining to grow the network and there have been a number a number of

Them that we’ disclosed um and I can also say that like New Growth from ripplet is it’s all going to be people who are using cryptocurrencies to settle or or stable coins or some of these sort of blockchain technologies that we’re not particularly looking to grow the

Sort of the sort of pure so so in the early days of Ripple net you could use Ripple net to settle and you could provide you know Forex you could provide a Forex rate let’s say if you just want to use it for messaging let’s say let’s

Say you said look we don’t want to use Swift for messaging we want to use Ripple net for messaging but we still want our internal Forex Des to provide all the rates or it’s not even a foreign exchange application it’s all you know US dollars or it’s all Mexican pesos or

Something we brought on those kinds of customers uh for a variety of reasons one being when it’s hard to find customers you don’t you don’t necess want to be too picky but also it’s like the value of a network is the number of things that you can reach on it like

Even if there’s a website that doesn’t add much value to the internet as a whole isn’t like of strategic value to the internet the fact that there’s a long tale of stuff that you can do on the internet as part of what makes it attract like whatever you want to do you

Could probably do it on the internet if not you’re like well why not and so it’s this idea that like anything the network could do would increase Network effects and increase the value of being on the network it would increase the number even if they weren’t strategically

Valuable to Ripple you know it didn’t it didn’t matter it still makes sense to grow just like Google that wants as many websites to be on the internet as possible even if they don’t produce any op even if they don’t fit any of Google’s strategic Direction because

Somebody will use them and that person is another Target customer that you know Google can offer their services to the same kind of logic applied but New Growth is all going to we’re not we’re not we’re not we’re very focused right now on blockchain settlement now there

Was news of uh Ripple’s acquisition of Medico last year and uh then partnering with HSBC what can you tell us there and is HSBC going to be using ripplet or The xrp Ledger in any way that has been I I mean that was so that was so exciting you know we knew we

Needed some sort of a custody solution we you know trying to Ripple trying to be like a sort of One-Stop shop for institutional adoption of crypto and trying to provide a platform that would provide access to the xrp ledger to tokenization to payments particularly like there had to there had to be a

Secure custody solution in there somewhere and so we were looking for we looked at many different companies and then uh in may we acquired Medico was a huge acquisition a quarter of a billion dollars Ripple’s largest acquisition ever and and um um you know obviously it was a Fant

It was kind of funny because when you first do an acquisition you’re not exactly sitting on the same side of the table as the company that you’re acquiring and everybody’s afraid to say something it will blow up the deal like if somebody has a crazy had this crazy

Idea of something do like like that’s a terrible idea let’s not acquire you know everybody’s a on pins and needles that they’re not going to blow up the deal and I remember our first meetings after the deal was closed when we were all sitting on the same side of the table

And and I I really have to say we found a bunch of Kindred Spirits I mean they’ve just been an amazing group of people to work with the technology they’ve built this incredible you know custody is a massive Market you know something like1 trillion dollar by 2030 and you know the increases in

Tokenization you know mean that that’s just going to grow and institutions are going to be are going to be like the main the main drivers so you need you know someplace to store it if there’s cbdcs if there’s stable coins you know if those things become big as we think

They will people are going to need places to store them they’re going to need connections to on-ramps and off-ramps payments liquidity Services it’s it’s kind of all going to tie in it’s kind of like the same thing that Banks um learned you know in the early days of Ripple another thing I learned

Talking to Banks is that a lot of banks don’t care about payments seriously like you might think well what do banks do what they say is we want you to like deposit your money with us and sort of leave it here and payments are expensive and they’re slow and customers complain

When we can’t do them well so we just won’t be very good at paying payments we’ll be a great bank but not very good at payments and what they learned very quickly is that that like you’re not nobody why would I keep my money at a bank that does isn’t good at payments

And what they discovered is that if I don’t keep my money at a bank I’m not going to go to the bank for a loan you know it used to be if you needed a loan you would go to your local bank that you had a personal relationship with

Virtually Nobody Does that anymore right right like the world has changed and I think the same thing happens with custody like if you want to get all these Associated businesses like you’re going to go to the place that has your cryptocur like you’re going to look for their liquidity

Services their payment services their connectivity to on-ramps and off-ramps that’s going to be the first place that you’re going to look and so by adding custody that’s going to make Ripple the leading Enterprise solution provider in the space so um you know I’m I’m just I’m just so super excited about that

HSBC um they plan to offer a custody service for digital assets to their clients so it’s kind of like a it’s kind of like a a layered a layering service where HSBC is using some technology for custody and that sort of makes them able to provide a custody a sort of relay

Custody service to their clients what’s great about that is HSBC can do the sort of compliance part for them so I if I keep my money at a bank I’m almost completely reliant on the bank’s compliance to make sure that like I don’t fund terrorists or I don’t receive

Money from like I don’t have to have my own compliance Department have a bank account because my bank account is an institution that has all those things now with cryptocurrencies many people will self- custody like I’m just not worried about all that stuff they don’t have to have a compliance Department

Because they don’t have a regulatory burden but if you’re an institution that has a regulatory burden it doesn’t make sense for every institution that wants to hold cryptocurrency to have its own cryptocurrency compliance like Department that’s re obviously they’re still going to they’re going to have something because they have to monitor

But they to actually build out all of those Services doesn’t make sense so layering is just like a very logical way to do that um and they’re looking at things like digital asset Insurance um they’re looking at tokenized Commodities like gold um so I think those are tokenized securities um HBC is extremely

Interested in those types of those types of um projects their Orion Project which was to tokenized Gold so it is it’s it’s it’s extremely exciting strategically important to Ripple and I I think we’re still in the process of processing exactly how the Strategic like Ripple had strategies

That they were working on that required custody but Medico has so much more than they have those things of layered services with compliance they have this possibility for a tokenization platform this integrating with payments and liquidity and I think we’re still thinking through exactly you know we

Know what Ripple brings to the table we know what Medico brings to the table obviously the two of them together is a is great but then what’s the extra what’s the Synergy that you get I think we’re still in the process of figuring out how we can adjust Ripple strategy

And Medico strategy to take advantage of what the other can provide um it’s going to be interesting to see I wish I could talk about some of those ideas because they’re great but and you nothing nothing’s very Little’s finalized yet so that’s something and again we couldn’t

Really do that until as and Medico were on the same side of the table sure you know and we’re totally willing to give the crazy share the crazy ideas and the bad ideas as well as the good ones without having to worry about blowing up you know a quarter of a billion dollar

Deal now uh let’s talk about cbdcs and stable coins um certainly there’s been news about piloting happening on The xrp Ledger with cbdc is being issued palao with their uh I think it’s a stable coin if I’m not mistaken how have those uh Pilots been going um do you anticipate

Any of those going into production uh in 2024 so palao actually issued a stable coin on The xrp Ledger which is not usually what we think I I mean one could even argue that that’s not really a cbdc I mean well I guess I mean it’s a it’s a

Central bank digital currency literally but it is it is you know a stable coin on a decentralized like you wouldn’t have expected that to be an early cbdc model right you would expected something much more contained so you know that that’s super exciting yeah so on the stable coin front that’s mostly

Happening through the Ripple x side The xrp Ledger side of uh of Ripple um we’ve recently announced Partnerships with stasis which is the leading Euro stable coin one of the top 10 stable coins globally in Nova which uh brings you know large erc20 stable coins like usdc

And usdt as well as an Australian dollar stable coin to the xrp lger deck one of the things that’s been missing on The xrp Ledger decks is like a large number of high quality assets like there’s xrp and then there’s a couple of like medium

You know and then there’s a long tail of interesting stable coins but not like not access to the not like a a high quality US dollar stable coin obviously is extremely important so and the Euro stable coin so that’s going to help bring some of those things to the xrp

Larger side on the cbdc side um it’s interesting to see how that’s progressing there’s definitely way more interest now than there used to be uh right now if you look at the countries that have said at least that they’re exploring a cbdc it’s 98% of global GDP

So like like all of the major countries have at least said they’re exploring a cbdc now they could be just playing lip service to a new technology but then again like if you look at central banks that’s not usually what they do central banks are usually like more conservative

Than the Catholic Church they’re very very slow I mean it is I think it is pretty unprecedented to see that rate of even just an expression of interest because when you’re a central bank like your country’s gross domestic product and its economy is based on you not

Being insane and so when you Embrace a brand new risky unproven Pro an uncertain technology that has a lot of Skeptics like that’s that’s actually pretty even just paying lip service to it is is pretty big and of course there’s a lot more than that there’s six

Countries that we have cbdc or stable coin pilot programs with palao Bhutan the Hong Kong monitary authority Colombia Montenegro and Georgia that’s that’s that’s that’s that’s pretty I mean I’m I’m honestly surprised that we were able to you know we got some really talented people and

We said go out to all the central banks in the world and tell them that like we’d like to help them launch cbdcs and explore with them and we thought like it would be amazing if they got one like that would be great because like again because these organizations are so

Conservative even Pilots like because because if you think about it like if you do a pilot with a company that turns out to be like a scam and blow up in their face like that’s really like they’re the sure the probability of those things is low but like the

Consequences are very high the reputational risk is enormous and so the fact that the they were able to convince so many people that you know so many central banks that to be willing to launch these Pilots you know was was quite was was quite remarkable and and I

Think it’s a testament to sort of our our position in the ecosystem and the technology that we built uh as far as going into production though it’s going to be interesting to see how well these things translate into production these are very slow I’m hoping that some of the smaller

Countries you know it’s obviously more impressive to say hey we signed a deal with Columbia or we signed a deal with the Hong Kong monetary authority to say we signed a deal with pal Bhutan but same thing with banks like you sign a deal with HSBC it’s big news but they

Are very you know maybe not maybe in some parts of their B you know especially like a central bank with a stable coin they’re going to be very slow moving um except the so the smaller countries um one benefit is they have less existing infrastructure so for

Example if you wanted to launch a cbdc in the United States are you competing with Visa yeah you know like there all these like should the federal government be comp like but if you go to a country that doesn’t have as much infrastructure you know countries that are looking to Leap Frog

Tech you know countries that skipped landlines and went right to mobile countries that sort of you know um are trying are looking for these leap fra they’re trying to they’re trying not to industrialize on oil and move right to renewable energy directly if they they’re trying to do these leap like

Move to EVS immediately like um they may be Much More Much More agile in terms of their movement um I think it would be I honestly I think one of these going into production in 2024 wouldn’t surprise me but I think it also could be I think you also could

See larger scale Pilots bigger tests and more refinement of the understanding of the use case I think one of the problems is the understanding of the use case is not super refined like we have specific Visions for what we think cbdcs could be used for and where they fit and these

Countries have somewhat different Visions because they’re aimed at specific problems that they have and it’s not always the right approach to take the specific problem you have today and some technology that’s really like about changing your entire economy and sort of making them fit together so there’s a little bit of a mismatch

That’s going to take some time as we sort of try to move these these pilots and these these tests towards something that that could you know scale into production but I don’t think it wouldn’t surprise me if one of if one of them moved into it’s probably not going to be

One of the larger if it’s one of the larger countries it’s probably going to be a smaller it’s going to be production but it’s not going to be like you know open to everybody who could use it it’s going to be like a small production um

But it could but you could see one of these smaller countries um it’s not inconceivable that one of these smaller countries could go into roll out especially because um they they’re they’re not super excited uh particularly like in the Middle East region they’re not super excited with

The control that the UN and surveillance that the United States and the EU has over their internal payments because there’s really I mean these are sovereign Nations there’s really no reason that there should be us and EU sort of surveillance and Invasion into them and they’re kind of concerned about

Having more control over their own fate and so that might be a driving factor for smaller countries in those kinds of regions uh we’ll see but but these are very slow moving institutions honestly I’m stunned that we have six countries that are even doing Pilots right now I

Mean I’m it’s like when you send a dog to chase a car and the dog comes back with six cars like you know I mean right it is remarkable I know whatever you have everybody wants more um we’ll see we’ll see though that makes sense and absolutely I think you know we

Who are in crypto uh we often want things to move fast but these Banks and these Legacy institutions they don’t move that fast and uh i’ I’ve seen it in the corporate world a bit but I can’t imagine you know just these government um agencies and Banks and so forth

They’re not going to move as fast so Target the smaller ones though weirdly I mean there are smaller countries like with banks it’s obvious like don’t go after HSBC Deutsche Bank credit SS you know go after your neighborhood Banks or you know me Challenger banks that are

One level down which is if you look at like Ripple’s partnership list with banks there’s a lot of those banks that are like santand is a good example that are like one one level down they’re not the very top Banks but they’re not they’re not irr they’re not not any bank

Is irrelevant but they’re not like names that nobody’s heard of right their household so a and you can do the same thing with countries like you know you go go for the biggest countries because obviously you’re got have the most impact but the smaller countries can move faster you know there’s countries

Where if the king wants something done there’s no regulatory obstacle to do that’s it like if it’s on the king’s priority list for the year it’s gonna happen know you right like it’s like a blank check to get whatever you know if you get a country like that on board

Then those OB obstacles can can melt away yeah absolutely um let’s talk about the amm um there’s a lot of questions from folks about this I would love if you can break down what is the amm uh what are the features and benefits of

It sure so the amm is a is um a feature it exists on on many um smart contract chains and ether and ethereum based chains that uh literally is makes markets automatically so what it does is it’s it algorithmically tries to both buy and sell the same asset at the same

Time and so what that allows is that allows anybody who wants to buy or sell the asset to go to the amm and say hey I want to buy the asset because the amm is willing to sell it and vice versa um and so it’s a it’s essentially A system that provides

Liquidity and um The xrp Ledger historically has not had has not had that has not had that capability um we do provide liquidity but we do it through order books and it’s kind of funny when I first started looking at the amm feature I was super excited

About am I was like why the hell are we using order books like we’re using this ancient technology when there this newer technology but what I realized is I looked at it closer and I think it’s generally acknowledged now that both of these technologies have their strengths and weaknesses there sort of advantages

And disadvantages amm for example are not super Capital efficient they need a lot of capital sitting around in order to provide Mo you know moderate amounts of liquidity whereas order books are but the advantage of an amm is doesn’t require human being to place an offer it’s always it’s always available as

Order books require somebody to actually like actively provide liquidity there’s advantages and disadvantages to both the reason that most blockchains went to amm First is because implementing an order book on a blockchain like ethereum is just impractical like there’s there’s dozens of orders placed for every order

That executes and if you’re you got if it might cost you a $140 to cancel an offer that no one’s going to execute that never executes it’s just it just doesn’t make any sense so the plan for The xrp Ledger with the amm feature is to support both order books and the amm

In a way that sort of synergistically allows them to each benefit the other and we’re we’re we’re excited to see that working working in practice you know we’ve run it in simulation and it not only continuously provides liquidity but it sort of facilitates payments which is most other blockchains don’t do

That so it will happen on The xrp Ledger once amm are enabled if if you’re going to make a payment let’s say you hold a stable a USD stable Co and you want to pay me xrp you’ll be able to use amm and Order books as sources of liquidity

Inside that payment which um which we’re which we’re super excited about so the features has been implemented it’s deployed um we’re now waiting for the net the sort of governance process of The xrp Ledger Network to sort of agree to enable it it’s been surprisingly controversial um but it’s steadily

Gaining votes I think I think 10 more to go so let see how it goes sure may be right around the corner uh coming weeks or so I I I hope I hope I hope so I hope so one one of the you know one of the

Things that’s sort of delayed is that there’s there’s aot there’s a concern about um sort of any increase in the amount of work that The xrp Ledger has to do because there’s a there’s only it’s a finite resource and so everything that you use resources on means less resources available for other things

That you might want to do and so that’s kind of a a judgment call a big factor in favor of mm is like they don’t just use resources when nobody’s using them they use resources when people are using them so you know if if people find benefit in

Them and are using them then you should use resources for that we’ll see how it goes it’s a slow I mean another thing is blockchain should be slow to change like it’s very d a blockchain that can rapidly be changed is D is is a dangerous thing um it should be a slow

And deliberative process it’s a little frustrating when there’s a feature you really like that’s just sitting around just waiting for people to be convinced that it’s safe to enable it but on the other hand like if it was broken in some fundamental way it could cause you know

Hundreds of millions of dollars and losses and so I also understand you know the the child in me is like come on I want this toy so I can play with it but then like the adult is like you know if it it makes sense for this to be a slow

And difficult process because you don’t want you don’t want a blockchain to be completely different two years from now than it was today because there nobody can sort of trust it and rely on it so it’s a delicate balance yeah absolutely that that totally makes sense

Um tell us about nfts minting on The xrp Ledger any updates there in addition to just generalized tokenization so there have been some projects that have been uh awesome there’s xrp Cafe which is a partner of ours on xrp several other projects I think there’s been a little bit of a

ShakeOut in the nft industry where a lot of the projects that were just lowquality garbage but just we’re trying to ride the trend have kind of shaken out so the numbers are down down but the the sort of the I think that’s a good I think that’s a good thing I think the

People who ride the trend and just with like you know procedurally produced garbage that’s not you know it’s basically just buying a gif that was you know JPEG that was produced by a machine that doesn’t even have you know doesn’t have anything attached to it um the

Numbers are still good though I um so in Q4 of last year there were more than 5 million mints more than a million nfts sold to about $10 million in sales volume so not not not not as big as the numbers that we were you know that we

Were seeing before but I think it’s I think it’s kind of good that it’s kind of settled down to where people actually see value and less of just GE where is there’s this new thing that people are messing with I think it’s still to be seen whether um whether these projects

Continue to mature and grow and offer some sort of a quality product that people really want or if it turns out to be a technology that uh you know was not as not not was one of those things that just kind of you know I’m I I’m I’m I’m

I’m excited I and and sort of positive that I think there are real use I think collect even just Collectibles I think is a real world use case that people really do care about but they have to be something you know of some quality connected to something meaningful I it’s

Going to be interesting to see one of the things that surprisingly reduced um was the sort of um incumbent adoption of like Nike offering nfts or Disney offering nfts or those kinds of things um have kind of reduced and that’s still surprising to me I mean like the NBA

Proved that that can work or at least could work while people were super excited about it so what do you think it’s related to the SEC and what they did with Stoner cats and this you know uncertainty there that was yeah that was really weird that was that was really

Yeah sorry I was gonna say I could see I hope not but you’re probably right yeah that could have been and look look every market right you have to specul ation bubble the froth that builds up and then that has to be cleared away and then you

Have the True Builders who are still there but then you throw into the mix the SEC we don’t have Clarity and the secs look like they could go after anybody who isues an nft is kind of ridiculous so maybe you know those RIS departments are like uh let’s cool down

Right uh before we and there’s nothing about their argument in Stoner cats that doesn’t apply to a human artist yeah you know if I decided to become an artist my early Works people who are buying them are hoping that my later works will build a market they’re looking at them

They’re thinking hey this guy’s probably going to go on to do great things and his later works are what’s going to build the market if I stop painting those paintings are never going to go like you’re hoping that that I’m going to become a famous artist and what’s

Going to do that is my later works so I mean it if you buy the model that a security is something where that you buy with an expectation of a profit where you’re relying on the person who sold it to you to do things that will increase its

Value well that applies to that applies to start yeah and lots of other I mean so many things can’t be the law yeah it can’t be the law yeah hopefully uh boy Congress can act this year or early 2025 I know it’s an election year so it’s

Going to be tough but um seems like we’re on the path to uh getting things done there’s some bills in the house I think a couple in the Senate there’s more uh political candidates talking about crypto now whether they’re presidential candidates or uh candidates for Congress or whatever may be so looks

Like we’re moving in the right direction at least I think that’s true I hope you’re right now David what do you guys thinking this is a tough question and and uh what are you guys thinking you know as far as the next two years about like use cases it seems like every cycle

There’s like a new thing that pops up there was nfts in the last cycle right uh the first cycle was icos and different things tokenization is now a big thing Larry Frink uh CEO of black rock is talking about it what do you and the folks at Ripple looking at from from

A use casee standpoint I don’t know if you can share because you know I don’t want you to give away your secret sauce and competitors can pick up on it but uh you know what are you thinking about for the for the next future well so I’ll

Give you the short version and you can dig into any of them that you’re particularly interested in one of them is real world asset tokenization things like tokenized Securities um things like tokenized carbon credits those kinds of things um another one another one is the convergence of AI in blockchain um as

Far as things like making blockchain safer making it easier to develop smart contracts making it easier for users to understand how to use um you know blockchain products and perhaps blockchain Pro working providing some of the functions for AI Safety and Security um that’s changing very rapidly though

So it’s kind of hard to say there so another one is decentralized identity um sort of making the way for Enterprise defi one of the biggest blockers for sort of Enterprise adoption to defi right now is the fact that uh there’s no sanction there’s like no sanction screening capability so like you could

Receive money from a terrorist you could send money to a terrorist Technologies like the like like did um will make it possible to have sort of compliance on public blockchains which is something that like we’ve never had it would be opt in you know you don’t have to comply

If you don’t want to or it could be that you have separate blockchains that are specifically screened for you know particular sanctions regimes but that’s going to allow of type of institutional adoption that currently is just not possible another another big one is interoperability movement of assets and information there is no blockchain

That’s going to there’s no layer one blockchain that’s going to be able to provide what everybody wants it’s just not it’s just not possible and so we it’s not going to be scalable so getting that scalability through interoperability and then people being able to innovate um at the blockchain

Layer so like if you want to build a smart contract on ethereum you’re stuck with ethereum’s fee structure and it’s resource structure and if your project fits within that great but if it doesn’t there’s virtually nothing you can do whereas if you could innovate at the blockchain layer you could create

Blockchains that had different fee structures or different capabilities storage comp you could draw different balances and that would allow you to do things that are currently not Poss like if you want to build a decentralized exchange that can support high frequency trading like centralized exchanges can

Um you’re not going to build it you can’t build it on ethereum like you have to be able you have to right that’s not that’s not what ethereum does you can’t build it on really any current so that interoperability and then the last one is the evolution of stable coins and

Cbdcs um I think I think they their impact on global Finance I think in the next two years you’re going to see new foreign exchange corridors probably reduced dependence on the US dollar particularly in areas like the Middle East where they’re very very incentivized to not have the sort of us

And EU Regulatory and surveillance thumb um speaking of AI and blockchain um there’s been a rise of Def fakes due to AI um you’re hard to tell whose profile is popping up or messaging you right impersonations are are you looking to partner with media companies or social platforms to have The xrp Ledger

Be used to um like you said digital IDs and and uh you know fight deep fakes and things like that well we’re definitely promoting uh the decentralized identity standard on The xrp Ledger to like get an identity standard on The xrp Ledger so you can bind identities accounts that

Give people control over their own identity and allow them to decide what what they want to reveal and basis you know on a way that they can control but that is very much a first that is very much a first step it’s not going to solve any major problems all by it all

By itself um but it is an enabling tool and um it’s one of those things that’s going to take you know some time and some effort to get to to to meet these sort of broad objectives um I’m not I I’m not sure that we’ve T I don’t think

Think we’re quite ready to do the sort of those sort of things yet U but but like nothing would prevent you from binding uh you know a social media presence to an xrp Ledger account or binding it to a decentralized ID individuals could do that it would be

Nice if platforms supported it so that they could give some sort of an indication the thing that you have to be careful with and this is the challenge this is the challenge in in this space if your system is so so and not that difficult to penetrate then it’s not

That useful but if it’s really good and really difficult to penetrate then the incentive to penetrate it is enormous because the amount of credibility that it gives you is much greater um it’s this is it’s going to be a very it’s gonna be combating deep fakes is going

To be a very very difficult Challenge and it’s not just a technical challenge it’s also it’s it’s also a sort of social Challenge and a sort of sort of procedural like like there’s an interoperability issue that’s G to be a really big thing I I don’t think you’re

Going to see Ripple trying to tackle that particular problem on our on our on our own certainly um I I do think blockchains have a role to play because they can they can bind identity they can bind cryptographic identities to real world identities um and they can provide

A sort a sort of irreversible unforgeable sort of repository of information that prevents me from saying different you know different things to different people it compels me to say the same thing to different people and it prevents me from tampering with the historical record so once I’ve said

Something I can’t unsay it those things are helpful Primitives but how to piece that together something that could actually combat deep fakes it’s going to be very challing and it’s it’s gonna get it’s gonna get bad in less than 10 years for less than a million dollars somebody

Who wanted to wreak havoc could could buy the hardware and necessary to produce dozens of fake streams let’s say showing a terrorist attack in Paris right now and then you would have people in Paris like sending this is like I’m right here I don’t see anything I don’t

Know what they’re talking and then you have like these these 20 streams that say that the attack is going on and these you know a dozen streams that say it’s not it’s going to be very challenging to figure out you know or you have evidence of a person committing a crime you know

Someone says that they were sexually harassed by someone you have a video of the incident the person’s like that’s not that’s not real wow like that never happened scary scary world Yeah by the way I have a good tip for people get a prosthetic fake finger and clip it on

Your hand and then any video of you will look like an AI fake man and I’m hoping we don’t have insane amounts of deep fake content with this upcoming presidential cycle because we know how crazy that can get uh hopefully it’s not out of control it’s gonna get worse until before it gets

Better true um I know we’re up on time so I got a few more questions here for you um any updates around po sign that you can share I wish I could say more um I I mean I think everybody knows that poly sign is is is in trouble and

Does is having going through a little bit of a crisis right now um you know I’m on I’m on the board at poine I’ve been working you know Jack McDonald and several other people at poine have been working as hard as they can to try to stabilize the company and get you know

The best outcome possible for all the stakeholders you know including including investors um ripples helped a lot but um yeah unfortunately I can’t I can’t I can’t I can’t give more details no worries um what are you most excited for in this upcoming cycle it seems like we’re headed into a next bull

Market cycle um I know you’re on the building side so I’m I’m not asking about price predictions but you know what are you most excited about what are you looking forward to this year uh well reg regulatory clarity a resolution to the lawsuit obviously would you know there there there is some

Reasonable chance that that that Ripple’s lawsuit with the SEC will be res will be resolved in 2024 um still could be appeals I suppose I mean whether that would be resolved I don’t know um uh big big on big big on um sort of scaling at the blockchain layer I

Think right now people can’t really innovate right at the blockchain layer and Technologies like side chains and some of the some of the zero knowledge proof stuff um will enable people to innovate more sort of right at that lowest layer and enable more scalability uh just getting more people into the

Ecosystem I think is is is is the biggest is is the biggest thing like we have to create user experiences that that are compelling to people and I’m hoping I’m hoping that we can do that on the xrp ler side I’m hoping the amm amendment will eventually activate decentralized identity doesn’t seem uh

All that controversial um and seeing things like carbon markets and to organized Securities I think one of the problems particularly so like in the United States and in most of Europe like we’re over served with financial products like we have access to everything like I can invest in anything

I want right on my right on my phone with an app but there’s a lot of people who don’t have those opportunities and they basically their choices to stuff cash in a mattress or or not you know and giving them access to tokenized Securities and giving them access to

Things like collateralized lending um obviously they would be on the so that’s the other interesting thing so like when you think about collateralized lending or centralized lending you often tend to think about like rich people having a tax efficient way to like access their crypto profits that’s not super you know

That that that’s not what what I that’s not the way I want to change the world but if you think about it from the other side of the sort of lowrisk loan for a person who can get a return who might not have access to other Financial products or services like that’s really

That’s really big because that’s that’s the the way you build wealth is by saving up a little bit over a period of time but you it has to compound otherwise inflation is just going to destroy it so they’re giving people who haven’t had an opportunity to build wealth an opportunity to build

Compounding wealth in a system that can’t can’t be regulated away or you know or taxed Away by by fees and everything that that you know eat into those Rich you know small fees today the fees compound too so those kind those kinds of things are are exciting and of course

Institutional adoption we’ll see what the bit what the Bitcoin ETFs lead to for sure um and then there was one question what’s your favorite dessert and that’s got to be turu so if anybody asked you would David rather have the turu or the whatever it’s going to be

The turu I’m I’m a huge fan of turu David always a pleasure chatting with you I appreciate the insights and the information and I’m excited for you know the roll outs of the updates Around The xrp Ledger thank you for joining me uh my pleasure uh this was fun oh I will

Just say one last thing I will be at e Denver this year speaking at the xrpl Zone around February 27th or so so um sign up yeah I gotta make it out of E e Denver one year maybe this year I hope to see you There