Alex Johnson

If the growth rate is fast, the AI story is dialed in, and the vibes are immaculate, there is (apparently) no number that doesn’t make sense! https://t.co/XMKyYoQT9o https://t.co/v6wZq8Wgeo

Makes Stripe’s decision to buy OpenRouter look smarter. https://t.co/7rQhUBI6eo

This is a very interesting discussion and it provides a useful lens into the way that fintech infrastructure tradeoffs are currently being discussed. This portion sums it up nicely. Self-custody is the easiest primitive for builders. But (IMHO) most customers don’t want it. https://t.co/zPVOce7cUJ https://t.co/2BXiaB29ij

This already exists. The FDIC insurance layer for neobanks is ... FDIC insurance! Neobanks don't hold deposits directly. Their partner banks do. And their partner banks have FDIC insurance that protects customers up to $250,000. There are some flaws in the current system. Pass-through insurance only applies if adequate records are kept documenting who owns what, and customers can't tell (from the outside) if a neobank and its partner bank(s) are keeping adequate records. Also, some partner banks do a poor job supervising their neobank programs and that lack of effective supervision creates additional risk, which can (in theory) negatively impact the deposit insurance fund. But these flaws can be fixed! The FDIC proposed a new rule to fix the inadequate record keeping for custodial accounts. The FDIC is also (reportedly) working on improving banks' approach to third-party risk management, with a specific focus on fintech partnerships. That's the right way to solve for this. If a fintech infrastructure company tried to build private deposit insurance for neobanks, they would discover that it's really hard to sell deposit insurance (the FDIC doesn't have this problem with banks as they are generally required to have FDIC insurance) and it's really hard to not go bankrupt as an insurance provider if you don't have some way of directly assessing and managing the risk of the thing you are insuring (this is why the FDIC has supervision and enforcement powers).

The best comp is Wise. Applied for a national trust bank charter. Presents some obvious money laundering risks. Received the OCC’s decision on its charter application this summer. The key difference is that with Wise, the OCC scrutinized the company holistically, rather than just looking at the proposed Wise National Trust (WNT) bank. All the Wise baggage was considered because, as the OCC wrote in its rejection, “WNT would be a small aspect of a larger enterprise with a purpose to enable the continued growth and scale of Wise.” Tellingly, this same approach was not taken with World Liberty. The OCC did not consider the risks or questions raised by commenters about World Liberty Financial (of which there are many) in its evaluation of World Liberty Trust’s application because, “World Liberty Financial, Inc., is not a party to this application.” This despite the fact that World Liberty Trust’s purpose is obviously to enable the continued growth and scale of World Liberty Financial. If I worked at the OCC, or Wise, or any company that is currently regulated by the OCC, or any company that is considering applying for a bank charter from the OCC, I would find this inconsistency disturbing.

Absolutely damning silence from the bank trade associations who, I thought, had serious concerns about crypto's repurposing of national trust bank charters and the AML risks posed by stablecoins. https://t.co/jw8b8Y0b1I

I'm hearing that Coinbase might have been the one to have pulled out, some time in the due diligence process. This has real "you can't fire me because I quit" vibes. https://t.co/pGpttDbL1E

A crypto company choosing to take less money in order to be acquired by a non-crypto company because it was a better cultural fit is so wild as to strain credulity. However, if it's true, it's quite the indictment of Coinbase. https://t.co/kJg9RqKp9M

I do not have a take on Stripe/PayPal, apart from the observation that Stripe seems to know what it's doing, PayPal does not, and acquisitions are very difficult.

Can Stripe build Circle before Circle builds Stripe? There’s an opportunity for someone to use a regulated, USD-backed stablecoin to significantly disrupt the global payments ecosystem. This is not a big direct revenue generation opportunity because the economics of stablecoins aren’t that good (especially if there’s any competition). However, it is a big indirect revenue generation opportunity if you can stack value-add services on top of a ubiquitous stablecoin rail. Circle is well on its way to owning that regulated, USD-backed stablecoin rail. More recently, it has been working to build out those value-add services (CCTP, CPN, USYC, agentic payments capabilities, etc.) Stripe obviously has a ton of value-add payments services already built. It has been working to retrofit those services for stablecoins and to build new, stablecoin-native value-add services. The problem for Stripe is that it doesn’t control the underlying stablecoin payment rail. Circle does and it has been working to vertically integrate it in order to lock the Stripes of the world out of the more lucrative opportunities higher up in the stack. Stripe’s initial response was to acquire Bridge and (through Bridge) to issue its own stablecoin (USDB). What Stripe seems to have realized is that this strategy for building out the Circle side of its business is going to take too long. Circle has too big of a lead. So, Stripe has taken a page out of the big banks’ book and has launched a consortium (Open Standard) which will develop its own regulated, USD-backed payment stablecoin (OUSD) to compete with Circle. It has convinced quite a few other companies to be a part of the consortium as well, including Adyen, Visa, Mastercard, American Express, U.S. Bank, Coinbase, Google, and Shopify. Stripe is incentivizing participation by creating a somewhat-decentralized governance structure for Open Standard and is incentivizing adoption by eliminating fees to mint and redeem and sharing nearly all the float revenue with the partners who are using OUSD. Essentially, Stripe is teaming up with everyone who makes money in any part of the payments stack (except Circle) and creating a new stablecoin business model that makes stablecoin issuance unsurvivable as a standalone business. This puts Circle in a tough spot, because, unlike Stripe, Circle can’t adopt a consortium-style approach to building out the Stripe side of its business. It needs to own that side of the business, which means it needs to build (or acquire) it itself. OUSD isn’t guaranteed to succeed. It has some massive execution and governance challenges ahead of it. And regulators will have their say, at some point. But it is an indicator of how important Stripe (and its partners) think regulated, USD-backed stablecoins are as foundational payments infrastructure.