In our inaugural episode, we hear from Dante Disparte. He’s Chief Strategy Officer and Head of Global Policy for Circle, a leading platform for moving digital money across the Internet and around the world. Dante gives us a fascinating preview of some transformative changes on the horizon – indeed, happening now – for how we send, spend, save, and secure our money. We also discuss the deeper ways that digital money could elevate living standards for the 1.7 billion people on this planet who are unbanked or underbanked. As the saying goes, it’s expensive to be poor, but innovations in this space suggest we’re on the cusp of meaningful social impact – if this movement doesn’t go off the rails.
Guest:
Dante Disparte – Chief Strategy Officer and Head of Global Policy for Circle
Josh Burek: This is Immutable, from Harvard Kennedy School’s Belfer Center for Science and International Affairs. I’m Josh Burek. In our inaugural episode, we hear from Dante Disparte. He’s Chief Strategy Officer and Head of Global Policy for Circle, a leading platform for moving digital money across the Internet and around the world. Dante gives us a fascinating preview of some transformative changes on the horizon – indeed, happening now – for how we send, spend, save, and secure our money. We also discuss the deeper ways that digital money could elevate living standards for the 1.7 billion people on this planet who are unbanked or underbanked. As the saying goes, it’s expensive to be poor, but innovations in this space suggest we’re on the cusp of meaningful social impact – if this movement doesn’t go off the rails.
Dante, welcome to Immutable. It is so good to have you here.
Dante Disparte: Thank you, Josh. Great to be with you.
Josh Burek: We've been heading toward a cashless society for quite some time. Pew Research shows that in a typical week, Dante, 29% of Americans make zero purchases with cash. Apple Pay, Venmo, PayPal, not to mention credit and debit cards, have become essentially ubiquitous, right? And so we’ve been moving money around in electronic form for decades, but this is different from digitally native monetary instruments like Bitcoin or a potential U.S. digital dollar.
Can you talk a bit about this fundamental difference? And not just in the how – the technical sense – but in the why; why might this shift be transformative for millions of consumers and citizens?
Dante Disparte: Sure. Well, to begin on the why, I do think it's important to move a little bit away from the technology and a little bit away from the policy conversation, and then look at the real-world outcomes. And so in my mind, nothing more so than the COVID-19 pandemic underscored why innovations around money in digitally native form in what in the blockchain parlance is described as a tokenized form is so critical.
And ultimately, if you think about all the things that we could do, Josh, with our lives and where technology was really one of the only difference makers at, insofar as business continuity goes, household continuity, government or educational continuity goes, then the real frictions remained around how we transmit value.
Yet we live in an era where the Internet has flattened the world, made things faster, more present at hand, but to transmit value at scale, even in a domestic setting, is incredibly hard. We saw that play out with COVID stimulus money. We saw it play out with the payroll protection program.
And so that’s the why in my mind, in addition to which you have to then look at the kind of global implications of how money moves. Lots of people on the margins of being un-banked and under-banked and so on. And so the how is then to take in my mind what is not really a breakthrough innovation, this concept of electronic money, and to now make it an individual monetary unit that exists in code, as opposed to in physical form, like a dollar bill or a coin.
That enables a whole host of other opportunities, unlocking peer-to-peer payments, and then tearing down one of the more insidious aspects of the global payments landscape, which is the walled garden problem, that even inside the walled garden, you have a lot of frictions that are introduced, but when you pay from one banking platform to another, enter the world of a death by a thousand cuts.
Josh Burek: A special subset of digital currencies are so-called stable coins. What problems do they solve? Who uses them and what makes them stable?
Dante Disparate: Well, as you know, this is a special subset of the digital currency landscape that I care perhaps most about, because I think it's the subset that will do the most in building a bridge between digitally native financial use cases. So what would you do if a dollar could exist on the Internet and then bridging them into the real world?
And so Circle, which is the company I’m a part of, is the backer of USDC, which is the fastest growing digital dollar currency in the world. And the use cases are manifold, from unlocking low friction, high trust payments for Internet native and digital currency, native applications and financial markets to increasingly linking into legacy financial systems and legacy institutions, such as Visa, MasterCard.
Most recently, we announced through the Stellar blockchain a partnership with MoneyGram that would address this question of fiat currency to digital currency on and off ramps. So cash in and cash out points, enormous implications in terms of a leader, alleviating poverty, enormous implications in terms of extending the perimeter of payments in these digitally native forms to billions of people that are on the margins.
And so the use cases are far and wide, but it ultimately gets down to this question of if cash were an innovation today, would regulators approve it for its opacity, its limitations in terms of transmissibility and in the context of a COVID-19 pandemic, the potential to convey or be a vector for spreading disease.
So I think technology alone is not a panacea, but it is showing us where many of the existing systems have fallen short.
Josh Burek: Where are stablecoins being used today? Even if we don’t know that it’s happening behind the scenes, how might people be interacting with this world – even if they don't know it?
Dante Disparte: This is the really, really, really important question, right? When was the last time we had a conversation about the internet that discussed the hardware and the software that makes the Internet possible? We started changing the world with the Internet when the technology faded to the deep background and the experience in markets and for people were outcomes. Digital currencies, blockchain-based financial services, and payment systems are now at a similar tipping point where you may not know for example, that one of the settlement options you're using on the Visa network could very well be a USDC-powered settlement.
That means that these new innovations are being embedded and the user experience of digitally native payments with stablecoins might very well be just instant, lower cost settlement, as opposed to where the model today requires quite a lot of presence of mind of the technology, as opposed to the financial outcomes.
But the use cases are far and wide from trading to payments to how you send, spend, save, and secure your money. All of these use cases are now in the hands of millions of users. But the beauty of it is that we’re doing this in a free market, pro competition way so that rival firms are actually using the same fundamental digital currency – USDC for all of these types of innovations.
Josh Burek: Even as we build this momentum toward mainstreaming, there are big points of disruption and volatility. Late last month, China intensified its crackdown on cryptocurrencies, effectively outlawing all crypto-based financial transactions. Now the SEC here in Washington, Dante, has said it’s not going to follow that path; Gary Gensler saying he’s technology neutral. As you look out as at the regulatory and policy horizon, what makes you hopeful and what makes you anxious?
Dante Disparte: Sure. Well, I I'm a persistent optimist, right? You would have to be by default, both being an entrepreneur and then being at this nexus of exponential technology and how it will impact humanity, I've remained a persistent optimist. I would also say I’m incredibly encouraged by free market activity and I’m incredibly encouraged that, as I wrote a piece in Project Syndicate not long ago on the geoeconomics and geopolitical aspects of the digital currency space race, I actually think the United States and the West has a potential to win this digital currency space race, because we’re not taking a one-size-fits-all approach.
We’re not, quote unquote, trying to out-China China with this top-down, command and control structure in which people could potentially be de-platformed from their money, and there’s all these other risks. I think the better posture is you want an air gap between your central bank and how money moves in an economy.
And this is one of those ironies that the vast amount of value-added money in circulation today on the planet would fall into this class of privately issued, either through the two-tiered banking system or moving on private or consortium-backed rails, such as the Visa network, the MasterCard network, ACH, and a whole host of other domestic and international money movement platforms.
I think what we’re building at Circle and what ultimately building dollars on public blockchains means is to import that same pattern of behavior into an era of the Internet where your bank, your financial needs don’t take bank holidays and your money and your ability to move money is always on, in the same way that I think so many of us are.
Josh Burek: I’d like to ask you to talk a bit more, Dante, about how blockchain technology that underlines digital dollar stablecoins could help the poor obtain, retain, and transfer wealth. And are there other social impacts on the horizon that you’re excited about?
Dante Disparte: Well, the Money Gram-Stellar blockchain partnership functionally enables USDC to be a settlement option across the MoneyGram network. And when you think about the poverty alleviation opportunities that this brings to life, as opposed to just abstraction, it’s really been for me, at least one of the major goals I’ve had in entering this space in the first place.
If you think about how to draw parallels between information connectivity and fixed line telephony infrastructure, without digital transformation, billions of people would have remained and would continue to remain on the sidelines, have access to the Internet or mobile telephony and all of the both good and bad things that brought with it.
I think the same paradigm holds true in the movement of money and access to banking that, so much of the fixed infrastructure of banking, if it’s all about brick and mortar, then we will continue living in a world with more than 1.7 billion people who are unbanked or underbanked. And I always am quick to remind people that this is not merely a developing and emerging market challenge.
It's something we see at home in the United States with millions of households on the margins of being banked in no small measure because to be banked is functionally expensive. And so the opportunity to then lower costs, increase competition using digital currency settlement, and then using now this network of cash-in and cash-out points provided by groups like MoneyGram.
This is frankly only just the beginning. Represents a sea change in what it means to be included. So my big vision is if every low-cost, Internet-connected phone on the planet could become a compliant payment endpoint, one that enshrines Western values of to the right of lawful the use of money should be free.
You should have a presumption of privacy. You should have the presumption that you’re not being plagued by Internet funny money. Think about the powerful opportunities that recreates and that presents to the world.
Josh Burek: Circle’s mission is consistent with what you've just been talking about. It's to raise economic prosperity through the frictionless exchange of financial value. A stablecoin is obviously integral to that mission, but it’s not the totality of that mission, Dante, and as I think about, say, where Google was 20 years ago, it began as a highly relevant search tool, but over time became really a kind of a digital information ecosystem. As you look into the crystal ball, not just for Circle, but for this industry, how might this evolve?
Dante Disparte: Well, I’m glad you pointed that out, because indeed it is a very deep, deep commitment across the company. And at all levels of the leadership to do everything we can to improve the odds for people and to sort of enable a true democratization of access to capital and all the financial opportunities that that recreates.
So if economic mobility was a ladder, the bottom rung of that ladder is basic financial access to be able to send, spend, save, and secure your money. Should be digitally native as much as it should exist in other forms. And so I often argue that these breakthrough innovations are completing unfinished work in the financial system, as opposed to competing or disrupting them.
But our bigger vision is not just about the ability to get a trusted digital rendition of a dollar or other future currencies in Internet-native form. The bigger vision is similarly to link to capital markets, to link to saving products, to link to a whole host of commercial products, for example, that would lower friction and trade and commerce and other activities. So it is pretty far and wide looking at the totality of financial transformation in a digitally native form, but one where the presumption of trust, privacy, compliance regulation, and a series of first principles are enshrined. And to whom and to which we are really, deeply accountable.
That’s the broad vision of the company. And we’re actually starting to see that play out in some truly profound ways. As the company continues this journey, and frankly, as the technology starts to fade to the background and the need for these types of solutions becomes a major policy objective around the world.
Josh Burek: Dante, we’ve talked before about how impactful it would be to drive through neighborhoods and not see a proliferation of payday loan lenders, which as you and I both know, they exist for rational reasons because typical bank overdraft fees are extraordinary. So yes, they may be predatory, but people are making the least bad decision they can. We’ve also seen accounts, right, of certain banking branches in major urban centers that charge lower ATM fees; people line up for 90 minutes to save maybe the $3.50 transaction to pull money out. This has real world impacts. And sometimes we lose sight of that when we talk about the bleeding edge of DeFi, but this can have real, concrete impacts on how people live their lives.
Dante Disparte: That really, sincerely, and genuinely is the hope that we start to see this money movement that we’ve been discussing Josh, affect real people in real ways. And certainly, you know, as our chief corporate storyteller, I want to bring those stories to light. Because oftentimes it strains people’s credulity and credibility when they say digital currencies are making a sea change in financial inclusion. We’ll start to see more of these become, you know, real stories with real protagonist in them. But you’re absolutely right. We live in a country with banking deserts, Internet deserts, opportunity deserts, educational deserts, and so many more.
But what we are not entirely desert-ified of is access to low cost, Internet-connected mobile telephony. So if that phone is your basic bottom rung to financial mobility, financial access, credit creation, and a whole host of products, which by the way, the decentralized finance movement represents again, a challenge to, if to be banked means brick and mortar, and if to create wealth means $500,000 of free cashflow, then a lot of our society is going to be in trouble. And I think what the technology is doing is showing where policy and existing companies have fallen short and is creating important challenges to that system.
But it doesn’t mean we throw the rules to the wind.
Josh Burek: We talked briefly before about China outlawing crypto-based transactions. Other countries, of course, are taking a hard look at this space. Some of this pushback is merited, right, based on real concerns about what this ecosystem looks like. On the other hand, you've undoubtedly encountered a number of myths and misconceptions. What are some of the leading points that you think people get wrong about this space, and what do they get right?
Dante Disparte: I think that China banning digital currency transactions and cryptocurrencies is to the industry, it’s a repeat pattern as opposed to something new. And oftentimes, the media will report on it as if it’s a surprise. In many cases, anytime you’re on the opposite side of the spectrum of potentially repressive countries, it’s probably because you’re on the right side of history.
In that spirit, I think there is a really big wave and frankly, very big chance for the United States to forge ahead, provided of course we create, national sea to shining sea regulatory clarity. We really have a chance to forge ahead and continue building this multi-trillion dollar industry inside the US and then to promote those opportunities around the world.
On the other hand, in terms of the myths. One of the big myths is that this is an industry that is irredeemable. It is an industry that is causing all of these terrible social ills. It is an industry that doesn’t care about regulation or compliance, and that tries to circumvent all of those rules.
I'm really always cautious of catch-all terms. Not all stablecoins are created equal. Not all blockchains perform the same. There are many, many companies in this domain, including in developing the software that powers DeFi that are really trying to build to a higher standard, frankly, than many of their peers.
And we want those to create a blue checkmark moment, if you will, inside the United States. And from that platform of strength, you have this really great chance of creating and defending an open Internet of value.
Josh Burek: Dante, I want to pivot to you personally. How does, how does this technology and its ambition align with your own sense of moral and professional purpose?
Dante Disparte: It’s a great question, Josh. So for one, I grew up on the wrong side of the tracks, so to speak. I'm originally from Puerto Rico. I was the first to get through high school or college in my family and by default grew up poor. So I have a deep understanding and frankly, a deep commitment to bending the arc of Moore’s law in humanity’s favor, as I like to describe it in the abstract.
So for me, this I so much bigger than, you know, waves. It’s so much bigger than spot trades, or which crypto bet you should take today. It’s really about this long range vision in which people have broader optionality of financial access and where it’s not just definitional nor dependent on your postal code of birth and your country of birth, but that you really have this opportunity to defend and protect this inner Internet of value.
That’s the north star for me, and to find a company like Circle in which that very north star is now running an operational company that is powering now a $33 billion digital currency and building it inside the four walls of public policy and regulatory posture and so on, I think is an incredibly unique moment.
It’s not lost on me that I don't want to waste this time. So you see, in me, hopefully someone who’s mission-driven, who’s trying to be accountable as a leader in the domain, but also to hold the industry to account where it could improve as well.
Josh Burek: Speaking of accountability. I want to raise the namesake of this podcast, Immutable. Immutability is the backbone of blockchain technology. It’s the core of the distributed ledger, and keeping with the personal lens, Dante, tell us something immutable about you. What can people absolutely count on from Dante?
Dante Disparte: That's a great question as well. My personal mantra, if you will, if I had to give myself an elevator pitch, it’s doing the right things the right way, and it’s not just in pursuit of excellence from a performance point of view, or just a quality point of view, but it’s also in pursuit of reliability.
And then a degree of morality as in, right from wrong. I’m really, really, really to a fault perhaps anchored and guided by a high commitment to ethical approaches to leadership value systems. I believe, all too often, corporate and personal value systems are really convenient until you put people under duress and companies under stress.
That is what drives me: values matter most when it’s least convenient. And I try to be really deeply a values-based leader.
Josh Burek: Thank you for sharing that. I really appreciate that. As a bonus question, Dante, I'm going to draw from my journalist playbook back when I was a reporter for The Christian science Monitor, starting out my career, I made sure to ask my sources, what question did I miss? What should I have asked?
Dante Disparte: I think if I were to ask one question, what would getting it wrong look like? Because the stakes are incredibly high at this moment in time. There’s an enormous policy conversation and policy machinery at work right now in the United States.
The president’s working group is convened as we speak, how to appropriately regulate these innovations because they’re not too big to fail, but they’re too big to ignore. And so there is this particular point in time in which we could potentially get it wrong in the United States. And then with that cede leadership of this multi-trillion dollar innovation to other countries and to effectively push it back into the shadows.
Alternatively, we can get it right. And get it right doesn’t mean you throw away the rule book and you abandon this concept of same risks, same rules, technology-neutral innovation. So I would love to urge those who are listening to really pay attention to what this really means in the long run.
And that if the Internet created an embarrassment of riches and economic competitiveness in the United States, the Internet of value could potentially make the wave of innovation that preceded look small by comparison. So I’m really keen on the economic competitiveness and national security implications of the technologists and the builders of this Internet of value calling the US home.
Josh Burek: I want to go one layer deeper, Dante, on this dystopian possibility. I would say in the case of social media, the risk wasn’t that it never materialized. The conventional critique today is that it worked too well. It’s become too integral to our lives and has led to the proliferation of toxic content, misinformation, et cetera. What’s the analogous risk with the rise of blockchain technologies and stable coins? What does working too well look like?
Dante Disparte: We’re working too well without guardrails looks like what you see happening around the world today. And because this is Immutable and it’s a podcast so closely linked to geoeconomics and geopolitics, then, you know, borrow a page from 5G wars and borrow a page from the concerns that many countries had about the potential privacy erosions, or effectively two systems, and a world cut in two, where one version of the Internet exists – a closed version – and another exists that is free and open.
I think that same specter is upon us. Today, largely Chinese-based mobile money platforms process over $60 trillion a year. Today, you could argue, is the US losing ground? Will the effectiveness of US sanctions and Western sanctions still work in a world where people could still transmit value at Internet scale, but not be answerable to bodies like FinCEN or OFAC or others? That’s just, you know, level one, jeopardy for the West, not really promoting free market answers. Now in my mind, the free market answers should not be our federal government or the central bank effectively trying to digitize its own national currency, which domestically creates a whole host of privacy erosions and the specter of de-platforming people from their money among many others.
So I think the answer is continue promoting competition, but not unchecked competition, even for category creators, as we’ve seen in social media and other categories in the past. I think the debate has to move from stopping innovation from occurring in the first place to enabling responsible actors to continue innovating, and then co-creating the regulatory manual along with them.
Josh Burek: Dante Disparte: a real privilege to speak with you today. Thank you so much for sharing your insight with us.
Dante Disparte: Thank you, Josh. Great to be on.
Julie Balise: Immutable is a production of the Belfer Center for Science and International Affairs at Harvard Kennedy School. Our program is produced and edited by Josh Burek, Director of Global Communications and Strategy. The Associate Producer and Technical Director is Benn Craig. Digital Communications by me, Julie Balise. Thanks to Deb Henderson for our podcast artwork. Upcoming episodes and additional information can be found at belfercenter.org/immutable.