Arc is an economic operating system designed for the machine economy, where the substance of contracts and corporations will become software machines themselves, and blockchain infrastructure provides the trustworthy medium for agents to coordinate, store value, and execute provable contracts.

(00:00:06) Today I know priors, we have Jeremy Allaire, the co-founder and CEO of Circle. (00:00:10) We'll be talking about cryptocurrency, AI, agentic payments, AI evolving on the blockchain, and a variety of other topics. (00:00:17) Great. (00:00:17) Well, thank you so much for joining us today. (00:00:19) It's a pleasure to have you. (00:00:19) It's great to be here. (00:00:20) Thank you. (00:00:21) So maybe we can start with you just giving a quick overview of Circle, what you do, how you approach the world, because I think (00:00:27) We're going to be talking a lot about stablecoins, crypto, AI, and how all these things tie into sort of the agentic future. (00:00:32) But I'd love to just start with sort of origins of the company, what you all are up to, and we can go from there. (00:00:36) Yeah, for sure. (00:00:37) So yeah, Circle's been around for a while. (00:00:39) I co-founded the company over 13 years ago or so, 2013. (00:00:45) And really at inception, I was really excited about this idea that we could create a protocol for dollars on the internet. (00:00:53) And I had been really excited about what was happening with technologies like Bitcoin and had been working on kind of internet infrastructure for a long time. (00:01:03) and got really excited, if we had a protocol for dollars on the internet, that potentially we could have a way to store and move value instantly, globally, frictionlessly, at no cost, ultimately. (00:01:16) The other idea that we were really excited about back then was this idea of programmable money and the idea that eventually these networks, blockchains, would become like operating systems and you could actually have machines (00:01:29) that intermediate economic activity and financial activity on the internet, including like autonomous software machines. (00:01:36) And back then, we didn't have generative AI or anything like that, but this sort of idea of kind of commoditizing the kind of payment utility layer with like very safe digital, dollar digital currencies, and then having like programmability of that with machines that are kind of (00:01:54) tamper-resistant, can run on the internet, that's what kind of drove the founding of the company. (00:01:58) And the view was like, if we could do that, we could actually improve the financial system, make it safer, make it more accessible, make it more efficient, and kind of derive new utility from money that we haven't had before. (00:02:10) And so that was sort of where we started. (00:02:11) Why is the dollar aspect of that important? (00:02:13) So if you look at a lot of the things that happened in cryptocurrency in the early days, it was really about creating things that were divorced from the traditional financial system if possible. (00:02:20) or were not dollar-centric. (00:02:21) So for example, Bitcoin was in part a response to the great financial crisis and the view that all sorts of weird bailouts happened there and therefore we needed some alternative sort of financial infrastructure for the world. (00:02:32) so I think, so I actually, what's very interesting is like, I believe in kind of Austrian economic thought. (00:02:40) I was studying Austrian economic thought like in the early 1990s for a very long time. (00:02:47) And so I've been interested in sound money theory. (00:02:50) And actually it was studying the kind of impact of the global financial crisis that drew me into this, because my view is like, there has to be a way to build like a safer financial system. (00:03:01) And (00:03:02) The key issue there was I was interested in this idea of full reserve money. (00:03:06) And in some ways, Bitcoin is full reserve money because you kind of, there is no way to fractionally lend Bitcoin per se. (00:03:13) So full reserve money means currency that's backed by something hard behind it, some asset. (00:03:17) Doesn't necessarily mean it's a hard back. (00:03:19) Full reserve money is different than, say, fractional, full reserve banking, I should say, is different than fractional reserve banking. (00:03:25) And so, you know, back in, there was another (00:03:29) major economic collapse, which was the Great Depression, the run on all the banks and all that fun. (00:03:35) And in the 1930s, there was a really big debate about what's the right construct for the banking system and the financial system. (00:03:42) And there was a proposal from a group of economists called the Chicago Plan (00:03:48) And the kind of ringleader was a Chicago economist, actually, it might've been a Yale economist or Princeton at the time, but Irving Fisher, who wrote a book called 100% Money. (00:03:59) And that idea was that full reserve money was essentially, you know, government obligation money. (00:04:05) So it's still the obligation of the government, like the US government in that instance. (00:04:09) But that essentially, (00:04:12) You can have that and you can hold that, but you can't take that and then fractionally lend against it. (00:04:18) So you have kind of a full reserve and you can only lend full reserve money. (00:04:22) And so that was a big proposal for how to structure the way the financial system worked. (00:04:28) And it was actually lobbied very, very hard against it by the banks. (00:04:32) And the banks really liked fractional reserve. (00:04:34) They liked to be able to have the inherent kind of leverage and risk-taking and instead convince the government to establish or they (00:04:42) collectively with the government sanction established an insurance company called the Federal Depository Insurance Company Corporation. (00:04:50) And so that was a kind of corporate insurance model, but the risk-taking still existed. (00:04:56) And so we've continued to kind of face those issues. (00:04:58) The great financial crisis was an example of 30x leverage, 12x leverage, 14x leverage against these sort of base layer. (00:05:05) And so my philosophy has been, (00:05:08) right now, in terms of general utility, our existing economic system, it does depend on really major reserve currencies like the dollar. (00:05:19) And my view is like, that's going to continue for a while, maybe 30, 40, 50 years. (00:05:25) It'll continue for a while. (00:05:26) But what we want to do is construct a system that is in fact safer. (00:05:30) So a full reserve form of money. (00:05:31) And that's what stablecoins are. (00:05:33) That's what dollar stablecoins are. (00:05:34) And in fact, with the Genius Act that passed last year, it's sort of codified in law. (00:05:38) law. (00:05:38) Like you can't do anything with this. (00:05:39) It's like this very narrowly bound, narrow money kind of model. (00:05:43) And so I think in some ways, like that original vision, we've now got established in laws around the world. (00:05:50) And now we have to do more with it. (00:05:51) We have to make it extraordinarily useful. (00:05:53) You can lend that form of money as well, but it's just that you can't do fractional reserve. (00:05:59) So what are stablecoins currently backed by? (00:06:01) My understanding is, for example, the stablecoin companies are big buyers of treasuries. (00:06:06) or US treasuries and other sort of instruments like that. (00:06:09) Could you explain a bit more sort of what tends to back these things? (00:06:11) Yeah, so up until really the last couple of years, stablecoins like USDC had to be always one for one redeemable against very safe liquid assets. (00:06:27) And we couldn't take risk outside of what was permitted under the kind of payment system laws that regulated us. (00:06:33) And so that was Circle. (00:06:34) There are other people who didn't take that approach, but sort of fiat stable coins in this way, we're back that way. (00:06:41) Now, laws have now come into play in major jurisdictions, whether it's in Europe or Japan or the US, et cetera. (00:06:49) And we've been following whatever laws apply to us, whenever they apply to us, obviously. (00:06:54) But what that's really led to is an architecture, which is basically what's now federal law, which is (00:07:01) really holding only short duration US government treasuries or treasury collateral that is overnight with global banks. (00:07:12) So that's very safe overnight treasury collateral for cash. (00:07:17) And then some amount in cash that is for kind of immediate liquidity. (00:07:23) But in that case, it's sort of holding it in these sort of big custodial institutions like Bank of New York that holds hundreds of trillions of dollars, et cetera, so of assets. (00:07:31) And so that is essentially the architecture of USDC. (00:07:35) And we're very transparent. (00:07:37) We have daily transparency onto most of it through a system we set up with BlackRock. (00:07:42) So USDC is like a crypto token. (00:07:45) that anybody can effectively purchase, and in exchange for $1, you'd get one USDC, and that USDC continues to be backed by a government treasury, like a short-term T-bill, or some cash or some exchange. (00:07:57) That's right. (00:07:57) It's backed by treasuries, repos, and short-duration T-bills. (00:08:01) The average duration tends to be of the T-bills, and that portfolio tends to be around like (00:08:08) 13 days. (00:08:09) So it's super, super liquid and kind of, it sort of allows it to be treated as like a cash instrument. (00:08:14) What do people do with it? (00:08:15) What are the main use cases of USDC? (00:08:18) The conception of this obviously is like a general protocol for dollars on the internet. (00:08:22) And in fact, the whole design is this is like a general purpose, general architecture money. (00:08:27) And we actually see it used, you know, from at the very smallest end, like someone who's paying, you know, 25 cents for a digital object in a digital game that's built on a blockchain, that would be like one end. (00:08:38) Or even now we're starting to see, and we'll come back to this topic, I'm sure, AI agents that are paying for the output of essentially the AI tokens of another AI agent, and they're spending, again, just a dollar, 50 cents, 20 cents, et cetera. (00:08:55) So super tiny transactions at one end, all the way to the largest electronic trading firms in the world that do huge amounts of capital markets activity who are settling multi-hundred million dollars (00:09:08) transactions. (00:09:09) And the powerful thing is it's all the same. (00:09:11) Just like, if I send you an e-mail, and my email's like, hey, this is what I had for breakfast, the payload of that is the same as if I sent you an e-mail that had like a CAA dossier attached to it. (00:09:23) USDC doesn't care. (00:09:24) So as a general architecture, it can be used across a huge range of things. (00:09:28) And we have everything from merchants in Stripe and Shopify that are using it to Visa actually using it themselves to actually move money on their own internal network instead of using the legacy banking system. (00:09:40) to lots of kind of neobanks, remittance companies that are using it as a way to move value. (00:09:46) A great kind of B2B FinTech ramp just yesterday launched USDC as like core to their treasury system. (00:09:54) You can use it to pay invoices, pay anywhere in the world. (00:09:56) So my sense is some of the reasons people do this is number one, you can do it at any time. (00:10:00) So for example, if I send a wire, I know a lot of crypto companies, for example, that when they raise money, they ask you to send USDC because instead of hitting a wiring deadline in the afternoon, you can wire the money on the weekend. (00:10:10) But it just works the way the internet works, right? (00:10:12) I mean, our expectation is like, I can pick up, my WhatsApp or I can pick up my WeChat and I can just communicate in video with anyone anywhere and it just works, right? (00:10:20) And my expectation is like, hey, if I make a piece of software like and I put it on the internet, like billions of people can access it. (00:10:27) I don't need to do something special. (00:10:28) And I think that's, (00:10:30) basically, this is just internet native, and it runs on internet protocols. (00:10:34) And so it behaves the way that any piece of data or content behaves on the internet, which is what our expectations are, most people's expectations are. (00:10:42) Yeah, I was just trying to enumerate a little bit of like what makes it a superior instrument for all sorts of purposes, and one is 24-7 accessibility. (00:10:48) Two, maybe some form of transaction fees relative to the volume. (00:10:52) And then three is, my sense is it's also a way for people to participate in US dollars who often would not have access directly. (00:10:58) And so they use crypto as almost a proxy too. (00:11:01) Yeah, for sure. (00:11:02) I mean, I think store value is a really big thing and we see that. (00:11:06) And in fact, like the law that was passed last year, the Genius Act, like a big motivation for the administration, and this is something that we've been proposing and kind of pushing for a long time is (00:11:17) that this is a way to continue to export the dollar. (00:11:21) And so we're now exporting digital dollars and we're doing that all around the world. (00:11:24) And that's like strategically important to the United States and from a geopolitical, geoeconomic perspective. (00:11:31) But there's other things too, which is, this comes from my own background as well, which is these are, this is programmable money. (00:11:37) There's never been programmable money. (00:11:39) Like you actually have (00:11:41) essentially like our stablecoin network is just a public API on the public internet that anyone can plug into and use. (00:11:47) And so if I'm a developer and I want like global dollar settlement and I want to provide that as a capability to my users, I don't have to ask permission. (00:11:56) I can just go connect to that smart contract, connect to that (00:12:00) public API and boom, I have now an application with global digital dollar utility. (00:12:05) And so that's really different. (00:12:07) Yeah, and smart contracts is basically a way to write code that's wrapped around this money that allows you to effectively have a virtual contract online. (00:12:15) So you can say under XYZ conditions, pay this out. (00:12:18) We're going to generate a financial instrument off of this. (00:12:19) And it's just kind of based on this other layer that you can plug into effectively. (00:12:23) Yeah, that is definitely the case. (00:12:25) And I think like (00:12:27) Yeah, the idea of programmable money was like, again, this early idea that we had, and smart contracts was sort of the original expression, but when I looked at that 13 years ago. (00:12:38) My view is that blockchain networks are operating systems. (00:12:41) They're going to be operating systems. (00:12:43) And so when we think about operating systems, we have lots of paradigms for that. (00:12:46) We have mobile operating systems. (00:12:48) The web was itself kind of an operating system with a runtime and a language model and an object model. (00:12:52) And, you know, clouds became kind of like these big virtual operating system environments. (00:12:58) AI foundation models are now essentially operating systems that execute tasks and other things. (00:13:03) Blockchains are operating systems. (00:13:05) And they have compute engines. (00:13:07) They have virtual machines. (00:13:08) And you can write Turing complete code. (00:13:10) You can write software that runs on these. (00:13:12) But there's some really key attributes that make them different. (00:13:14) So the first is that the code is sort of tamper resistant. (00:13:19) Once it's published, it's sort of like out as like a machine that's tamper resistant. (00:13:23) The second is it's perfectly auditable. (00:13:25) You can audit every single input and output of that machine, of that code in real time. (00:13:29) Because it's all on a public blockchain, so anybody in the world can look it up. (00:13:32) So it's like all the compute is public, accessible. (00:13:35) It's open source by nature, and that's really powerful as well. (00:13:40) And it also has these sort of, essentially, kind of transaction and compute integrity assurances. (00:13:49) And this is really key, and it ties back to AI as well, which is like, you want assurances that the machine is doing what it said it's going to do, and you want kind of the inputs and outputs to be provable to, and the state of the machine to be provable. (00:14:01) And these are things that, (00:14:04) It was not easy to do in the past. (00:14:07) And so these network computers, these operating systems now provide for that. (00:14:12) And as we're moving into the AI driven economic system, right, having those mechanisms becomes even more important. (00:14:20) It happened to be important for financial transactions where, you know, integrity, proof, auditability, verifiability are like intrinsic in a fiduciary apparatus. (00:14:29) That was like really key. (00:14:30) But now when we're dealing with, you know, kind of autonomous (00:14:34) actions in the economy, that also becomes extremely important. (00:14:38) It would be great to talk about that because, geez, probably 7, eight years ago, me and my friends used to speculate that the most likely place maybe that AGI would emerge, which again, I don't think is going to be the case in the future, would be off of the blockchain because you had these effectively agents, they're very simple agents even running back then in some sense in terms of doing transactions on the blockchain. (00:14:59) And you had these economic games that were multi-turn economic games to some extent that these actors (00:15:04) could play. (00:15:04) And so we said, isn't that a great place to basically evolve intelligence, right? (00:15:07) Because you have these multi-term games, you have economic incentives, you have game theory, you learn all sorts of lessons off of that. (00:15:13) Obviously, there's a very different world now with sort of generative AI and foundation models. (00:15:16) But I'd love to hear your view of where are agentic payments going? (00:15:20) Yeah. (00:15:21) And is it going to be crypto? (00:15:23) Is it going to be more just traditional banking systems? (00:15:25) Is it a hybrid? (00:15:25) Like, what do you think are the drivers of that? (00:15:28) I mean, there's a lot in there. (00:15:29) There's a lot we could talk about. (00:15:31) So maybe first, like, I think, my own view is that, we're going through a pretty steep kind of curve right now. (00:15:40) We're like in the... (00:15:43) about three months into a pretty dramatic shift in kind of the fundamental capabilities of technology, probably the most dramatic that I've ever seen in my own time in technology. (00:15:55) And I think, that shift is effectively going to mean that a couple things in my view. (00:16:02) So the first is that more and more of the actual work that is done in the real economy, especially in (00:16:11) in kind of the what we call the white collar economy, but in many, many areas of service and delivery and so on, so much of that is going to be conducted by AI agents. (00:16:24) And so AI agents conducting the work, AI agents collaborating with each other, AI agents, consuming services from each other and kind of, purchasing effectively specialized intelligence or output, et cetera. (00:16:37) Like this is, we're on a really interesting curve there. (00:16:40) And so the kind of agenda (00:16:41) authentic economy is being born as we speak. (00:16:44) And in that world, we need a different infrastructure for the financial intermediation layer. (00:16:50) Why? (00:16:51) Well, we don't have an infrastructure that can support that. (00:16:54) We don't have an infrastructure that can work globally, interoperably, instantly, that can be programmed through software layers by arbitrary pieces of software. (00:17:05) That doesn't exist. (00:17:07) We need an infrastructure where the agents themselves can dynamically create and spin up different kind of financial endpoints themselves. (00:17:17) We need transactions that can scale potentially into the billions or trillions of transactions. (00:17:23) We don't have that. (00:17:24) We also need the ability to kind of handle transactions at micro-scale as well. (00:17:30) So, for example, consuming (00:17:33) a certain amount of intelligence might be 5 cents or 10 cents as it is with these. (00:17:37) And so we need that to work. (00:17:38) We need that to work in real time, again, between any piece of hardware, software, anywhere in the world. (00:17:42) Isn't there arguably all that though stuff that people have been talking about for a long time in terms of just crypto, like the benefits of crypto? (00:17:48) It hasn't really become possible until really just the last couple of years. (00:17:52) So it really took kind of third generation blockchains to actually deliver on this. (00:17:58) So now today, like, you know, you actually can look at like transaction (00:18:02) transaction volumes of USDC, which is by far the most transacted digital currency in the world, way more than anything else. (00:18:08) And transaction volumes have grown incredibly. (00:18:12) And off of like a monetary base, it's also growing, but the transaction volumes are growing way faster. (00:18:18) And that's because money velocity is picked up. (00:18:21) The cost to transact is now sub-cent reliably. (00:18:25) And so when you take out the cost, you can do more transactions. (00:18:29) And so with Ark, which we can come back to, we now have an infrastructure where we can conduct transactions for a millionth of a penny, which just was never feasible before. (00:18:39) Yeah, tell us more about Ark, because I know that you folks are rolling this out as your own blockchain, et cetera. (00:18:42) I would just love to learn more about what it is, what are the use cases, what differentiates it. (00:18:47) I would love to talk about that. (00:18:49) I want to finish one other thought on this sort of, this sort of agentic piece, which is, I think, (00:18:55) in addition to this sort of like financial infrastructure that's needed in this world and the role that will play. (00:19:01) And it ties back to your actual kind of question and stuff that you were thinking about before is my own view is that agents and seeing what happened with OpenClaw and Multbook and all this stuff is all really interesting because (00:19:15) it showed that you could actually see emergent forms of cooperation, of interaction, of engagement amongst AIs. (00:19:24) And that's pretty powerful. (00:19:26) And clearly, like we're at the front edge of that. (00:19:29) Like there's going to be a lot more of that. (00:19:30) And so if you have AI agents that are from around the world, they could be generated from lots of different models and LLMs and the like, and they need to kind of coordinate (00:19:42) They need a medium, a trustworthy medium where they can do that, where they can instantiate an entity, where they can store value in that entity. (00:19:52) They can execute and arrange contracts that intermediate the work and the tasks, and that where all of it is real-time mathematically and computationally provable. (00:20:03) And so (00:20:04) Blockchain infrastructure now actually gives us the building blocks for, when I say agentic economic activity, most people think, oh, that's e-commerce or payment, it's not. (00:20:14) Agentic economic activity is actually how does the organization of what we used to think of as labor and capital, but essentially like kind of how does this organization of kind of compute work happen and what kinds of corporate forms might emerge in that world to do that? (00:20:32) And so I'm actually quite interested in that. (00:20:34) does (00:20:34) to ARC because that's a design surface that we care about, which is basically, we describe ARC as an economic operating system. (00:20:43) And this goes back to a comment I made earlier, which is, (00:20:47) these networks are operating systems. (00:20:49) And we're moving now from the kind of like early adopter era, which you're very familiar with, which was mostly around like, speculation on different things. (00:20:58) There were some interesting things like NFTs or whatever, but like we're now moving very squarely because of stable coins into like the real economic activity side of this. (00:21:08) And I think my view is that (00:21:12) As we go forward, the substance of what we think of as contracts, the substance of what we think of as corporations, are going to be software machines themselves. (00:21:24) And so we're going to see this progression. (00:21:25) And so ARC as an economic operating system is conceived of as a compute environment for laying down all of the building blocks of economic activity, whether that's storing value, moving money, (00:21:37) or instantiating a corporate form or manifesting and intermediating complex contracts. (00:21:44) Like a lot of this stuff, which was conceptual a long time ago, is now like real. (00:21:48) And we have a legal basis for it. (00:21:50) We have a regulatory clarity for it increasingly. (00:21:54) And it's interesting is that the drivers of this machine economy are actually machines. (00:21:59) And so, you know, our view is (00:22:04) Ark is designed for this moment, which is a moment when machines are going to play a larger and larger role in all of the output of the economic system. (00:22:16) So if I look at a lot of the blockchains that people have found exciting over the last few years, obviously there's Bitcoin, which was almost purposefully designed in a certain way to make it a little bit less adaptable to all these new things that are happening now. (00:22:30) Solana, Ethereum, et cetera, have been the, in the past, the traditional places that people have thought about ways to build smart contracts, to build a lot of the types of things that you just described. (00:22:39) What do you think is the difference between some of these more traditional L1s or blockchains and sort of what you're doing at Ark? (00:22:44) Yeah, so a few big things. (00:22:47) I think the first is that, (00:22:50) as I think you were sharing, or we were talking about before we started recording, but I think a lot of the designs on blockchains from, let's call it the early adopter phase, a lot of it was sort of like, hey, we're going to build something that is completely censorship resistant or outside of the reach of governments. (00:23:10) It's sort of like, we're building an alternative universe. (00:23:13) And that's like the goal. (00:23:15) And I think decentralization is itself a good goal. (00:23:19) But I think as we move from early adopter to sort of mainstream scaling, where whether it's a major company like Walmart or it's a household that's thinking about how they store their wealth, the intermediaries, and there will continue to be intermediaries. (00:23:36) We're not all going to be your own bank. (00:23:38) The intermediaries have obligations in terms of the (00:23:43) the kind of like robustness of the infrastructure that they have to run. (00:23:46) And so Arc is actually set up with a number of features. (00:23:49) One is that it's actually a known validator set. (00:23:53) And so the infrastructure operators of Arc are...