Let's welcome Kai Sheffield, Visa's head of cryptocurrency, to the show. Welcome, I'm glad to be here. Thank you for having me. Thank you for sitting there while we do our little puppet show. That's great. Now, we're here at Consensus 2024. Tell us about your experience so far. Today is the second day, what's the atmosphere like? It's great. I think there's a lot of energy and momentum. I'm really excited to see what developers are building and how much blockchain technology is starting to mature, how the infrastructure is improving, and the different payment use cases that stablecoins can potentially enable. And it's great to be able to engage with a lot of our clients, a lot of companies, partners in the payments ecosystem, exploring how we can use blockchain technology to improve payment flows. Visa is one of the most important companies in any kind of payment around the world right now. You've been the head of cryptocurrency for a long time, but how has the conversation changed internally from a few years ago to now? For example, how have the ideas that you're putting forward and the projects that you're driving changed inside Visa? We've been making steady progress every week for five years. We actually started our crypto team in late 2018, early 2019, right in the middle of the bear market. So our approach was really long term, which is, are there technologies that Visa is interested in that could improve payments? So we wanted to take the time to figure out how we could support our partners with these technologies. And we also started experimenting with stable coins. We started doing a lot of research and education for our clients. Our goal is to continue to make consistent, steady progress over the next 10 years. We're really excited about the opportunity that stable coins in particular bring over five years of bull and bear markets. It was kind of a nice setup. We never thought we'd do something like that with puppets in the company. In the bear market, have you ever gotten pushback or been asked questions like, should we spend time and effort building in this industry that's so volatile? No. I think we're really fortunate to be at a company that has a culture that, from the early days of Visa, all the way back to the '60s, that recognizes that value is going to be digitized. Value moves through different networks. We want to be a single connection point for our clients to move value in different places and with different payment flows. We know that cryptocurrency prices are volatile. We don't care about the price. We care about the underlying technology and how to deploy it within the payment ecosystem. But it takes time to do that, and we need to do it in a secure way that is controlled by our clients. So we're in it for the long term, and we continue to make steady progress despite market cycles. I think in the recent Visa study, you and your colleagues found that only a small fraction of the multi-trillion dollar stablecoin market is actually being used by real people in a payment sense. We're talking numbers between 100 billion and 49 billion or something like that, which is a big number, but it's not representative of the overall usage of stablecoins. What do you think it will take to increase that number and increase the actual adoption of stablecoins as a payment method of choice? First, one of the unique things about stablecoins is that you can see all the data on-chain. So we've spent a lot of time and resources trying to understand the on-chain data and understand how stablecoins are being used. We partnered with AM Labs to put a dashboard Visa on Chain Analytics.com. This was a real effort to use on-chain data internally. This answers some questions and raises many more. We wanted to make this available as a free public tool and resource for our clients, policymakers, and media. And we started with transaction metrics that were adjusted to filter out transactions that we thought were initiated by bots or that we thought were initiated as part of a smart contract. This is not perfect. So I'm not saying this is the be-all and end-all. But we think there's a lot of opportunity for the industry to really leverage on-chain data to better understand how people are using stablecoins. And one of the things we've learned is that it's not just that stablecoins are being used by consumers to buy coffee, it's that stablecoins are being used for high value business to business payments and things like that. It's cross-border, that is, peer-to-peer. So, I think we're just kind of across the chasm from consumers who are already in the cryptocurrency world and using stablecoins to trade cryptocurrency on exchanges and paying other people in cryptocurrency, to the infrastructure where mainstream consumers, especially in emerging markets outside the U.S., can pay each other and pay businesses in many of these flows over blockchain rails, but we still have a long way to go. We're excited to partner with existing companies in the payments ecosystem to find ways to start integrating stablecoins in their own way. And we think it's going to have to be a combination of the two. It's not one or the other: traditional payment networks or stablecoins. We think about how the two can work together to improve payments. Can you tell us a little bit more about this? What is Visa's role in the future of stablecoins? Yes. We see ourselves as a bridge between blockchain technology stablecoins and the existing payments ecosystem. One of the things we've been doing is investing in ways to use stablecoins in some of our core products. For example, you tap your Visa card to pay, you're instantly approved, and you're on your way out the door. But there's a lot that goes into moving money from whoever issued that card to the merchant's bank on the other side. So we've started experimenting with stablecoins like USCC that run on blockchains like Solana, and giving our clients the option to settle with us on the blockchain. So we can receive stablecoins into an account where we have Circle, and then we can convert that and pay the merchant in fiat. And we think we have a very large and diverse network of traditional financial institutions, fintechs, crypto companies, and so on. We're trying to think about how Visa can be a bridge. Not all businesses are going to adopt stablecoins and blockchain at the same time, so let's put ourselves in their shoes. If they want to use stablecoins, we can support that. They operate on traditional fiat. We manage the conversion back to that. So we're excited to see if we can play that role as a bridge. Speaking of which, I had a pre-conference haircut, like we all do, in front of the contestants. My barber only accepts cash. I said, oh, it's about the fees. Because small businesses often don't like credit cards because of the fees. He said, no, actually, it's not because of the fees. Because if you get paid by credit card on Friday, you can't go to the bank and get the money because the bank is closed. So I'm curious to know how Visa is thinking about helping small businesses leverage and understand that stablecoins enable instant payments and have digital payments available. You don't have to worry about the banks being closed on the weekend. Right. So we're doing a lot of things across the company to speed up how quickly money gets to small businesses in particular.You know, we have a product called Visa Direct that allows you to push payments and have money directly on the debit card of a small business over the weekend. So I think it's not just stablecoins. We think there is potential for stablecoins and there is potential behind existing Visa products to be able to move money faster. But we think there are a lot of ways that the payments ecosystem continues to evolve and that money can be made and get to where small businesses need it quickly. It seems like Visa is focused on stablecoins when it comes to crypto. So let me ask you in 2022. I was very excited to hear that Visa was filing trademarks for NFTS and Metaverse and wallets and things like that. What's going on with those? Are you focusing on that? Are those being set aside while you focus on the stablecoin research dashboard and looking at how Visa can work with stablecoins? We continue to follow the NFT ecosystem and the broader creator economy. And I think that has definitely evolved and changed. When we first started looking at and experimenting with NFTS, it was really only on blockchains like Ethereum and things like that, and it was pretty expensive to move over to, and there was an ecosystem of fine art that people were collecting. Some of the changes we're starting to see now is that a lot of the use cases for NFTS are like loyalty. You know, you can issue NFTS now for a few cents. There are some interesting experiments happening with things like digital receipts and loyalty programs where you can hold an NFT and get discounts on various purchases. So, our culture is to learn by doing and work with clients on proofs of concept. I run a Visa consulting and analytics business where issuers and merchants have been asking us how to incorporate NFTS into their loyalty programs. So we're still interacting with the ecosystem and experimenting. I think a lot of the use cases for NFTS have evolved quite a bit from a few years ago, but overall we're very excited about the larger economy and the role that blockchain plays in that. Hi, thank you for joining us this morning, and I hope you enjoy the rest of the conference. Thank you for having me, it's been a lot of fun. That's Kai Sheffield, Head of Crypto at Visa.
