Mike intro:
“Enterprises need to be ready to build for a tokenized future because at some point, almost all, if not every financial asset will move through blockchain.”

Question:
How does tokenization impact payments?

Mike:
“So the first point is how does tokenization affect a payment itself? Well, it allows you to move money faster. It allows you to move money globally, seamlessly, cheaper, without borders, without friction. And transparency is critical because it decreases risk; you know where the assets are, you know where the money is, you know where it’s going, you know where it needs to be and you can confirm that it’s there. 

Any business that needs to move money, any bank that needs to move money across borders or in a more secure, lower cost way can benefit from tokenized payments. And I think we’re only at the beginning of seeing really where all the opportunities are and we’ll see this across all verticals, all geographies and really all payment types.” 

Question:
How will tokenization impact the end user’s experience?

Mike:
“Tokenization should make payments faster and cheaper. So if you are a person in the United States and you’re sending money to your grandma in Mexico, your grandma should be able to get that money faster, at a lower cost than you know exists today. If you’re a big institution and you need to move money between the United States and Singapore on a Friday where it’s Saturday already in Singapore, you should be able to do that 24/7. You should be able to track that payment. 

You should be able to do it at a lower cost, so there should be benefits across the board to being able to move money in a tokenized way and regulators love this because all the assets are being tracked, all the assets are objectively verified, and both parties are able to see the movement of the asset and this means that again, because there’s lower risk, there’s lower costs all around. You don’t need to add in a buffer for fraud. You don’t need to add in a buffer for risk loss, for credit loss because the assets are going to move almost instantly. It also means we reduce counterparty risk.” 

Question:
How can tokenization or stablecoins potentially reduce costs associated with money movement?

Mike:
“Tokenization is going to help remittances in several ways. Number one, the money can move instantly. So instead of there being an hour delay, a multi-hour delay, a multi-day delay, you can send money to someone across the border, to anyone you need to in a very, very fast manner and obviously there’s going to be benefits on both sides of being able to do that. 

The second is because this is blockchain, you have the ability to send this payment without the intermediaries or the extra friction of multiple banks or multiple counterparties in between the transaction. That obviously again, means these move faster. It means they move at lower cost and this means that both sides will spend less money to be able to send this money through blockchain. 

The other aspect of tokenized payment is that regulators love this because both sides are able to see where the funds are and able to see where they came from. Very important for compliance, for regulatory, for KYC to know that these funds are happening between two authorized parties.”

Question:
How can tokenization help facilitate settlement?

Mike:
“Tokenization is going to help settlement because you’re going to be able to move money very quickly. A great example would be merchant settlement. So I’m a merchant who received a credit card payment on a Tuesday from a consumer. Normally most merchant acquirers are going to deposit that money two business days later. Well, if I’m a small business, I’m probably running very cashflow tight. I need to order bread, I need to order flour, I need to pay my employees, I need to pay delivery drivers, so waiting two days is really brutal. Obviously blockchain payments and tokenized payments allow you to make this money move whether it be T-0, same day, or even instant settlement immediately after the transaction. So you’re able to really benefit the cash flow of the business, the cash flow of the employee, or the gig worker, or the delivery driver, or the courier, or whoever it might be and that’s just one example of credit card settlement. 

If you look at other forms of settlement where there’s a trade or some transaction that happens and the assets move separately from the money, there’s always a risk that either the assets don’t move or the money doesn’t move. So when you look at an institutional settlement, you’re able to have both the assets and the money move simultaneously. So you have no counterparty risk, you have no settlement risk, you have no delay risk and obviously that brings the cost of settlement down dramatically ’cause you don’t have to add in a buffer for all those different types of extra cost or credit mitigation that would normally have to happen between two parties.”

Question:
How is Paxos an industry leader in tokenization?

Mike:
“Paxos is leading tokenization in three major ways. One is Paxos has the established regulatory infrastructure and compliance infrastructure to be able to do tokenization not only in a legal way and in a very again, compliant way, but it also means it’s safer for regulated companies around the world to trust that Paxos is probably the best, if not the only partner they should be considering. 

The second is because Paxos has this very large network of platform customers, our platform enables tokenization efforts in one to potentially benefit the users in another. And that also means that users from one platform can send tokenized dollars or tokenized assets to the user of another platform. That also means they could receive tokenized assets from the user of another platform which really opens up these networks into true interoperable connected points and nodes around the world. 

I think the third is that tokenization represents an ability to really drive down costs and increase speed. So transactions today that may be either too expensive, or too slow, or too risky really become enabled because Paxos, by using our tokenized network, we’re able to send these assets around the world again, not just instantly, but because it’s faster and you’re removing multiple intermediaries that the cost drives way down. So some products that might not have been possible or feasible previously now really become possible through Paxos.”

Question:
How does tokenization impact people in everyday finance?

Mike:
“Tokenization really enables a few different benefits to every user around the world and Paxos is enabling this in dozens of countries for hundreds of millions of end users everywhere. And what tokenization means is that access to funds, the cost of accessing US dollars specifically goes way down. PYUSD and USDP are great examples of that. 

When you look at being able to send money, a lot of times the reason it’s so expensive to send money between the US and Mexico or the US and El Salvador is there are a lot of intermediaries in between. So to send money could cost people 10, 15, 20% and that’s not helping these people gain access to the digital economy. It’s certainly not helping them send and receive money in a cost efficient way. 

The third thing is a lot of small businesses around the world really struggle with cash flow and PYUSD is a great example of being able to not only access funds faster, but also be able to have utility and use of those funds in a faster manner. So you could pay your suppliers faster, you could pay your employees faster and that’s going to benefit anyone because your employee may need to pay rent that day. And instead of going and borrowing it from a payday lender or borrowing it from an unsavory character, they’re able to have that money and pay their rent, or pay their bill, or buy their kids groceries in a way that again, previously they may have to wait two, three, four days to be able to get access to that money or even a week or two, or borrow it and then also you’ve got a lot of other problems on your hands, whether it be 10, 20% interest rates or borrowing from an unsavory lender. I don’t think that’s good for inclusivity. It’s definitely not good for economic empowerment or development and it certainly is not helping people grow economically around the world.” 

Question:
What are the benefits of tokenization for users without access to multiple asset classes?

Mike:
“Paxos is going enable the tokenization of real world assets and once you take an asset that may be in a closed off ecosystem or in an ecosystem that’s very hard to be able to access from outside of that system, you’re opening up the ability for end users to be able to purchase or access these assets that are amazing for building wealth, for storing value, for hedging against inflation. 

And Paxos’ tokenization abilities will allow companies to create their own versions of these tokens or you can even take real world assets that exist today, whether they be a public equity, a private equity, public debt offering and be able to give that access to someone. Maybe they’re in rural Brazil, maybe they’re in Mexico, and the ability to access that today is just not even possible. So these users now have the ability to gain access to the broader financial systems, whether they be securities, equities, or debt, so that they can build wealth, they can store value and they have the same access to these instruments that people in the United States and other developed economies already have.”

Question:
How does Paxos support tokenization?

Mike:
“Enterprises need to be ready to build for a tokenized future because at some point, almost all, if not every financial asset will move through blockchain because it’s going to enable companies to move money faster. They’re going to be able to access goods and services faster. They’re going to be able to sell products faster and they’re going to be able to sell products globally. And obviously these are really big things to think about for any company, so I think the immediate opportunity is to start to build the strategy for what are the benefits to your business and how can you access those benefits, whether it be cheaper costs of capital, cheaper movement of money, lower credit risk, lower counterparty risk, faster access to supply chains, faster payments to your employees, faster payments to contractors. 

All of those things can benefit any enterprise. But enterprises are complex places, so figuring out where do you start? What’s an immediate use case that you can benefit from? And you need a regulated, transparent, and trusty partner and that’s where Paxos comes in to help you not only think about the strategy, but to also help you implement these strategies anywhere you are in the world.”