Western Union CEO: Western Union's Stablecoin Future

How we doing, folks? One person. How we doing, folks? Good, good. I'm very excited about this. It's amazing to see just, yeah, the progression of DAS. We've been hosting this conference since 2019, and yeah, it's our biggest DAS ever. So I know people are talking about it's a bear market and prices are compressed, but are depressed, but yeah, it's very exciting to see just that, yeah, the biggest turnout we've ever had in, you 8 years of hosting this. And, uh, one of the reasons probably many folks turned out is we, we're excited to have, uh, uh, Devin, who's the, yeah, CEO of Western Union here. So please give him a big round of applause and excited to get in. I think Devin, the big, the biggest thing I'm wondering, I, I guess coming into this chat is, uh, you know, you come into Western Union CEO, president position, stock is down a bit, revenue's down a bit. You can do a million things to kind of turn the business you know, get the, get the business humming again and you go kind of all in on stablecoins. Why is that?

So I've been the CEO for 4 years. We probably are doing a million things. Stablecoins is one of those million things and it fits in a block of the strategy, which is we have an enormous number of assets. So we have 100 million customers. We're a licensed financial institution, either a bank, a money transfer company, an e-money company, in over 50 countries around the world, and we move hundreds of billions of dollars around the world. So that infrastructure— we have 4 billion endpoints, uh, in our payout-to-account network, we have 400,000 retail locations— that infrastructure which was built really to do consumer-to-consumer small-dollar transfers is useful. And so we have a number of strategies around how do you begin to monetize that and how do you use it for other purposes, plus how do we make it more efficient. And so with the passage of the Genius Act, we saw an opportunity to leverage stablecoins, uh, to do a couple of things. One, on any given day, we have a couple of billion dollars floating around in the system. So we solved the problem a long time ago of consumers being able to send consumers money and being able to pick it up instantly. So, you know, people talk a lot about, oh, well, crypto will be able to make it real time. It already is real time. The problem is it keeps a couple of billion dollars of mine floating around in the system to pre-fund all those transactions using the non-Swift Swift banking system. So we have to wait for T+2, T+3. And so stablecoins at an institutional level allow us to take a lot of capital out of the system to make it more efficient. Uh, the second thing it does is we're opening up our network to lots of other people who want to get access to basically off-ramps in tough places around the world. All the infrastructure lives there. We have all the local, you know, treasury departments and we can do FX exchange. And so if you have a digital asset in a country where we have infrastructure, we'll now enable you basically to walk into any Western Union or send it to any bank account in our network pretty seamlessly. So kind of as an off-ramp at scale that allows that kind of instant liquidity option, we find a lot of people are finding that attractive.

Do you think it's more about the internal efficiency and kind of getting rid of that, you know, multibillion dollars afloat, or is it more about improving the customer experience or a little bit of both?

So the customer experience won't change.

Customer experience won't change.

Won't change. We'll talk about how the value proposition for some people might change, but the customer experience doesn't change. Today you can send money to any one of 191 countries pretty much in real time, and you're still able to do that. There is a lot of efficiency. So if I can free up a couple billion dollars of capital, I can buy back half the company because we have cash sitting on the balance sheet to make all this thing work that all of a sudden I can get access to. But you then have to— I mean, the work in this is getting all of our, our partners around the world to be able to accept stablecoin, to settle in stablecoin, you know, to get that institutional-grade money movement And again, we're talking hundreds of billions of dollars. There's only— I think there's only $300 billion of issued stablecoin, right? So I'm talking about being able to take my company, which is basically the equivalent of the entire stablecoin market, and move it into stablecoins.

Yeah.

In 100 countries around the world. So there's a big infrastructure play that we got to get to get it right.

What's the scale there? How many customers do you guys have?

100 million.

100 million customers.

100 million consumers.

Yeah.

Yeah. Um, and so the, the value proposition changed though for some of them is by the way the system is designed today, customers have to accept the local currency. Now in some countries they also are dual currency countries, so you can accept dollars. So like in Peru or, different places, but lots of countries you can only accept local currency. So when you send $100 from New York to Bolivia, you're paying out in bolivars. It's a country that's had some political instability, some inflation. The value proposition change will be you can now accept a Western Union stablecoin that you can hold in that country until you want the bolivars. So you can isolate yourself from the currency fluctuations, the political instability. But more importantly, we're also going to be able to give people stablecoin-backed cards. So you can walk into a Western Union and you can walk out with a stablecoin card. And that, in essence, is almost a bank account. So it's a US dollar-denominated card that's backed by the stablecoin. And so you can keep it on the card in US dollar-denominated asset. You can then spend it at a point of sale. You can add money to it. So in essence, we're going to be giving people in these countries access to the banking system and to bank accounts without actually having to open bank accounts for them, which is really hard in many of these countries. So that value proposition changed for our receive customers is actually a pretty big deal.

And so you can now open essentially US bank accounts for all 100 million customers. You couldn't do that before stablecoins.

You certainly couldn't do that before. Yeah, they aren't bank accounts, they're stablecards, but they function kind of like having a bank account in a dollar. Like if you live in Brazil and you're above a certain wealth level, you have an offshore bank account. So you have a bank account in Miami or in London or in Switzerland. Just as a way to hedge the Brazilian economy and the inflation. And, you know, it's a very accepted way that people in that country conduct their financial affairs. But lower-income people don't have access to that. They can't open a bank account in Miami or in London, and private bankers don't have the time or interest in opening it for them. But a stablecard proxies that same ability to hold Now they're not gonna hold $100,000, they're gonna hold $100, but for them that $100 is as important as the $100,000 for you.

Right, right.

And so it is a value proposition change that we're excited about.

Yeah. Do you, when you think about the competitive landscape, are you more worried about the kind of circles and tethers, and you mentioned 100 million customers, I think Coinbase also has roughly 100 million customers maybe. Are you more worried about the, those kind of folks or are you more, who do you worry about when you think about competition?

Yeah. So I see those folks as an opportunity. So none of those customers are my customer. My 100 million customers and Coinbase's 100 million customers are 100 million different people.

Yeah.

Right. The overlap of those is very low. Yeah. My customers are unlikely to open a Coinbase account to send $200 to their mom in Guatemala who now has to figure out what to do with USDC or USDT in order for her to buy milk. That's just not a thing that's going to happen anytime soon. So by opening up our payout network, our funds-in, funds-out network, we actually may gain access to some of those 100 million customers who aren't my customers. But today, as many people know, local market liquidity, local market off-ramps— forget about the US, forget about Europe— but in tough places around the world, it's still a thing that's hard to solve, right? You know, we do a lot of business in Central Africa. We can get in and out of SAF at about 2%. If you go into the gray market, which is where most of the crypto wallets and crypto companies do, it's 6 or 7% because they don't have access to a central bank. We actually trade with the central bank. And so those local market treasury capabilities that we've built up over time are very valuable. So we'll have a much better deal if you own Circle or you own Tether or even you own Bitcoin and you want SAF than if you go and you try to do that at some local exchange who's basically trading SAF in the gray market because they don't have access to the central bank.

Right.

So we think that's access. We think those are customers that we don't have today that might find what we do useful. I don't think my customers are going to gravitate to their platforms.

Right.

We've not seen— we've seen no evidence of that.

So who's your competitor then?

Or who do you—

who do you worry about when you're—

so, so our traditional competitors, which are, you know, the Revolutes, the Remitlys, the Wises, and they're all doing similar things to us. You and I talked about backstage, right? The, the platform that poses the most potential risk to us would be Facebook and WhatsApp, simply because all of my customers everywhere in the world use that as a communication platform. And sending money is just a different form of communications. When we started as a telecom company, right, as a telegraph company, right? Like, so, you know, the idea that I'm communicating with loved ones and I'm sending money to loved ones is closely, closely linked.

Yeah.

Now I don't think they want all the regulatory problems and they certainly don't want all the infrastructure in the network that we manage around the world. But lots of, including us, lots of us, we and lots of our competitors finding, are finding ways to try to use that platform as a way of helping people transfer value between each other. So that's a more interesting conversation that somehow I'm gonna wake up and Coinbase is going to have all my customers.

Yeah, that's interesting. Do you worry at all then about— I think it looks like Meta. So Meta obviously had Libra and their stablecoin project and that got shut down. Do you worry at all? You know, a couple of months ago they announced they're kind of reentering the stablecoin game. Concern? Big concern? Small concern?

I don't know what— I got to understand what they're going to do, right?

Yeah.

The beauty, the general beauty of my business is people like that make money, mostly make money by selling advertising, right? And so they want you, right? You're rich, you spend money, you're good looking, you're like smart, you got this whole thing going here. Like, I want to sell you, you know, new shoes or Rolex, a whole bunch of things. So I'm going to go advertise. My customers are generally at the lower end of the socio-economic strata, right? Like, we view ourselves very much as enabler of access to the financial institution, financial institutions. And, you know, so our customers are not coveted by many of these companies as big opportunities for them to make money.

Right.

So, yeah, I don't worry about Meta that much.

Yeah. I don't know if this would— is a question more for your product team so we can skip it. I don't know how deep into the weeds you were, but I was looking at What you guys are doing with your stablecoin is very different than what other folks have done, like a MoneyGram or something. Like you guys, the way that you guys set up your stablecoin, you guys keep most of the economics. It's your own stablecoin. You're not using USD, you know, a lot of us, I think MoneyGram is just using USDC. How did you think about setting this up?

Yeah, so again, if you think about what problem you're trying to solve, we're trying to move money around the world principally for ourselves and in a much more efficient and effective and capital-light way. And so I will go from being a negative float business— I, I have a cost of capital associated with the billions of dollars that I have to keep in the system to make this value proposition of instant movement of money around the world working— to a positive float business where by having real-time 24/7 settlement, anything that actually lives in the system is now backed by Treasuries earning interest for me. And if one of my partners decides to hold that for some period of time in order to settle, I'm making money on the money versus today I am paying someone for the money my partner is holding. Right. And so it— again, the problem we're trying to solve is how do we effectively move billions of dollars around the world much faster and much more effectively and move from a negative float business to a positive float business? That means I need to own the float, which means I need to issue the coin. Also, we want to be able to, you know, stablecoins are basically programmable digital money. Right? And so in a business in which the regulatory environment and the compliance requirements and the partner nature of my business is so important, having our own coin allows us to program that in ways that can manage our compliance risk, can create different, uh, situations between different partners on the terms in which we transact with each other, and ultimately can also create some ability to recognize and reward people who use it differently than if they choose to settle with Swift in the traditional banking system. So we can embed kind of quote rewards in a way that we can design because it's our coin and we can do it on a partner level versus we're using a generic coin that somehow we got to do stuff. Yeah, for the same for everybody.

Yeah, that makes sense. I'm looking out in the audience and see a bunch of our customers who are for, you know, execs at other large financial institutions and payment providers and other kind of, yeah, institutions that have been for around for, you know, 100+ years. How do you, can you talk a little bit about getting an organization? I don't know how many employees you have, but thousands or tens of thousands. How do you get an organization of that scale and of that magnitude and you've been around for 150+ years, how do you get that organization on, board with moving on to digital asset rails?

Yeah. So just for scale, we have roughly 16,000 kind of FTEs around the world, roughly 2,000 here in the US and the rest. So it's a very global company, right, with an employee base spread all over the world and hundreds of thousands of retail locations, hundreds of thousands of retail locations, licenses, regulatory environments. I, people are always stunned when I say, you know, globally we have about 3,000 people in our compliance organization, right? That's to maintain our regulatory environment across all these places around the world in which we do business, many of them which are tough places to do business. Surprisingly, I have the opposite problem, the opposite problem, which is, Everyone is so enthusiastic about a couple of these initiatives, but this is one of them that all 17,000 people want to go work on stablecoin. And I need, you know, 16,900 of them to continue to do what we do every day to generate the revenue to pay for what we're going to do in stablecoin. And I need the 100 people who really know what they're doing to work faster. And so, uh, there's a lot of enthusiasm in the company. We have a lot of pride for what we do. We have a lot of people who came to work at Western Union because we're a purpose-driven company helping people who many financial institutions don't want to serve. And so we have lots of people who can see the benefits of if we could free up capital, if we could allow people to have this quasi-bank account that, that want us to move faster to help our customers. And so that enthusiasm is, is great. It's just not helpful.

Yeah. Yeah, yeah, yeah. That's fair.

That's cool.

That's good to hear. People want to work on stablecoins.

Now, if you actually want people to come to work 5 days a week, that's a whole different problem.

Does it stop with stablecoins for you guys in your digital asset and crypto strategy? Will it? So, you know, one of the things that you can do with stablecoins maybe is you have a wallet and then you start you partner, you know, you do something in DeFi, you could take out, you could allow your customers to take out loans. Have you got that far yet or start with the stablecoins first?

We're really starting with the stablecoins. There's obviously paths you can go down. And again, we're very focused on what problem are we trying to solve? How do we use this technology and platform to solve that problem? And this comes to if you have a 175-year-old company with thousands of people, if you don't remain maniacally focused on what it is you're trying to do and keep everybody moving there, it's very hard to get anything done.

Yeah.

And so our number one goal is to launch our coin and create institutional-grade money movement to move billions of dollars a year around the world between our trading partners. That's our number one goal. And once we get that one done— and the second goal is to launch basically receive capabilities in USDPT, our coin, so that our customers can hold dollar-denominated assets in inflationary and politically unstable places where it's regulatorily possible. Those two goals. That's it.

Yeah.

Come back in two years. If I've achieved those, we can talk about whatever it is.

Done deal. Next. Why did you guys I remember, I think it was 2018 or 2019, you were doing something maybe with Ripple. Now you're doing this with Solana. I don't know, this might be again a question for maybe the crypto product team, but any thoughts on that? Why you chose to do this with Solana?

So 2019 was before my time. And so when we went down this path, we had basically 2 or 3 requirements and we kind of looked at everything. So to be clear, We are chain agnostic, right? So we are going to have multiple— we're going to run USDPT on multiple chains. We chose Solana to start with for primarily two reasons. It's highly efficient at transactions and transaction economics. And so for us, having low or no transaction costs for minting and for being able to conduct large amounts of transactions at high volume, being able to, you know, burn and, you know, destroy coin seamlessly as we do this treasury operation. It's well suited to that. Um, you know, the Ethereum blockchain is a very capable blockchain, but it's heavier, requires more upfront investment in programming capability building. To your point, if you move into gee, we wanna do a lot of lending, we wanna do very sophisticated stuff, we will look at other capabilities and other platforms. But for us at this point in time, in this product evolution for the problem we're solving, it was the solution that made the most sense for us to get going.

Nice.

And to your point, we're doing it very different, which is we want to retain control, design, and economics because we're solving the problem for us.

Right, right. What does Western Union look like if you're wildly successful with this? I mean, you get a bunch more cash on the balance sheet. What else? What is, you know, 3, 4, 5 years out, what does this look like if you're wildly successful?

So I would go down two dimensions, right? One, We take the company from, uh, basically solving this problem for ourselves. But if we have now an institutional-grade ability to move money between trading partners, 50, 60, 70 countries in the world, um, in a highly regulated environment, we believe that is something— again, the, the correspondent banking system in SWIFT is inefficient. I'll just leave it at that. We think that's something that other people find valuable— small banks, other enterprises. And so our scale and our ability to build all of that infrastructure, which we need to go do for ourselves, which all pays for itself, we think is a valuable thing that other people will want to take advantage of. So if you run a, you know, $2 billion community bank and you have customers who need to send money to Europe today, you're highly dependent on your correspondent banking relationships and the SWIFT system, and it takes 5 days and it's not really traceable and it's expensive. We think we can move that. The other avenue is what we can do for our customers, and we think, you know, our customers will retain USDPT like a bank account, which again will put us into a different business than just paying out money. So now people will hold assets with Western Union in these countries, and then that leads to what do you do with those local payments, savings accounts, lending against them, all kinds of things that you can now do in many countries around the world where we're not going to go operate a bank in Bolivia, right? Like, that's not a good idea. So, um, it changes what we can do for our customers in those receive markets. So those are the two vectors.

Maybe we can wrap on this one last question that, uh, I think a lot of crypto people talk about, which is, you know, capital is moving on chain. You talk about legacy systems are not efficient, SWIFT, ACH, things like that. Maybe if we fast forward out 5, 10, 15, 20 years, how much capital, right? You know, right now probably 99% of the flows in the world move on these legacy systems. How much of that will transition onto public blockchains like the Solanas and Ethereums of the world?

I don't, I don't know. But I do know if you solve the friction points, right? Like if you go and work on how to actually move it around in a highly compliant manner with liquidity, and that's the That's the thing. Like, everybody talks about, gee, you can move money. Like, the problem is not the moving money. The problem is once the coin gets there, how do you cost-effectively create the liquidity that's needed at scale? Like, at scale, billions of dollars moving someplace where you can— the thing that works today is it's pretty efficient from that. It's very low cost, right? Again, my point of the SAF in Gabon, I have a pretty efficient system at doing that.

Yeah.

Today the digital asset system is not efficient at doing that. And so that local market liquidity, um, is the thing. Again, you're US to Europe, nobody's gonna, or that, that's not a thing. Yeah. The rest of the world is a thing. And so the sooner you can solve that at scale, the more you'll then have institutions find that that's a better option. But today they look at it and say, okay, it's more expensive to do it that way. I'm willing to suffer some of the cost of time and other things because the expense of that local liquidity is just too high.

Yeah, that's all the time we have. Devin, thank you so much for doing this.

It's great. Thank you.