Show notes
This time I have Tory Reiss, co-founder of the TrustToken Asset Tokenization Platform. Tory shares how their company was bootstrapped, raised capital from elite VCs and launched one of the biggest regulated stablecoins - the TrueUSD. Recently they also launched the TrueGBP. Tory and I talk about the ways in which you can use TrueUSD to easily transact internationally or to simply earn passive income with the interest-earning product of Nexo. Among many other things Tory also explains: How fiat-pegged stablecoins can replace traditional digital money; What sets TrueUSD apart from all other stablecoins; How to convert your USD into TUSD; What is the business model of TUSD; Why Tory sees MakerDAO and DAI as a partner instead of a competitor; How TUSD combats money laundering. This was a conversation that sparked me to think even more about the importance and stablecoins and how are accelerating the removal of existing financial borders. Tory's Contacts: https://www.trusttoken.com TrustToken - https://twitter.com/TrustToken Tory Reiss - https://twitter.com/theetory Evangelists who converted Tory into crypto: Satoshi Nakamoto and the Bitcoin White Paper Leaders Tory continues to learn from: Arjun Balaji, https://twitter.com/arjunblj “Cryptoassets The Innovative Investor's Guide to Bitcoin and Beyond” by Chris Burniske and Jack Tatar Feel free to message me, George, on Twitter @borderlessBTC Full Episode Transcript (01:52) George Manolov: Tory, I'm happy to have you today on the show. For everybody else; Tory Reiss is the co-founder of the TrustToken Tokenization Platform, which has been renowned for launching one of the biggest USD-backed stablecoins. But before we dive deeper into TrueUSD and the Trust Tokenization Platform, can you share a little bit about yourself, your personal professional path and how did you end up in the crypto space working on one of the biggest USD-backed stablecoins? (02:31) Tory Reiss: Absolutely. My background is a good example of that you don't have to stay in one area or define yourself too narrowly, because whatever you're really curious about, you can learn almost anything online. The Internet has made learning simple; you can be a lifelong learner. If you look at my path, I went to school in Chicago and, and my studies revolved around entrepreneurship, international studies, behavioral economics, and neuroscience. All these topics that really have nothing to do with finance whatsoever. I started my career in enterprise software. So, the first two companies I worked for were very focused on B2B enterprise software. The first being Microsoft, where I spent a good chunk of my early career. And the second being a startup in San Francisco called Lob that was also selling APIs to the Enterprise. I caught the crypto bug towards the end of college when I first started buying Bitcoin. Obviously once you have bitcoin, you follow the industry news over time. I saw how it was evolving and I was really excited about it, but I didn't really make the move into the crypto space or working in it full time until I saw what happened with Ethereum. In a way, the world was changing in terms of gaining a global compute layer or a global database layer that we could work on from virtually any country. It represented a paradigm shift in computing that I thought was very exciting, and particularly as it relates to finance. I'd always had a fascination with personal finance and financial technology. So, this company ended up being the perfect intersection of all those interests. We started working on what is now TrustToken in 2017 and then in 2018, we launched TrueUSD. (04:47) George Manolov: What was the thought process of starting a company that is to tokenize other assets? Did you first come up with; Hey, let's tokenize the US dollar? Walk me through that process of how did you come up with the idea. (05:06) Tory Reiss: It's a great question. At that time, when we saw what was happening with Ethereum and the ICO boom of 2017, what became apparent when we took a step back was that there was a new financial system emerging on the Blockchain. We saw exchanges, OTC desks, new forms of derivatives and lending products. We saw it cropping up everywhere. So, we did this exercise where we looked at traditional markets and tried to think of parallels in what would change in this new paradigm. The first thing we observed when we looked at Nasdaq or other traditional exchanges is that the majority of the value represented on those exchanges are hard assets such as real estate, commodities, etc. So, following that chain of thought, we thought, if Ethereum was going to be running the world's most important computations and many of those relate to financial services, there's going to be a need for a way to legally and technically represent real world assets on the Blockchain. And following that chain of logic, we thought what asset or what financial instrument which is the most well understood and widely adopted instrument in the world? And it was pretty clear at that time that it was the US dollar. We thought; this is going to be a great proof of concept, that if we can prove to the world this idea of representing a dollar on the Blockchain, then we could represent any asset. We saw it as a first step in just proving out the thesis that we could represent real world assets on the blockchain. (07:06) George Manolov: Alright. In terms of company building, what was the process? Because I know that you have raised capital from some of the top investors in Silicon Valley. So, did you first launch some sort of MVP? Did you have something prepared or in the running? or was it straight raising capital and then building it? (07:31) Tory Reiss: I think people should know that the reality of startups is way messier than they appear from the outside. This company started in a totally different space. We pivoted into Blockchain and it was very painful in the beginning. We didn't have many resources. Over a year ago, there was just five of us working away and we didn't really have a chance to have an MVP because as soon as our product would go live, it meant that basically anyone in the world could use it. So, we just put together all of the pieces, it was very much what I would call MacGyver, in the sense that we took a lot of toothpicks and bubble gum in the beginning, like a lot of manual processes and a lot of hard work behind the scenes to get our first version of TrueUSD out of the door. With that being said, the most important things are security and compliance. So, even if there were lots of manual processes for us on the backend in terms of how we interact with the banks or how we interact with our users, we still had to make sure that we had world class security and world class bank-grade compliance. We couldn't skimp on those, which was very tough. That was our biggest investment area early on. We started in the same way as most other startups; we were literally working out of the same house that we were living in. It was both office and where we lived. Once we had our product out of the door and we had traction, it then became a lot easier to raise capital. Today, we have thirty-one people, both here and in Asia, and a great office here in Selma. But it's not easy; you might be sleeping on a couch for a year or two before you actually get traction and have enough capital to move into your own space. (09:57) George Manolov: But then it's totally worth it, because you start building something big and TrueUSD is already quite big. If I'm not mistaken, it's the second largest USD-backed stablecoin after the notorious Tether. So, can you share a little more about TrueUSD? You say it's the most obvious asset to tokenize, but why so? What are the needs that TrueUSD solves and how do people use it? What deficiencies does TrueUSD solve? (10:41) Tory Reiss: That's another good question. At the time, we thought it was a great move because anyone anywhere in the world knows what a US dollar is, almost anywhere. I shouldn't say 100%, but most places in the world recognize and accept the US dollar. That was our logic at the time, that okay, if we tokenize that, then we don't have to explain what the token is, because it's essentially a dollar and people understand what a dollar is. What we only realized after, was that the product we created was far more useful than we originally imagined. The first use case for a USD-backed stablecoin was trading. Traders were using it because they could only trade crypto to crypto and they needed a stable store of value during volatile markets. Now, in the grand scheme of things, that's just a tiny use case. And by tiny, it's still a multi-billion-dollar market today. It's still about $3 billion in market, but it's still relatively small. What we've learned over time is that, the market beyond trading and beyond crypto is massive, because what we've actually created is a new payment rail. What's very important is that we've helped increase the velocity of money, the velocity of capital, and we've offered an alternative way to move value that's outside of the control of the traditional banking system. Traditional banks, which have been the gatekeepers for time immemorial, have been able to charge whatever fees they want on FX which is conversion between multiple currencies. Or if you want to move money internationally, they pretty much set the terms. But with TrueUSD, if you want to send money to anyone, anywhere in the world, you can do so in a matter of seconds and pay about 2 cents on average, which is the transaction fee on Ethereum. In many ways, it’s really a very powerful tool, because capital can now be moved more efficiently. If you're a lender, you can raise money in the US and deploy it in Indonesia the same day, that's never been possible. Or if you're doing remittances. The applications are so broad across financial services that we're now thinking much more broadly about how this technology can be applied. We're also going to be adding many more currencies to our offerings. And we think that this is just the start, currency is just the start. (13:40) George Manolov: That makes total sense. I've been thinking about the same thing, when a crypto equivalent of a currency, like a crypto US dollar, has so many advantages over the traditional US dollar. As you said, you can send it very cheaply and very fast locally and internationally. In regards to that train of thought, and specifically since you're saying you're going to be tokenizing more of the currencies out there, do you think that, in the not so distant future, fiat currencies will be essentially some sort of stablecoins on the Blockchain? (14:26) Tory Reiss: First off, one of the common confusions is when people say "the Blockchain". I think the reason why it's worth pointing that out is that, I think that there will be multiple blockchains, for better or for worse. J.P. Morgan, for example, has illustrated that their coin will be on a private blockchain. So, technically that's on, quote unquote, the Blockchain or a blockchain, but it's not a public blockchain. I do believe that public blockchains are better than private ones, because they solve a larger problem that J.P. Morgan's chain won't solve, which is the visibility of the data. Right now, it's actually an incredibly powerful thing to be able to have those transactions be public. The perfect version now is a public blockchain that allows some amount of privacy. So, for example, if we have a use case with Microsoft or with an SAP customer that relates to how their customers move money for receivables or payments to publishers, which are real use cases that are being explored right now, they want privacy for those transactions, but they're okay with it being public for scenarios that aren't related to their affairs. I think that's where things like Zero-Knowledge Proofs such as zk-SNARKs can become really useful, because you can then have some transactions that are private and maybe only visible to let's say a company and its audit partner, like Ernst and Young, and then have the majority of other transactions between the general public remain on a public blockchain. That way, we can all rely on a single chain, but use different technologies to adjust the level of privacy. And I think that's more of what the future looks like, rather than today where only a few people have access to that data and they typically can't be trusted. Unfortunately, that's what history has shown us. (16:35) George Manolov: That is very interesting. Would people still have any motive or incentive to use traditional currencies? Or what would it become the standard for all currencies, especially when Ethereum introduces zero knowledge proofs? (17:13) Tory Reiss: I guess I didn't answer the original question. I do think that it's inevitable that, if not Blockchain, a similar technology will be standardized. Most people don't realize that most cash today is already digital, and I think this is just improving upon it. The benefit of a blockchain is that it acts as a shared database; it's one of the few technologies that people can have faith in and use as a shared database. And for that reason, it might be the earliest adopted technology for digital cash. I do think that within this year or at least within the next few years, we will start to see sovereign nations issue their currency on a blockchain. I can't say if the whole world will go that direction, but I do believe that some governments are going to make that decision and I think it's going to happen. (18:29) George Manolov: When it comes to the use cases of TrueUSD, like you said, you didn't understand when you initially started the size of TrueUSD when it comes to payments, do you have such data or knowledge that people are already using TrueUSD for remittances or for other purposes outside of trading? Or do you think that today the main use case for TrueUSD is still trading? (19:04) Tory Reiss: The majority is still trading. However, we know for a fact that it's being used now for a number of other use cases. For example, we know that there are companies right now that are paying their employees payroll in TrueUSD, and it makes perfect sense why that would be, because more and more often it's common that a company is distributed, remote or has teams around the world and it's incredibly expensive for an employer to use traditional payroll providers to pay employees all around the world, especially if you're a smaller business. Let's say you only have 50 or 100 employees; you don't have the resources of a multinational corporation to have bank accounts in every single country where you have employees. Paying in TrueUSD costs nothing, it's super easy and wherever they are, they will be able to convert that TrueUSD back to something that has a utility. We're working on making sure that everyone can use their TrueUSD in whatever way they want, whether that's spending on products through a debit card, which we think is an obvious next step, investing, saving and earning interest, lending the money out and getting loans, we want all of those services to be available and already a lot of that is happening. Even if you look at Nexo which just launched a fantastic product where any user of TrueUSD can deposit their coins with their full liquidity and no lockup, but they earn six and a half percent interest, which blows away the Fed funds rate of two and a half percent that we have here in the United States. This is a long way of saying that these use cases are already happening, wh…
Full show notes at the publisher 
Our TOPPODCAST Picks 
Stay Connected
