Sam Kazemian - The Future of Stablecoins - TOKEN2049 Dubai 2025

I'm Sam uh founder of Fracks and uh in the next 15 minutes I am going to oh let's start with the first slide. There we go. I'm going to convince you that stable coins which everyone says are the trillion dollar opportunity in crypto is actually an understatement. Stable coins are the $20 trillion opportunity in crypto, especially given recent developments in the United States in the stable coin legislation and everything else that we're going to discuss. And first, we'll start off with this.

This is actually the M1 money supply graph from the Federal Reserve itself. And for people that aren't familiar, the M1 definition is literal digital cash that is available to spend in the United States in the United States banking system. And there's a reason that the Federal Reserve divides M1, M2, M3 money supply, because there's a lot of instruments that look like dollars and as a lot of people in crypto know aren't actually dollars in all different times. And the definition of M1 and the intent of defining the M1 money supply is things that legally are dollars and that are spendable as actual dollars in the US banking system and financial system. And if you look at this chart, there's right around 20 trillion of M1 or immediately usable cash in the US economy.

And that's actually the focus of this talk. So, as a lot of you guys probably know, there's two very important bills in the United States Congress called the Genius Act and and the Stable Act that is making its way through both houses of Congress and hopefully will pass sometime around June or July. And the most important thing to take away from it for all the international audience here uh that that aren't in the US is that this is not like a uh photo op of everyone seeing stable coin issuers in in the United States uh us or Paulo or other guys taking pictures in DC. This is actually an incredibly important legislative landmark bill that actually will make payment stable coins essentially M1 legal tender to be used in the US financial system. And that actually has a very very important uh legal ramification.

The first thing to actually just go over is in in short is the the bill essentially says there's about five types of collateral that can be tokenized as a you know ERC20 token, Solana token and those things are cash and federal reserve uh master accounts, demand deposits at at US banks, treasury bills, Fed reverse repos, money market funds uh and then the sixth one is tokenized versions of those so RWA tokens stable coins backed by these and that apply to the federal government and get a stable coin banking charter actually create this new class of asset called a payment stable coin and you can actually see is this part of the bill that that I put in this presentation you don't have to be a chartered bank it literally section 8 says federally qualified non-bank stable coin issuers can actually get stable coin charters and issue these uh these tokens and that's actually really really important because there is going to be a totally new class of entities issuing essentially M1 usable, spendable digital cash. And that actually is very important because one thing people mistake this bill for is that there's a lot of dollar regulatory uh you know, stable coin regulatory guidance. There's there's VAR here in uh Dubai. I actually had to include on the previous slide at the bottom this uh disclaimer that uh FRAUSD and our fraal chains not licensed or regulated by the virtual asset regulatory authority. Um and then there's also Mika in the European Union.

But the important thing that people are not understanding as much about this stable coin bill in the United States is that the bill is from the actual country that issues the dollar. And so if your stable coin is considered a dollar inside the United States, it's considered a dollar anywhere else that actually accepts dollars, right? For example, euro dollars are not dollars in the United States. That's why they're called Euro dollars. Otherwise, they'd be called dollars, right?

But dollars and FDIC insured bank deposits that get wired to European banks, those are dollars. Those are accepted as actual dollars. And so stable coins that are chartered and actually compliant with the payment stable coin bills in the United States are actually compliant with all the other regulations. In fact, the right way to say it is those regulations are compliant with payment stable coin regulations rather than payment stable coins need to be uh compliant with Micah and uh Vora. In fact, one of the things that I was uh thinking was pretty funny in this uh presentation was that I'd have to put the uh VAR disclaimer because technically the bills haven't passed and even though FRAUSD intends to be one of the first registered payment stable coin issuers, uh we don't have it yet.

So, I have to put this uh VAR disclaimer in the previous slide. obviously don't have to do that after uh all is said and done because it is more of a digital dollar rather than a stable coin for a particular region which is why this is such a big deal which is why there's uh all of these um people from stable coin companies going to DC um and taking these uh important meetings they're more than just for photo ops or for for the pump so to speak so how is FRA looking to take advantage of this and and lead this new uh era in M1 money conversion. So, as some of you guys might know, we've actually created FRAUSD, which is a fully backed uh T- billill and and cashbacked stable coin that's redeemable and mintable. And all the types of collateral that we've reviewed in the previous slide is uh usable to mint and redeem FRA USD. There's three important properties though that a stable coin needs if it is going to take most of the M1 money conversion from the old analog M1 money supply of bank deposits, money market funds, and cash in checking and savings accounts.

Number one is has to be legal tender. Okay, check. So, we've talked about the bill. Uh number two is there has to be some way for you to get the risk-free yield and not lose out on the opportunity cost of holding this new legal tender digital currency. And number three is should be universal, permissionless, global and have cheap settlements.

So these are the full money stack as uh we like to think about it fracks and the frack stack is actually uh each of those things individually. So the the first thing is obviously FRAUSD and the second thing uh we call FRANET where we're actually announcing this today here where we're going to soon announce a uh full stable coin banking system called FraNet where anyone can come they can sign up they can connect their web 2 accounts that have money market fund bank uh wires settled through Stripe and bridge which is one of our partners as well as other partners coming that allow you to mint and redeem FRAUSD directly into your Fraen account. And then you can also connect your Web3 wallet and transfer these FRAUSD stable coins into any of your web 3 wallet addresses in any of the 15 chains that we already issue FRAUSD. When you do that and you have a FRANET account, you'll actually be earning real time streamed risk-free rate yield of the entire Treasury uh collateral that your FRAUSD is backed by. So if you can imagine if you convert your money market fund or bank deposits or any of these instruments into FRAUSD after signing up for a fraction account then you can start using your FRAUSD in different places on these different chains while having it scanned and counted as your FRAUSD balance and your address on FRAL chain is getting real time treasury bill yield the risk-free yield.

So there's no opportunity cost in using this new type of digital currency and this new digital dollar. And the last part of the full money stack is uh the fraal chain. So people that have built on FRA, used Fraal's chain already know that this chain is a DeFi heavy uh full stack EVM chain and we recently upgraded the entire chain to an L1 with FRA tokens which we're used to called FXS as the L1 and gas staking token but now we've actually increased the the the block times the speed and the performance so that it's a full stack solution for distributing real-time yield and in order to do that we have to actually make sure that the block space and the throughput and the block times are uh the highest in in the industry and that's what we're targeting in future hard forks. And some of the things that I actually wanted to show here is the current data uh for who holds USDT and who who holds USDC is about 125 million unique addresses. Now imagine for a second if even 10% of those addresses were FRAUSD holding addresses that uh had a FRAN net account.

Then you'd have millions and millions of addresses that need realtime yield of the underlying T- bill and money market fund yield streamed to them every block. That's what you need a real high performance chain for and a dedicated chain for. So you can kind of think of Fraal as a fully programmable but specialized chain for converting the old M1 money supply into a new stack financial solution. And this also allows us for a long-term vision to be able to capture the settlement and uh flow value of FRAUSD being used as legal payments and legal tender, right? Because all these payments and and these savings occur on Fraal chain.

So even though people are using their money on a widescale amount of chains the fra USD is used on in in DeFi and in other integrations if people are earning on Fraal the most likely place that uh the real world will integrate in terms of chains is the one where everyone has their account on right it's not just enough that a blockchain is super fast and super cheap if no one has their money on it or very very few people have their money on it that they want to spend it's unlikely to be integrated in payment solutions, fintex and and web 2 services, right? And so the long-term game is as more and more people earn on Fraal, as more and more people use FRAUSD, then the chance of Fraal being one of the most universally integrated chains at point of sales and all these other products as well as e-commerce online uh websites and platforms increases because it is where everyone is earning uh their digital dollars. And when you think of what all of that stuff means, it's uh kind of sounds like the old original Facebook Libra vision. If people remember in 2019, uh Mark Zuckerberg, uh David Marcus, Christian Catalini, the the the big guys at Facebook announced Libra, as I'm sure most of you guys know, which is basically a layer 1 blockchain with a stable coin and big institutional partners. Uh and if you think about it, FRAUSD is a stable coin.

Fraal chain is a high performance chain and we have institutional partners and integrations that provide us critical services and also are aligned in increasing FRA USD adoption. So one of the main things that I I like to say in one sentence is FRA is bringing the original Libra vision back to life with FRA and the full full money stack. And that's pretty important because I think that the Libra vision was the 20 trillion vision but just too early, right? If everyone remembers uh when Facebook announced Libra, Mark Zuckerberg got uh dragged into the Senate uh shellacked and and grilled and then they they tossed it aside, right? The idea and then they sold the the assets to uh I believe it was Silvergate Bank.

If they announced it last week, I don't think that would happen, right? I don't think that the Senate would drag Mark Zuckerberg and say, "How come you're building something exactly that this bill that we're saying is legal is allowing you to build?" Right? because that's exactly what the new payment stable coin bills are actually allowing people to do and FRA hopes to be the very first one to execute on this full style full stack new M1 money vision and I'll uh end on this slide which is the the three in my opinion go to market strategies for the 20 trillion M1 digital dollar vision which is Tether obviously which is the original GTM of bringing digital dollars to developing economies and underbanked sectors. And then obviously you have Circle which bridges the rails between web 2 and onchain DeFi and onchain crypto which is why USDC is everywhere onchain if you're a DeFi user and uh a blockchain DGEN.

And then there is the FRA GTM, which people haven't seen yet until today, which is the idea to upgrade all of the old M1 savings and payments accounts to legal tender stable coins and real-time yield so that people can use them for payments in the blockchain as well as earn all of the yield that they're entitled to earn. And uh that's it. Thank you very much.