The MoneyPot Live: In Conversation With Luca Prosperi, Co-founder & CEO, M0

Join Luca Prosperi, Co-Founder and CEO of M0, for a deep dive into how stablecoins are revolutionizing finance. Recorded live from Money20/20 Europe, this episode explores why digital money is becoming the new backend of financial infrastructure.

Luca challenges the notion that stablecoins are just branded tokens, arguing they represent a fundamental redesign of the financial stack. Discover why major brands like MoneyGram are building their own digital money infrastructure instead of relying on white-label solutions.

Key Topics:

• How stablecoins evolved from crypto trading tools to comprehensive financial infrastructure in under five years
• Why businesses need control over their money stack
• The shift from bank deposit-centric to wallet-centric economies
• How regulatory clarity is accelerating mainstream adoption
• US Treasury predictions: dollar stablecoins surpassing $2 trillion by 2028

M0: https://www.m0.org/

Follow Luca: https://www.linkedin.com/in/lucaprosperi/

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Transcript

SPEAKER_00 0:05

Welcome to the Money Pot, the Money2020 podcast, where we get under the skin of the people, ideas and innovations, reshaping the future of money. I'm Darren Stigdu, content manager at Money2020 Europe. We're coming to you live from the heart of Amsterdam, where the industry is coming together to debate the future of money. Leaders are meeting, debating, deal making, and deciding what comes next. Joining me today is one of those leaders, Luca Prosperi, CEO of MZero.

SPEAKER_01 0:34

So thanks for thanks for having me.

SPEAKER_00 0:36

Thanks for joining me, Luca. How are you doing today? How are you finding the conference?

SPEAKER_01 0:40

Intense, as most conferences, very interesting, very productive so far.

SPEAKER_00 0:44

Great. Glad to hear it. So I wanted to talk to you today about app specific stable coins. I know it's something that MZero is really doing a lot in this in that space. Stable coins are everywhere at the moment. Why would any brand that's not actively involved in stablecoins already want to get involved?

SPEAKER_01 1:04

Yeah, I'm gonna play my step back card uh to start because I I'm I think we all need to change like or like refresh our mental model a little bit on stable coins because I think that we are used to see all these branded tokens floating around. But in my opinion, stable coins are becoming ultimately the new generation back end of finance. So the question I would ask back is like why apps or brands want to be in control of the money stack that powers their applications? And I think the reasons are several. Uh economics, control, integration with their businesses. As their businesses become digital, they want to be more in control of the infrastructure that powers them.

SPEAKER_00 1:47

I think there's a really good fiat example of this that exists today. Uh, it's a common tech story that I hear people try on LinkedIn all the time, which is that Starbucks is the biggest bank in the world, right? They, and really it's the biggest loyalty program, they convert cash into Starbucks reward points. I mean, I to me that it seems a little bit like Disney dollars, it's just company money. For users, what's the difference between having an app-specific stable coin and purchasing loyalty points?

SPEAKER_01 2:17

So I think that uh it's it's it's um is a it's a good comparison, uh, but it's an imperfect comparison because the reason why for you is is fantasy money is because you see the Starbucks points and for you are not purely uh fully fungible with the rest of the money system. So when you you cannot get out of the system. If you had, imagine if you had a Starbucks app and you would see a dollar balance in the Starbucks app, and you can send the money seamlessly to your peers or to your current accounts one for one. This that for you will smell like money entirely. I always make when with when like you know, I've been writing and researching about stable coins in digital money for a very long time, well before they were fancy, um before founding MZero. Um, I always ask back, and I come from traditional finance, used to work in a large bank. I was in Wall Street before. And uh and I always ask back to people that that are arguing against plurality of money, all these different forms of money, how many versions of money we have now? Like if I would ask you how many versions of the dollar of fiat dollar do we have now?

SPEAKER_00 3:22

Well, I can put a number on that, I think. Thousands.

SPEAKER_01 3:25

Yeah. Thousands. There's no one. Like, you know, every bank you see a bank balance in your app, uh the risk profile and the economics profile of the balance you see on the app of HCP C is very different from JP Morgan Chase, etc. The reason for the reason why for you it's one is because this money is fully fungible and interoperable within the system. And I think this is where we're going. I think that um we need a fully fungible, interoperable version of digital money. And digital money is just better to program financial applications on top. Now, why do people, I think that I don't want I don't want to I don't want to go too long in my answer, but like you see a movement. We've seen this movement in stable coins where at the beginning stable coins were just like a settlement asset for trading crypto assets. Then they became a good hook for uh international payments. You just connect fiat system A to fiat system B. And then it bec then it became a very useful asset for applications in general. But you're using somebody else's asset, you're using Circle's asset, or you're borrowing, so you're you're helping somebody else's business. They're they control 100% of this asset, they make 100% of the money. And stay the stage later, you would rent the applic, you rent the stack of somebody that is building this asset for you. You will go to a Paxes of this word and say, build me, build me a stable coin, hold own it completely, and I put my face on it. I think that now that there is this, so the control boundary is getting uh closer and closer to the business, where like if you are like a large business like like MoneyGram, for example, um like digital money really can empower your business in so many ways. You want to be in control. You want to know where it lands, how it can move, you want to be in control of the economics, uh, how it's connected, what are the compliance features? It's becoming simply a new, uh, very, very powerful infrastructure or layer. To me, stable coins are a new is the next iteration of Bass.

SPEAKER_00 5:24

Okay, sure. I I really appreciate that. But I think your Paxos example really uh echoes essentially white labeling to me. And white labeling is common throughout all industries. Yeah, why would it be so bad for companies to have that white label? Because they still own the customer relationship, right? So why does it matter for them to have to own this specific part of things?

SPEAKER_01 5:46

Um white labeling I think there are two problems. The first one is like my white label is very monolithic. And also you're white labeling in a tech stack, but you're we living in another tech stack. What I mean is like I don't want to spend too much time with compacts specifically, uh, but if you're talking to like a bank or a financial institution that is customing the asset, creating a stable coin and giving it to you, now most of the behaviors of this stable coin is not existing in that level of the stack, is that is existing digitally. I'll give you so many examples. Let's say you want to use the you want to direct the underlying economics of this asset um to your distributors or bar partners or clients or through products. How would you do that? Would you have to go you have to go to Paxos and ask for some rewards back, and then you have to create a rewards engine to distribute it. Very cumbersome. That's also why PYUSD, which is issued with Paxos, actually is wrapped up on M0 contracts, and we are actually building that technology. Let's say another example, you want your users uh have a stable coin, a white label stable coin in one chain and they need to move to another chain. This is not what a white label uh issuer would do. Like somebody needs to do the bridging of this, your users need to receive this. Um maybe your compliance requirements are different from the white labelers because you live, you operate internationally, and your white labeler is in the US or in Europe. So uh the fiat rails and the digital rails are two completely different rails. Now, like uh what we have seen now in this first generation are I always joke that we are living in the era of digital photography and we're still building printers and scanners. So we're excited because we can scan a picture, send email this picture to our mom on the other side of the world, and she can print it and frame it. But most of the fun today is happening on Photoshop or on Instagram. It's not nobody's printing and scanning anymore. And uh and I think when you when you're high asking a partner to build the entire vertical stack for you, it's very monolithical. They are building the whole vertical, you cannot get out of it. But the requirements are very complex. And I can give you an example, like you know, we we announced this week uh that MoneyGram is issuing um uh um MGUSD as their own control stable coin. I would just do it differently. MoneyGram is issuing an entire new digital money stack that is powering their business, but they have requirements. They want to be in certain geographies, they want to be in certain blockchains, they want to use the the underlying rewards in a certain way, they want compliance to behave in a certain way, they want to be integrated in their business a certain way. And this is a complicated, non-monolithical uh problem that you need to solve.

SPEAKER_00 8:41

Hey, let's let's explore that a little bit then. So I think what you've highlighted there and really connected to is kind of my next question, which is one of the major problems, not problems, challenges that stable coins and crypto as a whole has faced, blah blah blockchain technology as a whole faces, is we exist in a in a loop where you have a fiat stablecoin fiat loop, right? So part of part of your answer there was very much about the future of the economy and a very future-focused economy where you're moving stable coins to various other stable coins. But like you said, people are still, you know, they're printing those photos digital photos. So, how do we escape that loop? How do we make it so that people want to move from stablecoin to stablecoin?

SPEAKER_01 9:24

With time and hard work, um, it doesn't happen overnight. I think that uh this the digital money stack is getting thicker every year. Uh, you know, like this process that I was mentioning where stable coins went from first of all, I think stablecoins is a terrible name. I tried to fight it uh and I failed. I think we should just talk about digital money. Um but uh stable coins, the the time stable coins took to go from like being uh a settlement pair for trading crypto assets into like being a payment tool fully embedded in finance is less than five years. Uh, you see, a lot of finance, in my opinion, digital money will become the back end of finance. And how you will you convince the users to stay digital on digital? This will be transparent for the users. So like digital money will power the front end that the users use. And if a user is on Revolute and then is trading on Robinhood and is uh doing predictions on on polymarket and is trading perps on hyperliquid, and all this stuff is powered digitally, they will never leave the digital world. And I think this stack is getting thicker every year. Like the last year, uh two years ago, we saw the emergence of stablecoin power credit cards. So, like you have stable coins, you can you have a wallet, you can swipe a credit card, and the credit card gets settled on the card networks uh every day, and you don't need to go back to fiat. Now, like you have three, four of the largest, uh fastest growing fintechs are neo banks built on stablecoin power credit cards, like Rido Pay, Dollar App, Cast, uh, Etherfy, and a few others. They didn't exist, they're multi-billard companies now. They didn't exist at eight months ago. And uh now you start seeing uh tokenization of traditional assets that you will settle with digital money. So you will you will see like the the the digital stack is getting thicker every year and the fiat rails will still exist. Uh you'll see local currency denominated stable coins. So it's just a it's just a it's just a process. Like the connection in between the two words will always be very, very important. But I think the digital, the digital in native world will expand, especially in the year of agenting finance, where obviously digital money is made for that.

SPEAKER_00 11:48

Sure. I I I agree with you on digital money is a better term than stablecoin in particular. Ideally, at some point we'll just be calling it money. Uh there won't be any difference at all. Uh, five years though, you think five years we'll see like a real complete integration?

SPEAKER_01 12:02

No, I think five years is what it took to get where we are now, I think. Uh but I think we we are we are growing extremely fast. I mean, you see card networks accept interact with stable coins, uh jogger notes like Stripe being very, very active in this space, uh, not non-crypto native companies. I think in five years' time is gonna be we're gonna be in a very, very different place with like traditional trading venues like New York Stock Exchange and DCCC trading uh um tokenized assets directly, having direct issuance on tokenization, tokenized assets. I think it's gonna be a process that it will take multiple decades. I mean, there are people still using cash uh out there in the world, like physical cash, but the the the pace of innovation is accelerating incredibly. We founded MZero three years ago, and three years ago when we and you know, MZero is uh is a company that now raised like significant funding, like more than $100 million of equity funding, but so it's not definitely not a startup anymore. And there are similar companies in similar stages of their life cycle. But when we started a company three years ago, nobody knew about stable coins. It was a very weird crypto native phenomenon. Uh it was completely ignored by the rest, the rest of uh FinTech. And we'll look where we are now.

SPEAKER_00 13:23

Sure, yeah. I mean, it's it's been huge growth in my 2020. We just launched a book about stable coins because it's become such a massive part of the ecosystem. And you're right, in in just five years, it's been a huge, huge change. Um, I want to move into more maybe specific applications now. So what are like the unique and most impactful applications of app specific stablecoins in particular that you're seeing today? Because I think the common uh fallback that I see for stablecoin discussion is cross-border payments. There's huge upside potential there. But what other things are we missing out on, maybe, in the in the conversation?

SPEAKER_01 14:01

Again, I think that the whole economy is becoming wallet-centric and used to be bank deposit-centric. So any application that is uh managing or intermediating uh customers' money for whatever use case will move digital. I I don't think the the world is gonna be so narrow. The I mean cross-border payments is obvious because the connectivity between fiat systems, it's very weird. It takes forever and it's very expensive. You still send money bank to bank internationally, you don't know where it gets there. Somebody sometimes you get stuck, you don't know how much you're gonna pay, and stable coins you send everything instantly pretty much for free. But so this is obvious. Like, you know, we as we were discussing before, we announced um a partnership with MoneyGram together with Bridge Stripe and and Fireblocks and others. And remittance remittance companies are obviously looking at digital money. They want to embed digital money uh within their stack. And this it's a defensive move for them, but also allows them to expand the the products and um and the services they offer to their clients. But I think any any fintech that is existing today, you will see like Y Combinator put something uh a couple of years ago, uh a CTA for founders to build stable coin power businesses. If you are founder of a fintech business today, you will build on stablecoin rails. If you had to build Revolute today, it would be built on stable coins. It wouldn't be built on bank APIs. I'm pretty sure of that. So I think you see all these fintech use cases being built natively on stable coins. Obviously, retail comes first, uh, dollar-denominated real retail comes first. Uh institutional money requires different has different requirements in terms of compliance, size, and privacy. Uh, it will take a while longer. But I think all the financial applications that are being built today, I think the vast majority are stable coin-powered.

SPEAKER_00 16:03

Interesting, you say that consumer will come first, because when I think consumer, I think regulations. And I think that of regulators trying to actively develop frameworks that will protect their customers, that well, consumers. So, and I I also think, and I'm please tell me your thoughts. Uh, I don't know if consumers necessarily care what they're paying with in life so long as their goals are being achieved. Do you do you see that being echoed in reality?

SPEAKER_01 16:32

I think uh yeah, I agree with both uh your statements, starting from the last one. I think consumers, consumers just want to do cool things. And but if if the builders of those cool things are building on digital rails, they will use digital rails. They don't even know what they're using, most probably, right? So if uh if a consumer wants to um I spend a lot of time in the US more than Europe, so I apologize if I have like US-centric examples, but if a consumer wants to bet on events on polymarket, and polymarket is powered by stable coins, consumer will use stable coins now. If polymarket was powered by pen deposits, they would use pet deposits. So it's more about uh what type of uh rails an app builder wants to build on. And uh a programmer, an app developer wants to develop on digital uh smart contracts instead of patching APIs and and and working with the legacy systems. Now, so I think this is more is more about it's an easier platform for people to build cool things on so that consumers can use, and obviously the barriers of entry are much lower. So you can launch a global a global uh platform from day one on digital money rails. Now, the point on regulation is very, very powerful. I think that what ignited this, because stable coins have always been a crypto-native offshore uh phenomenon, but what um started this convergence between fintech and digital money was clearly regulation. Under the Trump administration, uh with the push for the Genius Act and now the Clarity Act, there is clarity uh in the US. Clarity, not in the in the sense of the act, there is clarity in the US. How what are the consumer protections, what are the legal requirements, the licensing requirements to issue and move money, digital money around. And it is interestingly enough, there is like uh there is there is there are arguments in the banking side that now the stablecoin instruments are so safe uh because there is no counterparty risk, they are so safe. And that now they can even pass indirectly yield to the users that bank deposits are not competitive anymore. And so actually, the traditional legacy system is arguing that this new model, this new product, it's so good that it can actually disrupt their business and therefore the rest of the economy, which obviously is not a very strong arm argument. Uh, we should just evolve. Um so regulate regulatory posture, regulatory clarity, and innovation, innovation um uh-oriented regulation has been one of the most important uh triggers of this uh phase we're living in. We're living in.

SPEAKER_00 19:14

You you made some good points earlier about cash and how some people are still using cash today. There are campaigns, like grassroots campaigns all over the world that uh bring people back to cash for various reasons. And I think sometimes that that's born from people not understanding the advantages of digital money, even just regular payment rails over cash. Because I think people, when you see a five pound note, for example, or a five euro note, you think there's my money, there's no fees associated with this. If you if we need to not just bring consumers with us, but also educate them, what's the what would you say the key advantages over cash are in terms of making payments on a regular basis, on a daily basis for consumers?

SPEAKER_01 20:01

I mean, uh I think that this obviously for interesting phenomena at the margin, but I think the vast majority of people nowadays uh transact digitally. They work on their on their phones, and I don't think anybody under 30 has ever entered a bank branch, maybe once. Uh I don't remember last time I had a bank note with me. I don't even carry my wallet anymore. Like, you know, I think most of us like have a phone-powered uh life. Um, I think the cash movement is fascinating because the cash movement, the crypto movement, they have the similar origins. You don't want to have counterparty risk. In crypto, in the in the world of Bitcoin, you don't even want to have sovereign risk. Um cash doesn't have bank risk, right? The cash is always redeemable with a central bank. Uh but cash is central bank risk, and cash is cumbersome to store, and cash doesn't grow in your pockets. Uh so actually the money, uh the state makes money because cash, you're you're having cash, you're pretty much financing the state for zero interest rate. And if you have a bond, you're financing the state for an interest rate. So stable coins actually is uh is a new primitive, which is a weird combination between a payment instrument, a money market instrument, and um and a treasury instrument all combined into one.

SPEAKER_00 21:19

I've got just two questions left for you. Thank you for bearing with me. So, US Treasury Secretary Scott Besson, I think recent quite recently predicted that the dollar stablecoin industry is going to surpass $2 trillion by 2028. Do you agree? And do you think we're gonna get there? And how do you think it will actually take the industry that far?

SPEAKER_01 21:38

Yeah, I don't know when by when. Uh I think is uh is a reasonable expectation. Currently, uh stablecoin float is around is around $300 billion, and we are at the bottom of the bear market if you look at uh crypto prices, and this is still like a very uh cryptocentric phenomenon. Most of the the talks in traditional fintech are positioning talks. So I think this is it's very small. It's probably one sixth, one eighth, one-tenth of a very, very large bank. So I think we would get in the trillions very, very quickly. And um, so I think I I agree with the statement, uh, but it's not gonna be the top. I think this stuff is gonna grow much more, and we will have a local currency-dominated stable coins existing alongside the dollar as well.

SPEAKER_00 22:20

Amazing. And so lastly, if someone's listening to this conversation and you want them to take away one concept, one key idea, what is it? What's the one thing they should know?

SPEAKER_01 22:31

Um, I think digital money will completely redesign uh finance and new champions built on digital money will grow much, much faster than what we've seen in the previous generation of FinTech. So everybody in this industry should pay attention. Uh, that's that's my my my CTA.

SPEAKER_00 22:51

Okay. Luca, thank you so much for joining us on the money pot. Uh, it's been really great having you with us on stage. Well, in the pot and uh also at Money2020 Europe. Where can people find you if they want to get in touch?

SPEAKER_01 23:03

Uh, they can find me like most builders in the space on Twitter uh or X today at Luca Luca Prosperis. My name is Mahando, and they can find what we do at m0 at m0.org.

SPEAKER_00 23:15

Thank you, Luca. And to everyone listening, thank you for being a part of the conversation and for caring about the future of money as much as we do. You can subscribe to the MoneyPot wherever you get your podcasts. You can find out more about money2020 at money2020.com.