Western Union’s Bet on On-Chain Settlement

In this episode of Mint Condition, host Maya Caddle sits down with Malcolm Clark to explore how Western Union is approaching stablecoins, on-chain treasury management, and the future of cross-border payments.

As one of the world's largest money movement companies, Western Union is testing how stablecoins can reduce the need for prefunding, improve liquidity management, and create more efficient settlement across global remittance corridors. Malcolm breaks down the thinking behind USDPT, the operational realities of off-ramping and treasury management, and what it will take for stablecoins to deliver real-world value at scale.

From remittances and settlement to regulation and global adoption, this conversation offers an inside look at how a 175-year-old payments giant is evaluating the next generation of financial infrastructure.

Connect with our Host & Guest:

Maya Caddle: https://www.linkedin.com/in/maya-caddle/

Malcolm Clarke: https://www.linkedin.com/in/clarkemalcolm/

About Mint Condition:

Join host Maya Caddle on Mint Condition as she explores what is actually happening as crypto and traditional finance increasingly intersect. Through conversations with operators, builders, and experts across payments and financial services, she looks at how crypto is influencing the next phase of financial infrastructure.

Transcript

Western Union’s Big Crypto Shift

Maya Caddle 0:03

Welcome to Mint Condition, where we go beyond the headlines to understand how payments companies and financial institutions are actually leveraging crypto. Today we are focusing on Western Union, the 175-year-old remittance giant that serves over a hundred million customers and moves more than a trillion dollars around the world each year. By any measure, it is the backbone of global retail remittance. But interestingly, it has doubled down aggressively into crypto. Western Union has launched their own stablecoin, USDPT. It's brought portions of its treasury on-chain. It's launched its own stablecoin and fiat payments network called Dan. And of course, Western Union is launching stablecoin enabled products for retail users. One of the interesting things to remember is Western Union is a licensed entity in multiple countries around the world, having to deal with exposure to numerous currencies at the same time, some of which are volatile in nature. They are the perfect example of how large organizations can innovate and how to really break down the economics of leveraging and launching your own stable coin. Today we are joined by Malcolm Clark, the global head of digital assets at Western Union. Before Western Union, Malcolm was one of the founding architects of Zell, led digital identity infrastructure at Early Warning, and built TD Bank's Canada-wide bank consortium identity network. He holds multiple patents across payments and digital identity. Western Union, traditional remittance company. I mean, anyone who has family internationally, whether it's in Africa, whether it's in Latin, whether it's in Asia, etc., we've used Western Union. Or black and yellow. And it's fascinating now to see you guys actually innovate truly by embracing crypto. And so what I really wanted to understand firstly is what is Western Union actually doing in this space?

Ending Pre-Funding With USDPT

Malcolm Clarke 2:20

And it's really targeted to do a couple of things for it. So if you take Western Union's core business, like many large multinational businesses, we move a great deal of fiat globally, so currency. We use the corresponding banking layer for that. And we pre-park or pre-fund our outbound agents, those that pay the money to our customers, on a nine to five Monday to Friday basis. So that has a capital cost inherent with that money movement. It has the delays or the timings of the correspondent banking network. So USDPT, the digital asset networks, and Solana allows us to remove the need to prefund. So actually being able to send in real time that capital or that money as a stable coin to those agents reduces my capital cost. So, you know, that's part of what we're looking at saying is hey, we have a capital cost which is a couple of percent. We now can take that out of our operational business of money movement with a change into moving to a digital asset. The second thing that this brings to the table is normally those capital costs and that money, it's parked in places, it sits off treasury, it sits in the corresponding banking layers, it sits in somebody else's books, if you like. Having a stable coin means that fund that we use to power that stable coin, it sits within our treasury account on the issuing side. So now we can put that to work against US Treasury bills or T-bills. So those T-bills, they have a yield on them of a couple of percent based on the rate. So we've now gone from a negative capital cost of a percentage to a positive income cost by really just changing our mechanism for treasury.

Maya Caddle 4:07

What Malcolm just described is a structural inversion of the Treasury model. And it's worth slowing down on the mechanics because the details matter here. Pre-funding isn't just about the direct cost of holding idle capital. The true cost is multi-layered. Firstly, there's the opportunity cost of capital part in correspondent accounts rather than deployed productively. Secondly, there's an FX cost of buying local currency in advance and holding across a weekend or a public holiday, during which time the rate can move against you with no ability to act until markets reopen. And finally, there's an operational cost of treasury teams managing liquidity across dozens of corridors simultaneously, monitoring balances, topping up agents, reconciling positions across time zones. Under a stablecoin model, the logic reverses. Western Union mints USDPT against dollars held at Anchorage. The dollar never leaves a treasury account. What moves is the token, which travels over the Solana blockchain in seconds, 24 hours a day, seven days a week, to the agent's wallet. The agent then handles the local exit, converting USDPT into local currency through exchanges or banking partners. The dollar that backs the token that bats USDPT sitting in the Treasury account now earns T-bill yield for as long as it's deployed. What was a cost center, parked, idle, drag generating capital, becomes a yield generated asset. The operational function hasn't changed. The capital structure has. Now, if we have to quantify that, on a webinar I did recently with Malcolm, he shared that pre-funded costs represent about 5 to 10% of all part capital. Using Western Union's recent 2025 10K, they hold approximately 2 billion in money transfer afloat at any given moment. Capital sitting in transit between sender and recipient, cycling through roughly every seven days. At Malcolm's 5 to 10% cost range, that represents 100 million to 200 million per year in pure capital drag. Money spent simply on holding money. Under a stablecoin model, that same capital stays in Western Union's Treasury, backing USDPT one to one and earns T-bill yield on every dollar for every day it's deployed. Equally, Malcolm shared that moving $100,000 costs Western Union anywhere between $25 to $2,500 per transaction, depending upon the corridor region and also speed. Of course, with stable coins, this is reduced to a few dollars or less.

Yield, Rebalancing, And TVL Economics

Maya Caddle 7:04

I'm curious on the exit, like you know, exiting um or fundamentally off ramping right um point. Part of that still requires whether it's you, whether it's other players, to do some form of rebalancing. And usually that rebalancing will still have to happen via fiat rails. And so one thing that sometimes I get asked is when you're then quantifying that, right? You're you know, you're thinking about the amount of money you're saving or earning by using stable coins versus the potential costs. Like, how does that weigh up? Because you still have to use fiat rails to rebalance at some point. Is that not still does that not nullify the benefits of using stable coins?

Malcolm Clarke 7:44

I think you have to look at it from we're now earning capital on something that was a cost basis. So with that yield earning, is there an opportunity to offset the fiat for the first time as an FX rate? So, you know, there could be instances where, and I'm not saying all do this as Western Union, but I can see others that'll say, hey, if I'm earning 3% yield and I have a cost basis of 1%, can I offset my cost basis with my yield? I still make a 2% share versus today, I have a cost basis of 1%. So it's about turning that negative cost basis into a positive. Now, 3% isn't a lot to play with. But again, if you have a 6% cost basis or 9%, you get a 3% yield on the other side. You're lowering your cost basis. So you have to have the economic levers of volume of USDPT or volume of stable coin to use that economic lever to offset your business somewhere else. So if you don't have a use case or you don't have a set of use cases that can drive the sheer TVL of your coin, then it's very hard to use that as an economic lever. So in Western Union's instance, a stable card, my consumer use cases, my money remote use cases, they're going to create the TVL and drive that yield pool. So I can then use that to offset my treasury set of business if I choose to later on. So you have to have both. You can't go into this with a one-sided economics, which is just going to swap everything to coin. It has to have some use cases behind it. So Western Union are perfectly positioned because we have a Daniel use case, which is 500,000 stores, and a 30 billion digital exits for wallets that can use USDPT for settlement. That drives TVL. Consumer use cases on stablecoin, holding the stable coins, moving around the trillions of dollars that get sent around, you know, moving some of that to stablecoin and USDPT, including what we send around, that drives TVL. So I now have a TVL pool here for my economics with treasury economics that I can use to offset. So it's got to all tie together on a two-sided chain. I think if you go with a single-sided chain, it's very difficult to make those economics. And I think you're seeing some of that play out now where organizations that rely on the T-bills and the yield based on the share of coin, if those T-bills get cut by rates in the US and take a significant amount of value out of their company, they are looking and they are looking at evolving into economics that don't just require rely on that yield part. That's kind of how that's starting to play through.

Maya Caddle 10:21

Malcolm's answer to the rebalancing question is the most important argument in this episode. And it's one I don't hear made clearly enough in industry conversations. A stablecoin's yield pool scales with its TVL. The total value of coins in active circulation at any given time. At low TVL, the yield is thin, the economic lever is weak, and the stablecoin can't cross-subsidize anything. At high TVL, the yield pool becomes a genuine balance sheet asset that can be used to offset costs elsewhere in the business, including the fiat exit costs at the agent level. The implication is that stablecoin economics are not separate from distribution strategy. You cannot model the yield without modeling the use cases that will generate the float. And this is exactly where most institutional stablecoin strategies fail. They model an instrument in isolation. They calculate what T-bill yield on X dollars of reserves looks like, but they compare that to their current pre-funding costs and they declare a business case. What they don't model is whether their use case architecture will actually generate and sustain the X dollars of float required to make those numbers real. Equally, when thinking about launching your own stable coin, you have to factor in how users on and off ramp. Western Union is being intentional. They're thinking about how they can make their agents and possibly some of their local partners, such as banks and payment networks, either help reduce this cost by ideally getting rates akin to bank FX rates, or actually settle these partners directly in USDPT.

Building Off-Ramps That Actually Work

Maya Caddle 12:05

One thing that's really interesting to try and understand is how do you even quantify what that benefit looks like, that financial benefit? And then also how do you even think about bringing that or implementing that use case? Is it specific corridors that you're focused on? How is that working? How is it actually working behind the scenes?

Malcolm Clarke 12:23

No, it's it's a really good question. So I think there's a little bit of a um not a not a clear understanding of how the fiat world works. So if you take Western Union, we've been moving fiat around for 175 years. So we're very good at getting very thin FX rates in corridors. So the implementation for this looks at saying, this is how our treasury works today. And today we work in a fiat-based world where we use correspondent banking layers, we use thin FX rates, we will either pre-fund in local currency or in US dollars based on the regions. So you're changing that and saying, okay, how do we bring in a digital asset which is programmable? And what are the benefits of that? So we spoke about the benefits in treasury yield and the removing of capital expenditure for parking capital. That's the true benefit for a company like Western Union. The FX rate and the thin FX rate and the exit, it really just changes that slightly. And there's a battle that we're going through at the moment, and many others will go through, of making sure that the exit point for our agents or our customers, those FX rates stay very thin because that's where they incur cost that naturally we've been able to control that cost. So implementation of this, not only is it a technical, okay, how do you settle now with the digital asset in a fiat network? How do you give your treasury teams the capability to use a stable coin to fund with agents? That's internal. There's also the other side of that, which is the external part of your network, which is all these agents and all these customers that you have to give them capability as well. So part of our journey has been bringing in an agent wallet. So this is still a relatively new space for agents. There are some agents that have become crypto native and they have crypto ecosystems, they have crypto infrastructure, they will have wallet ecosystems. There are other agents that don't understand crypto, they don't have wallets, they don't have infrastructure. So we've had to give them wallets, we've had to give them non-custodial capabilities so we can send them USDPT. In that capability, we've also have to connect the local exchanges, the local banks, the local exit rates.

Maya Caddle 14:49

Your treasury costs drop, your settlement times compress, everyone wins. It's clean, it's compelling, and it papers over the hardest part of the problem when you're launching your own stablecoin. What Malcolm is describing is implementation, agent wallets, local exchange integrations, country by country exit rail negotiations, onboarding agents who've never interacted with digital assets. That's the actual work. And it's not primarily a technology problem, it's a market development problem. Consider what building functional exit infrastructure in a single corridor actually requires. You need at least one exchange in country that will accept your stablecoin and quote the competitive rate against local currency. You need that exchange to have sufficient local currency liquidity to handle the volumes that a Western Union would send, which in a major corridor can be tens of millions of dollars per day. You need the rate to be thin enough that it doesn't erode the savings from removing the correspondent banking layer. And you need this to work reliably at 2 a.m. on a Saturday when an agent in Bolivia needs to fund cash payouts and a correspondent banking system is closed. This is the moat that Western Unions build out creates. A crypto native company that can replicate the Treasury Bridge product in months.

Malcolm Clarke 16:19

Yeah, and look, I think part of this is you have to have there's a realization that we've certainly gone through and others will go through well before we started this. There's something called a treasury swivel chair that I think is a term that I probably made up. And today the Treasury teams are swiveling between the digital asset ecosystems and the fiat ecosystems. And what they generally do is they're booking the rate for the corridor they're sending based on the volume, the speed, you know, um, is it a weekend, is it a day of the week, the time? So Treasury swivel chair is the challenge that we've solved. And this is when you say Western Union's all in on this. So the ability for my treasury teams to say, okay, I can book a razor-thin rate to this region through the normal correspondent bank because it's nine o'clock on a Monday morning, and I can swivel chair to a crypto asset on four o'clock on a Friday afternoon and pre-fund a corridor. That's how you're solving this. So the the concept of I'm replacing a fiat network with a digital asset network in a big company like Western Union is just not the case. Like you can't do that. Over time, you will see digital assets grow. You will see USDPT grow in its usage, but actually saying I get really thin FX rates here, I'm just going to ignore fiat and move to digital assets. That's not going to take place. So that's your first guiding principle when you're thinking of this. The thing, the place where you win out and the place where digital assets really start making sense is agents that want to reuse the capability in their region. So there are some agents that are saying, I would rather receive a digital asset because I want to reuse it, I want to hold it, I want to share a NIM or yield or benefit that you've got. I also need it because I'm sending it back.

Maya Caddle 18:05

The Treasury swivel chair, as Malcolm describes it, is a concept that sounds operational, but it's actually strategic. What Malcolm is describing is a routing model where fiat and stablecoin rails coexist, and Treasury teams develop the judgment to allocate each transaction or specific corridors to the optimal rail. For example, on a Monday morning, a well-priced correspondent banking route into a liquid corridor will often win on rate. On a Friday afternoon, before a public holiday, in a market where Western Union has significant agent exposure, stable coins win because a correspondent banking system will be closed for 72 hours, and agents need the funding now.

Malcolm Clarke 18:50

There are two different types of agents, and I think that's important to understand. So the first type of agent are those that are not owned by Western Union, they're partnership agents, and we have agreements with them. So those agents, it's really behind the scenes, it's about, you know, what are the economics of this? What is in it for them? What are the use cases for them that you know helps them solve? And more so what are the cost factors that we can take out of the network for them? Other agents, we own the contract, we can just force it. Like we are now settling in USDPT and you are exiting in this way. So some of it is a force function because we have agents that we own and we have agents that we partner with that we determine how we flow. Other agents, they work with multiple people and they, you know, they decide what they do. So there's a bit of a sell job and a bit of a benefit side of this, and then there's the force side. So because of that, you know, behind the scenes, you're really working with the regions, the local partners in regions like we're a global company in 180 countries. So where do you start focusing? Is the agents have the biggest corridors, the biggest volumes, the place where you have the most capital parked. And it's a combination of this is the benefit and this is why you should take it, to we're going to send you USDPT from this point forward, and this is how you're going to exit that. But again, by doing that, they still have to have the thin exit. You can't just say, It's like, yeah, returning up to my and saying, I'm going to send you this, it's going to cost you three times to do something, you're going to be pretty upset as an agent. So that's really it. I think the other side for our agent networks, these are retail stores and retail footprints. The best way to convince somebody to do something is show them the benefit and more foot traffic. So Dan is an example. So digital asset network, it in its sense is really just giving our agent

Dan Connects Crypto Users To Cash

Malcolm Clarke 20:42

new traffic for cash exit and on-ramps that we didn't do today. So that's a digital asset network that is being put into the retail space that didn't exist, giving them new things. So that's really, really exciting and really interesting. And that helps, you know, drive that narrative to those agents.

Maya Caddle 21:01

The Bolivia Flow Malcolm describes as a useful frame for understanding a gap that exists across almost every high remittance market globally, and that Dan is specifically designed to close. On one side of that gap, you have a growing population of crypto-native users, people who want to hold digital assets, transact on-chain, and increasingly receive value in stablecoin form. On the other side, you have a need for physical cash that hasn't gone away. The infrastructure serving these two populations has been built entirely separately. Crypto wallets and exchanges are excellent at moving digital value. They have no physical cash distribution capability whatsoever. Western Union is the inverse. They have 500,000 locations capable of dispensing local currency and markets that most financial institutions have stopped trying to serve with almost no native crypto capability. Until now. Down is a connection between them. Not a product in the traditional sense, more deliberate design to make Western Union's physical distribution infrastructure available as a service to the digital asset ecosystem through a single API at the moment when crypto native users need to cross from digital world into the physical world.

Malcolm Clarke 22:24

Right. So there's a couple of different types of agents. So let's take a very specific scenario. So we have agents which are large multi, you know, multinational Congolworks, which we move huge funds to, and we have the individual person who owns an equivalent of a 7-Eleven or a Bodega. So let's take the use case of somewhere in the middle, which is a mid-term agent that has multiple stores. So the flow of funds is actually quite simple. So that agent will either come with a custodial, non-custodial wallet, or we would provide them one under our wallet ecosystem. So we go from our treasury account, we have our USDPT wallet with USDPT dollars in there. We will simply say, okay, we have to prefund agent A in Bolivia. So we have to prefund them $100,000. So we will send $100,000 of USDPT into their Bolivian wallet. That happens instantly. So yeah, we already have their wallet address, they've onboarded, so just make that assumption. So I'm now Bolivian agent A. I have $100,000 of USDPT value in my wallet. I need to change that to Bolivar's. So within the wallet ecosystem, they have multiple options to do that. So they can go to a local exchange. So in Bolivia, I have the local exchanges, a Bybit, a couple of small local ones. So they can go to the local exchange and say, okay, I have $100,000 of USDPT. What is the equivalence in Boulevard in cash? So they will see the rates and they can say that's a good rate or not. They can go to the DEX markets or the gray markets and they can look for exchange rates on that market. Or they can go to a correspondent banking layer that accepts USDPT and they can say, okay, I'm going to send it into my correspondent banking layer. The corresponding banking layer and local bank is going to change that into the local boulevard and it'll hit my account. So those are the exit rails that we have to and we're starting to put in place and we have put in place in certain regions. We're working with local banks to accept USDPT. We're working with local exchanges. We're working with global exchanges, and we're working with that side. The other thing they can do is they can buy USDPT. So they can come in and say, okay, I want to run my entire ecosystem in a dollar denot of stable coin because I have a bunch of use cases. I want to come in and mint a bunch of USDPT. So they're going to send us local Boulevard. We will mint USDPT, send it back to their wallet, and they'll disperse that how they want. So in some countries, the disbursement of stable coins is starting to grow rapidly. So the theory is everyone always wants to exit in cash. Well, actually, some people want to disperse in local stablecoin or US stable coin. They want to hold it, they want to yield it, they want to spend it, they want to share it, they want to do things with it. So that's growing. We're seeing that evolution. Once you give somebody additional capability, that grows. Like it has this, you know, flywheel on that. And that's where you get the spend on dollar stable cards, or you get that I'm going to swap my stable coin into a cryptocurrency, into a crypto asset. So give me my USDPT, I'm going to go to an exchange, I'm going to buy Bitcoin. Like, you know, there are different types of users. Like this is a very complex ecosystem with lots of different users already into it. So we're tapping into that a bit more.

Maya Caddle 25:32

Dan is a piece of Western Union strategy that I think the market has most underappreciated. Because it looks like a product feature, but it's actually a distribution architecture decision with significant TPL implications. The core problem for any crypto wallet or exchange wanting to offer cash out is that digital asset liquidity and physical cash distribution are entirely different infrastructure problems. You can be excellent in the former and have no footprint whatsoever in the latter. Building physical cash access across even a handful of emerging markets means local licenses, local banking relationships, local compliance, and physical agent infrastructure. The capital and time requirements are prohibitive for most crypto native companies. In steps down. Dan solves this problem. Dan is available for many people in their crypto ecosystem to leverage.

Malcolm Clarke 26:30

We've had lots of companies joining that network. Essentially, it's not tied to USDPT or what we've done on that side. It's more saying, okay, we have this cash ramps in and outbound for consumers that sit within the crypto wallets and sit within the wallet ecosystems that today they use, you know, either ATMs or they use exchanges or they use Bitcoin, you know, places, the charge different rates. It's not consistent, it's really regional based. With the Dan network, you can simply pick Western Union as your exit, walk into a Western Union store and take out the relevant fiat in local currency. So that's a partnership network we've launched. That went live on April 30th as well. We have a number of partners that will start going live in the next month and a half using that digital asset network.

Maya Caddle 27:18

The new foot traffic argument that Dan provides is Western Union's most credible commercial leafer here. Incremental revenue with no incremental capital costs is a genuinely compelling offer for a store owner running on thin margins. But it only works if the down volume actually materializes at their specific location in their specific market. And that depends on crypto wallet and exchange partners and other partners for that matter, having meaningful user base is in that corridor. Which brings in a whole separate question about where crypto adoption is actually deepest and whether it overlaps with where Western Union's agent network is the densest.

Malcolm Clarke 27:59

So the answer would have been yes if those agents are spending the dollars in those local markets. But again, cash is still king. You know, companies like Western Union, other companies exist in regions because the population and requirement for cash and to send cash home instantly is a thing. So the dollarization, I would say yes, there is a risk of that for some countries. Um if it was, hey, we're just going to bring into the market the ability to take dollars and spending dollars through all networks and just you know, essentially settle and solve in dollars. But for our network, we're sending a dollar stable coin to an agent who is then changing it into local currency and then dispersing local currency. So, you know, we don't see that as a as a risk or something we're driving after. And you know, that's what we do today. We will send a correspondent bank US dollars and they will then resolve that into local boulevard, because we'll pick on Bolivia today, and disperse boulevards. So there's really no difference in our flow and what we're doing. I think overall the general risk of dollarization, you know, it's something that you know is on the minds of some countries. I think there are networks that are driving the narrative of, hey, we're going to send a US dollar-denominated stable, and we want that stable to be spent around the ecosystem, whether it's tapping on a terminal, whether it's buying a hot dog, and it's going to stay in that closed ecosystem. I think that is a risk. And I think that that could actually, you know, create problems for this entire US dollar-denominated industry. But we're very clear with our regulatory partners, our local partners. We have licensing agreements, we own global banks. Like we do have banks in Europe, we have banks in Latin America that we own. So we're not the same as a traditional crypto, like

Dollarization, Local Coins, And Regulation

Malcolm Clarke 29:51

we're even calling traditional crypto companies now that are looking at you know, moving dollars around with no insight into how it works on the other end with the local currency. So there is a risk, but it's not certainly a risk that we drive or we're trying to exacerbate. We we do go to local currency at some point in the last mile.

Maya Caddle 30:09

Some regulators are concerned about stable coins representing a dollarization of their economy. But in Western Union's defense, and actually in the defense of most stable coins, the structural defense here is about the last mile conversion. USDPT is a transport layer. Local currency is an endpoint. And this is where local currency stable coins become not just useful, but structurally necessary. And I'd argue more so than the current market narrative suggests. The conversation around non-dollar stable coins has mostly focused on the obvious euro, yen, etc. for settlements. But the more interesting driver isn't payments or settlements, it's treasury. As more of a company's transactions, settlements, and asset positions move on-chain, the friction and cost of constantly cycling between on-chain and fiat rails compound. Every off-ramp has a cost: effects conversion, settlement delays, counterparty exposure during the transaction. Even today, cross-border payments regularly take one to five business days to settle. And off-ramping from on-chain positions into fiat banking systems reintroduces precisely the latency and the cost that on-chain infrastructure was designed to reduce. The logical response is to stay on-chain, to hold treasury balances in stablecoins, to settle obligations in stablecoins, and deploy idle capital into on-chain yield instruments like tokenized money market funds and RWAs rather than cycling back through fiat. But staying on-chain only works sustainably if the stablecoin your treasury is denominated in matches your functional currency. A European company holding a dollar stablecoin to avoid off-rap costs has simply exchanged one problem for another. Now they carry FX risk on their entire on-chain treasury position. Thus, what starts to emerge is not a dollar-centric stablecoin ecosystem with everything else as an afterthought, but a multi-currency on-chain layer where local stablecoins serve as a functional treasury instrument for companies operating in their respective markets, connected by on-chain FX infrastructure, rather than routed through correspondent banking networks.

Malcolm Clarke 32:47

I think so. My take is um look, it's my view, and it's I haven't I have an an interesting view on this. So I like to build things with optionality, flexibility, and scalability. So the way that we've considered building US dollar payment token, we called it payment token for a reason. So the denomination before that can become Euro, it can become MX, it can become Boulevard, it can become whatever it wants. So because we have this treasury infrastructure now to send a digital asset around the world that exists with wallets and those capabilities, we can now resolve a USD PT into a local PT. So is there an instance in the future where we have an MXPT? Well, today, maybe, maybe not, but it gives us the flexibility to say, look, we're going to do on-chain FX. And in the local market, because of dollarization risk, a government has decided that they're not going to accept a US dollar stablecoin anymore. We can create a stablecoin which is local and we can do the FX on-chain and actually reduce our costs and still keep moving this digital asset around. So that's where, again, building for that optionality later is really the guiding principle of what we've done here. I think others have certainly taken the same approach. I think you've seen other companies that have micro-denominated coins, they have US denominated coins. So I think, you know, you've already mentioned that local regional country governments are not going to sit back and allow their economies to be dollarized. That's not going to be a thing. So they are going to push on that local currency requirement over time. There's certainly a window in the future that would happen in my mind. So that flexibility to allow that multi-currency capability on the payment token is really how we staged it.

Maya Caddle 34:37

I think with non-US or stablecoins, a lot of the narrative is typically focused on the G10 currencies, right? Um, and it and it makes sense, right? If you look at FX markets, they are they dominate in that space, right? Um, but from my personal view, um where does stablecoins a cheap product market fit?

Malcolm Clarke 34:55

We thought about it. I thought about it. I thought about it a lot.

Maya Caddle 34:58

It wasn't necessarily with the G10 currencies. It wasn't moving US dollars to euros, it wasn't moving euros to pounds because the fiat legs are very efficient. Um now, of course, there's an important place for these stable coins, and I think they will be especially matt now more for I don't know, I'm have a treasury that's denominated in Euros typically. And so rather than me now having US dollar stable coins, it makes more sense for me to have euro stable coins. But on the local stable coin piece or the non-G10 currencies, I have very strong opinions about I I feel as though those will be amongst the ones that take uh or cheap on our market fit first. Um, and so yeah, something I also think about and it's almost like a hot take somehow within the No it's true, and I I agree with you, and I think you've got the narrative is correct that this wasn't done to solve euro to pounds.

Malcolm Clarke 35:52

Like I think you know and again I go back to the end user where the challenge that we face and we've you know hopefully solved and time will tell, is again if you send if I'm sending you a gift using Western Union and you're in the UK, you want to get that gift in pounds. You don't want to get it in US dollars. Like, you know, it it's important that you see the pound equivalent of that US dollar that's been sent. So that extrapolation layer for the user of what they see means the stable is in the background. It's it's not in the foreground. Like I think again, we're very crypto in our minds sometimes where we think people are gonna hold US dollar PTs in their wallets and they're gonna walk around with it. It's a very small, thin set of the population of the globe that are gonna do that. They want to get pounds, they want to spend in pounds, they want to know that it's one pound for a cup of coffee, and I've got, you know, I've sent you 200 pounds, I've got 199 pounds left. They don't want to have to do math in their head of the how much is that in dollars back to pounds. Like they're not on vacation. Like that's what you do when you go on vacation or holiday for our for our language. Um, I I'm constantly doing a conversion of this coffee cost me three pounds, and it was four dollars. They don't people don't want to do that. They don't want to do mental arithmetic every time they're at the store. So that extrapolation layer and having the stable coin in the background is really, really key. And I think we lose that narrative a little bit in our industry because we're crypto and we think everyone's gonna walk around with crypto wallets. And yes, there is a population that will continue to and that will grow, but yeah, I think the general population for a long period of time are gonna continue to work in how they were.

Maya Caddle 37:30

My view, which I've held for a while and which I think is becoming more widely shared, is that the local stable coins with the deepest product market fit in the next five years may not be in the G10 currencies. There will be local currency stable coins in the high friction corridors. Malcolm's architecture is building for that world. The infrastructure, wallets, exchange, connections, local bank integration is currency agnostic once it's in place. Adding a local currency PT means minting against a different reserve, not rebuilding the network. That optionality is worth more than it looks today. Because the operators that have to rebuild their architecture when local currency regulation tightens are the ones that didn't design for it in advance.

Malcolm Clarke 38:21

I think one thing that the question that we're still or I am still wrangling with is how does this play out regionally? So you've already seen this week, Brazil has started to put in a law from October that you know, some of the money remittance, it's not aimed at that, but certainly some of the neo banks that are settling across the whole systems with US denominator US dollar denominated stable coins, they're no longer going to be permitted to do that from October. And that's how I read it, and it might be slightly different. So the question that still remains is, and you mentioned it yourself, I think as those regions and those countries catch up very quickly from a regulatory compliance point of view, they're going to start making regulatory decisions that could limit US dollar-denominated coins, could limit how they use and their consumers get hold of them. I think those questions will still remain. And I think, you know, part of, you know, we're very, very lucky at Western Union. We have incredibly strong regional teams that are very closely connected. So not just the regulators, we're licensed entities, we have banks, as I've said. So being able to answer that question as Western Union, it's difficult, but it's certainly within our capability. I think for others that are US focused or they're regional focused and they're trying to be global, those challenges and those conversations need to happen. Because I think as an industry, you have to approach those, those regions and you really explain and help them understand at a regulatory layer what it means, what the benefits are, and what are the impacts. Because again, with a local regulator explaining to them that no, you're still moving high volume of currency into the country that is spent locally and moving the economy. The difference is it's a digital currency underneath versus a fiat currency, but it does the same thing, that is incredibly powerful. And I think those regulators locally really need to understand that. So they don't make regulatory decisions that really hurt them and the industry without the full understanding. So I think you know, that's really the question we should be asking ourselves as an industry. Like, who is going to go to those local regions and really help with that narrative and really drive that understanding and education, as opposed to just sitting in that local region and you know, making tons of money? Because really that's that's what's going to happen, because that will that will hurt the whole industry.

Maya Caddle 40:48

So there's a cost that sits inside almost every institution that moves money internationally, that really appears on as a line item, but can pounce quietly across every corridor, every weekend, every public holiday. The cost of capital that has to be somewhere before the transaction happens. Pre-positioned in a correspondent account, sitting in a local banking relationship, part in anticipation of demand that may or may not materialize at the volume you plan for, is not unique to remittances. It is the structural reality of operating any cross-border payment networking scale. And it has been accepted as an unavoidable feature of the business for as long as correspondent banking has existed. What the Mal can describe today is what it looks like when that assumption gets pulled out and examined properly. The capital tool doesn't have to be a clock, it can be a yield-generating asset. If the rail underneath it settles in real time, operates around the clock, and keeps the reserves in your own treasury rather than someone else's correspondent account. The operational function is the same. The economics are inverted at the volumes Western Union operates, or at the volumes of any large PSP, regional bank, or corporate treasury means internationally. That inversion is not a marginal thing, it's a structural one. But the yield only works if the float is deep enough to make it meaningful. And that is the insight that most institutional stablecoin strategies miss entirely. You cannot model the instrument in isolation. The yield scales with TV out. The architecture is what any institution evaluating a stablecoin strategy should be stress tested against their own position. Not whether the yield is attractive, it is. Not whether the settlement efficiency is real, it is. But whether they have the distribution depth to generate the flow that makes the yield meaningful. And whether the use cases they are building are genuinely two-sided, or whether they are optimizing one half of the economics and hoping the other half follows. Western Union's bet is that they have both. Thanks for joining.