Raagulan Pathy: Stablecoin Revolution vs. Struggling Currencies, USDC Circle GM to Founder & The Future Of Borderless Banking – E574

"If you think about it from the most fundamental perspective, it's incredibly unfair that your future is dictated by where you're born, the passport you hold, the economy in which you live. As long as you're able to get a decent education and you have access to some basic human rights, like healthcare, and you can access digital goods, then you can live a globally first world life and participate in a global economy, even if you happen to be born in the wrong country. To me, the ultimate goal of crypto is to debate Bitcoin or USDC, we've spent a lot of time doing that but the more fundamental thing is that the internet came along. I call the internet the great leveler of the world. It leveled the world. Telecoms weren't open, information was not open, it was very much like banking, siloed country by country. And now we need to do that to finance, so that if you're born in Singapore or Australia, where I grew up." - Raagulan Pathy, The Stablecoin Guy, Co-Founder of KAST

"The thing that stablecoins did was they provided an internet layer for money. Bitcoin was the original blockchain-based layer, as well as a bunch of other crypto. But the issue is, a bunch of the other crypto is largely volatile and asset-based and speculative. Stablecoins—99% are backed against the US dollar—something people already understand. There's already 22 trillion of money supply in the US; if you add offshore, notionally it's about 40 trillion or 50 trillion. The beauty of stablecoins is that it's money accessible to anyone. Doesn't matter what passport you hold or what your residency is. It's on chain, it's one-to-one to the US dollar, and you can send it to anyone. To open an account like you would a bank, all you need is a wallet. And so that, I think, is matching the speed and openness of the internet. In many ways, it's a much better fabric for money around the world." - Raagulan Pathy, The Stablecoin Guy, Co-Founder of KAST

"The best example of this is when I went on a trip to Thailand, met some Argentinian guys. It was just after the Argentinian peso depegged from the US dollar. Yeah. It was one to one. This time when I went to Argentina, it was 1,200 to one. To just show you what Argentinians have suffered over the last 20 years—right—in terms of currency depreciation. Right. And so having access to US dollars is hugely transformative. And they own the wallet, so the government can't seize it so easily—and a whole bunch of things. And so I think in the context of these countries, it's very, very transformative to their banking experience. Would it be growing up as I'm able to feel secure about the value of my holdings in this bank?" - Raagulan Pathy, The Stablecoin Guy, Co-Founder of KAST

Jeremy Au speaks with Raagulan Pathy, founder and CEO of Cast and former APAC head at Circle, to break down the structural shift underway in global finance. They explore how stablecoins, particularly USD-backed ones like USDC, offer a new digital foundation for cross-border banking, especially in economies plagued by inflation, capital controls, and financial instability. The conversation unpacks why traditional banks are failing globally mobile users, how dollarization is accelerating through crypto rails, and why sovereign currencies in smaller nations may not survive the next wave of financial decentralization. They also debate the long-term tension between U.S. crypto regulation and dollar dominance, and why Southeast Asia must build self-sustaining economies instead of relying on exports. Raagulan shares his vision for a flatter financial world where anyone, anywhere, can participate in a global economy without being constrained by local systems.

05:32 Stablecoins Enable Global Financial Access: Stablecoins like USDC give users a secure, borderless way to hold and move dollars especially valuable in countries facing inflation, devaluation, or banking instability.

11:41 Global Dollarization Is Accelerating: Raagulan forecasts that stablecoin-driven dollarization will peak around 2040 as smaller national currencies struggle to compete with the liquidity and reach of the U.S. dollar.

10:00 Traditional Banks Struggle with Global Customers: Even in advanced economies, traditional banks are ill-equipped to handle globally mobile users, leading to compliance headaches and service breakdowns.

25:05 Crypto Rails Will Power the Future of Finance: The conversation separates the role of crypto as currency from crypto as infrastructure, emphasizing that universal crypto rails will underpin all global financial transactions.

20:35 U.S. Crypto Policy Is Conflicted, but Will Evolve: The U.S. government's stance on crypto has swung between crackdown and support, but Raagulan sees a middle-ground policy emerging that balances innovation and control.

38:30 Southeast Asia Must Shift from Export-Led Growth: Countries like Vietnam and Indonesia can’t rely solely on exports to the U.S.; they must modernize governance, stimulate local demand, and grow service industries.

27:00 A Freer Financial World Is the Endgame: Raagulan envisions a financial system where opportunity isn’t tied to birthplace. Crypto and stablecoins could flatten the playing field for billions globally.

(00:52) Jeremy Au: Hey, I am so excited to have you back on the show! You are now a founder again after 10 years, an executive (01:00) after being a founder before. Could you introduce yourself?

(01:02) Raagulan Pathy: Sure! And firstly, thanks for having me back after maybe three years. My name is Raagulan Pathy, I'm the founder and CEO of Cast. Cast is a bank alternative platform, think of it like a FinTech and it's built on stablecoins. And it extends upon what I was doing most recently in my corporate role, which is Running Circle's Asia Business. Circle is best known as the issuer of USDC.

(01:26) Recently popular because it just filed to go public this week so, that's a little bit about me. Prior to that, I worked at Zoom, Facebook, and Amazon. And before that was when I was a founder like 10 years ago.

(01:37) Yeah. People can check out that episode to talk about your prior history as a founder. This is kind of a sequel episode, so we can understand. What's interesting is that at that time, it was very much the crypto winter, the FTX implosion, the terror, and so forth, you were the general manager for USDCs, Southeast Asia and Asia business. (02:00) So, you know, what's interesting is that between now and then, obviously, there's been two major trends of many office leaders.

(02:04) The crypto, of course. The second part is macro, and the third part is your role. But let's talk about your role first. From your perspective, why did you decide to say, 'Hey, I want to be a founder Again?' 

(02:14) I think the thing for me is just whether I'm in a corporate role or founding a company, it's about solving a problem that's big enough.

(02:24) I'm a pretty big thinker. I think quite long term. I'm not really too concerned with things that are short term. Although in certain circumstances like working at Zoom, things became very short term because of the pandemic. I had a wonderful time at Circle.

(02:37) I was there for two and a half years running the Asia business. But it also had challenges in terms of, just the, I had to be on the road a lot. Some years I traveled to more than 20 countries. I would spend more than half the year, three quarters of the year on the road that comes with other challenges to your personal health.

(02:56) You don't get to spend time with family and friends as much. At a certain (03:00) point, I felt financially secure but I didn't have opportunities to control my time. So first, I actually set up to figure out, okay, how do I control my time?

(03:10) And I'd done a few seed investments that lasted very abruptly short, extremely short. Like literally a month or two before I was like, okay, let's go and build this. I think because I was so deep in stablecoins, I could see that there was this enormous opportunity which I'll talk about in a second, about what we're building for.

(03:27) That was just too good to leave alone. And there's also a window of time for startups where there is like a tectonic shift 

(03:36) Jeremy Au: Mm. 

(03:37) Raagulan Pathy: In a trend that means you've got a lot of tailwinds for what you're building. 

(03:41) Jeremy Au: Mm. 

(03:42) Raagulan Pathy: And I've just thought that moment in time, if I waited six months would just be gone

(03:46) or someone else would take this spot. So, I had to move quickly. 

(03:49) Jeremy Au: Yeah. Let's talk about this opportunity. What is the opportunity that you feel and believe exists? 

(03:56) Raagulan Pathy: Yeah. So today, if you live in a place like Singapore, (04:00) Australia, where I grew up, maybe the US, you live in a place where banking mostly works pretty well. 

(04:07) It's not perfect, but it works pretty well. But that's not the case for large parts of the world. From a macro point of view, there's things that are clashing, like finance is largely local. You know, you think about when you start up for a bank account, they ask for your local credit history.

(04:21) They ask for your local ID. It's not very global. 

(04:24) Jeremy Au: Right. 

(04:25) Raagulan Pathy: But if you think about the internet, the internet started you know, realistically, like 30 years ago, 1995 approximately is when it started getting popular. 

(04:34) And that has changed a lot of things around the world, right?

(04:37) Companies are born global first, as platforms like Zoom and subsequent platforms like Deel and Remote, showed. People are trading goods and services around the world, they sell online, you hire people globally, freelancers,

(04:53) there's influences, there's so much that happens globally on the internet. . But that openness of the internet, which is essentially (05:00) connected globally minus certain pockets like the Great Firewall of China, doesn't match how finance runs. It's fundamentally mismatched. The thing that stablecoins did, was they provided an internet layer for money. Bitcoin was the original blockchain based layer as well as a bunch of other crypto. But the issue is a bunch of the other crypto is largely volatile and asset based and speculative stablecoins, 99% are backed against the US dollar.

(05:26) It's something people already understand. There's already 22 trillion of money supply in the US if you add offshore, notionally, it's about 40 trillion or 50 trillion, globally. 

(05:36) The beauty of stablecoins is that it's money is accessible to anyone. It doesn't matter what passport you or what your residency is.

(05:44) It's on chain. It's one-to-one to the US dollar and you can send it to anyone to open an account like you would a bank all you need is a wallet. And so, that I think is matching the speed and openness of the internet. In many ways, It's a much better (06:00) fabric

(06:00) for money around the world. And I think, so stablecoins, the largest USDT and USDC, I obviously used to work for the issuer, the second one. But I felt that there was an opportunity to build a whole new type of bank or bank-like platform on top of this layer which is increasingly getting bigger. 

(06:17) Jeremy Au: Right. And I think that makes a lot of sense. I mean, obviously, you know, technology stack on one another. So, let's talk a bit about the banking infrastructure. So, you know, what does that look like for a consumer? What would it look like for somebody in, for example, Latin America?

(06:32) Like, would that banking experience be different or better? Because it's based on a stablecoin rail rather than, you know, yeah, currency. 

(06:40) Raagulan Pathy: Yeah. I was just in Latin America. In most countries in the world, there's approximately 180 countries. Probably like 40 of them you can say, most of Europe, particularly Western Europe, you know, US, Canada, Australia, New Zealand, Singapore, Hong Kong, UAE, things run, okay. Relatively open economies, you can send money most places you want, et cetera, but (07:00) actually the majority of the world doesn't have that.

(07:01) They have restrictions on how much money they can send in and out of the country. Sometimes you put money in the bank and the government may nationalize the bank and potentially take your money. 

(07:11) Jeremy Au: Mm. 

(07:11) Raagulan Pathy: They have issues with currency depreciation.

(07:14) The best example of this is when I went on a trip to Thailand. I met some Argentinian guys. It was just after the Argentinian peso de pegged from the US dollar. It was one- to- one. 

(07:23) This time when I went to Argentina, it was 1200- to- one 

(07:25) Jeremy Au: Mm. 

(07:26) Raagulan Pathy: to just show you what Argentinians have suffered over the last 20 years in terms of currency depreciation. And so, having access to US dollars 

(07:34) is hugely transformative. And they own the wallet so the government can't seize it so easily and a whole bunch of things.

(07:40) And so, I think in the context of these countries, it's very, very transformative to their banking experience. 

(07:46) Jeremy Au: Would it be growing up as I'm able to feel secure about the value of my holdings at this bank?

(07:52) Raagulan Pathy: Let's say you are, firstly I think, you know, like there's still gonna be, for example, people in Argentina who operate in the local economy. You (08:00) work in retail, in a cafe, someone pays you in pesos, you spend in pesos, but there's also a large part of the economy earning money from overseas.

(08:07) By being paid in stablecoins, they can hold it securely in a bank alternative platform, this is common across the world. You have security of your funds because you have US dollars, not forced to put into pesos, which, you know, the example shows it depreciates a lot.

(08:22) So, you have US dollars, you control the wallet. And then with a platform like ours, you can attach a card to it and spend it on Visa rails, you can buy stuff from overseas, you don't have the capital controls. Normally, you'd have to get paid into a local bank,

(08:36) they would convert it to local currency, the currency would depreciate, there's times when banking you get locked out completely. You know, Lebanon had a crisis where people literally get their money outta the bank. Right. And so, you avoid a lot of these pitfalls. And it's much more stable and secure.

(08:50) I mean, you can imagine like, if DBS goes down for an hour or two and we freak out, versus like, imagine they're like, oh, you can't get access for two weeks. And then we're gonna depreciate your currency. You had $10,000 in there, (09:00) now it's only worth 3000.

(09:01) You think about banking differently at that point. 

(09:03) Jeremy Au: Oh, a hundred percent. I'm curious about your geographic selection, right? Because I feel like maybe I was to be so basic to be like tier one, tier two, tier three. Tier one would be Singapore, America, Canada, Europe, where, you know, it's banks are up and it's, it's seen as infra, right?

(09:19) I think tier two obviously would be your emerging economies where there's a lot of digital banks that emerging, right? So like Brazil, Argentina, you know, but then there's tier three where the infrastructure is totally broken, right?

(09:31) Yeah. So, there are some countries in the Middle East, countries in Latin America where it's just broken, right, in that sense. So, I'm just kind of curious, do you see yourself playing like in level two or level three? I'm just kind of curious because there's so many digital banks are emerging for level two, from my perspective.

(09:47) Raagulan Pathy: Excuse my French. But banking is literally fucked across all three. 

(09:50) Jeremy Au: It's what you're saying. 

(09:51) Raagulan Pathy: But a different in different ways. Yeah. Right. And so, obviously, level three is like, you know, banks just can't trust that they'll operate. Yeah. You need it.

(09:59) (10:00) Level two is that there's good digital banks in your country. Yeah. But you still suffer from the bounds of what the government gives you to work with, right? They still make, you still have currency depreciation. And even Brazil, the currency has been depreciated, not like Argentina, but it's been depreciating five, 10% every year.

(10:18) You have issues of currency depreciation, you have high interest rates, and so, you still have problems even if the experience is digital and capital controls as well, you still have that problem. 

(10:28) .

(10:28) Raagulan Pathy: And then you go to the tier one countries. And I think in the tier one countries, they've just made banking difficult over time.

(10:35) When I first came, I actually like when I opened my DBS account in Singapore, it was before I lived in Singapore, lived in Singapore 12 years now. And before that, I had a company based in Singapore for a business that I had. As part of that, I opened a business account and a personal account.

(10:49) That's how I got my first DBS account, three or four years before I lived in Singapore. The experience then was that I'd go, I was at the accountant and then he would send a guy who would do my personal and my (11:00) business account and I'd go to DBS and I'd pick up my card. 

(11:02) Jeremy Au: Right. It was 

(11:02) Raagulan Pathy: There's no way. And I'm not from a private. Yeah. Because the amount of questions and difficulty. I have a lawyer in the Caymans for some personal affairs. I send some money to my lawyer, I get a periodic review from the bank.

(11:15) I'm like, guys they're like, who is this? I'm like, it's my lawyer. why am under periodic review, I'm just lending money to my lawyer. Who helps her with my personal holding company. Nothing complex here. But you're just nervous. Then you're like, are they going to restrict my account?

(11:28) And I, think I significantly bank with them, so I can't imagine what it would be like for others, I think banks got worse at facilitating people who are more global. Like, I think they're okay. Maybe with local people who are Earning money locally.

(11:40) Spending money locally. But as soon as you hit this global profile they're increasingly struggling. With their own internal. Compliance it's not, something against compliance. It's just that they're struggling to understand this new type of customer. and build a framework around it.

(11:55) Jeremy Au: Yeah. 

(11:55) Raagulan Pathy: And so that's why if you have a stable coin bank, which is much more open and (12:00) much more adopted to a global user. We think it's just a better experience even for people in that level one country. Not for everyone, but that percentage who are global. 

(12:07) Jeremy Au: I think the elephant in the room is that, banks are incentivized to take care of customers.

(12:12) the elephant in the room would be, governments, right. Because governments are by nature, national and sovereign. they're not built for global customers and global transactional flows. Yes. They think about they are citizens. Yes. They are currency, they are financial infrastructure.

(12:26) Right. Yeah. So, you know, how do you see that playing out? governments are also focused on their own fiat currency and they as regulators of banks. How do you see this playing out from your perspective? 

(12:35) Raagulan Pathy: My no bullshit version Yeah. Is that there is, two types of economies right in the world.

(12:41) Right. There's economies that are significantly large that they can defend themselves 

(12:47) Jeremy Au: Yeah. 

(12:47) Raagulan Pathy: Against globalization. 

(12:48) Jeremy Au: Yeah. 

(12:49) Raagulan Pathy: I mean, you know, Singapore's a small country in Hong Kong, but they're like centers with a lot of trade. Yeah. You know, significant large economies like India and China in Indonesia of the large populations, (13:00) maybe Nigeria in Africa.

(13:02) And obviously the US and China You know, and there's gonna be ones like Brazil and others. right. And of course the as a block, but then you look at all the other countries and it's really gonna become increasingly hard to defend their own currency. 

(13:17) Against globalization. 

(13:19) and manage all the things that come along with managing a currency, my personal view is that the majority of the world is gonna become dollarized. Most people think that Dollarization is going, you know, is shrinking. I would argue it's going the other way, it's essentially the basis for building all these currencies already. You know, people think, oh, every country's got its own currency. It's relatively new concept. Actually, what happened was that gold was the currency and everyone built the currency on the, off of gold backing.

(13:45) And that stopped at some point. You know, in the 1970s largely, they broke the gold peg. And then people started building their own currencies. And guess what? Unsurprisingly Most currencies, they can't manage themselves. 'cause they don't have a big enough local domestic economy.

(13:59) Right. (14:00) And so I think at this point, it's either you go to gold backed, which is not happening right now, or you go to the US dollar. So I think most of all's gonna go US dollar. 

(14:09) Jeremy Au: Okay. So this is really interesting, right? So first of all, I do agree with you that, if you are in a country that has an unstable currency or currency that seems to be weakening consistently.

(14:20) People are gonna want to dollarize to have a more standard piece. I think what's interesting is there's also a big piece about how. The world is de Dollarizing as well because China and Russia and the Middle East contrast the US dollar because of, the US control around the financial system to be able to sanction and of course do those things.

(14:42) Raagulan Pathy: Yes. 

(14:43) Jeremy Au: So those are the two types of articles I'm seeing right now. One is, you're saying Dollarization is going up and the other one is de dollarization, is happening. I'm just kind of curious, how you would explain this for folks here. 

(14:54) Raagulan Pathy: So, the issues of the world using. A currency that's backed by a (15:00) sovereign 

(15:00) Jeremy Au: Yeah.

(15:00) Raagulan Pathy: Country. Yeah. Is obviously comes with implications, right. Including they can turn off You know, treasury bonds and Right. We've seen some of this with the Russia war, et cetera. So it's not without problems, but, I think like the view of many countries that their currency is gonna replace it is just not realistic.

(15:19) And I use the simplest of litmus tests for this. The simplest litmus test is, and I've traveled to over a hundred countries personally If you land in any country, I guarantee you the people who are interested would know the value of their currency versus the USD. No one knows the amount of people, maybe in certain countries, they'll know the value against r and b. but most won't. Even in Singapore, like you could ask Singaporean, they'll tell you the value against the USD. You ask 'em the rate against an r and b, they'll be like, okay, well the USD is this much and I think the r and b is this, and then you do some mathematical calculation on it.

(15:50) What does that tell you? The US dollar is the accepted global currency for all trade. And so even if governments can maybe do it on a macro point of view, when they're selling large amounts of (16:00) oil, a singular trade. large singular block trades can be in some other currency.

(16:04) Sure, But for everyday commerce and usage, I don't think you're gonna break the US dollar anytime soon. 

(16:09) Jeremy Au: Yeah. So I think it's interesting because, you know, when we hang out with crypto folks, and when I hang out with central Banker folks, I always feel like I'm a little bit of a, split screen tv, 

(16:20) Right. Because, what we're kind of saying is there's a group that is more, government friendly and saying Hey, crypto is good because we are helping the US dollar rise and spread as currency of choice across the world. So I think that's one piece.

(16:34) Another point of view I'm hearing, is that, crypto is an existential threat against the US dollar. As a fiat currency, right? Bitcoin, for example, as a form of digital gold, is a way to eventually move America back to the gold standard by using Bitcoin because you know, the Americas, you know, E-T-C-E-T-C, not managing his financials well.

(16:58) and then I'll say into two more (17:00) camps after that, which is, that's a good thing that we move to the standard To protect people and move America to a new path. And another group saying, we should be against crypto to keep the US dollar number one. So those are like, a, split screen TV that I'm seeing.

(17:15) And it's very loaded because of this us and geopolitics. I'm just kind of curious, like, do you believe that. crypto or dollarization, do you believe that's, positive or negative against American dollars? A reserve currency. 

(17:30) Raagulan Pathy: So I am actually in both camps.

(17:33) But it's actually a matter of time. 

(17:35) Jeremy Au: Okay. 

(17:35) Raagulan Pathy: today, crypto is 2.6 trillion. Bitcoin is 1.6 trillion. Global currencies are a hundred trillion, crypto is like nothing compared to global currencies, US dollars are 25, 30% of currencies, but they're more than 60% of trade.

(17:51) what I believe is gonna happen first is that most of these other currencies are gonna get trashed, and the world is essentially gonna become (18:00) dollarized. even the currencies that don't look dollarized are dollarized. I would argue the Singapore dollars almost dollarized.

(18:06) I'd argue the Hong Kong dollar is almost dollarized. Obviously most of the Middle East is Dollarized, pretty much all of Africa is pretty much close to Bar in Brazil. All of LA is already And most of Asia is in some way or another. What I mean that is either they use dollars or they, fixing their currencies or managing their currencies against the US dollar very actively.

(18:28) it doesn't float in a range that far away from the US dollar for the reasons of trade. whether it's directly fixed or closely linked, or just full Dollarized, the world is actually already today nearly dollarized, now we're just gonna put it into a digital format.

(18:42) And make it more formal and great. Right now, the reason why it's unrealistic to think that Bitcoin or crypto is gonna. Overtake this in the short term is just, it's just the numbers. Right. Like I said, it's like Bitcoin is 1.6 trillion. Currencies are way bigger. It has to go up substantially a (19:00) lot right before it does.

(19:01) Yeah. And gold is approaching, I gotta check the latest numbers, but closer to 20 trillion, you know, so what I think is gonna happen is first dollars are gonna expand. Stable coins are gonna go from 50 billion to a trillion in 20 28, 20 29 probably. And I think we'll march towards 10 trillion, some point in 2040 or 2045.

(19:21) the dollars will crush most other currencies in both a digital format. if you manage your currency against a dollar, you've got your own currency, but you kind of don't.

(19:29) It'll be much more explicit. let's say M money supply is 22 trillion now. And by 2040, it becomes closer to 50 trillion. if Bitcoin hits, $2 million, which I think it could over 15 years from now . Then Bitcoin is worth 42 trillion. .

(19:46) Now you've got a situation where Bitcoin is worth 42 trillion. The US dollar money supply is 50 trillion and you've got gold, And then you've got this situation where countries start to think about it from a sovereign (20:00) perspective. Do I want to have everything in dollars or do I create a new currency that is backed by Bitcoin or gold?

(20:07) Because over time, the US dollar depreciates as well, you'd be better to back your currency against something that appreciates, It is just a timeline horizon. 

(20:15) Jeremy Au: think 

(20:15) Raagulan Pathy: do I think the world is gonna dollarize between now and 2040? . And it'll probably reach its peak around then.

(20:21) . And then you're gonna see that Bitcoin and maybe gold has got big enough that countries will hold a balance of dollars, Bitcoin and gold. And that's how they'll manage like a new type of currency. And that will happen from 2040 to maybe 2060. And then maybe after 2060 when I'll be very old, things will, become much more Bitcoin based, over time.

(20:43) So I think both bodies are correct. It's just crypto people in too much of a rush. 'cause they don't understand the sums of how big it needs to get before it's realistic. 

(20:52) . 

(20:52) Raagulan Pathy: And in the short term are gonna be. Dollarizing. 

(20:54) Jeremy Au: Yeah. we would have to check back on this episode in 15 years from now.

(20:57) It could be faster, it could be shorter. But I agree that short term (21:00) dollarization is already the king. 

(21:02) I think that's a beautiful observation. most currencies are already hard pegged, soft pegged, or artificially using US dollars.

(21:10) I also agree that it's already happening that crypto stable coins are the fastest growing segment because this is a more efficient way of holding US dollars than, Somebody trying to hold paper US dollars from a tourist.

(21:21) Out from Cuba, for example. Right. So I agree with you about a short term dollarization trend for sure. maybe zooming in on that long-term macro piece. I was talking to this, European guy and he said, I can't believe that American government will allow this to happen because it would destroy the ability to, do massive deficit spending.

(21:39) It breaks the economic model. So why would the fed, and the SEC be favorable to crypto As a, long term existential threat. And I think that's one part of it. the other part I find is that a lot of crypto people are very public and proud about it.

(21:55) Right. So normally, if you're trying to break the American banking system, you Would be pretty (22:00) quiet and hiding in a cave somewhere. but everyone's kind of like, oh, I'm on a podcast. And I believe that American banking system is totally broken and we need to break it.

(22:09) so it's very out there as a mission I'm just kind of curious, if that is true, wouldn't the American government, kill it? 

(22:16) Raagulan Pathy: the thing that I would tell you is having worked with American companies for 20 years 

(22:20) Is the relationship between the individual and the government is different here in Asia compared to America. 

(22:25) Jeremy Au: Right. 

(22:26) Raagulan Pathy: So in Asia it's cooperative. Don't we want our government to be strong? I think most Singaporeans, if you complain about train breakdowns, we want a strong government, But in America, the constitution . Is for the individual. Right. And individual freedom and individual rights. First and foremost. Not the government, right? so it's much more, a libertarian sort of view in the US that the need to have a libertarian view and freedom is much stronger.

(22:54) Then the need to support the government. Or to have a strong government, many sections of (23:00) the US population, I think will believe that you don't need government at all. It could just run A completely free market economy. 

(23:06) Jeremy Au: Yeah. 

(23:07) Raagulan Pathy: And all services could be free market.

(23:08) Right. And so I think that's just very different. I mean, the concept to many Americans of like, you just pay for your schooling and you just pay for your healthcare. 

(23:16) . 

(23:16) And if you don't have the money, that's your problem. You need to go and make it. 

(23:19) Jeremy Au: That 

(23:20) Raagulan Pathy: would be shocking to most people in Asia.

(23:22) . But it's not shocking to large parts. I wouldn't say the majority of the American population, but a libertarian section of the American population, which is not small. Could believe in that. And that's why it's okay for them to speak so openly about Screw the American government and the US dollar, because ultimately, it's sort of like, yes, we want the US dollar to be strong 'cause we're pro-America, but at the same time 

(23:41) Libertarian views and we think that, you know, Excessive government should be very minimized. 

(23:44) Jeremy Au: Yeah. I think that's super fair. I love that statement, the American folks can believe in crypto, from a maximal perspective, and they have a different opinion from the government.

(23:54) one thing that's always been in the back of my head is, you know, as a economics student, one of the things (24:00) that we always learned was currencies are backed by force. currency is a promise Of value. And when something goes wrong, there are courts, the justice system. And the justice system is effectively backed by the police and the military that enforce. Those rules. 

(24:14) Raagulan Pathy: currency is backed by force. That's a hundred percent correct. Especially if you're in a large country. 

(24:18) Jeremy Au: Yeah. 

(24:19) Raagulan Pathy: remember most of the world's history currency was backed by gold.

(24:22) Jeremy Au: Yeah. 

(24:22) Raagulan Pathy: currency came up. first you had gold. It was inefficient to move gold. So you stored it in a bank and initially banks would issue IOU notes. that was the initial currency. you had lots of different ones.

(24:33) the JP Morgan one and the Citi Bank. The Citibank one, the Hsb C currency note, which is backed by gold. Yeah. Eventually the government took all the gold and said, now we will back it by force. the timeline in which currency has been backed by force.

(24:46) Relative to the world's history is very small. 

(24:48) Jeremy Au: Right, 

(24:48) Raagulan Pathy: And so it's not inconceivable, That we go back to a currency that's backed by something apart from force. 

(24:54) Jeremy Au: Currency is backed by force. But more specifically, only fiat currency is backed by force.

(24:59) Yes. And gold (25:00) is backed by gold. 

(25:00) Raagulan Pathy: Gold is backed by gold. 

(25:02) Jeremy Au: Yeah, because that's true. If you move from a trader along the Silk Road from China to Mongolia. So gold is gold wherever it is. And there's no need for government to enforce that promise. There's gonna be an awkward transitional point.

(25:15) 

(25:15) Raagulan Pathy: I think we don't study history as well anymore. But remember the gold standard was there till the 1970s. It was only broken in the 1970s, not that long ago. 50 years ago. And for 50 years before that old currency was backed by gold. All the major currencies at least.

(25:29) it's not. That unusual and all you need is for currencies, including the strongest of currencies like the US dollar. They suddenly start depreciating really badly where people go, oh, you know, like right now if it happened, you go, oh, there's a few other currency options. Right? But gold and other things are not that big.

(25:47) even now with a bit of shakiness, you're starting to see gold go up a lot, right? 

(25:49) Jeremy Au: yeah, 

(25:49) Raagulan Pathy: But let's say it got really shaky. And, the US economy doesn't control the world's power in 15, 20 years time. then you might need something that's either gold or.

(25:58) Bitcoin if you ask crypto (26:00) people. 

(26:00) Jeremy Au: And so let's talk about that future, let's say this all comes true, everybody in crypto goes to sleep. They wake up, it's 2040. All those dreams have come true, Bitcoin has gone up. Digital dollarization has gone up. What is that world in 24 is a result? I mean, you know, maybe one statement I heard a little bit is obviously people use a lot more crypto for transactions. But what else would be the, other impacts or second order impacts of such a world?

(26:27) Raagulan Pathy: what I think is let's sort of like separate crypto from the, as the currency versus crypto versus the rails, right? Very interesting. Yes. So crypto is, the rails I think will become. Pretty much universal. on that rail you can put US dollars, which is like USDC and USDT Or you can have things like Bitcoin, as adoption happens, where pretty much everyone in the world has A crypto rails enabled wallet, most of 'em will have US dollars, but then they're gonna have this choice, you know, where they can flip between whatever they want, And so that, (27:00) that's what I think will pretty much happen in the world. it would mean that the world becomes much more truly global and matches the internet a lot more. Which I think is an exciting future My, one of my ambitions in life is to go to space only because I'm so curious what the world would look like from space. Hopefully one day have enough money and, and price goes down to achieve that. But just think about it, if you go to space today, right? You're sitting on a satellite in a space station, you're looking at the earth, right?

(27:25) You don't see borders. It's a completely ridiculous concept. Right. You know, the concept of borders in countries, it's completely manmade. Right. There's no like lines. We see it on a map that we make, but you look at the earth, you don't see any lines. if you think about it from the most fundamental perspective, it's incredibly unfair that your future is dictated by where you're born.

(27:46) The passport you hold, the economy in which you live. as long as you are able to get a decent education, you have access to some basic human rights, like healthcare, and you can access digital goods, Then you could live a (28:00) globally first world and participate in a global economy even if you happen to be born in the wrong country.

(28:05) to me, the ultimate goal of crypto, you can debate Bitcoin or USD, and we spend a lot of time doing that. But the more fundamental thing is that the internet came along. I call the internet the great leveler of the world.

(28:17) It leveled the world. telecoms wasn't open. Information was not open. It was very much like banking, like silo, country by country. And now we need to do that to finance so that, if you're born in Singapore or Australia where I grew up, the advantage I have versus someone who is born, look at Singapore, you can drive 25 kilometers away.

(28:37) The salary is one third or a quarter of what it is, just 25 kilometers away. You know, that whole concept can be leveled and should be leveled. And I think ultimately that's why I'm a big, supporter of crypto. I want to level it for the world.

(28:51) I want it in a way that anyone will have access to financial services so they can participate in a global economy, independent of where they're born or where they're from. (29:00) 

(29:00) Jeremy Au: Right. I think there's a beautiful piece, and I agree with you, that in that world, if you are in Argentina or some other country in the world, in the Middle East, you'll be able to access banking services, have a credit score, be able to borrow.

(29:12) And I think it'd be a much more flat, space, with probably, more efficient cost of capital. I'm curious, what happens to the US dollar? What happens to the Russian and Chinese currencies? 'cause these are controlled currencies. What do you think they would be? I mean, would they have to be more disciplined about how they do the currency?

(29:33) How would you see. That play out? 

(29:35) Raagulan Pathy: No, it goes back to what I said. I think these large economies are okay. Russia has so much. In the way of oil and commodities. And large enough internal population. And now having been sanctioned They've become even more self-sufficient.

(29:47) China, same thing Less on the commodity side, but more internal manufacturing. 1.4 billion people. You could argue that China could pretty much operate as a closed economy. They probably don't want to because it's (30:00) much better for them to be in global trade.

(30:01) But I think for them it's less of an issue. I think they'll be okay. And they can defend their own currencies 

(30:05) Jeremy Au: Yeah. 'cause Russia, China, they've generally, I think, more balanced budgets on average and they have big enough economies to do so. So then you know, everyone's gonna ask, what happens to the US dollar in that world from your perspective?

(30:17) I think yours is a bit more nuanced, I would say, compared to other folks. 

(30:20) Raagulan Pathy: I think the US dollar dominates the rest of the world. for whatever Russia and China and others may think they still have to participate. The rest of the world runs on the US dollar.

(30:28) 60% of global trade is US dollars. I think the US is gonna continue along just fine.

(30:34) Jeremy Au: so you're not in the group that's like, the US dollar is over and Bitcoin rules and America government must learn how to balance its books. 

(30:42) Raagulan Pathy: I think the American government would, it'd be good for it to balance its books, you know? I think it's healthier. Just like if you're an individual and you're spending more than you earn, it's generally not great for you.

(30:51) I think the US dollar is gonna continue along fine. And if anything, it's gonna get digitized and more easily accessible. the problem is in most of (31:00) these countries, even if you want access to dollars, it's very hard to get access to dollars.

(31:03) I think demand for US dollar would be three, 4 billion people, but only a few hundred million actually have the ability to open a US dollar account. . That mismatches driving stable coins. Demand 

(31:13) Jeremy Au: now that, we've seen the whole arc of it. I'm kind of like zooming in into like, you know, like this year, next year.

(31:20) And I think from my perspective on crypto has done, I would guess a, you know, three major moves. Right? I'd say, first of all, I think that, it's become lighter crypto regulations compared to the Biden administration.

(31:31) and then two of course is that I think it has on, trade barriers, right? So they've done liberation day tariffs, on the rest of the world. third they're balancing the books.

(31:42) Right. So yeah, trying cut government spending, using terrorists as a source of tax revenue to increase revenue. And of course, they'll inject some tax cuts into that mix as well. But, you know, there is, I think, a considered effort to push towards a bit more of a, balancing the books.

(31:57) So I'm just kind of curious, how do you think that layers (32:00) on to this conversation of finance and stable coins from your perspective? 

(32:03) Raagulan Pathy: let's take it from the view of the Biden administration. Yeah. Look, I mean, there's many parts of Biden administration people wouldn't like, including the whole white culture and all of that, which I don't really buy into.

(32:13) But I have no idea why they picked on crypto. you're not really gaining many supporters by picking on crypto. But you're gonna lose 50 million Americans who own crypto. I think it was a misinformed targeting, of crypto. when you push things so far, one way what's gonna happen is the government's gonna come in and open it completely which I didn't necessarily agree is the perfect answer either.

(32:34) The middle ground is always the right answer. we're going through this moment where it's Almost like a free for all. 

(32:39) there's some pretty good people like David Sachs, he's shown some early policy, which is just sensible.

(32:45) let's do things to modernize the rails. Let's have a classification of different types of crypto. The stable coin is very different to an NFT, which is very different to a cryptocurrency, you know, what does securities laws look like? So I think it's gonna go from.

(32:59) Extreme (33:00) one end to the extreme other. 

(33:01) . 

(33:01) But I can see with the mix of hard lunik as well as David Sachs there, that they will find some middle ground. I think David Sachs is doing the crypto part and hard lunik is doing the general macro. . Part of this, message about how do you rebalance the US economy and it's gonna go through some friction, frankly.

(33:17) and we're seeing it already, like markets sit down. I think I was just looking this morning in the last six weeks, NASDAQ's down 21 point half, 22%. So, you know, they're gonna react, but I don't think the tariffs in the end are gonna be as bad. I think it's just the Trump method of like going out.

(33:33) if you're the US economy, you can, 

(33:35) Jeremy Au: yeah. 

(33:35) Raagulan Pathy: you can put a tariff on anyone and be like, well, you need our consumers. So. let's negotiate. And I think that's just the way he does things. But if you look back in two, three months, things will soften up.

(33:46) last time he came in there was a similar path of like, things were really bad and then people negotiated things went so bad, I think it's both. people have also missed that they're just looking at the economic play. They're forgetting that there's also a power play as well.

(33:58) if you look at (34:00) Trump as a person, forget about the economics of being president for a second. he grew up outside of Manhattan, was not respected in Manhattan. He came into Manhattan. The business people didn't want to deal with him. And then he proved to them who was gonna be.

(34:14) Popular and build tallest buildings and all of that. So he always been an outsider. always been there to prove the chip on his shoulder. . Who can be boss. it's gonna create friction and then people will settle and the tariffs will be there, but it won't be as bad as people think.

(34:28) And then we'll move forward. 

(34:29) Jeremy Au: Yeah. And I think it's interesting because, this is a negotiating styling point, for Trump, Terror can get better, but true negotiation, could get worse if they, fight each other and retaliate when you think about all of this, is there any advice you would give for people who are, worried, This is not financial investment advice but I was just kind of curious how people think about it? there are people who are, you know, very anxious about the world, so they, they wanna go buy gold and be ready to run because there could be a World War happening.

(34:57) I mean, I don't think one scale, but I'm just kind (35:00) of curious. 

(35:00) Raagulan Pathy: I think we're approaching near maximum fear in the next week or two. And then I think things are just gonna get better from here I was looking at some companies today that are pretty much on fire sale prices.

(35:10) if you're a long-term investor I think you can pick up some high quality companies At very fair prices. You probably haven't seen for a while. earnings have got better over the couple of years. Prices are off 20, 25%. So I think things will be fine.

(35:23) If you're a trader in some of these countries and you're gonna export your life is a little bit more uncertain. It was gonna be difficult if you're selling goods, but, I just generally think most governments will be sensible and will fold.

(35:36) And I think we were talking about this in the pre podcast piece. I wouldn't say the Trump administration's calculation of tariffs is a hundred percent correct. They put up this big chart that showed, the implied tariff, which is the tariff plus the implied tariff through currency manipulation and other methods.

(35:53) But their point is correct. 

(35:56) Jeremy Au: Mm. 

(35:56) Raagulan Pathy: We know for sure that pretty much every economy in Asia is (36:00) Managing their currency against the US dollar To make it better for them to export. Almost universally. But barring a couple that have more floating currencies, Yeah, I think from the US perspective it's like, come on guys, we're not putting huge tariffs on you. You're manipulating currency, so you get a bit better deal from us. We need to rebalance this. It's just like the person who gets used and used that eventually they break, you know?

(36:21) there's a section of the us business and economic community that feels they've been used by the world. 

(36:28) Jeremy Au: Mm. 

(36:29) Raagulan Pathy: they would have that issue with Europe saying, Hey, we are fighting your wars. Why do I care about Ukraine? 

(36:34) Jeremy Au: Ukraine's 

(36:35) Raagulan Pathy: on your doorstep, . 

(36:35) Jeremy Au: That's 

(36:36) Raagulan Pathy: why am I fighting your war for you and spending money? why are we allowing these countries to manipulate their currency to sell to us? I think overall, the thing is though, that the US is a pro-business country, As much as there's people exporting to the US there's also people in the US who are, working with people overseas to make money.

(36:54) they can only push it so far because there's gonna be people who are disadvantaged in the US as a (37:00) result. that will create a natural equilibrium things will fix themselves. I think it's gonna come sooner rather than later. 'cause stocks can't keep going down with like the administration not caring at all.

(37:09) . Eventually they, Yeah. You know, they will care and go, okay, we have to, Back off a little bit here. 

(37:13) Jeremy Au: Yeah. '

(37:13) Raagulan Pathy: cause it's too much, 

(37:14) Jeremy Au: No, I do believe that, what you said is true that, there are many folks in this Trump administration who are smart, savvy, and understand macroeconomics.

(37:24) And I think it is also true that a lot of Southeast Asian economies have been focused on being exporters to the us, So I think when I look at some of these countries, I mean, we're looking at Indonesia, Vietnam, Ireland for example. All of these countries actually have been hammered by very significant between 30, 40 plus percent.

(37:41) And I think it's an interesting, sense of, fear and rationalization. So I think the rational logic is like what you said is like, Hey, they've been exported to the us. Historically, and I think that a lot of people will say that's what Americans have wanted. So they're doing it for them.

(37:55) It's like a divorce, like whose fault is it, versus a no fault divorce in that (38:00) sense. 

(38:00) Raagulan Pathy: Yeah. 

(38:00) Jeremy Au: But of course, there have been busy exporting. Indonesia is exporting minerals and other stuff to America as well, Thailand is doing electronics and manufacturing, Vietnam as well, textiles and so forth.

(38:12) So I thought, people would say, and I've heard from my friends there, they're like, Hey, this was the American contract, this was the deal we signed was that, we manufacture your stuff. You buy stuff that's cheap for your middle class. And your lower class. And we buy us treasuries to support a weak currency.

(38:30) And then you use that currency to, you know, spend it on infrastructure or r and d or investment, whatever way you wanna spend it. 

(38:37) Raagulan Pathy: it's like the guy who is in a corporate job. Who has a friend who's a. Comedian who has no money. But he is a really funny guy. you get a lot of value from him because you're in a boring corporate job.

(38:48) You can say, Hey, let's go to the bar. the guy doesn't have enough money. So you're paying for drinks. 

(38:51) Jeremy Au: Yeah. 

(38:52) Raagulan Pathy: You pay for drinks because he adds value. 

(38:53) Jeremy Au: Right. 

(38:54) Raagulan Pathy: And he's the fun friend to be around. Your friends are all having a good time.

(38:58) Jeremy Au: Yeah. 

(38:58) Raagulan Pathy: And then one (39:00) day you're like, oh, he's not as funny anymore and I'm sick of paying for drinks. 

(39:04) Jeremy Au: Yeah. 

(39:05) Raagulan Pathy: That's what's happening. 

(39:06) Jeremy Au: Okay. 

(39:06) Raagulan Pathy: That's the analogy of what's happening, you know? So it is not the unsaid contract. 

(39:11) Jeremy Au: Yeah. 

(39:12) Raagulan Pathy: Was there, you make a lot of money, you're in a boring job.

(39:14) You want to have someone come and entertain you. 

(39:17) Jeremy Au: Yeah. 

(39:17) Raagulan Pathy: But at some point that balance is wrong. And so now the US is saying, yeah, please come and hang out, but buy some drinks as well. 

(39:24) Jeremy Au: is the path forward for, these, southeast Asian countries.

(39:27) who are net exporters to America? Like, Vietnam, Thailand and Indonesia with relatively high tariffs. Singapore is very low at 10%, And you have a surplus, with the US what do you think stop selling as much to America, buy more American stuff, export to the rest of the world?

(39:43) Raagulan Pathy: the best cue for them is to do what China did, which is like stimulate local demand. Modernize your economy, diversify into other areas such as services, right? Yeah. The problem is that some of these economies, not all of them have been doing just like, okay, (40:00) well we just got huge amounts of labor and so let's just like manufacture goods and not really spend much time on the rest of the economy.

(40:06) So I think, in some ways it could focus their mind to be like, right, okay. Yeah. Like, time to get on with like Sorting out the rest of the economy. these countries are not small. Right. I mean, like vietnam's a hundred million people.

(40:18) Thailand is close to a hundred million, Philippines around there as well. They need to build better infrastructure, have less corruption, run better government, just all the basics.

(40:27) They have economic growth they can do outside of just selling goods to America. they just gotta get their house in order. Selling to America is kind of like the easy one. 

(40:34) 'cause the friend's always gonna buy drinks. Now the friend's not buying drinks. if you're not as successful anymore and not as funny anymore. 

(40:41) Jeremy Au: Yeah. 

(40:41) Raagulan Pathy: get a job. You know, it's the same. That's the way I think about it. these countries are fine. they can have a good, strong local economy if they wanted. 

(40:48) Jeremy Au: Well, I think that's really interesting because it sounds like your advice to these countries is, yes, it's a crisis, but the party has stopped, the music has stopped, and there's an opportunity to restructure economies, which (41:00) is going to be very painful because, I mean, it's hard for economies to turn on a dime, and, get us going.

(41:07) Raagulan Pathy: China's been going through this for a while, and even though China is like, oh, this is annoying and bad, right. It's not like ending for their economy, right? They're like, oh, well we've become a lot more self-sufficient. And operating internally a lot more. it's gonna be painful for these economies, but I don't think it's gonna be as painful because eventually they'll negotiate Something better. it'll make them look internally at the resources they have, these countries have young populations with very smart people where, you could develop a very strong services economy, hopefully. They focus on those things.

(41:38) Jeremy Au: Yeah. And I guess other side as well is your push of the non-US economies that have been hammered by terrorists to integrate one another as well, I think EU had a lot of agreements that were paused because we could never get over the finish line and a lot of them got approved 

(41:53) Raagulan Pathy: Very quickly. 

(41:54) Jeremy Au: Very quickly after Trump, was known to be coming, into the US administration again. And I think China (42:00) continues to be making positive movement towards, future agreements with the rest of the world, so, yeah. Interesting. I'm curious from your perspective.

(42:08) I know you are against the asymmetry or you think it's understandable that if there's asymmetry in the trading relationship between the US and. net exporters there's a correction. do you believe that lower trade barriers on average are better?

(42:21) Raagulan Pathy: I personally do. Yeah, because it goes to my economic thesis, right? You should have an open world and an open economy, right? so it doesn't matter where you're born or what passport you hold and the world could trade freely on the internet and otherwise. So that is my fundamental core belief, that's your core belief? That's my core belief. Yeah. the US is saying to these net exporters, you're not net exporting naturally. You are suppressing your currencies, if you let the currencies float, 

(42:47) The easy answer is just go, okay, we won't have trade supplies. We'll let all these currencies float. 

(42:53) that's like true global trade. you don't hold capital controls. you let your currencies float. 

(42:57) Jeremy Au: Yeah. 

(42:57) Raagulan Pathy: Easy. 

(42:58) Jeremy Au: Yeah. 

(42:59) Raagulan Pathy: Easy answer. (43:00) Singapore, manages currency a little bit.

(43:02) it has much more open trade. and has gone through its issues over time of managing the good and the bad of the global economy. But I think today the reason it's rich is because it has just faced these problems fronton and being forced to modernize the economy every step of the way.

(43:18) Yep. As a result, you know? Yeah. Even through the recent, you know, surge of like, well, we've got limited landmass, we don't have as many human resources, so we have to automate a lot more things. necessity causes you to modernize. fundamentally the world should be open.

(43:32) But the problems today are because both sides are making an error. 

(43:35) Jeremy Au: Right. And your perspective is the asymmetry be corrected in short term. And then your hope is that a more symmetrical, higher set of terrorists will eventually drop down over time. 

(43:45) Raagulan Pathy: Yeah. 

(43:46) Jeremy Au: Which may happen in the next, four years within this administration.

(43:49) Raagulan Pathy: Let's see. 

(43:50) Jeremy Au: Yeah, we'll see. But 20 by 20, 40, you know, that's far enough for lots of things to happen and a lot of things will happen. And then we'll circle back, in 2040 to see how these scenarios are (44:00) panned out We're living in a better world where, global users can use crypto and rails to do transactions and the world is flat on average. On that note, thank you so much for coming and sharing your experience. 

(44:11) Raagulan Pathy: Thanks for having me. I know it was largely a macro discussion, but I've really enjoyed it.