THE MAJOR XRP SHIFT IS INCOMING!? (HUGE ANNOUNCEMENTS)

[00:00:00]When we talk about XRP's future, it's not just about a price chart. It's about what the Clarity Act and the next wave of XRP ledger upgrades will actually unlock for people who hold XRP. In this part of the conversation with Paul, we're going to keep it tight. We'll hit on how US regulation, especially around the Clarity Act, could reshape the crypto market here and define XRP's lane. We'll also talk about XLS 65 and 66 and what they're meant to do for the XRP ledger and what that really means from a product and user perspective.

[00:00:34]We'll also touch on how amendments get approved on the ledger so you can see how these changes move from just an idea into a reality. We'll also bring it back to what matters most if you're an XRP holder. How you can earn yield while staying in your XRP position instead of selling it just to get a return. We're going to explore this and a ton of other stuff, guys. This is part two. If you missed part one, I'll link it below.

[00:00:59]Let's get into it with Paul Unenberg, chief product officer at Uphold. I love that. And we'll touch on AI here in just a bit. I did want to ask you since you guys are a global company, and you're dealing with the EU, which is with MA, you're dealing with the Clarity Act, you're dealing with other countries that have different kind of regulatory regimes. How do you create a product that works globally or do you have to kind of focus on the individual countries since we don't have yet a global regulatory regime for crypto?

[00:01:28]>> Yeah, we do have to focus a lot more on the individual kind of jurisdictions u than I would like. So we typically start with what is the the core problem that this is solving, right? Take something like EXA. People need credits so that they can use their crypto without having to sell it. So that that's kind of the the core philosophy behind it. So we start to build a product with there and then we look at okay where are the places in the world where there's some legislation or there's some kind of rule that makes this difficult makes this hard to do makes this something that um you just can't even touch. So for instance, right now in the UK, they have a proposal that says any DeFi lending that you have to do, you have to have an equal amount of fiat that is kind of backing those loans. Now, that doesn't really work for something like EXA, right? Where it's not Uphold who's doing a loan. It's a decentralized protocol who is issuing the loans. So Uphold doesn't have all of the doesn't want to back all the cash in that because we shouldn't need to. It's the the protocol operates like that. So there's there's nuances like that that we have to adapt for different markets. And a big part of it is then, you know, sitting down with regulators, making sure they understand how these product works, what these products do. Uh California, for instance, just came out July 1st with their version of the Bit License. So, we actually had the opportunity to sit with the California regulators and introduce them to Uphold, tell them what Uphold was all about, how our crypto products are different and and some of the things there. And so, it's always great when you can talk to the regulators, you can work with them, make them understand what it is that you're trying to do. And more often than not, by you're aligned, right? Because what what they're trying to do is they're trying to protect their constituents and make sure that their constituents aren't exposed to risks or things that their constituents don't want really want to be exposed to. And we want to give access. So we we want to make sure that they understand what that access means, how we protect that, all of it.

[00:03:31]>> And it's extremely difficult to go state by state. You don't want to have 50 states having 50 different versions of regulation. And that's why getting a a federal regulated bill like the Clarity Act signed into law is the the most important part here probably for the United States and and that could have, you know, decades of of positives if we're able to get it done. And if we don't, other countries will step up and lead and that will be a huge negative for the United States in my personal opinion.

[00:03:56]>> I I completely agree. Right. I think we've we've been in this gray area for so long where we're looking for the regulators to tell us the the Congress to tell us, hey, this is what we think the guard rails are. As long as you build within this, you you are doing everything right. And companies crave that. Companies want that certainty and they want to know, hey, this is what what we need to do to make sure that we're doing things the right way.

[00:04:22]>> Yeah. You've even had Patrick Whit in the White House, you know, who's the uh crypto counsel for the White House, who's been key in the negotiations with senators and and key Congress people. He said that he believes there's trillions on the sidelines sitting waiting to come into the crypto space. I'd imagine that's through investment and infrastructure, but also, you know, buying certain crypto assets if we're able to get the bill over the finish line. It really does feel like the crypto market is just ready to to take its next step as the next global financial infrastructure. We just need a few right things to happen in order for us to get there.

[00:04:56]>> Yeah, completely agree with that.

[00:04:58]>> All right. I did want to ask you um you spent a lot of time building in heavy regulated environments right now. Does regulation feel more like an edge for serious players or does it more something that slows down real innovation?

[00:05:11]>> Yeah, I think it it is an edge, right?

[00:05:13]So again, we'll talk more about AI, I think, later on, but in the world of AI that you can build things very quickly.

[00:05:21]I saw somebody on X the other day who's like, "Oh, I spent two hours and I built a bank." And what they did is they used their AI coding program to tie into all of these APIs that companies like Uphold offer. Great. You you can do that. But ultimately, those companies who offer those things need to be regulated. They need to follow the rules. Uh so regulation becomes actually a very important competitive advantage. If you can be licensed in the right places and if you can follow the regulations and make it easy to distribute things in that compliant way, it's a big advantage because not anyone can do that and these licenses AI can't help with them. You still have to apply. You still have to meet with the regulators. you still have to demonstrate that you have compliance programs and subject yourself to audits and random screenings and things like that. And not everyone can do that. Uh, everyone can build software today, but compliance is one of the the few places where you can really be innovative and still have a moat there.

[00:06:27]>> I love that. Did you have any other thoughts on regulation either here in the United States or globally that you wanted to share before we move on? I think that regulators are still figuring it out and they they are moving I think a little bit slower than all of us in industry would hope for but you know h having those these open questions getting feedback from the industry really meeting with people is only helpful and this is still new technology right it's it's not like there's people who have been doing this for decades and decades and decades so I think the people who become regulators are now more cryptofluent than ever before. And so that that's just a matter of the technology catching up, the distribution catching up, and and the people who are using it getting into those positions where they can start to say, "Oh, this makes sense and is still safe for consumers."

[00:07:19]>> Well, well said. Well, well said, Paul.

[00:07:21]I hope I hope certain regulators watch this and you know and and you never kind of know what they're doing with their spare time but uh hopefully they know that the US is is you know Americans are very excited about what the changes that they've been making are and we want to we want them to continue making these changes so we can have a free and open market where crypto and blockchain can really flourish and 60 million Americans already own crypto in the United States.

[00:07:46]We kind of are are demanding it at this point and let's let's hope they they hear the message. Let let's hope so too.

[00:07:52]I I've heard very positive signals from people in DC. I was at DC blockchain week and certainly again both sides of the aisles. It's hard to get bipartisan support for anything. This one seems to have it. So fingers crossed.

[00:08:07]>> Fingers crossed, man. Well, thank you so much for sharing those final thoughts on on regulation. I did want to move into um XRP and and different things happening there. I know we had a conversation about some new amendments that are kind of uh making their way uh to to voting on the XRP ledger. One of them is XLS65 and 66. For the people who aren't kind of deep in XRP technology or are not tracking the amendments, can you explain what the XLS 65 and 66 upgrades are meant to do for the XRP ledger and what what what from a product perspective what that might unlock for Uphold specifically and the broader community.

[00:08:45]>> Yeah. So for those who are unfamiliar with even the amendment process, right, the XRP ledger, the software that runs the XRP network is decentralized. Ripple may have written the initial version, but they don't control it. They don't control what happens on that network.

[00:09:03]So, in order for a change to become part of the network rules, everyone who runs nodes needs to vote on that change. Uh, and so that's the stage that these two changes are in. They're being voted on where people who are running the infrastructure can read it, look at the requirements, and decide whether or not they're going to signal support for that. and then ultimately update their software so that it supports these new amendments. 65 and 66 are pretty important to add two key elements to XRP. The first is what they call a single asset vault that allows you to deposit something like XRP and effectively track that you've done that.

[00:09:49]So I'm I have 100 XRP. I'm going to put them in this vault. I basically get a coupon that says, "Hey, you have 100 XRP in this vault." Now, that in itself, okay, that that's fine. There's not not too too special there. But with XLS66, it allows you to take those vaults and do lending based on those. So now you're putting your XRP in a vault. You're getting a receipt for that. And whoever is running that vault can have different programs where maybe they're going to give you credit based on the amount of XRP that you have similar to what we do with EXA today. Maybe they want to do a little bit more exotic things where they're going to use your XRP, get RLUSD uh based on that, for instance, and do some kind of basis trades or some kind of other strategy and then give you yield based on that. So it allows you to have your assets in a secure place, you know, onchain that my assets are locked in here. You can track your value of those assets through these coupons that you have and you can then do things based on those assets whether it's NFTTS whether it's tokenized securities whether it's real world assets that live on the ledger like take out loans like uh do credit swaps all kinds of traditional finance tools are now available on chain and >> and I think the the more uh more and more amendments are starting to kind of come together that really paint a picture for massive institutional adoption of the XRP ledger, but also giving retail the ability to participate and earned yield on all kinds of ways around XRP. And I think that's what we've been waiting for. That could be an aha moment where things really start to change and move and more people use their XRP actively to engage in the ecosystem and uh you know uh earn from that. I think that's really what what a lot of people have been kind of sitting there waiting for the right product and it looks like this could be one of those big products.

[00:11:51]>> Yeah, it can certainly unlock a lot of things. So the second part of your question, what does it do to uphold?

[00:11:56]Well, one, it lets us support this and maybe offer different ways that you can earn on your XRP. So maybe you can earn on in a borrow fold. Maybe you can earn by taking a tokenized assets and putting it in. Um, we'll see when the final amendments pass all of the mechanics, but it just allows you to do more onchain. Uh, and the onchain part is important, right? Because you could do all of this offchain today, but then you're exposed to risk, right? What happens if, uh, there's another Celsius, something like that, right? Nobody wants that. So having it on chain gives you a little bit more certainty, a little bit more asurances that there is a proof um there there's something real here that you can then yeah interact with programmatically.

[00:12:43]>> Absolutely. And I think that's what a lot of people kind of sit on the sidelines and wait because they're not sure like what happens if I put XRP into this system? What happens to it? Where where does it go? And I think that uncertainty really prevents people from participating in certain ecosystems around XRP specifically.

[00:13:01]>> Yeah. And that's totally fine too, right? Because the the people who have held XRP for for decades uh on Uphold, they they they're long-term holders.

[00:13:10]They they are not going to risk their XRP for anything that is just kind of fly by night. So, they're going to want to make sure it's, you know, solid. It's legit. it has real counterparties who are doing real things to generate generate these returns, right? Because what you don't want is some kind of operator that's like, "Oh, okay. We're going to give you returns, but they're using some kind of other money to do that or they have some kind of incentives to do that." Those aren't sustainable. That's that's not real world demand. You know, that that's just basically taking money from one thing and putting it into another thing and that that's not how you generate long-term yield. AB: >> Absolutely. When people hear XRP, what do you want them to picture? Is that payments, credit, liquidity, tokenization? How complete can that stack be on the XRP ledger?

[00:13:58]>> Yeah, I would like them to not even think about anything other than finance, right? So if you think about all the things that financial companies do today, everything from securely holding your assets to giving you a way to spend those assets to being able to give you credit to being able to allow you to access other types of things like stock trading or or loan products like heliloc type products, right? You you have all this universe of financial services. All of those can be possible on a blockchain like the XRPPL.

[00:14:34]And so when they start talking about XRP, I I just think about it as finance.

[00:14:40]Uh and it just happens to be powered by the XRPL. And more and more of that is coming.

[00:14:45]>> I love that. And then is there any is there any products right now besides Exa that that you want to talk about that kind of deals with XRP? Maybe something that's currently being used or something that's coming that you can talk about.

[00:15:00]>> Yeah. So, we're we're definitely still looking at ways for people to earn yield on XRP. That's the number one most requested feature. So, we're looking at vault strategies. We're looking at vault providers. How can you use networks like Flare, for instance, to open up an XRP vault? It's taking us a lot longer than I would like to, but you know, as we start to peel back this onion to the the conversation we were just having, oh well, we have to worry about this and about that and in this region it doesn't work. And as much as we need to be careful because we have billions of dollars worth of XRP on the platform, we don't want to expose our customers to any unnecessary risk and we want to make sure our customers understand that. Um, so we are slowly figuring out all of the right ways to do it at scale at the the billions level, but more and more coming there. And then of course as 65 and 66 start to become live on mainet we'll have even more products that tie into that because tokenization is coming for everything. Every asset you have can be tokenized. Uh and you should be able to use that asset then for credit use that asset for other things on chain whether that's trading whether that's swapping.

[00:16:14]Uphold has anything to anything. And we were actually one of the first companies to have permission from FINRA, the regulators for stocks to say crypto to stocks. Uh, and you know, really excited to see that actually coming because stocks are coming back to Uphold. They should be any day any day now launching.

[00:16:34]Um, probably by the time this airs, it will be live for customers.

[00:16:38]>> Is is that the product you're most excited about? Is there is there anything else that you you maybe are not working on right now that you would love to build in the future? I mean, I know you don't want to give away all of your good ideas, but I'm there could be something very personal and passionate that you are interested in. Anything you'd like to share in that area?

[00:16:57]>> So, again, I I I made every financial mistake you can make and I want to build tools that prevent people from doing that. So I I want to make sure that people are able to mitigate their risks, are able to get lowcost credit, and are able to pay their bills in a timely manner with the technology that we have.

[00:17:16]But what I'm most excited about is actually the stuff that I haven't even thought of yet because, you know, we we have so many manual processes today.

[00:17:25]It's so hard to get any kind of financial product out there. When you have an onchain world, it lowers the barrier to entry. And then someone can think about, oh wait a minute, this might be a good idea and you can start to see that actually start to get traction, get get explosive growth. So those are the things that I'm most excited about and hopefully my project team is thinking about them or one of your your viewers is thinking about, hey, I want to build this financial technology that allows it to scale to the next hundred trillion dollars.

[00:17:58]>> I love it. And that's what's so great about the XRP community. You have people from all walks of life, all different layers of education, and everybody is passionate about building the future infrastructure and digital assets and ideas come from anywhere and anybody.

[00:18:12]And I think that's what's really cool about this whole decentralized space.

[00:18:16]>> Yeah. Yeah. It's very very powerful to have everyone have a voice and those voices can then actually execute on that. So it's not just, you know, noise in the wind. It's people building things that have real world implications.

[00:18:28]>> Yeah. The next trillion dollar company is being built right now and people just don't even realize it. But uh it's going to be really cool.