The Future of Finance: Open Banking, Stablecoins & PropTech Tokenization

Denis: Hi everyone, welcome again to another episode of Block by Block, the number one proptech podcast of the UAE, and we're going global today. Once again, it's been a minute, I know. We're covering the future of finance, and I'm delighted to have Vanessa here today. I would love for Vanessa to introduce herself, because she can do it better than I can.

Vanessa: Hi. Thank you so much for having me. It's a pleasure to be here. My name is Vanessa Zuabi. I've been living in the UAE for about six years now, and I've always worked at the nexus between policy and industry. Recently I worked at VARA. I was one of the first to join VARA back in 2022, prior to the regulations launching, and more recently I've joined Lean Technologies, heading up their policy and strategic partnerships.

Denis: Nexus of policy and regulatory. Why policy and regulatory?

Vanessa: I would say it's always been policy and industry, the nexus, working in finance and technology. Policy and regulation shape how industry operates and how it functions, and I've always had a fascination with building. So having a foot in both industries has always been something I've done. I started my career in Washington DC. I worked there for about 10 years and specialised in public-private partnerships in the technology space, focusing on emerging markets, the Middle East and Africa specifically. Then I eventually moved to the region, and when I moved to the UAE I stumbled upon VARA, which was in the very early days of developing the virtual asset framework for the UAE. That was a really interesting time to be in the UAE.

Denis: Okay. So is it VARA that brought you to the UAE, or were you already here?

Vanessa: A long story. How long is this podcast?

Denis: Give us a minute.

Vanessa: I lived in Lebanon before that and had my own startup. So as much as I love the policy world, I am a builder at heart. I understand what it takes to build a business from the ground up, and I really understand how that impacts businesses coming into the UAE, whether in the virtual asset space or otherwise.

Denis: That's interesting. I think you're maybe the first person I've heard say that you have been a builder yourself and are in policy and regulatory. Most of the time you're either a builder or you're in policy and regulatory in a box. Honestly, this is one of the reasons why, in another career I had, I had quite a lot of difficulty explaining what I was doing to a regulator, because from their side it's quite a technical exercise. So how would you say being a builder yourself helped you become the policy and regulatory person you are today?

Vanessa: I wouldn't say I'm a compliance person, but from a policy and regulatory perspective, having a deep understanding of industry and how the market worked was always something I brought into shaping policy and regulation. I always wanted to be that voice a little bit. When you look at how the public sector and the private sector connect and partner, there's almost a translation that needs to happen between the two. The better you can translate private sector language and industry into regulation, the more effective regulation and policy can be, and vice versa.

I don't think you can look at regulation or policy in a vacuum. It can't just be a bunch of lawyers in a room writing something, and that's not how it should work. I think the regulators in the UAE have done a great job of consistently connecting with industry in a way that helps them shape how they look at regulation. The stronger you can build those relationships between government and industry, the better regulatory frameworks can be shaped and rolled out in the market. That's a huge thing we forget a lot of the time, whichever side of the coin you're on.

As much as regulators are thinking through the design and writing of regulation, they also need to think about the go-to-market, almost the way a business thinks about the go-to-market of its own product.

Denis: Acceptability of that product.

Vanessa: And adaptability. Regulators need to think about how regulations roll out in a market. How are businesses coming in and getting licensed? What does that process look like? Are there actors in the market, like banks and insurance providers, that are actually on board to support these entities in meeting their regulatory requirements? There's a lot more that goes into shaping a regulatory framework in any jurisdiction than just writing regulation.

Denis: Thank you for covering this. I think it's very useful for our listeners to understand. From policy idea to policy implementation, how long does that generally take? Give us a ballpark. You worked in the US, and in emerging markets in the Middle East and Africa. Help us paint a picture of how it looks here.

Vanessa: When I was working in Washington, things would happen in cycles, because it's administration to administration, and that can be a very frustrating process. What's unique about the UAE is that when the leadership is on board with rolling something out, it really has staying power. When you get the right people together, it happens at lightning speed. Reflecting back on when I joined VARA in 2022, I'm amazed at what we accomplished within the first year. Within about six months we launched a full, comprehensive set of regulations with substantial industry feedback. That was February 7th, 2023.

Denis: Wow. And you were right in the centre, involved on a team.

Vanessa: I was on a team, and what was unique about it was that, similar to me, they had almost a startup mentality. That's exactly what VARA was. It was a regulatory startup.

Denis: And it had never been done before.

Vanessa: Correct. We really had nothing to base anything off of, and I think that was a unique opportunity to do things differently. When you looked at other jurisdictions globally at that time, and even today, most regulation is strongly based on traditional finance rules and regulations. The virtual asset industry, especially at that time, needed a different approach and a different way of looking at things.

Denis: But why? I recognise that virtual asset regulation in particular, in Europe, where I've lived, in the Netherlands to be specific, is built on the back of traditional finance regulation. Think of Basel, MiCA and those types of things. Given that you were one of the first to join VARA, I'd be interested to understand why VARA, or the government, made the decision to clearly distinguish between TradFi and what has now become VARA and the digital assets ecosystem.

Vanessa: I think it was a product of the time. When they looked at the global jurisdictions that had implemented digital asset regulation, it was clear there was a gap. Most digital asset regulation was product-based, looking at it from digital asset to digital asset. In order to get regulated, you needed to approve every single digital asset you were listing on your platform. It was a product approval process, versus looking at where the real risk lies in the industry, and that's on the distribution side. That's why VARA took an activity-based approach to its regulatory framework and licensed across many different activities. At the time I think it was seven: exchange, broker-dealer, asset management, custody and so on. It worked with industry to design and develop this activity-based framework.

They also took FATF, Basel and other major financial regulations into account when building out the regulations, so it's not to say that traditional standards are ignored by any stretch of the imagination. If you look at the compliance rulebook VARA laid out, it's very much in line with global standards, not just any global standards but gold-star standards, and that has built its reputation. But at the time it wanted to distinguish itself from the way other traditional regulators were looking at the industry, and the only way to do that was to be distinct and specialised in virtual assets. I think that was a really interesting approach, because very few traditional finance regulators globally were willing to take the risk to understand the industry.

Denis: And also to understand it properly.

Vanessa: Right. Most of those regulators had very tiny departments with some specialisation in digital assets, but it wasn't a major focus. Dubai specifically, and Abu Dhabi at ADGM even before that, really wanted to make it a major priority and a place where the virtual asset industry could create a home and a headquarters. I think they've done a very good job of building that reputation here.

Denis: Very interesting. Bahrain also issued its own virtual assets framework prior to that. They were one of the original regulators, and they took a very product-based approach. You can actually see it in the licence categories. Now Qatar, where we have an operating company, clearly follows examples globally, and perhaps VARA's too, though they wouldn't say that. In 2024 I think they issued their digital assets regulation, and on the back of that, guidelines and an investment token rulebook. What I've noticed there is that they clearly distinguish between tokens that are allowed in the market and those that are not. Crypto is fully not allowed, stablecoin is a thing. So there is a pathway and development coming in that market as well.

Vanessa: I think regulators really need to think about how they're going to respond to innovation. Early on, VARA did a very good job of this by creating a principles-based framework that was adaptable to any kind of innovation coming in. The risk with a more product-based and prescriptive approach is that any time a new innovation or technology develops, you have to rethink the regulations and readapt. It's restrictive, and it means you can't adapt fast enough as a regulator, so you end up falling behind and putting people at risk because there are loopholes in the regulation. A regulatory framework like we have here in the UAE is more encompassing, more adaptable, and it holds people accountable in a way that a very prescriptive approach has more difficulty doing.

Denis: To close off this point, and then I'd like to go to the other side of the table: VARA obviously does quite a lot of work, and flexibility makes them competitive globally. What would you say are some of the risks you have seen because of that flexibility and adaptability?

Vanessa: I wouldn't say they're flexible when it comes to enforcement and supervision.

Denis: No, that's not what I mean.

Vanessa: What I mean is that when a new innovation occurs, it's still applicable within the regulatory framework. Just because you have a new business model or a new technological innovation doesn't mean you don't fall under the virtual asset regulations. Whereas regulators who approve one innovation or one product and don't approve another create loopholes in that process.

Denis: Exactly, this is the distinction. It captures all types.

Vanessa: So regulation like VARA's, and what the FSRA now has as well, is more all-encompassing, reduces risk in the market, creates more obligation for compliance and accountability, and allows for stronger supervision and enforcement. So I would say we're actually safer under this type of regulatory framework. I just want to make that very clear.

Denis: Very good. Thank you for making that point. You're now on the other side of the table, from regulator to operator at Lean Technologies. For those who don't know Lean, could you tell us a bit about it, and then what you do there?

Vanessa: Lean is one of the early innovators of payment and financial infrastructure in the region. They launched in 2019, and today they're one of the top fintechs here, focused a lot on open finance at the moment but innovating for the larger finance and payment space.

Denis: So open finance, what is that, for those who don't know?

Vanessa: Open finance is essentially the ability to connect your bank account automatically and easily to facilitate payments from any bank, anywhere. Lean has been an early innovator in this space and is innovating across a multitude of payment and financial products. Today Lean is processing over 5 billion in transaction volume across the UAE and GCC, and we have over 400 clients between the UAE and GCC. We work with some of the top names in the industry: Tabby, Tamara, Careem, Zena and several others. We recently launched our pay by bank product with Zena, which I think was a big milestone.

Denis: So pay by bank would be open finance.

Vanessa: Exactly. And with the regulatory framework, we have an in-principle approval with the CBUAE. We talked a little about how, when regulations launch, there's also a transition period to make sure there's full adaptability within the market. We saw that with virtual assets, and we're seeing it now with all types of financial regulation rolling out.

Denis: What makes open finance so much better than the traditional way of paying? I could do a bank transfer, I can pay by card. There are wallet structures, Zena has a wallet structure, there's tap to pay. What does open finance bring in terms of innovation?

Vanessa: It's an automatic, seamless ability to connect your bank account to anything and make a payment almost instantaneously. So it's really about instantaneous payments, and improving payment infrastructure helps support all industries. That's one of the most important things, even when we look at real-world asset tokenisation and other industries in the virtual asset space: the ability to connect seamlessly to traditional finance rails is really important.

Denis: Interesting. So now, what you do at Lean.

Vanessa: I head up our policy and also our strategic partnerships. I focus on our engagement with the banks. When you're looking at financial innovation and the fintech ecosystem more broadly, relationships and engagement with the banks are fundamental.

Denis: You can't do it without them.

Vanessa: You can't do it without them. Banking infrastructure is not going to change, but it's important that there's a symbiotic relationship between financial innovators like the Leans of the world and the banks. Just like between government and industry, I often feel there needs to be a bit of translation between fintechs and banks, because we're not competing. All too often it's seen that way, as a competition, but what we're here to do is work together. By focusing on building partnership and engagement between fintech companies like Lean and the banks, we do something important, not only from a regulatory perspective but for scalability. And when I say scalability, I don't just mean for the fintechs but for the banks. Banks are the foundation of everything financial globally.

Denis: And we fintechs, the virtual asset industry, all need banking foundations. We need to tap into the financial market.

Vanessa: Exactly. And banks can also use our industries as support and partners for innovation, so that we can scale together and create better accessibility to finance globally, whether it's virtual assets or payments.

Denis: Interesting. You touched on the relationship between fintechs and banks, which is very important for the success of that innovation wave. How has that relationship developed over the years? A few years ago there was this terminology of disruption: we're going to disrupt the banking sector. It never happened. As a matter of fact, I was reading an article, and I think for the GCC, whether by volume or monetary value, fintech is only processing around 2% of the transactions of all the banks. Fintech solves for a friction, sometimes a single point solution or multiple point solutions. So how has the conversation developed from disruption to "we can enable the whole market together"?

Vanessa: I think fintech should disrupt. I absolutely think that is a necessary thing, and if you don't allow for that, we won't move forward in any way, shape or form. A lot of people have asked me, why do we need to use blockchain for financial innovation?

Denis: Very good question. Help us answer it.

Vanessa: It's like in the early '90s if we asked why we should use the internet. It's just another tool. Why should we go to the ATM? It's another tool in the toolbox for moving our industries forward, and innovation is absolutely critical in all industries to facilitate that. So rather than banks feeling the need to keep things closed-loop and within themselves, being more open to engagement and partnership with fintech is important. What's interesting is that in a place like the UAE, we're seeing the regulators bring these partnerships together. We're seeing it with open finance, and in a number of other areas. Greater regulatory clarity also gives banks the comfort to partner with financial innovators, whether that's Lean or VASPs licensed by VARA. We've seen so many banks partnering with licensed VARA broker-dealers and even getting licensed themselves. Zand Bank is licensed.

I think this is the path forward. Regulatory innovation and development helps bring a much wider range of players, particularly the traditional banks, which are very hard to shift. When they see opportunity, though, they will, and when they see that it's done in a way that's regulated, safe and benefits their clients, that's where we'll start to see those shifts and greater levels of engagement. That's the area I focus on, both on the policy side and in banking engagement.

Denis: So that means you do a lot of coffees, lunches, brunches, dinners.

Vanessa: I try not to make it so fluffy, but yes. I make a point of staying constantly engaged and active, whether with policy people, with the banks, or just generally connecting with the industry. The more you understand the impact regulations have on industry by talking to people, the more you can understand how it's going to affect your business. So it's about constantly building bridges between how industry is responding to regulation and how the banks are responding to regulation. Understanding the different use cases that come out, especially in the aftermath of updated regulations, helps everyone navigate the market. It would be wonderful if regulators came out with a play-by-play for exactly how everything should go, but in a way it's better that they don't, because they want to understand what's happening in the market and co-develop.

Denis: That's a great word, co-develop.

Vanessa: The less prescriptive regulations are, the greater the opportunity to receive feedback and adapt, and then what you're really doing is setting policy precedent. You listen, see what the use cases are in the market, respond to that, and set precedent as a regulator.

Denis: We're going back to regulations because we started with VARA, which is a front runner in a number of areas, but the Central Bank of the UAE is the same. That's why we have open finance and SVF, stored value facilities. I was quite surprised when I saw a presentation a few months ago on how many IPAs had been given, not just to Lean but to operators and ventures more broadly, because we are co-building and co-developing. I think that is a real competitive advantage in this market, and you've got to love it. It's as if the regulators are startups themselves.

Vanessa: Oh, 100%. A lot of people ask me whether the UAE really is that innovative and that much more ahead of other jurisdictions. The answer is, is the UAE perfect? No. But if you look at the way other jurisdictions are rolling out their regulations, it's astounding how far ahead of the curve the UAE has been in how it has approached regulatory development, how it has adapted to the market, how it works hand in hand with industry, and how it listens to industry in a way I haven't seen other governments and regulators do. Even in Washington, with its culture of government affairs and engagement, there's a very hard-line way of looking at the distinction between the two. It's very binary and less collaborative. There are sometimes efforts to make it more collaborative, but here I see a true collaborative effort, and it has served the UAE well. Not everything is perfect, but it has created an environment where businesses feel they can come, be safely regulated, and have responsible innovation develop.

Denis: The UAE is a small market, but it has always been a platform to other very large markets. We're within a two-hour proximity of something like six billion people.

Vanessa: Exactly, so it's a great platform to have your regulated entity here while looking at other markets for your business, and obviously complying with those regulations, but using this as a platform and as a standard. In 2026 I'm really excited about the new innovation coming in the region when it comes to virtual assets and the rollout of a lot of new financial regulation. That might sound strange, being excited about new financial regulation, but seeing how it's adapted in the market and leveraged to create responsible innovation, seeing the industry make that shift, is very interesting. It's moving in a direction very few jurisdictions can say they've done successfully, and I think the UAE is doing a great job of that.

Denis: Let's talk about open finance, which segues into payments. We now know what Lean is about and what Vanessa is doing. I think listeners would also be interested to understand what is next for Lean in this space, in particular where it comes to stablecoins. I have a personal interest in stablecoins, so I want to understand how this development around stablecoins is happening alongside CBDCs, central bank digital currencies, if they still exist.

Vanessa: Lean is going to continue to be an innovator in the finance and payment space. We're very interested in expanding into the flow of funds. Right now we're doing technology infrastructure, and we will be expanding our product selection to offer a full suite of products to clients in the future. Stablecoins will definitely be a part of that. One way of thinking about stablecoins is: how do we make payments more efficient? That means reducing friction in how payments operate. It was one of the reasons the first thing Lean started with back in 2019 was open finance. It was the beginning of reducing friction, being able to seamlessly attach your bank account for a payment. The follow-through on that is looking at cross-border payments, and in today's world of cross-border payments there's so much friction in that process.

Denis: If I may, you're on a good thread, and I want to pause here and go deeper into that friction point. You and I are users of card payments and Apple Pay, and from a user experience point of view you don't experience friction. Everything flows. So what is actually happening in the kitchen of banks or payment service providers that causes this friction, and how is it translated to me as a user without me knowing? What are we solving for?

Vanessa: There's definitely a reduced cost.

Denis: Cost, very important.

Vanessa: Card transactions are very expensive. There's a huge amount of fees associated with them.

Denis: Like interchange fees.

Vanessa: Exactly. Connecting your bank account has a significantly reduced cost when it comes to account-to-account transfers. That's number one. You're saving individuals and companies an enormous amount of money just by being able to connect your bank account. In the past, connecting your bank account was full of friction. You had to include all of your details. Open finance reduces that friction substantially, and the pay by bank product Lean has been rolling out reduces it substantially. As we look to the future, everything for us is about reducing friction, and cross-border payments are the future of that. Today there are a lot of SWIFT solutions, and what you don't get with SWIFT is automation, or 24/7 reconciliation. It takes one to three days.

Denis: Ledger systems between banks.

Vanessa: Exactly. You're heavily reliant on correspondent banking infrastructure. There's also a lack of transparency. The ability to track those transactions is very limited, and often if anything gets stuck or delayed, you aren't able to trace it. Whereas when you're leveraging blockchain, public blockchain specifically, it's all very transparent, 24/7.

Denis: From origin all the way to destination.

Vanessa: Exactly. 24/7 settlement and significantly reduced costs in those transfers. I think this is the future when we look at payment innovation, and it's something Lean is definitely exploring.

Denis: Are we getting rid of SWIFT, then? Is that what you're saying?

Vanessa: No, again, everything is a transition process. As much as everyone is talking about stablecoins today, particularly post the GENIUS Act, with the CLARITY Act now being passed in the United States, it's going to take time globally for people to adapt fully when it comes to leveraging stablecoins. The positive thing we're seeing, and why we know this is the future, is that large banks are adapting these principles too. Even just seeing the success of companies like Circle has been so enormous and such a big win for our industry. They've done a great job, both on regulation and on success and scaling.

Denis: I think they've done a great job of institutionalising stablecoins.

Vanessa: Exactly.

Denis: Thank you for covering that. So how does a stablecoin solve cross-border transactions?

Vanessa: For the reasons I mentioned: one, it's 24/7 settlement, and that even goes for within borders.

Denis: Even within borders.

Vanessa: But where the real challenges are is cross-border. So 24/7 settlement, significantly reduced transaction cost, full transparency when it comes to tracking transaction flows, increased success in settlement, and a lack of reliance on correspondent banking infrastructure. Those are a couple of points. There's a lot to examine about why stablecoins on public blockchain are a really important way of solving for cross-border payments.

Denis: I think you touched on settlement, which for me is one of the most important things. Take someone who sends remittances back home, to Ghana or even the Netherlands. It would take T+2, if not longer, and how much are they charging? Even if I say I bear the cost, the person receiving it will still bear a cost. So there's quite some friction there, whereas when you remit funds through stablecoin rails, the cost is minuscule and it's almost instantaneous.

Vanessa: And there's reliability in the value of what you're sending, because it's very stable.

Denis: There's no FX volatility.

Vanessa: No FX volatility. That's a very important point.

Denis: Interesting. Talking about volatility and payment rails, I did some research preparing for this session. I was looking at global payment rails and the dominance of the dollar. When you look at reserves, FX flow, trade finance and treasury yield, 60%, if not 80%, of all of it is dollars, and somewhere all the way in the back you see the euro. But that's fiat. Now, how does it look for stablecoins? Volumes are significantly lower than traditional fiat currently, but if you look at the distribution, it's almost 99% dollars. I'm not against dollars, I'm just making a point. So what is your view on that dominance? It's a political question.

Vanessa: It's not political, it's a practitioner's question. When it comes to cross-border settlement, I think for the foreseeable future USD will be dominant, whether it's USD fiat or USD-backed stablecoins. For cross-border, I think there's no way around that. Where we will see challenges is in several jurisdictions' desire for monetary sovereignty and protection of their own currency.

Denis: Currency sovereignty and all those things.

Vanessa: Exactly. And having your own currency-backed stablecoin can work domestically, for domestic payments.

Denis: I see that in Africa, for example.

Vanessa: I think that can be a very effective tool for domestic payments. But when we're talking about international and cross-border settlement, there will be quite a bit of friction if we think we'll be moving away from primarily US dollar-based settlement, for obvious reasons.

Denis: For obvious reasons. Let's accept that it is what it is and it works. It has been working for the use case of cross-border. You need some type of base, if you will, to float different currencies around.

Vanessa: Historically that has been the one. I know that's a controversial point for some, but when we're looking realistically at implementation for the foreseeable future, it's the practicality of it.

Denis: It's a very good point. What I love about stablecoins, by the way, is that they create an infinite supply, whether it's dollar or euro or whatever currency. You're no longer dependent on the printing of money, because it's an infinite supply as long as there's enough backing. Correct me if I'm wrong.

Vanessa: Any stablecoin issuer needs to be able to back one to one. Preferably, and this is the way most regulators regulating fiat-backed stablecoins are leaning, those reserves are held either as cash or treasuries. That's quite important, and in the past it wasn't always the case, because there weren't regulations around that. It's an important distinction and it creates more transparency.

Denis: But if the reserves can also be treasuries and bonds, I've seen some even using corporate bonds, as an edge case, if it's AAA or whatever, or money market funds, the fact that you're allowed to be backed by different asset classes, which is obviously much more than the supply of dollar cash, in itself creates scalability.

Vanessa: Right.

Denis: Okay, cool. We are Tribe, as you know, guys. We are VARA regulated and we have a broker-dealer licence.

Vanessa: Congratulations.

Denis: Thank you, thank you. It was last week.

Vanessa: That's a feat.

Denis: Fees, fees, fees, fees, fees, by the way.

Vanessa: That's an accomplishment.

Denis: Fees, fees, fees. I paid fees when I started: IPA fees, white paper fees, supervision fees. Oh my goodness, these guys. Anyway, it is what it is. Banking fees, PSP fees. Okay, I'll let it go now. Do we have any other fees? Look, I'm head of finance, so I see all the fees. Good thing I still have my hair. Anyway, back to the point. We're an RWA company, so real-world asset tokenisation, particularly property, real estate, whether residential or commercial. How do you see the convergence of RWA and stablecoins happening? The reason I'm asking is that currently we only accept fiat. We don't have rails for stablecoins yet, so I would love to hear your vision as to how that might work in the future.

Vanessa: I think the UAE has created a very interesting use case for real-world asset tokenisation, particularly around real estate, through the partnership between the Dubai Land Department and VARA. There have always been a couple of challenges to scaling. Real-world asset tokenisation has been the trendy topic for the last several years, and what's interesting is that we haven't seen many scalable use cases globally. There are a couple of reasons for that.

The first is that there was typically a challenge around verifying the asset behind the token. Typically you were tokenising a legal wrapper or an SPV structure, which didn't necessarily mean the asset was actually there.

Denis: Exactly.

Vanessa: What was very special and unique about the Dubai Land Department and VARA partnership was that the Dubai Land Department specifically backed the verification of the title deed, which is essentially the token, and it's natively issued. That hasn't happened anywhere else, especially when it comes to real estate. Where you've seen natively issued tokenised assets is maybe with on-chain money market funds, on-chain treasuries and equity. We see a lot more use cases in that space where they're natively issued, and it's a lot easier to verify. Less so in real estate, gold and other commodities. So this ability to natively issue is really important for the scalability of the industry.

Then you have to look at where an even greater risk lies, and really when you start fractionalising these assets, it's in the distribution that you start to get a lot of risk. So being able to have a regulatory framework that can effectively regulate and monitor distribution of these assets matters. Luckily, in the UAE we do have that through VARA and other regulators. That's another area where the chances of scalability for a use case like this are even greater. So I would say that here in the UAE we have more ingredients for success in RWA than most other jurisdictions.

Denis: And what you talked about is working together.

Vanessa: Exactly, the ecosystem is very important. The last area where there's a risk of not being able to scale is the ability to bring in greater amounts of liquidity. How do you actually buy into these assets? I think stablecoins would be an effective way of doing that, because it's on-chain. RWA globally hasn't been able to scale partly because it's not linked to traditional finance rails.

Denis: There's a break-off. We talk about off-ramping and on-ramping.

Vanessa: Exactly, and stablecoins help bridge that gap very substantially. This is what stablecoins bring to the table. They really shouldn't be seen as a fringe asset. They're just another financial tool that should run in parallel to other financial tools when it comes to payments. By bringing stablecoins into the equation for real-world asset tokenisation, I think we'll solve a significant problem around payments and liquidity in that space.

Denis: What would you say we're waiting for globally? Why is it not being massively adopted? On a consumer or retail level I've seen high adoption rates, but for exactly the use cases you're talking about, why don't we see mass adoption?

Vanessa: Just like everything, there's a transition process. One, globally we don't see enough regulation on a mass scale. Some jurisdictions are in the early stages of developing their regulatory frameworks, and typically what we see in the development of those frameworks is that when VARA launched, we didn't have a rulebook around asset-backed tokens for real estate and others. That's not how they launched. That was another iteration, an amendment and an update. Most jurisdictions, and the UK just launched its crypto framework yesterday, actually, have included some early classifications of it. Same in Europe under MiCA. They've been classified, but you haven't seen mass adoption or a massive rollout. So it's important to see regulation in phases. First we're still seeing early development of regulation globally. Secondly, there's another iteration of looking at real-world asset tokenisation and how that plays into the larger framework. It'll just take time. Passportability is another factor.

Denis: What is passportability?

Vanessa: Passportability between jurisdictions when it comes to regulations and regulatory frameworks.

Denis: Concretely speaking, we have Dubai VARA, then MiCA in Europe, and you're talking about being able to transfer value between those jurisdictions, through stablecoins, for example.

Vanessa: That's an example from a regulatory perspective.

Denis: What would be required to get this done? The reason I'm asking is that in TradFi I know there's this concept of equivalence. You look at a partnering regulatory framework or sovereign country, and based on the comprehensiveness of that framework you assume it's equivalent, and therefore you would accept passporting. I know we're not in a predictive science here, but where do you see this happening, and when? What are the key requirements to get us there?

Vanessa: I think there needs to be a standardisation. Let me say where we are now, and then we can talk about what it will take. Most jurisdictions are collaborating on information sharing, which is a step in the right direction, especially as different VASPs are setting up in different jurisdictions. Information sharing between regulators is really important, but so is having a basic standard across the board. These regulations are still new. VARA is almost like a veteran in this way, but it launched on February 7th, 2023, which is only three and a half years ago now. MiCA launched after that, and the UK launched yesterday.

Denis: And on the back of TradFi, by the way, which we also concluded.

Vanessa: So we shouldn't see these as very old frameworks. They're still getting their feet under them. As that happens and people become more comfortable with virtual asset regulation, you'll start to see increased comfort with passportability, similar to what we saw with traditional finance regulation.

Denis: So basically what you're saying is, my son, by the way, is 11 years old, so once he becomes an adult, that's when this will be solved.

Vanessa: Probably.

Denis: Okay, good. So I need to prepare him to make the right investments.

Vanessa: Yes, actually.

Denis: Okay. Cause that will be the new world order, if you will. Interesting. I love this conversation and I'd love to continue it in another episode. But in every episode we have a standard segment where we ask our guests about the future of Tribe. From what you know about Tribe, what would you say our pathway looks like? Opportunities, obstacles, what do you see?

Vanessa: I think there's all the opportunity, because this space has not been tapped into properly. We're still in the early days of regulation. We're still in the early days of those regulations rolling out effectively. We're still in the early days of ecosystems being built to support real-world asset tokenisation. So the future can be anything, so long as the ingredients of that puzzle all come together, and they are coming together, slowly, painfully, but there they are.

Denis: I know, but they are coming together. So are you saying we're too early?

Vanessa: No, I don't think you're too early. I think you'll have a first-mover, or among-the-first-movers, advantage. And because we're finally having conversations around real-world assets today that are productive. We're moving away from real-world assets being regulated in the past on the basis of traditional finance. I think that held real-world assets back, because they were really regulating a traditional finance structure, an SPV.

Denis: Trying to retrofit.

Vanessa: Exactly, and it didn't work for scalability, distribution and fractionalisation of the asset, which is really the whole point. This is a good example, coming full circle in the conversation, of where specialisation around virtual assets in regulation can be useful, particularly in a use case like this. Only recently are we seeing those conversations develop. Only recently are we seeing native tokenisation taken seriously, or even thought about, by a regulator, and that's probably step one.

Denis: Step one.

Vanessa: Having a government entity like the Dubai Land Department come forward and say, "We'll natively issue our title deeds," is a huge step in the right direction, and hopefully a direction other government entities or verifiers of assets will move in as they see the value and the potential. When you combine that with a regulator, and again this is all early days, when we start to prove the use case that a regulator like VARA can safely regulate the distribution of those assets, then I think you're going to start to see significantly more scale.

Denis: Legitimacy.

Vanessa: Legitimacy, credibility and significantly more scale. So the possibilities are strong. I just think it's going to take a little bit of time, and there needs to be a real success story that shows scalability in order to see mass adoption globally. It's really about the first-mover advantage, and not just you as a first mover but the ecosystem. We need more of that, and I think that's a really core thing. It's both an advantage and a challenge, because no one can operate in a vacuum, whether it's the regulator or any individual within the industry. We all need each other, so building really effective ecosystems, not just strong regulations, is incredibly important when you're trying to build businesses and scale. I think the UAE is definitely moving in that direction and has been honestly a pillar. I know the world looks at the United States as the driver of mainstream adoption of regulation and digital assets, but I think the UAE has done a remarkable job in that space. I say that genuinely, and I'm quite proud to be part of this ecosystem.

Denis: You have been in both worlds. On that note, Vanessa, I want to thank you. I really loved the conversation. Guys, when we talk about finance, there's more to it than you think. Today we spoke about policy and regulation, how it affects stablecoins, how it affects RWA adoption, and how it all works. And within the ecosystem, we all need each other. Even here at Tribe, I'm telling you, those that are taking fees from us make this engine work. Thank you. This is Block by Block. Cheers.