Stablecoins Are Becoming Infrastructure & Engineers Need to Be Ready | Software Sundays #41

First up for the news for this week, I want to talk about stablecoins becoming part of the financial infrastructure that we rely on.

And when you think about stablecoins, you may think about how it's used for organizations like banks when they're sending cross-border payments, or you could use it for peer-to-peer payments and even for treasury management inside of large enterprises.

Stablecoins have use cases that are continuing to be identified and built upon.

But that shift and that change in how we're handling finances and financial transactions as a global economy is creating opportunities for builders that seek to build in that space.

Because when we think about the next generation of financial products and transactions and banking and how it needs to actually integrate cleanly with the existing system.

right? We already have banks.

We already have FedRent.

We already have ACH payments and all these different technologies and systems and protocols that we already rely on for banks today.

When we're talking about stable coins and that benefit that they add, they're not starting from scratch in a different area.

We're actually having to go through and change some of the things that already exist and make them work in this new era.

So in order to integrate with those old systems and make them work better for the new systems, we're gonna need to understand how to create APIs, integrate with APIs.

So that means understanding API authentication.

Like, are you using a hard token? Are you using some type of certificate based authentication? And even, are you even allowing connections between your internal system and an external third party system or vendor that you need to connect to or with.

That type of design thinking is required when we're going from fully centralized with some of the largest banks to how do we make this a little bit more decentralized? How do we get rid of some of the toll roads that exist in the current financial scheme? That's an opportunity for us builders.

And then it becomes even more important because the Genius Act actually requires stablecoin providers to keep US treasuries as highly liquid reserves in order to actually comply as a regulated and trusted stablecoin authority.

When we're thinking about that connection and how to maintain the ratio between whatever the stable coin is currently worth and making sure we have the reserves in place in terms of actual treasuries.

A lot of the brokerages that provide and maintain accounts for treasuries, those rely on the existing rails, that existing infrastructure for you to have the benefit of the speed the accuracy and the global access that stable coins provide, you have to be able to keep up real time with those existing banks and those existing service providers to make sure that you're complying with some of those regulations.

So even for a builder that's looking to go into the stable coin space, you have to understand how to make sure your app is compliant with these systems that you're connecting to.

Now, that could mean going through an audit and having some type of SOC 2 or SOC 1 audit or even SOC 3, a SOC 3 audit conducted if you're a publicly traded company.

And basically, you're going to have to make sure you understand how to collect that evidence.

You're going to have to make sure you understand how to actually meet those criteria.

Which framework are you using to manage risk and security across your digital system? And how is that being tested? All of those things become super important when we're thinking about that next era of financial payments and the systems that are required to power it.

Now, that's for the people that are building these systems.

But think about securing them and think about making sure that they actually work the same way the old systems work.

You need to understand cybersecurity.