Tomio Geron February 1, 2022

A new way for people to pay with crypto, Solana Pay, is launching Tuesday.

It’s one of many efforts to solve the crypto payments puzzle, from bitcoin’s Lightning Network to stablecoins. But Solana believes it has solved some of the problems that have held crypto payments back.

Companies that helped develop and support the protocol include Solana Labs, which initiated the project;; Circle; Citcon; and digital wallets from crypto exchange FTX and Solana wallets Phantom and Slope. Solana Pay’s backers are also working on an integration with Shopify that is expected to be released soon.

Solana Pay is an open protocol for developers with standardized payment specifications to build on and customize, meaning merchants can connect directly or use software built by ecommerce providers, point-of-sale software-makers or payments companies.

Bitcoin and Ethereum suffer from slow speeds and high transaction costs. While the Solana network is not as big as the bitcoin blockchain or Ethereum’s network, Solana has fast transactions (65,000 per second) and low cost (fractions of a cent per transaction). Solana Pay also has consumer-friendly features: Users can pay in person using a QR code or online using a browser plug-in. The technology works with any Solana-compatible token: Currently that includes its own SOL token as well as others like the USDC stablecoin.

It’s not quite equivalent to a credit-card payment, by design. Solana Pay is meant to be a digital version of a cash payment. That’s attractive for merchants, who can avoid the costs of intermediaries such as Visa or Mastercard or the costs of chargebacks.

“At its core, this is similar to a cash transaction. And the same way you can’t reverse a cash transaction,” you can’t reverse these payments, said Sheraz Shere, head of Payments at Solana Labs.

Still, some merchants and consumers may want protections. Shere said there’s the potential for holding funds in escrow, particularly for big-ticket items like a cruise ticket — a feature which could be built in an upcoming hackathon: “The beauty of this is that this is programmable with smart contracts.”

Solana Pay includes rich data specifications that aren’t available when just sending a token on the network. This includes a standardized destination, currency, amount, transaction identifiers and descriptive text fields so the merchant can confirm that a transaction was completed. The actual details of the transactions, such as who paid and what was purchased, are not public on chain.

Shere, who has worked for AmEx and Google, sees Solana Pay as different from other crypto offerings because of its strong stablecoin integration. He argues that Ethereum is too slow to settle and too costly and Lightning is focused more on paying with cryptocurrency versus exploiting blockchain technology. “We believe the lion’s share of opportunity is thinking about this not as crypto payments, but as a new set of payment rails … but paying in U.S. dollars, U.S. digital dollars.” Shere said.

Currently there is $4 billion of USDC on the Solana blockchain. That’s a distant second to the $44 billion on Ethereum, but it’s still substantial. Circle, the primary developer of USDC, worked on developing the Solana Pay standards, and has integrated Solana Pay with payments software it offers merchants as well as its treasury management product. Joao Reginatto, Circle’s vice president of Product, said it’s the first payment protocol that he’s seen operating on the chain level, versus privately within a company.

Meanwhile, this direct wallet connection with customers opens up new possibilities, Shere said. One example is someone buying shoes with Solana Pay and receiving a matching NFT in the same transaction. Smart contracts could also create offers or rewards that sit in a crypto wallet. That means merchants and consumers will have more incentives to take the plunge in crypto payments.

Zelle isn’t as cool as Venmo. That’s not stopping its growth.

Zelle’s payments volume jumped 59% in 2021 as more consumers turned to digital money transfers during the pandemic.

After years of efforts, Zelle is part of a larger growth of real-time payments in the U.S.  Photoillustration: Thiago Prudencio/SOPA Images/LightRocket via Getty ImagesTomio Geron February 2, 2022

The maker of Zelle saw a spike in usage of the real-time payments service in 2021, with more people using it for business payments.

Early Warning Services, the bank-owned company which operates Zelle, processed 1.8 billion payments in 2021, up 49% from 2020, with a value of $490 billion, up 59% annually, it reported Wednesday.

Community is alive and well in the hybrid workplace

Like anything worthwhile, it takes work, lots of flexibility and a whole lot of trial and error.

Annette Reavis, CPO at Envoy January 25, 2022

In November of last year, I started a new position at a company that creates great hybrid workplaces. Our San Francisco office has been open since last June, and our community is growing and thriving as we get to know each other. 30% are new hires like me.

We operate on two principles: 1) making workspaces where people feel safe and comfortable and 2) the belief that people do their best work together and in person. Bringing people together helps us flex our community-building skills. Plus, there’s power in gathering at the office a few times a week to collaborate, share and problem-solve.

Annette Reavis is chief people officer at Envoy, a workplace platform that helps modern workplaces manage hybrid work.

Coinbase’s policy boss defends its crypto regulation idea

Other crypto leaders call the idea for a single agency regulating crypto impractical — even stupid. That didn’t faze Faryar Shirzad.

Faryar Shirzad continues to argue that crypto is a game-changing technology requiring a totally new framework. 

Faryar Shirzad, Coinbase’s first chief policy officer, left a 15-year Goldman Sachs career last June to help draft the crypto company’s game plan for the coming battles over regulating digital assets.

His ideas are already shaking things up at Coinbase —even across the industry. Last December, Coinbase unveiled a policy framework which included an idea many found jarring: a single regulator for crypto.

“To avoid fragmented and inconsistent regulatory oversight of these unique and concurrent innovations, responsibility over digital asset markets should be assigned to a single federal regulator,” Shirzad said in a blog post.

It’s a bold proposal that addressed the current patchwork of regulation crypto companies face. But it quickly got scathing reviews from leading figures in crypto and fintech.

Kristin Smith, executive director of the Blockchain Association, the industry lobby group in Washington, said it was “not politically viable.” Dan Gallagher, Robinhood’s chief legal officer, called it “just plain silly.” In a recent interview with Protocol, INX General Counsel Cathy Yoon argued that for crypto companies “to ask for a separate standalone regulator specific for our technology — that to me is stupid.”

Shirzad has been unfazed by the criticisms, as he continued to argue that crypto is a game-changing technology requiring a totally new framework.

“The power of crypto is so transformational and so foundational and changes the assumed structure of the financial system that that point needs to be understood and embraced — even if, in the end, policymakers and the United States decide to take a much more incremental approach, we wanted to at least put that point out in sharp relief,” he said.

Shirzad, who served on the National Security Council under President George W. Bush before joining Goldman Sachs, elaborated on Coinbase’s position in an interview with Protocol. He also talked about his decision to join Coinbase and the key lessons from a career that took him from the White House to Wall Street.

This interview was edited for brevity and clarity.

What made you decide to move to Coinbase after a long career at Goldman Sachs and Wall Street?

It was fascinating. I got a call from a recruiter who said Coinbase was interested in talking to me and I thought, “Well, why not?” To be frank, I didn’t know that much about Coinbase. I obviously knew about it, but I didn’t have any particular expertise in it. I talked to Paul Grewal, who is the CLO [chief legal officer] and Emilie Choi who is the COO. And I got hooked. In the course of all of that, I also did my own research. And it was a journey that I sort of launched into that I’m still on and I’m super excited about it.

When did you first hear about bitcoin and the whole crypto realm?

I heard about crypto very early on. I’m a policy guy so part of my job and my career has been to track innovations and kind of watch them. It’s kind of what you do in government and then the various policy jobs I have. You sort of see things that could become something. The nature of the jobs I’ve had is to kind of watch things that may not seem that important but may have broader consequences down the road. Crypto was one of them.

Faryar Shirzad in the White House

Shirzad (right) worked on the National Security Council in the George W. Bush administration.Photo: Coinbase

What gave you pause about taking the job?

The biggest factor that I brought into every one of my conversations was that I’ve built a reputation over the course of decades of public service and the biggest issue for me was: Is this a company and a mission that I wanted to be a part of? Do I have conviction about it in a way that would work for me and would be sustainable, that would be a passion of mine?

I think fundamentally I’m a policy guy. I’m fundamentally passionate about good public policy. Crypto is an area and an innovation that is so potentially consequential and transformational and, by its nature, tests a lot of the habits of policymaking and politics and tests a lot of the parameters of existing policy. It’s very hard for everyone to figure out the adaptation. [Coinbase CEO] Brian [Armstrong] and Emilie and Paul and everybody very much want Coinbase to go deep on helping contribute to that exercise of figuring that out.

That’s when it became irresistible. I just thought, “I really want to be a part of this.”

I actually got the final, final elements of [the offer] when I was on a mountain bike trail with my son in North Carolina. [Laughs.] So we stopped and that’s when I made my decision.

Are there tactics or approaches to government that, based on your years with Goldman Sachs and on Wall Street, you know don’t work and which you’ve told the Coinbase team, “Hey, we’re not going to go there”?

I think the first thing is analysis, data and content matter and are formidable by a million miles. The second lesson is: You don’t win by talking your own book, as we used to say at Goldman.

What does that mean?

What that means is that policymakers aren’t interested in protecting your business model or whatever. You can’t go in there and say, “Oh, this is inconvenient. I don’t want to do it.” Or, “This is expensive. I don’t want to do it.”

That rarely works, particularly in the post-financial crisis period. You really have to talk about markets, society, communities, the economy, the functioning of financial markets, the functioning of fundamental parts of what government’s there to manage and protect.

We initially tried to do what a lot of other people do, which is to come up with a proposal that worked within the existing financial regulatory architecture. In the end, we realized the regulatory system is organized around the regulation of intermediaries. So you’ll run into a hundred problems if you try to adapt to the current system, just as you’ll run into a bunch of problems if you try to start afresh.

But in the end, given that we don’t know where the potential of this technology is going, it was the right thing to do, to at least make the point that it needs its own framework and it needs its own regulator.

It’s not necessarily a new regulator. It can be an existing regulator, but it needs to have a mandate that covers digital assets broadly and then do what every other regulator in almost every other market in the world does — which is to have a single regulator who focuses on outcomes, rather than having to be very careful about jurisdictional lines so to speak. That’s not an issue or dynamic that other regulators deal with, but it’s very much a feature of the U.S. regulatory system.

And that’s why we landed on that, even though it’s very hard to change the way our regulatory architecture is at the moment. It was a really important point to make as a framing issue as people look at how to approach the sector.

There’s a bunch of ways you could do it. It could be any of the current agencies or it could be a bureau I guess … as long as they’re empowered to do it. This innovation is so enormous. You can see that the transformation will be comprehensive.

But other crypto companies argue that the Coinbase proposal is impractical. Some were very critical.

We talked to probably 35 different firms and stakeholders in the crypto world before we came out with our thing and at least as many members of Congress, as well as a bunch of other smart people. Plus we got the top law firms in the country working with us.

Remember, our proposal wasn’t intended to be handicapping what Congress is most likely to do in the shortest period of time. Our proposal was intended, in a very earnest way, to lay out what the right outcome would be.

Now, there’s a lot of good proposals that people have that are much more incremental, maybe much more realistic, much more “take as a given the existing architecture.” And we support a bunch of those things and we commend people who were advancing them.

But at the end of the day, it’s very important for people to understand that the power of crypto is so transformational and so foundational and changes the assumed structure of the financial system that that point needs to be understood and embraced — even if, in the end, policymakers and the United States decide to take a much more incremental approach, we wanted to at least put that point out in sharp relief. That was our purpose.

That point we’ve made is unarguable. I’ve been in this business for a long time. If you want to argue what the right outcome is, it’s hard to argue with what we propose, even if it’s aspirational.

What does the right outcome mean?

You have to have a separate regulatory framework and that regulatory framework should be regulated by a single regulator, whoever that is. Remember, Ben, the only country in the world that has such a fragmented financial regulatory system is the United States. If you look at the important markets — Germany, France, the European Union, U.K., Switzerland, Hong Kong, Japan, Singapore, India — they have one or two regulators, nationally. That’s it. When those regulators look at issues, they look at them and say, “Okay, well what’s the outcome we’re regulating for?” The U.S. regulators are constrained by the fact that they’ve got very tight perimeters of regulation organized around the intermediaries they regulate.

When you’ve got a disintermediating technology like crypto, it’s really a mind-bender how you fit a disintermediating technology into a regulatory system organized around the regulation of intermediaries. Our solution is, well you do it the way every other country in the entire planet has done it which is to pick a single regulator and give them the mandate to do the right thing.

There’s also the view that crypto companies, including Coinbase, are trying to minimize the role of the SEC, essentially to sideline it. How would you comment on that?

Absolutely not. You know, as a company, we have enormous respect for all the regulatory agencies everywhere. We’re regulated by a multitude of them all around the world. Plus, the idea that we would be sidelining anybody is preposterous. It’s just not within the scope of anything we have the capacity to do or or anybody would be interested in seeing us do.

We were just simply making the broad point which is: Transformational technology requires a new rethink. Imagine in the days of the horse and buggy, somebody shows up with a car and you have two choices: Do you adapt the horse and buggy rules to work for a car? Or do you say, “Well, this car is a new thing. We should have a car regulator that makes sure you know that all the public interest things that we need to watch out for with this vehicle are protected.”

I think with that example, you’ll say to yourself, “Of course, it’s a car. It’s a new thing. It’s not a horse and buggy.” That’s kind of what we’re saying. You could spend a ton of time trying to make sure the saddle rules on the horse and buggy can be adapted to the car.

Or you can just say, “We could spend a lot of time adapting the old rules, or we could just recognize that this does the same thing. It gets you from here to there and helps you transport people and things. But it’s just fundamentally different and requires its own regulatory system.” It’s not more complicated than that.

The debates and the battles over crypto regulation are expected to heat up this year. What is your biggest worry?

The biggest worry I have is that you have a single regulator overcalibrate for one issue, one aspect of crypto and potentially decides the strategic direction that this country takes in crypto in ways that we’ve not fully considered.

Can you give an example?

Yeah. In the infrastructure bill, there’s a provision that basically said that, for crypto and for digital assets, anybody who helped facilitate the transfer of a digital asset would have to produce 1099 [tax] information.

So who is that? The software developer? The validator? The gas company that provides heating for the building in which the software is developed?

That potentially puts us in a position where it’s impossible to do those activities because people who have no proximity to the end user and have no ability to gather that information could be required by law to provide it, to gather it and provide it, even though they have no ability to do so.

It’s not a strategically sensible outcome. And I think members of Congress and the Senate understood that and that’s why there was a broad bipartisan effort to fix it ultimately, unsuccessfully. But that’s why you hear the administration talking about doing an executive order or something. There is some reason for optimism on it. We’ll see where they land.

But I think, in the end, the president has to weigh in, just like Bill Clinton did in 1993 with the White House statement on the internet. We’re in a very similar moment here. We’re in like the 1993 internet moment with crypto.

You see this technology. You see that it’s disruptive and transformational. You understand that the use cases are developing by the week so we don’t know quite where it’s going. Regulators shouldn’t give it a complete pass — but at the same time inhibiting its innovation will have strategic and broad-ranging consequences that we can’t even imagine at the moment. So you need to look at this technology, from the governmental perspective, with some strategic orientation that we’ve got to do this.

The United States has a proud tradition of promoting and accommodating innovation. It’s gotten it wrong here and there, and from time to time, and then it has to fix it.

This goes back to why I came to Coinbase. This is one of the big important moments in policymaking in our lifetime. And we’ve got to get it right.

I’m hoping the president’s involvement will bring that kind of trans-strategic sphere that’s marked with appropriate attention to the risk but with an American optimism about its potential.


By block head

Block Head is a blockchain journalist.