Designing the Future of Payments Systems | Konstantin Richter & Tom Zschach

Michael Apolito introduces BlockWorks investor relations, emphasizing transparency and professionalism in the institutional capital market. He critiques traditional investor relations models and presents BlockWorks IR as a solution that integrates real-time analytics and advisory support, encouraging on-chain businesses to enhance their investor strategies.

Tom Schock, Chief Innovation Officer at Swift, discusses the organization's role as a global network for over 11,500 banks, focusing on digital assets and their recent ledger announcement. He clarifies that Swift does not issue tokens or act as a custodian. Konstantin Richter, CEO of BlockDamon, describes his company as a crypto-native infrastructure provider, highlighting their wallet's role in facilitating agentic payments and bridging crypto with traditional finance.

The conversation shifts to agentic payments, defined by Schock as algorithm-driven decisions. He notes the hype around this concept but suggests that full automation, particularly for cross-border transactions, is still a distant goal. Konstantin adds that agentic payments involve software-driven orchestration, differing from existing systems through encryption and tokenization. He points out the current gap in aligning these systems with institutional needs, with many projects still in the proof of concept stage, awaiting regulatory clarity.

Schock raises concerns about maintaining accountability in a future where algorithms replace human transaction reviews, emphasizing that accountability must be understood in the context of underlying processes. He discusses the need for programmability and compliance in financial transactions, using the analogy of shipping containers to illustrate the importance of including compliance information for efficient execution. He stresses the separation of accountability from execution, with the latter being fully programmable.

The discussion also touches on the intersection of AI and crypto, noting that while Web3 technologies are designed for scalability, they still require human-defined rules. The necessity for algorithms to understand token characteristics and the importance of programming compliance to avoid distribution issues are highlighted. Regulatory clarity remains a significant concern, with institutions hesitant to engage in areas lacking clear legal frameworks. The anticipation of the Clarity Act is noted as a potential catalyst for moving from proof of concept to operational workflows.

One speaker advocates for the crypto community, highlighting that regulatory hurdles have significantly hindered development, particularly in digital cryptographic encryption. They discuss ongoing talks with major financial institutions about launching validators for on-chain yield, which are stalled due to legal concerns within banks. They emphasize the necessity for clearer regulatory guidance, noting that individuals in countries like Argentina, Manila, or Lagos prioritize access to dollars over yield. Despite regional regulatory delays, the global market for stablecoins like Tether continues to thrive.

Another speaker counters that the complete disappearance of systems like Swift is unrealistic, asserting that the financial landscape is becoming increasingly complex. They argue that the need for standards, compliance, and integrated workflows will remain essential, even as new asset types emerge. They envision a future where digital networks and legacy systems interconnect rather than replace one another, acknowledging that while digital networks offer advantages in liquidity and speed, they face challenges in consumer protection and compliance.

The discussion on instant settlement using stablecoins reveals that it could eliminate friction in financial transactions, with banks likely remaining involved to offer innovative services. Historical settlement methods have created friction that banks currently monetize, and increased efficiency may prompt banks to explore new monetization strategies. A shift in industry perceptions of digital assets is desired, moving from ideology to systems design, viewing crypto as a technology for execution and settlement rather than an ideological battleground. There is a call for better integration of innovations from the crypto sector into traditional finance.