CEO Spotlight: Building the Future of Money - State of Crypto Summit 2024
Summary
TLDRIn this insightful interview, Brian Armstrong, CEO of Coinbase, discusses the transformative potential of cryptocurrency as a means to update the financial system, emphasizing its role in increasing economic freedom globally. Armstrong highlights the importance of regulatory clarity in the US, the growing institutional adoption of crypto, and the technological advancements at Coinbase, such as Layer 2 solutions for scaling blockchain and the smart wallet for streamlined crypto access. He also touches on the bipartisan support for crypto legislation in Congress and the industry's impact on the upcoming elections.
Takeaways
- 🚀 Brian Armstrong, CEO of Coinbase, envisions cryptocurrency as a transformative technology for the global financial system, aiming to increase economic freedom and provide better financial infrastructure worldwide.
- 📈 Armstrong highlights the potential convergence of AI and crypto, noting the significant economic movements and technological advancements both fields are driving.
- 💡 The mission of Coinbase is to create a more accessible and efficient financial system that upholds property rights, sound money, and free trade, leveraging the ubiquity of smartphones and internet connectivity.
- 🌐 Regulatory clarity in the U.S. is identified as a major obstacle for the crypto industry, with Armstrong emphasizing the need for comprehensive legislation to prevent a turf war between the CFTC and the SEC.
- 🏦 Armstrong discusses the global landscape, noting the varying degrees of crypto acceptance and regulation, with some countries having a more unified approach to regulation compared to the U.S.
- 📊 Institutional adoption of crypto is significant and growing, with 56% of Fortune 500 executives reporting their companies are working on blockchain or crypto projects.
- 💼 Armstrong mentions Coinbase Prime's success in the institutional space, indicating a third of the top 100 hedge funds as clients, and the importance of regulatory clarity for further investment.
- 🛠️ Coinbase is focusing on technological improvements like Layer 2 solutions (Base) for scaling blockchain technology, which is likened to the transition from dial-up to broadband for the internet.
- 🔄 The script touches on the importance of derivatives and the role they play in capital markets, with Coinbase's international expansion showing significant growth in revenue.
- 🔒 The introduction of smart wallets by Coinbase aims to simplify the onboarding process for crypto wallets in applications, using biometrics to enhance user experience and security.
- 🌐 Armstrong predicts a future where a significant portion of global GDP is transacted on crypto rails, emphasizing the efficiency and potential of peer-to-peer transactions without intermediaries.
Q & A
What is the primary mission of Coinbase according to Brian Armstrong?
-The primary mission of Coinbase is to increase economic freedom in the world by creating good financial infrastructure for people all over the world that enforces property rights, sound money, and free trade.
How does Brian Armstrong view the current financial system?
-Brian Armstrong views the current financial system as slow, expensive, and with unequal access around the world.
What technological advancement is Brian Armstrong excited about in the context of cryptocurrency?
-Brian Armstrong is excited about Layer Two solutions like Base, which help blockchain scale and enable instant and free transactions, similar to the transition from dial-up to broadband for the internet.
What is the significance of smartphones in the context of economic freedom as discussed by Brian Armstrong?
-Smartphones, being inexpensive and accessible even to the poorest people in the world, can provide access to good financial infrastructure, property rights, and the ability to earn a living, thus contributing to economic freedom.
What obstacles does Brian Armstrong identify for achieving his vision for Coinbase and cryptocurrency?
-The biggest obstacle for Brian Armstrong is regulatory clarity in the U.S., where the country is behind compared to Europe and the G20 countries that have already implemented crypto legislation.
How does Brian Armstrong perceive the current state of institutional adoption of cryptocurrency?
-Brian Armstrong sees significant institutional adoption of cryptocurrency, with 56% of Fortune 500 executives reporting their companies are working on blockchain or crypto projects.
What role does Brian Armstrong envision for Coinbase in the future of global GDP?
-Brian Armstrong hopes that Coinbase will play a significant role in powering a larger percentage of global GDP over time as crypto becomes more efficient and widely adopted for payments and other financial services.
What is the significance of the Base layer 2 solution for Coinbase's products and the broader crypto ecosystem?
-Base is significant because it enables blockchain to scale, allowing for instant and free transactions, which is a game-changer for payments, remittance, and reducing friction in the economy.
How does Brian Armstrong view the potential of crypto in terms of reducing transaction steps and fees?
-Brian Armstrong believes that crypto can significantly reduce the number of steps and fees associated with traditional transactions by enabling peer-to-peer transactions with instant settlement, thus eliminating the need for intermediaries.
What is the current political dynamic around cryptocurrency regulation in the U.S. according to Brian Armstrong?
-The political dynamic around cryptocurrency regulation in the U.S. is shifting towards bipartisan support, with crypto becoming a significant voter base and a key issue for both parties to address.
What is Brian Armstrong's perspective on the future of Coinbase's revenue and growth strategy?
-Brian Armstrong aims to diversify Coinbase's revenue stream from primarily trading fees to more predictable subscription and services revenue. He also emphasizes international expansion and the adoption of innovative technologies like smart wallets and Layer Two solutions.
How does Brian Armstrong address the potential disintermediation of traditional financial institutions by crypto?
-Brian Armstrong believes that the smartest institutions recognize the potential of crypto and are leaning into it to stay on the forefront of innovation. He suggests that institutions are looking at crypto as an opportunity to increase productivity and streamline costs.
What is the role of the Coinbase Developer Platform (CDP) in the ecosystem according to Brian Armstrong?
-The Coinbase Developer Platform (CDP) provides APIs for core primitives that Coinbase uses internally for custody, trading, and integrating into blockchains. By making these tools available externally, Coinbase aims to help businesses come on-chain and participate in the value chain.
Outlines
🚀 Crypto's Vision for Economic Freedom and Technological Advancement
Brian Armstrong discusses the transformative potential of cryptocurrency, comparing its impact to AI and emphasizing its role in updating the financial system. Armstrong's mission for Coinbase is to increase global economic freedom by providing accessible financial infrastructure that supports property rights, sound money, and free trade. He highlights the importance of smartphones and internet access in enabling this vision, pointing out that even the poorest individuals can now access financial services. Armstrong also touches on the challenges of regulatory clarity in the US, contrasting it with the more advanced legislative environments in Europe and the G20 countries.
🌐 Global Regulatory Landscapes and Institutional Adoption of Crypto
The conversation shifts to the varying regulatory approaches to crypto around the world, with Armstrong noting the streamlined regulatory systems in the UK and Singapore compared to the US. He discusses the political dynamics affecting crypto's growth, such as leadership changes and differing national stances, and mentions the rapid institutional adoption of crypto, with 56% of Fortune 500 executives reporting their companies are working on blockchain projects. Armstrong also addresses the anticipation for regulatory clarity to increase institutional investment in crypto assets.
🛠️ Coinbase's Innovative Products and Layer 2 Solutions
Armstrong highlights Coinbase's suite of innovative products, starting with Base, a Layer 2 solution that improves blockchain scalability, allowing for instant and free transactions globally. He also discusses the introduction of derivatives products in the US and internationally, and the Smart Wallet, which simplifies the crypto wallet onboarding process using biometrics. Armstrong emphasizes the transition of crypto from an asset class to a utility in real-world applications, such as payments and decentralized social interactions, and predicts that crypto will increasingly power a larger percentage of global GDP.
💹 Navigating Market Volatility and International Expansion for Coinbase
The discussion focuses on Coinbase's strategy to maintain momentum and success regardless of market conditions. Armstrong outlines the company's shift from reliance on trading fees to a more predictable subscription and services revenue model. He also details Coinbase's international expansion efforts, with a 'go deep' strategy in select markets and a 'go broad' approach using self-custodial wallets in emerging markets. Armstrong reflects on the rapid scaling of international revenues and the potential for crypto to serve as a primary financial account for the next generation.
🔄 The Dynamic Interplay Between Traditional Finance and Crypto Innovation
Armstrong explores the relationship between traditional financial institutions and the crypto industry, noting that many institutions recognize the need to innovate and adapt. He mentions Coinbase's developer platform, which offers core crypto functionalities as APIs to third parties, fostering collaboration and innovation. Armstrong also discusses the potential for crypto to streamline global financial transactions and reduce the reliance on traditional banking systems, particularly appealing to a younger demographic seeking more accessible and fair financial services.
🗳️ Crypto's Emergence as a Bipartisan Political Force in the US
The conversation concludes with an examination of crypto's growing influence in US politics. Armstrong points out the bipartisan support for crypto legislation in Congress, attributing this to the significant voter base that crypto represents. He discusses the recent political developments and the urgency in Washington to establish clear regulatory frameworks for the crypto industry. Armstrong also mentions the role of crypto advocates and the importance of voter engagement in shaping the political landscape around crypto.
🏛️ The Political Dynamics and Future Outlook for Crypto Regulation
In the final paragraph, Armstrong reflects on the political dynamics surrounding crypto regulation, noting a shift in perception and a growing recognition of crypto's importance. He discusses the bipartisan nature of crypto legislation efforts and the role of voter influence in driving political action. Armstrong expresses optimism for crypto's future, suggesting it will be a top issue in upcoming elections and emphasizing the need for clear and supportive regulatory frameworks to foster innovation and growth in the industry.
Mindmap
Keywords
💡Cryptocurrency
💡Economic Freedom
💡Regulatory Clarity
💡Institutional Adoption
💡Layer 2 Solutions
💡Derivatives
💡Smart Wallet
💡Decentralization
💡ETFs (Exchange-Traded Funds)
💡Interoperability
💡Bipartisan Issue
Highlights
Brian Armstrong discusses the significance of cryptocurrency as a technology to update the financial system, emphasizing its potential to increase economic freedom globally.
Armstrong highlights the importance of smartphones and internet access in enabling people worldwide to access good financial infrastructure through crypto.
He identifies regulatory clarity in the US as a major obstacle to achieving the vision for Coinbase and the broader crypto industry.
Armstrong notes the progress in other countries with comprehensive crypto legislation and the US's need to catch up to prevent a turf war between regulatory bodies.
The interviewee expresses hope for a coordinated summer of AI and crypto, suggesting a convergence of these two significant technological movements.
Armstrong shares statistics showing 56% of Fortune 500 executives reporting their companies are working on blockchain or crypto projects.
He discusses the role of Coinbase Prime in serving institutional investors and the significance of regulatory clarity for increased institutional investment in crypto.
Armstrong mentions the importance of Layer 2 solutions like Base for scaling blockchain technology and enabling instant, free transactions.
The interview covers the significance of derivatives in capital markets and Coinbase's success with its derivatives products.
Armstrong introduces Coinbase's smart wallet, which simplifies the onboarding process for crypto wallets in applications using biometrics.
The conversation emphasizes the shift of crypto from an asset class to real-world utility in payments, voting, and decentralized social interactions.
Armstrong predicts that crypto could power a larger percentage of global GDP over time due to its efficiency and potential to reduce transaction steps and fees.
The interviewee and Armstrong discuss the potential for crypto to disrupt traditional financial institutions and the dynamic of collaboration and competition in the industry.
Armstrong shares Coinbase's strategy for international expansion, focusing on both deep markets with local operations and a broad approach with self-custodial wallets.
The discussion highlights the bipartisan support for crypto legislation in the US Congress, a significant development in the political landscape.
Armstrong reflects on the importance of crypto advocates in government and the role of voter representation in driving political change.
The interview concludes with Armstrong's optimism about the future of crypto and its potential to be a global standard for financial transactions.
Transcripts
[Music]
well I have the pleasure of interviewing
Brian Armstrong first of all I I want to
thank you for being a Visionary in this
space this is the biggest economic
movement of my lifetime and uh you know
it it from a technology point of view it
is rivaling AI uh but I think the in
institutional world does not quite
understand that this movement is as big
as that one and there will be probably
convergence at some moment in time yes
both crypto and ai go through these
Summers and Winters and so I keep hoping
at sometime we'll have a coordinated
summer of AI and crypto at the same time
but we'll see that would be nice uh so
let's start with um your long-term
Mission uh for for coinbase for crypto
generally or digital assets as we are
saying more and more these days yeah
well we fundamentally see crypto as a
technology to update the financial
system the financial system is it's slow
it's expensive there's unequal access
around the world and the mission of
coinbase is really to increase economic
freedom in the world and so we're really
passionate about this idea of how do we
create Good Financial infrastructure for
people all over the world that enforces
things like property rights and sound
money and free trade and the beauty is
that smartphones are now so inexpensive
you can buy one for you know maybe $10
$20 in anywhere in the world the poorest
people in the world now have smartphones
so if you have a smartphone and an
internet connection you can now have
access to Good Financial infrastructure
property rights the ability to earn a
living make a better life for yourself
and your family and that's a really
powerful idea because economic freedom
is kind of this underpinning of of all
progress right like more people are
going to try to do good things for the
world if they believe they can keep the
upside of their labor and America sort
of takes us for granted sometimes
because we were an an anomaly
historically but many places in the
world that's not the case um if you do
manage to accumulate some wealth it
could be seized confiscated from you it
could be devalued via inflation and so
if we're actually able to increase
economic freedom globally it would have
an incredible outcome in terms of like
it' been the curve of progress for all
human so that's really what we're hoping
to do with this technology yeah and it's
interesting um we're watching
devaluations around the world and
they're pretty massive in big countries
like in uh March Egypt devalued by 40%
can you imagine 40% Nigeria over the
last year
50% um and uh again I think we're seeing
a domino effect much like the Asian
crisis in the 90s um which people may
and may not remember so where do you
think or what do you think the biggest
obstacles are right now for you to
achieve your vision well in the US
probably the biggest obstacle is
regulatory Clarity definitely
unfortunately the US is a little behind
on this uh you know Europe has already
passed comprehensive crypto legislation
we've seen most of the G20 is actually
already drafting or has implemented
crypto legislation and so there's
broadly this recognition that this
technology is here to stay it has
incredible Innovative potential we need
to make sure we prevent consumer harm
things that happened with other
companies and everyone's aware of and so
the US uh you know I just got back from
DC a couple days in DC I met with uh 12
or 13 different members of the Senate um
the Senate is very eager to move on
legislation now after the house passed
the fit 21 Bill the market structure
bill with strong bipartison support more
than two-thirds of the house voted for
it and so the Senate now has a couple of
bills um being drafted that they're
hopefully going to turn this into law
whether it's in this Congress later this
year or the next Congress so we've got a
lot of work to do there and um it's
important America gets this right in in
the absence of that Clarity I probably
don't have to tell all of you um there
has been a bit of this turf war between
the cftc and the SEC the two Federal
Regulators are these Commodities are
they Securities you know our point of
view is that the tokens um underlying
assets are are Commodities there could
be an investment contract or something
like that on top of it uh that is an
actual security like if a if a company
is going to raise money that's a
security there should be a path to
register those uh broker dealers that
can trade them and we'd like to work
with the SEC to make that happen as well
but if we don't have Congress step in
and act the lack of clarity is just
going to be weaponized and you know
allow not allow the industry to thrive
on Shore and how about obstacles then in
the rest of the world MH what what is
what do you see is there a quicker uh
takeup uh of are embracing of this
technology and these Commodities around
the world well there's about 10 uh
markets around the world where coinbase
has set up local operations and each of
those has a slightly different story
right I give just to give you broad
Strokes I mean you know in the it's
funny in the UK and in Singapore for
instance um they don't have this issue
that we have in the US of having a
separate Commodities and securities
regulator they just have one regulator
so for instance you know the FCA in the
UK um this is a total non issue the
question about Commodities and security
is it never comes up because they just
have one fedal regulator so it's not
it's not poit politicized right um and
similarly in Singapore that's that's the
same issue so each country has slightly
different um you know moments in time
like Rishi sunk in the UK was incredibly
Pro crypto and that government is now
probably changing over um so we have to
sort of at any given moment there's
somewhere in the world where we see a
big opportunity you know President mle
coming in in Argentina for instance has
been super pro crypto right so we
basically we just in the global
landscape we sort of see who's in office
who's going to lean in and work with us
we grow our business there and then when
the guards change you know in who's in
office um we get an opportunity a few
years later and we grow it we grow it
there so we're going to we have a very
long-term point of view on this um
whether it happens in any given year or
decade in a certain country we know the
trend is is clear long term right and
then um back here in the US then uh so
uh individual
have have um have uh been been very
focused on this space well before
institutions right and and have
participated in the movement um can you
talk a little bit about um you know
institutions what you're seeing uh from
an Institutional point of view and um
and actually why the takeup is perhaps
so
slow well I think you're correct that um
retail dig jump into this space a little
sooner over the last decade but I'd say
in just the last year or two we've seen
an incredible amount of institutional
adoption and I feel like institutions
are fully in it at this point um I mean
we we released some stats in this state
of crypto report that showed 56% of the
Fortune 500 uh Executives report their
company is working on something on chain
in crypto right and so it's really it's
the biggest companies in the world you
know black rock is helping tokenize real
world assets you know JP Morgan has an
onchain project with uh called Onyx um
you know there Google cloud is accepting
crypto payments St judee's hospital and
then you know finex like stripe and
PayPal they're adding stable coin
support So 56% of the fortune 500's
doing something I think this is really
here to stay it's already happening
amongst institutions and you know
coinbase can play a big role there too
our our coinbase Prime product um is the
most successful in the institutional
space and we've got about a third of the
top 100 hedge funds are are clients um a
lot of them are also looking for that
regulatory regulatory Clarity moment and
I think when I talk to the institutional
investors often they they'll say you
know once we feel like there's
regulatory Clarity which will not be
some moment in time it's it's just a
it's a gradual Trend that's happening um
they're like that's what would cause us
to put 5 10% of our uh portfolio in
instead of a couple percent so that's
interesting our different perceptions
because um having just launched the spot
Bitcoin ETF uh what we've seen is none
of the major platforms have um approved
it yet so the flows we've seen and
they've been great um have either been
just from retail or they've been donated
by grayscale a lot of it was donated by
gray scale but we um we're still waiting
for an approval even from uh the
platforms that do tend to approve new
interesting different um financial
instruments uh they're waiting and and
maybe all this is is we need one and
then there'll be a very rapid adoption
because competitively it's it's going to
be very important to have this new asset
class we believe on on platforms yeah I
I agree with you on that I think you
could you could argue we haven't really
seen the the real inflows happen even in
ETFs and they've already been really
good I mean there from the numbers I've
seen there's far more demand in the ETFs
than is being min every day from Bitcoin
for instance which is a positive
indicator but you're right I think like
you know Morgan Stanley UBS some of
these firms I don't they haven't really
enabled um the ETFs where we'll see even
larger inflows in the future potentially
um I don't know why that is but the ETFs
were actually is an area where we did
get regulatory Clarity so this will
happen in bits and pieces and I think
it's an incredible First
Step yes um and then uh let's get into
products coin bases products which are
the most most exciting products to you
these days yeah well the first one is
really um a technology Improvement
that'll enable lots of products but you
know if any of you haven't seen Bas um
it's our layer 2 solution it's really
important to help blockchain scale and
so you know layer one uh networks were
the first thing that happened in crypto
they were they were kind of slow they
were kind of expensive but you could see
the potential of it with Layer Two
coming online it's kind of like when the
internet moved from dialup to broadband
it's it's actually enabling things like
you can now send usdcoin instantly
anywhere in the world uh for free um and
that's that's a that's a GameChanger for
things like payments and remittance and
um you know all kinds of things that
just reduce friction in the economy um
so that's one you know derivatives is
another thing we we now have our
derivatives products live both in the US
under our fcm and internationally and
our inter International Exchange um
that's an important part of any sort of
you know Capital Market and we we've
seen really good traction there the last
one I'd say is something we released
something called our our smart wallet so
this this one is it's a little bit
technical still but a lot of developers
have started to use it and it
essentially makes the onboarding process
for someone to get a crypto wallet in
any kind of application much easier it's
using things like biometric so you know
in the in the past you had to remember
this 12-word phrase and you had to save
it in a password manager and sometimes
people would you know put it in the
wrong spot and they would lose it now
you can really just um use a biometric
like a like a fingerprint and boom you
have a crypto wallet in any application
and so we're starting to see crypto
wallets get added into lots of different
web 2 companies lots of web 3 companies
that are kind of native on chain and
really the you know what we're seeing
just zooming out here is like crypto
started as an asset class that people
wanted to invest in and it's great it's
you know more than trillion dollars and
we've got uh over 400 million people
globally you know have used crypto now
about 5% of the GL global population
we're now starting to see it go from an
asset class to real world utility um
payments and you know voting and
decentralized social and having a direct
relationship with content creators and
their fans and all these kind of things
are now coming online and so that's how
we get it to be a billion people or more
using this um and it's following kind of
a similar adoption curve as as the early
internet yeah it's it's been interesting
um to do our own research on how many
steps of the transaction process um
crypto is going to
reduce yeah the the number of steps just
for a transaction to be authorized in
the traditional world is nine steps and
then transaction settlement I think is
another six steps beyond that and each
one of those is a fee a toll uh but when
you're talking instantaneous peerto here
that all collapses that tax goes away so
I think uh I think people are going to
get it there's a lot of frustration with
that fee believe it or not yeah it's
such a good point I mean sometimes
people ask me you know well shouldn't
coinbase why do you why are you
interested in Defi and self custodia
wallets wouldn't you want everybody to
just have their funds on your
platform and you know I think
centralized exchanges and everything are
going to be great for a long long time
but the real potential and Innovation
here is comes from these peer-to-peer
transactions how do we eliminate
intermediaries and that's crypto really
kind of makes a lot of those
intermediaries unnecessary because if
you can do instant settlement um you
don't have to have uh you know an
intermediary with some sort of risk that
is introduced with intraday settlement
um if it's just real-time settled you
can cut out the middlemen you can reduce
friction in the economy and um it's
important for that to happen on chain
you know coinbase is is moving more and
more of our products on chain we're
trying to play in that space with self
custodial wallets with defi uh to make
sure that we enable the true Innovation
potential because now it goes from just
being you know an asset class that 10%
of the world wants to invest in or so to
being something that billions of people
the majority of people in the world can
benefit from I mean crypto should really
be powering a larger and larger
percentage of the of global GDP over
time because they're just more efficient
rails why wouldn't you know payments are
like like water flowing to the path of
least resistance why wouldn't more and
more of it happen over time so my hope
is that you know in 10 years we'll be
sitting here and 25% of global GDP is is
happening on crypto rails yeah and uh
all of those steps that I described and
the toll takers it is all about risk
mitigation and it sort of look it's just
a cluey system instead of you know a
layer on the internet that developers
did not build in the early 90s because
we had no idea that financial services
and commerce were going to take place on
the internet internet right yeah so Well
you certainly coinbase has you know the
wind in its sales right now the stock
has done very well I remember last year
it was terrorized by the SEC at
different points until you know the
judicial system basically called the SEC
out so very happy about that
um I'd like to know how do you keep that
momentum going how how you know in terms
of of course we're an investor in the
stock but the company in the stock and
how do you keep it going and um what do
you worry about now that you're seeing
such good breakthroughs on the
Regulatory and political front here in
the United States what now is keeping
you
up yeah well we really want the company
to be successful in any sort of Market
environment you know adjusted even bit a
positive in any Market environment so
we've done a good job of shifting our
Revenue you know 3 or 4 years ago it was
like 95% trading fees right which can be
quite volatile depending on if there's
lots of volume or or not that quarter
we've now shifted it to be more and more
subscription and services Revenue which
is which is more predictable um and
that's allowed us to make it be you know
it allows us to plan the business over
more time you know with more
predictability I think um we've been
able to reduce costs quite a lot be very
uh judicial about how we're growing the
expens expense base but still invest in
the next uh iterations from a Innovation
point of view like the smart wallet and
base and you how do we accept Commerce
payments online how do we accept
political donations in crypto how do we
inject it into more and more parts of of
the crypto economy the other big piece
of the puzzle is international expansion
so uh obviously we started in the US
still our largest market but we we've
now picked uh 10 large markets uh we
call this our go deep markets um where
we have these local Bo on the ground you
know local licenses um local uh partners
and we've started to make great traction
um actually International in q1 grew our
Revenue grew faster than in the US and
so we've started to make that a bigger
and bigger percentage of our Market in
those those 10 or our Revenue in those
10 go deep markets we also have what we
call our our go broad strategy which is
with self- custodial wallets we can
enter into the longtail of countries
some of the big Emerging Markets um with
self- custodial wallets coinbase wallet
is is our product there so we sort of go
we go deep we go broad um depending on
how mature the market is the regulatory
structure there and that's been a good
strategy for international expansion
yeah we we've been surprised at how
quickly International has scaled I think
it's 177% of your revenues right now um
and starting with derivatives right that
that's that that really gave you the big
push I'd like to ask in terms of U and
you described earlier how you're working
with many financial institutions but but
you're also going to
disintermediate uh some of their
business so can you talk about that
Dynamic you know I uh you know I thought
that there would be a lot more push back
and then of course black Rock's um uh
decision to partner with you at a time
when we didn't even know Black Rock was
friendly to crypto I think or they had
just turned friendly so this dynamic
between you know the traditional
financial institutions that are going to
see some of their businesses
disintermediated uh certainly in the
traditional banking world I suppose can
you talk a little bit about that yeah so
the smartest institutions out there they
recognize that you know they're they're
all innovators as well they need to stay
on the Forefront of this and so they're
recognizing the potential in this in
this technology and many of them like we
discussed they're leaning into it
they're they're saying hey we're not
going to sit around and wait for
something to disrupt we want to be a
part of that disruption and so that's
just that's just the nature of business
you always need to be disrupting
yourself or someone will do it for you
um and so coinbase you know actually
it's great in financial services it's
pretty common where you know you might
technically be competitors on one
product but you're a customer of the
other product and so we're all kind of
pretty collaborative in that regard
coinbase has a developer platform um
called CDP coinbase developer platform
and a lot of the the core Primitives
that we've built which you know help do
custody and trading and integrating into
into all these blockchains we've made
those apis that we use internally
available to third parties externally
just like you know Amazon did with AWS
and so I think a lot of Institutions are
going to have an opportunity to use
those if they want it's a way for
coinbase to participate in the value
chain but also help every business in
the world come onchain um and of course
if they don't want to use our platform
they can build their own that's sort of
the beauty of it but hopefully our tools
are are good and and that'll allow us to
participate in in their success as well
so uh so they're looking at this as a
way to increase their own productivity
you know streamline their own costs am I
right yeah I mean each institution is
different but for instance you know
Banks pay enormous fees to Swift they
don't feel that it's it's a very
efficient system um now the process by
these you know there's a lot of inertia
right there's there's a lot of people in
the United States who still pay their
rent every month with a paper check so
sometimes these changes take a little
while it's there's um it's a demographic
shift too right there's it's a
generational uh thing that we're seeing
but there's a whole group of young
people who are growing up today where
you know they're never going to have um
a bank account in the traditional sense
with like a branch on the corner and a
checkbook um their phone is their wallet
they just want to have um a primary
Financial account where they get paid
and they can pay for things and they can
just transact in a global economy and I
think increasingly they're going to use
things like um you know there's mobile
money apps but I think crypto is a way
for this younger generation to
participate in something that they
perceive as being more fair more free
more Global um and for many of them they
don't they just feel like the system
doesn't really work for them the
traditional system and they want to
participate in this new system so my
hope is that coinbase can be the primary
Financial account for actually a next
generation of people growing up yeah
it's interesting um at ARK we are
looking for we're trying to figure out
who are going to be the winners in the
digital wallet space because it is a
winner take most opportunity that's why
I ask you about the banks and the
competition This truly is a win or take
most if we use WeChat pay as a a model
that was a bank branch in the pocket it
was all kinds of financial services and
commerce Commerce on it as well uh so
that is why I asked the question I think
uh the competitive Dynamic is going to
be very interesting we have in our
portfolio certainly coinbase and then
cash app is going via Bitcoin into the
rest of the world uh Robin Hood a
different way and so forth so but we
don't have any traditional Banks yeah
well I I mean I agree with you we want
people obviously to be using coinbase
app but I think there's one difference
between that in um in WeChat pay which
is that um the crypto Protocols are open
networks yes right and so the
interoperability is actually a key
feature where you know if someone is
using coinbase in on one one end of the
transaction and they're using another
app elsewhere it should really work now
crypto needs to get a little better at
some of these um common standards
there's there's a lot of fragmentation
just like in any industry it starts off
with lots of ideas and I think it'll
consolidate down over time so but the
interoperability is part of the strength
of the crypto Network it's not like it's
not like you know I have a PayPal
account you have to have a PayPal
account well that's hard to get really
Global adoption of that but if if we
each have a crypto account and you
you're using a local app made in
Venezuela or Nigeria it should work with
the coinbase app as an open standard
okay so you so do you disagree then that
it's a a winner take most opportunity I
mean look I think there you could say
it's win or take most in each market you
could say um I mean email email is maybe
a good example because email is an open
protocol too but you know Gmail works
better if you also use Gite right like
Google Calendar and Google Docs so I
think there's a lot of opportunities for
companies like ours to compete and build
good products but ultimately the
switching cost is a bit lower which
makes it makes our job harder but I
think it's better for the consumer and
that's what'll actually cause it to win
you know like a lot of people have tried
to think about how might you um attack
like the Visa Monopoly or duopoly with
Mastercard or something and um I mean by
the way I think they're actually going
to be leveraging stable coins Layer Two
so they're smart companies but if it's
like you know coinbase versus Visa it's
like we're probably not going to break
into that space But if it's an open
standard a global open decentralized
protocol kind of like the internet or
something I could see that disrupting um
like an incumbent so it's it makes each
individual company's job harder but it's
also the most powerful thing about it
that allows it to become a global
standard yeah interesting okay on to the
election
uh right I mean it uh been quite
exciting uh to to and you've been key to
I think to spurring this movement so
thank you coinbase uh uh for bringing us
all along uh leading the effort in
Washington uh so maybe can you talk a
little bit about uh what's going on in
Washington or the political Dynamic um
it just seems to have turned so suddenly
we had FTX in 20 22 and everybody said
okay that's it you know this is never
going to work no no no political no
politician is going to sign onto this is
just fraudulent and all of that at at
the time I was saying no no no no wait a
minute this proves the concept uh you
know uh Sam be mrey didn't didn't like
Bitcoin he didn't like decentralization
didn't like transparency so I think that
is where the wind has shifted did um and
certainly in the legislative world as
you mentioned earlier we're seeing big
surprises in terms of I would say
conversions we thought this was going to
be uh you know a onep party issue it
seemed like that at one point but that
has changed why do you think it
changed yeah well I think the core
reason is that DC has realized this is a
massive voter base in the US and that's
what's really started to make it a
bipartisan issue um you know there's 52
million Americans who used crypto we
helped fund this uh C4 called Stand
withth crypto.com
a lot of people's attention in DC and so
we're now in an environment where there
are strong crypto Advocates on both
sides of the aisle uh we saw recently
for instance in the House of
Representatives uh this fit 21 bill I
mentioned got more than 2third of the
house to vote for it so there's clearly
a political will that we need we need
clear rules in the US uh the current
situation is untenable and you know in
DC I just you know I met with the the 12
13 different Senators over the last few
days there's bills going back and forth
um being drafted there's a lot of
urgency from Senate leadership to say
how do we get this done now you know
legislation's complicated the stars have
to align you know any so I you know
anytime you go and try to attempt one of
these things you know you can never say
if it's for sure or not but I can tell
you this is one of the only bipartisan
issues happening in Congress right now I
mean the for anybody who doesn't know
the Congress really has been only in
place where they're passing they're
doing must pass bills there's not a lot
of collaboration um on bipartisan work
and I would say crypto is the number one
bipartisan issue it's kind of like the
only thing that they're coming together
to work on right now so that's really
encouraging um it's really the voters
that are in a democracy that are going
to elect candidates which which
represent their values and I think DC is
waking up to that yeah and I think it's
very important for the young vote and
they're waking up to that um
uh very much so H how has your own user
base have you have you seen you know
them writing in uh to to to Washington
to to really help change Minds yeah I
mean we've actually helped invite a
bunch of Founders to go to DC um you
know many of these Representatives they
they haven't really ever met someone in
the crypto space right and they don't
realize that for instance in Ohio
there's dozens of crypto entrepreneurs
trying to build things in their state
and there's there's sort of it's just
like anything you know it's a
relationship relationships matter right
if you're just seeing something on the
Internet you don't really know if it's
real it's these these Founders are
incredibly compelling in person to go
meet with the representative and say you
know I care about this and I'm in your
district and um this is an important
issue to me we got to get this fixed and
there's just no substitute for that so
um crypto is finally getting organized
politically and it's such a mass
um constituent of customers shareholders
employees um they deserve to have their
their views represented in our
government um if you haven't signed up
sign up stand with crypto.com
and will will guarantee uh you know his
attempts to uh to preserve that right
and then uh mining he wants to bring it
to America make it happen the rest of
the Bitcoin mined make it happen in
America so he's certainly captured this
this wave and uh I think it's uh you
know he's considered very divisive of
course by some people but uh you know
half of the population did vote for him
and uh I think he's you know educating
those who haven't who haven't taken a
close look at what this movement is all
about um I think it's a good thing just
the bipartisan nature of this yeah both
parties are recognizing they need to
address this issue and I I think it's
going to be actually one of the top
issues like in the in this election so
yes crypto's arrived it's arrived it's
arrived thank you so much thank you for
all you're doing to to make this new
world happen thank you C
[Music]
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