CEO Spotlight: Building the Future of Money - State of Crypto Summit 2024

Summary

In 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

00:00

🚀 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.

05:01

🌐 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.

10:04

🛠️ 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.

15:06

💹 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.

20:06

🔄 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.

25:08

🗳️ 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.

30:10

🏛️ 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.

Keywords

💡Cryptocurrency

Cryptocurrency, often referred to as 'crypto' in the script, is a digital or virtual form of currency that uses cryptography for security. It is decentralized and operates on technology called blockchain, which is a distributed ledger enforced by a network of computers. In the video, cryptocurrency is positioned as a revolutionary technology that has the potential to update the financial system, making it more accessible and efficient globally.

💡Economic Freedom

Economic freedom refers to the ability of individuals to make their own economic decisions without coercion or interference from the state. In the context of the video, it is highlighted as the core mission of Coinbase, aiming to increase economic freedom worldwide by providing access to a modern financial infrastructure through digital assets. The script emphasizes how smartphones and internet connectivity can empower people to participate in the global economy.

💡Regulatory Clarity

Regulatory clarity refers to having clear and consistent rules and guidelines from regulatory bodies. In the video, it is identified as a significant obstacle for the growth of the cryptocurrency industry in the US. The lack of clarity between the Commodities and Securities regulators is a point of discussion, with the hope that legislation will provide a clear framework for the industry to thrive.

💡Institutional Adoption

Institutional adoption in the script denotes the acceptance and involvement of large organizations, corporations, and financial institutions in the cryptocurrency space. It is highlighted that a significant number of Fortune 500 companies are exploring blockchain and crypto applications, indicating a mainstream shift towards integrating digital assets into their operations.

💡Layer 2 Solutions

Layer 2 solutions are technologies built on top of a blockchain network to improve its scalability and efficiency. In the video, BASE, Coinbase's Layer 2 solution, is mentioned as a crucial development for scaling blockchain technology. It allows for faster and potentially free transactions, which is a game-changer for reducing friction in economic activities.

💡Derivatives

Derivatives in the financial context are financial instruments whose value is derived from the value of an underlying asset or group of assets. In the script, the launch of Coinbase's derivatives products is noted as an important step in establishing a comprehensive capital market for cryptocurrencies, offering more options for investors to engage with the market.

💡Smart Wallet

A smart wallet, as discussed in the video, is a technological advancement that simplifies the process of creating and managing a cryptocurrency wallet, often integrating biometric security features. It aims to make the onboarding process for crypto wallets in applications more user-friendly and secure, which is essential for broader adoption.

💡Decentralization

Decentralization is the concept of distributing authority and decision-making away from a central location. In the context of the video, decentralization is a foundational principle of blockchain technology and cryptocurrencies, offering transparency, reducing the need for intermediaries, and potentially leading to a more equitable financial system.

💡ETFs (Exchange-Traded Funds)

ETFs are investment funds that are traded on stock exchanges, much like individual stocks. In the script, the launch of a spot Bitcoin ETF is mentioned, indicating a significant step towards mainstream financial acceptance and providing a regulated investment vehicle for retail and institutional investors to gain exposure to cryptocurrencies.

💡Interoperability

Interoperability refers to the ability of different systems or components to exchange and make use of information. In the video, it is highlighted as a key feature of open crypto networks, allowing for seamless transactions across different platforms and applications. This open standard is contrasted with closed systems like PayPal, promoting a more inclusive and connected financial ecosystem.

💡Bipartisan Issue

A bipartisan issue is one that garners support from both major political parties. In the video, the recognition of cryptocurrency as a significant and bipartisan issue in US politics signifies its importance and the need for regulatory clarity across the political spectrum. This bipartisan support is crucial for the advancement of crypto-related legislation.

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]