1 00:00:03,960 --> 00:00:06,389 Sean Aylmer: Welcome to the Fear and Greed Business Interview. I'm Sean 2 00:00:06,390 --> 00:00:09,178 Sean Aylmer: Aylmer. Crypto investors are having a better time of it 3 00:00:09,179 --> 00:00:12,390 Sean Aylmer: right now with Bitcoin rebounding to levels not seen for 4 00:00:12,420 --> 00:00:16,170 Sean Aylmer: 18 months or so. Expectations of interest rate reductions and 5 00:00:16,170 --> 00:00:20,130 Sean Aylmer: spot bitcoin exchange- traded funds, have seen the digital asset 6 00:00:20,160 --> 00:00:23,400 Sean Aylmer: climb in recent weeks. But where's the market heading and 7 00:00:23,400 --> 00:00:26,309 Sean Aylmer: what will greater regulation, or the potential for greater regulation 8 00:00:26,309 --> 00:00:29,759 Sean Aylmer: do to cryptos? Remember, this is general information only and 9 00:00:29,759 --> 00:00:33,150 Sean Aylmer: you should seek professional advice before making investment decisions. John 10 00:00:33,150 --> 00:00:37,260 Sean Aylmer: O'Loghlen is the Managing Director APAC at Coinbase, the largest 11 00:00:37,260 --> 00:00:42,059 Sean Aylmer: cryptocurrency exchange in the U.S. And John, you're the only listed exchange 12 00:00:42,060 --> 00:00:43,199 Sean Aylmer: in the U. S. That's right, isn't it? 13 00:00:43,560 --> 00:00:46,500 John O'Loghlen: That is right Sean. And with your safe harbor comments, 14 00:00:47,098 --> 00:00:50,549 John O'Loghlen: that we've just listened to, I'm also under the microscope 15 00:00:50,549 --> 00:00:54,510 John O'Loghlen: in terms of being a fully audited and compliant exchange. 16 00:00:54,510 --> 00:00:56,460 John O'Loghlen: It's something we take a lot of pride in. It's 17 00:00:56,460 --> 00:00:58,710 John O'Loghlen: quite public that we're in a number of actions with 18 00:00:58,710 --> 00:01:02,340 John O'Loghlen: the SEC right now, but we believe that the regulation is 19 00:01:02,340 --> 00:01:05,459 John O'Loghlen: going in the right direction, and I think that narrative 20 00:01:05,459 --> 00:01:10,379 John O'Loghlen: is really headed in a positive kind of direction. Also, 21 00:01:10,379 --> 00:01:14,580 John O'Loghlen: locally in Australia, recent guidance from treasury here has provided 22 00:01:14,850 --> 00:01:17,700 John O'Loghlen: clarity to the market that digital assets will come under 23 00:01:17,700 --> 00:01:20,520 John O'Loghlen: the purview of ASIC and an AFSL regime. And I 24 00:01:20,520 --> 00:01:23,459 John O'Loghlen: think this is a welcome decision. It's something we've spent 25 00:01:23,490 --> 00:01:25,589 John O'Loghlen: a lot of time leaning in on, and I think 26 00:01:25,679 --> 00:01:30,750 John O'Loghlen: investors here look at these big western markets where they 27 00:01:30,959 --> 00:01:34,050 John O'Loghlen: respect the decision of the regulators, and we're excited to 28 00:01:34,200 --> 00:01:35,460 John O'Loghlen: see where this is going in Australia. 29 00:01:36,060 --> 00:01:38,280 Sean Aylmer: Okay. Let's take a step back. For those who don't 30 00:01:38,280 --> 00:01:43,830 Sean Aylmer: know a lot about crypto exchanges and cryptocurrencies, we talk 31 00:01:44,069 --> 00:01:47,879 Sean Aylmer: about interest rates and ETFs helping Bitcoin, particularly. It's the 32 00:01:47,879 --> 00:01:53,520 Sean Aylmer: largest of the cryptocurrencies. Let's go through interest rates first. Why 33 00:01:53,520 --> 00:01:57,779 Sean Aylmer: do interest rates/ inflation matter for cryptocurrencies like Bitcoin? 34 00:01:58,830 --> 00:02:02,250 John O'Loghlen: Yeah, I think historically Bitcoin has been the kind of blue chip 35 00:02:02,250 --> 00:02:05,249 John O'Loghlen: token. And so if you look at the assets that 36 00:02:05,250 --> 00:02:09,180 John O'Loghlen: we host on Coinbase, there's over 300 assets. Then we 37 00:02:09,180 --> 00:02:13,410 John O'Loghlen: take a very careful due diligence approach to those. And 38 00:02:13,410 --> 00:02:16,320 John O'Loghlen: so Bitcoin's been the one that's been around the longest, 39 00:02:16,320 --> 00:02:21,750 John O'Loghlen: and it's the most well understood token or digital asset. 40 00:02:22,169 --> 00:02:24,630 John O'Loghlen: And in that regard, I think there's a degree of 41 00:02:24,630 --> 00:02:28,470 John O'Loghlen: transparency, a history of market performance. People can correlate it 42 00:02:28,530 --> 00:02:31,680 John O'Loghlen: with the ebbs and flows of interest rate. And I 43 00:02:31,680 --> 00:02:34,830 John O'Loghlen: think increasingly there's mand from a new, I would say 44 00:02:34,830 --> 00:02:38,129 John O'Loghlen: demographic, probably a younger demographic, a little bit more of 45 00:02:38,130 --> 00:02:42,269 John O'Loghlen: an open- minded demographic, into an alternative asset class. Kind 46 00:02:42,270 --> 00:02:45,300 John O'Loghlen: of akin to what gold was in a former life 47 00:02:45,300 --> 00:02:48,480 John O'Loghlen: for lots of people, as a hedge to the U. 48 00:02:48,480 --> 00:02:51,899 John O'Loghlen: S. dollar. And so we see these correlations in time 49 00:02:51,900 --> 00:02:55,649 John O'Loghlen: when there are spikes and rises, interest rates, we see 50 00:02:56,250 --> 00:02:59,668 John O'Loghlen: a correlation with what happens in Bitcoin. We can't predict 51 00:02:59,669 --> 00:03:03,299 John O'Loghlen: what's going to happen with Bitcoin, and we're not really looking 52 00:03:03,300 --> 00:03:07,889 John O'Loghlen: at future trends of Bitcoin. We're an exchange and so we 53 00:03:07,889 --> 00:03:11,219 John O'Loghlen: want to be independent and host assets that we believe 54 00:03:11,219 --> 00:03:14,820 John O'Loghlen: passed very clear due diligence tests. It should be noted 55 00:03:14,820 --> 00:03:18,359 John O'Loghlen: that there are over 5, 000 tokens out there in the 56 00:03:18,359 --> 00:03:21,630 John O'Loghlen: market, and we only host a fraction of those, but 57 00:03:21,870 --> 00:03:24,389 John O'Loghlen: the bulk of day- to- day traders and mom and 58 00:03:24,389 --> 00:03:27,810 John O'Loghlen: pop traders, people who are entering the market, are really 59 00:03:28,200 --> 00:03:32,729 John O'Loghlen: looking at Bitcoin or Ethereum. So a number of the trends that 60 00:03:32,730 --> 00:03:36,119 John O'Loghlen: you highlighted earlier, Sean, for example, the launch of the 61 00:03:36,119 --> 00:03:39,450 John O'Loghlen: ETF market, it's probably not just the launch of the 62 00:03:39,450 --> 00:03:42,690 John O'Loghlen: ETF market, but the names behind those filings. So the BlackRocks, the 63 00:03:42,930 --> 00:03:47,489 John O'Loghlen: Fidelitys of the world, clearly they've got very big user 64 00:03:47,490 --> 00:03:50,910 John O'Loghlen: bases and there's going to be some momentum coming into 65 00:03:50,910 --> 00:03:53,909 John O'Loghlen: those markets when those ETFs are approved. 66 00:03:54,299 --> 00:03:56,100 Sean Aylmer: Stay with me, John, we'll be back in a minute. 67 00:04:02,730 --> 00:04:06,389 Sean Aylmer: I'm speaking to John O'Loghlen, Managing Director APAC at Coinbase. 68 00:04:07,620 --> 00:04:11,879 Sean Aylmer: So why is this spot Bitcoin ETF so important? I get 69 00:04:11,879 --> 00:04:14,220 Sean Aylmer: that it gives a lot of credibility when BlackRock is 70 00:04:14,400 --> 00:04:18,540 Sean Aylmer: chasing the SEC to try and get an ETF up on 71 00:04:18,540 --> 00:04:21,180 Sean Aylmer: it. Does it also make it easier though for investors 72 00:04:21,240 --> 00:04:23,760 Sean Aylmer: to access cryptocurrencies? 73 00:04:23,760 --> 00:04:27,839 John O'Loghlen: 100%. Yeah. I mean, I think it's still not the 74 00:04:27,839 --> 00:04:31,710 John O'Loghlen: most straightforward asset class to engage with. A lot of 75 00:04:31,710 --> 00:04:34,470 John O'Loghlen: people, particularly if we look at self- managed super funds. 76 00:04:34,740 --> 00:04:40,589 John O'Loghlen: So this is a 890 billion dollar market in Australia. 77 00:04:40,589 --> 00:04:45,899 John O'Loghlen: It's about a third of the overall supermarket or maybe 25 to 30% of the overall Australian 78 00:04:45,900 --> 00:04:49,440 John O'Loghlen: supermarket. And why it's important to Coinbase is because that 79 00:04:49,440 --> 00:04:52,140 John O'Loghlen: Australian pool of savings is the fifth biggest in the 80 00:04:52,140 --> 00:04:56,760 John O'Loghlen: world, and clearly there's an opportunity there. Lots of those 81 00:04:56,849 --> 00:05:02,428 John O'Loghlen: investors have series of advisors or default ways that gives 82 00:05:02,428 --> 00:05:06,238 John O'Loghlen: them access to investments and ETFs are clearly well understood 83 00:05:06,600 --> 00:05:08,400 John O'Loghlen: and have had a very good run in terms of 84 00:05:08,400 --> 00:05:11,279 John O'Loghlen: pricing and access. There's all sorts of advantages to why 85 00:05:11,279 --> 00:05:15,450 John O'Loghlen: people like that space. And so for, I would say 86 00:05:15,450 --> 00:05:18,870 John O'Loghlen: more traditional investors, they can just add an ETF to 87 00:05:18,870 --> 00:05:22,979 John O'Loghlen: their portfolio without having to necessarily sign up to a 88 00:05:22,980 --> 00:05:27,359 John O'Loghlen: crypto exchange. And then I think also their tax obligations 89 00:05:27,360 --> 00:05:29,700 John O'Loghlen: and other kind of governance concerns they have to be 90 00:05:29,700 --> 00:05:32,250 John O'Loghlen: aware of are all taken care of. You can do 91 00:05:32,250 --> 00:05:36,419 John O'Loghlen: that with Coinbase Retail Exchange. We link to all sorts 92 00:05:36,420 --> 00:05:40,500 John O'Loghlen: of partners like Koinly, Crypto Tax Calculator, all sorts of 93 00:05:40,709 --> 00:05:43,140 John O'Loghlen: technologies that allow you to have a very seamless interaction 94 00:05:43,170 --> 00:05:46,680 John O'Loghlen: with the ATO and be completely compliant in terms of 95 00:05:46,680 --> 00:05:50,760 John O'Loghlen: managing any appreciation or losses you have in your crypto 96 00:05:50,760 --> 00:05:53,940 John O'Loghlen: portfolio. But I think there is a big part of 97 00:05:53,940 --> 00:05:58,138 John O'Loghlen: this market that has a familiarity at ETFs. I would 98 00:05:58,139 --> 00:06:02,130 John O'Loghlen: also say that that older demographic, in terms of let's 99 00:06:02,130 --> 00:06:05,729 John O'Loghlen: say a kind of more senior age group in that Self- 100 00:06:05,730 --> 00:06:09,960 John O'Loghlen: Managed Super Fund, their APU or let's say the amount 101 00:06:09,960 --> 00:06:11,820 John O'Loghlen: of money they're going to put into this asset class, 102 00:06:12,059 --> 00:06:14,790 John O'Loghlen: even if it is half a percentage or a percentage 103 00:06:14,790 --> 00:06:17,580 John O'Loghlen: point of their overall asset allocation in terms of diversifying 104 00:06:17,580 --> 00:06:22,200 John O'Loghlen: risk and following a classic kind of diversification strategy in 105 00:06:22,200 --> 00:06:26,969 John O'Loghlen: your portfolio management, even that 0. 5 or 1% allocation 106 00:06:27,178 --> 00:06:29,040 John O'Loghlen: of their total net worth is going to be a 107 00:06:29,040 --> 00:06:33,690 John O'Loghlen: multiple of what, let's say what's historically been referred to 108 00:06:33,690 --> 00:06:40,799 John O'Loghlen: as Bitcoin Bros or the initial young male demographic that 109 00:06:40,800 --> 00:06:44,070 John O'Loghlen: has been very interested in this kind of speculative market. 110 00:06:44,849 --> 00:06:48,779 John O'Loghlen: We have never played to that audience. I think our 111 00:06:48,779 --> 00:06:51,690 John O'Loghlen: user base is a little bit more wary of our 112 00:06:51,690 --> 00:06:54,810 John O'Loghlen: brand and the attributes of the brand and the protections 113 00:06:54,810 --> 00:06:58,620 John O'Loghlen: that come with the Coinbase brand. And so that's why 114 00:06:58,620 --> 00:07:02,460 John O'Loghlen: I think this ETF market has quite an interesting potential 115 00:07:02,580 --> 00:07:06,000 John O'Loghlen: and then also a local overlay of why I think there's going to be 116 00:07:06,000 --> 00:07:06,899 John O'Loghlen: demand for it in Australia. 117 00:07:07,320 --> 00:07:10,709 Sean Aylmer: Okay. So on that whole reputation issue, I was reading 118 00:07:10,709 --> 00:07:13,980 Sean Aylmer: something, was it Cathie Wood from ARK Investments was quoted 119 00:07:13,980 --> 00:07:15,480 Sean Aylmer: in the paper the other day saying, " You should have 120 00:07:15,480 --> 00:07:19,260 Sean Aylmer: 2 to 6% of your assets in cryptos." Now we're 121 00:07:19,260 --> 00:07:21,929 Sean Aylmer: not an investing podcast. Go and see your financial advisor. 122 00:07:21,929 --> 00:07:24,210 Sean Aylmer: We're certainly not recommending that, but it's just interesting someone 123 00:07:24,210 --> 00:07:29,190 Sean Aylmer: like that focuses that much on cryptocurrencies. The flip side 124 00:07:29,190 --> 00:07:32,580 Sean Aylmer: to that is we've seen the collapse of TerraUSD stablecoin. 125 00:07:33,510 --> 00:07:37,410 Sean Aylmer: We have seen some exchanges collapse big time and some 126 00:07:37,410 --> 00:07:41,639 Sean Aylmer: high profile people get charged over that. Is that kind 127 00:07:41,639 --> 00:07:44,820 Sean Aylmer: of a shakeout that was needed? Has it done too 128 00:07:44,820 --> 00:07:47,039 Sean Aylmer: much damage to the industry? How do you put those 129 00:07:47,039 --> 00:07:48,030 Sean Aylmer: things into perspective? 130 00:07:49,080 --> 00:07:51,510 John O'Loghlen: I mean, I personally put them into perspective having worked 131 00:07:51,510 --> 00:07:54,780 John O'Loghlen: at Goldman Sachs in 1999 and being an advisor to 132 00:07:54,870 --> 00:07:58,259 John O'Loghlen: companies like WorldCom and worked on big clients like Enron. 133 00:07:58,679 --> 00:08:01,679 John O'Loghlen: And at the time advisors who were mentors to me 134 00:08:01,679 --> 00:08:06,150 John O'Loghlen: were moving around the market and talking incredibly positively about 135 00:08:06,150 --> 00:08:10,590 John O'Loghlen: these big conglomerates, and they worked out to be major 136 00:08:10,620 --> 00:08:14,220 John O'Loghlen: fraud cases. And so I think when you have the 137 00:08:14,220 --> 00:08:17,550 John O'Loghlen: growth of an industry, you're going to have these bad 138 00:08:17,550 --> 00:08:20,880 John O'Loghlen: actors. In those cases I think the positive news is 139 00:08:20,880 --> 00:08:24,869 John O'Loghlen: that some of the bankruptcy outcomes for that major American 140 00:08:24,869 --> 00:08:27,000 John O'Loghlen: Exchange or U. S. or Global Exchange based out of 141 00:08:27,000 --> 00:08:31,110 John O'Loghlen: The Bahamas have been quite positive. And so I think 142 00:08:31,200 --> 00:08:33,389 John O'Loghlen: there's a little bit of recovery in terms of the 143 00:08:33,389 --> 00:08:38,338 John O'Loghlen: reputation for the industry around the FTX windup, but certainly 144 00:08:38,580 --> 00:08:41,039 John O'Loghlen: it wasn't a great, great day for the industry. And 145 00:08:41,039 --> 00:08:44,940 John O'Loghlen: then the recent charges against Binance are very serious, and 146 00:08:45,179 --> 00:08:48,120 John O'Loghlen: it's not really our position to comment on competitors in 147 00:08:48,120 --> 00:08:51,900 John O'Loghlen: the market. But I will say that we've spent an 148 00:08:51,900 --> 00:08:56,610 John O'Loghlen: inordinate amount of time and resources on governance ever since 149 00:08:56,610 --> 00:09:01,529 John O'Loghlen: the inception of the business. I was working previously in 150 00:09:01,530 --> 00:09:04,200 John O'Loghlen: the e- commerce and payment space and the remittances space 151 00:09:04,559 --> 00:09:09,150 John O'Loghlen: and have always personally been very concerned about my own 152 00:09:09,150 --> 00:09:13,500 John O'Loghlen: kind of professional reputation as an AFSL listed director and 153 00:09:13,500 --> 00:09:15,450 John O'Loghlen: the link to the brand that you're working with. So 154 00:09:15,450 --> 00:09:19,260 John O'Loghlen: I did pretty deep due diligence on Coinbase and looked 155 00:09:19,260 --> 00:09:22,920 John O'Loghlen: at fellow colleagues or former colleagues from other firms who 156 00:09:22,920 --> 00:09:26,670 John O'Loghlen: had worked there and new people there. And being a director 157 00:09:26,730 --> 00:09:30,208 John O'Loghlen: of a number of Coinbase entities in multiple geographies in 158 00:09:30,210 --> 00:09:33,870 John O'Loghlen: APAC, I can tell you we've got two approaches to 159 00:09:34,049 --> 00:09:36,540 John O'Loghlen: the market globally. One is what we call a go 160 00:09:36,540 --> 00:09:39,988 John O'Loghlen: deep strategy, and that's in about 10 markets globally where 161 00:09:39,990 --> 00:09:43,380 John O'Loghlen: we're fully regulated, boots on the ground, leaning into the 162 00:09:43,380 --> 00:09:47,700 John O'Loghlen: regulators very hard and have directors and audits and everything 163 00:09:47,700 --> 00:09:51,030 John O'Loghlen: else you can imagine. And that's basically the EU and 164 00:09:51,030 --> 00:09:54,929 John O'Loghlen: the UK and APAC at Singapore and Australia, we're looking 165 00:09:55,230 --> 00:09:57,480 John O'Loghlen: to hopefully launch in a couple of more markets. And in 166 00:09:57,570 --> 00:10:00,900 John O'Loghlen: the Americas it's the U. S. and buttressed on either 167 00:10:00,900 --> 00:10:04,530 John O'Loghlen: side by Brazil and Canada. The rest of the world, 168 00:10:04,920 --> 00:10:06,900 John O'Loghlen: we want to approach because we want to bring a 169 00:10:06,900 --> 00:10:10,080 John O'Loghlen: billion people on chain with what we call a Go 170 00:10:10,080 --> 00:10:15,179 John O'Loghlen: Broad strategy, and that's using more innovative and dynamic technology, 171 00:10:15,600 --> 00:10:18,090 John O'Loghlen: not dissimilar to how the kind of fintech world has 172 00:10:18,090 --> 00:10:21,958 John O'Loghlen: tackled all sorts of geographies where traditional banking's challenging, with 173 00:10:21,960 --> 00:10:26,459 John O'Loghlen: things like Coinbase Wallet and our layer to Ethereum platform, 174 00:10:26,820 --> 00:10:29,669 John O'Loghlen: Base and peer to peer products and wallet as a 175 00:10:29,670 --> 00:10:33,420 John O'Loghlen: service, which brands can build and build out their own 176 00:10:33,420 --> 00:10:37,679 John O'Loghlen: digital crypto wallets. So, lots of innovation in the Web3 177 00:10:37,710 --> 00:10:41,460 John O'Loghlen: ecosystem space to get into other markets where maybe the 178 00:10:41,460 --> 00:10:45,120 John O'Loghlen: regulatory guidance is not so clear, but there are very 179 00:10:45,120 --> 00:10:49,139 John O'Loghlen: big populations of people. And in those more traditional Western 180 00:10:49,140 --> 00:10:53,790 John O'Loghlen: markets, we very much, we've landed the boat, we've kind 181 00:10:53,790 --> 00:10:55,770 John O'Loghlen: of burned the boat, so to say, and we're boots 182 00:10:55,770 --> 00:10:59,219 John O'Loghlen: on the ground and very much engaged. And that's certainly 183 00:10:59,219 --> 00:11:02,069 John O'Loghlen: the case in Australia as we look into this new 184 00:11:02,070 --> 00:11:04,290 John O'Loghlen: regime that is going to be under an AFSL. 185 00:11:05,039 --> 00:11:06,780 Sean Aylmer: John, thank you for talking to Fear and Greed. 186 00:11:07,020 --> 00:11:08,400 John O'Loghlen: Thanks, Sean. Pleasure to be back. 187 00:11:08,910 --> 00:11:11,850 Sean Aylmer: That was John O'Loghlen, Managing Director APAC at Coinbase. This 188 00:11:11,850 --> 00:11:14,010 Sean Aylmer: is the Fear and Greed Business Interview. Remember, this is 189 00:11:14,010 --> 00:11:16,589 Sean Aylmer: general information only and you should seek professional advice before 190 00:11:16,590 --> 00:11:19,290 Sean Aylmer: making investment decisions. Join us every morning for the full 191 00:11:19,290 --> 00:11:22,468 Sean Aylmer: episode of Fear and Greed, Australia's best business podcast. I'm 192 00:11:22,469 --> 00:11:23,999 Sean Aylmer: Sean Aylmer, enjoy your day.