1 00:00:00,080 --> 00:00:01,440 Speaker 1: Brian, thank you for joining us. 2 00:00:01,520 --> 00:00:04,160 Speaker 2: A big question that's out there in the market now 3 00:00:04,320 --> 00:00:07,640 Speaker 2: is with Binance facing such severe pressures and more than 4 00:00:07,640 --> 00:00:10,559 Speaker 2: four billion dollar fine, what does this all mean for 5 00:00:10,680 --> 00:00:11,600 Speaker 2: Coinbase now? 6 00:00:14,120 --> 00:00:16,360 Speaker 3: Well, I think this is really a vindication of the 7 00:00:16,360 --> 00:00:19,079 Speaker 3: long term strategy that Coinbase has taken to build a 8 00:00:19,120 --> 00:00:22,520 Speaker 3: trusted and regulated company. Going back to twenty twelve, we 9 00:00:22,560 --> 00:00:25,160 Speaker 3: really decided to do that and got the licenses and 10 00:00:25,200 --> 00:00:27,600 Speaker 3: got the teams in place that were necessary to run 11 00:00:27,640 --> 00:00:30,280 Speaker 3: that type of company. And then every few years we 12 00:00:30,320 --> 00:00:32,479 Speaker 3: did see a new company come on the scenes that 13 00:00:32,479 --> 00:00:34,880 Speaker 3: didn't take that approach. Sometimes they would grow very quickly 14 00:00:35,400 --> 00:00:37,440 Speaker 3: because they were able to offer products that we didn't 15 00:00:37,440 --> 00:00:41,279 Speaker 3: think were legal, but inevitably they do come crashing down. 16 00:00:41,320 --> 00:00:41,479 Speaker 4: You know. 17 00:00:41,560 --> 00:00:44,600 Speaker 3: Regulators do eventually act, even if they don't act quickly, 18 00:00:44,640 --> 00:00:46,560 Speaker 3: and that's what we saw here in this case today. 19 00:00:46,600 --> 00:00:49,879 Speaker 3: So it's not only been I think, an opportunity for 20 00:00:49,920 --> 00:00:53,159 Speaker 3: Coinbase to step in, but it's also an opportunity for 21 00:00:53,159 --> 00:00:55,600 Speaker 3: the industry I think to turn the page here and 22 00:00:55,720 --> 00:00:57,920 Speaker 3: say that, yeah, some of the rules are clear around 23 00:00:57,920 --> 00:01:02,560 Speaker 3: Amlkyico fact that the issues that finance really had, you know, 24 00:01:02,600 --> 00:01:04,839 Speaker 3: stepped over the line on, but some. 25 00:01:04,880 --> 00:01:06,240 Speaker 4: Areas of the law are not yet clear. 26 00:01:06,240 --> 00:01:08,240 Speaker 3: We need to go get that regulatory clarity to make 27 00:01:08,280 --> 00:01:10,400 Speaker 3: sure that the future of this industry is built here 28 00:01:10,440 --> 00:01:13,920 Speaker 3: in America, not on offshore unregulated exchanges. And so that's 29 00:01:13,959 --> 00:01:15,479 Speaker 3: what we need to go do next, and I think 30 00:01:15,480 --> 00:01:17,440 Speaker 3: it'll prevent this kind of activity in the future. 31 00:01:17,600 --> 00:01:20,920 Speaker 2: Well, listen, even with this crackdown that you're seeing, there 32 00:01:20,920 --> 00:01:26,240 Speaker 2: were some really scathing allegations in the DJ's crackdown, sanctions, violations, 33 00:01:26,600 --> 00:01:28,360 Speaker 2: illegal trafficking of drugs. 34 00:01:28,640 --> 00:01:31,440 Speaker 1: You know, how do you know that this is it? 35 00:01:31,880 --> 00:01:33,680 Speaker 2: How do you know that there are not more bad 36 00:01:33,720 --> 00:01:37,080 Speaker 2: actors out there that would continue to stay in crypto. 37 00:01:38,800 --> 00:01:40,959 Speaker 3: Well, I can tell you the companies that I really 38 00:01:41,000 --> 00:01:43,600 Speaker 3: engage with, at least especially the ones here built in 39 00:01:43,600 --> 00:01:46,319 Speaker 3: the United States, they don't get the big headlines because 40 00:01:46,440 --> 00:01:49,800 Speaker 3: it's not salacious. They haven't you know, rocketed up because 41 00:01:50,240 --> 00:01:52,440 Speaker 3: you know they're not following the rules. But there are 42 00:01:52,600 --> 00:01:57,440 Speaker 3: dozens of really well intentioned and well funded and compliant 43 00:01:57,520 --> 00:01:59,760 Speaker 3: US based crypto companies that are building this industry. I mean, 44 00:01:59,760 --> 00:02:02,400 Speaker 3: you have to remember that fifty two million Americans have 45 00:02:02,560 --> 00:02:06,280 Speaker 3: used crypto. Now about four hundred million people globally. And 46 00:02:06,360 --> 00:02:09,359 Speaker 3: so while there is there are bad actors who try 47 00:02:09,360 --> 00:02:11,760 Speaker 3: to use crypto, the best data we have is that 48 00:02:11,760 --> 00:02:14,240 Speaker 3: that's less than one percent of the activity is for 49 00:02:14,280 --> 00:02:16,840 Speaker 3: illicit purposes. By the way, the US dollar cash is 50 00:02:16,840 --> 00:02:18,679 Speaker 3: about four percent elicted activity. 51 00:02:18,800 --> 00:02:21,560 Speaker 4: So crypto is really not uniquely crime ridden. 52 00:02:21,600 --> 00:02:24,960 Speaker 3: And the centralized actors in crypto, they need to follow 53 00:02:25,000 --> 00:02:28,600 Speaker 3: these rules around transaction monitoring and KYCAML just that like 54 00:02:28,639 --> 00:02:30,800 Speaker 3: coinbase has been doing for over a decade now to 55 00:02:30,880 --> 00:02:34,040 Speaker 3: make sure bad actors don't take advantage of these systems. 56 00:02:34,120 --> 00:02:36,360 Speaker 2: Listen, Ryan, you mentioned an opportunity to step in a 57 00:02:36,360 --> 00:02:39,160 Speaker 2: little more. It begs the question, have you been seeing 58 00:02:39,160 --> 00:02:42,760 Speaker 2: any inflows into coinbase from finance dot com. 59 00:02:43,200 --> 00:02:44,919 Speaker 4: Well, I think it's a little too early to say 60 00:02:44,960 --> 00:02:45,440 Speaker 4: that today. 61 00:02:45,680 --> 00:02:47,680 Speaker 3: The news has just come out in the last hour 62 00:02:47,880 --> 00:02:49,799 Speaker 3: or so, but I can tell you that over the 63 00:02:49,880 --> 00:02:53,200 Speaker 3: last year coinbase has certainly been making investments in international 64 00:02:53,200 --> 00:02:57,040 Speaker 3: expansion and launching our derivatives products to make sure that 65 00:02:57,200 --> 00:02:59,639 Speaker 3: we were ready for something like this to happen. I mean, 66 00:03:00,360 --> 00:03:03,280 Speaker 3: this has been a widely anticipated event. It's been public 67 00:03:03,280 --> 00:03:05,880 Speaker 3: news for quite some time, but there's been a DJ investigation. 68 00:03:06,040 --> 00:03:08,120 Speaker 3: So I don't think it came as a surprise to 69 00:03:08,120 --> 00:03:10,400 Speaker 3: anybody in the space. And I do think there's an 70 00:03:10,400 --> 00:03:12,880 Speaker 3: opportunity here for coinbase to step in and do. 71 00:03:12,840 --> 00:03:15,079 Speaker 2: You see a chance to buy assets, whether they're part 72 00:03:15,120 --> 00:03:16,560 Speaker 2: of finance or otherwise. 73 00:03:18,320 --> 00:03:20,720 Speaker 3: That's not our focus for right now. You know, I 74 00:03:20,720 --> 00:03:23,799 Speaker 3: think there's we wouldn't We wouldn't really behind them for 75 00:03:23,840 --> 00:03:25,960 Speaker 3: the technology or anything like that, because we have that 76 00:03:26,040 --> 00:03:28,720 Speaker 3: already on our side. And you know, I think what 77 00:03:28,760 --> 00:03:31,919 Speaker 3: we've seen today with this criminal plead is that there's 78 00:03:31,960 --> 00:03:34,920 Speaker 3: probably concerns over there about just the culture and everything. 79 00:03:34,639 --> 00:03:35,600 Speaker 4: That needs to be reformed. 80 00:03:36,400 --> 00:03:38,240 Speaker 3: We're not really looking at any of these assets from 81 00:03:38,240 --> 00:03:39,800 Speaker 3: an m and A point of view. We just want 82 00:03:39,840 --> 00:03:43,120 Speaker 3: to keep building our own products and services and doing 83 00:03:43,120 --> 00:03:44,720 Speaker 3: what we've been doing on that front. So I'm looking 84 00:03:44,760 --> 00:03:46,520 Speaker 3: forward to it actually as an opportunity to kind of 85 00:03:46,560 --> 00:03:48,880 Speaker 3: turn the page as an industry and get back to 86 00:03:48,920 --> 00:03:52,360 Speaker 3: building now that we've had a couple of these bad actors, 87 00:03:52,880 --> 00:03:54,280 Speaker 3: you know, brought to justice. 88 00:03:54,400 --> 00:03:56,920 Speaker 2: Listen as Worth also talking about the suit you're also 89 00:03:56,960 --> 00:03:59,800 Speaker 2: facing from the SEC. We know you've been fighting this suit, 90 00:03:59,840 --> 00:04:02,840 Speaker 2: this idea that the SEC has charged you for operating 91 00:04:02,880 --> 00:04:07,640 Speaker 2: as an unregistered securities exchange broker and clearing agency. What 92 00:04:07,720 --> 00:04:10,880 Speaker 2: has the tone been like with the sec since this 93 00:04:11,040 --> 00:04:13,440 Speaker 2: suit was filed and since you started fighting back. 94 00:04:15,120 --> 00:04:16,840 Speaker 3: Yeah, well, I think it's important for people to just 95 00:04:16,920 --> 00:04:19,320 Speaker 3: keep in mind that these are apples and oranges, right, 96 00:04:19,400 --> 00:04:22,599 Speaker 3: and you know, our case is a civil case over 97 00:04:22,640 --> 00:04:25,280 Speaker 3: some technical matters about what is a commodity, what is 98 00:04:25,320 --> 00:04:28,320 Speaker 3: a security, and we're essentially availing ourselves of the court 99 00:04:28,360 --> 00:04:30,680 Speaker 3: to go get that clarity in the form of case 100 00:04:30,760 --> 00:04:33,560 Speaker 3: law since it was not provided by the regulator, and 101 00:04:33,640 --> 00:04:35,800 Speaker 3: so kind of regardless of the outcome of that case, 102 00:04:35,839 --> 00:04:37,839 Speaker 3: we'll finally start to get some clarity for the industry 103 00:04:37,839 --> 00:04:41,360 Speaker 3: on where the line is there. The Binance case here 104 00:04:41,480 --> 00:04:45,560 Speaker 3: was a criminal proceeding very different and the dollar amounts 105 00:04:45,560 --> 00:04:50,240 Speaker 3: are pretty eye watering. So with that, you know, as 106 00:04:50,279 --> 00:04:53,880 Speaker 3: a backdrop, I think that coinbase really has an opportunity 107 00:04:53,960 --> 00:04:58,080 Speaker 3: to help foster this regulatory clarity going forward. As I mentioned, 108 00:04:58,240 --> 00:05:00,839 Speaker 3: I think the aml kyco fact rules have been clear 109 00:05:00,880 --> 00:05:03,920 Speaker 3: for a long time. All centralized financial services, including in crypto, 110 00:05:04,000 --> 00:05:06,440 Speaker 3: need to follow those rules. But what's not yet clear 111 00:05:06,760 --> 00:05:09,560 Speaker 3: is the market structure about how we're going to have 112 00:05:09,600 --> 00:05:12,880 Speaker 3: crypto commodities secure and crypto securities. You know, what is 113 00:05:12,920 --> 00:05:14,839 Speaker 3: the process for a crypto security to actually go in 114 00:05:14,839 --> 00:05:15,359 Speaker 3: and register? 115 00:05:15,839 --> 00:05:17,520 Speaker 4: What sort of entity might it be traded on? 116 00:05:17,640 --> 00:05:21,480 Speaker 3: These questions are still unfortunately left unanswered, and so we're 117 00:05:21,520 --> 00:05:23,640 Speaker 3: either going to have to get clarity from the courts, 118 00:05:24,320 --> 00:05:26,680 Speaker 3: maybe from Congress, and there's a couple of bills going 119 00:05:26,680 --> 00:05:29,120 Speaker 3: through Congress right now that have passed with biased partisan 120 00:05:29,160 --> 00:05:32,760 Speaker 3: support in the committees, or or something else will have 121 00:05:32,839 --> 00:05:34,600 Speaker 3: to happen. But I do believe that the US will 122 00:05:34,600 --> 00:05:37,080 Speaker 3: eventually get this right. We're committed to the US and 123 00:05:37,400 --> 00:05:38,520 Speaker 3: helping ensuring that happen. 124 00:05:38,600 --> 00:05:44,080 Speaker 2: Ryan, Why would anybody buy crypto after such severe abuses 125 00:05:44,160 --> 00:05:47,840 Speaker 2: we're seeing at other exchanges and the use of funds for. 126 00:05:47,880 --> 00:05:50,000 Speaker 1: A legal activity? What? How? 127 00:05:50,120 --> 00:05:52,200 Speaker 2: How does the industry after the fall of FTX and 128 00:05:52,240 --> 00:05:54,960 Speaker 2: after this massive fine in finance, how does the how 129 00:05:55,000 --> 00:05:57,680 Speaker 2: do Americans get you know, confidence in crypto? 130 00:05:57,839 --> 00:05:58,159 Speaker 1: Again? 131 00:05:59,800 --> 00:06:01,920 Speaker 3: We have to remember that, you know, the prices in 132 00:06:01,960 --> 00:06:04,560 Speaker 3: crypto are up two hundred percent year to date, and 133 00:06:04,680 --> 00:06:07,360 Speaker 3: about fifty two million Americans have used crypto, about. 134 00:06:07,120 --> 00:06:08,240 Speaker 4: One you know, one in five. 135 00:06:08,360 --> 00:06:11,120 Speaker 3: So there's a lot of reasons people are excited about 136 00:06:11,120 --> 00:06:14,000 Speaker 3: this technology. Of course, we see headlines periodically with bad 137 00:06:14,000 --> 00:06:16,080 Speaker 3: actors trying to use it, but as I mentioned before, 138 00:06:16,520 --> 00:06:18,640 Speaker 3: the best data we have is that that's less than 139 00:06:18,680 --> 00:06:21,520 Speaker 3: one percent of the activity in crypto. So people are 140 00:06:21,560 --> 00:06:23,960 Speaker 3: interested in crypto for all kinds of reasons. They're interested 141 00:06:24,000 --> 00:06:27,479 Speaker 3: in updating the financial system, which is slow and expensive, 142 00:06:27,480 --> 00:06:28,080 Speaker 3: and it's. 143 00:06:28,040 --> 00:06:29,600 Speaker 4: Not everyone has equal access to it. 144 00:06:29,920 --> 00:06:33,159 Speaker 3: They're interested in it from a technology that can update 145 00:06:33,160 --> 00:06:35,920 Speaker 3: that financial system and provide economic freedom all over the world. 146 00:06:36,600 --> 00:06:39,080 Speaker 3: They're interested in it because of Web three and how 147 00:06:39,200 --> 00:06:42,159 Speaker 3: creative people and artists can have more direct relationships with 148 00:06:42,200 --> 00:06:42,760 Speaker 3: their fans. 149 00:06:43,120 --> 00:06:44,640 Speaker 4: They're interested in it as a way to. 150 00:06:44,640 --> 00:06:47,440 Speaker 3: Kind of, you know, get out of the system of 151 00:06:47,480 --> 00:06:50,720 Speaker 3: big tech companies and actually control their own identity online. 152 00:06:51,080 --> 00:06:52,800 Speaker 4: So people are looking at it a lot like. 153 00:06:52,800 --> 00:06:54,719 Speaker 3: They looked at the early days of the Internet back 154 00:06:54,760 --> 00:06:56,640 Speaker 3: in the early two thousands, and there, you know, there 155 00:06:56,680 --> 00:06:59,000 Speaker 3: were scams on the Internet, there was bad actors, there 156 00:06:59,040 --> 00:07:02,039 Speaker 3: was bubbles, but of course the Internet was just fundamentally 157 00:07:02,040 --> 00:07:05,880 Speaker 3: a technology that you know, democratized access to information. Crypto's 158 00:07:05,880 --> 00:07:08,720 Speaker 3: democratizing access to value of making it more efficient how 159 00:07:08,720 --> 00:07:09,720 Speaker 3: it moves all over the world. 160 00:07:09,840 --> 00:07:10,960 Speaker 4: Right, that's very exciting. 161 00:07:11,080 --> 00:07:14,080 Speaker 2: Speaking of the democratization, you know, you guys have started 162 00:07:14,480 --> 00:07:17,000 Speaker 2: a super pack around the idea of more money going 163 00:07:17,040 --> 00:07:18,520 Speaker 2: into the elections. 164 00:07:18,200 --> 00:07:19,600 Speaker 1: Supporting the crypto industry. 165 00:07:20,080 --> 00:07:22,160 Speaker 2: How much of your own personal funds are you willing 166 00:07:22,200 --> 00:07:24,640 Speaker 2: to put towards the pack and are you selling coinbase 167 00:07:24,680 --> 00:07:25,640 Speaker 2: shares to fund it? 168 00:07:27,400 --> 00:07:27,600 Speaker 4: Yeah? 169 00:07:27,640 --> 00:07:30,240 Speaker 3: Well, I do think it's very important for crypto companies 170 00:07:30,320 --> 00:07:33,640 Speaker 3: and the venture community and everybody really really all of 171 00:07:33,640 --> 00:07:35,960 Speaker 3: the users of crypto, the customers of crypto, the fifty 172 00:07:35,960 --> 00:07:38,360 Speaker 3: two million Americans to get involved in this at this 173 00:07:38,440 --> 00:07:42,280 Speaker 3: point because unfortunately, you know, while crypto is a very 174 00:07:42,280 --> 00:07:46,840 Speaker 3: bipartisan issue in DC and we actually see the broad 175 00:07:47,160 --> 00:07:49,120 Speaker 3: sentiment is very reasonable, it's just saying we need to 176 00:07:49,120 --> 00:07:51,720 Speaker 3: put out some clear rules. Unfortunately, there are a small 177 00:07:51,720 --> 00:07:54,000 Speaker 3: group of people who are trying to curtail the industry 178 00:07:54,080 --> 00:07:56,440 Speaker 3: or push it back, and so I think that we 179 00:07:56,480 --> 00:07:58,840 Speaker 3: all need to kind of come together to donate to 180 00:07:58,920 --> 00:08:02,360 Speaker 3: super packs like the one that I did. And you know, 181 00:08:02,440 --> 00:08:04,800 Speaker 3: I'm not necessarily selling coinbase shares to do that, but 182 00:08:05,280 --> 00:08:07,320 Speaker 3: I personally donated to it. I think a number of 183 00:08:07,320 --> 00:08:10,080 Speaker 3: other crypto companies are going to do that, and most importantly, 184 00:08:10,120 --> 00:08:11,680 Speaker 3: we need to see the America. 185 00:08:11,680 --> 00:08:13,000 Speaker 4: Fifty two million Americans do that. 186 00:08:13,400 --> 00:08:15,640 Speaker 3: There's actually a website that has come together stand with 187 00:08:15,720 --> 00:08:19,000 Speaker 3: Crypto dot org, which is helping organize this effort, and 188 00:08:19,040 --> 00:08:21,600 Speaker 3: we've got over one hundred thousand people now in the US. 189 00:08:21,680 --> 00:08:23,880 Speaker 3: We've raised their hand and said, I really want to 190 00:08:23,880 --> 00:08:24,920 Speaker 3: seek clear rules here. 191 00:08:25,040 --> 00:08:26,240 Speaker 2: Before I let you go here, I want to ask 192 00:08:26,280 --> 00:08:29,360 Speaker 2: one more question. JP Morgan today really spread some doubt 193 00:08:29,640 --> 00:08:33,560 Speaker 2: about your ability to kind of maintain such rigor in 194 00:08:33,600 --> 00:08:38,400 Speaker 2: your earnings with the advent of an ETF tied to bitcoin. 195 00:08:38,760 --> 00:08:40,000 Speaker 1: How do you respond to that? 196 00:08:41,679 --> 00:08:44,040 Speaker 3: Oh, well, I think the ETF applications are really great 197 00:08:44,080 --> 00:08:47,520 Speaker 3: for crypto and for Coinbase. It's great for crypto because 198 00:08:47,520 --> 00:08:50,160 Speaker 3: it's going to bring in many new, large pools of 199 00:08:50,160 --> 00:08:54,920 Speaker 3: capital that traditionally haven't been able to directly participate in crypto. 200 00:08:55,440 --> 00:08:57,439 Speaker 3: And then it's good for Coinbase because we've been named 201 00:08:57,480 --> 00:09:01,439 Speaker 3: as the custodian on almost all of these ETF applications 202 00:09:01,880 --> 00:09:03,840 Speaker 3: and so we'll participate in the value stream there. 203 00:09:03,880 --> 00:09:05,520 Speaker 4: So we're very positive on the ETFs.