WEBVTT - Coinbase CEO Weighs In and Twilio Launches CustomerAI 0:00:01.440 --> 0:00:05.080 From the heart where innovation, money and power Collie in 0:00:05.200 --> 0:00:09.719 Silicon Valley and beyond. This is Bloomberg Technology with Caroline 0:00:09.800 --> 0:00:11.080 Hyde and Ed Ludlow. 0:00:25.840 --> 0:00:28.840 Welcome to Bloomberg Technology. I'm Ed Ludlow in San Francisco. 0:00:28.880 --> 0:00:32.200 We're standing by for a special conversation with the coinbas 0:00:32.280 --> 0:00:33.320 CEO Brian Armstrong. 0:00:33.560 --> 0:00:34.160 Have a listen. 0:00:37.960 --> 0:00:40.239 Interesting you did and how far do you think you're 0:00:40.240 --> 0:00:41.160 going to have to go here? 0:00:42.000 --> 0:00:45.400 Yeah, well, this was not unexpected. You know, we've been 0:00:45.400 --> 0:00:47.960 in discussion with the SEC for a long long time, 0:00:48.440 --> 0:00:49.400 even going back. 0:00:49.240 --> 0:00:50.760 To before we were a public company. 0:00:50.800 --> 0:00:53.400 We started sharing with them how we operate our business, 0:00:53.400 --> 0:00:55.840 how we list assets on the platform, how we think 0:00:55.840 --> 0:00:59.800 about our staking program, and through a large number of 0:01:00.000 --> 0:01:01.680 allogs back and forth, they allowed us to become a 0:01:01.720 --> 0:01:05.000 public company. You know, we had many discussions with them 0:01:05.000 --> 0:01:07.840 in the last year when their tones started to change 0:01:08.120 --> 0:01:09.880 and they started to come to us with more questions 0:01:09.920 --> 0:01:10.640 about the business. 0:01:11.160 --> 0:01:12.399 So we were very forthcoming. 0:01:12.400 --> 0:01:14.680 We met with them probably thirty times over the last year, 0:01:15.640 --> 0:01:17.800 and we started to kind of ask them for feedback 0:01:17.840 --> 0:01:19.440 and we said, you know, we would like there to 0:01:19.440 --> 0:01:22.759 be a robust market in the US to trade crypto securities. 0:01:23.360 --> 0:01:26.960 Of the thousand plus assets we've reviewed today, we've rejected 0:01:27.040 --> 0:01:29.800 ninety percent of them, the ones we we believer our commodities. 0:01:30.280 --> 0:01:32.840 What feedback do you have for this for us? How 0:01:32.880 --> 0:01:34.880 can we come in and register? How can we work together? 0:01:35.400 --> 0:01:38.280 And unfortunately we were met with silence. We really got 0:01:38.280 --> 0:01:41.960 no feedback in those thirty meetings. The first meeting where 0:01:41.959 --> 0:01:44.600 they were scheduled to come and give us feedback, they 0:01:44.640 --> 0:01:46.560 canceled it a few days before that, and then we 0:01:46.560 --> 0:01:48.200 got a wells notice a few days after that. 0:01:48.720 --> 0:01:50.080 So it's really unfortunate. 0:01:50.080 --> 0:01:52.840 We work with regulators all over the world, other regulators 0:01:52.880 --> 0:01:56.559 here in the US. I think I'm a reasonable person 0:01:56.600 --> 0:02:00.680 to get along with. But unfortunately the SEC and you know, 0:02:00.760 --> 0:02:04.320 this chair has taken a regulation by enforcement approach instead 0:02:04.320 --> 0:02:06.280 of creating a clear rule book in the US that 0:02:06.320 --> 0:02:08.520 can allow this industry to be built in a safe 0:02:08.520 --> 0:02:09.200 and trusted way. 0:02:09.639 --> 0:02:12.799 You know, when was the last time you personally met 0:02:12.800 --> 0:02:14.520 with Gary Gensler and what did you say? 0:02:15.360 --> 0:02:15.560 Right? 0:02:15.639 --> 0:02:18.560 So, when he first came in as the chair, I 0:02:19.040 --> 0:02:21.079 flew out to New York. I reached out to him. 0:02:21.080 --> 0:02:23.000 Our team has reached out. I tried to make an 0:02:23.000 --> 0:02:25.440 effort to connect with him in person, because that's what 0:02:25.480 --> 0:02:27.640 I try to do whenever a new regulator kind of 0:02:27.639 --> 0:02:30.800 comes in. Unfortunately, we were not able to connect at 0:02:30.840 --> 0:02:32.760 that time. I'm not sure why we couldn't get on 0:02:32.760 --> 0:02:36.079 his calendar, and we followed up a few times in 0:02:36.160 --> 0:02:39.080 the year after that. We eventually got a meeting that 0:02:39.200 --> 0:02:41.720 was virtual. You know, it may have been COVID related 0:02:41.800 --> 0:02:43.680 or something like that, but we were able to get 0:02:43.960 --> 0:02:47.480 a virtual meeting. But unfortunately, it was frankly like a 0:02:47.480 --> 0:02:50.440 pretty icy reception. I would say, you know, we sort 0:02:50.440 --> 0:02:52.520 of came in hat in hand and said, hey, Chair Gensler, 0:02:52.560 --> 0:02:55.760 you know you've asked people to come in and register respectfully, 0:02:55.760 --> 0:02:57.560 we're here to register. What would you like us to do? 0:02:57.639 --> 0:03:00.840 What process would you like us to go through? And 0:03:00.960 --> 0:03:03.880 his response was, you know, talk to your lawyer. I'm 0:03:03.919 --> 0:03:06.640 not here to advise you. And that was kind of 0:03:06.639 --> 0:03:07.880 how the conversation started. 0:03:08.320 --> 0:03:10.800 And so and at that point, you know, we realized 0:03:12.080 --> 0:03:12.799 there was a gap. 0:03:13.080 --> 0:03:15.600 You know, we felt like this was an important technology 0:03:15.600 --> 0:03:18.080 that we felt needed to be built in a safe 0:03:18.120 --> 0:03:20.320 and trusted way here in the US, in a way 0:03:20.360 --> 0:03:23.360 that consumers were protected, and I don't know what his 0:03:23.520 --> 0:03:26.760 motivations or you know, his personal views were, but it 0:03:26.800 --> 0:03:28.800 didn't seem like he was on the same page. 0:03:29.480 --> 0:03:31.960 So what does this mean for you if the government 0:03:32.200 --> 0:03:37.119 cracks down so hard on crypto on coinbase SEC? Does 0:03:37.160 --> 0:03:38.720 coinbase exist in five years? 0:03:39.960 --> 0:03:40.880 Absolutely? We do. 0:03:41.000 --> 0:03:42.800 And I want to make an important point, which is 0:03:42.800 --> 0:03:46.840 that the SEC chair may have a certain point of view, 0:03:46.880 --> 0:03:49.440 but that's not representative of the whole US government. 0:03:50.320 --> 0:03:51.640 In fact, quite the opposite. 0:03:51.680 --> 0:03:54.400 I would say the SEC chair is as a bit 0:03:54.440 --> 0:03:56.640 of a really an outlier here kind of in the 0:03:56.720 --> 0:03:59.320 US government. So when I meet with members of Congress, 0:03:59.320 --> 0:04:01.840 I think the broad consensus probably amongst eighty percent of 0:04:01.840 --> 0:04:04.480 people I talked to both sides of the aisle, it's 0:04:04.480 --> 0:04:06.640 a pretty it's a pretty reasonable view they have, which is, 0:04:06.760 --> 0:04:09.000 we don't know exactly what this technology is going to become, 0:04:09.040 --> 0:04:11.440 but we're seeing every other major financial hub in the 0:04:11.480 --> 0:04:14.839 world move towards clear legislation. We need to make sure 0:04:14.880 --> 0:04:16.760 that this innovation happens in the US in a way 0:04:16.760 --> 0:04:20.000 that again, let's just protect consumers. Let's apply some basic 0:04:20.000 --> 0:04:24.039 good ideas around AMLKYC and audited financial statements and make 0:04:24.080 --> 0:04:27.400 sure there's no wash trading let's create a clear market 0:04:27.440 --> 0:04:32.200 structure where you know, businesses can understand which is CFTC, SEC, 0:04:32.240 --> 0:04:34.599 who should they talk to about which types of assets? 0:04:35.000 --> 0:04:38.880 So Congress is recognizing this, and the White House is 0:04:38.920 --> 0:04:39.160 as well. 0:04:39.279 --> 0:04:40.200 Actually, the Biden. 0:04:39.960 --> 0:04:42.640 Administration put out in an executive order about a year 0:04:42.640 --> 0:04:45.320 ago kind of asking all the branches of government to 0:04:45.400 --> 0:04:48.000 sort of say, get your act together on crypto. We 0:04:48.000 --> 0:04:50.520 don't there's some risks, but there's some real important opportunities 0:04:50.520 --> 0:04:51.360 with this technology. 0:04:51.640 --> 0:04:53.360 Let's create a clear regulatory framework. 0:04:53.880 --> 0:04:56.240 Will you fight this all the way to the Supreme Court? 0:04:56.760 --> 0:04:58.680 Do you think you'll have to? And do you have 0:04:58.720 --> 0:05:00.400 the financial resources to do that? 0:05:01.400 --> 0:05:05.080 Yeah? So, even if this takes some time, you know, 0:05:05.279 --> 0:05:05.800 that's okay. 0:05:06.520 --> 0:05:09.320 We've so in Q one we were adjusted a bit 0:05:09.360 --> 0:05:11.479 of positive as a company, even in the depth of 0:05:11.520 --> 0:05:13.440 this crypto bear market, if you want to call it that. 0:05:13.760 --> 0:05:15.680 We have over five billion dollars a balance on the 0:05:15.680 --> 0:05:19.480 balance sheet, right So, and frankly, even though that this 0:05:19.560 --> 0:05:22.000 complaint came in from the SEC, it's really business as 0:05:22.080 --> 0:05:22.800 usual today. 0:05:22.920 --> 0:05:23.080 Right. 0:05:23.720 --> 0:05:25.760 We're continuing to trade the assets that we have on 0:05:25.760 --> 0:05:26.480 our platform. 0:05:27.400 --> 0:05:29.480 You know, we trade over two hundred assets on our platform. 0:05:29.520 --> 0:05:32.039 The sec complaint mentioned just thirteen of them, so a 0:05:32.040 --> 0:05:35.400 relatively small percentage of the assets we trade. We also 0:05:35.440 --> 0:05:38.800 have business overseas in other countries. We arrive a lot 0:05:38.800 --> 0:05:41.360 of revenue from other sources that are not related to 0:05:41.360 --> 0:05:45.640 trading feed So you know, coinbase is well capitalized and 0:05:46.080 --> 0:05:48.040 adjusted a bit a positive and Q one, I think 0:05:48.040 --> 0:05:50.359 we're going to be fine going to court. In fact, 0:05:51.279 --> 0:05:53.599 it's a relatively small portion of our company that you know, 0:05:53.600 --> 0:05:55.840 we have a great legal team, policy team, et cetera 0:05:55.960 --> 0:05:58.560 that's working on this. And what I really want, you know, 0:05:58.680 --> 0:06:00.880 ninety ninety five percent of the company to be focused 0:06:00.920 --> 0:06:03.839 on is just building great products for our customers and 0:06:03.880 --> 0:06:05.120 making sure we don't lose. 0:06:04.960 --> 0:06:05.400 Sight of that. 0:06:05.520 --> 0:06:07.920 And so this is a very serious matter that I'm 0:06:07.920 --> 0:06:10.440 going to work on with a couple of our executives, 0:06:11.160 --> 0:06:13.080 But really the vast majority of the company needs to 0:06:13.160 --> 0:06:15.520 keep building because that's how this technology is going to 0:06:15.600 --> 0:06:17.480 ultimately benefit a billion people hopefully. 0:06:18.040 --> 0:06:22.480 How long does the regulatory overhang last? The reality is 0:06:22.520 --> 0:06:24.840 this could take many, many months. And do you think 0:06:24.920 --> 0:06:27.040 that your investors might lose some faith or even your 0:06:27.040 --> 0:06:28.480 customers while you go through this? 0:06:29.440 --> 0:06:29.680 Yeah? 0:06:29.720 --> 0:06:32.520 Well, I mean, look This is not a new concept, right, 0:06:32.960 --> 0:06:35.800 There's been lots of discussion. The SEC has had rhetoric 0:06:35.920 --> 0:06:39.159 around this for several years that I think has influenced 0:06:39.200 --> 0:06:44.000 the market. And so the investors in coinbase are comfortable 0:06:44.000 --> 0:06:46.880 with that if they're because it's all public, right and 0:06:46.920 --> 0:06:50.400 it's not like some secret thing that's being revealed, and 0:06:50.480 --> 0:06:53.279 I think they're taking a long term view that Coinbase 0:06:53.360 --> 0:06:54.360 is a very different company. 0:06:54.360 --> 0:06:56.440 We're kind of an end of one, right. 0:06:56.520 --> 0:06:59.320 We're really the only company that was based here in 0:06:59.360 --> 0:07:02.320 the US that went public that has audited financial statements 0:07:02.360 --> 0:07:05.640 that's taken a compliance first approach. You know, even in 0:07:05.680 --> 0:07:08.120 this recent SEC complaint by the way that came out yesterday, 0:07:08.640 --> 0:07:10.600 it was unfortunate they sort of did it back to 0:07:10.640 --> 0:07:13.240 back with another complaint that went out there, and you 0:07:13.280 --> 0:07:15.120 know that may have been intentional to try to conflate 0:07:15.160 --> 0:07:17.440 the two, but I think people are smarter than that 0:07:17.480 --> 0:07:20.800 and they recognize that. You know, this complaint against Coinbase, 0:07:20.800 --> 0:07:25.320 there were no allegations, no allegations of misappropriation of customer funds, 0:07:25.320 --> 0:07:28.400 There was no allegations of wash trading. You know, myself 0:07:28.400 --> 0:07:32.200 and the executive team were not named personally. It's really 0:07:32.400 --> 0:07:35.760 debating this more technical legal question of are some of 0:07:35.800 --> 0:07:39.160 these assets commodities or are they securities? And I think 0:07:39.200 --> 0:07:41.040 that's something the court will have to decide to sort 0:07:41.040 --> 0:07:43.520 of get some legal press, some case law out there 0:07:43.560 --> 0:07:46.320 which will ultimately benefit us, because that's what we've been 0:07:46.360 --> 0:07:48.840 asking the sec for for a long time, is how 0:07:48.840 --> 0:07:50.960 do we get more clarity? So if we need to 0:07:50.960 --> 0:07:53.160 go to the courts to do it, it's not our 0:07:53.160 --> 0:07:55.520 first choice. We'd rather the regular had just published a 0:07:55.520 --> 0:07:57.440 clear rule book. But if they're not going to do that, 0:07:57.520 --> 0:08:00.440 the courts are there in the US to available ourselves 0:08:00.440 --> 0:08:02.640 of So part. 0:08:02.480 --> 0:08:06.960 Of this was about securities being registered or not in 0:08:07.040 --> 0:08:09.800 terms of how they're listed on your exchange, But part 0:08:09.840 --> 0:08:13.360 of this was about staking also, So staking obviously is 0:08:13.360 --> 0:08:16.120 becoming a more important part of the crypto ecosystem. Do 0:08:16.160 --> 0:08:19.160 you plan, based on how the regulators are treating staking 0:08:19.520 --> 0:08:21.320 to wind down your staking service? 0:08:22.080 --> 0:08:25.120 No, we're not going to wind down our staking service. Again, 0:08:25.200 --> 0:08:28.560 as these court cases play out, it's really business as usual. 0:08:28.760 --> 0:08:30.120 We're going to continue to operate that. 0:08:30.960 --> 0:08:33.360 You know, snake staking only represents about three percent of 0:08:33.360 --> 0:08:35.760 our net revenue, but it is a it's a very 0:08:35.760 --> 0:08:39.520 important function in the crypto community, and it serves an 0:08:39.520 --> 0:08:42.199 important part of these decentralized blockchains. And I guess I 0:08:42.200 --> 0:08:45.320 should mention also that you know, coin basis staking product 0:08:45.440 --> 0:08:48.920 is architected and built in a way to be compliant, 0:08:48.960 --> 0:08:51.040 and we've actually think it's materially different than some of 0:08:51.080 --> 0:08:53.440 the other ones out there which have been called staking. 0:08:54.440 --> 0:08:56.240 And so yeah, we're going to continue to operate our 0:08:56.280 --> 0:08:57.120 staking business. 0:08:57.320 --> 0:09:01.000 So if users wanted their funds back in the staking 0:09:01.080 --> 0:09:04.280 service at this point in time, does coinbase have the 0:09:04.320 --> 0:09:07.640 ability to service that at scale in case that there 0:09:07.760 --> 0:09:10.120 is a larger run on the staking business. 0:09:10.760 --> 0:09:14.199 Yeah, So you know, staking is really something that's a 0:09:14.240 --> 0:09:18.240 decentralized part part of these decentralized protocols. So Coinbase is 0:09:18.240 --> 0:09:20.880 really just you know, it's a pass through mechanism. We're 0:09:20.920 --> 0:09:23.720 helping people access these decentralized protocols. So some of the 0:09:23.720 --> 0:09:26.240 decentralized protocols have, for instance, like a lock up period 0:09:26.440 --> 0:09:28.679 of you know, some number of days when you initiate 0:09:28.679 --> 0:09:31.080 the withdrawal request, and so we're just making that kind 0:09:31.080 --> 0:09:35.320 of information available to the customer. But it's yeah, you know, 0:09:35.440 --> 0:09:37.679 all the the funds are there back to one to 0:09:37.720 --> 0:09:39.640 one that when you're when you're staking something, it's being 0:09:39.640 --> 0:09:43.200 pledged into these these decentralized protocols, and we actually don't 0:09:43.200 --> 0:09:45.160 even have the ability to you know, move it somewhere 0:09:45.160 --> 0:09:48.560 else at that point. It's we're just giving people access 0:09:48.559 --> 0:09:49.840 to these decentralized protocols. 0:09:49.920 --> 0:09:53.120 So the business face withdrawals, does that have a material 0:09:53.160 --> 0:09:56.640 impact on Ethereum's price? And how does cliinbase prepare for 0:09:56.679 --> 0:10:01.079 something like that? What do you mean is there kind 0:10:01.080 --> 0:10:03.320 of a broader run that you have to be prepared for. 0:10:03.960 --> 0:10:07.560 Oh well, okay, so in our business, we're we're not 0:10:07.600 --> 0:10:10.880 a bank, right, we don't do fraction reserve, and so 0:10:11.200 --> 0:10:13.360 there's not really this concept of a run, right, all 0:10:13.400 --> 0:10:15.240 the all the funds are there back to one to one, 0:10:15.280 --> 0:10:16.920 and you don't have to take our word for it. 0:10:16.960 --> 0:10:19.400 You know, are as a public company, we have auditors 0:10:19.400 --> 0:10:21.840 Deloitte in this case, who's gone in and verified all 0:10:21.840 --> 0:10:23.679 of that. You can kind of confirm it in our 0:10:23.720 --> 0:10:27.320 financial statement. So you know, if people want to withdraw funds, 0:10:27.320 --> 0:10:28.920 they one hundred percent of it is there. 0:10:28.920 --> 0:10:30.280 There's no such thing as a run. 0:10:30.120 --> 0:10:34.280 Really, So how do you answer the question of you know, 0:10:34.360 --> 0:10:38.120 on one hand, there is sec that is, you know, 0:10:38.240 --> 0:10:40.880 causing a big overhand in terms of both you guys 0:10:40.920 --> 0:10:43.920 and the industry. On the other hand, just financially, you know, 0:10:44.040 --> 0:10:46.920 rates are higher in the United States, people are more 0:10:46.920 --> 0:10:48.839 inclined to keep their money in a bank. Why should 0:10:48.840 --> 0:10:49.640 they keep their money with you? 0:10:50.600 --> 0:10:53.640 Well, what's interesting in crypto there's been the evolution of 0:10:53.640 --> 0:10:57.480 something called stable coins, right, and so we're actually in 0:10:57.640 --> 0:11:00.000 consort with another company in Circle in the space. We've 0:11:00.160 --> 0:11:03.079 we've created a USD coin, which is the second largest 0:11:03.120 --> 0:11:06.440 stable coin out there. And as you've mentioned, interest rates 0:11:06.440 --> 0:11:08.720 in this environment, that's been both a good source of 0:11:08.720 --> 0:11:11.480 revenue for US, but it's also something that we've passed 0:11:11.480 --> 0:11:15.440 along to customers, so customers can actually earn rewards on 0:11:15.760 --> 0:11:19.880 USDC and get access to some of these higher interestrate environments. 0:11:20.200 --> 0:11:23.080 Brought a question not just about coinbase, but about the industry. 0:11:23.200 --> 0:11:27.600 As you know, more regulatory enforcement actions come to the forefront, 0:11:27.920 --> 0:11:29.760 how much of an overhang do you think that will 0:11:29.760 --> 0:11:30.800 have on crypto pricing. 0:11:32.080 --> 0:11:33.240 You know, it's hard for me to say. 0:11:33.520 --> 0:11:36.480 It was actually kind of surprising yesterday with this complaint 0:11:36.480 --> 0:11:39.400 that came out, crypto was up, which I would not 0:11:39.440 --> 0:11:40.040 have expected. 0:11:40.320 --> 0:11:41.400 So I don't know what to make of that. 0:11:41.440 --> 0:11:43.839 I don't know if it means that people knew something 0:11:43.880 --> 0:11:46.520 was coming but they expected it to be worse than 0:11:46.600 --> 0:11:51.920 it actually was, or if they just felt that, you know, 0:11:52.360 --> 0:11:54.400 they're they're still a believer in it or something. But 0:11:54.600 --> 0:11:56.920 you know, I don't try to predict what's going to 0:11:56.960 --> 0:12:00.000 happen in these markets. You know, we don't operate ahead 0:12:00.080 --> 0:12:02.640 fund or anything like that. We just want to provide 0:12:02.640 --> 0:12:04.959 a good service to our customers around the exchange and 0:12:05.000 --> 0:12:05.800 all the products we offer. 0:12:05.960 --> 0:12:07.760 Before I let you go, I want to ask about 0:12:07.920 --> 0:12:10.640 not crypto, I want to ask about artificial intelligence. Even 0:12:11.040 --> 0:12:14.199 talking about it all day as a crypto entrepreneur, how do. 0:12:14.200 --> 0:12:15.760 You see AI? 0:12:16.320 --> 0:12:18.680 Do you see it as a competing factor in terms 0:12:18.720 --> 0:12:22.200 of dollars going towards technology? Do you see dovetailing with 0:12:22.280 --> 0:12:24.400 your industry at all? 0:12:24.480 --> 0:12:24.720 Well? 0:12:24.800 --> 0:12:28.439 AI is certainly one of those couple really important technology 0:12:28.440 --> 0:12:30.760 trends that the US needs to get right, along with crypto, 0:12:31.320 --> 0:12:33.240 and I think we're seeing a similar question start to 0:12:33.240 --> 0:12:35.240 happen in Congress along with crypto is like, hey, how 0:12:35.240 --> 0:12:36.840 should this be regulated so it can be done in 0:12:36.880 --> 0:12:40.200 a safe, trusted way? I do think there's a couple 0:12:40.240 --> 0:12:44.640 interesting intersections between AI and crypto. One of them is that, 0:12:45.280 --> 0:12:48.080 you know, in the world of AI, there you know, 0:12:48.160 --> 0:12:50.319 it's so easy to mass generate things, whether it's a 0:12:50.360 --> 0:12:54.520 news article or images, and so the provenance of those 0:12:54.600 --> 0:12:56.679 and the authenticity of it can be a little bit 0:12:57.000 --> 0:12:57.920 hard to figure out. 0:12:57.960 --> 0:12:59.040 And in a world of crypto. 0:13:00.080 --> 0:13:01.480 One of the great things about crypto, you know, with 0:13:01.600 --> 0:13:04.800 NFTs and whatnot, you can actually have a digital signature 0:13:04.800 --> 0:13:08.600 that proves, you know, this was issued by Bloomberg or 0:13:09.360 --> 0:13:12.360 by Brian Armstrong or whoever. So I think it could 0:13:12.360 --> 0:13:15.040 be useful to track the provenance of creative works, whether 0:13:15.080 --> 0:13:18.760 that's text, audio, video, et cetera. The other thing that 0:13:18.840 --> 0:13:21.360 might be interesting is that a lot of these these 0:13:21.720 --> 0:13:24.840 you know, bots or autonomous agents in the AI sphere, 0:13:25.200 --> 0:13:27.080 they're going to need to go get things done in 0:13:27.120 --> 0:13:29.120 the world. Right people are already using them to sort 0:13:29.160 --> 0:13:31.640 of say, hey, order my groceries, or you know, maybe 0:13:31.640 --> 0:13:34.360 build this website and spin up this server. And so 0:13:34.559 --> 0:13:37.920 they're going to need financial money. They're gonna need money 0:13:37.920 --> 0:13:40.880 to go do things in the world, these these AI agents, 0:13:40.920 --> 0:13:42.960 and so I think that actually in the future you're 0:13:43.000 --> 0:13:45.840 probably gonna see a lot of cryptotransaction happening between AI 0:13:45.920 --> 0:13:50.480 agents or AI and various businesses around the world because 0:13:50.600 --> 0:13:52.920 crypto is kind of the native money of the Internet. 0:13:52.920 --> 0:13:53.280 The Internet. 0:13:53.360 --> 0:13:56.000 Internet is global, it's decentralized, every country, everybody in the 0:13:56.040 --> 0:13:59.000 world can participate in it, and so it wouldn't really 0:13:59.000 --> 0:14:01.480 make sense to use you know, the dollar or the 0:14:01.480 --> 0:14:04.320 euro in a truly global context. If you you know 0:14:04.320 --> 0:14:06.120 what you want to be country agnostic. So I think 0:14:06.120 --> 0:14:07.400 AI will use crypto more. 0:14:07.760 --> 0:14:11.360 How much are you actually working on that future? 0:14:13.520 --> 0:14:17.520 So our we're not trying to build something that is 0:14:18.040 --> 0:14:20.760 allowing bots to like transact in crypto at the moment, 0:14:20.760 --> 0:14:22.920 but what we are doing is we're building good infrastructure, 0:14:23.000 --> 0:14:25.160 you know, picks and shovels, if you will. So with 0:14:25.280 --> 0:14:29.200 coinbased cloud, for instance, we're making our APIs around how 0:14:29.240 --> 0:14:32.360 crypto is stored and transacted and commerce happens, and we're 0:14:32.400 --> 0:14:34.600 just exposing those kind of like Amazon Web services, but 0:14:34.680 --> 0:14:36.880 to any business that wants to integrate it. So I 0:14:36.920 --> 0:14:39.600 suspect more businesses will integrate that over time, and some 0:14:39.640 --> 0:14:42.800 of those may use AI. We're also using AI in 0:14:42.840 --> 0:14:43.560 our business in a. 0:14:43.480 --> 0:14:44.160 Few other ways. 0:14:44.200 --> 0:14:45.920 I mean, we use it a lot for fraud prevention, 0:14:47.000 --> 0:14:50.240 you know, and unfortunately we get people signing up putting 0:14:50.280 --> 0:14:52.440 in stolen credentials and things like that, and so we've 0:14:52.480 --> 0:14:55.640 developed a lot of really good machine learning to detect that, 0:14:56.360 --> 0:14:59.080 and you know, we're occasionally we're testling it in a 0:14:59.080 --> 0:15:02.080 few other areas too, just like around Actually, like you know, 0:15:02.120 --> 0:15:05.760 our design teams they'll sometimes look at mid Journey or 0:15:05.840 --> 0:15:09.000 Dolly and sort of generate an interface using ANI at least, like, 0:15:09.080 --> 0:15:11.280 you know, show me five ideas for what an interface 0:15:11.400 --> 0:15:15.160 might look like to do remittances in crypto or for 0:15:15.320 --> 0:15:18.360 content creators to have a direct relationship with their audience, 0:15:18.400 --> 0:15:19.960 and what with the interface for that. And AI is 0:15:20.000 --> 0:15:22.720 just like a great assistant, you know, it doesn't. I 0:15:22.720 --> 0:15:25.600 don't think AI really is taking people's jobs. It's taking 0:15:25.720 --> 0:15:29.960 tasks off their plates, largely to make their jobs more efficient. 0:15:30.280 --> 0:15:33.520 And so having like a you know, a research assistant 0:15:33.600 --> 0:15:35.800 or someone like that, you know, a tutor or a 0:15:35.840 --> 0:15:38.200 mentor or a therapist whatever, everybody can have one of 0:15:38.200 --> 0:15:40.600 these paired with them, and I think it'll just make 0:15:40.680 --> 0:15:41.680 humans more productive. 0:15:42.280 --> 0:15:43.840 Ran We're out of time, but thank you so much 0:15:43.840 --> 0:15:45.120 for your time. As for taking our questions. 0:15:45.240 --> 0:15:52.000 Thank you you are watching Bloomberg Technology. That was a 0:15:52.000 --> 0:15:56.320 conversation with the coinbased CEO, Brian Armstrong at Bloomberg Invests 0:15:56.360 --> 0:15:58.720 in New York. Let's bring in Bloomberg Katie Greifeld out 0:15:58.720 --> 0:16:00.560 in New York. It's kind of app some of the 0:16:00.600 --> 0:16:02.840 headlines coming out of that conversation. 0:16:02.960 --> 0:16:04.480 Katie, What were the key takeaways for you? 0:16:04.840 --> 0:16:07.520 It was really interesting to hear a little bit more color, 0:16:07.560 --> 0:16:11.600 a little bit more insight on what Coinbase's sort of communication, 0:16:11.680 --> 0:16:14.640 what the relationship with the SEC has been. It was 0:16:14.680 --> 0:16:17.400 really interesting to hear from Armstrong saying that basically the 0:16:17.440 --> 0:16:21.240 SEC's tone has changed in the past year, that Coinbase 0:16:21.520 --> 0:16:24.640 went to the agency multiple times, was met with silence, 0:16:25.040 --> 0:16:27.840 and as a result, here we are today and we 0:16:27.920 --> 0:16:29.920 knew that they've been critical of. 0:16:30.160 --> 0:16:31.240 The SEC's approach. 0:16:31.360 --> 0:16:34.840 Obviously, we got that statement yesterday basically criticizing what they 0:16:34.880 --> 0:16:39.840 call this reliance on enforcement, regulation by enforcement, and we 0:16:39.960 --> 0:16:42.280 heard more of that today from Armstrong himself. 0:16:43.120 --> 0:16:44.640 As a reminder to our audience. 0:16:44.720 --> 0:16:50.280 The SEC sued both Coinbase and binances US operations this week, 0:16:51.360 --> 0:16:54.359 essentially accusing them of peddling on registered securities. 0:16:54.360 --> 0:16:55.600 What was interesting, Katie. 0:16:55.920 --> 0:17:01.480 On stage, Brian Armstrong referenced that other suit away from 0:17:01.520 --> 0:17:05.000 Coinbase without naming it, and said that to his mind, 0:17:05.119 --> 0:17:08.880 perhaps the sec was trying to conflate the two and 0:17:09.240 --> 0:17:10.240 what did you make of that? 0:17:10.680 --> 0:17:13.400 Yeah, he really tried to draw that line between these 0:17:13.440 --> 0:17:15.760 two cases. Obviously, we've been talking about them in the 0:17:15.760 --> 0:17:18.160 same bread since I think it was what less than 0:17:18.160 --> 0:17:21.680 twenty four hours that separated those lawsuits. But Armstrong said 0:17:21.720 --> 0:17:25.400 that in Coinbase's case, there were no allegations of misappropriation 0:17:25.440 --> 0:17:28.920 of funds, no wash trading, There weren't any executives named. 0:17:28.960 --> 0:17:31.480 And I think that's important because when you think about Binance, 0:17:31.520 --> 0:17:34.880 it's a lawsuit against Binance and also against Chang ben 0:17:34.960 --> 0:17:38.439 Jao of course, the CEO of Binance. That's not the 0:17:38.520 --> 0:17:42.119 case when it comes to coinbas. As Armstrong described it, 0:17:42.160 --> 0:17:45.480 this is really about sort of a legal sort of 0:17:45.680 --> 0:17:50.160 definition of securities. That's the common thread between these two lawsuits, 0:17:50.200 --> 0:17:53.639 basically what is a security? But in terms of the 0:17:53.680 --> 0:17:55.480 Binance allegations, they go. 0:17:55.520 --> 0:17:59.879 Much deeper, some more headlines crossing the Bloomberg terminal in 0:18:00.200 --> 0:18:03.600 wide ranging conversation, really Bloomberg, Nali bassecle also asking about 0:18:03.600 --> 0:18:07.359 AI and Armstrong saying that Coinbase is using AI in 0:18:07.359 --> 0:18:08.960 the field of fraud prevention. 0:18:09.080 --> 0:18:09.840 For example. 0:18:10.520 --> 0:18:13.040 He put a lot of emphasis on this idea that 0:18:13.160 --> 0:18:17.280 Coinbase is a public company and therefore it is audited, 0:18:17.760 --> 0:18:20.639 and so the SEC if it wanted to, could go 0:18:20.680 --> 0:18:22.199 and look under the hood, so to speak. 0:18:23.000 --> 0:18:25.960 That's the interesting thing I mean with Binance. Of course, 0:18:26.000 --> 0:18:28.360 Binance doesn't have headquarters. 0:18:28.359 --> 0:18:29.040 It's a much. 0:18:28.840 --> 0:18:32.600 Different case than Coinbase, which is a US public company. 0:18:33.240 --> 0:18:36.679 It listed in twenty twenty one, again a public company, 0:18:36.720 --> 0:18:39.560