1 00:00:00,080 --> 00:00:03,480 Speaker 1: The Bloomberg invest Conference had some of the most influential 2 00:00:03,560 --> 00:00:07,240 Speaker 1: leaders in finance gathering in New York for conversations on 3 00:00:07,280 --> 00:00:12,360 Speaker 1: a wide range of topics, including artificial intelligence, cryptocurrencies, and 4 00:00:12,440 --> 00:00:16,599 Speaker 1: global trends in wealth management. At the conference, Bloomberg Shanali 5 00:00:16,720 --> 00:00:20,799 Speaker 1: Bassk spoke with Brian Armstrong, co founder, chairman and CEO 6 00:00:20,880 --> 00:00:24,760 Speaker 1: of Coinbase, starting with the latest on how regulators are 7 00:00:24,880 --> 00:00:26,600 Speaker 1: cracking down on crypto. 8 00:00:27,160 --> 00:00:30,680 Speaker 2: Just yesterday, Coinbase and the SEC have been kind of 9 00:00:30,680 --> 00:00:35,280 Speaker 2: in this month, maybe years long dispute here over defining 10 00:00:35,320 --> 00:00:38,000 Speaker 2: a lot of the crypto environment, and they brought a 11 00:00:38,040 --> 00:00:41,560 Speaker 2: certain amount of charges against you, to which your chief 12 00:00:41,640 --> 00:00:43,920 Speaker 2: legal officer yesterday told me that you guys are willing 13 00:00:43,920 --> 00:00:47,920 Speaker 2: to fight this pretty significantly. When you saw those charges 14 00:00:47,920 --> 00:00:49,880 Speaker 2: brought against you, what is the first thing you did 15 00:00:49,960 --> 00:00:51,560 Speaker 2: and how far do you think you're going to have 16 00:00:51,600 --> 00:00:52,120 Speaker 2: to go here? 17 00:00:52,600 --> 00:00:56,000 Speaker 3: Yeah, well this was not unexpected. You know, we've been 18 00:00:56,040 --> 00:00:58,600 Speaker 3: in discussion with the SEC for a long long time, 19 00:00:59,080 --> 00:01:00,040 Speaker 3: even going back to. 20 00:01:00,080 --> 00:01:01,400 Speaker 4: Before we were a public company. 21 00:01:01,440 --> 00:01:04,000 Speaker 3: We started sharing with them how we operate our business, 22 00:01:04,040 --> 00:01:06,440 Speaker 3: how we list assets on the platform, how we think 23 00:01:06,480 --> 00:01:10,480 Speaker 3: about our staking program, and through a large number of 24 00:01:10,520 --> 00:01:12,319 Speaker 3: dialogues back and forth. They allowed us to become a 25 00:01:12,319 --> 00:01:15,600 Speaker 3: public company. You know, we had many discussions with them 26 00:01:15,600 --> 00:01:18,440 Speaker 3: in the last year when their tone started to change 27 00:01:18,760 --> 00:01:20,520 Speaker 3: and they started to come to us with more questions 28 00:01:20,520 --> 00:01:21,280 Speaker 3: about the business. 29 00:01:21,800 --> 00:01:23,000 Speaker 4: So we were very forthcoming. 30 00:01:23,000 --> 00:01:25,280 Speaker 3: We met with them probably thirty times over the last year, 31 00:01:26,280 --> 00:01:28,440 Speaker 3: and we started to kind of ask them for feedback, 32 00:01:28,440 --> 00:01:30,039 Speaker 3: and we said, you know, we would like there to 33 00:01:30,080 --> 00:01:33,360 Speaker 3: be a robust market in the US to trade crypto securities. 34 00:01:33,959 --> 00:01:37,560 Speaker 3: Of the thousand plus assets we've reviewed today, we've rejected 35 00:01:37,640 --> 00:01:40,400 Speaker 3: ninety percent of them, the ones we believe our commodities. 36 00:01:40,880 --> 00:01:43,479 Speaker 3: What feedback do you have for this for us? How 37 00:01:43,480 --> 00:01:45,480 Speaker 3: can we come in and register? How can we work together? 38 00:01:46,000 --> 00:01:48,880 Speaker 3: And unfortunately we were met with silence. We really got 39 00:01:48,920 --> 00:01:52,560 Speaker 3: no feedback in those thirty meetings. The first meeting where 40 00:01:52,560 --> 00:01:55,240 Speaker 3: they were scheduled to come and give us feedback, they 41 00:01:55,280 --> 00:01:57,120 Speaker 3: canceled it a few days before that, and then we 42 00:01:57,200 --> 00:01:58,680 Speaker 3: got a wells notice a few days after that. 43 00:01:59,320 --> 00:02:00,640 Speaker 4: So really unfortunate. 44 00:02:00,720 --> 00:02:03,480 Speaker 3: We work with regulators all over the world, other regulators 45 00:02:03,480 --> 00:02:07,200 Speaker 3: here in the US. I think I'm a reasonable person 46 00:02:07,200 --> 00:02:11,320 Speaker 3: to get along with, but unfortunately the sec under you know, 47 00:02:11,360 --> 00:02:14,919 Speaker 3: this chair has taken a regulation by enforcement approach instead 48 00:02:14,960 --> 00:02:16,920 Speaker 3: of creating a clear rule book in the US that 49 00:02:16,919 --> 00:02:19,160 Speaker 3: can allow this industry to be built in a safe 50 00:02:19,160 --> 00:02:19,839 Speaker 3: and trusted way. 51 00:02:20,280 --> 00:02:23,399 Speaker 2: You know, when was the last time you personally met 52 00:02:23,400 --> 00:02:25,160 Speaker 2: with Gary Gensler and what did you say? 53 00:02:26,000 --> 00:02:26,200 Speaker 4: Right? 54 00:02:26,240 --> 00:02:29,200 Speaker 3: So, when he first came in as the chair, I 55 00:02:29,680 --> 00:02:31,680 Speaker 3: flew out to New York. I reached out to him. 56 00:02:31,680 --> 00:02:33,600 Speaker 3: Our team has reached out. I tried to make an 57 00:02:33,639 --> 00:02:36,080 Speaker 3: effort to connect with him in person, because that's what 58 00:02:36,120 --> 00:02:38,240 Speaker 3: I try to do whenever a new regulator kind of 59 00:02:38,280 --> 00:02:41,440 Speaker 3: comes in. Unfortunately, we were not able to connect at 60 00:02:41,440 --> 00:02:43,360 Speaker 3: that time. I'm not sure why we couldn't get on 61 00:02:43,400 --> 00:02:46,679 Speaker 3: his calendar, and we followed up a few times in 62 00:02:46,760 --> 00:02:48,000 Speaker 3: the year after that. 63 00:02:48,360 --> 00:02:50,400 Speaker 4: We eventually got a meeting that was virtual. 64 00:02:51,040 --> 00:02:52,760 Speaker 3: You know, it may have been COVID related or something 65 00:02:52,800 --> 00:02:55,440 Speaker 3: like that, but we were able to get a virtual meeting. 66 00:02:56,200 --> 00:02:59,240 Speaker 3: But unfortunately, it was frankly like a pretty icy reception. 67 00:02:59,320 --> 00:03:01,400 Speaker 3: I would say, you know, we sort of came in 68 00:03:01,440 --> 00:03:03,360 Speaker 3: hat in hand and said, hey, Chair Gensler. You know 69 00:03:04,120 --> 00:03:06,560 Speaker 3: you've asked people to come in and register respectfully, we're 70 00:03:06,560 --> 00:03:07,160 Speaker 3: here to register. 71 00:03:07,240 --> 00:03:09,839 Speaker 4: What would you like us to do? What process would 72 00:03:09,840 --> 00:03:10,760 Speaker 4: you like us to go through? 73 00:03:11,320 --> 00:03:14,280 Speaker 3: And his response was, you know, talk to your lawyer. 74 00:03:14,320 --> 00:03:17,160 Speaker 3: I'm not here to advise you. And that was kind 75 00:03:17,160 --> 00:03:20,520 Speaker 3: of how the conversation started. And so and at that point, 76 00:03:20,600 --> 00:03:23,880 Speaker 3: you know, we realized there was a gap. You know, 77 00:03:23,919 --> 00:03:26,400 Speaker 3: we felt like this was an important technology that we 78 00:03:26,440 --> 00:03:29,160 Speaker 3: felt needed to be built in a safe and trusted 79 00:03:29,160 --> 00:03:31,520 Speaker 3: way here in the US, in a way that consumers 80 00:03:31,520 --> 00:03:35,120 Speaker 3: were protected. And I don't know what his motivations or 81 00:03:35,520 --> 00:03:37,920 Speaker 3: you know, his personal views were, but it didn't seem 82 00:03:37,960 --> 00:03:39,440 Speaker 3: like he was on the same page. 83 00:03:40,080 --> 00:03:42,600 Speaker 2: So what does this mean for you? If the government 84 00:03:42,800 --> 00:03:47,720 Speaker 2: cracks down so hard on crypto, on coinbase SEC? Does 85 00:03:47,760 --> 00:03:49,360 Speaker 2: coinbase exist in five years? 86 00:03:50,600 --> 00:03:51,480 Speaker 4: Absolutely we do. 87 00:03:51,600 --> 00:03:53,360 Speaker 3: And I want to make an important point, which is 88 00:03:53,440 --> 00:03:57,480 Speaker 3: that the SEC chair may have a certain point of view, 89 00:03:57,480 --> 00:04:00,000 Speaker 3: but that's not representative of the whole US government. 90 00:04:00,920 --> 00:04:02,240 Speaker 4: In fact, quite the opposite. 91 00:04:02,280 --> 00:04:05,120 Speaker 3: I would say the SEC chair as a bit of 92 00:04:05,120 --> 00:04:07,960 Speaker 3: a really an outlier here kind of in the US government. 93 00:04:08,040 --> 00:04:10,240 Speaker 3: So when I meet with members of Congress, I think 94 00:04:10,280 --> 00:04:12,960 Speaker 3: the broad consensus probably amongst eighty percent of people. 95 00:04:12,720 --> 00:04:15,160 Speaker 4: I talked to both sides of the aisle. It's a 96 00:04:15,160 --> 00:04:16,840 Speaker 4: pretty it's a pretty reasonable view they. 97 00:04:16,720 --> 00:04:18,960 Speaker 3: Have, which is, we don't know exactly what this technology 98 00:04:19,000 --> 00:04:21,280 Speaker 3: is going to become, but we're seeing every other major 99 00:04:21,320 --> 00:04:24,839 Speaker 3: financial hub in the world move towards clear legislation. We 100 00:04:24,880 --> 00:04:26,720 Speaker 3: need to make sure that this innovation happens in the 101 00:04:26,800 --> 00:04:29,240 Speaker 3: US in a way that again, let's just protect consumers. 102 00:04:29,279 --> 00:04:32,800 Speaker 3: Let's apply some basic good ideas around a mlky C 103 00:04:33,080 --> 00:04:35,720 Speaker 3: and audited financial statements and make sure there's no wah trading. 104 00:04:36,720 --> 00:04:40,400 Speaker 3: Let's create a clear market structure where you know, businesses 105 00:04:40,440 --> 00:04:43,920 Speaker 3: can understand which is CFTC SEC, who should they talk 106 00:04:43,960 --> 00:04:47,400 Speaker 3: to about which types of assets? So Congress is recognizing 107 00:04:47,400 --> 00:04:50,240 Speaker 3: this and the White House is as well. Actually, the 108 00:04:50,279 --> 00:04:53,000 Speaker 3: Biden administration put out in an executive order about a 109 00:04:53,120 --> 00:04:55,800 Speaker 3: year ago kind of asking all the branches of government 110 00:04:55,880 --> 00:04:58,120 Speaker 3: to sort of say, get your act together on crypto. 111 00:04:58,520 --> 00:05:00,520 Speaker 3: We don't there's some risks, but there's some real important 112 00:05:00,560 --> 00:05:01,960 Speaker 3: opportunities with this technology. 113 00:05:02,279 --> 00:05:03,960 Speaker 4: Let's create a clear regulatory framework. 114 00:05:04,520 --> 00:05:06,920 Speaker 2: Will you fight this all the way to the Supreme Court? 115 00:05:07,360 --> 00:05:09,279 Speaker 2: Do you think you'll have to? And do you have 116 00:05:09,320 --> 00:05:11,000 Speaker 2: the financial resources to do that? 117 00:05:12,040 --> 00:05:15,720 Speaker 4: Yeah? So even if this takes some time, you know, 118 00:05:15,880 --> 00:05:16,400 Speaker 4: that's okay. 119 00:05:17,120 --> 00:05:19,920 Speaker 3: We've so in Q one, we were adjusted a bit 120 00:05:19,960 --> 00:05:22,120 Speaker 3: of positive. As a company, even in the depth of 121 00:05:22,120 --> 00:05:24,039 Speaker 3: this crypto bear market, if you want to call it that, 122 00:05:24,400 --> 00:05:26,279 Speaker 3: we have over five billion dollars a balance on the 123 00:05:26,320 --> 00:05:30,080 Speaker 3: balance sheet, right, So, and frankly, even though that this 124 00:05:30,160 --> 00:05:31,200 Speaker 3: complaint came in from. 125 00:05:31,040 --> 00:05:33,720 Speaker 4: The SEC, it's really business as usual today, right. 126 00:05:34,320 --> 00:05:36,359 Speaker 3: We're continuing to trade the assets that we have on 127 00:05:36,400 --> 00:05:37,120 Speaker 3: our platform. 128 00:05:38,000 --> 00:05:40,120 Speaker 4: You know, we trade over two hundred assets on our platform. 129 00:05:40,160 --> 00:05:43,120 Speaker 3: The SEC complaint mentioned just thirteen of them, so relatively 130 00:05:43,120 --> 00:05:46,200 Speaker 3: small percentage of the assets we trade. We also have 131 00:05:46,320 --> 00:05:49,520 Speaker 3: business overseas in other countries. We arrive a lot of 132 00:05:49,920 --> 00:05:52,599 Speaker 3: revenue from other sources that are not related to trading fees. 133 00:05:53,240 --> 00:05:57,200 Speaker 3: So you know, coinbase is well capitalized and adjusted a 134 00:05:57,240 --> 00:05:58,960 Speaker 3: bit a positive and Q one, I think we're going 135 00:05:59,000 --> 00:06:02,600 Speaker 3: to be fine going to In fact, it's a relatively 136 00:06:02,640 --> 00:06:04,400 Speaker 3: small portion of our company that you know, we have 137 00:06:04,440 --> 00:06:07,000 Speaker 3: a great legal team, policy team, et cetera that's working 138 00:06:07,080 --> 00:06:09,599 Speaker 3: on this. And what I really want, you know, ninety 139 00:06:09,680 --> 00:06:11,599 Speaker 3: ninety five percent of the company to be focused on 140 00:06:11,880 --> 00:06:14,760 Speaker 3: is just building great products for our customers and making 141 00:06:14,760 --> 00:06:17,240 Speaker 3: sure we don't lose sight of that. And so this 142 00:06:17,279 --> 00:06:19,080 Speaker 3: is a very serious matter that I'm going to work 143 00:06:19,120 --> 00:06:22,320 Speaker 3: on with a couple of our executives, but really the 144 00:06:22,400 --> 00:06:24,640 Speaker 3: vast majority of the company needs to keep building because 145 00:06:24,640 --> 00:06:27,120 Speaker 3: that's how this technology is going to ultimately benefit a 146 00:06:27,160 --> 00:06:28,120 Speaker 3: billion people hopefully. 147 00:06:28,640 --> 00:06:33,120 Speaker 2: How long does the regulatory overhang last? The reality is 148 00:06:33,160 --> 00:06:35,520 Speaker 2: this could take many, many months. And do you think 149 00:06:35,520 --> 00:06:37,640 Speaker 2: that your investors might lose some faith or even your 150 00:06:37,680 --> 00:06:39,080 Speaker 2: customers while you go through this? 151 00:06:40,080 --> 00:06:40,320 Speaker 4: Yeah? 152 00:06:40,360 --> 00:06:43,120 Speaker 3: Well, I mean, look, this is not a new concept, right, 153 00:06:43,560 --> 00:06:46,480 Speaker 3: There's been lots of discussion. The SEC has had rhetoric 154 00:06:46,520 --> 00:06:49,760 Speaker 3: around this for several years that I think has influenced 155 00:06:49,800 --> 00:06:54,640 Speaker 3: the market. And so the investors in coinbase are comfortable 156 00:06:54,640 --> 00:06:57,360 Speaker 3: with that if they're because there it's all public, right, 157 00:06:57,400 --> 00:06:59,760 Speaker 3: and it's not like some secret thing that's being revealed, 158 00:07:00,880 --> 00:07:03,000 Speaker 3: And I think they're taking a long term view that 159 00:07:03,440 --> 00:07:04,960 Speaker 3: Coinbase is a very different company. 160 00:07:04,960 --> 00:07:07,080 Speaker 4: We're kind of in an end of one right. 161 00:07:07,120 --> 00:07:09,960 Speaker 3: We're really the only company that was based here in 162 00:07:09,960 --> 00:07:12,920 Speaker 3: the US that went public that has audited financial statements 163 00:07:12,960 --> 00:07:14,840 Speaker 3: that's taken a compliance first approach. 164 00:07:15,680 --> 00:07:17,480 Speaker 4: You know, even in this recent SEC. 165 00:07:17,160 --> 00:07:19,440 Speaker 3: Complaint by the way that came out yesterday, it was 166 00:07:19,520 --> 00:07:21,640 Speaker 3: unfortunate they sort of did it back to back with 167 00:07:22,000 --> 00:07:24,080 Speaker 3: another complaint that went out there, and you know, that 168 00:07:24,120 --> 00:07:26,000 Speaker 3: may have been intentional to try to conflate the two, 169 00:07:26,120 --> 00:07:28,320 Speaker 3: but I think people are smarter than that and they 170 00:07:28,360 --> 00:07:31,680 Speaker 3: recognize that. You know, this complaint against coinbase, there were 171 00:07:31,680 --> 00:07:36,040 Speaker 3: no allegations, no allegations of misappropriation of customer funds, there 172 00:07:36,120 --> 00:07:39,080 Speaker 3: was no allegations of wash trading. You know, myself and 173 00:07:39,120 --> 00:07:43,440 Speaker 3: the executive team were not named personally. It's really debating 174 00:07:43,480 --> 00:07:46,560 Speaker 3: this more technical legal question of are some of these 175 00:07:46,560 --> 00:07:49,960 Speaker 3: assets commodities or are they securities? And I think that's 176 00:07:49,960 --> 00:07:51,760 Speaker 3: something the court will have to decide to sort of 177 00:07:51,760 --> 00:07:54,360 Speaker 3: get some legal press, some case law out there, which 178 00:07:54,400 --> 00:07:57,200 Speaker 3: will ultimately benefit us, because that's what we've been asking 179 00:07:57,240 --> 00:07:59,520 Speaker 3: the sec for for a long time, is how do 180 00:07:59,560 --> 00:08:01,640 Speaker 3: we get more clarity? So if we need to go 181 00:08:01,680 --> 00:08:04,320 Speaker 3: to the courts to do it, it's not our first choice. 182 00:08:04,320 --> 00:08:06,880 Speaker 3: We'd rather the regular had just published a clear rule book. 183 00:08:06,920 --> 00:08:08,600 Speaker 3: But if they're not going to do that, the courts 184 00:08:08,640 --> 00:08:11,240 Speaker 3: are there in the US to avail ourselves up. 185 00:08:12,040 --> 00:08:16,520 Speaker 2: So part of this was about securities being registered or 186 00:08:16,520 --> 00:08:20,040 Speaker 2: not in terms of how they're listed on your exchange. 187 00:08:20,120 --> 00:08:23,480 Speaker 2: But part of this was about staking also, So staking 188 00:08:23,520 --> 00:08:26,440 Speaker 2: obviously is becoming a more important part of the crypto ecosystem. 189 00:08:26,640 --> 00:08:29,239 Speaker 2: Do you plan, based on how the regulators are treating 190 00:08:29,320 --> 00:08:31,920 Speaker 2: staking to wind down your staking service. 191 00:08:32,679 --> 00:08:34,880 Speaker 3: No, we're not going to wind down our staking service. 192 00:08:35,480 --> 00:08:38,640 Speaker 3: Again as these court cases play out. It's really business 193 00:08:38,679 --> 00:08:42,480 Speaker 3: as usual. We're going to continue to operate that Staking 194 00:08:42,520 --> 00:08:44,840 Speaker 3: only represents about three percent of our net revenue, but 195 00:08:44,960 --> 00:08:47,599 Speaker 3: it is a it's a very important function in the 196 00:08:47,640 --> 00:08:50,880 Speaker 3: crypto community, and it serves an important part of these 197 00:08:50,880 --> 00:08:53,720 Speaker 3: decentralized blockchains. And I guess I should mention also that 198 00:08:54,440 --> 00:08:57,720 Speaker 3: you know, coin basis staking product is architected and built 199 00:08:58,400 --> 00:09:00,640 Speaker 3: in a way to be compliant and actually think it's 200 00:09:00,640 --> 00:09:02,640 Speaker 3: materially different than some of the other ones out there 201 00:09:02,679 --> 00:09:05,920 Speaker 3: which have been called staking. And so yeah, we're going 202 00:09:05,960 --> 00:09:07,720 Speaker 3: to continue to operate our staking business. 203 00:09:07,960 --> 00:09:11,600 Speaker 2: So if users wanted their funds back in the staking 204 00:09:11,679 --> 00:09:14,880 Speaker 2: service at this point in time, does coinbase have the 205 00:09:14,920 --> 00:09:18,280 Speaker 2: ability to service that at scale in case that there 206 00:09:18,400 --> 00:09:20,760 Speaker 2: is a larger run on the staking business. 207 00:09:21,360 --> 00:09:24,800 Speaker 3: Yeah, So, you know, staking is really something that's a 208 00:09:24,840 --> 00:09:28,720 Speaker 3: decentralized part of part of these decentralized protocols. So Coinbase 209 00:09:28,800 --> 00:09:31,360 Speaker 3: is really just you know, it's a pass through mechanism. 210 00:09:31,360 --> 00:09:34,240 Speaker 3: We're helping people access these decentralized protocols. So some of 211 00:09:34,240 --> 00:09:36,440 Speaker 3: the decentralized protocols have, for instance, like a lock up 212 00:09:36,520 --> 00:09:38,880 Speaker 3: period of you know, some number of days when you 213 00:09:38,880 --> 00:09:41,480 Speaker 3: initiate the withdrawal request, and so we're just making that 214 00:09:41,559 --> 00:09:43,440 Speaker 3: kind of information available to the customer. 215 00:09:44,600 --> 00:09:46,360 Speaker 4: But it's yeah, you know, all. 216 00:09:46,280 --> 00:09:48,520 Speaker 3: The the funds are there back to one to one 217 00:09:48,520 --> 00:09:50,640 Speaker 3: that when you're when you're staking something, it's being pledged 218 00:09:50,679 --> 00:09:53,959 Speaker 3: into these these decentralized protocols and we actually don't even 219 00:09:53,960 --> 00:09:55,959 Speaker 3: have the ability to you know, move it somewhere else. 220 00:09:56,000 --> 00:09:59,199 Speaker 3: At that point, it's we're just giving people access to 221 00:09:59,240 --> 00:10:00,360 Speaker 3: these centralized calls. 222 00:10:00,520 --> 00:10:03,720 Speaker 2: So the business face withdrawals, Does that have a material 223 00:10:03,760 --> 00:10:07,280 Speaker 2: impact on Ethereum's price? And how does claimities prepare for 224 00:10:07,320 --> 00:10:11,719 Speaker 2: something like that? What do you mean is there kind 225 00:10:11,720 --> 00:10:13,920 Speaker 2: of a broader run that you have to be prepared for? 226 00:10:14,600 --> 00:10:18,160 Speaker 3: Oh well, okay, so in our business, we're we're not 227 00:10:18,240 --> 00:10:21,559 Speaker 3: a bank, right, we don't do fraction reserve, and so 228 00:10:21,840 --> 00:10:23,960 Speaker 3: there's not really this concept of a run. Right, all 229 00:10:24,040 --> 00:10:25,880 Speaker 3: the all the funds are there back one to one, 230 00:10:25,920 --> 00:10:27,520 Speaker 3: and you don't have to take our word for it. 231 00:10:27,559 --> 00:10:30,000 Speaker 3: You know, are as a public company, we have auditors 232 00:10:30,040 --> 00:10:32,440 Speaker 3: Deloitte in this case, who's gone in and verified all 233 00:10:32,480 --> 00:10:34,319 Speaker 3: of that. You can kind of confirm it in our 234 00:10:34,320 --> 00:10:37,880 Speaker 3: financial statement. So you know, if people want to withdraw funds, 235 00:10:37,920 --> 00:10:39,199 Speaker 3: the one hundred. 236 00:10:38,920 --> 00:10:40,360 Speaker 4: Percent of it is there. There's no such thing as 237 00:10:40,360 --> 00:10:40,880 Speaker 4: a run. 238 00:10:40,760 --> 00:10:44,880 Speaker 2: Really, So how do you answer the question of you know, 239 00:10:45,000 --> 00:10:48,720 Speaker 2: on one hand, there is sec that is, you know, 240 00:10:48,840 --> 00:10:51,440 Speaker 2: causing a big overhand in terms of both you guys 241 00:10:51,520 --> 00:10:54,520 Speaker 2: and the industry. On the other hand, just financially, you know, 242 00:10:54,640 --> 00:10:57,480 Speaker 2: rates are higher in the United States, people are more 243 00:10:57,520 --> 00:10:59,439 Speaker 2: inclined to keep their money in a bank. Why should 244 00:10:59,400 --> 00:11:00,000 Speaker 2: they keep their money? 245 00:11:00,000 --> 00:11:00,280 Speaker 4: Thank you? 246 00:11:01,240 --> 00:11:04,240 Speaker 3: Well, what's interesting in crypto, there's been the evolution of 247 00:11:04,240 --> 00:11:08,080 Speaker 3: something called stable coins, right, and so we're actually in 248 00:11:08,240 --> 00:11:10,960 Speaker 3: consort with another company and Circle in the space, we've 249 00:11:11,000 --> 00:11:14,000 Speaker 3: created a USD coin, which is the second largest stable 250 00:11:14,000 --> 00:11:17,120 Speaker 3: coin out there. And as you've mentioned, interest rates in 251 00:11:17,120 --> 00:11:19,720 Speaker 3: this environment, that's been both a good source of revenue 252 00:11:19,720 --> 00:11:22,400 Speaker 3: for US, but it's also something that we've passed along 253 00:11:22,440 --> 00:11:26,800 Speaker 3: to customers, so customers can actually earn rewards on USDC 254 00:11:27,679 --> 00:11:31,000 Speaker 3: and get access to some of these higher interestrate environments. 255 00:11:32,040 --> 00:11:34,960 Speaker 2: Brought our question not just about coinbase, but about the industry. 256 00:11:35,040 --> 00:11:39,440 Speaker 2: As you know, more regulatory enforcement actions come to the forefront, 257 00:11:39,760 --> 00:11:41,600 Speaker 2: how much of an overhang do you think that will 258 00:11:41,600 --> 00:11:42,600 Speaker 2: have on crypto pricing? 259 00:11:43,920 --> 00:11:45,080 Speaker 4: You know, it's hard for me to say. 260 00:11:45,360 --> 00:11:48,319 Speaker 3: It was actually kind of surprising yesterday with this complaint 261 00:11:48,320 --> 00:11:51,240 Speaker 3: that came out, crypto was up, which I would not 262 00:11:51,280 --> 00:11:51,880 Speaker 3: have expected. 263 00:11:52,160 --> 00:11:53,280 Speaker 4: So I don't know what to make of that. 264 00:11:53,320 --> 00:11:55,360 Speaker 3: I don't know if it means that people it knew 265 00:11:55,400 --> 00:11:57,480 Speaker 3: something was coming but they expected it to be worse 266 00:11:58,280 --> 00:12:03,240 Speaker 3: than it actually was, or if they just felt that, 267 00:12:03,520 --> 00:12:06,120 Speaker 3: you know, they're they're still a believer in it or something. 268 00:12:06,160 --> 00:12:08,680 Speaker 3: But you know, I don't try to predict what's going 269 00:12:08,720 --> 00:12:11,600 Speaker 3: to happen in these markets. You know, we don't operate 270 00:12:11,640 --> 00:12:14,000 Speaker 3: a hedge fund or anything like that. We just want 271 00:12:14,040 --> 00:12:16,280 Speaker 3: to provide a good service to our customers around the 272 00:12:16,360 --> 00:12:17,680 Speaker 3: exchange and all the products we offer. 273 00:12:17,800 --> 00:12:19,560 Speaker 2: Before I let you go, I want to ask about 274 00:12:19,760 --> 00:12:22,480 Speaker 2: not crypto. I want to ask about artificial intelligence. Even 275 00:12:22,880 --> 00:12:26,040 Speaker 2: talking about it all day as a crypto entrepreneur, how do. 276 00:12:26,040 --> 00:12:27,600 Speaker 4: You see AI? 277 00:12:28,160 --> 00:12:30,520 Speaker 2: Do you see it as a competing factor in terms 278 00:12:30,559 --> 00:12:34,040 Speaker 2: of dollars going towards technology. Do you see dovetailing with 279 00:12:34,120 --> 00:12:36,240 Speaker 2: your industry at all? 280 00:12:36,320 --> 00:12:39,760 Speaker 3: Well, AI is certainly one of those couple really important 281 00:12:39,760 --> 00:12:42,040 Speaker 3: technology trends that the US needs to get right, along 282 00:12:42,080 --> 00:12:44,760 Speaker 3: with crypto, and I think we're seeing a similar question 283 00:12:44,800 --> 00:12:46,960 Speaker 3: start to happen in Congress along with crypto, is like, hey, 284 00:12:46,960 --> 00:12:48,600 Speaker 3: how should this be regulated so it can be done 285 00:12:48,600 --> 00:12:51,640 Speaker 3: in a safe, trusted way. I do think there's a 286 00:12:51,720 --> 00:12:55,920 Speaker 3: couple interesting intersections between AI and crypto. One of them 287 00:12:56,160 --> 00:12:59,200 Speaker 3: is that, you know, in the world of AI, there 288 00:12:59,679 --> 00:13:01,920 Speaker 3: you know, it's so easy to mass generate things, whether 289 00:13:01,960 --> 00:13:05,920 Speaker 3: it's a news article or images, and so the provenance 290 00:13:05,960 --> 00:13:08,040 Speaker 3: of those and the authenticity of it can be a 291 00:13:08,080 --> 00:13:09,760 Speaker 3: little bit hard to figure out. 292 00:13:09,800 --> 00:13:10,880 Speaker 4: And in a world of crypto. 293 00:13:11,880 --> 00:13:13,320 Speaker 3: One of the great things about crypto, you know, with 294 00:13:13,440 --> 00:13:16,640 Speaker 3: NFTs and whatnot, you can actually have a digital signature 295 00:13:16,640 --> 00:13:20,439 Speaker 3: that proves, you know, this was issued by Bloomberg or 296 00:13:21,200 --> 00:13:24,199 Speaker 3: by Brian Armstrong or whoever. So I think it could 297 00:13:24,200 --> 00:13:26,880 Speaker 3: be useful to track the provenance of creative works, whether 298 00:13:26,920 --> 00:13:30,600 Speaker 3: that's text, audio, video, et cetera. The other thing that 299 00:13:30,679 --> 00:13:33,240 Speaker 3: might be interesting is that a lot of these these 300 00:13:33,559 --> 00:13:36,679 Speaker 3: you know, bots or autonomous agents in the AI sphere. 301 00:13:37,040 --> 00:13:38,920 Speaker 4: They're going to need to go get things done in 302 00:13:38,960 --> 00:13:39,319 Speaker 4: the world. 303 00:13:39,400 --> 00:13:41,480 Speaker 3: Right people are already using them to sort of say, hey, 304 00:13:41,559 --> 00:13:44,439 Speaker 3: order my groceries, or you know, maybe build this website 305 00:13:44,440 --> 00:13:46,839 Speaker 3: and spin up this server. And so they're going to 306 00:13:46,960 --> 00:13:50,360 Speaker 3: need financial money. They're gonna need money to go do 307 00:13:50,480 --> 00:13:52,960 Speaker 3: things in the world, these these AI agents, and so 308 00:13:53,480 --> 00:13:55,160 Speaker 3: I think that actually in the future, you're probably going 309 00:13:55,200 --> 00:13:58,200 Speaker 3: to see a lot of cryptotransaction happening between AI agents 310 00:13:58,720 --> 00:14:02,880 Speaker 3: or AI and various businesses around the world because crypto 311 00:14:02,960 --> 00:14:04,720 Speaker 3: is kind of the native money of the Internet. 312 00:14:04,760 --> 00:14:05,120 Speaker 4: The Internet. 313 00:14:05,200 --> 00:14:07,880 Speaker 3: Internet is global, it's decentralized, every country, everybody in the 314 00:14:07,880 --> 00:14:10,840 Speaker 3: world can participate in it, and so it wouldn't really 315 00:14:10,840 --> 00:14:13,320 Speaker 3: make sense to use you know, the dollar or the 316 00:14:13,320 --> 00:14:16,280 Speaker 3: euro in a truly global context if you you know what, 317 00:14:16,280 --> 00:14:17,600 Speaker 3: you want to be country agnostic. 318 00:14:17,679 --> 00:14:19,280 Speaker 4: So I think AI will use crypto more. 319 00:14:19,640 --> 00:14:23,200 Speaker 2: How much are you actually working on that future? 320 00:14:25,360 --> 00:14:29,360 Speaker 3: So our we're not trying to build something that is 321 00:14:29,920 --> 00:14:32,600 Speaker 3: allowing bots to like transact in crypto at the moment, 322 00:14:32,600 --> 00:14:34,800 Speaker 3: but what we are doing is we're building good infrastructure, 323 00:14:34,840 --> 00:14:35,880 Speaker 3: you know, picks and shovels. 324 00:14:35,880 --> 00:14:40,160 Speaker 4: If you will. So with coinbas Cloud, for instance, we're making. 325 00:14:39,960 --> 00:14:42,840 Speaker 3: Our APIs around how crypto is stored and transacted and 326 00:14:42,920 --> 00:14:45,280 Speaker 3: commerce happens, and we're just exposing those kind of like 327 00:14:45,320 --> 00:14:48,040 Speaker 3: Amazon Web Services, but to any business that wants to 328 00:14:48,040 --> 00:14:50,800 Speaker 3: integrate it. So I suspect more businesses will integrate that 329 00:14:50,840 --> 00:14:53,760 Speaker 3: over time, and some of those may use AI. We're 330 00:14:53,760 --> 00:14:56,000 Speaker 3: also using AI in our business in a few other ways. 331 00:14:56,040 --> 00:14:57,760 Speaker 3: I mean, we use it a lot for fraud prevention, 332 00:14:58,840 --> 00:15:02,120 Speaker 3: you know, and unfortunately we get people signing up putting 333 00:15:02,120 --> 00:15:04,320 Speaker 3: in stolen credentials and things like that, and so we've 334 00:15:04,320 --> 00:15:07,480 Speaker 3: developed a lot of really good machine learning to detect that, 335 00:15:08,200 --> 00:15:10,920 Speaker 3: and you know, we're occasionally we're testing it in a 336 00:15:10,920 --> 00:15:13,920 Speaker 3: few other areas too, just like around Actually, like you know, 337 00:15:13,960 --> 00:15:17,600 Speaker 3: our design teams they'll sometimes look at mid Journey or 338 00:15:17,680 --> 00:15:20,760 Speaker 3: Dolly and sort of generated interface using ANI at least, 339 00:15:20,760 --> 00:15:22,720 Speaker 3: like you know, show me five ideas for what an 340 00:15:22,760 --> 00:15:26,520 Speaker 3: interface might look like to do remittances in crypto or 341 00:15:26,920 --> 00:15:29,800 Speaker 3: for content creators to have a direct relationship with their 342 00:15:29,840 --> 00:15:31,680 Speaker 3: audience and what with the interface for that. And AI 343 00:15:31,760 --> 00:15:34,120 Speaker 3: is just like a great assistant, you know, it doesn't 344 00:15:34,480 --> 00:15:35,760 Speaker 3: I don't think AI really. 345 00:15:35,840 --> 00:15:36,920 Speaker 4: Is taking people's jobs. 346 00:15:36,920 --> 00:15:40,800 Speaker 3: It's taking tasks off their plates largely to make their 347 00:15:40,880 --> 00:15:44,400 Speaker 3: jobs more efficient. And so having like a you know, 348 00:15:44,480 --> 00:15:47,560 Speaker 3: a research assistant or someone like that, you know, a tutor, 349 00:15:47,520 --> 00:15:49,800 Speaker 3: or a mentor or a therapist, whatever, everybody can have 350 00:15:49,840 --> 00:15:52,080 Speaker 3: one of these paired with them, and I think it'll 351 00:15:52,120 --> 00:15:53,520 Speaker 3: just make humans more productive. 352 00:15:53,920 --> 00:15:58,400 Speaker 1: That's coinbase co founder, chairman and CEO Brian Armstrong speaking 353 00:15:58,440 --> 00:16:02,000 Speaker 1: at the Bloomberg invest Difference with our own Shannali Bassk. 354 00:16:02,400 --> 00:16:06,440 Speaker 1: For more interviews like this, subscribe to the Bloomberg Talks podcast, 355 00:16:06,520 --> 00:16:11,280 Speaker 1: available on Apple, Spotify, and anywhere else you get your podcasts.