Coinbase CEO Brian Armstrong on bitcoin going to $1 million, electing a pro-crypto Congress, and Jamie Dimon

23:19It feels analogous here, once you get above some minimum penetration. Yeah, it's not everyone's paying with us, but it's just not worth not accepting it. When you make up all the banks starting to embrace crypto, So Jamie Diamonds had previously Bitcoin as a fraud. It's worse than tulip bulbs. If I was a government, I'd close it down now. And now, of course, they're launching JPMD. They're tokenized dollar. And so it's just been an interesting reversal. I'm curious what you make of all that. I think ultimately they're responding to customer demands. So if their clients want it, they're going to support it.

23:53And I feel like banks have had this back and forth with crypto where they'll say, We're not so sure about Bitcoin, but we like blockchain technology. Maybe we could make a closed network for interbank settlement, or maybe they don't like paying swift fees. So they are excited about it in the abstract, and they've run a lot of pilots. But I haven't seen them full on embrace it. It's a little bit of that innovator's dilemma type thing, Clay Cretiansen, where just culturally, it's so hard to get an organization where they're making tons of money off the traditional system. Anything they do in crypto would just be this fraction of a share, but it comes with all this risk and complexity.

24:31So they don't get a lot of people who come in with that mindset. They don't have a lot of DNA inside the company that wants to build a crypto. Now, I think just like the New York Times, when the internet came out or something, some of these local newspapers are not going to adapt to the new system, and they're going to fade away. But a lot of the best ones will adapt to it, right? In the same way that there's websites now for these media companies. The banks are going to embrace crypto. So the payment company is, you know, be a mastercard or running good pilots on stablecoins. You know, obviously, I think Stripes jumped in with both feet, which is really, really smart.

25:03And you've caused a lot of other people to wake up and do the same thing. So I think the smartest ones will adapt. I think that's good. I think from a coin -based point of view, I mean, we increasingly want to be people's primary financial account, right? As crypto kind of eats financial services, I think for some of our customers, we can be a bankrupt placement, right? And they can manage their trading, their payments, their direct deposit, like they have a credit card, they have a loan. And a lot of them actually, by the way, they won't even really care that it's crypto, they just want the best financial services.

25:31So if it's the cheapest way to send money to their family overseas, or they can get the best rewards on this card, or whatever it is, that's what we ultimately want to provide to them. And I think the banks will have to compete in that new environment. Are they going to be an infrastructure layer, powering some of these new Fintech apps, the next generation of kids, thinks of as their primary financial account, or are they going to adapt to the new world and build their own apps or embrace crypto? Like I said, the smartest banks will do it and many will get left behind. And that's good. That's free market competition.

26:01Totally. Companies don't disrupt consumers, you know, call it disruption by voting with their, you know, their fees to use something else. Has anyone impressed you on the banking side of things just in terms of being forward -thinking? Hmm. Well, yeah, a number of them. I mean, actually, I think Jamie Don is great leader, are very smart, even though he's common to some Bitcoin. I don't really agree with, but he's a great guy, and we work with them a lot. You know, I think Santander has been really great. There's some banks that have really embraced crypto, like Citizens Bank and there's Cross River.

26:35And you know, Silicon Valley Bank had a love hate relationship. They had their own risks to manage. Yeah, there's a bunch. What does Coinbase becoming people's primary financial account look like? I mean, it means that we just have a bigger responsibility and share of people's financial lives. So it's not just going to be coming into trade crypto. It's like, okay, maybe I started with that, but I have a lot of crypto here. Okay, I can get the best rate on the loan to do a mortgage or whatever, because I have a lot of assets here as collateral. Or it could mean that I can use a Bitcoin credit card and get 4 % back in Bitcoin as rewards when I spend, right?

27:12Or it could mean that it's very easy to send money overseas instantly for less than a cent. So we need to do a good job of leveraging the benefits of crypto to update the financial system and not make it just crypto for crypto say. Because the early users of Coinbase were just crypto die -hards. And that's great. We've gotten to maybe 6 % or 7 % of the world has used crypto now, kind of like the early 2000s for the internet. And we now need to get to about a billion or half the world eventually using it to really increase economic freedom globally. So it's gotta be about something more than the technology.

27:47It's gotta be about just, it's faster, it's cheaper, it's better, it helps me get done when I wanna get done. The reason I ask is because I observe the growth of neo -banks outside the US, you know, new banks as obviously taken over in Brazil, roughly as the fastest growing bank in Europe. And in the United States, the largest consumer banks are basically the same, a very similar recognizable set of characters from the 1970s. And maybe that'll still be true in 10 years' time, or again, maybe things will really have shaken up. And so I'm very curious what the neo -bank revolution in the United States looks like.

28:23Well, I think that's a great way to phrase. I probably should have phrased that way, actually when I was describing it. But yeah, I think some people are calling them like stable -coin neo -banks or super apps, right? There's a lot of terms you could come up for this, But I think that's our opportunity. By the way, as a technicality, I don't think we're actually going to go get a banking license because I don't know how deep people want to go on the details here. But the core thing of banking license allows you to do is not have all the money there. It's called fractional reserve, right? Which is an interesting business model, but it also comes with such heavyweight regulation that it makes it much harder to really innovate on products and ship quickly.

29:05And so we actually don't really want to be a bank. You want to be fully backed as opposed to being fractional or not. I want to be 100 % reserved, not fractional reserved, which is actually safer for the customers. You can't have a bank run. You can even store the assets like the stablecoins especially in backed in US treasuries, things that are bankruptcy or mode, etc. So there's really strong protections you can put in there. And then I think that that'll allow us to continue to innovate and provide the best customer experience. So yeah, ultimately, I think it could be a bank replacement for many people or let's call it a I like your term Yeah, the US needs a neo bank since the rest of the world seem to keep having them.

29:40Yeah, wash is your prediction for the 10 year rate of growth like average annual growth in the Bitcoin price

29:53You know the rough idea I have in my head is like we'll see a million dollar Bitcoin by 2030 in there's high error bars around these things, but just to give you a couple of data points, right? It's like we're starting to see regulatory clarity emerge in the United States, which I think is a bellweather for the rest of the G20, have the genius act passed now for stablecoins, but this market structure bill is being debated in the Senate, fingers crossed, something could happen by the end of this year. That would be a huge milestone. The United States government now has a strategic Bitcoin reserve.

30:21So that has, if you'd asked me five years ago, that would have been kind of like vision board, someone would have said, you're crazy like the United States government's not going to officially hold Bitcoin. But if they do that, which there's now an executive order to do, I think a bunch of other countries are going to do that. We've seen a lot of interest from sovereigns, right? Coinbase actually provides crypto services to about 140 government entities that believe it or not, like at both federal state, local and internationally. So governments are now getting more and more engaged in this. and you can imagine the big pools of capital around the world and there's a lot of...

30:55So I don't see the regulatory thing going away. That was one of the big risks is like, is the government going to shut this down? I think that risk has been severely diminished. And then, you know, is there going to be some flaw found in the Bitcoin protocol? I think that's been severely combed over at this point. You need to make sure we upgrade it to post -quantum cryptography. But... Are some leptic curves already post -quantum? Or no? They are theoretically, I believe. I don't know. No one knows. It's a little untested, but yeah, I believe there is a path where the Bitcoin, Core Team, Ethereum, and so on, everyone, they're looking at proposals now to upgrade to even more.

31:29Definitely both. Yes, yes. So, yeah, I think the list of kind of risks is getting diminished, and at the same time, the amount of demand, the amount of institutional money just sitting on a sidelines waiting for this next bill to land, these are the big institutions I talked to, they're holding 1 % of the portfolio in Bitcoin and I'm like, what would it be to five to ten and they say, regular for a clarity, that's it. So I think we'll continue to see huge inflows of capital. The ETFs have been huge. Well, people talk about the institutions on the sidelines. I think the gold comparison is a very apt one in that it's a non -productive store of wealth, which I mean that is a compliment, not an insult.

32:08And but depending on what you mean by institutions, I don't think like the major sovereign wealth funds or mutual funds that would ever hold a lot of gold today, I don't know. And so, doesn't it seem like you're substituting the gold buying, but it'll be kind of unusual for those large institutions to buy them on cash flowing assets? Well, it depends on their strategy, but there is a theory that in a diversified portfolio, you should have some percentage of it, five or 10 in commodities or species or whatever. I think there's a good bet to be, BlackRock has actually published some reports and research on this about how they believe crypto should be a part of every healthy, diversified portfolio at this point.

32:56It's like, because it has interesting, inversely correlated aspects with other assets. It's changing over time, by the way, as it evolves. But I think that it will be, we'll be sitting here in five or 10 years and most wealth managers or maybe sovereigns like in who hold a traditional diverse side portfolio will include one to 10 percent like crypto. If you didn't want to put a fraction of your portfolio into crypto, should you dollar cost average into Bitcoin and maybe the other major coins, but not the mean coins in a market cap weighted way or I know what's the right investment strategy if you want to put some money into crypto?

33:32Yeah, well with the caveat that I'm not giving investment advice and all that. But yeah, I mean, I think it's reasonable for people if they're just learning about any new thing, whether it's crypto, you know, if you like it, put 1 % of your net worth in something you're willing to lose and learn about it, right? But within crypto, watch the put it into. Oh, well, look, I think Bitcoin is a great place to start. We actually have something called the Coin50 Index, which is the top 50 coins by market cap. Markcap weight of that percent. Yeah, Markcap weighted. I think that, you know, I'm not going to go down in like list specific coins, but I think what you should do is you should hold Bitcoin, you can hold the index if you want, as sort of a, and then what you should do is go try and use crypto.

34:10Spend it at a Stripe Merchant, use your Coinbase credit card, and post some content onto the base app, and start to earn money in crypto, start to shop at a store that accepts it, whatever. So I think that these are, people should go use crypto. There's part of it that's an investment, And eventually, by the way, as these stocks get tokenized, and people want to get a loan, they're going to be using crypto without even really knowing it underneath. It's like, they may not know how electricity works, but they can turn on a light switch. That makes sense. So we have the genius hack now. Yeah. What does it mean in particular?

34:48Because like, stablecoins were legal before. They're more enshrines now, but just what can we do now that we have the genius hack that we couldn't before? Well, okay, I'll start with stablecoins and then whether the genius hack, So, stablecoin is basically fast cheap global payments, right? We can now do it under one second, one cent anywhere in the world. That's unique. I mean, there's no other payment rail that gets all three of those fast cheap. So, there's not a gene -sac thing. You're just saying this if you can now do it with stablecoin. Yes, I'm getting to your question too, but yeah. So, there's no other payment rail that gets all three of those boxes.

35:16Check, there's some that are fast and cheap and are global, etc. So, that's a huge deal. Now, what the gene -sac did was it said, if you want to call yourself a stablecoin and operate in the United States, there's certain requirements you have to meet. that make it more safe and trusted, right? One of them is 100 % of the reserves have to be back in US dollars or short -term US treasuries. So you can't hold it in other risky things. And you have to pass an audit once in a while and prove you're doing it. So it's kind of like basic hygiene. So these are like the tactical things, but the bigger picture thing that it did was it put a federal law in the books in a stamp of approval and it said, this is going to be trusted and legal and allowed and built in the United States.

35:54And that created a huge demand from every company that deals with payments, which is 100 % of them. And it said, we need to have a stablecoin strategy. We need to figure out what we're going to do here because it's now going to be a thing. The US government blessed it. And that can't be understood. I know that someone is more interested in the past two weeks. I'm so incredibly proud of you probably. Something similar. Yeah, it's like Gold Rush. Like everyone's kind of coming in and trying to figure out what is going on with this and how it can save their company money. Like, there's lots of companies they try to pay out developers in these markets all over the world, right?

36:25And kind of like the US and Europe and a few other countries that works pretty well. And then there's a whole long tailed countries where people just don't have access to good financial services. And it's like kind of a black box. How much money shows up on the other side of this payment rail with huge fees taken out. And so if you have a global payment rail that's fast and cheap, it just it democratizes access to financial services where anybody with a smartphone is on a more level playing field. Their wealth can't be taken away from them, eroded away via inflation. It's an incredible tool for progress and just property rights and sound money, economic freedom basically.

36:59So yeah, that's what that opened up with. Stablecoins, now we need to get the market structure bill done, which is all the non -stablecoin crypto assets. Got it. And so there's this plot of security, what's not all economic stuff. Yeah, yep, yep, yep. And you must have some funny stories from the passage of the, you know, Genius Act, because it was such a winning or a holocaust or a wide. Yeah, so one thing I realized was like, for a long time, we were trying to make progress in DC and try to advocate for legislation. And nothing was ever happening. And I realized that people educated me about this a little bit and it's like, it's actually kind of rare for Congress to act.

37:35In fact, somebody told me Congress is really good at doing two things. Nothing and overreacting in some crisis moment. And so we realized at a certain point we had to generate a political will to do this. And we had like 50 million people in the US who had used crypto. And we said, let's try to get them organized. And so we funded this 501c4 I believe called stanwithcrypto .org. And we got two million of these folks in the US to raise their hands and say they wanted to elect pro crypto candidates. And I remember I was talking to our policy team and I was like, well, let's put a score card like A to F, every politician in this upcoming election in last November.

38:10And our policy team is, their whole job is to build relationships with politicians. So they're like, why don't we put a list of our crypto champions? And I was like, no, I want to put a list of the crypto enemies, too, with an F. Who has an F? I could see them like, get nervously perspired. And I was like, no, let's put the score cards. Like, someone needs to win an election. Someone needs to lose an election because of the crypto vote. Crypto famously, in terms of how it shows up in DC, is much more are pugnacious than, say, tech was historically. Where we have our friends, we have our enemies and things like that.

38:44So did that. And the standard with crypto and fair shake, I guess fair shake was more relevant one in some of the recent battles. Did that come from you essentially that we're not going to be pussy footing around here. We're just gonna make clear how we feel. Well, there were a lot of people involved so I can't claim for credit. But what I saw a shift in the crypto industry was a lot of the traditional policy advice that we got from people who worked in tech and they all said, you know, you need to go in there and build relationships. So be the good cop. And then what you should do is form a trade organization who can be bad cop.

39:20And they can go fight the battles and write the nasty op -eds and try to, you know, whatever, yes. For whatever reason, the people we kept getting into these trade groups wanted to also be good cop. I kept thinking, you know, okay, does the back cop are right? Yeah, who's gonna get into the political blood sport on X and be tearing down these people? They're doing bad things and they just wanted to have polite meetings behind closed doors. And so I realized that a certain point is the election was coming up. I was like, if they don't do it, maybe no one's gonna do it. So maybe we should do it, right?

39:52And so I don't think we did anything like too crazy. But what we did do is we, for DC standards, this was crazy, right? We came out and we said, we're unequivocally pro crypto. We don't care if you're on the left or the right. We want to elect pro crypto candidates. And by the way, we want to get anti crypto candidates out of office. And this really blew people's minds in DC because everything there is kind of partisan, right? And so there was a feeding frenzy kind of coming up to the election where I was getting angry phone calls from both sides like, how could you have given money to this person and you know, and were like, well they're pro crypto.

40:28And then I get a call from the other side like how could you be a real man that person like well they're pro crypto If you're really a single issue voter. Yeah, yeah, so on the one hand I was like Maybe we're just pissing off both sides. Yes, and we'll have no friends after the election But on the other hand, you know if you're taking flat you're over the target like I don't We're explicitly at apolitical company, right? But we're unapologetically pro crypto So to me it was it was very consistent and by the way I had to remind many of them apolitical does not mean 50 50 It means we will elect pro -cryptocandidate regardless of what party they are helped donate to them or whatever.

41:01You know, regardless of which party they're in, it's not necessarily going to be 50 -50. It might be 60 -41 way and 60 -40 the other way the next election or whatever. So that was a big mental shift and it was kind of a contrarian thing. And it helped elect the most pro -cryptocongress. So the work that we did along with the bunch of other people, it's not, I don't want to take credit for it, a bunch of other companies worked on this, that set up the most pro -crypto congress, which is now, I think, getting this legislation passed. We made it clear to people in DC that, if you're anti -crypto, there's no constituency for that.

41:34American people want crypto. Yeah. And if you are pro -crypto, it can help you get elected. And so it's just good politics. That was a novel idea. Do you have issues now, once you get through the market structure bill, genus acts to happen. Do you have issues left, like what do you? Are you done going to ZC? Yeah, I mean, the upside to all of this, like there was a lot of downside. I mean, literally in the last. They stuck in that couch, yeah. Yeah, in the last administration, you know, they were trying to kill the whole industry, right? But now that we've gotten a build a little bit of knowledge around policy, which can be dangerous, the thing you know too much, right?

42:10At least things can go either way. And I hope that we'll get market structure done. It does kind of start to make me wonder, what else can we do to update help update financial system? And our mission is around increasing economic freedom. So, you know, an example would be, I think the accredited investor laws are kind of unfair, right? Only rich people can invest money to get richer. That seems regressive, right? There could be a financial literacy test, for instance, instead of having a certain net worth or income to become an accredited investor. Or, you know, I like this idea. I'm very excited about this idea of special economic zones, right?

42:41And they've worked very well in China with Shen Zhen and in the UAE and these places and you know, we have so much regulation. Why don't have a sandbox for one area to test out new ideas where you could have one around crypto or biotech or drones or you know supersonic aircraft so I think it'd be great to see if we could get I don't know 10 pieces of federal land in the United States set up as different Special economic zones and there's a there's a company called Prospera which we actually invested in Which has a prototype set up in South America, but they're trying to do this now in the United States Yeah, I mean there's a lot of different areas Do you have any favorite pet policy issues that you would kind of push for in DC?

43:18I'm probably something with aviation. Yeah, I'm just going to say, well, this one happened actually. I'm super excited about these new mosaic rules that happened. What's up? Okay, so in general, there's been a lot of discussion around the kind of directory agenda of the current admin. And you're like, okay, I mean, getting rid of outdated regulations seems great, but you need to actually go do it and pass the new rules. And they just did that in the aviation sector where you can't just like build a plane in self -general public. You have to go through a whole bunch of FAA approvals that were both a very cumbersome process to multiple years and also a very prescriptive process where it's like you know only of these kinds of engines or something like that.

43:57And so famously electric aircraft couldn't be certified because they said you know an aircraft engine is like you know burns gasoline and does this not the other. And they just came along with the Sean Duffy announced last month. this new regime for certifying aircraft that is radically simpler, I think will allow for much more bottoms -up innovation in that sector. That wouldn't be on my list, but it happened. I think we'll see much more innovation in the light aviation sector, which I'll see the US used to be a leader in and stagnated over the past decades. Yeah, I think you might have seen, by the way, there was an exec order instructing the FAA to allow supersonic aircraft that overland in the US that did not create an audible boom by some decibel.

44:42Yes, that was really exciting. I mean, I'd love to fly places much faster. And another one I think would be great is like, takes 10 years and $2 billion, apparently, to get a drug to market through the FDA. I mean, they have these three phases of trials around safety and efficacy. I mean, I think it'd be amazing if you pass one phase one for safety. Why not let a doctor prescribe it, especially to somebody who is at end of life, patient who has no other options, like, you know it's safe, you just don't know if it's effective, let a doctor make that call. I mean, this would give you data much sooner on giving these drugs to market, whereas every year there goes by, there's people dying.

45:18There's so many things like that that I think could be improved by making sensible deregatory movements. I think everyone agrees that the accredited investor rules are a bit silly, where they are both exclusionary if you don't meet the kind of minimum net worth test. And as we have seen, wealthy people are not that necessarily savvy when it comes to making investors. The list of tyrannos investors was a who's who, a very wealthy and accredited people. At the same time, when it's just a free -for -all, you get a bunch of scams and frauds, and the US has some of the best capital markets in the world.

46:00And as I look at what's happened to crypto world for a very pocket of more liberal, I think the kind of whole phenomena of rugged and people looking to essentially engage in kind of zero sum behaviors are some of the worst things that we should not allow to perpetuate. And so I'm curious as you think about replacing the accredited investor rules, what would your framework be for liberalizing investment and yet keeping the best things we have today, which is I think really high standards of propriety and really strict rules for honesty and fair dealing. That's a great question. Yeah. So I think fraud, you'd want to prosecute the full extent of the law.

46:42And one thing you can do is have requirements and they're about disclosures, right? And say, if you want to raise money for this thing, you do have to provide the following information. And if you materially miss State Stomping, especially intentionally, and you deferred investors, you should go jail for that, right? Now, it doesn't mean only wealthy people, wealthy people should be allowed to do it, right? So I think that's a nice way to divide up those issues. Yeah, I think that there's also, we don't wanna create this false idea that the government stamp of approval means it's a good investment, right?

47:16Because there's many stocks that have been, you know, public - and trade -accompanied theory blessed by the SEC or whatever that went down 85 % 90 % in the last few years, right? Some of the biotechs or I won't name companies, but a lot of them, you can lose your shirt in the public markets with these officially. So we need to kind of teach a sense of personal responsibility in this too, which is there is no return without some amount of risk. And the government is not here to tell you what is a good investment or not. You still have to make that judgment yourself, but they can help by saying, the information this person is giving you is true, and if they're lying to you, there's tort law for that where they can go, you can go have damages.

47:58I probably lean a little more free market on this than most people, but yeah. I think, yeah, the best consumer protection sometimes is competition, right? If you have a car company and it's like it's a bad car and it keeps breaking down and it's expensive and in some ways the best solution is to have another company come in and try to compete with them and provide a better alternative. And a lot of people who are actually very street smart, even if they're not like financially literate, but they know what a scam is. And they know that there's three friends told them that that thing is not good.

48:33Do you guys try to do anything on the coin -based product side of things with some of the coin -hype scams that happen? Or do you say people are grown -ups and they should evaluate their own investments? Yeah, we had a lot of debate about this because it's a little bit like the app stores or maybe even Amazon, where let's say someone's trying to sell like a fraudulent product on Amazon. They probably want to get rid of that, right? But let's say that it's like a two or a three star product, and some people they like getting a lot of people don't. But it's not a fraud. Like you actually, you want to allow people to make their own choices and see if you've got two stars, but you can buy this if you want, right?

49:08And maybe the provider of it can clean it up too, and you'd tell them. So we've tried to take a similar philosophy where we want to list everything that is legal, and frauds are not legal, would be illegal, and provide information to the customer to help to make better decisions. We've tried variations of this, we haven't quite nailed it yet, I think about like an on -chain review system, a reputation score. We actually released like an API that allows anybody to look up a crypto address, which could be a foreign asset, or a person, and have like kind of an on -chain reputation score, so it's kind of an early prototype of this.

49:41But I think eventually you'll get kind of like a FICO score equivalent. You'll get an Amazon or Yelp rating equivalent. And you want to make sure, you know, if I'm trying to send a few USD coin to John Collison for the pint, I need to make sure it's the real John Collison, you know, not an imposter swatting on your name or something like that. So those are some of the tools I think we can, in the private market, build that would help this. And yeah, and let the government kind of go after the fraudsters. You mentioned crypto's product market fit in emerging markets. And there is a very strong product market fit there that's actually not new.

50:19People in markets where this historically been a very high rate of inflation have traditionally sought to guess money out of that currency. And you know, people talk about buying hard assets as one approach trying to get money in dollars. It's already a behavior to try and get money out of that currency and into something that they think will hold its value better. This is not invented by crypto. This exists for many decades. Maybe countries where there is a black market exchange rate, that's like a good indicator for there will be the estimator. The governments of many of these countries will not all disapprove of this, where they would prefer that all money is kept in the country's currencies.

50:57And this is kind of a gap between what the government wants and what the people want. Where does this go? Who wins? We are often walking in this balance when we go into a new country where we really want to work within the existing system and we often will go get a license that will local entity for regulated financial service products. And I'll come back to our self -custodial wallet in a moment. There are usually portions of the government which are hesitant around crypto. Sometimes it's the central bank, right? But there's other parts of the government that are actually very pro at. They want to digitize the country, create economic opportunity.

51:31So we're sort of talking, you know, you can talk to different hands of the government. You'll hear different things. But the people, the people unequivocally want it. So in many parts of the world, we're able to work with in that system and offer what we want. Other parts of the world, it actually would be difficult to impossible for us to go and create a regulated financial service business. Because that country doesn't have a clear regulatory framework, they only give out bank licenses to their cousins and friends who bribe them, which would be illegal for a US company to do it, and you just can't do business very effectively in many of these places.

52:04So we also have a self -custodial wallet that is not regulated is the financial service business because we never take possession of customer funds. It's regulated market software product. You can like a messaging app. You can just launch it. It's a good capture keys in one password. So like ultimately the software product. Yeah. So that's allowing us to go into some of these other markets. And I mean, you asked where this will go. I mean, it's some of these markets. I say like there's the top five or 10 Fiat currencies, government currencies, the majors. Those will probably stay around. I don't think they're going anywhere.

52:34But the best dollar is with Frank, you're thinking about that. Yeah. But the long tail, the other 150 or so government currencies, I think they probably should get replaced. I mean, they're not really, they're not doing a good job. They're often abused. They're eroding the rights of the people. And I think that there is a good case to be made that those should get replaced by Bitcoin and USDC, etc. It was Ecuador or something like that that actually, you know, they pegged their currency the dollar to you. So it's a way of doing that in all these countries. Almost as an active civil disobedience, frankly, like in some of these places like Venezuela, You may be technically breaking the law or something by introducing a self -cursor to a wallet that brings dollars to the people.

53:10I think I'd be okay with that. Like that's an act of civil, you know, because people are really in terrible conditions there due to the government stealing their wealth via inflation. So I think that's, that is a good thing. And then I'd say, even in, and obviously digital dollars very unequivocally good for the United States and keeping the reserve currency status and demand for treasuries, it's also a good thing for Bitcoin to be used in the United States because the democracy But democracies around the world are having a problem right now with deficit spending. And like, it's this kind of issue that to get elected, you can promise more free stuff.

53:41And, you know, that drives up the cost. How are we going to have the discipline to balance budgets? And I think Bitcoin is part of the answer to that. It's a check in balance on deficit spending, where if it gets too out of control, people will flee to Bitcoin in times of uncertainty. If deficit spending is kept under control, people will continue to use that fiat currency. And so, I actually think, I don't want to be hyperbolic about this, but I actually think Bitcoin is in some ways extending Western civilization like in the American experiment because if the US is going to lose the reserve currency status, which I hope it doesn't, because I'm an American, I believe America is a good thing for the world.

54:13But if we lose all discipline and we're going to lose the reserve currency status, I'd rather people went to Bitcoin than to the Chinese you want. And so thank goodness we have Bitcoin as a check and balance in this new economy. The deficit warrior is to look at the deficit maths and say, you know, interest payments are not rated in defense spending. How does the US avoid losing reserve currency status? Well, yeah, one of it is don't, you don't play the way the dollar, you know, the debt to GDP ratio is right. Are the things to watch usually, right? I think I forget we're at now 150 or 170 or something, but I think if you look at historically, you know, maybe when it was in the British, lost it or the Dutch, they They were in the 250 range.

54:56So we're in sight of a pretty dangerous threshold historically, it's hard to see where the political will is going to come from to do that. And I hope the Bitcoin can be a part of that solution. We'll see. Why haven't non -dollar stablecoins worked? The share of global stablecoins at US dollars is 95 % plus. I mean, it's much higher than the US dollar share of currency. Why is that? And will it persist? Why I think that if you're gonna have permissionless access to anything, you're gonna use the most trusted one, the reserve currency, right? So that could be why. You know, Europe actually, to their credit, they did put, I mean, sometimes Europe's the leader on regulation, which is not necessarily what you want to lead on, but they did get out of regulatory framework for the US to their credit.

55:40So there is a Eurocoin. It's very small. It's very small. It doesn't have a lot of traction. I don't know. I think the dollar is solving the need that people have. There's actually one other thing that's even smaller, which I think has interesting potential is called a flat coin. I don't know if you've seen these, but they instead of tracking like a one -to -one backed by a dollar, which of course has some level of inflation between whatever 2 to 5 % a year, a flat coin tries to track CPI, which is the consumer pricing index to maintain its purchasing power. So if like a Big Mac cost - Like tips.

56:12Yeah, inflation protected. Security. Yeah. So I think like if you could buy a Big Mac for a dollar or whatever today, a stablecoin, ideally 10 years from now, you'd also be able to buy it for a dollar. So there's one that's built by this company called Amplify for it's called Spot and it's been tracking a $2019, since 2019 and it's now worth about $1 .26. It went through crazy ups and downs. It's actually been pretty flat and so economists will often debate like do you want to have 200 % inflation here? Does incentivize people to spend their money? But it's kind of nice to have one that's also maintains its purchasing power for putting contracts together and pricing things that you want to be the same price in the future.

56:50Yes, yes. What have you learned from biology? I was about to say, for anyone who doesn't know about biology, but you can probably look at it. They probably know who biology is. He is one word, like the Donna, exactly. Yeah, one name. Biology is a brilliant guy. I mean, he's probably, I don't know, top couple of smartest people I've ever met in my life. He's very out there. He's truly an original thinker. He was briefly the chief technology officer of Coinbase. He came in through an acquisition and did some amazing work. And he taught me how to manage a totally different type of person, I would say.

57:23You know, biology, he is kind of unmanageable. He's what some people might call a free radical within an organization where he really bounces around and he's just kind of absorbing vast amounts of information, even things that, you know, his responsibility maybe even he's not even supposed to be doing. And he's basically told not to do them. Yeah, it was a closely told nod to do them, does it anyway. And occasionally he would come back to me with these just incredible insights. And I'll give you one funny biology story, but at one point he came back to me and he said, these are all the salespeople that are making more revenue than their salary, and these are all people that are not.

58:05And first of all, I thought it, I had was, you're not supposed to have access to anybody's salary. But how did you get that? He's like, don't worry about it. I found it in some database somewhere I wasn't supposed to have access to. The other thing I asked him was, well, how did you connect all that up? Because last week I was asking the data team, well, can you connect sales force to all of our salary data and let's start to run some reports and have some more accountability? He was like, oh, well, I couldn't sleep this weekend. I just knew something felt off. I had to code it up and put it all together.

58:37I was like, okay, give me a little bit of time to go verify this. because he came in on Monday, he looked like he hadn't slept the whole weekend. He's kind of this mad genius. By the way, I went and ran it down with the actual data team and it took them three weeks to replicate what he had done over the weekend, but he came back and he's 100 % right. So he continually was doing things like that. And he's incredibly high -disagreebleness, which I learned from him as well, where he would go into a team and say, why is this not functioning well? And he would suffer no fools, right? and he would not be afraid to go in there and turn half the people on a team.

59:11Whether he had the permission to fire them or not, sometimes he would just torture them to greatness or whatever. He is a very contrarian figure. I'd say about once a week someone would come into my office as CEO and say, I can't work with biology. And he's causing so much collateral damage. And I'd say, yeah, but he's also generating enormous amount of value. And I need you to learn how to work with him. I realize it's difficult, but it's creating a very positive outcome across all these areas. Now, I kind of knew that it wasn't going to last forever because it was incredibly disruptive, but I learned from him how to come and be like a turnaround CEO.

59:47It went needed if I can call it that. Where I think in the past, I was opting a little more toward trying to be liked instead of to be clear about what we're doing and where we're going and what the bar is. And so he helped me be a better CEO and have a little more disagreeableness. He encouraged you to let Brian be Brian and listen to yourself more. I like the tweet a while back of Who's it the the three scariest words in English language or biology was right? Yeah, because about some COVID prediction or something. Yeah, well, he was frequently very Early on his predictions and I think that I think you had that you thought were crazy at the time that now you have or world views He had that's yeah, you thought were crazy initially and now you've come around.

1:00:29Yeah, I mean I think he was actually early warning me about the activist contingent within the company. I was in a lot of big deal. People are... Is the apolitical company, which led to the mission first post? He was telling me about that years before. This can't be a big deal. He swam fast. In 2020, you released this blood post saying that Coinbase is a mission -oriented company and take all your other issues you might have and don't come to them with us and work somewhere else if you don't like it. and you had a buyout offer if people didn't want to work at such a company and a few percent of the company took the buyout.

1:01:04And this was like a big deal at the time and everyone was talking about it. I think part of what's interesting is how much the industry has moved where Coinbase was, I don't wanna say a pariah, but definitely, movable at the time for being so stringent on this point. And recently, literally Google was putting out a blog post saying leave your politics at home, we're just focused on organizing the world's information, and we don't only hear from you about all your other stuff. And so it feels like Silicon Valley has really shifted on this. But one question I had is, you're talking about being an apolitical company.

1:01:39I feel like apolitical is a community to frame it, but it's maybe more something like, there's actually a very narrow set of views that you have to agree with to work at Coinbase. You have to believe in financial freedom, or you have to believe that crypto is a good thing for the world. And then everything else We're just not going to engage with and we'd rather you don't bring up and maybe that's a technicality Maybe that's a kind of a good Actually as I was writing that blog post I originally I was thinking of calling it an apolitical company, but I changed it to be mission first because you're absolutely right We are unapologetically Pro crypto we're about economic freedom and you could argue that that does have a policy angle to it In fact, we are trying to get massive change happening in DC with legislation passed.

1:02:23So we are very unapologetic about engaging in politics on our mission. But everything outside of that, which sometimes there's edge cases you have to go figure out. But everything outside of that, we try not to bring it to work. And so it's a mission first policy as opposed to being explicitly apolitical across everything. But yeah, that was an evolution. And we did take a lot of arrows for doing that, but I think it was a good move. I presume you think it was now looking back on us. You're very glad that you did it. Very glad. Yeah. I mean, I was failing as a leader before that because I was not creating clarity in the organization.

1:02:55We were having some people thought our mission included social justice, activism on police brutality. Some people thought, you know, and I clarified it. I said, we're all going this way. Yes. And I'm sorry, I failed to create clarity beforehand, but if you don't want to work here at that company more or another, I'm making it clear, you know, here's the exit package. And we had all these debates internally. People were terrified that I was about to do this. You had some people try to convince me not to do it. Some people said 50 % of the company will quit and all this. It turned out to be 5%. Sometimes your fear gives you bad advice and you have to...

1:03:28I got more confidence to do it by basically going talking to some of our employee groups, hearing from them directly. Also watching some videos of people like Lee Kwan -Yu and Ronald Reagan to some more situations where leadership inspiration moments. But where does Stripe land on this topic, if you could talk about it? Like I said, I think the norms or the expectations have very much shifted where, in a productive way, I think, where people get fast companies have a thing they're trying to do in the world. And it's hard enough to do that thing. It's hard enough to get to genius act past. It's hard enough to make some impact in the world.

1:04:14And the US is a pretty big place, and there's a broad variety of views on a whole bunch of social views. And so the classic, if you're going to a dinner party in the 1950s, the advice would have been that you leave politics and religion aside as good, worked in our party conversation topics. And this rediscovering of old wisdom, I think, that it's hard enough to do one thing. And it's not that these aren't very worthwhile endeavors. Like both of us have kind of pursuits that we're doing outside of work in various regards. But just it's really hard to get an entire company aligned around some cause.

1:04:58And so you want to spend that capital very carefully. And I think yours came up an interesting moment in time where there's a lot of expectations of companies to be broadly getting involved in a whole bunch of issues. And it was so notable again, because that was a popular idea at the time. But I think it's become almost received wisdom at this point. Yeah. And yeah, I think we never went super far into the broad set of issues, but I think I kind of broadly agree with you on companies mostly sticking to the knitting. Yeah. It strikes me in that coinbase, from a product point of view, when you're in the early days when industry, you kind of have to do everything.

1:05:37You know, Microsoft in the 90s, they were doing operating systems, and they were doing applications, and I mean, they made some hardware, remember like the Microsoft natural keyboards, and fight simulators, and they exactly encaried everything. And if you look at open AI in AI, they're doing consumer, they're doing B2B, they're doing Sora, the video model, and again, because AI is so fast -changing and rapidly emerging. And similarly in crypto, you guys have the institutional product, you have the stablecoin as USTC, you have the brokerage, you have your L2 with base and you're playing everywhere.

1:06:09And again, that feels correct to me in a very fast moving space. It also seems like it would challenge focus where everything is a good idea, because it could work in this fast moving industry. So how do you focus, how do you resource things, how do you decide what to cost? Again, it's easy with Stripe, because we're just trying to stick to the niche, and we're trying to make the payments infrastructure good. But your world is a more open -ended map. Yeah. What all the things that you count, I mean, you guys have a lot of products in the payment space. I was super fine. Yeah, the purpose of the question.

1:06:39I think so a lot of this comes down to like the founders, right? So in my case, sometimes I can't help myself. I have so many ideas. And in fact, the company usually is pushing back a little bit. We need more focus and I'm like, OK, you're right. We should focus. Because there is virtue in focus. There's also virtue in having multiple revenue streams. Because when one thing's up, another wing's down, right? There's Virtue and having some small teams working on variety of things because USDC and base started off as like three to five person teams and USDC will probably add 800 million revenue to our bottom line and you know I would have never have guessed that in the past in the past year So and there's a lot of actually out of guest that like was it not obvious?

1:07:21It was not I began. Oh, I mean actually So we have this This system internally where twice a year employees can come pitch what like venture bets that they want to do internally. And there's a, we've tried to construct it to be, you don't need a unanimous yes. Like in most companies you need your boss, your boss's boss, your budget, all the way up to the CEO to say yes to greenlight something, which means you get one know you're out. We try to create a little bit more like internal venture capital, so you can go to any of the product group leads. And there's a handful of smart, hand -picked engineers, and then myself and a few other people.

1:07:54And if you get any one of us to say yes out of their budget to fund it, your green lit. So it's like pitching a bunch of internal venture capitalists. So what that means is we get more of this risk -taking culture. We try a lot of ideas, and some of them don't work, and we have to show them down. That's actually hard. How do you have the guts to cut? Because in a startup, you'd run out of money, and you can't raise the next round. So we have to have sort of mimic these rounds of investment. But once in a while they completely defy odds and I'll tell you a secret which is I actually voted no on the USDC project Because I read it and I said ah, it's just not really decentralized as much as I would want You know, I had some reason in my head and thank goodness somebody else on the team Voted yes to fund it out of their budget and I was totally wrong So I use that as an example a lot where it's like the best ideas don't have to come from me They have to come from everybody in the company and we have to try more ambitious ideas.

1:08:40How about base? Basis is another example that I was a venture bet. It started as a small thing where Jesse came to me and said he wanted to spin up a layer two. And I didn't have any specific idea about how to do it or anything. The only thing that we did was we funded it and we shielded it because new ideas are fragile sometimes within big companies. I think one time you told me a great phrase, you know, you don't wanna give it the big company a bare hug of death. And so the only thing I did to my credit was I may have protected it, but I didn't have any idea really what Jesse was working on for most of that.

1:09:09And he had iterated through three or four ideas, and base was like the fourth thing that he came up with. And it finally started to work. And became the number one layer two solution on Ethereum. And now it's the base app that just came out. So I think it's, as CEO, it's not so much my job to come up with the next great idea. It's to create the right environment where good ideas can happen, be nurtured, and the bad ideas eventually do get shut down. We have some discipline around that. And the hardest time to work on new venture beds is when the core is under threat, or it's a downturn or, and the core is always under threat, right?

1:09:43And so, you know, it's a, this is where it's the core. It's like a successful business that other people want. Right. Right. And so we have this great, this makes our decision -making, I think, very, it's very healthy decision -making, but it's a healthy tension in the org where, usually it's like people are saying, the core is underfunded, it's under threat, how can we allocate more? I want to take resource from that thing, it's not yet any revenue yet. And not always, but sometimes I'm on the other side saying, I want to find the core. We also should have a some percent, 10 percent of our resources going to these venture beds because five, 10 years from now, we need to have the next chapter on coming out, right?

1:10:19And you see sometimes there's founders versus operators. And I think if you have too much founder energy, they sometimes blow the place up. Yeah. And if you have too much operator energy, they're just boring and they never do anything innovative ever again, but they're very efficiently run or, you know, and so I think - It's like a series of layer desk curves. Yeah, I'm in a lucky spot at Coinbase with Emily Choi as the president and she and I make a great team where I Yeah, I think we can both do it either way, but the natural like a natural happy place Yeah, I try to be a little more founder like provide the risk tolerance The venture bets she really makes it a well -run company pushes back when she's like you know Brian If we just focused on the core in Europe it might generate another billion of revenue right stuff It's a great.

1:11:00It's a great combo Do you use prediction markets anywhere internally and how you run the business? not yet. Shouldn't you? Yeah. Crypto -pilled. Yeah. We are integrating work and prediction markets. There's still, we haven't gotten full clarity. This new CFTC chair hasn't been confirmed yet. The US ones are, the US citizens are not allowed to use it yet. The on -chain ones. Yeah. The ones that are approved to work in the US, you have to get them, I think, I believe each market has to be approved by the CFTC. Oh wow. So if you had some fun internal pet project, we just hadn't, we don't have the resources to go get it everything.

1:11:33Yeah, yeah. But hopefully it become his lower friction at some point. But then once they are approved, yeah, we'll see a prediction market on projects, or something like that. You can use them. That's a great idea. What are other ways in which Coinbase is crypto -pilled, AI -pills works differently from a company founded 10 or 20 years prior? Yeah. Well, like a lot of companies, I mean, we're leaning as hard as we can into AI. I don't know how much. What does that mean, concretely? So we're doing a lot of the best practices, right? We made a big push to get every engineer on cursing copilot. And then another question was, well, are they actually going to use it?

1:12:08Because a lot of them onboarded when I - You were Toby, who mandated - Yes. I mandated it. Yeah. You're required people to have a call with you? Yeah, that's true. I did do that. You're required people to justify to you the CEO if they weren't using AI code. That's true. That's true. Because it's actually - I'm not meant to tell that story. No, no, I don't mind. It's actually a good story. I mean, originally, they were coming back and saying, all right, over the next quarter, or Kimmer was two quarters, or like we're gonna get to 50 % adoption. I was like, you're telling me, why can't every engineer just onboard by the end of the week?

1:12:38And so I kinda went, I went rogue. And I posted in the all -in slacks and - It's a light dusting of thunderbird. Yeah, I was like, A .I. is important, we need you to all learn it, at least onboard. You don't have to use it every day, yet until we do some training, but at least onboard by the end of the week. And if not, I'm hosting a meeting on Saturday with everybody who hasn't done it, and I'd like to meet with you. To understand why. Now, a few people are on vacation, you know, there was some, there was a list of, Anyway, I jumped on this call on Saturday, and there was a couple of people that had not done it.

1:13:08Some of them had a good reason because they were just getting back from some trip or something, and some of them didn't, and they got fired. At least some people really didn't like it. By the way, that heavy -handed approach, but I think it did set some clarity at least that we need to lean into this and learn about it. I want to experience a very eye -coding being so far. It's clear that it is very helpful to have AI helping your right code. It's not clear how you run an AI -coded codebase. I don't know what the best way to do it is. I agree. I think we're still figuring that out too. One thing we started doing is every month we host a call it an AI speed run, where someone, one of the engineers volunteers, that month to run a training for how they're using it.

1:13:48We try to cherry -pick the team as they're doing it the best. And we're doing about, I think it's about 33 % of code written by, yeah, I know, we have a goal to get to 50 % by the end of the quarter, let's see if we get there. You probably can go too far with it. You don't want people vibe coding these systems moving money. And so we've really encouraged people to believe you do have to code review it and how the appropriate checks in place on that with humans in the loop. But some of the front end pieces, et cetera, you can iterate faster. We want to make sure it's used not just in the engineering team, right?

1:14:18It really should be any team like design is using it heavily product managers. I think FPNA could even be using this as like generate and just all the data and tell me what you forecast the revenue to be right. So we're getting to a world where even as CEO by the way, I use it a lot. You know, we use like a decision making process called Rapids and everyone writes their input. We have a role now for AI that writes its input in as one of the people that help make decisions. And so we're kind of testing the limits of it of like, you know, when can it actually start to be the decision maker on some things and do better than humans?

1:14:52Yeah. The last question, what advice do you have for us as we start to navigate the crypto world more and as crypto becomes so much more relevant for payments? Well, I thought I should be asking you the same question, you know, we're starting for... In payments, yeah. We're in repayments, you guys are in crypto, hopefully we get to work more together. crypto, it's never because it seems never as bad as it seems. It got to be in it for the long haul through ups and downs. It's very successful. Yeah. And I would say that crypto is about decentralized protocols fundamentally. So I think those are the ones that have done the best, right?

1:15:27And there are temptations at times, I will name some of the prior projects, but they've come together with small consortiums of companies. I think we really want to make more open standards and there's a trade -off because if you truly have a decentralized protocol, it's slower. And like, based, for instance, we started it, but it's going through progressive decentralization. And we're in stage one, or stage zero to stage one decentralization. We're getting stage two soon. And so everybody should really, on that network, be able to exist on a level playing guild with Coinbase. That's what we're getting to.

1:16:01And so I think in that ethos, Everybody, it's a permissional system everybody can build on. That's what's going to actually disrupt traditional finance. It's not going to be another proprietary system. And there's a spectrum between those two things. It's not like a binary. I guess that's how to get really red -pilled on it. Brace fund makes crypto actually work. Yeah, yeah. All right, well with that. Thank you. Thank you.