Larry Fink and Brian Armstrong Are Not Worried About Another Crypto Winter

0:00This episode was recorded at the 2025 DealBook Summit. This year's DealBook Summit sponsors include Premier Sponsor Accenture, Associate Sponsors U.S. Bank, Vanguard, Invesco QQQ, and University of Michigan, Supporting Sponsor Capital One, and Contributing Sponsor Invest Puerto Rico.

0:262025 is actually, we'll look back on this as the year that crypto regulation went from kind of gray market to well-lit establishment. And then I think we'll have the foundation to really have this industry be built in the U.S. and we'll see a little bit less of this kind of, you know, high-risk activity happening offshore. This is Andrew Ross Sorkin with The New York Times, and you're listening to interviews from our annual Dealbook Summit, recorded on December 3rd in New York City.

0:58Good morning again, everybody. I wanted to try to bring together this morning two pioneers from two different generations, dare I say, to talk about the future of finance at a time when we are going through a remarkable shift in all of it. From the passing of the Genius Act to the surge of stable coins, prediction markets, now talk of tokenization, as well as where we are in our economy. And Larry Fink, of course, founded BlackRock back in 1988. Today, it's the world's largest asset manager overseeing$13.5 trillion. That's with a T, if you can believe it. Brian Armstrong founded Coinbase in 2012.

1:37Today, it is the largest crypto exchange in the U.S. and has grand ambitions to do much more. In 2021, it became the first crypto company to go public and has half a trillion dollars in assets on its platform. So good morning to both of you. One of the reasons I wanted to put you together is you historically over the years did not agree with each other at all about this world of crypto, if I dare say. You obviously were a proponent from the beginning. I think we met about a year or two after you began this effort. Larry, you were, though, on the other end of it, even on this stage in the past.

2:13You famously, in 2017, called crypto an index for money laundering. BlackRock. And thieves. And thieves. Yes. Money laundering and thieves. You now have the biggest Bitcoin ETF. So what happened here? You know, as the secretary said, you got to evolve and change. So I did say that, I think I said that in Washington, sitting next to Jamie Dimon. But during COVID, when we had a little more time on your hand, we weren't traveling around the world, I actually took it upon myself to visit and talk to a lot of people who were advocates of it. I wanted to understand, what am I missing? Why do I have that belief?

3:01And so I was testing myself like I do in many other things. So around 2021, 22, I began to evolve those views. Those statements were not about crypto. Those statements were specifically about Bitcoin. So let me be clear, too. But I see a big, large use case for Bitcoin, and I still do today. And so this is one thing that I get excited about. I have very strong views, but that doesn't mean I'm not wrong. By having strong views, you have to test yourself and ask yourself. And in my role, I see thousands of clients a year. I have governmental leaders. And we have these conversations. And my thought process always evolves.

3:48And this is a very glaring public example of a big shift in my opinion. How much, though, and Brian, you can speak to this, do you think that folks in the legacy or traditional industry didn't either get it, want to promote it, want to be part of it, because they were scared? Yeah, well, this is the classic innovator's dilemma, right? Anytime you have a new technology come around, everybody who's an incumbent has to decide, do we want to embrace it or do we want to fight against it? And in some of these larger organizations, it's kind of funny actually, because there'll be a part of the organization, like their lobbying team in DC, it's actually fighting against it, kind of trying to do regulatory capture.

4:28But the innovation arm of the company is actually embracing it. And for many of the largest banks now, we're actually powering pilots with them doing stable coins and custody and trading and these kinds of things. And once in a while, we run into their lobbyists in DC, and they're kind of trying to curtail it. And so I think it's like any company, You have to embrace change and be on the frontier. It's not unique to crypto. Is there any chance in your mind at all that Warren Buffett is right? He and Charlie Munger used to call it rat poison and say, eventually, it'll go to zero. It just might take a while.

5:02But they're talking specifically about Bitcoin. They're talking about Bitcoin. But you offer a Bitcoin ETF, so you can speak to them. Yeah, there's no chance. I don't think that's going to happen at this point. I mean, you know, there's something that happens from a psychology point of view as we all age. And, you know, we grew up in a certain environment and were shaped by the experiences we had. And I think for Charlie and Warren, they, you know, they grew up in an environment of America preeminence and the dollar was everything. And how dare you question it? And, you know, we're in a world now where democracies around the world are trying to figure out how to curb deficit spending.

5:35And, you know, Bitcoin is kind of this new digital gold. People are going to it in times of uncertainty. And so it's tough for them to contemplate a world that is more decentralized and running on the Internet. How much of it, though, in terms of what's happening in the last year, is a function of money, money being spent? You mentioned lobbying in Washington. So you were behind the political movement that really pushed a lot of this. I mean, directly, you spent about$50 million in corporate donations in the 2024 cycle. The crypto industry spent about$130 million. How much of it do you think is here now because the industry effectively, and some people cynically would say, bought this new opportunity?

6:13Yeah, well, our mission is to increase economic freedom in the world. And I prefer to do that just with our products and integrating crypto into the traditional financial system to update it. But it turns out over time that a big way we can accomplish our mission is actually, you know, holding bad government accountable, right? So if there's 52 million Americans who have used crypto and they want to see clear rules on the books, to protect consumers. I think in the last administration, we saw that our representatives in government were not actually fulfilling those values that the American people had.

6:43They were actually unlawfully trying to kill the industry. A lot of it went offshore as a result of that, and a lot of consumers got harmed. And so, you know, we've always been very transparent about donations we've made to super PACs like Fairshake, but we also helped bring together a large number of voters to elect pro-crypto candidates. And to me, that's democracy working. I think we need to get back to what is the purpose of Bitcoin. Then we get into the stablecoin. You know, the$13.5 trillion that BlackRock managed on behalf of our clients, it's basically managing hope. That's all it is. I mean, why would anybody invest in a 30-year outcome?

7:17Unless you're hopeful in 30 years, you're going to have the compounding effect. Bitcoin is an asset of fear. and when you're less fearful like we had a trade agreement with china you saw a shift downward there is conversations this week that there may be some type of settlement in ukraine bitcoin fell a little bit so you own bitcoin because you're frightened of your physical security you own it because you're frightened of your financial security. The long-term fundamental reason you own it because of the debasement of financial assets because of deficits. And so to me, even the movement in the last week, and we've had about a 20, 25 % drawdown, and this is the third time since IBIT was created, our ETFs.

8:10And so this is, you see these shifts and they're actually pretty non-correlated shifts. And that's, and so the role - But then some people say, is that really insurance, right? If you had bought it at$125 ,000 and it's now sitting at$90 ,000, you're saying to yourself. If you bought it for a trade, it's a very volatile asset. You're going to have to be really good at market timing, which most people aren't. If you're buying it as a hedge against all your hope, then it has a meaningful impact on a portfolio. The other big problem of Bitcoin is it's still heavily influenced by leveraged players.

8:48That's what I wanted to talk to you guys about. That's Bitcoin. But we could see, because we see where the flows are coming from, we're seeing more and more legitimate long-only investors investing in it. There was an article about a foundation. Endowment just bought a lot of IBIT. But I can tell you there are a number of sovereign funds that are standing by. They're adding incrementally at 120, at 100. I know they bought more in the 80s. That's fine. And they're establishing a longer position. And you own it over years. This is not a trade. You own it for a purpose. But the market is heavily leveraged.

9:30And that's why you're going to have more volatility. So, Brian, let's talk about that, though, the leverage piece, because I think people don't, we all don't know where all the leverage lies. I think some people look, Michael Saylor has a company strategy, formerly MicroStrategy. That seems like a big levered bet. He owns about 3%, I believe, of all the Bitcoin that exists. How much leverage is there really? Well, yeah, I mean, we saw a little bit of this on October 10th this year. And there was quite a bit of leverage that got unwound as the market moved around a little bit. But this largely happened on offshore exchanges, right?

10:01On Coinbase, we saw very little of this. And to me, it's just an example of why we need clear rules on the books in the United States. I think 2025 is actually, we'll look back on this as the year that crypto regulation went from kind of gray market to well-lit establishment because we saw the passage of the Genius Act, which was huge for stablecoins. We've now seen a bipartisan vote for the market structure legislation in the House, and now it's going through the Senate. And so hopefully within a few months, we might get a vote on that in the Senate. And then I think we'll have the foundation to really have this industry be built in the U.S., and we'll see a little bit less of this kind of leverage or high-risk activity happening offshore.

10:38I want to get to stablecoins and tokenization and blockchain and where this all goes. But you mentioned lobbying before, and I just want to ask you one lobbying-related question. And actually, it can go to both of you because you're both doing something similar, which is that you've both made donations to the new ballroom that the White House is creating. We were just talking to the Treasury Secretary earlier about David Ellison making movies and trying to placate the administration, if that's what he's doing. I want to read you what Jamie Dimon said about making donations in this context, because he says that he's not doing it.

11:13And he says we have an issue, which is anything we do, since we do a lot of contracts with governments here and around the world, we have to be very careful about how anything is perceived and also how the next DOJ is going to deal with it. So we're very quite conscious of the risk we bear by doing anything that looks like buying favors or anything like that. What do you think about that? I agree with what Jamie said, and everything we do is with that type of lens. Typically, our political giving is split between 50 % one party and 50 % one. How we distribute it, that is up to my public policy team, but we're very deliberate on it.

11:54We try to be equal in every category, in every case, but we are very deliberate, and we look through the lens at how he described it. But, Brian, what do you think of that? Because I think there is a view that people are trying to buy influence in Washington and that it's more available to buy today than it used to be. Yeah, so I think these are really two separate things. On the one hand, we're an American company. We're proud to be an American company, so we donate to various things like national monuments and milestones. and it is bipartisan, you know, in the way that Larry described. Separately, we heavily engage in lobbying.

12:30I mentioned to you this StandwithCrypto.org and like Fairshake and all these kinds of efforts. And so those two are separate in my mind, but both important. Like we're proud to be an American company. And do you ever worry, I mean, to this Jamie Dimon point, that somehow, you know, the Democrats will get into office next time around or maybe even after that and then say, you know what, we think that all of these donations were part of some kind of quid pro quo or some kind of influencing. Does that mean they're not going to use the ballroom then? I don't know. It's always possible. I mean, these agencies can get politicized.

13:05They seem to always get politicized. So anything's possible. But that shouldn't stop us from doing the right thing. It comes down to the ethics of an organization and making sure you're looking at the entirety of what you're doing in a balanced and fair way through the lens over time. Okay, let me ask you a different question, Larry, because you just wrote a piece in The Economist about tokenization. And I think that tokenization, some people here will know it well, some people will not, so maybe you can help level set. But I think you have a view that tokenization is effectively going to change finance forever.

13:38Yeah. Want to explain? Explain. Okay. There's so much conversation going on about AI and how AI is going to be reshaping the world. There's not enough conversation about how technology is going to be reshaping the financial services area too and the need for democratization. As Secretary Besson talked about, the democratization of investing in America. There are slews of middlemen in the whole financial services area. We have elongated settlements, elongated processes. If we could digitize every asset, so if we digitize all stocks and bonds and have it more seamless going from a digital wallet of cash or stable coin into equities or bonds through most categories through an ETF it will reduce the friction costs, the transaction costs and it allows a much more free flow so there's 4.1 trillion dollars of money in digital wallets globally sitting in stable coins mostly.

14:47And can you now, and right now if they wanted to go into a bond or stock or have a real estate transaction, they have to take the money out of the digital wallet into a traditional wallet and have all those commissions and fees and all that stuff. So the whole idea of tokenization of all assets, including real estate ultimately, is going to just reduce huge friction costs, making investing easier, simpler. You could, as the secretary was talking about this one account, you could do this all through your app And it's going to allow a more, I would say, a free-flowing process of investing Brian, if all of this happens, how does the finance industry change?

15:29Would you short all the credit card companies, for example? Because invariably... That's the digitization of a dollar Well, that's the digitization I mean, we can also get into stablecoins, which is the other piece of this Which is, in some cases, required for all of this We didn't really talk to the Treasury Secretary about it, but underlying all this has to be lots of treasuries, which a lot of the banks, one of the reasons I think banks have been frustrated or anxious about some of this has been the idea that there's going to be a flight of capital effectively out of the banks that's going to go to effectively support the stablecoin business, which ultimately will support in large part some of the transactional issues and potentially even some of the tokenization projects.

16:07Well, in that case, I think that's just the banks trying to protect their profit margin. I mean, they should have to pay rewards and higher rates to their own customers. And I think they're trying to put their thumb on the scale regulatory capture, essentially, to prevent crypto from doing that. But my prediction is actually the banks are going to start, we're already seeing this, actually, they're going to be increasingly embracing stable coins. And my guess is that in a year or two, they'll come back and say, actually, we want to be able to pay interest and yield on stable coins in our own companies.

16:34And so it goes back to that innovator's dilemma situation. I mean, the best banks are leaning into this as an opportunity, and the ones who are fighting it are going to get left behind. I would say as a country, we're light. We're light. Yeah. We're light. Who's ahead of us? India and Brazil. So this is the biggest issue. We are a successful nation. So much of the foundation of our success has been the role of the capital markets. If you think about how the U.S. economy was able to restabilize itself faster after the Great Financial Recession, it's because of the role of capital markets. Now, the Secretary was talking about the role of private credit, but it was really the capital markets.

17:17And we are now starting to see in Brazil and in India a whole transformation of a digital economy. You know, they've digitized their currency. now you even have now a credit card purchases on the pipe right in brazil itself the pics and so what i am worried about we're not moving fast enough and you know and so i you know i didn't put this in the article because you know i didn't want to be that vivid on this but this is one of my big fundamental issues we need to move faster you know we need to move faster as a country even an AI? I mean, you haven't asked a question. When people say, is there an AI bubble?

17:59I ask, well, if we don't continue to spend on this, and that means we're going to have some failures and some success stories. But if we don't spend enough faster on AI and digitization and tokenization, other countries are going to beat us. So you think, by the way, actually, I'll ask the AI question then. Do you think we're in an AI bubble? And do you think the economics of this are all going to make sense. If we were sitting here all together five years from now, will we say that we vastly overspent? Well, a number of the hyperscaler CEOs and I have had this various conversation. They're not certain if they're overspending or underspending right now, but what they're certain is the, and they're seeing it right now, most hyperscalers are short compute.

18:42There's not enough happening, the amount of demand for this. That being said, the timing of this build-out may underperform their investment criteria, but they're certain that the demand will be there. And this is why I love a capitalistic market. I'm not here to suggest there's not going to be some, you know, headline blow-ups. I mean, there are going to be some huge winners and huge failures. I mean, it gets to this economy. But I would say there are going to be just incredible winners. And I've raised this question with politicians. Does that mean we're going to have five, $10 trillion companies?

19:23What does that mean societal? How are we making sure? That's why I love the new children's account, because how do we broaden the economy if these hyperscalers are these massive winners? Brian, let me connect this back to tokenization, because one of the things that we're seeing is there's an effort now to tokenize private companies, a lot of private companies in the AI space that are not public. They don't have the same disclosures that you have, but people are going to eventually get access to some of the stuff. And some of this might ultimately, by the way, end up, you're looking at me askance, Larry Fink.

19:57Yeah, I haven't heard this one. You haven't heard this one? There's a bunch of companies that are now being, Robinhood and others have tried to, or effectively tried to tokenize private companies so that you could sell pieces of those private companies to the public without the same disclosures. What do you think about that? Well, in that case, you know, I think they had some footfalls because you have to do it with the permission of the company, right? So I don't think that approach worked very well for them. But if you just zoom out for a minute and say, okay, these companies are staying private longer, right?

20:27Sarbanes-Oxley and all these things made it more difficult to go public. The amount of demand for capital in these private companies is just going to keep growing and growing. And there's so much money in crypto. How can crypto update capital formation, just like it's updated every other part of the financial services area? So there's a big investment that we're making in how to update capital formation and make it easier for private companies to raise money. But we want to do it with the permission of those companies. Ultimately, do you want to compete with Larry? Do you guys think that you're competing with each other?

20:53Because you've talked about broadening your offerings far beyond crypto? No, I don't think so. In fact, we're a great partner of theirs on their ETF. We're powering, I think, more than 80 % of the ETFs for crypto in terms of custody and trading. And as there's an effort to tokenize their funds, Coinbase is well positioned to be the leader in just tokenization of every assets. I mean, we've done that with stable coins. You can look at it happening now in various parts of the world with stocks. It should be happening with every fund. And what we want to do is actually market their products to our customers.

21:27The half trillion of assets that you mentioned for retail and institutional, we want to put those products in front of our customers. I think we'll work well together. You mentioned IPOs and governance issues. I want to ask you a governance question. You are moving your company from Delaware to Texas. You are following Elon Musk, effectively. And lots of companies, yeah. Tell us why, and do you think that this is, and this is interesting to me because Larry, on the other end, I don't know if you think you're on the other end, historically has represented shareholders who want to have access to vote for things, and the shareholder is going to have less access to vote for things likely in Texas.

22:07Yeah, well, we want to run our company in a business-friendly jurisdiction. I mean, it's pretty simple, right? I think Delaware historically had a great monopoly on this, and they had a lot of trust in the courts and everything. But recently we've seen really unpredictable outcomes from the court. We've seen hostility toward founder-led companies, and they're not deferring to the judgment of these boards. And I think even on your show, Andrew, the governor of Delaware, came on and kind of made dismissive comments about one of the leading entrepreneurs of our time. And so that was a bit of a head-scratcher for me.

22:37I mean, how are you going to have people come incorporate in your state if you have this anti-business rhetoric, right? So luckily, the founding fathers in the United States had this brilliant idea called federalism, where we have a free market competition amongst the states. And we had some meetings with the folks in Delaware. I think the legislature was doing a good job trying to fix some of the court outcomes. But ultimately, if you want to get reform, you know, you don't try to just use your voice internally. You have to leave and align incentives and punish bad behavior. Otherwise, they're not going to reform themselves.

23:09So we're happy to be in Texas, and they seem very business-friendly. But when you say business-friendly, shareholder-friendly, or you're saying founder-friendly is what you're saying? I think both. Yeah. I mean, it's business-friendly in the sense that you can just get things done quickly. They're not going to allow somebody who owns one share of stock of your company to rack up hundreds of millions of dollars in legal fees. So I think it's business-friendly. I think, you know, ultimately, like, people can choose which company they want to invest in. Like, the free market is the right regulator of that.

23:41We don't want unpredictable outcomes from courts that are doing activist activities. Larry, you like Texas? You want to move to Texas? I mean, we were one of the original founding investors in the Texas Stock Exchange unrelated to this topic. But I want to just link back to, yes, we're responsible for all our clients' equity investments. and we've offered the right of each of our clients to vote their own shares. But let's just get back to tokenization. If we were able to tokenize every stock, we would know instantaneous the asset owner of record. So I would be transacting the trade on behalf of that owner of record.

24:22If we tokenize, we ultimately democratize everything related to voting. Every holder of the asset will have the ability to vote. But the argument always has been that most retail investors don't vote. And as a result of that... But if it was on an app on a phone now that it is so easy and clear, technology can't help that education problem. Okay, but then the question is, if you're running a company... By the way, you're the CEO of a company, too. They also represent shareholders. is that a good, I mean, if every quarter, or every year rather, you're fighting proxy battles every year as it is.