#439: Brad Garlinghouse on Crypto Regulation

Brad Garlinghouse is the CEO of Ripple. In this conversation, we discuss crypto regulation, the US approach compared to other jurisdictions, whether Ripple would ever move from the US, how the SEC and OCC affect regulation, and what a Biden presidency could look like for crypto. ======================= Crypto.com is the only all-in-one platform that allows you to BUY / SELL / STORE / EARN / LOAN / INVEST crypto all from one place. Join over 1 million users currently using the Crypto.com app. Download and earn $50 USD using my code ‘pomp2020’, or use the link https://platinum.crypto.com/r/pomp2020 when you sign up for one of their metal cards today. ======================= OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. ======================= Digital art is here, and it's real. NFTs are selling for hundreds and thousands of dollars. The only platform I buy on is Nifty Gateway, which is an official sponsor of the Pomp Podcast. They release content from the best NFT artists in the world twice weekly, and have featured many world famous artists including Kenny Scharf, Trevor Jones and WhIsBe. NFTs on Nifty Gateway are in extremely high demand, so if you really want one, make sure to be on the website as soon as it is released. Go to www.niftygateway.com/pomp and sign up for an account today. =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Brad Garlandhouse is the CEO of Ripple. In this conversation, we discuss crypto regulation, the US approach compared to other jurisdictions, whether Ripple would ever move outside the United States, how the SEC and OCC affect regulation, and what a Biden presidency could look like for crypto. Before I talk about our sponsors, I want to clearly call out that I know Ripple and XRP are both controversial. There's some people that like it, there's some people who don't. This conversation was hopefully trying not to

• 0:41Anthony Pompliano?

  get into those details, and more so allowing Brad, as an executive in the space, to talk about the regulatory environment and what he's thinking about in terms of his business. Now, some of the things that Brad talks about are great, and other things I completely disagree with him on. But I do think it's important to allow people to hear from individuals what they believe, and then to have the debate online and with each other as to what is true, what is not true, what you think is a good idea, and what you think is a bad idea. So don't take everything that's said in this podcast to be something that I necessarily agree with, but also, I think it's important to present perspectives so that you, the listener, can go ahead and make your own decisions. So with that said, let's talk about

• 1:24Anthony Pompliano?

  our sponsors before we get into this episode. The first is Crypto.com. It's an all-in-one platform that allows you to buy, sell, store, earn, loan, or invest crypto, all from one place. You can join over 1 million users currently using the Crypto.com app. Crypto.com is a place where they are trying to make crypto way more accessible and also drive mass adoption. Crypto.com, an all-in-one platform that allows you to buy, sell, store, earn, loan, or invest crypto, all from one single place. Go check them out. Not only do they have a fantastic URL, Crypto.com, but also they're driving mass adoption.

• 2:01Anthony Pompliano?

  Next up is OKCoin. OKCoin is a leading crypto exchange for both beginners and experienced users. You can fund your account in under two minutes and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry. OKCoin.com is great. They've been working really, really hard updating the product. They've been pushing a lot of great marketing. And also, the CEO, Hong Fang, has come on the podcast. And one of the things that she talked about that I really liked is they've been funding Bitcoin developers. So if you want to help support people who are supporting Bitcoin developers, and also use a great product that has an advanced trading engine and low fees, you

• 2:46Anthony Pompliano?

  should go to OKCoin.com. If you go to OKCoin.com/pomp, you'll get some sort of special treats. So, visit www.OkCoin.com/pomp and open an account today. Again, OKCoin.com, an advanced trading engine, low fees, and they've been supporting Bitcoin developers. That's what I'm talking about. So go support them. Go to OKCoin.com/pomp. Lastly, is Nifty Gateway. Many, many, many of you have heard me talk about digital art. I'm a huge fan. I think digital art is here, and it is real. Non-fungible tokens, which is the technology underneath the digital art, are selling for hundreds and thousands

• 3:29Anthony Pompliano?

  of dollars. The only platform I buy on is Nifty Gateway. They are an official sponsor of this podcast. They release content from the best digital artists in the world twice weekly, and they've featured many world famous artists, including Kenny Sharp, Trevor Jones, and Who's B. NFTs on Nifty Gateway are in extremely high demand. So if you really want one, make sure to be on the website as soon as it is released. You can go to niftygateway.com/pomp, and you can sign up for an account, you can participate in the auctions, or you can buy on the secondary market. Again, niftygateway.com/pomp. Go check them out, and let me know what you think about Nifty Gateway's platform and about digital art. Let's get into this episode with Brad. I hope you guys enjoy this.

• 4:13Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 4:39Anthony Pompliano?

  All right, guys. Bang, bang. I've got Brad here with me. Thank you so much for doing this, sir.

• 4:44Speaker 02

  Absolutely. Good to be here. Nice to see you.

• 4:46Anthony Pompliano?

  For sure. For those that didn't listen to the first episode we did, maybe just give us a quick kind of two minutes on your background and what Ripple does.

• 4:54Speaker 02

  So, uh, real quick, I, I've been in Silicon Valley doing tech stuff for 23 years, moved out here in 97, kind of dot com 1.0. Always been kind of involved in leading edge and hopefully not bleeding edge, uh, stuff. And the first job I had out here was, uh, we were rolling out the first cable modems in the country. And then I was at Yahoo for a bunch of years. I'm shortening this, but was at Yahoo for a bunch of years and done a couple of other things on the investment side of things. Joined Ripple five and a half, closing in on six years ago, early days of crypto. And, uh, I mean, suffice to say, it's been just an incredible journey.

• 5:30Speaker 02

  Both crypto at large, but also seeing, you know, Ripple grow from having an idea that the germination of, you know, how we thought about, you know, applying these technologies, not in kind of experimentation and speculation, but hey, real utility. Let's solve a problem. Let's be clear about who our customer is. You know, we now have publicly shared, we're doing, you know, closing in on a run rate of kind of $10 billion a year of transactions across RippleNet. About 20% of that through what we call on-demand liquidity, which are XRP-enabled transactions. We're continuously seeing a lot of growth. Uh, you know, we can talk more about the implication of COVID, but that's some of the high-level things, around 500 employees globally and, uh, cranking along.

• 6:16Anthony Pompliano?

  Awesome. What exactly is Ripple and RippleNet, just for those that don't know that?

• 6:22Speaker 02

  Sorry. So Ripple is in effect, you know, when I say I grew up in Kansas, as you and I have discussed once or twice, and when I tell my friends back home, in effect Ripple, the simple way to think about it, we're an enterprise software company and we sell software to banks, financial institutions, payment providers that enables them to do real-time cross-border transfers. Today, you know, we have different value networks. It is, I think, very analogous to early days of the internet, where sending an email between AOL and CompuServe, you couldn't act, that was not interoperable. They were disparate networks and you couldn't send messages between them. The internet comes along and technologies like TCP/IP come along and SMTP,

• 7:07Speaker 02

  and the ability to then have interoperable data networks enable things that we obviously rely upon today. In effect, Ripple is trying to do the same thing to make value networks interoperable towards the vision of enabling an internet of value, what we call an internet of value. And today, the most painful part of those non-interoperable value networks, I think, is really in cross-border transactions, where you're going cross-currency, cross-network, cross-institution. There's a lot of friction there. You know, I often have used an analogy of an airplane that if it's the fastest way you want to move money today from San Francisco, where I am, to London, is to actually get on an airplane and fly it there.

• 7:48Speaker 02

  You know, that's just a crazy thing to say in a world you can stream video from the internet. So Ripple is solving that problem. RippleNet is the network of banks and financial institutions that are connected today, that are enabling, you know, I don't know off the top of my head, I think it's 60-plus countries where we have payment corridors today. That continues to grow quickly. And yeah, that's Ripple and RippleNet.

• 8:13Anthony Pompliano?

  Awesome. So the reason why we wanted to talk is the crypto regulatory environment. A nice way to put it might be that it leaves a lot to be desired. There is everything from uncertainty and just kind of the unknown all the way to maybe some bad ideas that are out there. So maybe just walk us through as the CEO of a company that is constantly looking at both the United States crypto regulatory framework, but also other countries and other regions. How do you kind of see where the United States is? Maybe where does it kind of rank against other people? Good, bad, ugly? Just kind of give me your your general thoughts to start.

• 8:55Speaker 02

  Well, so first of all, look, I don't know if I said it upfront, but thank you for having me on because I think talking about this stuff is super important for all of us to have kind of a common understanding of where we are. And I also will say, you know, we talk about the crypto regulatory framework, you know, I think we do, as you in your question identified, have to parse like US versus other, you know, it is specific to geography. Unfortunately, the US regulatory framework is not, it's really out of sync with what other major economies are doing. And you actually see in a very positive way, sorry, I didn't turn off some of my distractions there. You see in a very positive way, some

• 9:34Speaker 02

  countries, I'll highlight in a constructive way, the UK. UK has a very clear taxonomy. It's called the FCA, the Financial Conduct Authority, I think, took the, really took the lead on characterizing what different assets should be viewed based on the use case. And, you know, I think that was, that helped everybody in the UK know as they thought about crypto, how to use crypto, how the rules for the road were clear. You know, I can highlight in a positive way what MAS has done in Singapore, what FSA has done in Japan, Switzerland, UAE. These are all examples where there are, there's clarity.

• 10:15Speaker 02

  What's frustrating, I think, is here in the US, you see lots of different kind of constructs. You know, I think you even tweeted about this, but there was a Department of Justice report, I don't know, three or four weeks ago, and it listed, like 70 to 80 pages, and listed eight separate US regulatory bodies, each of them with a different view about, you know, crypto is a property, no crypto is a commodity, no crypto is a virtual currency, or no, could crypto be a security in some cases? And, you know, like, for the US, I think we celebrate the leadership the US has had around the Internet of Information as we know it today, and it's in part because early

• 10:57Speaker 02

  on, back in the mid 90s, there was a clear regulatory framework that allowed people to invest with certainty, with clarity, and you've had a lot of investment come in and a lot of success stories that are, you know, well-known. Without that here in the US, I think it's really hard for the US to compete on a level playing field with what's happening to these other markets.

• 11:18Anthony Pompliano?

  Absolutely. And when you start to think about in the United States, let's start with maybe the things that seem off, right? Or just there are decisions that have been made or directions that were headed that, you know, might not be the best path. What falls in that bucket for you, right? So not the things that are uncertain or unknown, but are there specific things that you're like, "Look, you know, either you guys have a different view, or you feel like other jurisdictions are at odds with a certain direction that the US regulatory environment is headed?"

• 11:50Speaker 02

  Yeah, you know, I'm going to answer that question that you're going to think I'm trying to dodge it. I'm not. I want to give a preamble. Oftentimes, when I answer my perspective on this, I get the, you know, certain elements of the crypto community are like, "Oh, Brad just hates on Bitcoin." Let me be clear, and I said this to you when I was last on your show. I personally, in my own account, own Bitcoin. I'm a long Bitcoin. I'm a believer, period. I also think the best way for Bitcoin, and really all of crypto, for long-term success is that we are intellectually honest and talk about, like, what are the problems that might limit success in the future? And like, one of the things I think is just, it is reality, the facts support it,

• 12:33Speaker 02

  is that today, the US has said, US Securities Exchange Commission has said Bitcoin is not a security. They've said Ether is not a security. And that has given them the good housekeeping seal of approval. That allows entrepreneurs to say, okay, great, I can, I can build upon that, I can invest in that, I can, I can do that with certainty. For Ripple, because we use XRP in our tech stack, we will go, and I've had this experience, I will talk to CEOs of other companies, and they'll say, well, look, hey, you know, we need to, we're not going to work with enabled, Ripple's products enabled by XRP until there's clarity there. You know, there's over 100, 150 companies working in the XRP ecosystem, and you know,

• 13:18Speaker 02

  without that certainty, we have given, here in the United States, we have given an advantage to two technologies, in Bitcoin and Ether, that are today, by virtue of the mining capacity managed in China by a small number of miners, we're really enabling China to have an advantage. These, I actually happen to think the Chinese Communist Party has been extremely strategic. Like, I think they have been focused on dominating next-generation technologies. What we saw happen with 5G networks, as an example, we lost the 5G race, and I think we're in danger of repeating that mistake in the battle over what I'll just describe as global financial infrastructure and global payments. So, look, I think it's a long-winded way of saying,

• 14:02Speaker 02

  we need a level playing field, not just for the many companies in XRP community to compete effectively, but you know, we need that for other projects as well. I'm not trying to be just, kind of, pro XRP, but I'm trying to look at, again, all boats rise. I want crypto to do well.

• 14:20Anthony Pompliano?

  Yeah, and I think part of it, you know, the one difference I would make there is like, there are a very few number, but some Bitcoin being one of them, that there was no kind of, hey, you give me money and I will sell you this token, right? So kind of the initial distribution was what many people would call fair distribution, or whatever terminology you want to use. The thing that I think you're highlighting is for pretty much the, I don't know, 98 or 99% of other projects that have some sort of business or commercial use to them, there's not a lot of clarity. And it almost sounds like it's not only just the final like, security, not security type,

• 15:03Anthony Pompliano?

  deciphering, but also maybe there's even uncertainty around like the framework that will be applied here? Is that fair? Or do you feel like the framework is pretty defined? And then the decision is the undefined part?

• 15:17Speaker 02

  No, I think both of those are undefined. I mean, look, I think early on, you know, there was this kind of argument that, hey, you know, Bitcoin is super decentralized and therefore, you know, it can't be a security. And you kind of look at that, you're like, all right, so let's help people understand how the XRP ledger is decentralized and how it is open source. And frankly, even recently, there have been, there have been things that the XRP community have championed for the open source ledger of the XRP ledger that we have opposed that still passed. And if that's not a definition of what is, you know, open source technology, like I'm not exactly sure what is, but I think there was a perception that, okay, the first framework was decentralization.

• 16:01Speaker 02

  And that meant that Bitcoin got the good housekeeping seal approval and then not that long after Ether got it. And then there's, it stopped. And then it's like, well, maybe decentralization isn't the right thing. So I think, you know, once you kind of educate people about how the XRP ledger works, you're like, all right, uh, you know, let's, okay, let's yield that the XRP ledger is also decentralized.

• 16:26Speaker 02

  It's like, okay, do people own different amounts and therefore that it's different? And I just think it has been hard and some of the things that have been published that are intended to make it clear are frankly really long kind of frameworks that is like, okay, I don't know, I'm pretty educated about all things crypto and I read these things. I'm like, all right, wait a minute, you know, I'm not exactly sure how to do, how to think about this. And look, I go back to what I said earlier was just recently that the DOJ came out with this report on cryptocurrencies and in talking in some ways how they can be used for illicit purposes. But when just recently you're talking about eight separate US regulatory bodies, you know, it just makes it hard for companies in this space to operate.

• 17:08Anthony Pompliano?

  For sure. I asked you last time, I'm assuming your answer has not changed, but your belief and the people at Ripple's belief is XRP is not a security. Correct me if I'm wrong on that. But what would the challenge to the business be if it was deemed a security? Right? So like, I always think of it as like, there's almost like this path where you say, okay, your belief based on whatever frameworks are out there is XRP is not a security. If that ends up being the end state, you get the kind of, you know, the housekeeping that you described. I think you guys have like a pretty clear path as to like what you'll continue to go do and accelerate and kind of the positive impact on the business. What's the impact if, whether rightly or wrongly, but like there was a decision that like, hey,

• 17:51Anthony Pompliano?

  XRP is a security? Is that kind of the, like, maybe not the death blow, but, but does that pretty much tie your hands and make it nearly impossible to, to conduct business in the United States? Or is there some alternative path, but maybe it's just like filled with more obstacles and it's just more difficult? How do you look at that?

• 18:09Speaker 02

  Well, look, I, I mean, I look at it as one member and Ripple's an important member of the XRP community that I don't, it is my very strong opinion that it's very hard to look at XRP as a security. I've made lots of points publicly about why that's the case.

• 18:27Anthony Pompliano?

  I didn't think you'd change your mind on that, but I just wanted to give you the opportunity if you did, but go ahead.

• 18:32Speaker 02

  Fair enough.

• 18:35Speaker 02

  You know, I think if XRP were deemed a security here in the United States, that, you know, where you have other major G20 markets that have already taken a different view. It's kind of like, I'm not aware of any market globally that thinks XRP is a security. And so, you know, you think about it, all right, so why would we here in the United States want to make a decision that's out of sync with other major G20 markets? Why would we want to create an uneven playing field that advantaged these Chinese-controlled technologies, particularly frankly, in a Trump administration? Whatever you may think about that. And I just step back and think, all right, why, like, is this the best path? Like, who are we solving for?

• 19:20Speaker 02

  And, you know, there's plenty of conspiracy theorists that, you know, are out there that have all kinds of conjecture about all kinds of things. I just look at it and think about, look, you've got a bunch of companies here in the United States building upon an open-source technology that isn't controlled by the US, isn't controlled by China, isn't controlled by Ripple. We should want to fuel and foster that. We should want to provide the clarity, the certainty, the level playing field. And I don't, I think that if there were a negative determination made, that would mean that, okay, in the United States, people would need to be thinking about, if you trade XRP, well, you need a broker-dealer license. You know, you also have examples which, you know, like today PayPal has announced

• 20:04Speaker 02

  their intent to support these things. And they have actually, my understanding is they have been relatively transparent that, hey, we're not supporting XRP at the opening of PayPal support because of the lack of regulatory clarity. Well, you know, all right, so that gives these Chinese-controlled technologies, where the Chinese Communist Party certainly has, if not control, heavy influence. I mean, again, I'll digress to simply point out. Ant Financial, the largest IPO in history, is delayed by the Chinese Communist Party. Let's not pretend that if the Chinese Communist Party wants to provide control or oversight in some way of these concentrated miners in China, I think that's not, that's not realistic.

• 20:47Speaker 02

  And again, I'm not necessarily even saying, let's just acknowledge it. And let's decide, okay, does it matter? Is it critical? Let's, let's not pretend it's not there. Let's acknowledge it's there.

• 20:56Anthony Pompliano?

  Well, but hold on a second. So there's a difference, though, between could they exert influence over miners that are a minority part of the network, right? Versus

• 21:07Speaker 02

  I'm not a minority.

• 21:08Anthony Pompliano?

  Of course they are. There's, there's nobody who's got 50 plus percent control.

• 21:12Speaker 02

  Four miners in China have well over 50% control.

• 21:16Anthony Pompliano?

  But that's 200%.

• 21:19Speaker 02

  No, sorry. The, the, the combination of four miners have over 50% control.

• 21:23Anthony Pompliano?

  Yeah, well, no, they, they've got over 50% of the mining hash power, but they don't have control of Bitcoin, right? It's not like the Chinese Communist Party can change anything or do anything. They, there are miners.

• 21:35Speaker 02

  If you control a majority of the hash power, the miners are the masters. If you control a majority of the hash power, you know, we have seen 51% attacks on other blockchains. If the Chinese Communist Party, I mean, if what you're saying is you don't think the Chinese Communist Party could go into those four miners and say, hey, you need to do X, Y, and Z. I mean, I would, I'll ask you, is that, is that the position that you're?

• 22:01Anthony Pompliano?

  I'm trying to understand what your argument is in terms of you're saying that the Chinese Communist Party has the ability to essentially 51% attack the Bitcoin network.

• 22:11Speaker 02

  What for sure they do.

• 22:13Anthony Pompliano?

  Oh, I disagree with that for sure. All right, hold on. Wait, wait, wait, time out, time out, time out, time out, time out. Put a pin, hold on, pause. We, you, I know you well enough and I think you know me well enough. We're not going to change each other's mind on this. So just put a pin in that one.

• 22:27Speaker 02

  Okay, well, let me ask two questions.

• 22:29Anthony Pompliano?

  Okay.

• 22:29Speaker 02

  Do you think the Chinese Communist Party could, if they wanted to, control those four miners?

• 22:34Anthony Pompliano?

  No.

• 22:39Speaker 02

  But they can control the IPO of the largest, I mean, like by compare.

• 22:42Anthony Pompliano?

  Of course, no, what they can do is they can shut the miners down.

• 22:47Anthony Pompliano?

  Right, but like the Chinese Communist Party does not control Ant Financial in terms of make the business decisions. What they did is they stopped the listing on an exchange, of course, but they control the exchange. They don't control Ant Financial.

• 22:59Speaker 02

  If I come back to you with like maybe five examples where the Chinese Communist Party has actually made decisions at a more micro level than you.

• 23:07Anthony Pompliano?

  But here's, here's a good example. Hold on. If you use the Ant Financial example, right, that would be like me saying that the SEC controls Ripple, right? Because

• 23:17Speaker 02

  Well, first of all, you just compared the Chinese Communist Party to the Trump administration.

• 23:21Anthony Pompliano?

  To the SEC.

• 23:24Speaker 02

  Look, I, I don't believe that a comparison to how the US government works and how the Chinese government works is a

• 23:30Anthony Pompliano?

  No, I know. My point, my point being that when Ant Financial goes to conduct the IPO, right, it's very, very well documented that Jack Ma said some things that sounds like it pissed off the CCP and there was, whether directly or indirectly, you're not going to take the company public right now, right? Was it a decision made and that was executed? The, why it happens is, besides the point, it's just the fact that, yes, they stopped that from happening. That is, in my opinion, no different than if an outside regulatory body or the government stops you from listing on an exchange or doing something. Now, I think where people have the problem is why it happened, right? Like imagine if you were trying to conduct business and if you said something that, you know, upset somebody, then they would

• 24:15Anthony Pompliano?

  come after you type situation. That wouldn't be a good business environment to operate in. But let's go all the way back for a second. Hold on. So if, if XRP was deemed a kind of a negative ruling in your opinion, then really what it does is it might not necessarily hamper your ability to operate globally, but definitely in the United States, it would drastically change the way that you can operate, if not even make it nearly impossible to do it based on how the system's built today?

• 24:42Speaker 02

  No, I mean, that's too far.

• 24:43Anthony Pompliano?

  Okay.

• 24:44Speaker 02

  Like, look, a lot of what Ripple does today in the United States, we could continue, no problem. You know, a component of what we do today is, you know, our customers of ODL, on-demand liquidity, they buy XRP from us. If, in fact, then that is a security, we would have to get a broker-dealer license. Anybody who's buying and selling XRP in the United States has to get a broker-dealer license. The reality is, what we would probably do is just say, okay, in order to provide certainty and clarity on a go-forward basis, we would want to look at other markets, other jurisdictions where there is that clarity. And, you know, earlier in this conversation, I highlighted the UK, I highlighted Japan, I highlighted Singapore.

• 25:27Speaker 02

  These are all markets where, you know, you do have that clarity, where you can operate with certainty. And Ripple could keep, you know, moving forward. And, I mean, frankly, most of our customers are non-US customers by a long shot today. And so we could absolutely continue to build the business and grow. It just, we would no longer be a US taxpayer. We paid, you know, I don't know, probably order of magnitude, a couple hundred million dollars in taxes here in the United States. And I just think that it doesn't serve, I think, the US agenda to, to drive us offshore.

• 25:56Anthony Pompliano?

  So this is a really important point. I don't, I don't know if you guys published this number or not, but if you're able to share it, the percentage of customers that are US versus international, I think most people, when they think of large companies, they think of them as like, hey, they started in the United States, they penetrate the US market, and they kind of internationally expand. And so the US is usually like a big portion of the business. Crypto is a little bit different, right? Where companies actually, like, they can be global on day one. The whole point of what you're building is that you can operate anywhere, right? And so you and other crypto companies naturally have like much larger international customer bases than just a traditional company. Is that like a 10% of customers are in the US or more like 45%?

• 26:40Speaker 02

  More than 90%. Of RippleNet customers are outside the United States.

• 26:44Anthony Pompliano?

  Wow, that's a huge number. Okay.

• 26:46Speaker 02

  Yeah, so look, you know, cause effect. And one of the things that's interesting here, I don't, I can't know this, I'm speculating here, but like, if there was more clarity here in the United States and certainty, would that number be different? I don't know. And certainly, one dynamic is we're solving a cross border payments problem, which is more paying for smaller economies, because, you know, a lot of banks, a lot of financial companies here in the United States, the percentage of business they do that's domestic payments versus non-US payments is different. Look, it all kind of goes back to, we need a framework that provides this clarity. I will highlight in a really positive way, and particularly these days, not many people are saying nice things about what's going on in Washington, but

• 27:30Speaker 02

  you know, there's some legislation that was introduced before the election called the Digital Commodity Exchange Act, and this would be a huge step forward in providing regulatory clarity, and I think it would really bring the US to kind of equal footing with some of these other major G20 markets.

• 27:46Anthony Pompliano?

  CFTC, I think, put this forward?

• 27:49Speaker 02

  You know, I'm not sure I would attribute it to the CFTC as much, I don't have the names right in front of me, but you know, this was brought by a number of reps. And I do view this as pretty bipartisan, you know, it isn't just, you know, hey, what do Democrats think or Republicans think? It's, look, we need this clarity. The bill was introduced, I think it was in the AG committee, and did, you know, it got some traction and I think will be revisited, you know, when Congress comes back in session in the spring.

• 28:17Anthony Pompliano?

  The reason why I mentioned the CFTC is I interviewed Chairman Tarbert and we discussed it, and he seemed like relatively receptive to that framework. Let me ask this, if 90, 95% of your customers are outside the US, and there's the lack of clarity in the US, is there a world where you just say, basically, you know, not screw the United States, but like, we're better served just moving everyone outside the United States and just like operating the business everywhere but in the US? Or is that too aggressive of a kind of position to take?

• 28:53Speaker 02

  Look, you know, I guess randomly mentioned before, like, I'm a kid from Kansas. We are a proud US company.

• 29:01Speaker 02

  Our preference would be to remain a very proud US company. Could we operate successfully outside the United States? I think it's clear we could. That isn't our... And I also want to be clear, you know, we get lots of stones get thrown in the crypto community, and as you and I talked about, I was with you last time, I think we all should kind of like, look, all boats can rise. And even my comments around, you know, Bitcoin and potential control of the Chinese Communist Party, I say that in a way like, how do we actually acknowledge that? And like, what are the implications? And let's think about how we could address that. For me, it's, I would like Ripple to stay a proud US company. If there are dynamics that limit our ability to be successful here, then of course, you know, I have full share responsibility.

• 29:46Speaker 02

  I want to see Ripple be as successful as possible, and I want to do the things that will help achieve that.

• 29:52Anthony Pompliano?

  So there's going to be a change of administration, it appears. I'll say it appears because in 2020, I'm not going to think anything is official until it happens. But under a Biden presidency, does this become a better solved problem? Or does it actually get worse? Like, how do you kind of think of a Trump administration, a Biden administration, and what that means for the crypto regulation?

• 30:20Speaker 02

  Yeah, it's a good question. I mean, I think a lot of the stuff we have been talking about isn't a Republican or Democrat, and, you know, by extension, I don't think materially changes in a Biden administration. There's a lot of bipartisan support for, you know, using Ripple's point of view of like, hey, should the US have improved underlying financial infrastructure? And frankly, even as we saw through the stimulus, that, you know, the ability to actually have low friction, ability to distribute money was challenged. So I think it's a pretty bipartisan. The two things I think may change, I mean, so, one, I do think there's more and more understanding of the potential, I'm responding to your comments.

• 31:02Speaker 02

  Commentary, the potential for China's control is is a factor that I think is is rising to the fore. The the second is, I think that in this, I think, may change in a Biden administration, is the attention and concern from an environmental point of view about all things environment. And by extension, understanding that today, and again, I'm not saying I'm long Bitcoin, but understanding that today Bitcoin mining obviously consumes a lot of power. And, you know, how do we think about that? You know, are there ways that we we could improve that? I I think you know well, Pomp, that, you know, Ripple has worked as regulators

• 31:44Speaker 02

  since the very beginning and somewhat in the earliest days of crypto controversially. And I don't think any administration change here in the US is going to have a material impact or change. It's it's a bipartisan issue. Both sides of the aisle care about transparency for consumer protection. They care, I mean, maybe one side cares a little more about environmental impact. But like, I I think the macro trend lines here in the US, the macro trend lines globally are very positive for crypto. And I think that's one of the reasons why we're seeing, you know, things that the market overall do so well. And obviously, with, you know, Bitcoin as a bellwether, leading that charge, you know, almost back to, you know, three year highs, I think, and almost all time highs, I I remain very bullish.

• 32:29Anthony Pompliano?

  Yeah. What about Jay Clayton stepping down from the SEC or like a Brian Brooks? He's temporary head of the OCC right now. Maybe he stays, maybe he doesn't.

• 32:39Speaker 02

  Right. Nominated today.

• 32:41Anthony Pompliano?

  Yeah. So what is kind of the, does, is there material change if either one of those, well, Jay Clayton is definitely stepping down and Brian may or may not stay, like, does that have an impact? Or again, is this so much bigger than any one person or one organization? And it really has to be kind of a a national, almost a focus, right, to kind of get this clarification?

• 33:04Speaker 02

  Well, I think I'll maybe comment first on Brian Brooks. I mean, under Brian Brooks' leadership, they've taken a very pro-industry stance. I think, yeah, the OCC has published several letters in this, allowing banks to service crypto companies, even hold crypto. And that's a very big deal, I think. I actually think some of, when that was first announced, I think it was under-reported or under-understood, if you will. I think it's a really big deal, and I think it's very positive for the industry. And again, I think if, if we believe these technologies around crypto and blockchain are consequential, and we want to put the

• 33:43Speaker 02

  US in a position to lead that next generation, I think the, the leadership from the OCC and under Brian Brooks has been a very big deal. You know, what does it mean for Jay Clayton to step down? I don't know. You know, it depends a lot on who is coming in as the next chair, and you know, what priorities they set. I hope that we find ourselves with a clear understanding that so far, the SEC has not provided a level playing field, right? In the, in the balance, they, they put their finger on the scale a little bit, and to advantage Bitcoin and Ether. And by the way, you have seen that, since those determinations were made by the SEC,

• 34:27Speaker 02

  Bitcoin, even in the period between Bitcoin's announcement and ETH's announcement, two and a half years ago, Bitcoin outperformed. Then you add ETH into the good housekeeping, and ETH outperformed the whole market, right? And that's, that's just logical, right? That makes sense. If there's clarity and certainty. And so, look, I, I think the SEC has tried very hard to, you know, get the abusive activity that was represented by the ICOs. You know, before you and I had met, I certainly was outspoken in my belief that ICOs were fraught with risk and likely to bring the ire of the SEC. I think it did. But I, I still think we haven't gotten that clarity. So they went after the tail of the bad actors, but we haven't really gotten that clarity at the head of,

• 35:11Speaker 02

  like, there's a handful of clear, you know, assets, digital assets being used in this market, and I think we should have that level playing field.

• 35:20Anthony Pompliano?

  Absolutely. The last thing I want to end on is probably the biggest change between the first time we talked and now, which is there's a global pandemic and the Fed has decided to step into markets and kind of everything that is tangentially related to COVID. How has that impacted both your guys' business, but also potentially you think the crypto regulation?

• 35:42Speaker 02

  So, you know, I think there's a well-understood dynamic where a lot of trends that were preceded the quarantine were already happening. I just think that the quarantine and dynamics associated with that have accelerated those trends and crypto is one beneficiary of that. The move away from cash to more digital transactions, certainly the crypto market at large as an inflationary hedge has benefited from trillions of dollars of stimulus here in the United States and really globally. For Ripple specifically, we still expect growth on a year-on-year basis. One of the key metrics we look at is transactions on

• 36:23Speaker 02

  the network. How many transactions and how is that growth rate? And look, we expect growth to be about 5X year-on-year. Now, I will say that's not quite where we thought it would grow more than 5X. On the other hand, if you say to most people like, hey, we're growing at 5X year-on-year, you're like, holy shit, that's fast growth. So, we're probably a little bit behind where I thought we would be. So, I don't want to pretend that COVID hasn't been an impact. But look, in many ways, remittances are as important as ever. The cost of remittances, the friction of remittances are as important as ever. And I think that bringing that to the fore and helping people understand how Ripple is solving those problems for banks, for financial institutions, for payments, I think

• 37:06Speaker 02

  is important. And I'm really pleased that the team at Ripple, I mean, it's been incredible to see. We have 500 people worldwide and just getting shit done in a different environment and firmly believing in the mission has, I think, helped in that regard.

• 37:21Anthony Pompliano?

  Absolutely. To close this out, what do you kind of think should happen with the regulatory environment? Is this a, I call it a national decree? Like, there's one body and they can just say, hey, here's the rules from now on. Go forth and build what you want. Is there some other kind of solution that you're looking for?

• 37:44Speaker 02

  No, I think the DCEA would be a perfect example of the DCEA, I mean, the Digital Commodity Exchange Act that I commented about earlier, it would be a major step forward towards regulatory clarity. And I think it would provide, you know, allow US companies to have, to be able to compete on equal footing. Look, I just want to keep emphasizing, we're not looking for the US government to do something to advantage the XRP community or to advantage Ripple specifically. All we want is an equal playing field. We want to level equal footing so that we can compete in the market side by side with the companies that they have already done things to advantage.

• 38:22Anthony Pompliano?

  Yeah. Where can people find you on the internet?

• 38:26Speaker 02

  Twitter is probably best, @BGarlingHouse.

• 38:30Anthony Pompliano?

  All right. Have you been answering tweets? I know people have got to be tweeting at you all the time.

• 38:35Speaker 02

  Every once in a while, much to the frustration of the communications team at Ripple, every once in a while, it happens mostly when I'm on a flight and I'm bored and I'll get on Twitter and I'll start commenting, which gives them a lot of angst that, uh oh, what's Brad saying? But no, I get on there once in a while. Look, the challenge is, of course, there's a lot of, I mean, frankly, it's a reflection of the politics of the United States. There's a lot of vitriol sometimes, just like, okay, come on, you know. And like, I understand different people are going to have different perspectives. I really do believe all boats rise here. And I spend way more time and energy thinking about how can I help other projects? How can Ripple help other projects? I'll remind you, like Ripple

• 39:15Speaker 02

  has invested literally hundreds of millions of dollars, not on XRP, but in other projects across the crypto community.

• 39:23Anthony Pompliano?

  Yeah. The thing that I think is so interesting is people decide to attack or not attack. And sometimes there's very good reason and then other times there's, you kind of are scratching your head as to why is that the good or the bad thing? So it's just a byproduct, I think, of crypto in general. But listen, Brad, thank you so much for doing this. If you guys want to ask Brad questions, hopefully he's flying soon and he will respond to all your tweets.

• 39:56Speaker 02

  I don't know when you're posting this, but if I get a slow afternoon, I'll go in there and reply to a bunch.

• 40:02Anthony Pompliano?

  All right. So if you guys want, tweet at Brad, I'll send him an email before we, before we post this, he'll be ready to go for, we will obviously be super kind and, and very thoughtful love letters, but try to, try to ask serious questions and hopefully you guys get some answers that I didn't ask. Brad, listen, thank you so much for doing this and we will have to do it again, my friend.

• 40:21Speaker 02

  All right. Good to see you. Go Kansas.