91 - Brian Armstrong and The Future of Coinbase

Brian Armstrong is the Founder and CEO of Coinbase. As a pillar of innovation and adoption in crypto, Brian is playing a pivotal role in determining the kind of future we’ll see in the space. The Crypto movement is a battle for hearts and minds, and Coinbase is fighting on the front lines. Building bridges between the legacy world and the Metaverse is a daunting task, but Brian has been a headstrong leader with a powerful vision. Coinbase finds itself in a position to maximize a user’s choice for what they do with their assets. With new features on the way like their NFT platform, Coinbase is steadily opening the doors for composability, decentralization, and ultimately… sovereignty. ✨ EPISODE DEBRIEF ✨ https://shows.banklesshq.com/p/exclusive-debrief-brian-armstrong ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ 📣 DHARMA | From Dollars to DeFi! https://bankless.cc/dharma ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini​ https://bankless.cc/go-gemini%E2%80%8B 💧LIDO | DECENTRALIZED STAKING https://bankless.cc/Lido 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ------ Topics Covered: 0:00 Intro 7:30 Brian Armstrong & His Start 14:11 Why Coinbase? 19:00 Money, Tech, and Values 25:48 The Drive and Vision 29:36 The Future of Coinbase 32:56 Retail, Institutions, and Developers 36:32 Relationship with DeFi 40:32 Coinbase Lend & CeDeFi 47:30 Public Goods & Decentralization 51:39 Eating All the Banks 58:09 Custody & Sovereignty 1:02:30 The Metaverse 1:10:02 NFTs and Mainstream 1:16:52 Withdraw to Layer 2 1:18:34 Regulation 1:26:40 Taking on the SEC 1:32:12 Maturing and Growing 1:36:27 Closing & Disclaimers ------ Resources: Brian on Twitter: https://twitter.com/brian_armstrong?s=20 Coinbase: https://www.coinbase.com/ The Master Switch: https://www.amazon.com/Master-Switch-Rise-Information-Empires/dp/0307390993 ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:07Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, Brian Armstrong on the podcast, CEO, co-founder of Coinbase. What an episode, what a conversation. What were some of your thoughts coming out of that?

• 0:34David Hoffman?

  I really liked the way that we actually structured the podcast, started talking about Brian the human, Brian with the person with the values and visions, and then turned that right into how that turned into a company called Coinbase. You might have heard of it. And then, of course, a number of the things that have gone around in the recent news cycle, Coinbase's fight with the regulators, their new NFT platform, their new NBA and WNBA sponsorships, a lot of things happening in the world of Coinbase. And also, a lot of things happening around the world of Coinbase, including banks feeling scared, Mark Zuckerberg turning Facebook into Meta. And then, of course, we finished, again, with the conversation about Brian Armstrong towards the end. As a crypto veteran of the 2010s, what he thinks

• 1:15David Hoffman?

  the 2020s will look like, and why he seems to be immune from this cycle of founders that create something, get wealthy, and get lazy, and then get disrupted. That's not Brian. Coinbase has yet to be disrupted. So what keeps him going? Why is he still here fighting this fight? And overall, just a nice look into both the person behind the company and also the company itself.

• 1:36Ryan Sean Adams?

  Yeah, I love that. And I love, by the way, you just patted ourselves on the back for a brilliantly structured podcast agenda. It wasn't that, David. Like, I really do think that it was a fantastic conversation. Got to know Brian a bit more, got to understand Coinbase. That's really what I was looking for out of this conversation, is I sort of wanted to, not explicitly ask the question, but I sort of wanted to find out, like, is Coinbase going to be the DeFi-friendly exchange, the DeFi-friendly crypto bank, or should we wait for another? That was kind of my question going into this. And that's That's very much why we started with with values and I feel like we've got a ton of values. The bankless movement has a lot of values alignment with where Brian was going to go.

• 2:19Ryan Sean Adams?

  And the thing that probably impressed me most was his answer when we asked him, when you asked him the question of, hey, Brian, how can we make sure that Coinbase doesn't just become one of the legacy banks that we all hate already, right? And his answer to that was exactly what I hoped he would say. You know, maybe to his detriment, I guess, like to his own. It was not the rational self-interest. It was more the founder willing to take a risk. Like, here's how I hope the world plays out sort of answer. And I've got a lot of, you know, respect for that type of an answer. So overall, this is very bullish, I think, on Coinbase's dedication to the bankless ecosystem,

• 3:04Ryan Sean Adams?

  the DeFi ecosystem, open, credibly neutral protocols, the things that we care the most about on our program. So, yeah, I think you guys will really enjoy this episode in unpacking all of these thoughts. We also talked about, you know, NFTs as well, the new NFT platform. We touched upon the regulatory situation in the US. And guys, let's not forget, Brian has been here since the very early stages too, okay?

• 3:30David Hoffman?

  Before crypto was cool at all.

• 3:32Ryan Sean Adams?

  Yeah.

• 3:32David Hoffman?

  It was not cool when Brian was trying to build Coinbase at the very beginning.

• 3:36Ryan Sean Adams?

  It was not cool. I mean, and so Brian is definitely, you know, some people have called you and I OGs here recently. I've seen that on Twitter, okay? We are not OGs, okay? Brian Armstrong is an OG, all right? This is somebody who's been in the space building from the very inception. The final thing I think I was left with is, um, this is not a trader, okay? This is not somebody who is in this for just the money, okay? This is somebody who is a builder in the space and cares about builder things. It's a very long-term oriented sort of focus. And I think that's pretty unique, even if you compare, you know, Coinbase to all of the other crypto banks in the world. It's kind of unique. There's a lot of that DNA in the company. So anything more that you want to say, David?

• 4:21Ryan Sean Adams?

  Or should we get right to it?

• 4:23David Hoffman?

  Yeah, there's so much more I want to say, especially exactly what you're talking about with why Brian was interested in making sure that he doesn't turn himself or Coinbase into another bank. But we'll have to save that for the debrief.

• 4:34Ryan Sean Adams?

  Oh, nice tease.

• 4:36David Hoffman?

  Where Ryan and I will save.

• 4:37Ryan Sean Adams?

  I like that.

• 4:38David Hoffman?

  Yeah, you like that? Where Ryan and I spend 20, 30 minutes just kind of debriefing, unpacking the episode, what were our thoughts about the episode itself? And that goes out to the premium subscribers of Bankless. So if you are a premium subscriber, stay tuned for that debrief. Lots to talk about there. And if you want these debriefs, you can go and sign up for the premium version of the Bankless newsletter, where you will get the private RSS feed, where you can hear our debriefs every single Monday. And with that, I think we should go right into the conversation with Brian Armstrong. But first, a moment to talk about some of these fantastic sponsors that make the show possible. Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot.

• 5:23David Hoffman?

  No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while and we'll say it again. DAOs have money and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO, apply for a grant to Uniswap. Just look at the size of the Uniswap Treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO? No matter how big or small your idea is, you can apply for a uni-grant at unigrants.org

• 6:07David Hoffman?

  and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless, and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless. The era of proof of stake is upon us. Proof of stake systems like Ethereum, Terra and Solana allow the industry to move away from the hot, loud and wasteful proof of work systems and return back to a Cottage industry of individual stakers and individual validators. And that is what we need to make this industry stay decentralized. Individuals must play their part in crypto network validation. And that is what Lido is here to do. Lido makes taking accessible to everyone at the click of a button. By delegating your stake to Lido's network of nodes, you can access the yield offered by proof of stake systems

• 6:51David Hoffman?

  and claim your share of the network transaction rewards. Do you have 32 ETH and want to stake it to Ethereum? But running a node sounds intimidating? Or maybe you have less than 32 ETH and you need to pool your ETH with others so you can access taking yields. Lido offers a solution for both. Simply go to lido.fi, choose which assets you want to stake and deposit them to the Lido validating network. Lido is working to make sure proof of stake stays as decentralized as possible and is committed to decentralizing its own validating network to eventually become a completely permissionless protocol. So if you want to stake your ETH, Terra or Sol and get liquidity on your stake, go to lido.fi to get started.

• 7:32Ryan Sean Adams?

  Bankless Nation, we are super excited to introduce you to our next guest. He needs no introduction, though. He's never been on the podcast, but that does not mean he is an unknown figure in crypto. This is Brian Armstrong. He is the CEO and co-founder of Coinbase. Brian, it's fantastic to have you on Bankless. How are you doing, sir?

• 7:50Speaker 02

  Doing great. Thanks for having me, guys. I've been a listener for a while and just been very impressed with all the content you're putting out there, so thanks for having me.

• 7:57Ryan Sean Adams?

  Well, that's awesome. I guess I would say join the mutual admiration club because I've been a Coinbase customer for quite some time. In fact, I think a lot of people listening to this podcast will probably recognize Coinbase as maybe like the first place they actually got into crypto. That was certainly my case. My first Bitcoin buy ever was on Coinbase. And I remember at the time, I didn't really know too much about crypto. I was kind of sketched out by many of the other exchanges out there. And Coinbase really made the experience feel safe, made it feel easy, and it got me over the hump. So I guess I would start by saying, Brian, thanks for building Coinbase, man. Love the product. It's great. Love what you've done with it.

• 8:36Speaker 02

  Thank you. I appreciate that. Yeah, we've helped to get hopefully millions. More people into crypto, which has helped the whole space. And it's just the beginning. So hopefully, you know, the space just has taken off in a crazy way in the last three, four years since we helped people get a little bit of crypto. And now our, our next big challenge is how do we get people to actually go use that crypto in all kinds of all these, all these novel ways and make that just as simple as it was the first time you went to buy it.

• 8:59Ryan Sean Adams?

  Yeah, that's super cool. We want to discuss a lot of that. Now, you know, maybe first, let's take you down memory lane a little bit just to talk about how far you've come. So Coinbase, as I understand, it started in 2012 or so. This is relevant news, not the first time you guys have been top of the charts in terms of the App Store, but you topped the charts last week. Coinbase sitting at number one in the iPhone, Apple iPhone charts. But I want to take you back to like, maybe 2013. My friend Dan tweeted this out a while ago, and I just remember reading this. This is a picture of you at a Coinbase booth. And I think you were like, single manning the booth, maybe at a conference, maybe a consensus conference, you know, I don't know, nine years ago or so, eight or nine years ago.

• 9:44Ryan Sean Adams?

  So tell us about the journey, right? So like, I feel like Coinbase has had to get a lot of things right in order to get from this single person booth to number one in the App Store. So number one, you have to be in the right place, right? Like, which is, you know, crypto, you had to be right on that. You also had to have kind of the, the timing right about things. And then you also had to, to execute. So take us from maybe all the way back here to now where you are. How did all of this happen, Brian?

• 10:14Speaker 02

  Yeah. Well, first of all, there, so there was three of us there. It was myself, Fred Ursom, and then Olaf Carlson. We, you can see on the left there in the gray T-shirt.

• 10:23Ryan Sean Adams?

  Is that Olaf right there?

• 10:24Speaker 02

  Yeah, he later went on to found Polychain. And so it was just us three. We were the only three employees at the company. Those gray T-shirts we were giving away there, you know, with some kind of terrible design probably that I threw together at the last minute, got, you know, probably off 99 designs or something like that. And if anybody still has one of those, actually, that'd be funny to post like on Twitter. They're, they're probably collector's items now. But, you know, it was a very scrappy operation. As you can see, we had just a couple of T-shirts in a little booth. Most of the companies who were at that, that original Bitcoin conference, you know, don't exist anymore, but the people are still around in some way, shape or form. And so it was like, it was, it felt like.

• 11:07Speaker 02

  The Chaos Computer Club, if you think about the early days of like Steve Wozniak and Steve Jobs. And anyway, it had a very kind of, you know, kind of altered vibe to it that was a little weird, but it was very cool. And so how did we get from there to here? I mean, so many steps along the way. I mean, basically, we just, we, we were three people at that time, just trying to make something that customers wanted. And the original idea that I had for Coinbase was when I first read the Bitcoin White Paper, I was like, hey, this is, this is about, this is cool. It's kind of like the internet. It's a, it's a new global decentralized protocol for moving information, or not just for moving information around, but for moving value around. And as somebody who had studied economics and computer science and was kind of excited

• 11:51Speaker 02

  about creating more freedom in the world, that really caught my attention. And so the first thing I could do, I thought to do, was the only thing I think I have to do was, all right, well, this technology is really cool, but how do we make it easier to use? So why don't I make a really simple hosted Bitcoin wallet? That was the very first idea I had. And my, my analogy at that time was like, kind of like GitHub, you know, is a very simple way to use Git, or Gmail is a simple way to use email. It's all hosted, it's in the cloud, so you don't have to worry about security and backups. And I had this thought like, you know, someone's probably going to make a Bitcoin company like that, like the Gmail for Bitcoin. And I started tinkering around with it on nights and weekends and applied to Y Combinator. And so suddenly we had a little bit of seed funding, we had two employees, and here I was at this conference.

• 12:33Speaker 02

  So, you know, right around that time, we really didn't have any traction. We had no users. I called people who had, who would sign up for the site, you know, I'd post a link on Reddit or somewhere like that. Hey, come check out this Bitcoin wallet I'm making. And some people would sign up, but they would never really come back and use, keep using the product. And so I called a couple of the people who had signed up. I actually, I just emailed them and said, hey, I built this app, can you, can I get on the phone with you? And I remember asking them, you know, why didn't you come back? And people said, well, I love, I thought it was pretty good, but like, I don't really have any Bitcoin. And so I didn't have any Bitcoin to put in the wallet. I remember asking them at one point, a little light bulb went off and I was like, "Well, if we put a simple buy button in there, would that, would you have bought some?" And they're like, "Yeah, probably."

• 13:17Speaker 02

  Because it's kind of hard to get. And so that led us on a bit of a journey to go get a bank integration and figure out some compliance stuff and integrate with an exchange. And eventually it made a very simple buy button. And from that moment Coinbase started to really grow quickly. And it actually got to a place where we were not pushing the boulder up the hill every day. The boulder started to roll down the hill and we started to chase after it as fast as we could, you know, with customer support inquiries and keeping the website up and getting enough working capital into the business to keep it running. So that was how it got started. I'll pause there because there's a million other things to get to where we are today. But that was the beginning.

• 13:54Ryan Sean Adams?

  Yeah, I think we're going to talk about a lot of those dots and like where we are today and also where you're going. But like, I'm also curious about this thread because this is also, I think, a conversation a little bit about, about you, Brian, like, you know, why you founded Coinbase and the reasons for it and the values, your DNA that's kind of imbued in the company. One thing that's interesting about that story is so Olaf was at the booth, you know, Fred was at the booth. They have both gone on to fund incredibly successful firms in the investing space, like funds in and of themselves, which is absolutely fantastic. You've stayed at Coinbase though, and you've continued to build. So I guess my question is like, why did you start the thing in the first place? And what's made you stay?

• 14:33Speaker 02

  Yeah, great question. So I think the thing that made me start it in the first place was that I, I read the Bitcoin white paper in like December of 2010. And it, it basically captured my attention in a really profound way. I remember having this thought like, wow, this might be the most important thing I've read in, in five, 10 years. And the reason that that happened was a few things. One was that

• 14:59Speaker 02

  I was always very passionate about this concept of economic freedom. You know, I had I had studied a bit of economics. I had read some Ayn Rand, you know, I was like very passionate about this idea of like, if we give people basically the ability to keep the upsides of their of their labor and made the global financial system more efficient in terms of how people, you know, generate wealth, keep wealth, have a stable currency, how do they participate in global trade, property rights, how can we make that? And I was like, that that seems like this kind of secret hiding in plain sight that like, what if the world had just better financial infrastructure and property rights? And we were able to somehow inject that into all these countries around the world? So I hadn't quite phrased it like that in my head, but that was sort of the inkling that I had at that time where I was really excited about it.

• 15:43Speaker 02

  And then the other thing was that I had always felt like I had been born a little bit too late to really start a great internet company. Because the internet was coming of age as I was in high school and whatnot. And by the time I graduated, there was like, you know, there was Google and Amazon and PayPal and all these things. And I it sounds very silly now to say, but at the time I was like, man, maybe how often does an invention like the internet really come along? I wish I had been there in the formative stages of the internet to start one of the the early internet companies. That would have been so cool. And so when I saw the Bitcoin White Paper, I was like, this sound, this is like maybe the next internet, you know? And I had always wanted to be an entrepreneur. Even in high school, I was starting little things with my friends. Most of them were not very successful, but the Bitcoin White Paper was this moment where

• 16:26Speaker 02

  I was like, all right, I might be crazy. My friends all think this is kind of silly, but I want to start something that's impactful and has has has an impact on the world. And this feels like it might be the next big thing. And it fits just it just aligns with my values. Like, I want I want there to be more economic freedom in the world. So this could be the kind of thing that I could get into for like 10, 20 years or more. So then you asked, I guess, why am I still here? Yeah. So it's fun. I mean, not every day is fun, right? There's parts of it that suck. But for the most part, it's fun because it scratches an itch for me, which is I like learning new things and being the CEO of a company is like always pushing you outside your comfort zone to some new challenge. I also love building things with technology.

• 17:10Speaker 02

  That's kind of one of my great passions in life as a, you know, I studied as a computer scientist or as a software engineer. And I just, I just love building things with technology as a way to improve the world. Like that's, even if, you know, I retired or I was like stuck in a cabin by myself in the woods for like 10 years, I probably would just try to build things. That's like who I am. And so it scratches that itch. And it basically, as Coinbase grows, we have more and more resources and people to try bigger and bigger things, to try more ambitious things, to try more impactful things. You know, I want us to eventually get to be having a billion people accessing this open financial system through our products every day. And that's fun. So as long as it's fun, I don't see myself changing on that dimension.

• 17:54Speaker 02

  But I'm really happy also for a lot of the early people at Coinbase, including Fred and Olaf and dozens of others who went on to start crypto investment funds, other companies in the space. Like one of the things I'm really proud of is that Coinbase has spawned a lot of startups in the crypto space. And that to me felt, feels like, okay, we had this nexus of culture in the very, very early days, which helped educate a lot of people about this. And then they went on to do even greater things. And that's, by the way, that's still true today in an even bigger way. We have so many people, like Coinbase Ventures is our investment arm. We made like 47 investments in the last quarter, like in the last three months of people starting crypto companies. And a lot of those were like connected to Coinbase or former employees of Coinbase.

• 18:37Speaker 02

  So I feel like the ecosystem is just in the very early days. It's, it's just, you know, hopefully the Coinbase mafia keeps growing out there.

• 18:43Ryan Sean Adams?

  Yeah, it definitely does. I mean, we've spoken to a number of members of the Coinbase mafia. I guess Antonio, the founder of DYDX, maybe most recently, but you guys are definitely, you know, spreading. I'm curious about values, right? So you mentioned sort of the feel of like circa 2013 in crypto where it felt sort of home. Brew, Compute Club, sort of felt like very chaotic and very interesting.

• 19:05Speaker 02

  Yeah, sorry, Homebrew, that was the name of it. The chaos was something else. It's a security conference.

• 19:08Ryan Sean Adams?

  Yeah, yeah, yeah. So I want to ask a question about like, so I think people come to crypto for different reasons, right? In like bankless, we often class, there's tourists, there's sort of mercenaries, and then there's like settlers, right? And some people are here for the money. Some people are here for the tech, hard problems, that sort of thing. Some people are here for the values, right? And I'm curious to hear, because I think you can really plot the trajectory of an individual based on the reason that they're actually here. I recall reading an interview, I think this was Forbes, of an exchange founder. This was a recent Forbes article in October. And the interviewer asked him the questions like, hey, if you could abandon crypto and just trade like orange juice futures, you know, would you do it?

• 19:51Ryan Sean Adams?

  And his answer was yes, right? Like, I'm kind of here for the money, right? Now, I want to give that money to philanthropic causes. I believe in altruism. But I'm not actually here for crypto values. So I'm curious, when it comes to Brian Armstrong as like the reason you're in crypto, and you had to rate money, tech, and values, which comes first on your list?

• 20:15Speaker 02

  Yeah, so I think it started with values for me.

• 20:19Speaker 02

  I love the, I love the tech also. I mean, look, money is, money is great. I think that it gets a bad name. People think, oh, well, it's just profit driven. I, you know, I'm a capitalist at heart. I think probably a contrarian view, even in today's climate. But I think capitalism is a force for good for the world. And if you accumulate capital, you can do even better things to improve the world. So I don't want to shy away from capital at all. But the thing that, that certainly got me excited about crypto in the first place was the values. It was really this idea that I, it just never made sense to me. Like, why does every country have some small number of people with their fingers on the dials, manipulating the currency?

• 20:58Speaker 02

  That seems like a huge conflict of interest, especially since we got off the gold standard in the 1970s with Nixon and all that. And actually, I spent a year living in Buenos Aires, Argentina in 2009, and I got to see firsthand. And what it looks like a country that had gone through hyperinflation where it was not just a little bit of an issue. It was like it was a massive issue and inflation is like this really insidious thing because it actually erodes wealth from the poorest people in society like, you know, wealthy people can buy assets that adjust for inflation like real estate. That's that's guaranteed scarcity or they can buy stocks or whatever. But poor people are holding their money in cash and it's really like a tax on the poorest people in society. So it's this completely unethical thing.

• 21:38Speaker 02

  It's hiding in plain sight like most people in the world don't really quite understand or appreciate what it is because they've never lived in a higher inflation country like outside the US. Although frankly, you know, the US may be in danger of becoming a higher inflation country here, which is something we could talk about too. But that was something, you know, I also I had worked at Airbnb as an engineer and they were they were trying to move money into and out of 180 countries around the world for the for their business. And I got to see just how inefficient it was. And if you compare it to things that we know of and use in tech like email or WhatsApp or webpages or whatever. You know, if you send a WhatsApp message, it goes anywhere in the world. It doesn't care what country you're in. Not every country is using their own proprietary messaging system, you know, that that would just be silly.

• 22:24Speaker 02

  There's not a tax at the border when it when it crosses and it arrives instantly, right? But money is not like that. It's like every country of the world has their own proprietary system. It's like not super interoperable with the other countries. There's a high fee whenever you move the money. There's also delays. And so I just think of it as this huge unnecessary friction on the world economy, which is how money moves and how everybody's on a proprietary system. Usually there's a couple oligopoly players in each market who control payments into and out. And it's a lot of corruption too. It's just like in a lot of countries, you know, they they're not issuing bank licenses anymore. Like you need to be the cousin of the president or whatever, or bribe somebody to actually get a bank license in a lot of countries.

• 23:06Speaker 02

  And so this corruption basically just hurts the idea of good property rights and a well functioning economy. And it just I experienced it as an entrepreneur. I experienced it at Airbnb. I experienced it while living in Buenos Aires, Argentina. And so I had just like kind of felt it viscerally that this was unfair, you know? And so that's what got me excited about crypto. I was never really a trader or anything like that, to be honest. I was more of like a tech guy.

• 23:33Speaker 02

  I still to this day, like we have, we have a huge institutional business and I go to Wall Street and I talk to all these firms that are onboarding and now like big institutional, traditional players are all moving a bunch of money into crypto and frankly, it's there, they speak like a different language. I'm still like trying to learn the language after, you know, many, many, many years. And I have a bunch of amazing people on our team who come from that world and are able to grow that part of our business. But I, yeah, I, I don't really actively trade crypto either. I just, I buy and hold. You know, I'm in the camp of like, I, I never really want to sell Bitcoin or other crypto that I own, like, unless I need to buy something specific. So I, I feel like this is the future of

• 24:14Speaker 02

  the financial system. I think in 20 years, it'll be a substantial portion of global GDP and I'm just, I'm in it to create more freedom. That's, that's what I'm all about.

• 24:23Ryan Sean Adams?

  So there's no Brian Armstrong meme coin portfolio, degen portfolio out there then? You're a buy and hold guy?

• 24:29Speaker 02

  Uh, no, I mean, look, there's a lot, I actually, one thing that kind of bugs me about the crypto industry at times is like, I do think there's too much focus on like short-term thinking and get rich quick and all that, like the Lambos and all that. I think it's, I think it's unhealthy. Because first of all, a lot of people are just going to get in for the wrong reasons and then something's going to crash and they're going to lose money and that's not good for any of us. That's what really pisses off regulators and people like that as they come in, hey, this, consumers aren't being protected, right? So I've always tried to think of this as long-term thinking. How do we ensure that consumers have appropriate disclosures, how they making, you know, well-informed choices? Like dollar cost in averaging with a small amount of your net worth and hold for the long term? And how do you, it's not really about the speculation too. It's about how

• 25:13Speaker 02

  do we actually use this stuff for more and more parts of the economy? Because as we get more and more people actually using crypto, everything else makes sense. It's no longer, it's no longer speculation. And the good news is that's finally happening. I can't, I can't tell you how many years I would go to conferences and People would ask me these questions like, so when are the use cases coming? You know, and like, nobody asked me that question anymore. Tens of millions of people in the United States alone, and not mentioned the world, are using crypto for a lot of stuff now. So I feel like that ship has sailed, which is really good.

• 25:45David Hoffman?

  Brian, one of the themes we like to explore the most on Bankless is how the values of the person impacts the things that they create, whether that's networks or companies in your case. And so how have your values that you've learned throughout your time in Argentina and, you know, just being a human in this world, how has that come to impact the drive and the vision of Coinbase? Because Coinbase is very famously a tunnel vision company, as in they have the future of the world that they want to see manifest, and then have that, you know, future version actually be manifested. So how have your values come to become instantiated inside of Coinbase? And then what are Coinbase's values if they all are different than yours?

• 26:23Speaker 02

  Yeah, it's a great question. So, you know, I think actually companies really demonstrate the values of the founders. It's not, not all companies have founding CEOs still because they, they move on sometimes. But really, especially in startups and any company that still has a founding CEO, there's, there's a very direct link often to the values of that person. I think that's true in our case as well. So one of those examples of our, of our values, and by the way, you can look up online. We, we used to distinguish, these are our values, these are, this is our culture doc. I eventually just combined those, and so now we call it just our culture doc. If you, if you Google Coinbase culture, you can find a list of them. But some of the areas, I'll just talk about how those manifest inside the company.

• 27:08Speaker 02

  So one of them is this idea of long-term thinking and just not cutting corners. So we really try to be the most trusted brand in the space. That means focusing on cybersecurity. It means focusing on compliance, proactively working with regulators. It means not trying to like add every coin under the sun. We were very thoughtful about like doing rigorous analysis about securities laws and compliance and all this kind of stuff. By the way, to our own detriment, there, sometimes there was, there was times where I would have said, man, can't we just make everything available and let the market decide and we'd have more innovation? But, you know, we do want to create trust. And so it's always, I think, you know, taking the balance of those other stuff that came from me. So.

• 27:50Speaker 02

  I love efficient execution. I love it when companies get rid of bureaucracy. People get a lot of high-quality work done quickly. They do that in a bunch of ways. They do it by not letting a bunch of tech debt accumulate. They do it by having really clear communication. Like, one thing you'll notice if you come to Coinbase is almost everybody is a very clear and concise communicator. I'm kind of obsessive about that. I also love this idea of companies, companies really are only as good as their products, and the products come from the people that are there. And so, we try, we have this idea of like championship team at Coinbase. We try to just only hire people where, where hell yes, you know, it's not like if you're not a hell yes, you're a no in terms of hiring.

• 28:30Speaker 02

  I mean, there's a bunch of others, but one, one last one I'll mention is that I really love this idea of continuous or repeatable innovation. And so, a lot of companies, I think, they, they get one product to work and they have, they're kind of a one-hit wonder and they're like, okay, let's just scale that thing. And I really wanted Coinbase to be a multi-product company that kept building new stuff. I was very inspired by like Google and Amazon in this regard. And so, what we do is we take 10% of our resources and we put it towards venture bets or like moonshot type bets. And so, a lot of, a lot of things have come out of that, like Coinbase Wallet, our self-custodial wallet came out of that, Coinbase Commerce, we're launching our NFT thing next.

• 29:08Speaker 02

  And so, I never want us to be a company that kind of gets complacent and rests on our laurels and says, oh, we're so great because this thing is growing around the world. It's like, no, technology always moves faster and there's always going to be some new thing on the horizon that's going to come disrupt us. So let's always be building the future, you know, with 10% of our resources while we're putting the rest towards more adjacent bets or the existing core infrastructure. You don't want to neglect that either. So those are some of the values that have crept in that it kind of came from, from me and the early folks.

• 29:38David Hoffman?

  One of the hard things about coming to understand how this industry works and what it is for people who are just learning about it is that the definitions and lines around crypto are very, very blurred. Like, is it a security? Is it a commodity? And that's not just a conversation about the assets, but also about the companies inside of the space as well. And so, I want to ask with the vision of Coinbase now, kind of, you know, in the listeners What does Coinbase want to be when it grows up in the next five, 10 years? Because is it a bank? Is it a tech company? Like now you guys have this NFT platform. You would never see a bank have an NFT platform. And so like, what is Coinbase? What is it trying to aspire to be when it is in its, you know, maximally successful version of itself?

• 30:24Speaker 02

  Yeah. Yeah. So I think of it as a spectrum. You know, there's like, there's financial service companies on the left, like, like banks. And then there's tech companies to the right of that. And then if you go even further, there's crypto companies. I think crypto companies are like the next evolution of tech companies. And so we want to be a crypto company. I'd rather be a tech company than a financial service company, but I'd rather be a crypto company than a tech company. And I think the best tech companies are going to all become crypto companies.

• 30:54David Hoffman?

  So in your mind, Brian, this is like an evolution, right? It's like bank, tech company, crypto is kind of along an evolution. You don't see Coinbase as being somewhat in between a bank and a financial company. You see it being sort of this third thing, this more evolved state. Is that right?

• 31:11Speaker 02

  Yes. And that, I should be clear, that's aspirational, right? So I don't think we're fully there yet, but that's where I want us to keep going. I want us to keep decentralizing Coinbase, embracing decentralization, like self custody and DeFi and smart contracts and all this stuff. Now, this is, this gets complicated, so I'll give you another layer on this, right? So our core business today, which generates most of our revenue, is a regulated financial service business. So how can these things be compatible? Well, the way I think of it is that, you know, to get all the fiat money in the world, into crypto, into this new crypto economy, we have to build a reliable bridge between that finance 1.0 and finance 2.0, right? So that means, that means we have to go work with regulators.

• 31:55Speaker 02

  We have to go work with traditional bank partners. You know, I don't have any aspirations of Coinbase ever becoming a bank, but even, let's just say someday hypothetically in the future, you know, we may even have to own a bank for some reason, right? Because the regulatory environment sort of catches up and it decides that that's required. And maybe we have some subsidiary that's a bank or something, but we try to, honestly, we would even try to kind of coordinate off from a culture point of view, because I don't want that type of thinking to permeate the entire organization. And so even while we're helping build the bridge from finance 1.0 to 2.0 and get all the more and more fiat money into crypto. We also want to be building the crypto economy. And so that means embracing more of the decentralization piece. And so like a very rough analogy I'll make is that, you know,

• 32:39Speaker 02

  Google makes most of its revenue from ads, right? AdWords. But it's, I don't really think of it as an ad company because they're making self-driving cars and Android and Google Chrome and like, so sometimes you have a really great business model that is difficult to do something and it generates a lot of revenue. But I want to be a company that uses that revenue to help build the future and not get too caught up in being in the old world, if that makes sense.

• 33:06David Hoffman?

  Yeah, one of the things I want to learn from this is crypto is evolving just as fast as anything these days. And so do the companies that are inside of crypto need to keep up with the rate of crypto change in order to stay alive with the industry? So I want to hear about the product vision for Coinbase as it relates to so many different things about crypto. And so what is Coinbase's product roadmap, product vision? You guys are now, you know, going headfirst into NFTs. You recently had this lend product, which we'll talk about later during the regulatory section. So the products that are coming online out of Coinbase, so what is the theme of them? And what's the vision behind that?

• 33:42Speaker 02

  Yeah. So I'll break it down into three parts because we actually have three different customer segments now as a multi-product company. So the first customer segment is individual people, retail investors, if you will. The second one is institutions or businesses that are companies. The third one is developers. So let me, let me just talk about each of those briefly. So the first one on this retail side, our, our product strategy is to be the primary financial account in the crypto economy. So that means we're the primary place where you store your crypto, but also increasingly you can connect more and more things into that primary financial account. So you can do borrowing and lending, or you can have Coinbase card or Coinbase earn. And in the near future, you can even connect third-party applications,

• 34:28Speaker 02

  like any kind of DeFi app or whatever, into that primary financial account. And it's, it's like, yeah, it's the place where you store all your stuff, but you can also use a lot of things through the primary financial account.

• 34:39Speaker 02

  The second customer segment, these institutions or businesses out there that are now increasingly getting into the crypto space, for most of them, they have the, you know, we also want to be the primary financial account, but it's, it looks different. It's, we have to be a qualified custodian. We need to be a prime brokerage. They want to do massive like OTC trades or have different kind of security audit requirements. And so we're also the primary financial account for them, but the products look very different. In the third customer segment, these developers, this is where we want to be a kind of more like AWS for crypto. So we're taking a lot of the services that we've built out internally at Coinbase, which power our products, like how we talk to all these different blockchains, how we custody, how we trade, how we do staking,

• 35:24Speaker 02

  and even identity and logins and stuff. And we're exposing those through these services via Coinbase Cloud. That's, that's our product for developers. And so what we hope is that that can be sort of a tool that, you know, thousands of other crypto companies or non-crypto companies can use to integrate into the crypto economy. And they don't have to store the crypto with us. They could be doing a self-custodial wallet built on top of that, or they could be building their own custody, or it could be like, you know, Reddit has like these, a kind of a wallet now with these different tokens and different subreddits. So I think in the future, most startups are going to use crypto in some way, shape or form. A lot of big companies like banks and whatnot are trying to figure out how to integrate crypto into their products. And they don't all need to come directly to Coinbase.

• 36:06Speaker 02

  Hopefully, they can also use Coinbase Cloud to build a lot of that stuff. So that's, that's a lot of the stuff on our roadmap. We're also doing a lot of international expansion, by the way. So we're trying to get more and more global coverage. And we're trying to do this, the 10% venture bets I mentioned with the repeatable innovation to build cool new stuff that it all plugs into the primary financial account.

• 36:28Ryan Sean Adams?

  That's so interesting. So retail, institutional, and then developer. And I wonder how that changes as you move from kind of a financial services type crypto company to a fully fledged crypto company. I wonder if those segments change in the future, but you could keep us updated. I think one of the reasons we wanted to have you on, Brian, is because Coinbase has just a Tremendous amount of influence in the space now. And that's, you know, hats off to you. It's because of the fantastic product that you've built. I think 60 million some accounts. So with that influence, I think comes some power, some amount of leverage in the industry, some amount of power. And so one of the questions I think Bankless listeners have is, okay, what's Coinbase going to do next? How do they see the world?

• 37:13Ryan Sean Adams?

  Because they can not only partake in the ecosystem, but they can actually influence it in different ways. So I want to understand a bit more how Coinbase sees the world. And I want to take this in like maybe three parts. First Coinbase relationship with DeFi. And then talking about Coinbase relationship with the existing banking system. So legacy banks, we might call them. And then third Coinbase's relationship to the big tech companies of the world. Right? So those three parts in your mind. But let's start with DeFi. Okay, so what's interesting about Coinbase's vision and about DeFi's vision is some of the visions are kind of complementary. Right? So you mentioned being able to do things in crypto,

• 37:54Ryan Sean Adams?

  like lending, like staking, like borrowing, like trading. Right? There are ways to do that inside of a Coinbase in maybe DeFi advocates would say in a more centralized way. There's also ways to do this inside of the DeFi ecosystem. And so some people ask the question, okay, is DeFi and Coinbase, are they competing then? Are they competing for liquidity? Are they competing for customers? The Bankless take on this, by the way, Brian, is actually, these are just open protocols that the Coinbase's of the world can build on top of. We have this thesis. I don't know if you've heard of it. It's called the DeFi mullet, where we think like they'll be kind of banking in the front and then like DeFi in the back for a lot of organizations. But I want to hear how Coinbase thinks about DeFi.

• 38:39Ryan Sean Adams?

  Is DeFi a friend? Is it a competitor? Is it some mix of both? What's your take?

• 38:45Speaker 02

  Yeah, so I think DeFi is unequivocally a friend.

• 38:49Speaker 02

  It's been, I think it's been clear for a couple of years now that DeFi is something really important that a lot of customers want to use. And so It's certain, I think it would be a huge mistake for us at Coinbase to say, well, you know, centralized is the only way built products built by Coinbase or something, you know, that just wouldn't make sense. We have to go where if customers are telling us they want to use this stuff, then we've got to make it easy for them to do it. Otherwise, we're just not relevant. Right? And so, yeah, we're definitely on a path to integrate some more of these DeFi services. So, you know, in Coinbase, the custodial app, which is the main one that most people use today, we are making more and more DeFi services available there. And I think your mullet is a good analogy. Like, there could be a

• 39:33Speaker 02

  very simple interface that, you know, maybe the average person doesn't even know they're using DeFi, but behind the scenes, it's using those protocols. And that just gives them more, you know, more functionality, more assets to trade, whatever it is. Now, I think we also have Coinbase Wallet, which is our self custodial app, which, by the way, has grown like something like 3X in the last year. And so, that's another option where we can have people access the whole world of DeFi through an interface where they even have full control of the custody itself. And there's, there's a whole kind of, I think, healthy tension or something like that between the Coinbase custodial app, which, you know, is regulated as a financial service business, and the self custodial wallet, which is really regulated more like a software business, because we're never

• 40:18Speaker 02

  taking possession of any customer funds, we're not executing any trades. And there's still a lot of, I would say, legal precedent that needs to be worked out probably in the coming years about that. But that's, that's an interesting divergence that's happening. And Coinbase is really committed to serving both. So Coinbase custodial, self custodial, both are important parts of this primary financial account strategy, and they're both going to have access to DeFi.

• 40:42David Hoffman?

  So Brian, the recent Lend product, which unfortunately got halted thanks to the SEC, was that a DeFi mullet model? Was that a Coinbase in the front and DeFi in the back? Or where was the yield for that product going to come from?

• 40:54Speaker 02

  No, so that was a centralized model.

• 40:56David Hoffman?

  Okay.

• 40:56Speaker 02

  And, you know, that was, that was just a very interesting moment to touch on that briefly, if you want. I mean, You know, we had reached out to the SEC a number of times as we were developing that product. And some of our competitors in the market had kind of had a product like that for one or even two years live in the market. And so we felt like, you know, we should be able to launch it too. We didn't really hear any objections. And then it came down to it really like just in the last couple of weeks before we were about to launch, the SEC came back and said, under no circumstances should you launch this. In fact, they even sent us a Wells notice, which is kind of an intention to sue over it. And, you know, that didn't feel very good because I felt like we'd been pretty

• 41:38Speaker 02

  upfront with them about it. And part of the mission of the SEC is to create a fair market out there. And it didn't seem very fair to me that other companies could do it and Coinbase couldn't. And I, you know, I think there's a reasonable explanation for that, which is basically that they have limited staff and they're just, they can't possibly cover everything out there in the market. So this Coinbase is a public company. We're a bigger company. So when we, when we went to go do it, then they, it kind of got increasing attention. They're probably also doing things with other companies that it just hadn't come out publicly yet. So I don't fault them too much for it, but it certainly didn't feel good. It was really demoralizing for the team who had just spent all this time trying to create this product. And I think it would have been really good for consumers too, that everybody wants to earn yield on their assets. Like you, the, you know, the interest you can earn at your bank right now is just

• 42:20Speaker 02

  kind of a pit, a tiny amount. So anyway, that was a centralized product. We ultimately decided not to launch it because the SEC was telling us they were going to sue us, which we always go talk to our lawyers when these things happen and they kind of told us, you know, it's like a 50 50. If this goes to court, the law is pretty unclear. It's like you might 50% chance you win. I'd rather take like an 80 20. If we're going to go to court, if you're going to sue your, you know, one of your regulators, which I, which I hate to do. So we ultimately decided not to launch it. And I really hope the SEC kind of both makes these rules more clear because frankly, the lawyers advising crypto companies are telling them it's a toss up 50 50. That's not helping anybody. So we just want clear rules and for them to enforce it evenly with everybody,

• 43:04Speaker 02

  which I think they'll eventually get to do. But yeah, that's what happened in that situation.

• 43:09Ryan Sean Adams?

  Yeah, I feel like the story is very much not fully written. I think we'll be hearing more about that soon. We've got a lot to cover about the SEC when we get to regulatory. But you know, keeping I guess on this theme of you said Coinbase very much sees DeFi as a friend, right? So Coinbase is kind of a DeFi friendly crypto company very much. Do you think this strategy is different than those that maybe you Coinbase's traditional competitors might be pursuing? So I think of somebody like a Binance, for example, right? And so CZ has coined this term CDFi, right? Which is like centralized DeFi. And Binance has created this thing, which is a fork of Ethereum called the Binance Chain.

• 43:53Ryan Sean Adams?

  It has a very small set of validators, mostly controlled by Binance and company, right? And so it's this centralized DeFi amalgamation. FTX is a little bit different. It feels very much, and these are not your words, these are our words, right? It feels very much like they are pursuing a similar strategy of control as Binance Chain, but maybe not as explicit through maybe a chain like Solana, for example. So maybe there's sort of this veil of decentralization, but maybe they have a bit more influence and control over something like Solana than they would over something like Ethereum. And so we've got Binance putting its stake in the ground. This is how we're going to do DeFi. It's called Binance Chain, right? And like Binance is sort of the center of the universe.

• 44:37Ryan Sean Adams?

  We have FTX doing maybe kind of this blend where it's playing in both camps, but it also still really wants to control this DeFi thing. And now I almost feel like it's like Coinbase, it's your move, guys. Like, what are you guys going to do in this space? And that's what I'm most curious about in this conversation is like, what is Coinbase's move going to be? Are you going to take a roll your own smart contract platform approach? Are you going to adopt a specific smart contract platform? Are you going to open? Are you going to pick the most open, credibly neutral decentralized technologies? How do you think about this and what's your strategy here?

• 45:14Speaker 02

  Yeah, great question. So, you know, I haven't heard that term CDFi, but it kind of makes sense. And by the way, I think CZ and Sam are great entrepreneurs and nothing but good things to say about them. So let me start with that.

• 45:29Speaker 02

  You know, I had some conversations with CZ about BNB. And I think on the one hand, it's really smart what they did to get more scalability out of it. Right. Because scalability is one of the biggest things, holding back the adoption of other chains. I think like Ethereum, and I know they're working on it with a lot of, a lot of efforts. But it's important to get more decentralization. So that part of I thought was smart. But the the centralization of BNB with most of the BNB being controlled by that one company and the validators, as you mentioned, that that makes me uncomfortable. I think as a developer, that's kind of risky to build your application on something that is controlled too much by by one company. And so and Solana might be somewhere in the middle. I don't know the exact details, right? But yes, I agree with you.

• 46:12Speaker 02

  I think it makes me a little uncomfortable to have it be that that centralized. So I think what Coinbase, by the way, there was moments in the like 2018 or around that timeframe where there were some engineers at Coinbase who came to me and said, hey, we should build Coinbase chain. And, you know, my reaction was, you know, on the one hand, you could argue it was naive. Right. Because hey, if we had made it, maybe it would have been worth 50 billion or whatever. It's great, great market cap. But on the other hand, I'm kind of glad we didn't make it because I don't like the idea of there being a Coinbase chain. I like their idea, the idea of the chains being much more decentralized than that. Now, if we also thought about, okay, well, could we help make a more decentralized chain that truly we didn't control and maybe we contribute engineers to it?

• 46:56Speaker 02

  But whenever we kind of looked at that and we got a little closer to making something, I kind of looked at, I was like, well, that's kind of what the existing chains are doing. I don't know if the world needs another chain at this point. It probably needs one or two of them to just keep making progress on their developer roadmap. And so what we did instead is we built a team of engineers internally. We called the protocol team. And we're still building it out. It's still a little early, but that's the team that is their job is basically to go out there and help scale blockchains, not our blockchain, any, any of the existing blockchains. So, you know, look, you could argue that Coinbase would have another 50 billion on the market cap or something if we had made our own chain. But I, again, I'm not in it for the. Just to like, print a bunch of money or something. I want this to be adopted globally in

• 47:38Speaker 02

  last, you know, hundreds, thousands of years as the future of money. And so I don't want us to get too into the centralization of any one chain.

• 47:46Ryan Sean Adams?

  So Brian, this protocol team as well, it almost sounds like this team is going to be pouring into and pushing out some, some public goods. Of course, in like Bitcoin and Ethereum and the ecosystem, there are all sorts of public goods that don't clearly have a monetization mechanism, but that the entire community relies on. Is that what this protocol team is effectively doing, contributing to open source public goods?

• 48:11Speaker 02

  Yes, that's correct.

• 48:12Ryan Sean Adams?

  It's fantastic.

• 48:13Speaker 02

  Yeah. And it's a little bit like, you know, Google, once they reached a certain size, they had a team working on things like open SSL and like these, these protocols that the whole internet was built on. And they had benefited enormously from that as a company. So it was kind of a way for them to give back. So anyway, that's what we're trying to do with that team. I, I do think scalability of these blockchains is a huge unlock for the next, you know, 100 million slash billion people who will come into crypto. If we can get another couple orders of magnitude of scalability with layer two or lightning or any of these things, then the future is going to be very, very, very good for all crypto.

• 48:48Ryan Sean Adams?

  I'm just curious, like you personally, do you have not an official Coinbase position? I expect Coinbase's position is like somewhat chain agnostic, somewhat, you know, you know, kind of neutral, right? But you definitely support open source and decentralized chains. But you personally, Brian, do you care which chain wins here? Like, is there a difference in your mind between an XRP and a Bitcoin or a Binance chain and Ethereum gaining traction? What's, what's your take on that?

• 49:14Speaker 02

  Yeah. So, I mean, we're, we're trained agnostic as a company, as you said. I, you know, I hate to, I hate to get too involved in these because I do think there's a lot of like holy wars in the crypto world.

• 49:23Ryan Sean Adams?

  Yes, there are.

• 49:25Speaker 02

  As you all know, so I mean, I would rather we all were just a little more cooperative here and just try to help get the whole thing going. Everyone is sort of like shilling their own book a little too much. So, but do I care? I mean, I care, I care that the platform that most crypto gets built on is, it is decentralized, it's developer friendly, it's going to help, it's going to scale. You know, I care about stuff like that. I think it just will make the whole industry more successful. But I also think that

• 49:56Speaker 02

  You know, even though Coinbase is kind of a big company in crypto, it's not like I have, I don't, I don't think I have the hubris to say I could sway it one way or the other. Like, the, the market is going to tell us what it wants to use, and I think developers are smart. By and large, developers are building on top of the systems that have the right properties. And so that's, that's where the market's going to go. And I think we're, we're going to be followers there, not really helping shape it too much.

• 50:20Ryan Sean Adams?

  To you and Brian, sometimes I think people forget that developers are economic players as well, right? You talk about this kind of like economic freedom. Well, developers choosing on what platform to develop on, that is a massive vote of confidence, right? They're basically deciding, here's where I'm going to live and like, open up my shop. And that is a huge vote of confidence for any, any chain or any ecosystem they choose to build on.

• 50:42Speaker 02

  Yep. I mean, that's, going back to the internet, that's why developers got so excited about the internet was like, why would you want to build your app on some proprietary system where it could just get taken away? People were tired of like, if you built a Microsoft Windows app and it got really successful, Microsoft would just clone it, right? Or actually, Microsoft, people forget the history of this, but on our board, you know, is Marc Andreessen, who built the first web browser. And he tells us all these funny stories, him and Ben Horowitz, about like, in the early days of the internet, Microsoft actually tried to create their own proprietary internet. It was called, I think, Microsoft Network. And, um, you know, developers just didn't want to build on it because they were like, Microsoft's just going to steal my app if it gets too big.

• 51:22Speaker 02

  And so I'm going to build on the open internet, even though the open internet was like a little bit rougher around the edges. And it was like, kind of really chaos how the protocol got upgraded and everything, just like in crypto today. So anyway, history is kind of repeating in a funny way.

• 51:37Ryan Sean Adams?

  Yeah, I totally remember that times, like as an elder millennial, probably, probably David does not remember these times. But like Bill Gates used to talk about the information superhighway. And he would never talk about like the actual internet and like, you know, TCP IP and some of those protocols. It was always this like Microsoft type thing. Uh, and then eventually they capitulated in a big way.

• 51:58David Hoffman?

  On the complete other side of the same spectrum, we have crypto networks on one side and then banks on the other, where one's maximally decentralized and one's maximally centralized. And Bankless wants Coinbase to eat all the banks. I want to be able to deposit my checks into Coinbase. I want direct deposit, routing numbers, account numbers. And that's hopefully what we see. And I don't know if that's actually like, you know, an explicit vision of Coinbase, but that's my vision of Coinbase. And so, at the same time, I also don't want Coinbase to just become another bank.

• 52:29Speaker 02

  Yep.

• 52:30David Hoffman?

  And so, Brian, can you ease our minds about like, if and when Coinbase does eat all the banks, why should we still be optimistic that Coinbase doesn't turn into the thing that it ate?

• 52:40Speaker 02

  So, I mean, this is a really interesting trend, just in history, where if you look at the history of all networks, by the way, there's a great book on this called Master Switch. It talks about like, the, you know, television networks and radio and the telegraph and like, it goes back through all the history of these different networks. And the history of it is basically when something starts off, it's very fragmented, there's a lot of upstarts, you know, the people operating on this new network, like the incumbents kind of laugh at them because it's so unreliable and quirky. And then eventually, the new network, you know, is the next S-curve, and it basically starts to consolidate as it gets bigger and there's becomes monopolistic players, then they turn evil, and then the next network has to come along with it, new entrants to come disrupt it, right?

• 53:23Speaker 02

  So, how, by the way, every day, every week at Coinbase, I flip between worrying about, "Oh, my God, like, we're so slow and big, and there's some new startup that's just going to come eat all of our lunch." And then the next week, I'm like, "Okay, we're going to become too big in crypto, and then how do I make sure that somehow it doesn't turn evil, like, somewhere in the organization?"

• 53:41David Hoffman?

  You do that, too, huh?

• 53:43Speaker 02

  Yes, exactly. So, and there's a funny thing that happens, by the way, if you ever, you know... Once you found a company that gets beyond, you know, say like three or 400 people, like Dunbar's number is 150 people. So you can imagine, once you hit 500, there's people that you've never met inside the company, right? And so occasionally, as a CEO, you, you know, we're about 3,000 people today, you encounter something in your own company where you're like, how could that have ever happened inside the company I founded?

• 54:10Ryan Sean Adams?

  Oh, my God, Brian. Sometimes David and I meet people and we forget they've been on our podcast.

• 54:17Speaker 02

  Exactly. So anyway, there's a whole, that's how, once you get bigger, you have to kind of really put down in writing and like articulate what are the values and the culture and then find ways to communicate throughout larger org. So it's, anyway, it doesn't work for you to meet everybody individually anymore. But, okay, so getting back to the, your main question. So, yes, I mean, I do think that Coinbase is, we're already seeing people start to use their Coinbase account as an alternative to a bank account. You know, we have Coinbase Card, so you can spend at merchants. We just launched this feature, we put out an announcement about Coinbase payroll and direct deposit, everything which is coming soon. So there'll be a way to do that. But

• 55:00Speaker 02

  I think the real answer to your question is that more and more of crypto is going to go to self custody. I actually think that self custody is probably the future, longer term. It might be, you know, some institutions and people are probably going to think that's crazy because like they're just getting into crypto into the centralized way, which is where they're most comfortable. And that'll have a major tailwind behind it for decades to come. But I think the way that, you know, self custody, as it gets safer and safer to store your crypto there without some accidental loss of your coins, maybe there's like social recovery, or there's multi-party computation type solutions, you know, basically the apps need to get better, easier to use, safer. And then that's the real safeguard against,

• 55:46Speaker 02

  you know, Coinbase ever becoming some giant company that starts to look more and more like the banks that it sought to improve upon. And the other, the other thing is having a founder or CEO really helps, right?

• 56:00Speaker 02

  You know, I'm not good at everything in the world, but one thing I can do at Coinbase is I can help sort of say, "Hey, this is why I started the company," and so I can speak with a certain moral authority. It's like, "We're not gonna do that." "Why not?" Because that's not why I started the company. I don't have to give any other justification, right? Whereas you can imagine like a professional CEO who comes in, who's like accountable to Wall Street, quarterly earnings and above, you know, they may start to think about the company differently. Now, that's great. I'm not planning to go anywhere. I want to be with Coinbase a long, long time. Eventually founders do pass away, right? And it's an interesting, it's an interesting question to think about. How do you build a company culture that survives a second and a third founding, right? Like, Apple after Steve Jobs, or,

• 56:46Speaker 02

  you know, Amazon after Bezos, or whatever. And I don't know if anybody has solved that problem perfectly, but what a lot of people do is they try to like, write a book and really write down their philosophy and their articulation, and then you have to kind of pass the baton to somebody and try to create good long-term incentives for them to actually take risks and try something new and ambitious.

• 57:07Speaker 02

  You know, this might be getting, this is rambling a little bit, but I'll give you one final thought on this, which is, one of the most scarce things in companies today is actually, today is actually risk tolerance, right? So, why, you know, why did Tesla launch kind of their self-driving cars and Waymo under Google didn't? Right? And, you know, Google was probably ahead on self-driving, and they had more money into it, and they had every advantage and every reason, but they don't still have their self-driving cars really on the road, whereas Tesla has partial self-driving and is collecting all this information. And the reason is that there was a founder-CEO who basically said at a certain point, "I care enough about the mission that I think we're ready and we're gonna go for it."

• 57:51Speaker 02

  And I guarantee you, there was some lawyer or somebody at that moment who was probably telling him, "Don't do it. It's not ready." "If somebody dies in the first week, the company's over," you know, and it's scary. And so if you're a professional CEO, you know, you're thinking about, "Well, what is my career trajectory and my next job and all these things?" But if you're a founder-CEO, you're thinking, "If we don't accomplish the mission, what's the point? Why did I do all this work?" Like, that's the only reason. I don't care about my next job. I just want to accomplish the mission. So... Risk tolerance, in a weird way, is a very valuable thing. And I think about that as a founder CEO, hopefully that can help us make the right calls as we get bigger and avoid becoming like the thing that we've sought to improve on. But ultimately, we're going to have to decentralize so that, you know, can't be evil is better

• 58:36Speaker 02

  than don't be evil.

• 58:37Ryan Sean Adams?

  Just a quick reaction on a lot of things you said there. It's like, I'm actually blown away by something you said there, Brian, because like, so getting back to the last point, a founder CEO is more risk tolerant, I suppose, because something you said in there is pretty risky for Coinbase's core business model, which is, you guys custody a heck of a lot of assets. And you said that you see crypto moving to a world that is more self custody. In bankless terms, we would call that less banked and more bankless. That is the world. That's the mission that we're on as like a crypto thesis-driven media organization. That's the world we want to see. But isn't that against your interests?

• 59:17Ryan Sean Adams?

  Like, isn't that against Coinbase's interests to see a world that graduates to self custody? Can you square that for me? I'm glad you said it, but I'm wondering why?

• 59:29Speaker 02

  Yeah.

• 59:30David Hoffman?

  Yeah, aren't you just teaching your consumers how to not need you?

• 59:33Speaker 02

  Well, so I think you could argue that it works against our interests, short term, or maybe even medium term, but it's definitely within our interests, long term. And the reason is that companies have to evolve, continually be evolving, to serve their customers. And if you're not serving your customers, then you're just on a slow path to irrelevance and death. Right? And so, we always kind of need to meet people where they are. So there's still a huge number of people in the world who are like, I don't even know about crypto, like, I barely understand it, I think it's some internet money or whatever. And for them, a centralized solution is the thing. And that's going to be true for, by the way, a decade or two or more, maybe forever for some of these people. But you two are living in the future, right? And I'm kind of with you.

• 1:00:18Speaker 02

  I'm also thinking about the future. And there's a huge segment today already, but it's going to grow, I think, even bigger, who want to be self custodial, they want to be self sovereign, they want to be able to access more and more stuff that that allows. And they basically want to live this ethos of like, don't tell me what to do with my own money, you know, it's my money, I should be able to, I should be able to do whatever I want.

• 1:00:41Speaker 02

  Yeah, we're able to hold both of these ideas in our head at the same time. Basically, build for the future and start to build products for that customer segment, while also building these products for probably the majority of the world still, which they're not quite that far in their thinking. They're still getting bought into crypto to start with. So we need to make products for both of those markets.

• 1:01:01David Hoffman?

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• 1:01:42David Hoffman?

  Another product I'm stoked to get my hands on is the Gemini Crypto Back Credit Card, which gives you 3% cash back on all of your purchases, but paid to you in your preferred crypto asset. When I get my Gemini credit card, I'm going to make sure that I get my cash back in ETH. So whenever I buy something, I get a little bit of ETH bonus back to me at the same time. You can open up a free account in under 3 minutes at gemini.com/go-bankless. And if you trade more than $100 within the first 30 days after signup, you'll be gifted a free $15 Bitcoin bonus. Check them out at gemini.com/go-bankless. The AVE protocol is a decentralized liquidity protocol on Ethereum, which allows users to supply and borrow certain crypto assets.

• 1:02:26David Hoffman?

  AVE version 2 has a ton of cool features that makes using the AVE protocol even more powerful. With AVE, you can leverage the full power of DeFi money legos, yield and composability all in one application. On AVE, there are a ton of assets that you can supply to the protocol in order to gain yield. And all of those same assets can also be borrowed from the protocol if you have supplied collateral. Here, you can see me borrowing 200 USDC against my portfolio of a number of different DeFi tokens in ETH. I'll choose a variable interest rate, because it's a lower rate than the stable interest rate option. But I could choose the stable interest rate option if I wanted to lock in that interest rate in permanently. V2 also features the ability for users to swap collateral without having to withdraw

• 1:03:11David Hoffman?

  their assets, trade them on Unslap, and then deposit them back into Aave. With Aave, users can do this in one seamless transaction, saving you time and gas costs. Check out the power of Aave at ave.com. That's A-A-V-E dot com.

• 1:03:26Ryan Sean Adams?

  Well, let's talk about this future and kind of the third piece here, which is the section of Coinbase versus Facebook, AKA Meta, AKA big tech, right? Right? So the way you've described Coinbase so far actually makes a lot of sense to me in that Coinbase's Act One is really the bridge, and that's what you guys have excelled on. So you're in this bridge from old world legacy finance to new world, new finance. And it's not just new finance that we're building over here, because if you take the long-term view of what crypto actually is, it's a property right system, right? It's about economic freedom. So we're actually building this thing, and I feel like maybe crypto started at first, this thing called the metaverse, all right? Mark Zuckerberg, and I think some of the big tech companies, want to do something in

• 1:04:11Ryan Sean Adams?

  the metaverse too. I think Mark is a very bright individual, okay? He sees a lot of things before everyone else does. And so he sees this thing called the metaverse, and he wants to build that too.

• 1:04:25Ryan Sean Adams?

  I'm curious about your take on Facebook's announcement of basically pivoting the entire company to be a metaverse company, and your take on, does Coinbase actually have a role in building out the metaverse as this sort of this third evolution, this crypto company? What do you think all of this means for Coinbase and your strategy moving forward?

• 1:04:48Speaker 02

  Yeah, so I think, I think Zuck is, it was a brilliant move from him for a number of reasons. And you're correct that the metaverse is something that people have been talking about for a while, and crypto has made a lot of great progress with that, you know, Decentraland and all these things, NFTs. It's not a coincidence, I think, going back to our, my prior comment about founder CEOs. Of the FAANG companies, the big four or five big tech companies, Facebook is the only one majorly doing something in crypto right now, you know, both with DM, which you could argue is like a little, maybe it was the right thing and the wrong thing, but now with the metaverse, they're thinking about crypto. You saw it probably in his announcement, he referenced NFTs and things.

• 1:05:30Speaker 02

  I think it's not a coincidence. He's also the only founder CEO left at the Fang companies, which is, which is an interesting thing. But I give him a lot of credit for making this move. I think that, you know, people probably have concerns about Facebook being big brother or something and like the privacy concerns. And I think Mark Smart, he gets that, you know, you saw, he mentioned in his talk that, for instance, you know, they're making it so you don't need to sign into Oculus with your Facebook account and, and that kind of stuff. But the reason why I think it's, it's smart is that number one, of course, Facebook, because it's a social media company and it's disrupted so many business models and, you know, it's, it's a mirror of society, both the good and the bad. And so, you know, they have all this pressure about deplatforming and people think they messed up the elections.

• 1:06:13Speaker 02

  So they're basically, their brand has just been getting so much hate that it's, people forget, just, it's kind of like basic psychology. Once you have a label for something, you think of it as something in your mind. So he's kind of now saying, hey, Facebook is not just the blue app, whatever that you hate. It's also WhatsApp. It's also Oculus. It's also, you know, Instagram and these other things. And so I think it's a great move for him just to rebrand and say that the parent company is now about something bigger to get rid of the hate. I also think it's a, it's a brilliant move because VR and AR I think is the future of computing, you know? Well, we went from mainframes to desktops to laptops to, to mobile. And by the way, a bunch of companies like Microsoft kind of missed the move to mobile. I think that, you know, Apple and Google are now sort of missing the move to AR, VR.

• 1:06:58Speaker 02

  Totally. Um, which is funny because they're the ones you'd think, they, they, they saw that how important the transition to mobile was, but now they're missing the next one. So I think it's incredibly ambitious and bold that, that suck is, they're basically, I think they're losing over a billion dollars a year on their, on their VR, AR, Oculus stuff right now. And he's, he can see that that's where the future of computing is going. So I, I think that's all brilliant. So what, so what role could Coinbase play in this? And not just with Facebook, but all, every version of the metaverse. You know, again, we want to be the primary financial account, right? So we want to be the, the place that people store their, their, their digital goods and their, their currencies. And so we need to make it easy for people to connect their Coinbase account into any version of the metaverse that's out there.

• 1:07:44Speaker 02

  And so that's what we're going to do. I don't, I don't think we would actually go build,

• 1:07:51Speaker 02

  you know, like a game or UI or something like that, but we do want to make it easy for people to store all their stuff in self custody and Coinbase custody if they want that.

• 1:07:59Ryan Sean Adams?

  Yeah, we're going to get to the NFTs, which is maybe a step for Coinbase into the metaverse in just a second. But, you know, one other thought I had for you, and I wanted to get your take on is so some in crypto see Mark Zuckerberg entering the metaverse and you see that as an attempt to kind of co-opt what crypto is doing, basically centralized and control and, you know, you know, become Panopticon, the, you know, surveillance engine. My take is a little bit different. I actually think because of the credible neutrality of the underlying base layer protocols like Bitcoin and Ethereum that we've built, Mark will actually, whether he wants to or not, be forced to build on top of it. In the same way, Facebook was forced to build on top of TCP IP and all of the open

• 1:08:44Ryan Sean Adams?

  internet protocols. So, and what, what will he build on top of? The property rights system that crypto offers. So I personally see this move as incredibly bullish for crypto. This is basically, and we've seen moves with Twitter, we've seen it with TikTok as like incorporating NFTs. This is basically Web 2 poking their head up and especially, you know, Mark saying, oh my God, we need to get in on this crypto thing. What's, what's your take? Do you think this is overall bullish or bearish on our industry? Is this a, you know, control type play? Or do you think this is going to, he's going to be forced to build on crypto whether he likes it or not?

• 1:09:21Speaker 02

  I generally am more in the camp that you're in as well. I think it's, I think it's very bullish for crypto to see Facebook making such a big bet in metaverse. And I think you're right for them to get user adoption, they're going to have to build on top of the open standards and let people have interoperability of their, of their digital goods throughout that world and, and use the native payment layers, right? Now,

• 1:09:44Speaker 02

  If there is, you know, there may be a temptation for them to sort of centralize in some ways, right? And so to the extent that that happens, I would certainly love to see other metaverse companies being built. And, you know, maybe we can all collectively as an industry, just make sure that there's interoperability between them. Because it would, it would really be a bad outcome to have, go back to like, look at just like Microsoft Windows had over like 95% market share or something, and it started to act much more monopolistic. Whereas with mobile, we have Android and iOS, and it's like, there's still some bad behavior, but it's less because there's at least two of them. So two is a lot better than one, three is better than two, you know, you kind of go down the line.

• 1:10:25Speaker 02

  So I would love to see other companies step up and help make other metaverses. And the crypto community can totally do that. We've seen some of those great companies already, like Decentraland and others. So I hope they do that. But it's funny, you mentioned Twitter, they're doing a lot with crypto too. Another founder CEO still in the job.

• 1:10:42David Hoffman?

  Totally.

• 1:10:42Speaker 02

  So anyway.

• 1:10:43David Hoffman?

  Well, something that I think will really accelerate the development of the metaverse is Coinbase's new NFT platform. So we want to get some details on that. Brian, I think the NFT platform was surprised how many people actually signed up for the thing. I think something like 2 million came within just the first few days. Maybe you could give us an update on the numbers there. So the other details that I'm looking for as well are, well, when's it going to launch? And also, is it going to be an open system or a closed system? When it comes to just users and, you know, having self-sovereignty and ownership over their NFTs? Can they withdraw the NFTs? Where will the images be stored? Can you just give us the details on the NFT platform?

• 1:11:19Speaker 02

  Yeah, sure. So, um, yeah, I think there was maybe like 3.5 million in the first couple, three, three days or something. I actually don't know the latest numbers. It's kept going up. But, um, yeah, so I mean, we're definitely going to be interoperable. People can connect self-custodial wallets into Coinbase and NFT. You can store it using MetaMask or Coinbase wallets. In the future, we'll probably make it possible so you can just connect your Coinbase custodial wallet as well, if for all the, you know, 68 million verified users who, who have that. So our overall goal is just, how do we make? Everything in crypto just trusted and easy to use, right? So for a lot of people right now, NFTs are getting tons of traction,

• 1:12:03Speaker 02

  but it's still relatively hard for the average person to do it. They have to install a Chrome extension, maybe buy some crypto somewhere like Coinbase, but then they have to transfer it to another wallet. You know, there's, there's things like signatures that pop up and all that. You can't even, like, let's say you don't have any crypto, but you want to buy NFTs. Cause it's, NFTs are bringing in a lot of people who have no experience with crypto whatsoever. You know, it'd be great if they could just put in a credit card, right? It'd be great if there had more social features to it. So hopefully we can provide a lot of that with, with Coinbase NFT. And yeah, just make it easier for the next 100 million or people or something to come in and use NFTs.

• 1:12:40Ryan Sean Adams?

  One thing about the platform that I noticed in the mockups was the social media elements to it. There were like handles, there were followers and following and likes. Is this also a social media play as well?

• 1:12:52Speaker 02

  Yeah, it definitely, it definitely borrows elements of that, right? I think that you could imagine variations of different apps in the NFT space. So there could be things like, like OpenSea, which is awesome, you know? And it's, and it's kind of like a marketplace, sort of like Airbnb or eBay or something like that. But I think people are really love and are familiar with social aspects as well. So if there was a version that was kind of like Instagram, that you could see people's profiles, what they own, you could follow them, you could even have like a feed of like the most interesting stuff by the people you follow, but also buy and sell them, that would be pretty cool. So, you know, I, by the way, I think there's a lot of other features too. Like, I would love to be able to put out like a bounty and have people commission NFTs for like,

• 1:13:36Speaker 02

  or make memes or whatever, like around a certain trend that you want to put out there in the world. And there, there's a lot of really cool stuff that we could do. So those are all just kind of scratching the surface.

• 1:13:45Ryan Sean Adams?

  Part of the cool thing about NFTs, the story of NFTs has been basically mainstream adoption and mainstream interest. And it's just like this whole other cohort whose eyes, when you go to talk to them about crypto, like at a party or like, they just glaze over when you start using finance terms. Or it's like, let me tell you about the history. History of money and right, why we have goals, right? Like their eyes glaze over, but you show them an NFT, right? And you know, their favorite crypto celebrity has a, or their favorite celebrity has an NFT. Totally changes the game on this. I wanted to talk a bit about maybe mainstreamness of crypto, because I think that's what NFTs really bring us.

• 1:14:27Ryan Sean Adams?

  And you guys have done something pretty damn mainstream, which is you just became the official crypto platform of the NBA and the WNBA, which sounds huge. Can you tell us a bit about that? Like, why this, what is this partnership going to do? And then like, why is this partnership attractive to both sides?

• 1:14:48Speaker 02

  Yeah, for sure. So I think for a long time, by the way, Coinbase never really did very much traditional marketing. I was, I never really had a marketing background. Frankly, I didn't really understand a lot of marketing. And our occasionally we'd have board members who'd come to me like, Brian, when are you going to think about marketing? And I'd be like, well, we're doing like these referral programs. I was always into like the traditional growth stuff that tech, tech companies would do. But once we went.

• 1:15:12Ryan Sean Adams?

  So that's why you never sponsored the podcast.

• 1:15:13Speaker 02

  Yeah. Yeah, we should probably, we should probably sponsor it.

• 1:15:19Speaker 02

  But, uh, you know, once we became public, a public company, I was like, all right, let's, this, this is now the time to really go into this in a big way, because it's no longer some niche thing. Like it's, it's mainstream enough where we can start to do brand advertising. And like more things where enough people in the audience who see it will know and care about crypto, that it's actually worth it. There's always this risk in marketing that like especially not, not like, um, paid, paid marketing or performance marketing, but like brand marketing that's broad, like a TV ad or something that's, that it's really hard to measure the ROI of it. And so I wanted to wait until we got big enough. I'll give, by the way, Sam Bankman Fried from FTX a lot of credit here. He, he went, he went hard into it early.

• 1:15:58Ryan Sean Adams?

  And he's doing arenas now in Miami, isn't he?

• 1:16:00Speaker 02

  Yeah.

• 1:16:01Ryan Sean Adams?

  Tom Brady.

• 1:16:02Speaker 02

  Yeah. So he's, he's kind of like been lining up all these celebrities and stuff. And I, you know, mad respect and props to him for doing that. I always try to think about like, what is the most, I, a lot of, a lot of marketing just comes across like inauthentic to me.

• 1:16:16Speaker 02

  And I'm still trying to learn about it, by the way. We have a great chief marketing officer we hired and all these things we're doing now. We're doing tons of experiments, but you know. It's always this balance, like you want to take, not just be preaching to the choir of crypto people, right, who are already super into it, you know, they already know what Coinbase is. But you want to go kind of, what's the rung outside of that, like gamers? Or the rung outside of that, like artists, you know, doing NFTs? Or maybe the NBA and people who are into culture and like music? And just how do you go one layer out? But I also feel like a lot of marketing that's out there that I see for other brands is just, it's kind of inauthentic, like it never really made sense to me just because some famous person is using this thing. Like, why should I use it? I want to use it because it's like a good product or it's innovative or something.

• 1:17:00Speaker 02

  I never know if I'm like just weird in that regard, or if that, if marketing comes across inauthentic to most people. Like, I don't actually know. So anyway, we're trying a bunch of experiments. We're doing it hopefully in a way that's, that's really authentic to who we are. You know, we're branching into areas that are outside of the core demographic to get more and more people into it. I think, by the way, this Super Bowl, you're going to see a bunch of crypto ads in this upcoming Super Bowl. It's almost going to be like the crypto bowl or something.

• 1:17:28Ryan Sean Adams?

  One of yours?

• 1:17:29Speaker 02

  Which is sort of a sign of the times. But yeah, crypto is going mainstream, so we're going to get all kinds of marketing stuff happening.

• 1:17:37Ryan Sean Adams?

  That's amazing. That's great. Very cool.

• 1:17:40David Hoffman?

  Brian, Coinbase's external brand and reputation is off the charts. Just everyone associates like almost crypto and Coinbase is almost the same thing. Before they really know what crypto is, they're like, oh, crypto, is that the Coinbase thing? Internal to crypto, the brand is a little bit different and crypto moves very, very fast. And Coinbase being the largest company inside of crypto just doesn't really move as fast as crypto does. So the internal to crypto branding is not as stellar as the external to crypto branding. And Brian, and this is where we go from us asking you questions to us making an ask of you. And I think the number one thing that Coinbase can do to just completely accelerate adoption for all of the space, do good for everyone, including their customers, including the internal to crypto branding,

• 1:18:22David Hoffman?

  is to allow users to withdraw their assets onto layer twos. These will, because of the layer ones, especially with Ethereum, with the amount of congestion, it's like dropping people off like in the basement of a skyscraper. It's just, it's just. A bad user experience, especially when the layer ones are just not meant to be for humans moving forward.

• 1:18:39Ryan Sean Adams?

  It's like dropping them in the middle of Manhattan with no money to like flag a taxi.

• 1:18:43David Hoffman?

  Right, right. And so I want to ask, what is the rollout plan, if there is one, for allowing users to withdraw and deposit assets onto like Polygon, onto Arbitrum, Optimism, all these layer twos that are actually supposed to be the nice friendly environments for users to actually begin doing stuff?

• 1:19:00Speaker 02

  Yep. So 1,000% agree. Thank you for the feedback, by the way. I don't, I don't have anything that I want to announce publicly like today, but just suffice to say, the team is thinking exactly how you are and they've been, I've been seeing some really cool stuff internally, but hopefully, hopefully we can share more soon.

• 1:19:19David Hoffman?

  Cool.

• 1:19:19Speaker 02

  It's a great point.

• 1:19:20Ryan Sean Adams?

  Let's talk about regulation for a minute, right? So I think when crypto people talk about regulation, they're like, oh, I thought in crypto, you guys were making this thing that couldn't be stopped. Why are you so worried about regulation? And my reply is always like, I'm not worried that bad US regulation will kill crypto. I'm worried that bad US regulation will kill the US, like actually harm the US. Okay? It'll put this country behind and as a citizen of this country and a resident, you know, I care that the US does not fall behind. Can you give us like a state of US regulation from your perspective? How worried are you about it right now? And like either bad regulation coming down the pike or just this lack of regulatory clarity?

• 1:20:03Ryan Sean Adams?

  Like, how are we doing? What's the report card in the US?

• 1:20:07Speaker 02

  Yeah. Well, by the way, I love that phrasing of it. I think you're right. It's not a risk that it harms crypto. It's a risk that harms the US. And as a US citizen, I agree. I'd love to see the US not only remain a financial hub, but actually remain on the forefront of all kinds of innovation. That's what's kind of made us strong as a country. So, you know, embracing the internet, like all kinds of things as opposed to sort of clamping down on it, which is what we saw happen in China and all kinds of things like that. So what's the current state? I mean,

• 1:20:36Speaker 02

  Look, there's a pretty big gap in understanding between folks that I chat with like you and when I go to DC or even Wall Street and things like that. There's, it's kind of remarkable to me, like, we're all one country, but, you know, culture and innovation starts in certain pockets and it takes a while to trickle down to, frankly, the East Coast, and then it takes a while to trickle down to Europe and, you know, into emerging markets. So, the world is getting more and more connected, but it doesn't, there's still a big gap in understanding. It's also people who just grew up, their whole career, like, is in Wall Street, for instance, or in DC. It's hardwired into their firmware, to use like a tech analogy, that it's like, well,

• 1:21:20Speaker 02

  the dollar is the currency of the world. You know, how dare you even challenge that? And it must be a scam if anybody does try to challenge it, right? Look at like, you know, Warren Buffett or these people, Jamie Dimon or whatever, it has some comments out there, which, it's, once you reach a certain age, I think, you know, human brains become sort of ossified. It's like, it's hard to accept new ideas. But for people who grew up in tech, it's kind of natural. We're more like digital natives, you know, and of course, you know, the world doesn't need like thousands of currencies. That's another misconception that I see out there. People are like, well, why would there be thousands of private currencies? Like, this sounds like it's just, everyone's gonna lose their money and it's a terrible idea. And I have to kind of explain to them, okay, crypto is money, you know, and Bitcoin is

• 1:22:05Speaker 02

  kind of this new form of money. Maybe there'll be a couple other forms of money, like we have, you know, yen and the euro and stuff, but there's not gonna be thousands of kinds of money. People are using crypto for all kinds of new things, like the metaverse and artwork and like new kinds of financial services and tokenizing people's time. And it's a hard thing to get the first time you hear it, right? It's like, why would people want to tokenize their own time? You know, it doesn't make sense to me, right? And so- A lot of, I have to sort of balance the amount of time that we spend at Coinbase. Part, I feel like half my brain, half my job is like to go to DC, to go talk with, you know, traditional finance 1.0 players and just explain and be patient and also

• 1:22:47Speaker 02

  understand all their concerns because they have many concerns about ransomware and national security and all, you know, the sanctity, the safety of the financial system and how we're going to cause runs on the bank. And like, it's amazing, like the kind of different theories and fears that come out of these other worlds. And then the other half of my time is trying to hang out with people on the cutting edge of crypto where people like, like you and people on, on the team at Coinbase who are honestly like way far ahead, they're ahead on this than I am. And I'm trying to understand and stay on the forefront so we can just keep building the future faster and faster and faster. So there's this kind of dynamic where I feel like the regulators are always trying to fight the last war. They're trying, they're still thinking about crypto, how we were thinking about it in 2015 or something, and they're trying to figure out what to

• 1:23:30Speaker 02

  do about that. Meanwhile, crypto just needs to keep innovating faster and faster and faster so that we keep building more and more great stuff and help bring those along that aren't quite there yet. And somehow this will all get worked out. It's, it's going to be messy, but I'm, I'm very optimistic that the US is not going to like throw the, throw the baby out with the bathwater. You know, there's going to be a lot of fears and consternation about, you know, oh, are we losing power in the government and, and all these things. But I'm, I'm an optimist at heart. It's going to keep getting built and freedom is on the frontier.

• 1:24:01Ryan Sean Adams?

  You know, it's interesting, again, as you described that, and 50% of your time, by the way, you're saying having those types of conversations. Once again, this is Coinbase serving that bridge, right, between these two worlds, between this 1.0 world and this 2.0 world. And I've got to say, crypto needs this so much. Like, I feel like particularly people in the US, maybe this year we've started to wake up to the political power that crypto as a cohort might have. Like, oh, there's a lot of us. Oh, we have some capital. Oh, there's this thing called lobbying that we could do. But we still need some like representatives from the industry, the A16Zs of the world, the Coinbase's of the world to actually advocate. On our behalf and bridge these gaps between like DeFi crypto natives and DC.

• 1:24:46Ryan Sean Adams?

  Is that something you feel Coinbase and you yourself have been called upon to do? Like you guys put out this this framework which asks for a single crypto czar, right? So a single regulator, a distinct frameworks. We're not using the Howey test. We actually have a framework that applies to crypto digital nations, something that empowers holders and fair competition. Is that your purpose in building out the regulatory framework? And are you going to, do you plan to continue serving in that role for the crypto natives in DC and the other regulatory bodies?

• 1:25:22Speaker 02

  Yes, absolutely. I mean, so if you think about how do we ensure that this industry gets to the next 10x or 100x? And just keeps helping people all over the world? How do we get the next billion people access to this technology as they can benefit from it? You know, we have to work on blockchain scalability and all these things. But one of the biggest ones, if not the biggest one is how do we explain this in a way to the current establishment regulators? And everybody at banks and associated with them that this this stuff is here to stay. Yes, there are some risks, but it is a huge net positive for the world. And just patiently explain that in terms that they can understand it. There needs to be these translators, if you will. So Coinbase is playing a big role in that. We hired our chief policy officer who who used to run that for Goldman Sachs.

• 1:26:05Speaker 02

  We've built out a big team of policy efforts or policy folks that who we're going and engaging. A16Z is doing an amazing job here. My hat is off to them. They've built a huge policy team, put together tons of material, hosted conferences. They're writing, you know, legal law review papers that judges read. Katie Hahn, who's on our board, is a former DOJ prosecutor. She's just a force of nature and she and I have had great trips around DC. Coinbase is also funding, along with a number of other companies, this group called the Crypto Council for Innovation. And it's cryptoforinnovation.org. It's essentially an advocacy group or think tank that is gonna, you know, do more of this work. But it could do it as at least a one layer removed from the companies themselves.

• 1:26:50Speaker 02

  Can go engage with DC and policymakers around the whole world on these issues. So I think that. You know, we're gonna have to add another zero to everything that we're doing here because there's just so many people in so many countries around the world who have, who are starting to think about this and they just don't have all the information in front of them. And so we can help move the needle on some of these people who are on the borderline. Some people are just gonna hate crypto, whether they're on the left or the right, it seems to be a pretty bipartisan thing. It's not really a left or right thing. But some of them just really hate it, we're not gonna change their mind for some reason. Others are on the borderline and we can move their minds. And then there's a ton of big crypto advocates as well in DC and Washington and we need to hug them tight.

• 1:27:33David Hoffman?

  Brian, while the SEC was coming after the lend product and sent you guys that letter that basically informed you that if you release the lend product that the SEC intended to sue you, me and Ryan on the weekly roll up, we were all gung ho for Coinbase going toe to toe with the SEC. And for a number of reasons, one, like, we don't want the SEC to bully us around. But also as an industry, while crypto is very tribal, we're also a complete family, right? So we're like, if the SEC goes after Coinbase, like, they're going after us. They're going after all of us. And so maybe it puts Coinbase into an unfortunate position as like, they are the representatives of the crypto industry to maybe a little bit too much. But we wanted to see somebody take on the SEC. Because if it's not Coinbase, then who? And you talked earlier about,

• 1:28:16David Hoffman?

  like, it was a coin flip between 50/50 of whether you guys were going to win that battle. And maybe that's not the greatest odds, especially when it comes to, you know, injecting financial capital into paying for these legal bills. But also, at the same time, like, if it's not Coinbase, the next best, biggest company that can take on the SEC are not gonna have the same odds as Coinbase. Is that a responsibility that Coinbase even wants to have? And is that a fight that you guys are willing to fight?

• 1:28:40Speaker 02

  Yeah, so I mean, I don't think we want that responsibility, but we do have it. And yes, I agree with you. I think that it would not surprise me if in the coming year or two that it does come to some kind of litigation with the SEC. You know, that's not, by the way, that's not the end of the world, right? If they're unwilling to put out just clear rules that everybody can follow, or if we just fundamentally disagree with the rules that they put out, they haven't really put out any clarity, any clarity like that that I've seen. Then it is going to ultimately come down to the courts to decide. And that's basically regulation through enforcement, which I think is bad policy. And it's not good for America, but if that's how it's going to end up, then yes, we will engage in litigation. I'd rather pick an 80 20, and I think there's a number of things like that.

• 1:29:25Speaker 02

  I think that, you know, we've talked with people, you know, you know, I talked with the CEO of the New York Stock Exchange. They sued the SEC five times and won five times. So there's many situations where regulators, I think, overall are good folks that are just trying to do the right thing. And they're trying to protect people and I, I really respect what they do. But there's other times where it becomes political, they're overly ambitious. You know, they're, they're just trying to grab turf or they just, they're not interpreting what the actual law says fairly. And we have to go to the courts. And so we're not opposed to doing that when necessary.

• 1:29:58Ryan Sean Adams?

  The thing is, I think, as we've always said on Bankless, this is ultimately a battle for hearts and minds, isn't it, Brian? And so like, we're at the point in the US where we have 10 to 15% of the population who owns a crypto asset, right?

• 1:30:09Speaker 02

  Yeah.

• 1:30:09Ryan Sean Adams?

  What happens when that gets to 20, 25, 30%, 40%, right? Is Congress really going to debate whether a pudgy penguin is a security or not? Or are they just going to let us have our pudgy penguins? Do you know what I mean? So I, I do think that is our ultimate protection is just onboarding the world. And that's something that, you know, Coinbase is obviously doing as well.

• 1:30:30Speaker 02

  I couldn't agree with you more. I mean, that's one of the biggest things I think that folks in DC right now are just not quite getting. Is that tens of millions of Americans, soon to be 50 or 100 million Americans, want to use this stuff. And it's going to be incredibly politically unpopular to go to be anti crypto. I think event in the next, I don't know, three years, something like that, someone's going to lose an election over this. And then they're really going to realize it. They're like, ooh, don't touch that. That's, that's political suicide. And it's really ironic that, you know, some of these regulators are sort of saying, oh, well, we're here to protect. We're here to protect the retail investor. The retail investors are like, go away. We don't want your, we don't want your help.

• 1:31:10Ryan Sean Adams?

  Very, very patronizing, yes.

• 1:31:13Speaker 02

  It's incredibly patronizing. I mean, and frankly, like, I think that the securities laws were created for the right reasons and had a good intentions. It's like, we wanted to protect people. But it's made me question more and more whether like, are the securities laws still, should they still be there today? You know, like, if, if we had really been following this. Like, are we actually precluding a whole bunch of wealth creation? Because if crypto today was able to create $2 trillion of wealth creation, and what would it have been if the security laws had been more permissive? And like, why is it that if you're, you can only invest in private companies if you're an accredited investor, you're already a rich person? I never understood that. It's like, it's literally preventing you from getting rich, investing in private companies, unless you're already rich.

• 1:31:57Speaker 02

  It's a regressive tax on poor people. So there's so many things about the securities laws that I think are just broken and not relevant today, and so it may be time to just rethink them. And that's, that's a policy or a concept that probably nobody on the East Coast is thinking about yet. But the, the average US citizen is starting to wonder if these laws still make sense.

• 1:32:17Ryan Sean Adams?

  My brilliant co-host likes to say, sometimes when they say investor protection, what they really mean is incumbent protection. And I think that's what's happening.

• 1:32:25Speaker 02

  Yes, exactly. Let's, let's not forget where a lot of, there's a revolving door between big banks and a lot of financial service regulators. And so whether consciously or not, there is an incentive for them to kind of protect the traditional players. And that's, that's not American. I think that's, that's quasi-nationalizing private companies and then embedding them, you know, with these certain protections from competition. That's un-American, and I think it's, it's bad for consumers as well. So people are smart. The average citizen is, is starting to realize this.

• 1:33:00Ryan Sean Adams?

  And that's why we want Coinbase to eat all of the banks. Yes, it is. And as we draw to a close, Brian, this has been just a fantastic discussion. I feel like I see Coinbase's strategy much more clearly and your place in the world. That's really what we are looking to understand. I think many in the crypto community were looking to understand. You've articulated it very well. But now maybe we're kind of coming, you know, full circle, right? Because we started this with a shot of you in 2012, and you were at this booth with two others from Coinbase, when this was just a cottage industry. This was tiny. Now, 10 years later, almost 10 years later, this is not a cottage industry. Coinbase's top of the App Store. Crypto is big. I mean, we just passed $2 trillion not that long ago. I wouldn't be surprised if we hit $10 trillion.

• 1:33:44Ryan Sean Adams?

  In this next cycle, like that would not surprise me in the least. So the first decade of crypto was all about birth. Okay. But now we're in a new decade. This is the 2020s. And I'm wondering if you have any thoughts on what you expect to see in crypto for this next decade. You're a long-term thinker. So tell us about the 2020s. What is going to be the theme of the 2020s? And do you have any advice for us for this next decade as we prepare?

• 1:34:12Speaker 02

  Yeah, well, I think if the first decade of crypto was about birth and then people basically trading it, speculating it, speculating on it by trading, I think the next decade of crypto is going to be about people using crypto. And so that's actually even more exciting to me because I'm not really a trader at heart. I think that's a good business model and it got a bunch of fiat money into crypto. But we're already seeing it happen with NFTs and DeFi and the metaverse and all the voting and decentralized identity and, you know, social media stuff, BitCloud and all this stuff. So I'm, I'm super bullish on the next decade in crypto. I think it's going to be people actually using it. And it's just going to get bigger from there.

• 1:34:49David Hoffman?

  Brian, one of the patterns I see in this industry and one of the reasons why there's so much innovation is that somebody comes into the world of crypto, they build something really, really cool. It gains traction, it gains success, that builder, that founder becomes wealthy and rich. And then they become complacent and lazy and then somebody else builds something new. And the creative destruction process happens and the cycle iterates forwards. You seem to be immune from that. You've been here since 2013. Is there a time in this next decade or a time at all where you consider yourself like, oh, like I did it. Like I'm done and I'm going to tap out and

• 1:35:22Ryan Sean Adams?

  When are you going to retire?

• 1:35:23David Hoffman?

  Yeah, when are you going to retire?

• 1:35:25Speaker 02

  Well, first of all, thank you for saying that. I mean, I this is a great note to wrap on actually because I, you know, I don't have any desire to retire. One of my biggest fears actually is that, you know, I had sort of an early insight into crypto and I was like excited about it. And that as Coinbase becomes bigger and I become older, that I just start to lose touch with the latest cool things that are happening and I eventually become this, you know, I would hate to be the Jamie Dimon, you know, of 10 years or 20 years from now, where I, somebody comes into my office is like, all right, there's this new thing, you know, AI friends or whatever, you know, some crazy idea. And I'm just like, no, that'll, that'll never work. Um, you know, we don't, we don't do that here at Coinbase, you know?

• 1:36:09Speaker 02

  And I, I always think about this story, you know, so Steve Wozniak, when he built the first prototype of an Apple computer, well, he, he was an employee at HP and he actually went to his boss at HP and he was like, I think HP should build personal computers. And his, his boss ran it up the chain and people said no. And so he left to found Apple. And that's one of my biggest fears is at Coinbase is like some, some engineer on the team will come in and tell me some idea. And I'm like, ah, that doesn't make any sense to me. And so one of the things I've done with this project 10%, I told you about where 10% of our resources goes to new initiatives, I've made it so there, there's a panel of people. And if you get any one of those people to say yes and champion the project, we will fund it. And by the way, so in other words,

• 1:36:50Speaker 02

  there, there's projects where I have voted no, somebody else on the team, some of them are pretty junior people at Coinbase too, like just very crypto forward engineers and stuff. One of them will say yes, and we'll fund it anyway. And so, um, that's where I'm trying to protect the company from myself. If I'm becoming too, too like, you know, lofty in my thinking or just out of touch, that we will still try new things. And I think that's, that's the key to innovation. But if, if we fail to do it, then it's the, it's the next generation of startups job to come in and disrupt us. And so that's the paranoia we always got to think about.

• 1:37:23Ryan Sean Adams?

  Brian, this has been absolutely fantastic. We will close it there. Thank you so much for guiding us into your head, why you started Coinbase, where it's going into the future. This has been an excellent conversation. We appreciate it.

• 1:37:34Speaker 02

  This was awesome. Thanks guys for getting out this content. And I think you're, uh, you're helping shape, uh, this next generation of thinkers and, uh, participants in the crypto economy. So thanks for doing it.

• 1:37:45Ryan Sean Adams?

  We appreciate it. We are bringing billions into the bankless movement, hopefully over the next decades and actions items for you today. Join that waitlist we're talking about. That's Coinbase NFT waitlist. If you already haven't, also Brian mentioned a book. I'm a sucker for book recommendations. It's called The Master Switch. We'll include a link in the show. Notes. Lastly for you, become a triple point consumer of bankless. If you've not, we've got the triple point asset, which is Ether. Triple point consumer means you're subscribed on YouTube, the podcast, also the newsletter. There are three places to describe, as always, risks and disclaimers, guys. None of this has been financial advice. Bitcoin is risky, ETH is risky. You could definitely lose what you put in, but we're headed west. This is the frontier.

• 1:38:28Ryan Sean Adams?

  It's not for everyone, but thanks for joining us on the bankless journey.