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Another company we've been keeping a close eye on is Coinbase and it's set to join the S and P five hundred next week. The company's CEO has also been calling for lawmakers to pass a stable coin bill. A lot of the financial industry watching that bill very very closely. We are joined now by Coinbas's CEO who's on Capitol Hill right now, Brian Armstrong. And Brian, thanks for joining us while you're doing your trip at the hill. But first we have to really start with your big moment,
which is at S and P five hundred inclusion. You have been focusing here on expanding your world in financial services. Discover was taken out, you're added in. What does it say about the moment?
Yeah, well, it's a huge moment for crypto to now be in the S and P five hundred with Coinbase entering, and it means that crypto is here to say, people are going to have crypto exposure in all their four oh one k's and it points a little bit to I think where the future of financial services is going.
Cryptos a technology to update the financial system. We actually launched our own index coin fifty, which is the top fifty crypto assets market cap weighted, and someday we hope people might actually, you know, feel the same way about getting the S and P five hundreds of getting in the coin fifty index.
So it's a great moment.
We were talking a little earlier about e Toro's ipl You see other entrants like that come into public markets, wondering what it means for you because e Toro is not going to be the only one in terms of entering that crypto versus stocks world. Do you think coinbase will ever get into traditional way equity trading, or at least tokenized equity trading in a much larger way.
Yeah, well, we think that all asset classes are being tokenized crypto. Again, it's this technology to update the financial system. That means every company, every fintech, every bank, every payment company, even non financial service companies are going to be integrating crypto payments. It's kind of like when the Internet came out, and first you had dot com startups and then comp
every fortune five hundred company uses the Internet. So we think it's going to be very similar and actually this is a good thing for coinbase because many of these companies when they come to crypto, they're going to.
Buy our products and services.
We actually power crypto custody trading payments, especially with stable coins, which is a big new emerging activity for lots of companies already, and so we're excited about that happening now on you specifically asked about tokenized equities. We're excited about those, and we want to lean into the crypto native solutions, not trade traditional securities in the way that many other
companies do. We think there's unique advantages to having this come on chain, and so we're excited to explore that. We've We've met with, for instance, the sec Task Force on this recently, and there seems to be a general willingness to have these kind of asset classes come on chain.
Now let's stay posted on that front. Of course, there's a big question on how soon that could happen now, Brian stable coins, because part of the discussion that is looming large in Washington is of course that stable coin bill. Now call a trip I made down to Coinbase's New York offices. I spoke with one of your deputies, Jesse Pollock, and he showed me the way that people are transacting
on Coinbase via stable coin, often at no fee. I'm really wondering from your perspective to the extent that when you see a bill passed, how much that could set off stable coin payments, peer to peer payments in a way that's cheaper than the financial industry does it today.
Yeah, well, you're right.
Stable coin adoption, for like USDC, it has grown enormously and a lot of it's happening on Base, which is a layer two solution that Coinbase helped create. So it's a very exciting moment where we're seeing stable coin adoption. Now, we also need to make sure that this technology gets built here in the US, and that's what this stable coin bill is really about.
It's a historic moment.
There's a lot of interest from senators on both sides of the isle that I've met with today to get this legislation done, and that's what we're here to try and help do.
Now. The details matter, and there's bits of language.
That are being to go siated right up into the last minute, but we're here to try to underscore the urgency of this and the fifty two million Americans who've used crypto really want to see this legislation get passed so that this industry can get built here on shore in America.
Well, you say words matter. What are the words now that you would want to see changed as it hits the final finish line?
Yeah, I mean there's a couple examples for you.
One is that you know, DeFi is something that is separate from financial services. We don't think it should be included in AML provisions. AML provisions make a lot of sense applied to the centralized intermediaries like exchanges and custodians, things that coinbases core business, but DeFi should be excluded from that, and recent language updates we've seen seem to indicate that that's.
The path they're going on.
One other area for you to think about is there are some prohibitions on paying interest and yield in some of the drafts or some of the language that we were made aware of. We think that this is a you know, banks should have to compete on a level playing field with crypto. We think that paying interest in
yield to customers is good, is a consumer benefit. We actually think to American consumers should be able to benefit from that, and any company, whether your bank, crypto company, should be able to compete on that front.
Now there's a.
Lot of debate back and forth about that, but these are examples of the kinds of issues that are coming down into the line. We want to make sure that you know perfect is not the enemy of good enough, and getting this legislation passed is the highest priority.
I'm wondering where you see this going. We've even heard from the Bank of America CEO saying that they would see a Bank of America stable coin one day. Once you see this bill pass Now, for you, would you be considering issuing a stable coin at coinbase.
But we have a great partnership with Circle on USDC, and so that's the primary stable coin that we like to advocate for. We think it's the fastest growing major stable coin, it's the most trusted, it's the most compliant. But to your point about you know, the bank CEOs, et cetera, we want everyone to succeed here. We think that banks should be able to participate in stable coins.
It's a huge opportunity and we want to make sure any potential legislation doesn't prohibit them or us from doing that.
So Circle for a moment, Circle is in talks to go public do you think anything will change with your relationship once it becomes a public company, And frankly, would you ever consider buying Circle? I mean, your relationship with the company has gotten so close, why not just have it in house?
Yeah, well, we're very excited for their success.
USDC has been an enormous outcome, and so they deserve a ton of.
Credit for that.
Them going public doesn't change anything about our commercial relationship. But in terms of other deals we might consider in the future, I mean that of course would be up to them in US but you know, nothing to announce today.
Are you actively looking at other acquisition targets now? You made a lot of news recently with the Derabiit acquisition. Hankkit, I will ask you about that, but there is a question about how much more dry powder you have to do more.
Yeah, we're always looking at M and A opportunities. You know, we do have a pretty large balance sheet that could be put to use here, and of course, part of the benefit of being a public company now and yes five hundred is that you have somewhat of a liquid currency to do that. So we're looking at acquisition opportunities constantly.
It doesn't mean we swing at every pitch, we want it to be the right opportunity, because the hard part is not buying the company, it's actually successfully integrating it. But we've made a number of acquisitions recently. For instance, on Base, we acquired a couple of startups. We're looking at international opportunities that could aggregate share companies that do things similar do we do, and then also things that could just accelerate our product.
Roadmap on derebit. Very curious, of course, this was one of the larger acquisitions we've seen in the crypto community, a very very milestone moment for coinbase as well. It's a derivative exchange, and do you expect it to win approval to operate in the US? If so, how soon?
Yeah, you're correct.
So it is a derivatives exchange, and that's a big push for US. International derivatives trading has been a huge area for crypto. It's the vast majority of all crypt trading volume actions and we are excited to do that both internationally where we operate, and eventually to bring it into the US. I don't have an exact timeframe for you on that, but we believe that having spot trading options and futures all on one unified platform, and we
can be the trusted counterparty to these traders. That's going to be a winning solution both in the US and internationally.
So what about the future a little more. I'm really curious about how you're viewing the tone coming out of Washington when it comes to the future of crypto. What do you think, besides the table, the stable coin Bill will be the biggest change in the industry over the next four years.
Yeah, well, getting legislation passed, of course, would be a huge milestone with stable coins and then and market structure as I mentioned, But I think the other big opportunity on the horizon right now is that stable coins are and payments are becoming a bigger and bigger area of the economy. I mean, I think ultimately stable coins will power the majority of all payments in global GDP or in the economy large and crypto is going to become
the majority of the financial system. It is updating the financial system in many ways, so that's going to happen across you know, revitalizing our credit markets. There's features that coinbase has launched recently, like defive borrow lend, which got over one hundred million dollars in loans in one hundred days.
It's growing like wildfire.
It's going to update the capital formation markets, how people raise money to start a company or to build an
apartment complex. It's going to tokenize traditional securities, bring them online for twenty four to seven trading, allowing people markets all over the world to have a level playing field and participate in those So, whether it's payments, credit, securities in a new gold standard, you know, with bitcoin, I think crypto truly is updating the financial system, and we're going to get to this world eventually where there's a transnational economy that is not controlled by any one country.
The long tail of fiat currencies probably don't need to exist, they could be replaced by bitcoin, but the major ones, we'll each have stable coins which are thriving. So it's a bright future if we can update the financial system and create more economic freedom for people.
Brian, I'm curious about the conversation around a US strategic Bitcoin reserve. More so, I'm also curious whether coinbase will be the custodian.
Well, it's definitely a historic moment for the United States of America to declare bitcoin as a strategic asset. That was a huge moment I think underappreciated in the markets actually, And you know, I believe that they're going through an RFP process now, and we're of course throwing our hat
in the ring to hopefully be that provider there. You know, we actually provide crypto services, whether that's custody or trading to over one hundred and forty government institutions at the federal, state, local level, not just in here in the US, but in other countries as well. So I think we would be the perverred provider, I hope. But we'll throw our hat in the ring and they should run a fair and orderly process.
It's interesting because you see very mixed responses from people across the crypto community around the administration's approach to crypto, but particularly the president's approach to crypto. Bloomberg recently reported that the top buyers of the meme coin that are buying for seats at the White House dinner or the President's dinner. For those meme coin holders, many of these buyers are likely foreign based on what we have seen
of the purchasers of these coins. Now, from your perspective, what does this say about how much activity has moved offshore and does it create an issue for the way that crypto is evolving on shore in the United States.
Yeah, well, I'm not sure about the numbers specifically on the Trump meme coin, but I know that written large, the crypto industry has largely moved offshore from the US because of the lack of clarity of rules in the last four or five years, especially, so I'd say it's roughly eighty percent.
Offshore at this point.
And for people who care about national security rules law, you know, that's a huge issue. We need to make sure that this gets brought onshore into the regulatory perimeter. And whether people that love crypto or hate crypto, they should be for legislation which does that. And that's a lot of what these urgency of these bills getting passed, even including the stable coin bill tomorrow.
What do you make more largely to the president's approj on crypto. There are people who are on one hand, are very happy that he's pushing the initiatives forward in the United States, but there are also people who are frustrated that his own projects are taking finances money away from other projects, well.
From our perspective, We've been very happy with the President's approchon crypto. I mean, he said that he wants the US to be the crypto capital of the world. He's told Congress that he wants this legislation both for stable coins and market structure to be.
Passed before the August recess.
You know, declaring a strategic bitcoin reserve here in the US was an incredible milestone. So from our point of view, it could not be a better outcome versus what we saw over the last four years, where the lack of clarity was really weaponized togat inst the industry. But what's
positive is that crypto is truly bipartisan. I mean, the President's leadership here has been amazing, but I think that Congress and especially in the Senate, the folks I talk to you, there's now a strong bipartisan majority of people who want to see pro crypto legislation get passed.
Right, I want to start off where we left off. We're talking about other competitors in the space. E. Toro being a new trading you know, publicly traded company, for example, but also foreign companies that are entering the US potentially because they're excited about lighter regulations or at least clearer regulations and rules of the road. Do you see much more competition ahead for Coinbase.
Yes, I mean actually, I think that many different companies are now coming into crypto with this regulatory clarity on the horizon. And you know, one way to look at that is you know, oh, no, there's too much competition. The other way to look at it is I think it's an incredible improvement because you know, you have to remember in the past the industry is just being attacked. Our competitors were more like FTI and these kinds of companies.
I'd much rather be in the world we're in now, where we have lots of companies coming in and by the way, those are all potential customers of our products and services. So to me, I just see tam expansion when I see regulatory clarity, I think it's a huge unlock.
Brian, we're looking forward to seeing where it all goes, that is Coinbased CEO Brian Armstrong. Of course, during his visit to Washington, we're looking forward to getting a readout because of course the rules are changing under the ground