Ripple Labs CEO Brad Garlinghouse Talks Crypto

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Here with Us now Live. Ripple CEO Brad.

Garling House, And of course this has been a long battle. How much certainty does this provide is the entire case over.

So this provides a lot of certainty for Ripple, for Frankly me personally, because the SEC had sued me. The SEC has abandoned their appeal, and so they filed suit in December of twenty twenty. We won on the key parts of the case. In the summer of twenty three, Judge Torres made a ruling that XRP in and of itself was not a security. It's almost overbatim quote. The SEC filed an appeal about eight months ago, and what they've now agreed is.

They're going to drop that appeal.

We still have a cross appeal pending, and so we go from being defendant really too plaintiff.

So we now are.

The driver's seat to determine how we want to proceed.

Are you dropping it?

We're going to see it feels a lot better to be on the offense than the defense. You know, four years, we spent over one hundred and fifty million dollars defending that case. Not just for Ripple, but for the whole industry. I think it was really important that this SEC, the Gensler SEC, was really trying to bully and continued law fair filing lawsuits and lawsuits and lawsuits against crypto companies.

I mean, to that end, if you're looking at a new SEC, why not drop the case at this point? Why not clear the pay or why not clear the water?

Well, that certainly is an option.

I mean, again, it's clear the SEC has said, you know they I think in retrospect never would have brought this case.

The judge did rule in certain.

Instances back in twenty fifteen and twenty sixteen some XRP sales that we sold to accredited investors to institutions that those had constituted a security, and so there was a one hundred and twenty five million dollar fine that's sitting in escrow. We wouldn't mind having that back. That's on the table, and I think they're some nuances to know

The SEC is no longer pursuing that to that.

End, to your point here, the court decision had ordered you to pay a one hundred and twenty five million dollars civil penalty for exactly what you were talking about. Is that one hundred and twenty five million paid, is what you're saying.

That's still up participet.

Yeah, well it's not a dispute.

I mean, that's sitting in an escrow, and you know, depending upon whether we decide to continue with our appeal, we could walk away.

And the whole thing and be done, done done.

On the other hand, when you have a case where there were no investor, no investor harm, no investors lost.

Any money, you're kind of like, wait, like why are we here?

And it really goes back to Gary Gensler fighting a fight that was about power grab, that was about overreach of the bureaucracy to try to take a new industry. That what we're seeing now happening in Washington is smart legislation will come forward that happened with stable coins in real time, and I think you'll have a market Structure Bill is what it's described as to provide clarity and rules for the SEC and CF we will look at.

The bigger picture.

We're going to have you for a little while this morning. But do you think that part of this means fighting it till the very end to make sure even that part of uncertainty around being sold to certain investors classifies as a security.

Is that what you are fighting for ultimately at this point?

Well, I mean, at this point, all we're fighting for is do we want to fight to get one hundred and twenty five million dollars back?

We look, I'll be honest.

Would I have walked away from that before they appealed? Before President Trump put Paul Atkins and Scott Bessend and David Sachs as critical key, very smart leaders in this industry to bring this industry back on shore, I would have walked away.

Now you look at that, like this case in.

This SEC never would have been brought. And so where we find ourselves is great. There's a clear illegal victory to say xarp's not a security that was good for the industry, But there's pieces of it that we think could be kind of cleaned up, and there's questions, do we want to fight that fight or can we come to agreement with the SEC to drop everything the whole idea that.

This wouldn't have been brought under this SEC.

Have you had that specific discussion with Paul Adkins and with David Sachs.

Well, Paul Adkins hasn't yet been confirmed.

You know, he's a very knowledgele guy about this industry and has been for.

A long time. But I've had conversations.

I won't comment on specifics with certainly, you know, I think David Sachs would agree that this is a case that didn't make a lot of sense in the beginning. Again, there was no investor harm. This was about Gary Gensler waging new war against this industry.

You know, it's interesting.

I want to also point out that the affiliated token, of course XRP has been up roughly fourteen percent now about thirteen percent in the last twenty four hours.

You know, one thing a lot of people had looked at.

We're thinking a lot about how the administration is handling crypto assets, particularly outside of bitcoin. Why do you think XRP wasn't specifically named in the Executive order for the Digital asset STOCKPIP.

Well, so XRP was named by the President in untruth social he posted something saying that there should be other tokens, that there's going to be a bitcoin strategic reserve and then a crypto stockpile that would include things like excesse.

Later the executive order didn't include it. Why was that.

I don't know what specifically is in the executive order. My understanding is there's going to be a bitcoin strategic reserve, there'll be a crypto stockpile representing other cryptos, and I would expect that will include XRP. Look, at the end of the day, I think the stark contrast is in the Biden administration, we couldn't get a meeting with people at the White House. Now we're welcomed into the White House, and that's just a massive change. I think we want

I think the reason they keep pushing you too is because I think now it's widely accepted that this is a pro crypto administration, but the details, that is what's causing an overhand The uncertainty of the details, so to the extent you have confidence right about XRP being in that stockpile or otherwise getting more support for an ETF for example, Where does that confidence come from and what kind of timeline do you see.

It happening A on?

So I have immense confidence on the ETF.

I think there's eleven different filings pending with the SEC to launch ETFs from everybody from bitwise to Franklin Templeton and a whole bunch of people in between. I think those will be live in the second half of this year. We have seen even outside the United States, you have live ETPs, and at a time when a lot of outflows are exiting, some of the crypto ETFs are seeing inflows into XRP. And I think that's because you had

And that's great for the market.

It's great for builders within the XRP ecosystem globally.

One more on the stock pam, Yeah, how much XRP would be in it? Where does it come from?

Well, my understanding what I read about the I mean, I think there are some questions and that the devil. Maybe in the details as Treasury implements some.

Of this absolutely details, but.

My understanding is that the stockpile wi be represented by seized other cryptos other than Bitcoin, that then we'll be in that stockpile.

So to the extent that.

Various law enforcement agencies have seized cryptos which would include XRP, that those would go into the stockpile in addition to the Bitcoin Strategic Reserve.

That's my understanding, Riple CEO Brad garling House. And of course we have been talking here about a big moment for you and for your company, of course, a rollback really of the tensions that had been brewing.

With the SEC. And let's talk about the next phase.

One thing I'm really wondering about now that there's more clarity for you, is that is an IPO, frankly in your future. Now we talk so much about the potential for the XRP token to be wrapped in an ETF that is a method of listing.

So is listing possible now for you for Ripple, well.

Certainly something that is possible.

The United States SEC under Gensler was so hostile to this industry, I mean, ironically they approved the s one from coinbase and then sued them for doing the things they said they were doing.

So this sec fortunately is going.

To be I think very constructive and positive for this industry.

So I think that's available.

I think the companies at a stage where we could consider that. That being said, it isn't a huge priority, you know, I think most companies are going public raising capital is something that is high.

On their radar.

You know, we have been in a very fortunate position to be able to grow the business organically. We're also frankly more proactive and looking at acquisitions. That this is an industry that finally is going to be able to thrive in the United States, the largest economy in the world. And I think the industry is still underestimating the shift from the headwinds to the tailwinds. That's going to make a bigger difference that people think. And finally, the US market is really unlocked.

So it sounds like what you're saying, acquisitions are almost more of a priority now than an IPO for you. So then what would you be looking for to buy and how big are you willing to go?

Well, I'm not going to name names, but look Ripple at its core is a blockchain infrastructure company. We sell our technologies to business, primarily financial institutions, and we'll look at other things that are blockchain infrastructure companies. I think there will be consolidation this year. There's a lot of excitement about some of the changes, and you know we will lean into that for sure.

So when you think about what's possible in terms of financial institutions, there's been a lot of conversation about loosening of regulations and red tape when it comes to the financial industry and its interactions with the crypto community. What are you actually seeing have and our bank's really warming up in a way that's significant right now?

I mean I think unequivocally yes.

I mean, just in the last few weeks, I have seen US financial institutions go from being like, look, we're just not going to touch it because we don't want the extra scrutiny of the regulators, which again may or may not have even been legal, given these are legal businesses. But you have large banks who used to say negative things now saying positive things. I think that the two areas you'll see the most activity in the short term.

You need to be able to safely.

Manage and custody that for customers and potentially for the bank.

And the second is around payments.

I mean, the global payments infrastructure still remains very dated.

Wires are slow.

I just had a wire that was sending over Euro's disappear for five days.

You know, that's surprising a world of the Internet.

So one part of that payment's infrastructure that I'm watching really closely is, of course stable coins. There is starting to be more clarity in Washington, and you're seeing people starting to use stable coins in really interesting ways. I think about Robinhood, for example, using stable coin in terms of facilitating twenty four hour trading.

What's next?

I mean, if you think about the next forefront of stable coins, now that the US is getting toward clarity, what's possible.

Well, again, I think we're underestimated how big that might get. You know, today that market's about two hundred and thirty billion dollars, so I think some smart people think that may go up ten.

X in the next five years. I think that's probably right.

I mean, the two leading players and tether as well as USDC are both I think poised to do well in that market. Ripple launched our own stable coin at the end of last year. That's already ahead of our own internal forecasts in terms of where we are at this point in the year. It's still we're small, but the goal is by the end of the year for r l USD Ripple stable coin to be one of the top five in the market by the end of the year.

And I think the whole market's going to grow dramatically of this year.

So what does it take you to get there? Who are you pairing up with?

Are you creating some financial partnerships in order to make our l usc more of a household name.

Yeah, for sure.

I mean even today we had more listings go live for our l USD on some global crypto exchanges.

You know, anytime you do something new, it takes.

A minute for that kind of if the pun of the Ripple effect of seeing how that plays out, and so we're seeing that happen in real time.

So I'm really pleased.

Again, as I said, we're ahead of our Q one forecasts of where we expect it to be, So we feel really good about that progress.

Given through what you have gone through with the SEC.

I think one major question is how tokens list in the future, What do they mean?

How are they classified?

Now that you're talking about many other say even private equity companies looking to tokenize their funds. Venture capitalist Kathy Wood told us yesterday she's considering that.

For her own fund. What does this mean? What are the rules of the road.

Are people going to list and put the cart in front of the horse as they do?

So?

Yeah, well, look, I think tokenizing, like what Kathy Wood's talking about, democratizing access to do different investment vehicles in different investment types is very compelling. Even you imagine shark tank enabling the participation by different sharks, Like, there's some really interesting stuff you could do. Right now, Congress, it seems, is more focused on getting stable coin legislation passed. That went for markup last week, and I think you'll see that potentially in front.

Of the President in weeks.

The other piece of legislation I think we'll move quickly after that is kind of the market Structure bill last summer. If something called Fit twenty one past the House did not get through the Senate, I think that a market structure bill like FIT twenty one will come before Congress, hopefully before the summer recess.

We'll see that pass.

Also, you know, when you think about how many exchanges are now looking to loosen their listing standards, already on the heels of lighter oversight and the cart before the horse question.

Do you think that people are getting a little ahead of themselves and listing things that shouldn't be listed.

Well, I don't think about it as lighter regulation, because, frankly, I think the industry wants to be regulated. And what we've been saying for years as an industry is we just want clear regulation.

We don't want lawsuits.

Just claiming one thing and the next week contradicting themselves, which is exactly what Gensler's SEC was doing. So I think just the fact that we have an SEC who's trying to work constructively instead of trying to sue more companies. Let's actually work and let's codify and get legislation to provide that clarity.

Again, if you don't have that clarity, what you saw years ago was an ICO boom where tons of things that were raising money never worked out for the people that were buying the tokens or points.

Look, I agreed, I said then that I think of it. Some of these icos were a lot more like IPOs. They were securities. The problem is the sec then kind of used that to just blanket and say, I mean, well, Gensler said, before he was SEC chair, he didn't think there are securities, and then after he became SEC chair, as kind of his power grab, Gensler wanted everything under his jurisdiction.

So I think I was that ICO boom.

Went away, and there's lots of ways this government can regulate and manage fraud and manage criminal.

Activity, and that did happen. People did go to jail.

I have one more question for you about ripple on XRP, in particular on the supply and how it's managed and the unlocks. Is there anything you would do to change the amount of supply brought to market?

Can you do that? How does that exactly work?

Because there is a level of dilution for XRP when more supply is in on a regular basis.

So this is one of the things I'm glad you ASKEDECT because there's frankly misinformation. Sometimes frank disinformation people spreading falsehoods out there. The amount of XRP that was created in twenty twelve when it was first started that blockchain has first started was one hundred billion units.

That can't be increased. It's slightly deflationary. Now there's about ninety nine point nine billion units.

Ripple owns about forty two percent of that supply.

We have had in for I guess eight years.

We published something called the XRP Markets Report, where we share how much we are introducing into the market because we want that to be predictable, and that has been the case for many years now, and so we will continue to make sure that's very predictable. You know, at some point maybe we won't be selling as much. We'll see how that plays out in the future. But right now, frankly, we get criticized for owning too much, and then we're

We'll be keeping a close eye on those moves. Brad, thank you for joining us here.

On said, I know that it's a big announcement and for Ripple, and of course a lot of still changes still ahead. That is of course, Ripple CEO Brad Garling House,