Midterms, Binance Buys FTX

tech regulation, and social media. Plus, California is voting on Proposition thirty, which would tax the wealthy and fund the adoption of electric cars. Lift President will explain why his company is back in the effort despite Governor Gavin Newsom's campaign against it, while Uber is staying quiet and f T excess Sam mag Mun Freed has been snatching up crypto companies on the brink. Now he's getting bailed out by Finances c Z. We'll explain how a feud between

the two founders ended in an unexpected acquisition. All that in a moment, but first I want to dig into those Disney results now and bloom bringing Bloomberg Intelligence media analyst Keith rang rang and Athan with all the details. Keether walk us through the main takeaways here. Yeah, thanks so much, Emily. So I think the main takeaways here was, you know, streaming. Everybody was a little bit worried whether they were going to be able to sustain streaming subscriber momentum,

and yes they did. They came out swinging, you know, thirty percent above consensus, more than twelve million subscriber ads on Disney Plus. But I think where they really kind of fell short was on the bottom line. So we saw that streaming losses kind of came in um much higher than expected. So it's more than four billion dollars that they've lost in the director consumer segment for fiscal two. They did, however, say that those losses are going to

improve going forward. This was peak losses according to them, and we should we should expect them to break even if in physical four. But for me, really the big miss was in the park segment. Uh, you know, where we were expecting them to come in with about one point nine billion dollars in operating income. They came in at about one point five. UM. Now, there's been a lot of different things. They remember Shanghai Disneyland is closed. Um, you know, we had a hurricane Ian in Florida, so

There've been a couple of different things. So I think the question now is is it a demand problem or is it a cost problem? Can you compare how Disney Plus is doing. These are the Netflix, which of course, you know, suffered first subscriber loss in a decade earlier this year, but then started regaining subscribers in the latest quarter. Yes, so it's really been a tale of you know, kind of to two different worlds really here in terms of

streaming subscribe mind. But remember these are two services that are very different stages in their life cycles. So so Netflix has almost a ten to twelve year head start on Disney So they're they're already kind of expanded into all those international markets, and they were kind of hitting their wall a little bit earlier this year with Disney Plus.

They're still kind of really expanding into new markets. We saw them go into about hundred million homes over this summer in two and then right now they're really kind of hitting that steady cadence of content. So we've seen some really big hit series come out, whether it was an End or whether it's a she Hulk, and they're going to see much more kind of coming onto the platform, you know, once they release Black Panther of course, as well as Avatar. Those are going to come on the

Disney Plus platform as well. So all of that kind of tells us that there's a lot of momentum for this company going forward. The question really has been that profitability question, and it's not just for Disney's, for all the players in the in the streaming space. Neflix Hastings has said they're looking into sports rights. How big a threat would that be to ESPN? Yes, So remember ESPN spends about nine to ten billion dollars every year on

sports rights. I'm not so sure Netflix is going to be able to make that big off a pet um, you know. I think they're looking really more at, you know, maybe second tier sports. They've they've looked at a few different things. But I think one thing that they are worried about though is, you know, uh, sports rights do kind of have this huge inflationy competent attached to them. You know, they go up sixty every time new rights

fees have to be renegotiated. But the one good thing that that you know, Netflix does have working in its favor is they do have now this ad supported tier and that is just perfect for sports because you have a captive of audience, advertisers will be really interested. So that if they are going after sports in a big way,

I think they can still make it work. All right, Bloomberg Intelligence analyst Keith Rock and Athan, We're gonna stay tuned the headlines from the Disney call, but appreciate your insights across all of it. Meantime, Lift reported weaker than expected growth in writer leaving some investors concerned it's losing ground to Uber. This after Lift said it would cut of its workforce nearly seven hundred people in its second round of layoffs this year. For more on this, I'm

joined by Lift co founder and president John Zimmer. So, look, John, share sinking revenue, falling short of expectations, fewer riders than expected. What's your response to the investor response? Here? Look, I mean we take it seriously. We can say that revenue in Q three was at an all time high for the company. We guided into Q four of adjusted IBATA at an all time high and again record revenue. Uh you know, on on specifically on riders um the same

increase in active writers. Uh that uh we saw a quarter of our quarter was approximately what we saw seasonality wise in UH, so no big, big change there UM. And then in October we can say that we saw six percent month over month ride growth, which is actually faster when compared to the same period in well. And in addition to record revenue, you saw record revenue per rider. But there are real concerns that you're seating ground to Uber, are you if you look back on the quarter third

party data, so it's about one percent movement. Uh. And we've actually seen share take up post quarter as we've rolled out new products for our drivers, including up front pay. It's been a narrative. You know, We've been talking about this for a decade. We've been in the business of Lift for a decade. UH. You know, people constantly asking

this question of what we're doing Lift versus Uber. UH. And we've consistently over that decade UH take in market share UH and and we feel we feel comfortable where we are and with the products that we added to the market in the last few months, where we'll be in the coming quarters. We've talked about this many times over the last decade, so I appreciate you bear in with me. John. How is drivers supply relative to levels? Uber? Said?

They're back. Yeah, so I can get more specific than than they're back and say that quarter over quarter, active drivers increased the most that it has in about a year. So we are seeing a return on the driver's side again. With the new products, we're seeing increased driver hours. I think there's still a bit more opportunity to go to get back to kind of pre COVID UH service levels. But we're the closest to those that we've ever been. So got to ask about Prop thirty. I went and

voted on it today. Lift is a huge backer of it, this proposal to raise taxes on the wealthy to pay for electric car rebates and charging stations. That said, after you back this, Governor Gavin Newsom came out with a flurry of ads saying to vote no. What happened there? Why is list so for this, Why is the governor

so against it? And do you have any regrets? Uh? No, regrets won't speak to the governor's perspective, but I can say that, you know, California has the highest some of the highs have not the highest UH or lowest air quality in the country. UH. And as you look at vehicles, electric vehicles historically policies have centered on UH, people who can afford an electric vehicle getting an incentive to buy

an expensive electric vehicle. What Prop thirty does, UH is it really addresses lower income populations and make sure that they can get an electric vehicle. UM, and we think that's really important. It also puts money towards fighting wildfires. Still, the governor called it a trojan horse that puts corporate welfare above the fiscal welfare of the entire state. And Uber hasn't taken a position one way or another. I ask actually asked our Causra Shah he why a few

days ago. Take a listen to what he had to say. We feel like we're making the right investments. We are, for example, lowering our own booking fee and making sure that drivers can make more on a trip basis when they move over to E vs UH, and in partnership with both public and private we think California is headed in the right direction, which is why you know we've stayed out of Prop thirty one way or the other. M John, on the face, it seems like this proposition

would benefit Uber as well. Why why do you think they didn't take a stand? UM, I can't comment on why they didn't take a stand or haven't taken a stand on other important issues of our time. But I can tell you why we did again. We think it's the right thing for the entire state in terms of the environment, UH, in terms of the air quality, and in terms of allowing any driver, not not just a riot cheer driver, but any driver in the entire state

to get access to a more affordable electric vehicle. So look, another question that I know I've asked you a few time over the years, but folks are asking it again. Given the recent quarter, Uber has seen success, you know, moving into food delivery, cross selling it to writers. Are you thinking about that at all? Would you consider, for example, strengthening the partnership with grub hub to potentially drive some

additional revenue. We've done some B two B delivery, so not we have no plans, no interest in doing kind of a consumer delivery that that competes with their eats business or or door dash, But we do want to find opportunities for drivers that that like driving on both UH delivery as well as rideshare. That said, rideshare drivers have historically always earned more than than delivery drivers on

average over the last several years. Uh And so we think our focus particularly if we do head into a recession where people typically spend less money on takeout or delivery. Uh and and where transportation is more resilient. You know, I think we're still coming off the tails of a pandemic where where that was very popular and it was helpful to have both those. I think in a recession

or environment, we're comfortable and confident in focusing on consumer transportation. Meantime, the markets haven't been kind to most companies, especially tech companies. Lift now has a you know, about a four billion dollar market cap. Would you consider a sale or a merger at this point? So we're we're focused on being an independent, profitable business. Uh And we're gonna we're gonna focus on on that. Uh and and stay the course. All right, John, thank you so much for joining us.

And if you were listening to that conversation you're intrigued. Make sure you vote everywhere and definitely in California. Lift co founder and president John Zimmer, thank you. Thank you. Okay, coming up, how disinformation is creating a new era of US political unrest. That's next, This is Bloomberg. Americans remain divided over the government's ability to conduct a free and

fair election. A CNN poll found forty percent of voters think it is somewhat likely that elected officials will one day successfully overturn the results of a US election because their party didn't win. That issue fueled by misinformation. So how can the country progress if both sides can't even agree on the facts. Jory Craig is the head of Elections and Digital at I s D Global Group focused on finding solutions to extremism, hate, and disinformation, all major

major problems. Jory, how prevalent is misinformation in the election that's happening right now? So misinformation which is misleading or confusing information shared by accident, is somewhat prevalent. But what we've seen in the months leading up to the election, really nonstuff, is disinformation, so balter, misleading information intentionally put into voters seeds to confuse them, to so doubt in advance.

So when election day come, they already have these preceded false narratives in their heads and they're expecting activity to have and that will confirm those narratives for them. So how much of an impact do you think this miss and disinformation will actually have on the votes, uh, that that people decide today. So we're about to find out in the next few hours. I mean, we have already seen election officials, people running for office repeat disinformation claims.

We've been seeing that in the week's leading up. We've been seating that already today. So the question will be, you know, our voters going to buy this cyclical scam that these election deniers are offering when they're repeating these lives that have really been the same lice. Um, we hope you know that voters are able to cast their ballot and there are no challenges. We've seen things be

safe at the polls so far. So hopefully these election deniers and these people seating these narratives won't have their way. But we'll see. Uh. Time will tell. So there are so many conspiracy theories out there that we don't want to amplify here. But what can we regular people do to mitigate miss or disinformation? Sure, so one thing that everybody can do is slow down. We all passively scroll through our feeds, uh, and it can be easy to

share something quickly without checking the source. We can all slow down. Also, people think sometimes that if they want to rebute something or say hey this is wilder, Hey this isn't true, that they should re share it, but actually they shouldn't. They shouldn't regive, you know, reshare or give more amplification to the false post. And journalists really have this bad habit to there trying to be you know,

share breaking news. Uh, they can slow down and wait till all the facts are collected or just post the true information instead of resharing what's false. Also, talk to your neighbors, talk to people who don use social media regularly and help them understand that there are people out there trying to push false narratives intentionally on social media because it's a place that you go to see trusted sources,

your friends, your family, etcetera. You know, one of my next questions was how can the mainstream media make this better or worse? Yes, well, I think that the mainstream media has a tough job. They're trying to provide breaking news, relevant information, but unfortunately, with how fast things move on social media, it means that often they're taking things out

of context. So we've already seen we've already seen today, you know, journalists re sharing things that if they hadn't shared it those narratives would have stayed in fringe spaces, they wouldn't have been exposed to the mainstream public. So journalists have a duty to be a little bit more responsible. And remember that Twitter is not the majority of where is not a place where the majority of Americans are

spending their time. Uh, And so you know, the reactions they get on Twitter are keeping up with the Twitter stream. It's not exactly uh, you know, the most responsible way to be getting information out to everybody who votes. Well, speaking of that, I'm curious what you make of Elon Musk's approach at Twitter thus far. The right of free speech is one thing. The right to algorithmic amplification a free speech is another thing. Do you like what you're

saying or do you worry about the potential dangers? I worry about the potential dangers. And there's just so many, I mean, cutting resources like he did so close to the election. You know, most people are going to be thinking about content moderation because he keeps forcing this false conversation about about free speech. But that's not really even at the top of our list or even at the bottom of our list of what we worry about. We worry about how when trust and safety safety teams are cut,

we don't have the staff on hand. The platforms don't have the staff on hand to respond to the threats that we're seeing, to respond to law enforcement subpoenas, to try to get the information of where someone's posting from if they're posting an active thread. Uh. The back and forth on free speech is the distraction from what we know these platforms are focused on, which is growth. Their product features are taking pieces of content and putting it

into more feeds than would otherwise see it. So people who think that it's a question of free speech or censorship don't realize that their feets are already curated, those accurations already happening. They don't have a choice in what they're putting in, in what they see in their feeds. It's just not something they have already. So it's a distraction, and we're all worried about what Elon Musk is gonna do.

No one really has confidence in his ability to understand how to make Twitter a safe place or even a profitable place for those who are only concerned with the money it's gonna make. So I'd say all around, it's been bad news so far. So look, these are problems that are going to persist even when the election is over. You know what happens over the next couple of weeks, how do you expect misinformation disinformation to weigh on our digestion of these results. It's going to be taxing, i'd say.

I'd say that regardless of the results. We know that the bad actors who are pushing to UM deny the election results are likely to deny results in this election, and they have a long game their eyes are on, and so you can expect that whatever happens over the next two weeks will be setting up for what they want to carry into the elections, whether that's calling certain locations or certain states the most prevalent locations for allegend

election fraud, whether that's denying election results, whether that's pursuing litigation UM. All of this is leading up to four where they hope to do their ultimate power grab and restore what they what they had previously. So we'll see their playbook for show in the next coming weeks, and hopefully Americans will reject this narrative and not give it more oxygen and we can all move on with the actual results. Of the election based on what Americans choose

to say in this election. All right, Jerry crag Had of Elections and Digital at I S T Global, thank you so much for weighing in on all of these important issues today. Some other stories on our radar. Job cuts in the tech industry now nearing levels last seen in the early stages of the pandemic. In the last few weeks, a number of tech companies have said put

hiring on hold or cut jobs outright. Think Twitter, Apple, Amazon, Alphabet Now Salesforce just today cut hundreds of workers from its sales team, and the Wall Street Journal says Facebook parent Meta is set to cut thousands of employees this week. Crypto Exchange Finance is buying rival f t X, led by Sam Bankman Free. This means billionaire Chung Pung c

Z Saw, who owns Finances, crypto's richest man. It's now consolidating power in the crypto world after a bitter few between these two men, with cz actively undermining confidence in ft X is financing helping spark an exodus of users from the exchange. We're going to dive deeper into all of this in our Crypto Report later this hour. Let's get back now to the mid terms and talk about the impact the outcome of this election could have on the fate of big tech policy. I want to bring

in Shoshanna Zooba for more on this. She is the author of the Age of Surveillance Capitalism and a professor emeritus at Harvard's Business School, and has so many insightful things to say on this topic. So, look, whether it's Republicans or Democrats in control after this election, how do you think the votes cast today will impact the future of the tech industry. Well, the answer to that question and really, you know what I'm gonna say, Let's zoom

out a little bit and understand where we are. These midterm elections are are pretty traumatic, but they are actually one milestone in a two decade long social experiment in which we are the guinea pigs. And that social experiment began in the late nineteen nineties when our political leaders are democratically elected leaders abdicated the new digital information and communication spaces of the Internet to private companies. They told the companies you lead will get out of the way,

there will be no law to constrain you. And two decades later, we are paying the price of this social experiment. You know, perhaps among the prices that we have paid is the fact that Bloomberg did very extensive analysis that found that candidates who propagated the big lie that the election was stolen from former President Trump actually got more engagement on social media, and that social media companies also profited from that engagement. What can be done about that?

All right, so, but we're we're in a crazy situation. So we let the companies take over these spaces. And by the way, as everyone knows, this is the digital age. We live in an information society. Never has information been more essential to every single thing we do. And if we ourselves are not represented as information, we no longer even exist on society's atlas. It is absolutely crucial to

our lives as individuals and to our democratic society. But what we have instead is avoid democracy advocated, and that left avoid where democracy should have been figuring out, hey, how do we run this Internet and how do we take advantage of the vast new digital capabilities to advance our values and prints sables to advance a democratic form of government. We never had that conversation. We left a void,

and it was surveillance capitalism that filled the void. And what that means, Emily is this is not a hard luck story about technology. We're not up against technology. This is a bad story about economics because when they figured out that they could invade our spaces, our personal spaces, extract us as data, use that data to predict our behavior, and really figure out that that was going to be

the new commodity business. Human data sold in process like a commodity, just as if we were selling oil barrels or tons of wheat, same deal. So they built systems for volume and speed, that's all that matter. Or get the bulk of those data flowing through the AI, flowing through the machines as much and as quickly as possible. And these are systems that simply cannot discern fact from lies. Truth has no in these systems, right, we can't even agree on what the truth is. What are you seeing

in Elon Musk's approach to Twitter so far? What are your biggest concerns there? Well, my biggest concern is that we're talking about Elon Musk all the time, So you know, we've been trying to solve the problems that are that have been caused by this abdication, This sort of original, huge mistake that we made. And some of those problems are obvious to most people now, the complete loss of privacy.

But another set of problems is this vast um complex of disinformation which has saturated our information spaces and taken over our politics and our lives. So when you've got a problem, you try to fix it. We've been trying to fix this problem by looking at the owners of these spaces, the Zuckerberg's and now Mr Musk, and literally on our knees pleaing with these individual men who were never elected. We never chose them to lead or to have such power over society, and yet we are reduced

to begging and pleading. And that's why today every headline begins with what is Ellen going to do? Because in this in this situation right now, they have the power and we are helpless. Why are we helpless? Because our

lawmakers have left us naked. We have not the rights, the laws, and the institutions that we need to keep us safe in this digital century, to keep us safe from the ruthless, profit driven machine that these companies represent, surveillance capitalism, and even to keep us safe from government surveillance.

Now and I wonder, given the tumult we're seeing at Twitter, the layoffs happening at Meta, and the pivot to the metaphirst, the national security concerns around TikTok, is it possible that the social media landscape could look very different a year from now or even a few years from now. Well, the social media landscape not only can, but must look very different. I mean, right now, we're all operating in

the definition of crazy. We know that begging these men to be nice to society isn't working because their systems cannot comply, and because why would they voluntarily give up profit when there are no laws to make them do so. So the first thing we have to do, Emily is pivot and stop being crazy. We need to be addressing our lawmakers. We need laws, we need legislation, we need rights to protect us. Everything has to shift to our lawmakers.

It is they who gave these spaces away. They created this problem, and together citizens and lawmakers, that's how we're going to solve it. So the fact that we're um, we're wondering, you know, what is the social media landscape

going to be in a year. It is we who must decide democracy that must decide, because we've got to go back to the beginning and understand that this economic paradigm that is essentially taken over the digital age is injurious, is destructive to democracy, and it's destructive to individuals our society. Is what about uh starts out, What about those who

say this is free speech and letting free speech rain. Yes, yes, I'm yearning for free speech, Emily, because what we have now is, you know, we think we're talking to each other, but what's actually happening is we're doing that communicating in a private space that is privately owned by a company that is driven by a ruthless profit motive to extract

more and more and more from us. And what they have learned and the research you alluded to a moment ago, Emily, is that the crazier the content, the more fringe, the more inflammatory, the more hate written, the more we start up and look just like an accident when you're running down the highway, we stop and look where mesmerized, We engage more, even it's even if it's to say I'm angry, And this is how they extract more data from us that's critical for their revenue line and on it goes,

so we are not talking to one another in a free and open social situation of normal social dynamics, the kind of society that the framers of the Bill of Rights imagined when they gave us the right to free speech. They imagined a free and open space where the best ideas rise to the top. Because that's how communities proceed, that's how communities evolve. There's always gonna be crazy stuff. Crazy stuff is supposed to get born at the margin

and stay at the margin. That's always gonna happen. There's free speech, but we live in a world where the crazy stuff is artificially selected, algorithmically amplified to drive profit, leaving us saturated in this world of craziness so much so that and I really want everybody to know this, we've had more disinformation with every election. We had a massive onslaught of disinformation more than ten times that in UH when we got to and in even before we

got to the election. Our new head of the f d A, doctor Robert Califf Uh, through his the analysis of UH done at the f T day, f d A, was able to declare the disinformation in the year had become the primary cause of death in America. So we're talking about politics, we're talking about life and death, and we're talking about the possibility of a democratic future. Shoshana Zubov so much to talk about and never enough time, obviously.

If you want to hear more of what Shoshanna has to say, check out her book, author of the Age of Surveillance Capitalism. Thank you so much for joining us. Coming up, we've got a great big guest. Coin Base CEO Brian Armstrong is on the phone. He's with us. Next, this is Bloomberg, big crypto drama over the last few days, ending with a shock after Finance agreed to acquire its

most formidable rival, f t X dot com. Coin Base CEO Brian Armstrong has a few thoughts about that and more, and joins us now to give us his stake on the news. So let's zoom out a bit. First, Brian, Crazy day in the crypto markets. What happened today from

your purview? Yeah, well, you know, it's hard to judge too much until all the facts are in, but it appears that ft X got into a bit of a liquidity crunch and there was some risky behavior that they were engaging in, and you know, it appears that Finance is wanting to come in here and acquire ft X,

But we'll see if that deal goes through. And I think the broader story that as I think about it just zooming out, is that over the last few years, UM, you know, companies like coin Base that are pursuing a trusted and regulated approach, we've been trying to see regulatory clarity, and sometimes in the absence of that, UM, we've seen customers basically going off shore to these offshore, unregulated exchanges, and occasionally we're gonna see blow ups like this, I

think unless that is resolved somehow. So this is a validation of our strategy that we've been taking for the long term. And UM, yeah, I think that's what we've been seeing. In these recent markets. There are big concerns about crypto liquidity and how fickle uh it is or isn't. How do you prevent liquidity crunches from happening? Yeah, well, in cuimmus this case, I mean, this kind of liquidity crunch is not possible to happen because, um, we're not

you know, investing customer funds. Um, we're not uh, you know, doing market making or engaged in any kind of complex arrangement with other you know, parties that we own. It's very simple. You know, we're regulated as a custodian and a brokerasion in exchange. We hold all of the customer assets one to one back. So if customers want to come and withdraw those funds, even a hundred percent of them, you know, that's fine. They can withdraw all of it

at once. And as a public company, our financial statements are audited and anybody can go and see them. Um. So these are the kinds of things that I think helped make us the trusted platform. And unfortunately, again in these kind of offshore, unregulated exchanges, it's a little unclear exactly how their financial statements are orchestrated and what their relationships are with these other third parties. You know, what's happening with customer funds is it being loaned out without

their permission? Um. And so hopefully this is a good reminder to everybody that you know, having trusted companies in the space is what's going to help this space grow over the long term. So look, analysts are looking at this as you know, and if the deal goes through, of course, and it hasn't yet. But as a seismic shift in the competitive landscape, how are you thinking about that? Does doesn't mean you'll need to evolve your strategy at all, No,

I mean I don't think our strategy changes here. So I mean, first off, we try not to look at too much of what competitors are doing. We try to just look at what our customers want and and focus on that. I also think that, by the way, you know, most of the interactions we have with our competitors in space are their operative, their friendly. We're trying to grow the whole space x and it's not so much a

competitive thing most of the time. But that being said, I do think, you know, um Finance and coin bass are taking pretty different approaches and UM you know, we're we're building in a very trusted, compliant way. We're trying to go get licenses in the countries where we operate. UM you know, we're also not just a trading platform. We don't think trading the be all end all of cryptol that we have really good products in that space.

We you know, the reason I got into this and I got excited about it is I want there to be a more fair and free and global financial system where there's more economic freedom, and so we're enabling people through our products to do all kinds of things with crypto, including you know, earning a living and paying for things in commerce and remittance and pure to pure payments and

even accessing web three in the world of DAPs out there. So, um, we're going to continue to build towards that our strategy doesn't change. But I do think this could have an impact in terms of, um, the regulatory landscape and you know how policymakers are going to engage with different parties

going forward. Would coin buys consider buying f t x U S So you know, I had a number of conversations with people over the last m twenty four hours and um, there's reasons why that would not make sense, and I'm not quite at liberty to share the details right now. I think I'm gonna let other people share that if and when they're ready, or it'll probably all

come out eventually. And I think, you know, finance, I'm sure is looking at the details of this transaction as well to see, um, if it makes sense for them. But yeah, I mean, look, we're we're in a position where we really just want to focus on building our own products, and um, it may be a bad situation, um if this deal doesn't go through for the customers involved.

And so I have a lot of sympathy for that, um, but it's not something where we felt we had the option to come in and acquire that would make sense for us or their customers. Well, let's talk about the customers. What's your pitch to f t X users about why

they should move their funds to coin base over binance. Yeah. Well, as I mentioned at the beginning, I mean, Combus has always taken this approach over the last ten years of being the most trusted, the easiest to use out there, and we developed this suite of products over time that allows people to come to our platform and not just trade, but do all the other kinds of activity you know, staking um, if they want to participate in that, engaging

in commerce web three, various things like that. And of course we serve different customer segments to we serve regular individual consumers, you know, institutional businesses and also developers. And I think the core thing is that, um, you know, there's a lot of things that would cause the customer to choose our platform, but in this exact moment in the market. I think the main thing that the top of mind for them are is going to be are

my funds safe? How do I know that? Is this a transparent and regulated firm or is this something where I don't have great visibility into it? And what's my counterparty risk? Um? So those are the questions people are probably gonna be asking in this moment, and that's probably a good reason why they'd come and look at coin base. In fact, we're seeing, um, we're seeing good inflows and activity on the platform, as you can probably imagine. Oh really,

you're seeing big inflows right now. Yes, we're definitely seeing increased activity on the platform there. How concerned are you that finance will have too much power over crypto if this deal goes through? Yeah? I mean so the decentralization is one of the big topics in crypto and it's kind of a core ethos, and so I definitely think there's a risk in any sense of any party having

too much control. Um. You know, I don't want to speculate too much on what binuses ROLL would or would not be, but I think that's up for the market to decide, right And um, yeah, I I think that that will get worked out. I don't have any like particular thing that we need to do there, but I do think it's the top of mind thing for everyone in crypto. They don't want any one party to have too much control. On that note, then, how do you this will impact crypto regulation in d C, which, as

you know, has been very much a work in progress. Yeah, so we've certainly been big advocates UM working with policymakers in d C to come to more regulatory clarity, especially around centralized exchanges and custodians and stable coins. UM. We also think that the innovation potential in defy and self

custodial wallets that needs to be preserved. And I actually think by the way, those things have the ability to create an even more UM, transparent and trusted financial system going forward, because all of those things are on chain in the open, and you know, you don't have to trust a third party. You can basically trust math and code and UM and yourself to operate in those environments.

So it's very important to preserve that potential. But I think, you know, one of my big fears and the thing I would caution against is that I think some people in d C may be tempted to say, hey, this is why we need more stringent regulation, and I guess my pushback to that would be these, uh, these exchanges

were you know, are operating largely offshore unregulated. Um, it was not because of proposed regulation here in the US or in any other major market that the The issue here is that most of the regulators have been too focused on onshore companies that are basically trying to play by the rules, like coin Base, and that's fine to focus somewhat there, but meanwhile, the customers were going to these offshore unregulated exchanges, and um, the regulators basically we're

not sanctioning that activity or preventing it from happening, and so we're seeing that risk now emerged. So I think the regulatory proposals that are in motion, like the d C S t p A bill going through Congress, these are you know, heading in the right direction. Some of the language needs to be thought more closely, especially around DE five. But if that kind of stuff comes to fruition, that'll be good. Then we just need to enforce a level playing field for the whole industry. And that's the

part that that has not been happening to date. And just to give you one statistic, you know, if you look at the thought and future, is volume more than that crypto activity Trading volumes actually moved outside of the US, and I think it's largely been due to that lack of regulatory clarity. What happens if this deal doesn't go through, Brian? What then? Well, um, you know, it does appear that some customers of ft X would be taking losses and

that's not a good thing for anybody. Um, And then I think the industry, you know, needs to think about how to go on from there and again seek that clear regulation, get the level playing field. It's enforced equally around the world. And um, you know, companies succeeded, companies failed. That's part of capitalism. It happens in traditional finance as well. Um, but it doesn't mean that the whole thing gets the whole traditional economy gets called into questions. So the same

thing is true here in crypto. It just means we need to keep building better systems and have that regulatory clarity for the centralized actors. Sam Bank Ben Freed has been a huge political donor, big presence in Washington. Do you think he loses some credibility as a result of this. I mean, it's hard to imagine that he wouldn't. UM. I mean, that's a very difficult situation where, you know, I actually think he was very passionate and articulate. UM.

In many of these meetings. He drove the conversation forward, and I give him credit for that. UM. But there's probably a lot of people in DC right now kind of scratching their their head, feeling like they got duped or deceived by this person who may have not had

things exactly in order. UM. And I don't you know, I don't know exactly how that happened and how he ended up in that position, but UM, it might cause them to be a little bit more skeptical of where they're getting donations from or what the purpose of those donations are. UM. And I hope it doesn't, you know,

taint their view of the crypto industry broadly. There's a lot of people out there, like myself that are in our policy team and many others, UM, you know, a sixteen z and Han Ventures and Paradigm that out there driving a lot of this regulatory and policy work. And yeah, I hope they remember that there's people working in the space that are that are here for the long term. I'm strong so of Cooin based. Thank you for making time to come speak with us today. Brian really appreciate it.

Thank you, Emily, and that does it for this edition of the show. We've got a great show for you tomorrow as well. Reid Hoffman will be joining us to talk about AI in the next decade of tech innovation. Plus Elon Musk and Twitter and Gary Tan of Initialized Capital, We're gonna be talking about the future of startups in San Francisco. I'm Emily Chang in San Francisco. This is Bloomberg