Coinbase vs Robinhood: Who Will Win?

Transcript

Can I let me get your guys' take on one actually specific stock that Sante and I talk about a lot, which is Coinbase. Um Quinn, I feel like I used to see you talk a lot about this. I I don't know if you're still a holder of Coin or if you just had a nice little run there, but so there's this Jeff Dorman tweet. He said, "I honestly don't know how Coin survives. Robin Hood and Bulge Brackets are going to win the trading biz. Custody has no moat. Stable coin interest income going to zero. Their customers hate them." Look at the comments. Acquisitions have been flops. management makes baffling decisions like buying back 0% debt. Quinn, are you uh do you remain a Coinbase bull or did you get out of that trade? Yeah, I haven't I've I've been on the other side of that

trade uh more in the last three months than I have long it. Um I yeah the they have they've what's really good for everybody in terms of opening up the regulatory umbrella and support and new people rushing in traditional finance rushing in. That's a negative for the people who benefited from regulatory capture and being able to charge rip your face off level of fees for years on end without any competition. So you're already seeing it with Robin Hood on the retail side. I think you're seeing it uh with many players on the institutional side.

You have traditional prime brokers like StoneX who are public and large getting into crypto trading. Now that it's kind of approved, you're going to have all the big banks. So yeah, I mean when you look at, you know, they charge like 25% on staking. I mean staking is about as commoditized of a product as you can have in crypto. They're charging, you know, exorbitant fees on retail trading. It's it's it I will push back on that because the the stickiness of the staking deposits is something that in finance in general the stickiness of the depositor base is high and so I would just that's the only c when I hear you say that I look I I want to run this validator business way back but I think

I think the thesis there if I take the alternative is these can persist higher unlike like your bit w like your grayscale products because the the stickiness of this base is probably higher. But yeah, I mean they're they're getting hit hard on a number and it also just goes to what is being priced in and I mean the multiples come down it obviously a ton with prices but and then also a view I'm not sure I want to be like super long uh crypto trading volumes right now either. So yeah, there's a number of other market.

I like hood more than than coin, but for a couple other reasons. Uh but I am I am curious um it's just a more diversified business but also just I guess how much of coin and the trading and the expectation there's been like the the the micro strategy premium which is there's a scarcity value attached to some of these assets where historically it's been hard to express a view in a more traditional construct which is and that was like Coinbase Micro Strategy now maybe new bank to some capacity like public companies have started getting more into crypto but Coinbase has been like that premier kind of blue chip call it of let's go long crypto in a very pure vanilla career risk low way but as

we have more you know as we have more options available the ETF main is what I think about the premium just goes down that like that demand um goes down so the the the multiple comes down you know just don't recover this is going to end up being a bit of an echo chamber because like one of the biggest things I bought at the lows here in this recent crash was Robin Hood and I finally felt like I got my entry into it and so I'm definitely on that side of things as well. But yeah, I I will say that I'm pretty bearish on just this idea of branding of exchanges, you know, like you compare it to Tradfi where it's just like you just have your brokerage and you know, you don't really care about the routing that it goes through.

You just care that it gets settled and it's and it's in your brokerage. Um obviously, but you care no but you care which brokerage it is. Like you're either a TDM air trade user or a Charles Schwab user. Isn't that Isn't that branding on the retail side? On the institutional, you're saying you don't care and then the fee compression goes down because they can't Oh, on the institutional side. I see. Yeah. Yeah. Yeah. Yeah. Exactly. So, yeah, basically you're fighting that battle on one side, which is that if you have this branding premium of the likes of Coinbase, etc., that's pretty bearish. Um, so it's it's more about, you know, what extends their runway. I'd mentioned in our in our pre-hat kind of chat there about this, but I think one of the only saving graces they might have is there's those rumors of them acquiring Darebit and you

know options are such a different beast in terms of the liquidity required to make them effective just because there's so many strikes. There's so many different expirations and you know the spreads can just become so wide so easily. So, you know, I've been a huge bear on like onchain options for years because all of them like you just go and look at the spreads and it's just like, you know, as a buyer, I'm not walking that. It's just insane. So, you know, obviously Darabbit has become the deacto place for for all crypto options. And you know there's some stickiness there in terms of a moat and I think if they got that that would differentiate them against other crypto exchanges but then you're also once again fighting the battle that if you look at like I bet options those are the tight like it's going to be really difficult to fight

those spreads. They're just always going to be tighter because you have institutional market makers there versus there's a lot of people there's a lot of institutions that still can't even touch DAR bit. So yeah, it's Yeah, it's tough. [Music]