Coinbase’s Brian Foster: Stablecoins May Overtake Fiat Volume in 5 Years?

Transcript

5 years ago that answer was different. I think a lot of people came to market saying all right I'm going to start small with maybe just Bitcoin access no send receive no yield capability no stable coins and that was maybe a good enough wedge in the door today the market is just matured so much and there are so many great options now for investors that I think if you want to be competitive you need to have a broader capability earlier on in your journey we don't want to do the you know halfbaked version of this product we want to do the one that is the most novel and the best for investors Hi everyone, welcome to the converge podcast at the Defiant. I'm joined today by Brian Foster, co-head of

infrastructure at Coinbase. It's great to have you here on the show. Well, >> thanks for having me, Chris. >> Yeah, so excited for this conversation. This has been a very exciting year for the infrastructure side of crypto tokenization uh with a lot of new players coming into the space for the first time. So just so we we get started, can you like please walk me through what being head of infrastructure at Coinbase really means and like who your clients are, what kind of products are you looking at today?

>> I'm happy to do that. Coinbase does a lot of things these days and so it's useful maybe to start with a just a high level orientation of how we organize the business and so um as you said I co-head the infrastructure business infrastructure at Coinbase you can really think of as the complement to our first party business right so if you go way back in time Coinbase started as a retail platform where people could come and mostly trade crypto right that was what the business was primarily about over time we evolved to serve more types of firstparty clients family offices hedge funds, other types of asset managers and institutional clients. But we also recognized that outside of those first party clients, there'd be a lot of other types of brokerages, banks, fintex, payment services providers,

really what you know on Wall Street you might call the sell side, right, who would want to also participate in this market. And we said, we've gone really deep on building infrastructure to support our first party business. Let's take all of that expertise and that platform and turn it into a product that can help those infrastructure first players on the sell side, if you will, in addition to the first party client. So, it's a very complimentary business and something I think we were well equipped to do given how we started in going really deep and building a vertically focused first party business. So that means that that would include both what you might do for example for Black Rockck and their ETF in like holding the custody of the Bitcoin or Ethereum but also providing sort of like crypto services for other fintex and

trusty players who provide crypto services to their end clients. And who are those type of like institutions that today look at like Coinbase for for those type of services? >> Yeah, that's exactly right. So to try to simplify things, there are many products in the infrastructure platform, but they're really centered around two main categories. One is about enabling trading and access to our markets. And so we provide all kinds of tools related to, you know, market connectivity, custody, staking, data, financing as a service to financial institutions who want to help their own clients access crypto markets, right? And the ETFs, I think, loosely fit into that category.

They're really about access to crypto as a financial asset class where we play the role of custodian and prime broker. The other major category which recently has been a very high growth part of our business and really the market at large has been of course about enabling payments and we've had this I think really big moment in the last year or two where stable coins have gone mainstream as a tool not just to support you know trade settlement and really the investing side of the crypto market but actually have now become a new payment grail accepted by PSPs, fintex and money movers and so we're hard at work arming that second major category of client type fintex, banks, PSPs, and money movers core business includes payments and really supplementing what they

already have today with a that cryptonative rail um you know the blockchain the on and off ramps the wallet infrastructure and the stable coins themselves so that they can enable better payments for their clients. >> Great. And if we think about that first bucket then the more like access to crypto for institutions and so on. How has that that changed? Because if you think even from a retail perspective, the appetite for digital assets has evolved over the years. You know, we had very good years, very bad years, but at the same time we have always talked about institutions finally coming to a space and institutional capital is coming. So from what segment are you seeing the most demand currently? Are you focused today on enabling let's say a regional bank in I don't know the

Midwest and helping them give access their clients access to crypto trading so that they can hold Bitcoin or whatnot or are you more focused on okay you know let's see something front tempon is you know launching their proprietary trading and they need access to all of this and they don't want to retool what's what's driving demand on on that side of the business today >> great question the ultimate demand comes from you know the buy side from the investors if they will right whether they are retail or institutional and so as you know that demand has been growing over the years but has also been cyclical with you know the core what I would think of as cryptonative assets like you know Bitcoin and ETH and Salana and so that demand es and flows but over

time has really grown as crypto has become what I think really is a standalone and new asset class from the infrastructure business the way we think about this is the demand side for infrastructure is a little bit more maybe a bit smoother in how it grows relative to that end client demand because the demand for infrastructure is really a function of which fintexs, neo banks, brokerages and exchanges want to offer crypto trading, right? when we think about that trading bucket. And so that curve really followed a a steady progression of, you know, first who was really technically equipped to contemplate what's kind of a thorny problem, right, with like thinking about digital assets and am I really equipped

to do due diligence on a Coinbase and understand wallets and private key management and markets and 24/7. So there was a little bit of a a readiness and a and a technical sophistication factor that made some of the faster moving fintexs and neo banks and brokerages the early movers in that category. I think regulation also played a part right as the regulatory backdrop has improved more of the conservative institutions like you know the PNC banks of the world have started to come in and and and partner with us. So that's been that's been really the story of the curve on um of the demand curve on the trading side of infrastructure. first fastmoving fintex neoax brokerages now more conservative traditional brokerages and banks who are a little bit more sensitive and patient and waiting for

that clear unambiguous regulatory and green light and they still prefer to do it through a third party like infrastructure provider because if if I go back a couple of years if I was a bank I wouldn't want to offer this service directly because I don't know like I wouldn't have the clarity from the OCC on whether I can even hold digital assets in in my balance whether I can like operate this safely and that would mean that probably I would want you know to deliver on the customer value proposition like the product itself but really not get my hands dirty. Do you see? So like and and that can goes both ways right in one sense it'll be okay I definitely wanted a parted previously because I didn't want to get exposed but today might be okay

now everybody's getting this I don't want to be the last one not having this in my home banking app. Yeah, I think that the answer is going to vary a little bit depending on who you talk to, but that's great for us, right? Some players in the market who we work with, they really want the whole stack from an infrastructure perspective, >> and they're starting from a place of maybe open-mindedness and saying, "I'd like to have the best product capability, right?" And when people start there and they start to do the due diligence and understand the technology and look at what we have, the choice to partner becomes natural because you can make a very clear argument that I want to have the best product. I should use the best infrastructure components to make that product really really powerful. There's obvious other considerations like speed to market

economics, right? What is going to cost to do this and how scalable is the thing, right? If I'm going to make an upfront investment in a whether it's a partnership or an in-house build, I know that this market's going to grow and so I need to work for the long term. And I think more and more partners as they've done that calculus have concluded that at least a large share of what they're going to need but in some cases all of it they will partner on underneath that and others will say for a variety of reasons you know hey I have a great technical capability in house or a strong sort of institutional bias towards building to which we say that's great and even those firms still usually need something right if you think about the most extreme example maybe a firm says I want to build everything I'd like

to build custody and you know all of the wallet capabilities and permissioning and logic and and maybe even brokerage, right? But Coinbase operates at the infrastructure level are markets businesses in a perfectly integrated way. And so even those players will still often route trade flow to our exchange. So we find there's always something to do and in many cases there are five, six or seven things to do even for these large partners. >> Yeah. And and how are you seeing the the enablement side on the on the trapy or you know like fintech or even trading partner on on things like the compliance the the risk management because when I work with with banks they have never faced something like a tech analysis or

have to do with travel rule or the idea of okay here you have to go look not only at direct exposure but also like indirect exposure. So, how how does that process of incorporating digital assets into the rest of the stack looks like for for for your clients? >> I think for the firms that are the most sensitive to compliance, it actually plays to Coinbase's strengths. So, we welcome those conversations. So you're right that for particularly a lot of the traditional financial institutions and large banks, this is a sensitive spot where the way that compliance needs to happen in the crypto world which is includes all of the onchain monitoring that's a novel capability that all these firms need to understand. And so what

typically happens is in a education and due diligence process there's a chapter right we in our one book which is about onchain you know cryptonative compliance and we have a great set of capabilities that come off the shelf when people work with our platform but also we encourage all of our large clients to supplement that with their own in-house monitoring and and because they have you know regulatory oversight typically you know in three or four different ways they're going to need that anyway. Exactly. Exactly. So, we get to say, look, we're going to get you from here to here and put you in a great position and and by the way, help you feel confident about this and educate you, but you're going to stand up this, you know, to get you from from there to there, right? And do that inhouse, >> right? We'll we'll talk more about

payments in in a bit, but I also wanted to touch on like the capabilities. So custody trading liquidity which is and and deal flow which is like liquidity flow which is something huge but there's also this integration with you know the banking or the fiat the cash leg of transactions. So now Coinbase has received conditional OCC approval. Why is that needed and how does that become part of like the differentiation that Coinbase has in in this space? Sure. The the simple answer, we haven't been public obviously about all parts of our strategy. We are publicly traded company, but the simple answer for why we pursue sometimes these additional regulatory licenses is often that it gives us flexibility to number one

develop new types of products or number two engage certain client types or certain clients in new jurisdictions that maybe we we couldn't otherwise. And so broadly I can say that you know getting that OCC charter just affords us a little bit more flexibility in terms of in terms of our ability to design new product but also to serve specific types of clients and as a supplement really to the great licensing foundation we already have right and so that's how we think about really generally getting new licenses >> and are you seeing like an increasing sophistication in terms of what people are doing with digital assets meaning couple years ago was enough Okay, you'll have access to an handful of digital

assets that we are okay in terms of like compliance and regulatory client or whatn not. But are today things like staking, yield, defy integration becoming more relevant and how are you like implementing that? I think that the simple answer is that more and more of the clients we work with that fall into this brokerage and financial institution category recognize that if they're going to be competitive and have something today that is up to par with some of the leading capabilities on the market they're going to need you know four or five dimensions out of the gate from a product perspective so you know 5 years ago that answer was different I think a lot of people came to market saying all right I'm going to start small with maybe just Bitcoin access no send receive no yield capability no stable

coins and that was maybe a good enough wedge in the door. Today, the market has just matured so much and there are so many great options now for investors that I think if you want to be competitive, you need to have a broader capability earlier on in your journey. And so I think that's helpful for us from an infrastructure perspective because we get to say to all these partners, great, we have all of those things. So we can pull that timeline forward for you and make you competitive on day one. And by the way, if you watch our product showcases, we're continuing to ship product at a super fast rate. And so our job in the infrastructure business is to help keep all of those partners and clients we work with on the frontier so that when their investor wants the next thing, we can say you're

going to have it and just really accelerate their ability to build for their clients. >> And now switching to the other side of the of the payments part of things. So just in terms of context still most of what you see in in crypto in terms of volume still relates to trading in of some nature and only a small fraction has to do with real world payments B2B or even like P2P remittances all the use cases are still a small fraction but it's been growing rapidly. How have you seen that that evolution play out and what has the implication of that been in terms of like the products that you've you've you've launched or your road map because it's moved really quickly. It's moving super fast and I think it's true

that backward-looking you know trade settlement and stable coins as a as a you know quote currency against other crypto assets have been really the predominant way that the market kind of bootstrapped and got comfortable with stable coins. But you're right, today this pure utility play of stable coins enabling payment completely independently what's happening in trading that is the much faster growing thing and I would not be at all surprised if in the next few years that's by every by every metric you know the far bigger the far bigger category I think look a few a few things have happened stable coins obviously are are not new but they've had a moment in the last year or two and typically the way that we see these markets develop is one or two very large credible players decide you know what it's time and they

make a big move and then the dominoes start to fall and everyone gets comfortable. We saw this with the ETFs, right? Working with Black Rockck and a few other very legitimate firms initially and then the dominoes fell and everybody came in suddenly we had a market in a new category. I think the same thing has happened with stable coins. A few large players there was a critical mass that began to move and if you are competing with one of those players you're asking at the board level and in your execs you're going hey like are we missing the train? >> Right. >> Right. And so all of those dominoes have started to fall very rapidly. And I think what's really interesting about you know that that strategy question of like do we go now or do we wait for companies in the payment space whether

you're you know a fintech a crossber money border money mover or a bank is the stable coin enabled payment capability touches a huge part of your business right it has more you know trading crypto is interesting and bitcoin neath salon etc as a new asset class but the business rationale for making that leap for some firms has always been hard because you go Okay, this is a piece of my portfolio. Now, of course, with tokenization, that case is getting stronger cuz it's more of the portfolio, but contrast that reality with stable holds where on day one, you're going this actually could be a substitute for my payment rails period, right? And so, I think for the for the folks contemplating doing something here, the question of integrating stable

coins is much more existential, right? It's going to potentially touch all of my flows globally. Question of kind of when and how fast that happens. And so, there's urgency and that's what's been exciting. If we talk to these firms, the the smart CEOs understand that, you know, 3, four, 5 years from now, they actually may have more stable coin volume than they have fiat volume. So, they're all at the table and eagerly, you know, somewhere on the journey of of building. And our job in the infrastructure business is to work with them on, you know, number one developing that strategy, but number two, arming them with the tools to build great products where the stable coins are really working in the background, but to their end clients who are often, you know, merchants or businesses or retail, it just feels like a simple native payments experience,

>> right? Like like a balance. one of the you mentioned, you know, like dominoes falling and we we haven't really seen as many dominoes fall as as what we saw this week with the OpenUSD. So, a couple of questions there, but do you see that as a this sort of like fundamental shift because you have, you know, Visa, Stripe, Coinbase, everybody from and and Black as well and so you have both the the trading and the payment side. Do you see that? How would you characterize like this happening?

>> I think it's a really exciting moment. I think something worth clarifying about Coinbase's role in this stable coin market is that, you know, obviously we are super bullish. We're long stable coins. We think this is a fundamentally important technology that is going to really help upgrade the financial system consistent with our mission and obviously just a huge strategic priority um priority for the firm. To do that, Coinbase's role is is to be a platform, right? And so we have a long-standing history with a couple of stable coins we've supported, most notably USDC, which continues to be a huge focus for us and and will be a huge focus well into the future. But we're also a platform and it's our job as an infrastructure provider and as a markets business serving a really wide, you

know, divergence of of sort of different types of customers and clients to respond to their needs and to support a range of assets just like we do, by the way, in our trading business. So I think that's our that's our position to be this platform that supports the leading assets specifically on on OSD. I think what's exciting is just how many big names are involved right out of the gate, right? They're not small firms. And so that to me is just a marker of where we are in the maturity of this market that you have more than 100 really large credible firms with distribution who are ready to invest in this. Now there is a cold start thing, right? And some of the really large stable coins have incredible scale and network effects and are being used. So I I do view this as you know it's day one

but certainly the people around the table you know this is the right mix that where something really interesting could happen. Yeah, it's it's been a it's been a big year for press releases in some way because when you look at for example Tempo that you have you like dozens of design partners, dozens of ecosystem partners but we're adoption still is to be seen but let's say something like OSD you really like holds on and like everybody's super excited and we we see some momentum. Do you see this also as a fundamental shift in how you know the stable coin economics are going to be distributed because everybody's been super concerned with that you know you you see that in the

Genius Act discussions around you know like stable coin yield all the problems that that we we we saw there and for Coinbase in particular the relationship with with Circle has been really important in terms of you know getting that kickback and and like building the the economics of the Do you see in some way also issuance has become commoditized and everybody has their own stable coin. So why do we need something like O USD? I would assume that you go along the lines of saying well we are a platform so we have to support whatever our institutional clients need. But if you were to put yourself on their shoes of all these smart CEOs, is this just greeted for the yield that's driving this or are we really uh should be looking forward for new use cases and

new ways in which you know like stable coins like OSD are going to be used? >> It's a good question. I think empirically what we see when we talk to you know businesses and and merchants and end customers of stable coins you know to a degree they're actually agnostic about the underlying asset which is they're just saying solve my problem. I'm trying to help someone get my money from A to B efficiently and cheaply, right? And so to that end, you go, all right, which of these assets are good enough from a sort of institutional credibility, the way that they're structured, the regulatory oversight, the backing, and there there's a few of them that that are, you know, on a path of clearing that bar or already have cleared it, but it's a small it's a small group. So, you need to be able to

do that. But then the client again is typically saying, I just need my payment to work. So you asked an interesting question of how might the economics shift. Coinbase as you said as a platform. I think what's interesting for us is that you know we we have our own owned and operated distribution if you will right and fundamentally the way economics in the stable coin world have worked have been so far about distribution. And so Coinbase is in a great position I think regardless of which assets we support to benefit from that distribution. And then for the end clients and partners all they really need to worry about is is this helping me get my money from A to B efficiently?

And Coinbase is an infrastructure provider. Are you supporting the assets that clear that bar? >> Yeah. And it feels also that Coinbase has an important role in something that it's becoming more of a pain point today, which is this. You know, it's getting fragmented in such a way that I'll get last week we had Moneygram on on the show. They'll have their own stable coin. You know, platform XY Z will have their own stable coin and different ways of issuing those. But you still need venues where you can go from one to the other. is that part of the the play here where like Coinbase would be, you know, the liquidity engine for multiple stable coins and that's part of the value prop. I guess >> that's exactly right. We're already in a great position to do that. And although we haven't maybe marketed this

explicitly as product, it's integral to what we're already doing, right? We think about this is really like the stable coin clearing house. And so you can come to Coinbase today and get access to most of the major stable coins, easily swap them in and out for each other. We'll be in a really interesting position with USDC and OUSD by virtue of being a place where you can you know on and off ramp it at a huge scale and we we control obviously you know the the economics when people come through our platform and so we'll continue to be that central clearing house and infrastructure platform and that's a really interesting role to occupy I think in in the market.

>> Great. Okay. So let's move on from from payments into the other hot topic which has been tokenization RWAS tokenized securities perpetuals all the all the different types of assets. So everybody says it's a huge priority. Everybody's doing something. You see all the job listings for people in like digital asset strategy, delivery, whatever. Still a fairly small space. And you know the typical, you know, this is 30 billion. Then stable coins are 300 and then crypto is 3 trillion. So it's still, you know, two orders of magnitude smaller depending on how how you count it. So, and again to to the the point around like press releases and announcements and road maps and good intentions, what are you seeing sort of

like being real today and like actually solving problems and and I'll I'll let you go on whatever direction you like, but is it more on the enabling access to different asset types or is it more on okay, we have terrible outdated technology and infrastructure on rails that still hold us to T plus2 settlement and and that that is overdue for replacement and which of the two are you seeing sort of like more relevant today? >> Coinbase as a firm has been maybe very conservative, arguably too conservative in avoiding the sort of press release game in this category, but substantively the investment we've made here has been very real. And we have a couple sort of

hardline positions that are maybe a little bit different than some of the other big players, particularly the folks coming at this from the traditional finance, >> you know, in incumbency. And one of our big hardline positions is we want we don't want to do the, you know, halfbaked version of this product. We want to do the one that is the most novel and the best for investors, right? And central to that is onetoone backing. And these being real tokenized assets, not, you know, what's effectively a derivative product or something that has, you know, high slippage or hidden fees. We want it to be pure and real and a direct expression of the underlying asset that it that that token is wrapping, right? And so um that's that's been a dieh hard position for us and how

we've thought about building the product in terms of the way we're going after the market and how we're unlocking this to create real value. First it's it's super early as you pointed out was it's a small market partly because of there's still major regulatory work happening here domestically in the US. But first the obvious thing for us to do is to help to help really make this about an access play. And so for a non- US market where who we've initially engaged, we're offering these tokenized products to people who we believe have demand for certain equities and other instruments we could tokenize. We can just reduce that friction for access. So that is a very obvious out of the gate value prop.

The longer term value prop obviously is we want to really I think create a new surface on which to build new products. >> Okay. >> Right. And so to me, like what's interesting about the the access play and bringing certain investments to new clients is of course exciting, but I think the bigger prize and more interesting part of this long term is what can you build that you couldn't build before? Because these assets are onchain. They move 24/7. They settle near instantly. They settle very cheaply. And I think that if we build this market correctly, we're going to have all kinds of almost a renaissance of financial product innovation derived from this new product for >> but is that mostly a retail play because even in emerging markets like you can

get a like a account ping through your broker dealer or many of the like fintex today even brought access to ETFs, US stocks for for many years now and there are like aggregators that are built on top of the you know the so like trading infrastructure. So myself as you can tell I'm not from the US and I've been trading US stocks for almost 10 years abroad. So who are we really providing access to that didn't have it and okay and if that is real and there's like a concrete benefit there the second part we still haven't seen it right people actually building things on top because I would love the idea of okay I have my whatever SpaceX stock and now I'm going to use it a as collateral on Jav and and

take a loan. So how how real are the two things or is it mostly an expectation of a new world where these are the default rails? >> I think that it's super early. So we have to bear that in mind and typically these things have a gestation period. You know we saw obviously blockchains went through a major you know scaling cycle like every new infrastructure does but we had you know the invention of blockchains predated really the growth of the the best DeFi products by years right it took a little bit of time. I think we're going to see something similar. I expect it might go faster in tokenization because we now have a snowball effect and developers in a real industry, but I think step one is just simply getting these products out in the wild for the first time, right? And

we'll we'll see about demand. You know, we're we're we're we're humble about it. we don't know is the answer. But we do know that for a lot of investors, you know, outside of the US and other certain regulated markets, it's much easier to engage with, you know, an Austoodial first wallet and experiment there than it might be for someone who has the ability to get, you know, banked and get a KYC brokerage account. So, we do think there is a delta there in terms of access and demand. And then in terms of the products being built on top, I think it'll just take a little bit of time. >> Yeah. And it's also like the relative size of the two spaces it's it's significant right because you know the trading volume of retail customers in Latin America it's I don't know like probably the rounding error of

institutional trading in the US >> right >> so but but I I do see the point in like okay we'll build this and in the same way that you you've done for the like ETFs and for you know like crypto as a service access then institutions will come and then it becomes more efficient and and and there will be this this transition to the new rails but at the same time it's with the increased regulatory clarity in the US it's become easier for you know DTCC NASDAQ NY everybody to get on board with the crypto rails what does it mean what does that mean for like a crypton native company or infrastructure player like Coinbase is it more competition are you seeing specialization

how do you think that might play out >> we generally have a view you know we're we're not cavalier about competition, but what we found over the years is that when large incumbents entered this market tends to grow the pie and Coinbase is a broad enough company with both our first party and our infrastructure and developer, you know, businesses that we found ways as a firm to benefit from that pie growing and partner with the folks who are coming in the door. I do think specifically on this vector of you know building markets for tokenized products there are still many it's early and there's firms who are taking different approaches and they're not all compatible with each other and so at there's going to be this natural you know battle I think to create standards and Coinbase has a view that you know we're we're really

students of Silicon Valley history and we have Silicon Valley DNA I think of our we're a little bit of a platypus half half Wall Street and half tech right and you know we have a view that open standards and open protocols tend to win out. So our bias is towards do the thing fully on chain, right? Make it truly cryptonative from day one. >> Figure out how to make that thing compatible with Wall Street and figure out how to uh shepherd that model safely within the regulatory framework, but let's not compromise just because it's done this way today. Right.

>> Right. And so we are probably on a spectrum like here feel and um I think some of the firms with different models may be a little bit more conservative or or happy to do something closer to the maybe the very nice business that they already have working today. And so that's how these things that's how these things go. But you know I expect there will be a phase where we we figure out where that clearing point is for what the standard ult ultimately becomes. And then as a firm you know Coinbase traditionally has figured out how to make that work. A couple of weeks ago, we had the the DCC here on the show and it's really exciting to see how early they have been in the space like all they're doing in terms of tokenizing. I don't want to get you in like in a

complicated position with with with the question here, but my my take from from from what they are doing and others are doing it. It looks more like core technology replacement. We're going from this. We're going to adopt this technology because it's going to allow us to move into same day settlement and 24 something five six7 sort of like trading and settlement and we're using technology infrastructure networks that it allow us the degree of control that we feel comfortable with and and and you see for example the massive investment that has gone into the Kanto network that in a way replicates the closed or like >> right >> wall gardens of the past >> right And if I stand from a cryptonative

perspective, institution, many of the institutions that are now building those types of infrastructure are the names that you would have, you know, like the the the cipher banks or early crypto adopters thinking, yeah, crypto is meant to eliminate this type of entities because they will no longer be needed because by definition and almost by their mandate, they're meant to be intermediaries uh between people. So the way I understand it and you correct me of course is like Coinbase sits on this like cryptonative side of things or like helping Wall Street make the transition to this new rails but at the same time there's this other side which is adopting a few of the the more like technologyled aspects of of the of the

ecosystem but not its open permission permissionless composable nature. So it's it's a really broad question, but I wanted to get your sense of how do you see the ecosystem evolving in in that dimension into the option of like new ways of trading versus replicating what we currently have and sort of like what will be where will Coinbase sit in that container. >> Sure. I I would love to tell you with total confidence this is exactly how it's going to pan out and there this is the right model but I can't do that. What I can say is, you know, I think that everybody who is investing this market is kind of acting rationally from where they're starting from, >> right? And so you you called out some very wellestablished players who are doing amazing work innovating.

>> Yeah. >> And have traditional, you know, traditional financial services roots. If you're in that position, makes a ton of sense to say, I want to think of this as technology that I can use to do an even better job servicing my existing clients, lock them in, make my products better. That makes total sense. But I think we're, you know, even like a lot of those firms are have have recognized and come a long way in understanding that even if they have success in some of these models that may be a little bit more from Coinbase's position, you know, look a little bit more like a compromise or a little bit more permissioned or closed. I I think they recognize now that there is enough unique distribution in the cryptonative world and a separately fastmoving train in that direction that they're going to have to

figure out if they want to play in that market how to make their thing work with it. Right? And we've seen that if you remember, you know, six or seven years ago, I know you've been in the industry a while, we did this whole same song and dance around blockchains themselves, right? You know, you had a big cycle where Wall Street and a lot of large enterprises said, "I'm going to build a closed permission chain." And of course, that's the right way to do it. And a lot of them were, you know, very wellreasoned and sounded smart. And, you know, over here you had the open public chains which ultimately grew a lot faster, right? So that's that's not to say this is it's going to play out exactly in parallel to that. But what happened is there were experiments in both directions and ultimately I think

those firms who started with a more kind of close and permission strategy ended up adapting and building bridges and we ended up partnering with many of those firms and building products with them together. I will not be surprised if something similar pans out here and also I think look these are the world's big place in and you know the financial markets are enormous. There are different client archetypes in different geographies here and it's like we're very like positive sum thinkers at Coinbase. I think it's very likely that you know the Coinbases of the world have solutions that work very well for certain client archetypes in certain geographies who have biases towards you know certain product formats and also these other traditional financial institutions can win. The question is going to be how do we build the bridges where they're needed to make those two

worlds interoperable. >> Are there any unlocks still pending? So I can think of the clarity act still you know like it's to be seen whether we can make it this year or not. >> Yes. >> But you know a lot has changed. So is there something like in your checklist that is missing for you know this being the greatest wave of adoption and of you know the crypto infrastructure that >> well with the the the sort of version one of Coinbase's product strategy which we've just announced at our at our showcase a couple weeks ago. um the lights are green to start really with this push towards you know XUS onchain tokenized assets and so we're really you know we're really pursuing that with vigor obviously domestically the clarity act is still you know being debated

you'll have to ask our policy team for their latest views they can speak to that in much greater depth than I can but you know still ongoing and obviously that would be a huge unlock in terms of just you know certainty around here's how disasters will be treated and the market structure will come together u so I do think that is a really important moment for the US and then even once that that green light happens on you know the regulatory structure the markets have to get built right and that is an organic process that's about building products and competition and innovation and and takes a bit of time and so you know I think that could take us another you know year or so let's see to get really off the launch pad even even following that that green light from from the domestic regulators but it

feels like everyone is kind of ready with what their strategy will be and we're going to run the experiment >> nice so if we were to sit it again you know let's say 12 months from today what is the like metric that you would like to to highlight >> it's a great question on that last I mean we've covered a lot of a lot of territory today on that last topic of tokenization I'm certain we will have more product and more users out there using these things in the wild and so I think we'll have a much um you know that so all of those basic KPIs should be up and to the right right around active wallets and users of these tokenized assets more I would say total aum if you will on tokenized products certainly including stable coins but I also think we'll have a sharper view about the

question you asked around what's really driving demand and where the value is right and we'll be able to see okay over here yes over here no and perhaps even some of the early more interesting products that I alluded to about okay are investors and you know maybe asset managers going to come in and and combine these things and actually take advantage of smart contracts right so I I expect we'll have progress along all of those dimensions is and then certainly in the stable point side I think the you know the TPV numbers are going to continue to grow that's a thing that's totally orthogonal to everything happening in trading it's just PSPs and fintexs and banks coming in you know aggressively to start to build the pipes and then put flow through the pipes and so those are kind of all the big picture

things that I'm watching for and expect we'll have up into the right 12 months from now >> yeah that makes sense and in the way they they reinforce each other which I think is some of the what we have discussed today Yeah. >> Well, great. It's been fantastic having you on on the show. Looking forward to having you again in 12 months from today and and see if everything moved to the right. So, yeah. Really nice. Thank you so much. Great.