How Coinbase builds a crypto operating system through acquisitions

Transcript

GM. Good morning. Welcome to the Milk Road Show, the daily crypto show for when you're emotionally hung over and financially overexposed. I'm your host, Jay Hamilton. It's Monday, July the 7th, and today we are joined by Akal the Basa, the head of corporate development of Coinbase. He's the point person behind Coinbase's M&A strategy and their venture investments. Just 5 days ago, Coinbase picked up another acquisition. I'm talking about liqufy, their fifth acquisition of 2025. He also spearheaded their very large acquisition of Darabit, $2.9 billion acquisition that happened earlier this year in May and the largest crypto acquisition uh to date. You can

go back to our episode with Dan Tapiro actually happened the day that this became public information and Dan being an investor in Darabet talked about that on the show. So today we're going to talk to Accel about crypto M&A, the landscape that he is seeing, Coinbase's M&A strategy, the five categories that Coinbase is betting on right now when they're looking at M&A and of course the evolving landscape of the crypto industry from everything from regulation to so much more. Before we jump in, Milkro is hiring right now and we are looking for talented crypto natives to join our team who want to help take crypto to the masses and help others invest in a safe way. We're hiring a

head of people. We're hiring a crypto content creator and a few other roles. Check the link in the show notes. If you are looking for a job or you know somebody looking for a job and you want to join our team, today's episode is brought to you by Definitive, the leading multi-chain trading terminal trusted by funds, Dows, and Protraders. Also brought to you by Letin get cash without selling your Bitcoin. Without further ado, Accel, welcome to the Milk Road Show. Hey Jay, how are you? Good to be here. I'm great. I'm great. Thanks so much for joining us today. really excited to get you on because uh uh nobody is doing more in the M&A space than Coinbase is right now. I hope you got do you get a little bit of a a break over the Fourth of July weekend? You get get did get to

take a breather? A little bit. A little bit of a breather, but we're non-stop. So, didn't didn't stare for too long. I can I can tell. Uh you've already done five acquisitions this year. And then what's the total number at now? 35 acquisitions in total. Is that more than 35? Yeah, I think we're at closer to 37 or 38 or something like that at this point. Okay. Okay. So, before we dive into some of the specifics, uh let's just zoom out for a second. Give us a highlevel 30,000 foot view perspective on how Coinbase is approaching M&A and the strategy that you're working on right now.

Yeah, great question. So there's often kind of like a misconception when it comes to how companies think about M&A and maybe how Coinbase thinks about M&A. Uh the misconception can be articulated as you know somebody like an AL sits in an ivory tower and says we're buying X Y and Z thing. Uh it's exactly it's actually exactly the opposite. Um so we follow what's called kind of like a product strategyled M&A execution uh philosophy. So we have our product strategy and we look for ways in which we can supplement and augment our product strategy through M&A. And so what that means in practice is we have a couple of themes that we're really excited about that you know are unsurprisingly really well sort of explained and pretty pretty close I

would say to what our overall product strategy is. Happy to get into those if that's of interest. Uh but in general I'd say it's a product strategy kind of deal execution philosophy where we look to augment and supplement uh our existing product strategy. Yeah, let's let's let's continue down that path. What are these themes uh that you're focused on? Yeah, so there's five of them and they'll probably sound fairly familiar to your listeners. Um so I'd say the first is derivatives and advanced trading. Um so uh across derivatives and advanced trading, most of the volumes in crypto are in derivatives uh as opposed to our, you know, our primary business today which are at least historically which is spot. So we're constantly looking for ways in which we can help accelerate our derivatives business and

help you know serve advanced traders in in a more cohesive way. Deriv is I guess one example of that. Uh so that's one focus area. The second is around stable coins and payments. Um I think if you've been living under a rock you probably don't know what's happening in payments but uh I would say and you know I think everybody in crypto kind of has been watching and has been seeing what's happening across stable coins and payments. we think that you know USDC is kind of the best shot at real world utility uh with payments moving on chain and so you know happy to get more into that if that's of interest. Uh so that's the second one. The third is what we kind of broadly call onchain consumer infrastructure. Um but what this actually means in in in practice or in plain English is we have a number of

these businesses that are kind of more cryptonative. So base being one, Coinbased wallet or TBA being the other. And you know, those businesses have historically been pretty small, at least in the past, but what we've really seen over the past 18 to 24 months is that they're starting to really contribute um you know, product market fit to the overall enterprise. Uh and so we're constantly looking for adjacencies that can help supplement and uh uh kind of augment those businesses. Spindle is a really good example of that. Uh the fourth area is around institutional access. Um so you know the asset class since I joined Coinbase in 2019 and you know it's just amazing with every incremental run um more and more uh adoption of crypto is happening and more

institutionalization of the asset class. And so we want to help accelerate that and um uh by you know acquiring assets that kind of help institutions access crypto in a much more cohesive way. And the last one which I'm personally most excited about uh is international expansion. So, you know, we obviously have a core business that is primarily retail focused today, uh, with, you know, that's primarily US focused today. And, you know, the the mission and vision is to create an open financial system for the world. Uh, and you can't do that if most of your business is in the US. Uh, and so I would say one of the big areas that we're we're really excited about is how do we establish our core retail business and institutional presence internationally and uh, markets that are of consequence to help kind of accelerate that mission of creating an

open world. So, I'd say those are the kind of five areas. So, would love to jump into I'd love to jump into all five, but realistically we might not have time to go through all five. Uh, so le let's talk stable coins and payments. Let's talk about that one first because uh that is the that's all the talk right now, especially with the Genius Act passing recently and circles IPO. There's just you can't you can't avoid the conversation around stable coins. uh tell us how you're thinking through that that specific theme.

Yeah, it's a good question. Um so when you take a step back, stable coin payments are really sort of an innovation in uh enabling people to make payments overseas and internationally in a much more fast, cheap, and efficient way. Uh and we sort of view the layers of the stack as follows. uh one is you know there sort of issuers like circle like you mentioned they're in the business of issuing stable coins we also view there also being kind of distribution platforms like a coinbase or others that have a large retail footprint that are in the business of distributing these stable coins and then the third category which these are all pretty broad we sort of consider transactional services um so businesses that are you know essentially building

products and productizing a lot of what's happening with stable coins uh today you know we play pretty well AC I think across like the issuance business with our relationship with Circle. Um, you know, we have always been in the distribution business with Coinbase retail the exchange. And, you know, I think what you saw in state of crypto a few weeks ago is we're now sort of trying to enter into, you know, co uh what we're calling uh Coinbase for business or coinbased payments, which is an attempt at, you know, productizing a lot of what we've done around USDC into more transactional services. And, you know, I think as is always the case with Coinbase, the answer is almost always both or and. Uh, and so we're excited about what we're doing on the organic front. Uh, but we're always

opportunistically looking for M&A opportunities that can help accelerate what we're doing on the transactional services front to kind of help productize a lot of the goodness that USDC has into, you know, products and services that, you know, real everyday businesses can actually use. And obviously the unique relationship that you have with Circle when we think about stable coins that that dominates is h how give us give us just a a quick background of how that relationship works because my what I wonder is how much of your stable coin strategy is actually just investing in Circle and allowing Circle to do its thing versus building out Coinbase's side as well.

Yeah. So we obviously have a very as you call it unique and you know special relationship with circle um and have had that for quite some time and I think taking a step back we're we're just excited about the adoption of stable coins in crypto and I would say in general with circle um we are huge fans of their success obviously as partners and investors in the business uh and so I would say our stable coin strategy is you know largely I would say to help accelerate the adoption of stable coins be it through circle or or or other you know or other mechanisms and ways and obviously USC's long been a product of Coinbases and as well as circles and you know I think uh zooming out we're most excited about the adoption of stable

coins and then you know whatever the right path may be I think we're excited about that. You mentioned international expansion being a area that you personally are are most excited about. Uh what's the current status of Coinbase internationally and then where do you want to be? Yeah, great question. So, I think the latest numbers are, you know, more than 80% or so of our business today is US focused. Um, with the balance being international and the lion share of that being in the EU. From our perspective, we would love for it to be more than 50% of revenue over the next 3 to 5 years. Uh, that's obviously a huge huge bet. Um, and I think we've done uh a lot I would say over the last three or

five years uh as it is just organically. So, Um, on the organic front, we have a number of these tier one markets where, you know, we have high conviction that these are markets that we need to operate in and in fact, you know, maybe be close to number one or number two or a market leader in. Um, and, you know, to have that ambitious of a of a of a goal, it's very difficult to get there without M&A. And so we're kind of constantly on the lookout for what are opportunities that can help us accelerate the percentage of our business that comes from international um and do so in markets that we have high conviction in in the near term or in the long term. Uh one of one instantiation of this would be Darabit.

Uh Darit is almost entirely exus uh and so I think it really helped accelerate a lot of what we're doing around that kind of higher level goal of getting to more than 50%. Um, and you know, we've got a lot in store, I think, uh, for the coming quarters on how do we kind of help, uh, keep pushing against that goal. So, you're not you're not slowing down at the current pace that you're keeping up right now. We're not. No, I mean, look, I think for us, it's not lost on us that obviously the market dynamics, uh, are strong balance sheet. Like, you know, we're we're in a position now where there's regulatory clarity. We have a strong balance sheet, strong market cap. you know, we're in a uh period of time where there's regulatory clarity and kind of an open window. And so, you know, we

don't want to shy away from that. We want to step into that. And I think um that's sort of reflected in what we've done. You know, five acquisitions this year. I think we'll probably do a number more before the end of the year. And, you know, I think uh for for us, we're kind of an all-weather company. We want to keep making huge bets and regulatory clarity helps. And uh certainly a strong balance sheet and and market cap helps that helps that as well. I I want to talk a little bit more about uh the overall landscape and market for M&A right now and what you're seeing behind the scenes uh in terms of interest in you know the the current setup as you said it's a bit of an open window right now and that we have regulatory clarity but we don't quite have market structure yet so it's a it

is a unique time but but before we get there I do just want to talk quickly about liqufy because that is the most recent acquisition that you just did last week. Uh just walk us through quickly what was the strategy behind liquify and what is that going to enable for Coinbase? Yeah, great question. So liquify for maybe you're listen maybe folks do or do not know it's kind of like a token cap table management investing tool. Um you know the internal moniker that we kind of use was like a cardo or like a share works for crypto. Um, and you may ask like what what is Coinbase doing with a tool like that? And I think taking a step back like what we're really trying to build is an end-to-end platform for

businesses to manage their businesses on chain. And if you think about like well then what what do these businesses actually need? A key critical component of that is how do you manage your tokens? How do you incorporate? How do you deal with vesting compliance? I mean today it's kind of a mess. I mean you have you're you know talking in like bunch of like legal fees, lawyers like entity structures and corporation and that's just to get to your token and then you get to your token and then from there you got to figure well how do I pay my employees how do I deal with my you know investors and so I think liquify really streamlines all that into like a single cohesive platform and you know I think for us it's a really critical piece of like what we're kind of calling this endto-end platform for

businesses uh starting their businesses on chain uh And so we're really excited about the acquisition. We think it gets us a critical part of like the earlier part of the journey for a startup founder who or any type of business that wants to move on chain. And so more to come on it, but you know, we're excited. This is one of the one of the bigger pieces that's kind of helping bring more businesses on chain. And I think it's worth also taking a beat too to discuss like what we've seen in terms of token creation over the past 12 to 18 months. Token creation's gone absolutely vertical. uh people are coming on chain more and more so now than they ever have been. And I think you look at these stats like 2017 run, 2021 run, and where we're at today. There's more and more

businesses coming on chain and this problem is just going to get worse and worse. And if we want to bring a billion people on chain, tools like liquify sort of need to live in a place like a Coinbase where we can offer it to like a lot more customers and make it a lot easier to uh for business to come on chain. And I think uh uh in service of this sort of endto-end platform that we're working on, it's it's I I have to sort of laugh a little bit when you say uh token creation looking to understand the tokconomics and the setup of their business because most of the token creation over the past 12 to 18 months has been memecoins which do not do not need to set up their tokconomics in the same manner as what you are discussing of truly building a business

on chain. uh but it it doesn't not to take away from yes there are still thousands of businesses that have been created and have launched in the past uh few months and I think a lot more coming in in this next this next period especially with market conditions where they are right now a lot of tokens and a lot of business have been waiting on the sidelines and waiting to for the either for the market structure bill either for the the legislation or for the market conditions to line up uh and to allow that better setup that I think will come in the back half of this year. Uh I don't know if you have anything to comment there.

Yeah. No, I I I I totally agree with you, man. Um I think my sense is with things like tokenization as you mentioned around market structure, you're just going to see more and more institutionalization of this asset class. We see a significant amount of demand for these sorts of things internally. And I think we're seeing that uh anytime we speak with our customers, our prospective customers and you know something like a liquify is just going to help streamline this process so much more than it has been before. And we're excited to offer it to our customers to prospective customers and you know I think as more and more businesses come on chain you know be they meme coins or you know businesses that you know maybe want to tokenize tickets or tokenize you know um whatever

it might be. I think those sorts of things having a streamlined capability just helps accelerate that transition on chain. In traditional finance, whales use the Bloomberg terminal. In crypto, they use Definitive, the trading terminal built by Coinbase alumni, which lets you trade across every major chain out there. Definitive's combination of low fees and advanced order types like Limit, stop-loss, and take profit, make it one of the best onchain trading experiences there is. The kicker, Milk Road listeners trade free on their first 25,000 in volume. Visit milkroad.com/definitive and start trading like a pro today.

Selling your Bitcoin should be a last resort when you need cash. That's why there's Lein, the trusted platform for Bitcoin backed loans. You can unlock cash in as little as 18 hours with no monthly interest payments and no prepayment penalties. They've issued over 9 billion in loans and never lost a single satoshi of client funds, even during the chaos of 2022. If you're a long-term hodler, this is the move. Get liquidity without selling at milkroad.com/letin, spelled ln.

Mhm. Uh let's let's zoom out for a sec and talk about the what you're seeing in crypto M&A because I do my sense is that we are in a bit of a unique period and the the sentiment that I keep hearing is uh and I'm going to take a little bit of a hard line here and then you can uh provide color and let let me know what you think is that there is a lot of builders who have built been building in crypto for five plus years for for a while. And now we are in a a a phase of crypto and the asset class that we've

never been in before where all of a sudden we do finally have clear legislation or it's coming and we have institutional investment and we have bigger players looking to get into this space. And then also we have a lot of the large incumbents, the web 2 tech companies also looking to get into the space in more meaningful ways, not just with a, you know, a a web three small team off the side of of the company, but actually doing bigger things. Um, give us give us sort of the state of M&A right now and maybe like where where it's come from and then where you think it's going to go in the next six to 12

months. Yeah, it's a it's a fantastic I think I first of all I agree with you. Um so maybe I can just take a a swing at articulating as I sort of see it. Um I think if you rewind and I like to use my tenure at Coinbase is like a reasonable benchmark for how it's evolved over time. So it's been you know close to six years and at least two or three cycles. I think when I joined um crypto M&A it was us and maybe a handful of other names that were even in the business of acquiring companies in crypto. Um, I would say it was still in many respects, you know, still kind of after the 2017 run, things were a little bit quiet in 2019. Um, and you know, I think if you zoom out and like fast forward to today,

a couple of trends at least that I'm seeing. I think one, as you sort of mentioned, given regulatory clarity, you're starting to see entrance in fintech. Um so Robin Hood, Stripe, a number of others have sort of entered into the space and I think a lot of that's driven by you know commitment to crypto and now maybe emboldenment given there is regulatory clarity or emerging regulatory clarity. So that's one. I think the second is traditional finance. We're starting to see them start to activate on the crypto M&A front. And so I'd say new entrance around fintex and trifire kind of like one or two themes that I'm sort of seeing. The third I would say is just broader access to capital. Um so circle obviously went public. We know a number of other names have gone and filed. Um you know as and

when these companies file uh to go public that means they'll have public equity that they can then go use to finance M&A transactions. And so you should reasonably expect that there would be more potential buyers on the landscape that perhaps weren't nearly as active before. Um and then I would say the last is a lot of companies as you sort of mentioned have been created between this run the prior run and runs prior to it. And you know a number of these companies are kind of picking their heads up and thinking you know do I want to keep going or do I want to maybe establish myself at a larger uh firm and uh really help accelerate my vision that way and so I think uh in summary I would say new entrance across fintech across stratifi you're seeing the capital markets open up which you

know I think enables uh people to have the currency to go finance M&A and then a pocket of companies that you know are obviously thinking around thinking about their strategic alternatives and so Um, what that means, I think in practice is there's more buyers in crypto than there have been at least previously. And I think that's not an unreasonable or controversial thing to say. Uh, and I think what that means for Coinbase is, you know, honestly, we're excited about the the idea that the the industry is maturing. Um, you know, it felt like, you know, their founders should have optionality around how and the manner in which they take their business. And, you know, I've always been in uh the crypto space to ensure that it kind of matures and grows. It's, you know, it's actually a welcome sign when you have firmer

capital markets, a more of a buyer universe, more optionality, and I think ultimately ends up providing a better service to end customers and helps move the space forward. So, that's kind of how I position. I would say it was really early back in the day, maybe a handful of buyers, and now regulatory clarity, new entrance, uh, and then capital markets have kind of opened up and so, uh, and I think it's just a signal that the the industry is maturing. Is there is there a little bit of a gap right now though in the in the timeline because as you said there's there's more IPOs coming this year but not there's still not a lot of public crypto companies right like a handful and and and and regulation isn't quite here yet

and like the banks definitely I don't know like are who do you go up against when you're doing these these M&As like are are the banks and I can see the FinTech being there. Robin Hood, I mean, obviously big announcement last week. I could see them being in this conversation, but are the banks really there yet? You know, if I'm being honest, uh, so you're right. I think I mean, and none of this is like particularly novel, but yes, Stripe bought Bridge, Stripe bought Privy, Robin Hood bought Bitstamp, like these are fairly active fintech that have been in crypto for some time. Uh, some longer than others. Uh, and so I would say you're right to say that, you know, these sort of tend to move first.

And, you know, I think that's naturally the case when you just look at, you know, financial services overall. I mean, the fintexs tend to move a little bit faster than the banks do. And so, I think to answer your question maybe more like directly that I I don't think that we're seeing a ton of bank participation. And, you know, not for their, you know, not out of any criticism towards them, it's just, you know, they're in a tighter regulatory environment than um than maybe some of the fintexs may or may operate under. And so I think what you'll probably see is that yeah, crypto companies come first and tech companies come second and then banks eventually and trade sort of come third. Um and that's what I would expect to see across crypto M&A. Uh but you're right, we're not seeing a ton of it today because we are a little bit in

this weird middle ground point. Um but you know innovation tends to follow I think that sort of like that order that I kind of articulated and I think the good news is that you know just it's sort of following innovation cycles around you know the broader institutional vision of this asset class. I mean it's it's super exciting that folks like Robin Hood and Stripe and others um are are participating in the space and you know it was a little lonely back in the day. Uh and so it is it is great to see all this sort of kind of coming to fruition and we're excited about the overall trend that the industry's maturing.

Part of me thinks though that like as a uh head of corporate development that being lonely at the pitch table may maybe isn't such a bad thing. It's not it's not necessarily bad when you don't have anyone that's trying to push up the price and you can just be there alone and set the price and set the market. Yeah. No, I mean there's there's definitely some uh perhaps some truth to that. But I think what I what I'd honestly say is that like I genuinely got into this space to see it kind of come to fruition and realize the vision that all of us are so freaking excited about where you have a faster, cheaper, more efficient underlying technology under which there will be applications built on top of which then form you know these products which then form companies

which then form markets and then you see these massive platform shifts and you know I obviously in my role running M&A at Coinbase like certainly it could be the case that like yeah dictating timeline money in terms but I ultimately think these things are always about fit. um you know people end up going where they want to go um and what is sort of best positioned to help them accelerate what their individual vision is and sometimes the answer is Coinbase and sometimes the answer is I want to stay standalone or sometimes the question answer is something else and so you know I ultimately think that the true north is like I don't know I like to use this analogy where it's like you know it's almost like micro breweries fighting over you know who gets shelf space when the real enemy is Annheiser Bush if if

that makes sense. Uh where you know it's I try not to lose sight of like the broader goal of like a rising tide lifts all boats and you know we're all I'm personally just very excited to see crypto mature and uh go from like the kind of weird you know cyberpunk original kind of incarnation of what it was before into this like broader institutionalized asset class that you know can take up a huge percentage of global GDP someday. And I think I'm I'm excited to see the that we're kind of pushing towards that path. What about the web two incumbents? Uh you were at LinkedIn previously. I think we all we all hear and occasionally you see a headline of Google or Facebook. I mean we all know Facebook story of what

they previously tried to do with Libra token and their own chain and then those chains sort of spun out into Aptos and Sooie and those teams have gone there. when you look at those any insights into what are they active in M&A are they at the table you know it's interesting I would say AI is taking up a lot of the oxygen in the room is sort of my my my honest assessment of it um you know you've seen Meta or Google or any of the other names take really really big bets over the last even the last couple of weeks uh in how do they sort of stay at the forefront of what is very likely another platform shift happening artificial intelligence. Uh and so I think I would broadly characterize them as cautiously

optimistic and interested. Uh but we haven't seen them as aggressively pursue on the M&A front. Um and I think honestly the senses they're got their hands full with you know trying to ensure that they um you know stay at the forefront of innovation with respect to AI. And it doesn't mean that they're not interested. I think we have great relationships with a lot of the big web two names um from a partnership perspective. But I would characterize at least my assessment in the role in which I sit today is that certainly interested, curious, participating and experimenting. But we're not seeing the level of moves that they are making with like you know Facebook in their deal with scale AI or you're not seeing the level of swing that you typically w

would see in something like crypto which is obviously its own platform shift as you are seeing with AI. And so, um, there's definitely a gap there, I would say, between the two two areas, but I don't expect that to stick around for long. I mean, these large internet companies dominate distribution on the internet, um, like period. I think Google has a third or half of the world on one of their products every month. And same is the case with Meta or others. And so, I think as and when and as this asset class continues to mature, I mean, they're not going to stay in curious forever. They'll start to get involved pretty, I think, proactively.

And I think that the what's what's maybe holding that back right now is, you know, they're taking really big swings on AI right now. Perhaps they have their hands full. I'm not sure. But I would say there's definitely a gap between the level of swing that we're seeing between the two categories. It's a very interesting, fairly obvious insight, but actually very interesting to hear. Uh sometimes we forget that even these massive companies can't do everything, right? It's so easy to assume that oh well, they're so big they can just do everything. But uh even everyone has to have priorities and have focus. Uh before we wrap it, Cleo, I want to zoom out for a second. Um when you when we look at Coinbase's strategy, one thing I've really been trying to frame and we've talked a lot about on

the show and you know, we've been big supporters of Coinbase uh from from a tech and product side from the beginning, but also from an investment perspective. Uh we've been talking to our audience about investing in coin on the public market side for for for a long time. Uh and it's been great to see the stock do so well recently. So that's obviously really exciting. But when we look at Coinbase's strategy, if you were to frame it, what is the the the the the thing that is so interesting is you're in a in a market where you have you have fintex and you have banks and the question on my mind is in where in the spectrum does Coinbase end up? Does Coinbase become a bank and start

competing with the banks on more traditional banking infrastructure? Uh, or do the banks more come to the crypto side and come to the blockchain side? Give us the the long-term sort of vision for Coinbase. Yeah, very good question. Um, so we are believers in this underlying technology. We think that crypto is and and blockchains are this fundamentally faster, better, cheaper, more efficient underlying technology. Um, and I think if you take that view, uh, what our long-term strategy really is is just to become this primary account for this emergent asset class. And, uh, you can kind of see that in the way in which our products have manifested. So it started

out with just a basic buy sell of bitcoin through a retail uh focused exchange that has expanded obviously to an institutional business through prime where you know institutional customers can get access to the asset class. Um you know and the third prong of our strategy is really around crypto as an app platform and uh you know things like base things like our developer PG uh like Coinbase developer platform all the developer tools that we're building are really in service of like developers as this new sort of end customer segment and you know our our vision is you know we want to create an open finance system for the world we think that um you know there this underlying technology is a way in which you can secure um more freedom building on chain and you know I

think If you were to ask me, we basically just want to be this primary account whether you're a business, whether you're a retail investor, an institutional investor or or a developer. Uh we want to sort of be that primary home for you to uh to live and manage more of your business or your life on chains. Uh and so I think it's tough to frame in the in the context of let's say banks or fintex, but I would say in general we believe this is a fundamentally new technology that it and it's it's super exciting. It's faster, cheaper, more efficient and we think it's going to eat a lot of industries and we want to be the kind of primary interface layer under which uh you sort of interact with this new uh emerging technology and economy and uh whether you're a retail investor institution uh

or or a business or a developer we want to sort of uh provide the services necessary to be that primary account. Last thing I want to chat about is the the impact of the market structure bill. uh and you can we could frame that in the impact of the genius act which was the stable coin bill that came out or we could frame it even larger in terms of I know we don't I guess first question is any insight on do you think that market structure is coming in August September like any insight on the timelines around that I know it's a difficult thing to project what politicians are going to do but if you have any insight there but more so from from two perspectives from a uh from an M&A perspective, what's the

impact of of the market structure bill when we get it in whatever form it might be? I don't need you to speculate on what exactly the bill is going to look like. Um yeah, and then and then broader, what what's the impact of a bill like that in terms of adoption and as you mentioned, you know, your objective is to get a billion people on chain and to bring these financial services and tools to the world. Uh is that is the market structure bill a real tipping point and how will that impact that? Yeah, I think so. So, I would say first and foremost, I'm probably not the best person to comment on the intricacies of the, you know, the bill itself, but I what I can comment on is, you know, sort of what you asked, which is around, you know, how does this

impact the M&A landscape? How does this impact the overall crypto landscape? And my overwhelming sense is that, you know, this sort of fits alongside the theme of regulatory clarity. Um, and you know, it's kind of like become almost like a meme where you know, the words it's it's just been such in the I guess it's been within our top priority for some for some time to kind of push regulatory clarity. It's just exciting to see that, you know, we're kind of going inch by inch, brick by brick and uh securing that here in the United States. And you know, my honest sense is that there's like really two impacts that I would sort of see. One is on adoption and then two is on the M&A uh on the M&A landscape side. on the adoption front, you know, additional regulatory clarity and a

market structure bill or a past market structure bill. My overwhelming sense is that this ushers a new set of customers into the space that have historically just not been interested or perhaps for other reasons not been able to participate in crypto. Uh, and so I think that we'll start to see more adoption of these products and services globally. Uh, both benefiting obviously Coinbase, but benefiting a number of different constituents and players in the space. Uh and then on the M&A front, my yeah my my sense is, you know, as and when more uh regulatory clarity sort of emerges, you'll start to see more companies taking big swings. You know, sort of as I explained earlier where it kind of feels like the crypto companies came first on M&A, fintech companies came second, and then you have banks and

larger kind of more traditional financial services companies likely coming third. And you know, my sense is that, you know, uh additional regulatory clarity sort of helps usher that in uh and helps accelerate that. And so that's what I would say. I think additional adoption from, you know, names and uh players that have historically just been off on the sidelines for, you know, a variety of different reasons. Um maybe largely due to regulatory clarity, lack thereof. And I would say that the second is, you know, you'll probably see names emboldened to take big swings in the space and probably would be uh folks that would, you know, take bets that maybe otherwise would not have been in a position to do so.

I think it's it can't be understated the impact and and I I often think right now it is understated particularly within cryptonative world because we've been talking about this for so long that we're we're almost sick of talking about it and we're almost over it basically before it even happens, right? uh which is a dangerous perspective to get into because then you can you can diminish the value of something like this and I completely the the the impact on the on the institutional side and on the interest is obvious I think like you know okay yeah we have regulation yes

now a lot of institutions that have been sitting on the sidelines and probably are waiting actively can can step in but the adoption part is the part people forget that most the world does not own crypto or get involved with crypto yet or use onchain tools and that is that is the big picture here right we need that adoption to happen and I'm not saying that you know just because you know the New York Times all of a sudden says hey a crypto bill has been passed that you know every aunt and uncle and grandparent that you have is all of a sudden going to go buy crypto but like the impact will be felt in a very meaningful way and I think that is a a

it's not being discussed in in the perspective of of individual adoption or retail adoption. I think in the way that we'll as we lead up to it whenever it comes hopefully at some point in Q3. I think we'll start to feel a a wave of excitement again beyond crypto that we haven't I hope that we haven't felt in a while. I I totally agree with you, Jay. I mean, that's what gets me so freaking excited, honestly, is like just how freaking early we still all are. I mean, it's like the same couple hundred thousand people that are daily active some odd users of all these tools. And, you know, you look at these numbers. I, you know, as you mentioned, I come from like the web two world, like internet scale, right? Like, you know, users with

a B next to it, not with like a K. Um, and you know, it's that part just gets me so freaking excited because you know, as you sort of pointed out, like there are a number of names and faces, be they retail participants, be they institutional participants or what have you, that either just haven't participated in the space for for a variety of reasons. And the more legitimacy you bring to the asset class, the more you move from like users with a K to like an M and then eventually internet scale. Because what you've what I've certainly studied and what got me really excited about crypto in the first place is these platform shifts happen over a 10 15 20 year time horizon. Takes time to move like an entire new industry to a new platform. And you know technology has always won out. Whatever

is faster, cheaper, more efficient wins out over time. And those innovation cycles take time. And you know, I think it's it's easy to, as you pointed out, get caught up in like, oh, yeah, it's maybe, you know, who cares or like it's a meme at this point. We've talked about some, but like we really I think it's it is certainly understated in my opinion. And, you know, I think we're in this journey for another 5, 10, 20 years to get to internet scale and like it's really exciting that like each of these things are just brick by brick institutionalizing the asset class and bringing more and more people on chain. And you know, as I sort of pointed out, like technology always wins. uh whatever is faster, cheaper, more efficient, capital, people, talent, all that flows from that. And you know, that's certainly the I guess the most exciting

part for me is that we're still just so freaking early. It's it's so true. The quote that I heard recently from Mark Andre was that when looking reflecting back on his internet investments in the early days of the internet, he said, "Everything that was said would happen with the internet did happen, but not in the timelines that everybody expected." Right. Totally. And and that's exactly where we are. We all there is a lot of people in this space who are tired and have been here and been building or been investing for a long time for many years. And the expectation sometimes can get in the way of the bigger picture because your expectation is that we

should already be there and we should already have these whether it be from an investment perspective of the the portfolio or the the gains that you should have or whether it be from a builder perspective in terms of the users that you should have and don't don't lose sight of like we will get there and we are on path to get there. It's just these ex exactly what you said. These shifts take longer than you want them to and particularly when you have a shift like this that also involves a traditional system in our financial system that is so embedded and so old and so you know you just you have to be patient in order to get to where we are going in the end.

I totally agree. Um, and as yeah, anybody who, you know, people ping me all the time like, hey, you know, what's it like working at Coinbase or the crypto industry? And I think it's there's no real way to describe it other than like it's you have to be very patient. You have to have a really thick skin and you got to be in it for the long term. Um, and like that last part is so important because you know the day-to-day can feel like, oh man, what happened to Bitcoin today or what's going on with Ethereum or what's happening here? and you know so I think long-term oriented mindset makes sense.

Uh you sort of need to have that and I agree with you some it's can be very tiring for sure but um the long-term kind of like how do we get this in the hands of a billion people I think is what um at least what gets me excited and keeps me going every day it's been a pleasure to get you on the show today. Thanks so much for joining us. Yeah Jay this is awesome man. As always I need to remind you all that none of today's episodes was financial advice. I am not your investment adviser. A Cleo is not your investment adviser. You should always do your own research and seek investment professional help if you need so before making any investment because investing is risky and difficult. And if you want to help others with their crypto investing journey, you should apply to

the job at Milk Road. We are hiring a bunch of positions right now, including a head of people, a crypto content creator, and many more. Check out the link in the show notes to join our team. Thanks all for listening in. We'll see you back again tomorrow. Have a wicked awesome day. If y'all are making swaps or trades right now, highly recommend you check out Milkroad Swap. This is a DEX that we built in partnership with Cow Protocol. Why did we build it? Not to make money. Just honestly, so we could have a place to do our swaps for the lowest fees that we could find. This is the fees on Ethereum, Arbitum, and Bass are only.15% fees. Uh this is a huge difference from uh other centralized exchanges that

charge half a percent or even up to 1.2% fees on their swaps. Also, you can swap on Salana all at swap.mmillroad.com. Check it out today. You won't be upset. And you can join me in my favorite place to make swaps on chain. As always, if you liked today's episode, please hit subscribe and make sure you follow us so you don't miss out on the next one. There's also a link in the description to our free 5-minute daily newsletter where we simplify crypto for you while making you laugh. And if you're willing to step up your crypto investing game, we're going to also leave a link for Milk Road Pro. You get access to our portfolio where you can see exactly what

we are buying. This is your number one resource to help you invest successfully in crypto. One final note, this show is for educational purposes only and nothing we say is financial advice. Investing in crypto or any asset is risky and you should never invest more than you can afford to lose. Thanks so much for listening in my friends.