Why trillions in TradFi capital are moving onchain with Coinbase's Brian Foster

Transcript

My recollection the last number we reported was over 500 billion in assets. You know the slight majority of those now is actually in our institutional business that would put Coinbase on the scale of you know some of the largest banks in the world. >> All right. Good morning everyone. Welcome to the Milkro Show. The daily crypto show that keeps asking banks a very simple question. Why are you still doing this the hard way? Today is February 5th, 2026. We are recording this on February 4th, the day before. And if you are paying attention to what's really happening in crypto outside of just price action, the tokenization of everything is in full swing and tradi is migrating onchain.

And at Milk Road, we believe this is one of the biggest technological and financial trends that are happening right now, maybe ever. Uh, and we want to understand that further. So, we're bringing on the guy who's behind the scenes making it all happen. And today we are joined by Brian Foster who leads crypto as a service ETFs and government at Coinbase to talk about how institutions are actually moving on chain. And today's episode is brought to you by some. Turn crypto tax chaos into confidence and bridge send stablecoin payments instantly simple global frictionfree.

Brian, welcome to the show. Thanks for joining us. >> Kyle, thanks for having me. >> Awesome. Well, I got to ask this title, head of crypto as a service ETFs and government. Who gave you that title? Was that like did you choose that? Did Coinbase choose that? Where'd that come from? >> We got >> Did you just do everything? >> Yeah, we stop that, Kyle. That's a that's a symptom of um maybe taking on a a few more jobs than I should be uh over the years, but you know um in in all seriousness, Coinbase is doing so many things and growing quickly. And so I know we'll get into that on the call, but that's uh that's what you're seeing there.

>> Yeah, absolutely. Well, look, let me give the let me tee up the episode to the listeners first and for you, but then I I think I might just want to ask you what the heck's going on on markets because um there's a lot of red candles out there recently and so we'd love to get your opinions. But I think just to tee off this show and what we're going to discuss is I think most people think about Coinbase as sort of like the crypto exchange or really now I guess it's like the everything exchange um for retail investors that's sort of you know competing with Robin Hood let's call it. Um, but I think what many are missing about Coinbase is also becoming sort of the the bridge for institutions, you know, to move their operations, their assets, their services, uh, and all that

stuff on chain. And that's really what I want to focus the conversation on today. Not necessarily the like the everything trading app that, um, also people know Coinbase for. So, we will dive into that. Before we do, what's your take on what's going on in markets? >> Sure. I'm excited to talk about all of that. The markets have been pretty interesting the last couple months. So definitely return to volatility. Look, we are um you know very long-term oriented at Coinbase. I certainly am oriented that way personally and I think it's not you know the first time we've seen volatility in in Bitcoin and some of the you know some of the major focus areas within the crypto market. But I think look, volatility creates opportunity and it's moments like these where you have to ask yourself, are you in it for the long term, right? Do you

see this secular trend of digital assets um really impacting all of finance, capital markets, and and payments, which I know we're going to talk more about. You know, for me that the answer is a resounding yes. And you have to figure out how to navigate the volatility short term, but it's a great time to focus. We we hunker down and do a lot of our best work when I think people get distracted by volatility. And right now we're certainly full steam ahead at Coinbase. >> Everything you're listening to today is also covered in our daily crypto newsletter. And on Sundays we even recap the best parts of the entire week's worth podcasts. So check it out at the link below.

>> Nice. Love that. So you know and this it's a good segue into what our discussion is because I think when a lot of people think of crypto, they just think of like trading digital assets. They're just trading this random stuff whether it's memecoins or Bitcoin or or L1's or whatever. And the thing I always come back to when you have that long-term review is like what is it that we're actually trying to accomplish here with blockchains and with crypto and is that trend still intact? Are more assets still moving on chain? Right? Um and are more institutions moving on chain or more people moving on chain? If the answer is yes, then there's no real reason to to be so scared on what's going on in the markets. And so I think we all understand the whole like retail using crypto and trading crypto and and

you know using DeFi. Help me understand institutions. There's all this talk of institutions are coming on chain, their assets are coming on chain. What does that actually mean? Um what are they actually doing when they come on chain? Why are they coming on chain? Can you sort of like think high level here and just like walk us through what that really means? >> Yeah, absolutely. I think so much has changed in the last, you know, five, six, seven years. The market's really transformed and what we're doing today is much broader than what we were doing, you know, just a few years ago. So maybe just starting by rewinding the tape for how we got here. Sure.

Really, when I joined Coinbase about six and a half years ago, most of our energy was focused on building great products to help people access Bitcoin and major crypto access assets as really part of their portfolio in a new financial asset class connected to this exciting technology trend of of blockchains. And um that was a really you know invigorating time to be working on the market but in retrospect like super narrow right compared to all of the things we're doing today spanning um payments and tokenization and and really now the whole portfolio and much more of the core plumbing that um that impacts markets uh glo globally right so this thing's gotten way broader right we've moved way beyond the kind of early days

of just you know bitcoin and crypto access and I think that our approach as we've dealt with institutions and seen them, you know, coming in one by one over the years has been really to keep pace with the evolution of those other trends, starting with um, you know, Bitcoin and crypto access, and that's very much a trend that's alive and well today, but keeping pace to meet them um, as they have new demand on things like stable coin enabled payments and tokenizing the rest of the portfolio, right? Securities, commodities, and now, of course, starting to think about prediction markets. So our job really in a client-f facing business is just to be responsive to that demand and help keep pace with the markets to get our clients what they need.

>> Can we apply that back to the products or like the the revenue streams that you guys are actually doing? So it started with sort of access to Bitcoin um which is basically you know custody for ETFs, right? Black Rockck launched the Bitcoin ETF, Coinbase custodied it for them. Same with I don't know like 90% of the ETF provider. Same with for ETH and and so on. So, okay, there was the first one of the first things you guys did for for institutions and then you started talking about more whether it's like payments and stable coins and and tokenizing. Walk me through what those actually are and what the the products are, I guess, that or the services are that that Coinbase is providing.

>> Sure, great question. I'm going to map it to those three kind of thematic areas that we really focused on, right? Which is number one kind of Bitcoin and crypto native crypto access as a financial asset class. Number two, payments and specifically stable coin enabled payments and number three tokenization. So starting with access to crypto as a financial asset class, we really set out to take everything we'd learned from building this big retail business and saying, "Okay, let's provide super powerful but simple and easy to use tools that are geared specifically to the needs of institutions, right? And that meant institutional-grade custody coupled with an algorithmic prime brokerage and a financing capability.

And these are just you know fancy institutional institutional terms for saying I need to support like the whole trade life cycle make it really easy for me to access these markets in a high octane way that's going to pass muster with my compliance and risk department etc. Right? So really leveling up everything we learned in retail to nail that institutional opportunity around um Bitcoin access. So we built the custodian for safekeeping. We built a prime brokerage for uh trading access that powers our you know firstparty clients like asset managers and hedge funds but also you know supports a lot of our brokerages who work with us and build on Coinbase as a platform. Uh and also as you mentioned the ETF business.

So that's really the short version of how we set out to kind of meet the market on this access play. Really the second trend that we're laser focused on is this notion of stable coin enabled payments. And this has been an incredibly exciting one over the last two years or so where I think the market's transformed from stable coins being viewed as a sort of, you know, cryptonative tool to help people move money around for the purpose of enabling trading into something that's actually part of a solution that large corporations and large payment service providers need to get a job done, which is to prove their money movement rails globally. And that's a super powerful phenomenon. I think if I were being, you

know, self-critical and reflecting on some of the growing pains that the industry had to go through. We had to get out of that mode of just thinking about, you know, those crypton native Lego bricks of here's a wallet, here's a stable coin, here's a blockchain and learn to package that all together in a into a solution that really resonates with those major major client archetypes I just mentioned. I think the industry's come incredibly long way um on that in the past, you know, year or two. And it's it's really go time now for this trend. So Coinbase is hard at work at that. We have a huge initiative focused on stable coin enabled payments. Um and just like we had that moment I think where we activated the really large asset managers and hedge funds for Bitcoin trading. We're now at that same moment I think for stable coin enabled

payments. And it's a really exciting time to be working on that. Um the third the third trend quickly and just mapping it to the products of tokenization. This is an interesting one where actually the sort of technical problem set here is like in a way the easiest thing to do in this part of the market, right? It's really about um obviously some important regulatory work that's getting done in Washington DC to create you know structure and rules around how these assets are going to be able to move in the markets and be treated but also about sort of interfacing with the incumbents and the traditional financial institutions that today are dealing with all of these assets, right? And so this this trend is huge from a sort of

addressable market perspective um but a grind in terms of we need to unlock these things from a regulatory perspective and from interfacing with you know the traditional uh capital markets players um to be able to to get this where it needs to go. Coinbase's role in that is of course we've said we want to be the everything exchange and ultimately you know a partner and a distribution point for anybody who wants access to all kinds of tokenized products but also we're providing tools that help people easily create new tokenized products to store them in a custodian that's digitally native and of course to move them around uh on base um you know our our blockchain and also other blockchains we support. Um, and then of course we want to ultimately participate in the markets as well and

help people be able to trade these assets. And we're at I would think of, you know, kind of mile five or six of that of that marathon on the tokenization. >> Interesting. So, um, we we'll go through each of these three, I think, one by one and kind of like dig into the details a little bit further because I think they're both, as you kind of said, both massive opportunities. All three of them. Uh, not both, all three of them. So, Access was the first one. um which is the one you guys have kind of been doing the longest. Um you guys probably measure this by like I don't know assets under management. Do you have a ballpark range of like how how much you guys are holding or how much you guys are custodying for right now and can you can you share that or is that disclosed? You

actually can't say that right now. >> We we've been public about that. So like a good public company employee, I'm going to recommend that people see our um our our public financial statements, but my recollection the last number we reported was over 500 billion in assets. um the uh you know the slight majority of those now is actually in our institutional uh business. I think in excess of 300 billion is what we most recently reported and then another you know 200 odd billion in retail but again encourage folks to see the latest uh public numbers that we've uh that we've disclosed and so you know another interesting way to think about that is um someone pointed out recently um that you know that that would put Coinbase at

the scale of you know some of the largest banks in the world and so we really have taken this this responsibility of operating as a scaled player for some of the largest clients clients in the world uh uh to heart. >> Well, you brought that up. I was actually going to say the same thing, which is why are they why are institutions come to you guys instead of, you know, why aren't they do this themselves? Why don't they custody their own assets or why don't the big banks do this on behalf of them? Is it just you guys were there first? Have you guys like figured out something proprietary? Like, what's the moat that you guys have here? And and why does everyone keep coming back to you guys? >> It's a great question. I think that it there's a couple things that go into

this and it's a you know, there's not one simple answer. I would say the biggest thing is um first and foremost it's about trust right and so I think this is viewed correctly by a lot of the market participants as a frontier market for them right so a lot of the firms we deal with have been around for a very long time a lot of them are riskadverse they're proud of the businesses they've built and there's a lot of people uh whose you know careers are on the line to be good stewards of their firm and they're looking at a relatively new market compared to you know how their firm might think about uh the world and they're saying, you know, hey, I I want to participate in this growth trend, but I need to do it in the right way and I needed to be from a regulatory

perspective. I needed to be absolutely ironclad from a security perspective. And who can help me get there? And you know, enter Coinbase. I think say that look we have the track record from security and a compliance perspective that resonates and helps helps them check those very important boxes but we also have the experience technical and product perspective to do things that are really really hard right and this is this is a key things like crypto infrastructure is hard I think it's hard to find the specialized talent that can build it out well and then there's economic equation of how do you want to spend your marginal you know 50 or hundred million dollars of budget right do you want to kind reinvent the wheel on some of these things that have now been matured and hardened at uh Coinbase

or you want to quote unquote quote rent some of those pieces and get huge leverage out of that get to market faster and have a more compelling commercial story. So, it's kind of all of those things together that that lead those clients to us. >> Makes sense. And is there a lot of demand for this? like is this a thing that you guys are looking at saying oh every institution or maybe it's not every but like so many institutions want more of this right now and this is like a big thing that's growing within Coinbase and I'm not asking to like so that the listeners can value Coinbase it's more so you can start to think about what's happening in this industry in general and sort of stratify like are they really wanting more of this or has that sort of slowed down after the

initial you know sort of ETF launches of Bitcoin and ETH >> you know it's funny I would say when I first got into this industry the the planning functions um and the execs at a lot of these firms were understandably very I would say uh impacted by the sort of month-to-month volatility right say like okay am I am I going to bet on this thing that is in the in just when it was just about the access play for maybe Bitcoin like am I going to bet on this thing that's a small portion of my business and that is you know at the time was very volatile knowing that you Who who knows is it is it going to be there in six months a year and that's a

very different discussion discussion then um you know than it is today where number one you know the the breadth of of ways that this market is touching your business um has increased right it's now about access and payments and tokenization so you have to take the trend much more seriously but number two it's just been going on for longer and it's impossible to ignore and so we have conversations anymore uh where I think our partners or or potential clients are are dubious about the kind of long-term trend. The questions more center around, you know, where do I start? What is the right sequencing? And how can you help me shape my strategy to make to make

sure I nail this in an efficient way? Those are fun conversations. Um so that's really how things have shifted in the past, you know, couple years. >> Crypto taxes are a nightmare. You've got trades across 15 exchanges, DeFi positions you forgot about, NFT flips, staking rewards, airdrops, and somehow you're supposed to report all of this to the IRS. Good luck. Cue the solution, SUM. You may know it by its old name, Cryptotax Calculator. The Sum platform connects to over 3,500 exchanges, wallets, and crypto projects, including full support for DeFi, NFT, staking, and airdrops. It finds deductions you'd miss, reconciles massive transaction histories without losing track, and generates IRS ready reports that will help you pay the least tax possible. Oh, SUM is also the official tax partner of

Coinbase and MetaMask, rated 4.6 out of five on Trustpilot. Turn crypto tax chaos into confidence. Get started for free at milkroad.com/sum. That's sum.com. Milkroad listeners can also unlock 20% off their first year subscription with code milkroad 20. Stable coins are reshaping the financial order, but most companies don't have the opportunity to participate in the rewards they generate. Plus, launching a stablecoin means wrestling with complex regulations, building bespoke infrastructure, and burning endless developer hours. Enter Bridge and its new product, open issuance. Bridge lets companies send, store, accept, and even launch their own stable coins instantly.

Seamless fiat to stable coin flows, control over reserves and rewards, and full interoperability across every bridge issued token. No more patching payment rails, no more monthslong launches. Visit milkroad.com/bridge to see how it works. >> Let's move. You brought up stable coins there. Let's move on to the stablecoin. You called it actually more stablecoin and um stablecoin enabled payments. Um and so this is quite interesting. So I'd love to learn learn more about that of >> what institutions are starting to adopt this. They're starting to want to use stable coins and payments. And it doesn't have to be specific names unless you can name them, but more like what types of institutions I guess or what types of companies and corporations. Um, and then I want to get into your stablecoin as a service product and like what that actually means and why that

exists. But let's just start kind of setting the stage of like who's using this and why. >> Happy to do that. So I I will say we have announced a handful a small handful of our largest partners in this category and we're dealing with uh some of the largest financial institutions and payment service providers uh in the world which is super exciting. So we've announced work with uh with city uh city bank uh PNC as well and some of the largest fintexs and and PSPs. So um I would say that you know the way just before we zoom in on payments the way broadly to think about how Coinbase organizes its client business. We have a firstparty business right where we directly face retail and institutional clients right through the blue app if

you're a retail client or nonodial app or the prime uh platform if you're a hedge fun or or an asset manager and then over here separately which is the business that I look after we have really the infrastructure business right or what we colloally call crypto as a service and that is about providing our partners with tools to enable you know stable coin payments and crypto trading if you're a brokerage right or a or a wirehouse uh or tokenization tools if you're an asset manager needing to create these things or or custody them or move them around. And so the payments focus for us from a client-f facing perspective right now is predominantly living in that second category where we're providing a combination of

infrastructure Lego bricks to help these large payment services providers, banks and fintexs take advantage of the sort of magic of global 247 super fast settlement that comes with uh stable coins, but make it feel seamless and easy for them and make it fit into their existing workflows. And so that's the work that we're doing. And I think where this is going is for those firms, they're going to make it feel just like any other payment rail like an a wire, you know, in all of their product surface areas and abstract away these crypto sort of nuances to their users.

And the user ultimately should just feel that magical benefit of I just sent a payment across the world super cheap, super fast, near instantaneously. And that's amazing. stable coins and the wallet infrastructure and the blockchain components happen to be the tools that allow you to get that job done. >> Right. And so are they just using USDC in the background or are they wanting to create their own stable coin? Because obviously we've got, you know, USDC, USDT are the most popular from Circle and Tether, but you've had PayPal launch their own. I think it was Fidelity last week that announced they were going to launch a stable coin. So in in terms of where this is going or at least what you're seeing so far, is it I'll just use the existing ones that have the liquidity already or do these companies that you're working with want to launch

their own? Is that why you have the stablecoin as a service product? >> It's a great question. The answer is it's a mix of both. And so I think different types of clients and actors right now are approaching this problem a little bit differently. So, you know, everybody broadly understands the benefit of a thing that's working well like a USDC, right, which is at huge scale in the crypto market, widely used. It has a brand, it's trusted, it has great, um, you know, regulatory oversight and, uh, and controls on the back end in terms of how collateral is managed at very large, well-known banks.

And so, um, people people gravitate to that and understand that value proposition. And a huge chunk of chunk of the market says, I'm just going to use that thing. that's working well and is known. That works great for Coinbase. USDC is integrated into all of our tools and infrastructure. It's a very easy starting point. We also have some other types of firms who say, you know what, I understand all of that, but also like the brand value of having my own thing with my name on it is important to me. And to that we say, great, we have a second sort of flavor of ice cream for you in the platform of of stable coins.

And and that is um what we're calling stablecoin as a service. And what we've really endeavored to do with the stable coin as a service capability is to say we're going to give you all the underlying liquidity and tools and interoperability that comes with USDC, but allow you to just toggle that branding piece to make it feel more and give you a little bit of the best of uh the best of both worlds. Now, this is like a a relatively new offering for for Coinbase that we just went public with uh recently, but it's getting a warm reception from a lot of our a lot of our partners. So it's essentially USDC but wrapped in the brand of X company that wants it and then somehow and I don't know how much you can speak on this but somehow maybe Circle's taking a cut, you

take a cut and and then the company that's issuing it or I guess it's you guys issuing but the company that's putting their brain on it take some sort of cut as well and that's where the kind of value occurs from it all. But it's it's within their branding. >> That's roughly right. Yeah. Co Co Coinbase has the flexibility given our position in the market to make sure economics work well uh for for our partners, but we really think of it yes as best of both worlds. You get everything that you would get with uh USDC from that kind of liquidity and interoperability perspective, but you'll also get the brand. So, zooming out, I don't know, 5 years from now, 10 years from now, do you think that there's just like hundreds or thousands of dollar stable coins, or do we somehow abstract that all away and it

just goes back to it's just a dollar, but there's something behind it? Um, how do how do you see this all playing out? Because already it's getting so fragmented with so many dollar stable coins. Um, and it feels like it's only going to get worse or better, whatever you want to call that, but how do you see that playing out in I don't know, five years? >> I I agree. It's something we think a lot about. We're we're very much um you know product nerds here and and I I think have a a bias where it's let's optimize for the user experience that makes sense and fragmentation is um is not necessarily easy for users, right? Or you don't have to think about this asset or that asset as I'm uh as I'm approaching, you know, a simple action like making a payment, right? And so I

do think that in the long run for these things to really work at scale, we're going to have to abstract all of that away, right? And we're working to do that with the the magic trick of the stable coin as a service play is that because it's running on all the same rails as USDC, we are able to do that abstraction uh much more easily as our our uh partners. But I think you know like anything when it's early um and you have a sort of you know network effect and market driven uh uh sort of substrate here on which all of this is built it's going to have fragmentation out of the gate right there are incentives for players when they see green field to try new things and can I kind of stake out my turf in the long run you know history tells us that these

things tend to reconsolidate um over time and we've already seen that power law start to take effect with the assets that are working well so it wouldn't wouldn't surprise me if you know 5 years from now we're looking at a much much larger market cap and sort of flow uh in the stable coin market but still have that steep power law and consolidation around a couple dominant assets >> right okay speaking of you're expecting it to be a much larger market cap I was going to ask you what are your growth expectations for stable coins and this does not have to be financial advice this doesn't have to be Coinbase's opinion I'm curious on yours because you know Scott Besson I think came out you was it late last year and said he expects in the next I think it was 5

years um we're going to be up at like close to three trillion uh in terms of stable coins right um and so he's seeing some pretty incredible growth and I'm just curious uh and then we also have the genius act that came last year as well uh and so you know ideally that's going to help to proliferate this further at least in the US um so curious if you can comment on both of just like do you agree with Scott Besson or do you have a different take in terms of the size and the growth trajectory of stable coins and then how does the genius act either help or facilitate that. >> Sure. Yeah. As as you said, not financial advice. Uh but I think in terms of the trend and the addressable market opportunity here, you could easily, you know, squint your eyes and

see a world where we're at, you know, 10 or even 100x of where we are now um you know, in the next decade. That would would not shock me at all. I think when you look at these kinds of trends, there's a lot of parallels here to the uptake on stable coins that map to what we saw with Bitcoin and you have this kind of grinded out early phase where the largest players who really control uh flows of assets need to get activated and they need to get comfortable with the infrastructure and we're doing that right now. that kind of dirty work of grinding it out and helping uh people really feel comfortable around you know compliance and security and a fundamentally new thing and although some of these firms uh you know were

onboarded into the market visav the initial interest in bitcoin there also a lot of new um PSPs who maybe didn't participate in that part of the trend and so for that part um of the market they're actually looking at this sort of crypto stack if you will for the very first time so there's a little bit of a time there um once Once you get all those pipes flowing, that's where things get really interesting and is sort of, you know, I think of the sort of activation of um all of these major PSPs and the super easy to use product formats like cards which are taking off.

Um >> what's a PSP by the way? What's a PSP? >> Human service providers. Yeah. Thank Thank you for for checking me on my corporate uh drug. >> Oh, good. >> Yeah. Yeah. So when there are those moments of act of of activation where you get a new category like that to come on that I think of as like you know the ETF moment but maybe for for payments that can really grow the market orders of magnitude and we're we're in the thick of that you know grinded out phase of dealing with those players right now. >> I see I think last year 2025 we had about a 51% growth in stable coins. So, do you expect 2026 to be something similar or do you think we're starting to get through the the grind phase that you just mentioned and it's like the

pipes are bigger and we can start to see this stuff flow more or like what are your expectations around that? >> It's always hard to I won't share a specific number with you. Um, but what I can tell you is there's two like it's funny on on a backward-looking basis a lot of the stable coin activity centered around actually trading enablement, right? So I think if you backwards looking data, you do see a bit of a correlation between some of the overall um investing and trading related crypto KPIs and or data and some of the stable coin growth numbers. What I expect to happen is as the paymentsoriented use cases start driving a greater share of

growth in this part of the market, um maybe that trend over time will will decouple a little bit, right? From from from the kind of Bitcoin trading and those and those other data points. And so, um, what I can tell you is as we grind it out to activate more and more of these pure play payment services providers and fintexs that are laser focused on the payments piece, you should start to see, you know, volumes um, tick up there. And and of course, like the demand side of this from ultimately from consumers who are going to pay in stable coins and merchants who are going to accept them are going to have to drive a lot of this as well. You have to really get the whole ecosystem activated, not just one pipe in the middle.

>> Do you guys work at that level too? Like obviously you're working with the banks to like figure out how they can operationalize stable coins or launch their own stable coin but you know there's the there's a use case of just every company in the world that wants to do payroll globally which makes way more sense to use stable coins. We in our company we have 60some employees and about 30% of them u because we have two companies a marketing agency and and milk road about 35% of them I think today are paid in stable coins and a lot of our invoicing like a lot of our clients pay us in stable coins as well and honestly it's so much better we hate when we have to do a wire or I have to go sign something at a bank it's it makes no sense to me when we can just

use stable coins. So, do you guys also deal with those like just normal companies that maybe aren't even crypto companies yet that are already starting to adopt stable coins for like payroll and things like that or or that sort of out of your guys wheelhouse? >> It it absolutely is. And we got to remember, Kyle, that to have a follow-up conversation now and g geek out together on what you guys are doing, right? And and so we would love to help you and talk about some of those tools that that you might be using and see if there's anything we can do um at Coinbase for you. But but yes, um this category of of payroll um and you know enabling um enabling payroll for you know 1099 workers or or or or anyone really is a really exciting category and we're actually well down the path with a lot

of the major players in that market. We have not announced yet um all of those names but it's a it's a fantastic category. We find that a lot of people do want to be um paid in stable coins. Um and if the you know the payroll providers are interested in having another option that makes this uh easy and a little bit faster um you know for their clients. >> Interesting. Yeah. Excited to see that that play out more because after just doing it ourselves, we're like how's the world not doing this yet? You know, like it's uh it's it's wild and um it's one of those things where the UX is just actually good now and so it actually works better than the Trafy world. So those are the kind of things you want to see. Let's jump over to to the tokenization side. So, this is sort of

the third bucket that we talked about. Um, I guess let's first, and this is maybe kind of the the the newest thing, but also the thing that is really starting to get highlighted a lot. You know, Larry Finins going on saying that we're going to tokenize tokenize everything. Um, and so it's becoming quite popular. Maybe give us the high level notes of like what does this mean? First of all, why are institutions doing this? Um, and then again, I guess you can talk about your product which you guys recently announced as well. um tokenization as a service like what is it that you guys are actually doing for them? Why aren't these companies just tokenizing it themselves? Like what is it that Coinbase actually does?

>> Sure. This is a really exciting trend and the simple way that I think about it, you know, for your audience is is really about the rest of the portfolio upgrading all of those assets, whether they're, you know, securities, commodities, real estate, or something else. upgrading them to be able to live on blockchain rails and benefit from, you know, smart contract programming, the ability to be moved around the world um instantly just like the stable coins, right? And improve improve settlement. And so that's a simplification, but this is a this is a very easy way to think about where we're going with um with tokenization. And as I mentioned before, this is a market where you need some some major unlocks for us to really, I think, get to where we think we're going

to go. Um, but I think we're in the process of of making those those unlocks happen, right, around the regulatory piece and of course um, you know, interfacing with the world of of traditional financial services. In terms of Coinbase's role here, we really do uh, we really do a handful of things. So, we have to help you if you're an asset issuer, a big asset manager, we have to help you with the actual act of creating the token itself, right? Getting that analog format formatted asset onto the the blockchain in the tokenized format. So create it um store it safely in our custodian which is already scoped to do that and today can hold a wide variety of digital assets not just um you know bitcoin and native crypto assets um you have to be able to

move it for settlement right and that's where the blockchains themselves come in coinbase has base of course a great uh solution for that is an L2 but we are a multi-chain uh platform and support a wide variety of other chains um and then finally you have to be able to you know distribute and provide markets uh for these assets and ultimately Coinbase has an ambition to um you know to play a key role uh there as well. And so th those are the kind of things we're focused on the tools for you know the creation the storage the movement and settlement and ultimately the distribution and markets and our products map to those um key kind of parts of the value chain and we're working with the folks whether it's the asset issuers or you know the other um you know custodians and exchanges um to make sure that we can do

those things effectively for clients. I guess you guys are well positioned for this one because you already have the custodian business that you've built the trust on and you've built sort of the moat on that for so many years now with digital assets. It only makes sense to start to do that with everything else as you wrap it and put it on chain. Um, which I think is is quite interesting. You mentioned there's, you know, we've all heard of tokenized equities, so like stocks coming on chain, treasuries are coming on chain, there's private credit that's coming on chain, you mentioned real estate, obviously dollars are coming on chain through stable coins. Um, where do you think obviously stable coins is probably the fastest growing one here and will be for for some time.

What do you think's next? What do you think is going to be the next big thing that gets tokenized? Is it is it stocks like we're all talking about or do you think there's I don't know too many regulatory hurdles or just things we've got to figure out before that can happen? Like where do you see this tokenization thing really growing to start over the next, you know, year or two outside of dollars? >> Yeah, it's a great question. I think that what the largest players in the market generally are going to be responsive to where the demand is, right? And I think it's safe to say co Coinbase has not been um public about our exact order of operations, you know, by asset class, but I can say that, you know, generally we're responsive to client demand. So if if you zoom out just separately from Coinbase for for a

second and recognize that probably a lot of the large players think that way, it'd be reasonable to expect that there's going to be a lot of energy around tokenizing, you know, equities and ETFs, which are just, you know, major major uh sort of demand sources out there in the market. And then probably you can go down the list sort of by um by size to think about um where the sort of lowest hanging fruit of of demand will be. But I have to say that just, you know, simply replicating um the parts of the portfolio that are easiest to access today and putting them on on um sort of the upgraded tokenized rails is to me only a small fraction of the story. The much much more interesting part of this equation um is

actually what new types of products are going to get created in combining certain assets or taking advantage of the programmatic nature of having a thing on chain in the first place to create better products for investors, right? And and that's the part that gets me really excited. I think we're super early um in that journey. And you'll you'll notice if you look at what products have actually been tokenized today, people have started with in a way the kind of most boring um most liquid largest um products. So I think we're going to go on a journey of doing the obvious things where there's a ton of demand and and the things are large today, but I'm excited to see what new products are going to get created that are novel and useful for investors that take advantage of those product

properties. When you're speaking to these institutions that are looking to tokenize their assets, there's two ways that they're going right now from what I see is some want to tokenize on a public blockchain like Ethereum or base, right, or Salana or you name your blockchain. And then there's some that are wanting to tokenize on a semi-public or semi-private type blockchain. Um, why are they doing one or the other? Which way do you think this is going to go? like what are the conversations you're having when it comes to this um and and which one wins out?

>> Well, Coinbase has a very uh public view on on this which is that we're pro um public blockchains and I think um you know Coinbase is a firm that has Silicon Valley roots. Many of us um you know our exec team and our leadership team were kind of close to the action as as we saw the internet come of age um and believes that you know we believe that ultimately these um public and open- source chains are going to acrue the most value because they're super easy to build on for developers. They're inherently global and there are great interoper interoperability benefits just like we saw with the internet protocols, right?

Um and so that that's our sort of default orientation. I think the way that the market has handled this when we think about the large institutional uh clients um not not just the buy side but also the sell side the banks and the brokerages they came into this first from a place of being a little bit constrained uh by what they were actually allowed to do right and so for a bank to touch a public blockchain for the first time although to you and to you and me that might seem like no big deal we wake up and do that and it's fine that that's a big deal for a large bank that has to get comfortable with that from a compliance and a security perspective, it's a totally novel surface area for them to think about.

And so I think in the earlier days of this journey when a lot of them were starting to think about all of this for the first time and when there was less regulatory clarity and maturity generally in the market than there is today, the natural impulse was let's start in a sort of controlled permission environment that I know will pass muster with my compliance and risk teams. So we saw a lot of that in in sort of you know the 2015 to 2020 era. Um what's changed recently in the last few years is that the demand side of the equation on public chains is now um irrefutable, right? It's there. It's staring you in the face. This is where pretty much all the value is accured. It's where all the clients are. It's where all the money is. And so you now have a very clear

business case, number one. And number two, you just have more comfort uh from these very large financial institutions as they've as they've been forced, you know, by their clients pulling them on the demand side to start to reckon with these markets in the first place. So e even the most conservative financial institutions are now recognizing they have to be on public chains or at a minimum they have to be able to interoperate uh with them as >> right as all these assets move on chain uh all these like trady assets let's say you know equities like I don't know Nvidia or Tesla or name your favorite stock or or ETF um and as treasuries and all these things come onchain do you see the world playing out where they start to get integrated into the

the DeFi I applications that we know and love in the crypto space today, whether that be, you know, Morpho or Aerodrome or A or whatever, and we start to be able to like take a loan permissionlessly out against our Tesla stock, you know, on top of base um using a or using Morpho or something like is this the world that you think is going to start to happen with all these TRFI assets um or or how do you see this sort of playing out? >> I absolutely think that's going to happen. In fact, it's already underway. Um the answer is that for different types of market participants, they're going to draw a perimeter around where they expose their products that's

consistent with their own sort of risk appetite, right? And so for um a Coinbase, we've been doing this a very long time. We have the compliance framework and the understanding and the regulatory oversight and the technology that we're very comfortable with a firm a as a firm uh dealing with uh onchain native environments right we're comfortable with dexes we're comfortable with smart contracts so we're very excited to be at the bleeding edge of that I think for some of the more conservative firms that I was kind of mentioning in our in just a few minutes ago they might draw a narrower um perimeter and we're seeing a lot of that it's kind of concentric circles to say, I'll start here. I'm going to first deal

with maybe um you know, venues that have direct oversight from specific regulators and allow my products to live on those like some of the centralized exchanges and brokerages that we all know well. Um but over time, I think as they get more comfortable with those native onchain environments and non-custodial wallets, they're of course going to want from a commercial perspective to take advantage of all the distribution and demand in that channel as well. It's just for some of those firms going to be a multi-stage rocket. >> Take time. Yeah, absolutely. Um, let's let's just kind of I'm going to ask just a couple more questions and and we'll wrap up here. Um, and I think I've got two that I that I want to make sure I ask. One is it's interesting the list of names that you said you guys are working with and I have a few written

down. These are public that you've tweeted out which is City, Chase, PNC Bank, JP Morgan. Um, these are some of the biggest banks in the world. And it's kind of interesting because you know these financial services that you guys are offering to the banks generally you'd think the banks would offer but they're not at least not yet. And I'm curious how do you guys see this sort of competition playing out? Like Coinbase was obviously so early so you guys were first um and sort of led the way on this. Are you starting to see that banks are going to start to offer similar services to what you guys are? Is this a good thing? Um or do you think they're all just coming to Coinbase because like we don't know what we're doing here so please just help us.

I love this question. It gets back to the heart of the kind of two general areas that Coinbase is operating in with respect to um you know our client businesses, right? We have our first party business where we directly acquire clients and then separately where I spend all of my time the infrastructure businesses right which are partnership with those institutions. And so what we've decided really as a firm is that look, we're building tools uh and trying to drive growth in the the largest markets uh in the world, right, which is really all of financial services and payments. And this is a huge opportunity. And our goal is really to bring as much of that market as possible on chain as quickly as possible. We know that we're going to build great

first-party products for those clients who we go acquire directly, but the scope of our ambition to really grow this market is much broader than that. And we're not going to get there with only our first party products. So it makes sense to complement that business with the infrastructure play which is to say partners of ours like JP Morgan Chase and PNC and City and BlackRock and and Shopify and others have incredible client businesses, incredible distribution, incredible products and we we love and accept that. And what we're saying to them is we're here to help you. We think that's awesome. we're going to give you infrastructure and tools and advice um to the extent that you want it um to help you really jump you know headlong into this market as well. And so the two businesses are very

complimentary um in that way. I think you know for Wall Street uh coopetition is a is a very normal thing that everyone's comfortable with. you have maybe you know JP Morgan's um you know prime business is is servicing Morgan Stanley's uh you know investment management arm right that's a very this is a very natural motion and I think people are looking at Coinbase in in the exact same way so um we're here to kind of earn the trust of those partners and we have a view that um you know by working with Coinbase at the infrastructure level you're going to be able to build the very best products and the firms that get that and understand um that value proposition I think are are really excited to partner with us >> very Cool. Uh, we'll wrap up with this.

Crypto moves very, very fast and so I'm sure the conversations you guys are having with institutions are changing on a yearly basis. I mean, from 2024 to 2025, you know, Trump taking office, the whole idea of crypto in this onchain world completely flipped overnight basically and all of a sudden it was like, oh, I can have that conversation. I'm just curious from 2024 to 2025 and now in 2026, how are the conversations changing across these these institutions? Whether it's just like the level of of people you're getting to speak with within there, their their trust within the this industry, their curiosity, like however you can conceptualize that, please just help us kind of understand how it's changing and how fast.

>> The short answer is it's gone from, you know, a sort of contained conversation in a part of the firm to a very urgent conversation at the very top of the firm. Right? And that's a function of what we started talking about uh in this conversation which is that this now impacts if you're a large financial institution. This digital asset trend impacts every corner of your business, right? There's no there's no more kind of head in the sand. It's a you know this is a a five alarm fire but also a huge opportunity. And so um that's been super exciting. The tone has totally changed in the past couple years um in response to that um to that recognition. And then of course just you know the types of things we're talking about have evolved radically beyond just

how do I think about Bitcoin or or Ethereum um to okay I'm trying to globalize my payments business. Can you help me do that Coinbase? Right? That's a type of conversation we were not having um two years ago and then certainly on tokenization as well. Let's look at you know the entire product complex in my asset management arm. How do I bring that onchain? That's that's an incredibly exciting one that we're having we're having now that you know was not the case a year or two ago. So the short short answer is no shortage of super energizing conversations and they're happening at the very top of the house. So we got a bunch of busy people at Coinbase trying to keep >> No doubt. No doubt. Well, awesome.

Brian, thanks so much for joining. This is a this is a great conversation to get kind of the the inside scoop of what's happening both at Coinbase but just more in the institutional world in general which I think our audience doesn't always get a get a a look into. So I really appreciate you coming on and sharing this. Uh and yeah, we'll have to get you back on to give us some updates as as things go by because I know things are moving fast. >> Awesome. Thanks for having me, Kyle. Great chatting with you. >> Cool. Thanks, Brian, and thanks everyone for listening and we'll see you guys in the next episode. Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel and join the Milkro Daily and Pro newsletters and start investing like the top 1%. This show is for

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