All-In Summit: In conversation with Brian Armstrong

00:00:00.000 | Brian Armstrong.

00:00:24.000 | Brian Armstrong is the co-founder and CEO of Coinbase, which is the largest

00:00:29.000 | exchange here in the United States. And according to Bill Gurley, he's hoping for

00:00:34.000 | more regulation so he can pull up the ladder behind him. So let's start there.

00:00:38.000 | We're here for Bill Gurley's. Generally speaking, your reaction?

00:00:42.000 | I thought that was such an amazing talk. I was like cheering backstage when I heard that.

00:00:46.000 | I think we need more of that. I haven't seen somebody laid out that clearly in a while.

00:00:51.000 | He's totally right. I mean, regulatory capture is a huge drain on innovation.

00:00:55.000 | And the incentives are set up in kind of a bad way. If you take our company, for instance,

00:01:01.000 | if you ask me just personally, I think there should be less regulation around this.

00:01:05.000 | I think it would create more innovation. Society would have to tolerate greater variance.

00:01:11.000 | There'd be more scams. There'd be more highs. There'd be more lows.

00:01:14.000 | But the truth of the matter is a lot of times you have regulation and it ends up having

00:01:18.000 | the opposite of the intended effect. So we don't live in that world where people are going to say,

00:01:23.000 | "Let's just be hands-off and do nothing." So when I go to D.C., the Overton window of discussion

00:01:28.000 | is basically we're going to do the regulation for you or you can engage and have a say.

00:01:33.000 | And so of course we're going to take the other side and say, "Okay, let's try to help craft that regulation."

00:01:37.000 | But if you ask me just personally as a citizen, there should be less regulation, I think.

00:01:41.000 | What do you think the regulation should be as we kind of get through the boom-bust cycle,

00:01:46.000 | all the scams and fraud that occurred? And now it seems like the enforcement has gotten

00:01:52.000 | particularly intense. What would be a balance that would protect us from going,

00:01:58.000 | protect us going forward and eliminate the massive amount of grift, the massive amount of crime

00:02:04.000 | and stealing and fraud that happened in crypto that we all witnessed and is undisputable,

00:02:10.000 | but then also would allow us to innovate and not have it all go offshore? Because you said,

00:02:14.000 | "Listen, if you don't want us here, you opened, I think, on some foreign islands, some entities,

00:02:20.000 | you're ready to walk out of America, I understand, if they don't make great regulations."

00:02:24.000 | But we're not leaving America, that's for sure. I mean, this is our biggest market.

00:02:27.000 | I'm an American. We started here.

00:02:29.000 | Well, if they delisted everything but Bitcoin and Ethereum, what would you do then?

00:02:33.000 | The thing is, I don't think that's in the realm of possibility because that's not what the law says.

00:02:39.000 | So we can start with what I think regulation could be or should be, and then let's talk about

00:02:43.000 | what the regulators are actually doing because it's a little bit different.

00:02:46.000 | So the actual regulation that would allow this industry to be built here in a safe way,

00:02:52.000 | but also protect the innovation, it would do things that are actually kind of similar

00:02:55.000 | to the traditional financial services industry.

00:02:57.000 | So you would have some basic rules in place around, "Okay, you need to get these audits complete.

00:03:02.000 | Washed trading is illegal. Let's make an actual process for somebody who wants to register

00:03:07.000 | a crypto security, and it could trade on a broker-dealer or these kinds of things."

00:03:12.000 | So these are actually not rocket science. They're just kind of copying a lot of the best practices

00:03:16.000 | like AML, KYC, those kind of things from the traditional financial services industry,

00:03:20.000 | and centralized players in crypto should have to follow those.

00:03:22.000 | Now, if you're doing a decentralized thing, I don't think that's a financial service business.

00:03:26.000 | You're never taking possession of customer funds like these decentralized protocols

00:03:30.000 | or self-custodial wallets. I think that should be treated more like the software industry,

00:03:34.000 | and the centralized players should be more regulated.

00:03:37.000 | Now, you can also do things like have a sandbox for innovation and say,

00:03:40.000 | "Okay, if you're a startup and you can't afford $20 million a year in legal bills,

00:03:43.000 | you're under a certain amount, then you can operate in this sandbox."

00:03:47.000 | And there's other things other countries have done.

00:03:49.000 | What's actually happened is not quite that, although there are some good bills going through Congress.

00:03:54.000 | Unfortunately, we have a regulator, the chair of the SEC, who's kind of weaponized the agency

00:04:00.000 | for his own political purposes.

00:04:02.000 | Gary Gensler.

00:04:03.000 | Right, along with Elizabeth Warren, who they just don't want crypto to exist in the United States.

00:04:08.000 | Isn't their argument, "Well, just register like we all do when we sell securities?"

00:04:14.000 | And what's your best argument for why crypto shouldn't just do what we all do every day,

00:04:21.000 | which is register securities?

00:04:22.000 | I'm all for that, yeah.

00:04:24.000 | I mean, there should be a robust, healthy market to trade crypto securities in the US.

00:04:28.000 | There is not currently a way to register.

00:04:31.000 | And so they've been sort of talking out of both sides of their mouth and then saying,

00:04:34.000 | "Hey, just come in and register," and then you see these exchanges come in that have never traded a single coin

00:04:39.000 | as the ones that are propped up as the ones that are following the rules.

00:04:44.000 | So I think what their true intention or belief is behind the scenes, and I'm speculating a little bit here,

00:04:49.000 | is they just don't want it to exist.

00:04:51.000 | And so they're trying to cast a shadow over the whole industry to make it difficult.

00:04:54.000 | They're just sending subpoenas and well-known notices.

00:04:56.000 | Why don't they want it to exist? Why?

00:04:58.000 | I believe it's because--and again, this is just me speculating a little bit.

00:05:02.000 | I think it's because they don't want to lose power.

00:05:05.000 | They think the government should run financial services.

00:05:08.000 | They have their hooks into the big banks.

00:05:11.000 | They can pressure the big banks to close accounts on--you know, if you have the wrong political opinion

00:05:16.000 | or you're in the wrong industry, you're in oil and gas or whatever the flavor of the day is.

00:05:21.000 | They want to be able to pressure companies.

00:05:24.000 | Because they can't get it done through Congress, they want to pressure it through the big banks.

00:05:29.000 | And crypto--in America, people should be free to have control of their own money, to use new technologies.

00:05:35.000 | It's fundamentally anti-American what they're doing, and I think next year in the elections,

00:05:39.000 | we need to make sure that all voters and people who are pro-innovation, pro-technology,

00:05:44.000 | vote people out of office who are trying to curtail our freedoms around crypto.

00:05:48.000 | [Applause]

00:05:49.000 | Their counterargument would be that your industry, which you're the largest player in,

00:05:58.000 | stole a bunch of money from consumers and perpetrated tens of billions at a minimum of crimes.

00:06:06.000 | And so they would not say they're doing it to control.

00:06:09.000 | They would say they're doing it--I'm not saying this is my opinion,

00:06:12.000 | but they said they would be doing it to protect customers.

00:06:15.000 | So you've had tons of fraud. You had issues inside your own company

00:06:18.000 | with people pre-trading coins before they were listed.

00:06:23.000 | Yeah. Well, that wasn't us. That was an employee who got convicted.

00:06:27.000 | Yep. So the space, you would agree, is rife with crime.

00:06:32.000 | So if they want to--and that's their counter. So respond to their counter.

00:06:37.000 | What's true about what they say?

00:06:39.000 | Well, they're absolutely correct that this industry has attracted some really bad people.

00:06:43.000 | I will admit that. If you look at the beginnings of any new technology,

00:06:47.000 | the Internet, there were lots of scams.

00:06:50.000 | Even in traditional financial services, we have Bernie Madoff and Exxon periodically.

00:06:54.000 | So what you should do in a free society is if somebody commits fraud,

00:06:58.000 | absolutely that's what the justice system should do is go after them, create a deterrent,

00:07:02.000 | put them in jail. Sam Bankman Freed should go to jail.

00:07:06.000 | It does not mean that the industry should be outlawed.

00:07:10.000 | And one of the really dangerous things that's happening is that the Constitution says

00:07:15.000 | that Congress creates the laws.

00:07:17.000 | What's happened is that we've created these agencies,

00:07:21.000 | and because they can just send subpoenas to everybody or publish these guidance letters--

00:07:26.000 | this is kind of the administrative state, if you will--they are de facto creating laws.

00:07:31.000 | Other industries, like in the FDA, if the FDA puts out a guidance letter

00:07:35.000 | and you don't like it, what are you going to do? It's a de facto law.

00:07:39.000 | So there's an interesting constitutional argument around this of like,

00:07:42.000 | is the administrative state overreaching?

00:07:44.000 | And I think we've seen that in this example with the SEC.

00:07:47.000 | [applause]

00:07:49.000 | Well said.

00:07:51.000 | But isn't one of the fundamental premises of Bitcoin, blockchain technology,

00:07:58.000 | that we can wrestle away control from the government,

00:08:01.000 | and so you are de facto putting yourself in this kind of opposing position to the government,

00:08:06.000 | because you live in a country that the government has the laws

00:08:09.000 | and the ability to create new laws and enforce those laws upon you.

00:08:12.000 | And ultimately, crypto is going to be challenged by the fact

00:08:16.000 | that it is a challenge to centralized governments.

00:08:19.000 | Yeah, I mean, that's exactly right.

00:08:21.000 | Anytime you create a startup and you go up against some big incumbent,

00:08:24.000 | there's going to be a shift of power.

00:08:26.000 | And in the U.S., the government enjoys this monopoly on issuing the currency.

00:08:31.000 | In the U.S., our banks are more privatized than, say, China or most other countries,

00:08:36.000 | but they're quasi-nationalized in the U.S.

00:08:39.000 | I mean, we talked about the revolving door and all the kind of oversight,

00:08:43.000 | and like a bank cannot launch a new product without government approval,

00:08:46.000 | so how really private market is it?

00:08:49.000 | I think Bill Gurley showed that graph of like,

00:08:51.000 | there haven't been any new banks really created since Dodd-Frank.

00:08:55.000 | So it's a quasi-nationalized industry.

00:08:58.000 | Of course, some people are going to be upset about losing the power of that,

00:09:02.000 | but in America, this is a free country,

00:09:05.000 | and American citizens should be free to use any technology that they want.

00:09:09.000 | They should be free to use cryptocurrency.

00:09:11.000 | And as long as you're not hurting somebody else,

00:09:13.000 | that should be protected as a freedom here.

00:09:15.000 | So what's the path, Brian?

00:09:17.000 | Because it seems like what you guys have had to do, you and others,

00:09:20.000 | basically use the courts to beat back the administrative state.

00:09:24.000 | Do you want to talk about that process?

00:09:26.000 | And one example is this Bitcoin futures thing that just--

00:09:30.000 | I'm not even sure if it was resolved in the last few weeks or not.

00:09:33.000 | There was a pretty important ruling.

00:09:34.000 | Do you want to just update people about that kind of stuff?

00:09:37.000 | Yeah, well, so that is one of the great things about America

00:09:39.000 | that makes me bullish on it,

00:09:40.000 | is that we do have these different branches of government

00:09:42.000 | that are such a great check and balance.

00:09:44.000 | And you're right, the judicial branch

00:09:47.000 | has been kind of my favorite branch of government in the last few months.

00:09:51.000 | And they've really kind of--the SEC has gone zero for three in the courts.

00:09:54.000 | The courts kind of keep upholding rule of law,

00:09:56.000 | which has been really great.

00:09:57.000 | So there's been a handful of cases.

00:09:58.000 | There was the Ripple one, there was the Terraform one,

00:10:01.000 | which agreed on this idea that the underlying cryptoassets themselves

00:10:04.000 | were not securities.

00:10:05.000 | That's a very important fact, by the way, in our case with the SEC.

00:10:08.000 | And then just recently there was this Grace Jail Trust ETF,

00:10:13.000 | and the judge ruled that the SEC was arbitrary and capricious

00:10:18.000 | and unlawful in not approving their application.

00:10:20.000 | This is what you mean when you say they're just de facto passing laws

00:10:23.000 | where they don't necessarily have the rights to do it.

00:10:25.000 | They're blocking free enterprise.

00:10:27.000 | They're blocking the ability for you guys to just do business.

00:10:30.000 | Yeah, and unless you're a big company like Coinbase,

00:10:32.000 | you don't have the legal budget to kind of go to court

00:10:36.000 | and fight these things out.

00:10:37.000 | And I can tell you as a public company,

00:10:39.000 | I talked to a number of other people, and they were like,

00:10:41.000 | "Oh my gosh, you can't sue the SEC or engage in litigation with them.

00:10:46.000 | You're a public company. You have to settle. You have to settle."

00:10:49.000 | And I was sort of--the settlement option on the table

00:10:52.000 | was to essentially delist everything other than Bitcoin.

00:10:55.000 | And so that would have been the end of the industry in the U.S.

00:10:58.000 | It was an easy choice.

00:10:59.000 | Of course, if we think the law doesn't say that, we're going to go to court.

00:11:02.000 | [applause]

00:11:05.000 | So--oh, go ahead, David.

00:11:07.000 | Yeah, so I want to ask you about use cases, Brian.

00:11:11.000 | So I think we've had Bitcoin now for over a decade.

00:11:13.000 | I think it's been volatile but I think proven very robust.

00:11:16.000 | No one's been able to double spend a Bitcoin.

00:11:18.000 | I think for store of value, I think that use case

00:11:21.000 | is pretty much proven.

00:11:23.000 | Then we had the rise of Ethereum and this idea of a world computer,

00:11:27.000 | and there was a lot of talk for a while, especially during the very frothy,

00:11:30.000 | sort of bubbly period, that there'd be all these use cases

00:11:34.000 | that would be built on the world computer.

00:11:36.000 | People might even be running social networks on them, stuff like that.

00:11:40.000 | I think there's sort of been a correction from that.

00:11:42.000 | I mean, I think people now sort of realize there's certain--

00:11:45.000 | there's a lot of applications where it just makes sense

00:11:47.000 | to use a centralized database.

00:11:49.000 | Blockchains wouldn't be efficient enough for that.

00:11:51.000 | I'm kind of wondering at this point, where do we stand in terms of use cases

00:11:57.000 | being proven out beyond the original Bitcoin store of value?

00:12:01.000 | Like, what are the other big applications that have either been validated

00:12:06.000 | or that we should expect to be built on top of all this infrastructure?

00:12:12.000 | Yeah, so I'll run through a couple of them that are there already today

00:12:15.000 | and then there's a couple on the horizon.

00:12:17.000 | Obviously, trading was this first use case.

00:12:19.000 | Then we saw things like stablecoins have actually gotten quite a bit of adoption.

00:12:24.000 | There's about $150 billion or so locked up in stablecoins,

00:12:27.000 | useful for payments, cross-border stuff, all kinds of things.

00:12:31.000 | DeFi obviously got to--I think it's probably at about $50 billion

00:12:35.000 | total value locked up in that, which is meaningful.

00:12:38.000 | I wouldn't say it's been mainstream by any stretch,

00:12:40.000 | but it's certainly material.

00:12:42.000 | Even NFTs got to a pretty--I think it came down like 90% plus,

00:12:46.000 | but it's still--it's in the tens of billions.

00:12:48.000 | So those are things I'd say are--they worked, and I think they'll grow over time.

00:12:52.000 | I'll talk about what I think could unlock that next wave of growth too.

00:12:55.000 | But there's a couple others that are on the horizon.

00:12:57.000 | So decentralized identity, ENS is probably the most popular one.

00:13:00.000 | There's only been about 3 million or so people have used ENS so far,

00:13:03.000 | but you see it show up a lot.

00:13:05.000 | Explain what that is.

00:13:06.000 | Well, ENS is the Ethereum name system, so it's a decentralized identity,

00:13:10.000 | so you can control your own information online.

00:13:13.000 | It's not like using Google or Apple or a big company.

00:13:15.000 | So my Twitter ex-profile, my Facebook profile, this is who I am.

00:13:19.000 | I can prove it.

00:13:20.000 | Yeah, and this is kind of the vision of Web3 is that if everybody has

00:13:23.000 | their decentralized identity, then you can now create a follower graph.

00:13:27.000 | You could make posts associated with that, like text, video, audio,

00:13:31.000 | to make a decentralized social network.

00:13:33.000 | Artists could have a direct relationship with their fans and have provenance.

00:13:37.000 | If you're CNN and you want to publish an article,

00:13:40.000 | it can be cryptographically proven that it came from that account.

00:13:44.000 | It's not like a fake GPT.

00:13:46.000 | To build on Sax's question, why has crypto as an industry

00:13:51.000 | and the entrepreneurs there done such a terrible job at making it easy

00:13:55.000 | for consumers to use the product?

00:13:58.000 | I know that's something you've really spent a lot of time on making this

00:14:01.000 | easier and trustworthy, but we're in the second decade here.

00:14:05.000 | If you ask somebody to do what you just said, create a decentralized identity,

00:14:11.000 | they would not even know where to start.

00:14:13.000 | Can you talk about why that blocker exists?

00:14:16.000 | Yeah, so I do think there's a few things that can help unlock

00:14:19.000 | this next wave of adoption. UX is one of them.

00:14:22.000 | It starts with what we started with at the beginning.

00:14:25.000 | Pretty much every crypto startup is just getting a subpoena right now,

00:14:27.000 | and that's not fun, especially if you're two kids with a laptop and a dream,

00:14:31.000 | and your parents are worried you're going to go to jail or something.

00:14:34.000 | The regulatory apparatus has been quite bad, and I think that will hopefully

00:14:37.000 | shift here in the next few years as we get Congress to act,

00:14:40.000 | or a new SEC chair, or CFTC, or someone.

00:14:42.000 | But put that aside.

00:14:43.000 | The other big blocker has been the scalability of the blockchains.

00:14:46.000 | So every transaction on-chain is still--if you do it on layer one,

00:14:50.000 | it's anywhere from $5 to $25.

00:14:53.000 | It takes anywhere from a few minutes to an hour to confirm.

00:14:56.000 | So that's not going to work to really build decentralized applications

00:15:00.000 | where every upvote or like or post has to happen on-chain.

00:15:04.000 | So we're getting now to layer two solutions, which is sort of like

00:15:07.000 | the internet going from dial-up to broadband,

00:15:09.000 | and Coinbase is trying to help that.

00:15:11.000 | We launched our own layer two solution called Base recently,

00:15:14.000 | and it gets the cost and the speed down by about an order of magnitude.

00:15:18.000 | The metric I've been tracking internally and I kind of push our team on is

00:15:21.000 | we need every transaction to get under one cent in one second.

00:15:25.000 | That feels like a threshold where we'd see an explosion of new use cases.

00:15:29.000 | The last one is the UX, as you put it, and today it's kind of remarkable

00:15:32.000 | actually how many people have used these things like DeFi and NFTs

00:15:35.000 | because the process to actually use it is crazy.

00:15:37.000 | It's like you buy the crypto on Coinbase.

00:15:39.000 | Sometimes you'll move it to a Chrome extension.

00:15:41.000 | You have to connect your wallet into this thing.

00:15:43.000 | You have to know what private keys are.

00:15:45.000 | And so if we can just make that where it's sort of like a WeChat app

00:15:49.000 | or something where you're instantly connected in your wallet and your identity

00:15:52.000 | when you load it up in your browser or equivalent self-custodial wallet

00:15:56.000 | and it's just one click and it's done,

00:15:58.000 | that's what we need to get to as an industry.

00:16:00.000 | Scalability, UX, regulatory improvement.

00:16:03.000 | At the core, and this is where you and I, you've been on this week at StartupSaving

00:16:07.000 | three times and we've had deep discussions about this,

00:16:09.000 | the core of financial regulation in the United States

00:16:12.000 | is based on accredited investors, qualified purchasers,

00:16:15.000 | which are 6% of the country, and 94% of people in the country

00:16:19.000 | are not allowed to participate in the wealth creation

00:16:21.000 | that everybody on this stage has benefited from,

00:16:23.000 | many people in the audience have benefited from,

00:16:25.000 | which is the formation of companies.

00:16:27.000 | It sounds crazy that we have not evolved this since the 1930s.

00:16:32.000 | Would this entire problem be solved

00:16:35.000 | if we could have an accreditation test, a sophistication test,

00:16:39.000 | where if you passed it, like a driver's license,

00:16:42.000 | you could get in the car and drive it knowing the responsibility it takes?

00:16:45.000 | We could simply give people a test and make them sophisticated investors

00:16:49.000 | and then if you wanted to buy cryptocurrency or startups or real estate,

00:16:54.000 | you would be allowed to do it.

00:16:56.000 | Yeah, I know you're hot on this idea and I think the key part about what you said

00:17:00.000 | is it's not based on your net worth, it's based on passing the test.

00:17:04.000 | I think that's a good idea.

00:17:06.000 | By the way, I think accredited investor laws are sort of an example

00:17:09.000 | of what I was saying earlier about regulation that had an unintended effect

00:17:12.000 | where it was trying to protect people,

00:17:14.000 | but it actually made it illegal to get rich unless you were already rich.

00:17:17.000 | It was like this incredibly exclusionary thing.

00:17:20.000 | So anyway, a version of it that was not based on net worth I think could be good.

00:17:24.000 | I'm not opposed to that.

00:17:26.000 | An economics professor making $150,000 a year

00:17:29.000 | would not be able to participate in startups or crypto or whatever,

00:17:33.000 | whereas somebody who inherited a million dollars would.

00:17:36.000 | It's crazy to think that that law exists.

00:17:39.000 | I agree.

00:17:40.000 | One of the things that you need for a vibrant ecosystem

00:17:44.000 | is a lot of practical thinking sometimes.

00:17:47.000 | And just having been around crypto since 2011,

00:17:51.000 | my observation, I just want your reaction, is too many people are caught up

00:17:55.000 | in the philosophy of being unplugged from the system

00:17:59.000 | and being unavailable to the man and all of this bullshit.

00:18:03.000 | And all it does is actually create shitty products actually

00:18:06.000 | because people don't think about wanting to get to 500 million people.

00:18:09.000 | People like it when it's used by 5,000 people

00:18:11.000 | because there's this weird culture of like,

00:18:13.000 | "Let me just build for myself and my nine other friends

00:18:16.000 | who want to live off the grid."

00:18:18.000 | I really believe that crypto struggles with that.

00:18:21.000 | There are a few people like you who are like,

00:18:23.000 | "I'm just a practical, ambitious person who wants to take it to every single person."

00:18:27.000 | And I just want your reaction.

00:18:29.000 | Do you see that? Did you see it before? Is it changing?

00:18:33.000 | It's an interesting point.

00:18:34.000 | I mean, there are a lot of people that are the early--

00:18:37.000 | it's just like crossing the chasm or that book, right?

00:18:39.000 | The early people who joined these things,

00:18:41.000 | they really don't like the existing system.

00:18:43.000 | They're a little quirky. They have higher risk tolerance.

00:18:46.000 | And you do need to get into bigger concentric circles to cross the chasm, right?

00:18:50.000 | And the internet was the same way.

00:18:52.000 | I mean, the early internet was weird, right?

00:18:54.000 | And people would compare that to New York Times or watching cable TV,

00:18:58.000 | and they'd be like, "Oh my gosh, this is so illegitimate,

00:19:00.000 | like these silly blog posts and stuff."

00:19:02.000 | And it slowly became bigger than the traditional thing.

00:19:06.000 | You guys are an example of that.

00:19:08.000 | So I think crypto will get there, but yes,

00:19:10.000 | there has to be a willingness to bring in the next round of people

00:19:13.000 | and the next one, and maybe they're into art

00:19:15.000 | or maybe they're into just earning a living and paying their family overseas.

00:19:18.000 | They're not even into crypto itself for some libertarian paradise.

00:19:22.000 | Yeah, and I think-- exactly right.

00:19:23.000 | I think this is sort of what explains the massive complexity.

00:19:26.000 | Only somebody who wants to minimize the market

00:19:28.000 | would create a nine-step process to be able to do something.

00:19:31.000 | Because the average smart person would say, "That should be two steps.

00:19:34.000 | That should be one click."

00:19:36.000 | But doesn't a lot of that complexity arise from the sort of--

00:19:40.000 | the substrate, which is you're building on top of blockchains,

00:19:43.000 | and people want that decentralized, like trustless sort of layer?

00:19:49.000 | I mean, isn't that--

00:19:50.000 | I mean, I think all these companies could be doing a much better job with UI.

00:19:53.000 | I agree it's a problem, but does it arise from the limitations of the tech stack?

00:19:58.000 | Yeah, well, remember, it's just like people used to only write desktop software,

00:20:02.000 | like Microsoft Office, and then Google came along and they're like,

00:20:04.000 | "Hey, what if we could do everything in a browser?"

00:20:06.000 | And Google Docs and Sheets was initially way worse than a desktop software.

00:20:10.000 | It was always going to be slower because you're building on a web stack and all this.

00:20:14.000 | And the tools got better and JavaScript engines got better,

00:20:17.000 | and I think that's the-- broadband happened.

00:20:19.000 | I think that's the era that crypto is going through,

00:20:21.000 | and it's our responsibility as the companies in the space to make this happen.

00:20:24.000 | No one's going to do it for us.

00:20:26.000 | There's all these competing protocols.

00:20:28.000 | There's big egos. There's personalities.

00:20:29.000 | We've got to come together, make the tools simpler, integrate them, make them interoperable.

00:20:35.000 | This is where I feel like I could have done so much more over the last five years.

00:20:40.000 | Same happened in hardware earlier.

00:20:42.000 | What's that?

00:20:43.000 | Same happened in hardware early on.

00:20:45.000 | And one of the big things I always try to do--

00:20:47.000 | I know we have these court cases going on and stuff like that,

00:20:49.000 | but I always try to make sure-- and I tell the team this too--

00:20:52.000 | is we have great lawyers.

00:20:54.000 | 5% of our resources is going to go deal with that and make sure that's not an issue.

00:20:57.000 | 95% of us are here to build products.

00:20:59.000 | Let's never lose sight of that.

00:21:00.000 | Otherwise, we just become some lawsuit company.

00:21:02.000 | What is the product?

00:21:03.000 | I'm going to ask you a question before I ask you.

00:21:05.000 | Does your mom use Coinbase?

00:21:07.000 | Yeah.

00:21:08.000 | But she's my mom.

00:21:09.000 | But she's your mom.

00:21:10.000 | Okay, yeah.

00:21:11.000 | But do you think if you weren't the founder and CEO, would your mom use it?

00:21:14.000 | Meaning not out of love, but out of necessity or need or interest?

00:21:19.000 | Yeah.

00:21:20.000 | We've had over 100 million people sign up globally.

00:21:22.000 | A lot of them are-- the biggest demographic is-- excuse younger.

00:21:26.000 | It's people in the 25- to 35-year-old bracket.

00:21:29.000 | Initially, the users were often doing--

00:21:31.000 | they wanted to just own a piece of the future,

00:21:33.000 | and it was some trading thing.

00:21:34.000 | Now about half our active customers do something other than trading.

00:21:38.000 | And it runs the gamut.

00:21:40.000 | They're spending crypto with Coinbase Card.

00:21:42.000 | They're earning staking rewards.

00:21:44.000 | They're starting to engage in some of these dApps

00:21:47.000 | and doing payments with stable coins.

00:21:48.000 | But it's a wide range of things.

00:21:50.000 | Where I'm going with this is do you try to allocate resources inside your company

00:21:53.000 | to answer that use case, which is, all right, folks,

00:21:56.000 | we have this core, fervent, obvious demo,

00:21:58.000 | and we can always grow with that demo and wait for that demo to be 50 years old,

00:22:03.000 | but that's going to take 30 years.

00:22:05.000 | Instead, we have to get that 50-year-old today.

00:22:08.000 | What is it that he or she actually wants or needs that they'll actually adopt?

00:22:11.000 | And then all of a sudden 100 million users can become 500, can become 2 billion.

00:22:15.000 | Absolutely.

00:22:16.000 | I do think that is our responsibility, and that's what I'm pushing people internally on.

00:22:19.000 | And we need to drive the utility of crypto because if it's just the speculative thing,

00:22:24.000 | for what?

00:22:25.000 | I didn't get into this because of trading.

00:22:27.000 | I'm not really like a trader.

00:22:28.000 | I got into it because I wanted there to be a more open and fair

00:22:31.000 | and free financial system for the world that reduced friction,

00:22:34.000 | allowed new businesses, capital formation, all these things to happen,

00:22:37.000 | take out the middlemen who are just charging all these fees.

00:22:40.000 | So that's what I want to get to.

00:22:41.000 | Are you tempted to then go outside the U.S.?

00:22:43.000 | Because then when you say that, I think most people would say,

00:22:46.000 | "Oh, go to India and sit on top of UPI, go to Africa."

00:22:50.000 | So how do you maintain that focus?

00:22:52.000 | Yeah, so we are definitely focused on international expansion.

00:22:54.000 | I just wanted to make the point clear we're not giving up the home base.

00:22:58.000 | But, yeah, there's a lot.

00:22:59.000 | We just launched in Canada last month.

00:23:03.000 | We just launched an international exchange earlier this year,

00:23:06.000 | which I think will help us get to a wide range of markets.

00:23:08.000 | Our self-custodial wallet could do better in emerging markets.

00:23:12.000 | India is its own challenge.

00:23:14.000 | We launched and it got shut down three days later,

00:23:16.000 | and we're going to try to relaunch it again.

00:23:18.000 | So we need to get it there in emerging markets too.

00:23:21.000 | Brian, while we have a few minutes,

00:23:23.000 | can you share with us some of your work outside of Coinbase?

00:23:26.000 | You've been making investments in projects like Research Hub.

00:23:30.000 | You started New Limit.

00:23:32.000 | Maybe share with us if there's a common thread to some of the work

00:23:34.000 | you're doing outside of Coinbase.

00:23:35.000 | Does it connect back or is it entirely distinct?

00:23:38.000 | Yeah, well, I mean, the thing I get excited about is

00:23:40.000 | how do we accelerate progress in the world?

00:23:42.000 | And I think technology, innovation, some of the regulatory challenges,

00:23:46.000 | all the stuff you guys talk about,

00:23:47.000 | it's part of the reason why I love the pod is like this is a unique voice

00:23:50.000 | in the world that is pro-builder, pro-crypto.

00:23:53.000 | It's like we can change--

00:23:54.000 | He legit listens to the pod, by the way.

00:23:56.000 | You've been on--you're really the seventh bestie in terms of appearance.

00:24:00.000 | Frequency.

00:24:01.000 | Yeah, in terms of frequency.

00:24:02.000 | You've been on twice.

00:24:03.000 | Anyway, I think that voice is so missing in our society,

00:24:06.000 | and so I just love that you guys have taken the mantle on that.

00:24:08.000 | But, yeah, so anyway, my investments have followed along with that.

00:24:12.000 | Research Hub is trying to make scientific research

00:24:15.000 | more like open-source software and make that more efficient.

00:24:19.000 | New Limit is doing research into longevity with epigenetic reprogramming.

00:24:22.000 | So I'm trying to use my own capital to further this

00:24:25.000 | and just accelerate progress in the world, get people to build more stuff.

00:24:28.000 | And before we wrap, I want to mention one thing.

00:24:30.000 | Everybody clapped when I mentioned the voting situation next year with crypto

00:24:35.000 | and how important that is.

00:24:36.000 | And we created this website, standwithcrypto.org.

00:24:39.000 | Everybody should go check out.

00:24:41.000 | We're trying to get people to raise their hand and say

00:24:43.000 | that they want to stand up in our democracy

00:24:45.000 | and make sure that the right rules get put in place for crypto.

00:24:49.000 | So if people can check out--

00:24:50.000 | Which candidate is the most pro-crypto at this point?

00:24:52.000 | I mean, I know RFK seems to be, right?

00:24:55.000 | Yeah, I mean, it's been interesting--

00:24:57.000 | and, by the way, Coinbase is apolitical,

00:24:59.000 | but if anything in service of our mission around crypto, it's fair game.

00:25:02.000 | But a lot of the challenger presidential candidates have all been pretty pro-crypto.

00:25:07.000 | I mean, the Vake.

00:25:09.000 | I think Tim Scott is good on this.

00:25:11.000 | I think DeSantis is good on this.

00:25:12.000 | I think RFK.

00:25:13.000 | So I'm hoping this becomes a bigger issue in the presidential race.

00:25:17.000 | And, you know, the Biden administration with Warren and Gensler

00:25:20.000 | has not been good for Americans on this dimension,

00:25:23.000 | and it's pushed a lot of tech jobs overseas.

00:25:25.000 | How much of a crater has Sam Bankman fraud put on the industry?

00:25:32.000 | It's definitely not good.

00:25:34.000 | I mean, it reminds me a little bit of Mt. Gox when that happened back in the day.

00:25:38.000 | And luckily, people turn the page on this thing,

00:25:41.000 | and they move on after about a year, and so I think we're coming up on that.

00:25:44.000 | Have you met-- Did you meet with him?

00:25:46.000 | I know he wanted to do business with you.

00:25:47.000 | At what point did you realize this guy was a complete sociopathic fraud?

00:25:51.000 | You know, I wish I could have told you that I knew in advance.

00:25:57.000 | I had met him and spent time with him here and there periodically.

00:25:59.000 | You didn't know, right?

00:26:01.000 | Sorry?

00:26:02.000 | Didn't get a sense when you met him?

00:26:03.000 | No, I got the sense that he was very smart

00:26:05.000 | and that he was perhaps a bit reckless and young,

00:26:08.000 | and I wondered at times, like, where is he getting all this liquidity

00:26:11.000 | to go write these huge checks and everything?

00:26:13.000 | I knew what our budget was, and I was like, I don't know where he was getting the money.

00:26:16.000 | Customer accounts.

00:26:17.000 | Apparently.

00:26:19.000 | Everyone said the same thing about Bernie Madoff, by the way.

00:26:21.000 | No one knew when they met him.

00:26:23.000 | No one meets the guy and says, "I think that guy's a fraud."

00:26:25.000 | And what about CZ?

00:26:26.000 | There's, like, every few months, there's something on Twitter that blows up

00:26:29.000 | about how Binance is just-- there's something amiss.

00:26:32.000 | Yeah.

00:26:33.000 | You know, I don't want to comment on that.

00:26:35.000 | I've met CZ a number of times, too,

00:26:37.000 | and I think he's done a lot of good things for crypto,

00:26:39.000 | but I don't have any inside information into what's going on inside their house,

00:26:43.000 | so we'll have to see.

00:26:44.000 | Ryan, I just want to say, you know, it's very brave, I think, the work you're doing.

00:26:48.000 | Both in terms of-- and we talked about it on the pod.

00:26:51.000 | People can refer to the episode about, you know, the cancel culture

00:26:54.000 | and hysteria, you know, in people's Slack rooms,

00:26:58.000 | and you getting focused and being a mission-driven CEO

00:27:03.000 | that really wants to do good for people in the world who--

00:27:06.000 | You and Toby, the two most seminal business CEO essays of the last two years.

00:27:10.000 | Yeah, and I think you turned the tide and made people really focused on what matters,

00:27:15.000 | which is building products that help humanity,

00:27:17.000 | and for that, we thank you.

00:27:18.000 | Thank you.

00:27:19.000 | [applause]

00:27:22.000 | [music]

All-In Summit: In conversation with Brian Armstrong

Chapters