Why JPMorgan & PNC Bank Chose Coinbase to Offer Crypto Services! with Shan Aggarwal

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Today, what we hear is all of their customers are saying, hey,
I want access to crypto. So if you're in that
situation all of your customers are asking you about access
to crypto, there's only so long where you can say no, actually,
we don't think that's a good thing.

Speaker 2 (00:15):
Right Like, at some point you have to listen to
your customers.

Speaker 1 (00:18):
Right And the groundswat now has gotten so loud that
we're starting to see that transition pretty significantly.

Speaker 3 (00:32):
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visit the link in the description. Hey, folks, welcome into
the Thinking Crypto Podcast. I'm your host, Tony Edward and
joining me today is Sean Agbawah, who is the chief

(01:38):
business officer at Coinbase. Sean, great to have you on.

Speaker 2 (01:43):
Thanks for having me. Excited to be here, Yeah, Sean.

Speaker 3 (01:46):
Recently Coinbase partnered with JP Morgan and PNC Bank. These
were some of the major headlines, and I want to
dive into those relationships and how you'll be working together.
But let's kick it off with your background. Tell us
a bit about where you're from and your professional BACKGD.

Speaker 2 (02:00):
Yeah.

Speaker 3 (02:01):
Sure.

Speaker 1 (02:01):
I grew up in California in San Jose, a small
town called Los Gatos. I spent most of my childhood there,
lived in LA for a while. I did my undergrad
at UCLA, and then after college I worked in strategy
consulting as well as venture capitoling. Growth equity before joining
Coinbase in twenty eighteen.

Speaker 2 (02:24):
At Coinbase, I've.

Speaker 1 (02:26):
Helped build out our corporate development and coin based ventures functions,
all of our M and A and investing efforts. I
led investor relations for a period of time, all the
way through our direct listing in twenty twenty one, and
then now I oversee all those functions along with business development, strategy, execution,
and analytics.

Speaker 3 (02:47):
What was your first encounter with bitcoin or crypto and
what was your aha moment?

Speaker 1 (02:53):
My Aha moment was in twenty seventeen. I was at
that time working in early stage venture and this was
kind of the era where neo banking was on the rise,
and the firm that I was at had invested in
Venmo in a company called Acorns, and we were looking
at all of the new neo banks that were cropping up,

(03:13):
and I thought it was fascinating because this was the
real first consumer innovation that we had seen from a
tech perspective in quite a while. But as you get
under the covers, you realize that a lot of these
applications innovated on UI and the user experience, but the
actual underlying plumbing was still the same and was relatively antiquated,

(03:37):
and so I read the Ethereum white paper and.

Speaker 2 (03:40):
That was kind of like my aha moment where you know.

Speaker 1 (03:44):
The way I thought about it is you could effectively
have a financial system that operates like an operating system, so.

Speaker 2 (03:49):
Almost like iOS or Android.

Speaker 1 (03:51):
You could have that for financial use cases and then
in the future broader use cases.

Speaker 2 (03:58):
So kind of bit the bug there, went down.

Speaker 1 (04:00):
The rabbit hole, and then in twenty eighteen wanted to
dive headfirst in.

Speaker 2 (04:06):
So that's why I joined point base.

Speaker 3 (04:08):
Very nice and tell us a bit about your role
and you know, what's your day to day Like is
it building these relationships with financial institutions bringing them into
the fold of coin basis services.

Speaker 1 (04:19):
Yeah, So, like I mentioned, I oversee all the business functions,
data execution, and analytics. So I spent a lot of
my time thinking about coinbasis strategy, both at the corporate
level and for each of our different business lines, thinking
about what we should prioritize, why do we prioritize them,
and then you know, how do we position ourselves best

(04:39):
to win in those areas? And then also from an
external perspective, forming those relationships with large external partners that
you know, we can provide our services to and then
reciprocate value in some way, and so that includes you know,
this year, we've done quite a few partnerships with a

(04:59):
lot the institutional players that you mentioned, like JP Morgan
and the NPNC, but even on the technology side, with
companies like American Express we partnered with to launch the
Coinbase one credit card, with Shopify, who has integrated our
new on chain payments protocol for enabling their millions of
merchants to accept USCC as a form of payment, and

(05:22):
any others.

Speaker 3 (05:24):
That's incredible and congrats on this success. And I mean
these are very big players in the tradi fire world.
Tell us a bit about how that in pitching them,
How receptive are they? Is it more easier now than
it was years ago? Because crypto is matured as an
acid class to technology, there's a clear delineation as to
the benefits and how you can use it. Talk to

(05:47):
a little bit about that and maybe the dichotomy how
it was years ago versus now.

Speaker 2 (05:52):
Yeah, it's a night and day difference.

Speaker 1 (05:54):
You know, Like I mentioned, I've been in this space
for since twenty eighteen, and for a long while there
it sort of felt like you were chewing glass, you know,
trying to have these conversations, really really pushing the boulder
up the hill. And in the last twelve months the
dynamic has changed completely, and I think a lot of
that is due to regulatory clarity that we've started to see.

Speaker 2 (06:20):
Now over the last nine months.

Speaker 1 (06:21):
Obviously, the Genius Act was a huge milestone for the
industry and gave a ton of credibility to the space,
and I think just collectively, over the past years, you've
seen more and more folks who have sort of made
the crossover where they might have been initially cryptoskeptics, but
they now are taking efforts to actually cater to the

(06:42):
crypto ecosystem and seeing it for the benefits of the technology,
which is really exciting for me, right And you know,
we don't hold that over to anybody. It takes different
people different periods of time to sort of like get it.

Speaker 2 (06:57):
But it really seems like over the last twelve months,
the idea.

Speaker 1 (07:02):
That you know, blockchains and crypto provide a more fair, transparent,
and globally accessible infrastructure for a lot of financial transactions
has started to take a hold, and you hear a
lot of talk about tokenization and tokenization of different asset classes.
You know, we helped start USDC in twenty eighteen, and

(07:25):
that was really one of the first instances of quote
unquote tokenization, right, it was tokenizing a dollar at that point,
and I still remember in twenty eighteen when we did that,
a lot of people would ask the question, well, what's
the benefit of tokenizing a dollar, like why would you
want to do this?

Speaker 2 (07:39):
Right, like what's wrong with the dollar?

Speaker 1 (07:42):
And now it just sort of clicks and people are realizing, well, hey,
you can actually leverage tokenization to other asset classes, to
public equities, to private equities, to fixed income, to corporate debt.
And I so I think the catada the out of
the bag at this point, and the conversations are a
lot more productive. It's switched from pushing the boulder uphill

(08:05):
to pushing the boulder downhill, which generally feels like a
better place to be in.

Speaker 2 (08:12):
So that's been good.

Speaker 3 (08:13):
Oh absolutely, I bet it makes your job and your
life easier, right, And you know, do you think part
of it, in addition to the regulatory clarity and the
change in the environment around crypto and the US is
these firms also they have to make sure they're paying
attention to disrupt the technology, or they are at the

(08:34):
risk of being disrupted. You know, the most popular case
I think is Netflix and Blockbuster, right, And that doesn't
happen overnight, but over time they start to lose market share.
If I can go to stable coin route, if I
can earn better yield on stable coin platforms, or whatever
it may be, why do I need a traditional checking
account necessarily?

Speaker 1 (08:54):
Yeah, I think basically, you know, when you're big as
a company or as an entity in space, it's really
easy to look at new things that are small and
be very dismissive of them.

Speaker 2 (09:05):
Right. They kind of look playful, They kind of look
like a joke.

Speaker 1 (09:09):
And a lot of these things often start out in
a way that seems quote unquote like unserious, right, And
I think that there's a little bit of a playful
element to that. But the effect is it makes it
easy for a lot of people to not spend the
time or energy understanding like what is the actual technological innovation?

Speaker 2 (09:31):
And so you see these things sort of slowly build
up over time until they get too big to ignore. Right.

Speaker 1 (09:37):
They sort of like cross the chasm and the dynamic
changes where the incumbents of the bigger companies realize like, oh,
I actually have to do this, and if I don't
do this, then I will potentially be completely disrupted, right,
And so, you know, I think there's a lot of
I won't name any names, but there's a lot of

(09:58):
entities that for a long time said, hey, we don't
want to offer crypto trading to our customers, right because
we don't believe in crypto assets. You know, we hear
a lot of rhetoric about bitcoin and ethereum and stable
coins and all of this kind of stuff. But today
what we hear is all of their customers are saying, hey,
I want access to crypto. So if you're in that

(10:20):
situation all of your customers are asking you about access
to crypto, there's only so long where you can say no, actually,
we don't think that's a good thing, right, Like, at
some point you have to listen to your customers, right,
And the groundswat now has gotten so loud that we're
starting to see that transition pretty significantly, right. And you know,

(10:43):
just in the past year, we've had a number of
announcements as we're trying to build this business.

Speaker 2 (10:48):
We call it crypto as a service.

Speaker 1 (10:50):
Where many companies know Coinbase primarily for our first party applications,
so they're applications that you use, probably Tony I use
a lot of consumers around the world, as well as
a lot of edge funds, asset managers, and otherwise. But
underneath that, we've all we've built a lot of infrastructure
to enable those products. We've built secure custody, we've built

(11:12):
trading infrastructure, we've built staking infrastructure, and we've made that
into a platform that others can access and use to
offer crypto capabilities to.

Speaker 2 (11:23):
Their end users.

Speaker 1 (11:24):
And so now what we're seeing is like with this
ground swell, a lot of those entities are coming to
us and they're saying, hey, I want to offer crypto
to our my users too, and we're super happy about that.
That's great, and we've kind of been building to this
moment for quite some time, and we have all of
the technology and that platform ready in a turnkey fashion

(11:46):
to basically turn Krypto on for a lot of those
third parties as soon as they're ready.

Speaker 3 (11:51):
And in that software as a service and these products,
this products suite is it kind of like a white
label thing where JP Morgan and we'll talk a bit
more about this. They can just go offer crypto trading
and the folks, the consumer doesn't necessarily need to know
coinbase is powering the system.

Speaker 2 (12:06):
Yeah, that's exactly right.

Speaker 1 (12:08):
And there's many large entities out there today whose crypto
services are already powered by coinbas Like the most notable
is black Rock, and all of the ETFs that you'd buy,
you might buy those through Robinhood, Charles Schwab e Trade
or a third party broker you don't actually know, but
all of the trade execution and custody is actually powered

(12:30):
by coin based on the back end, and coin based
custody is over eighty percent of the colin and ethereum
that underlies a lot of those ETFs. So, like, to
your point, it is white labeled, it's not branded as
coin base, and that's okay. We're totally fine with that
because we think about it as really growing the pie.
Where you know, five or ten percent of people could

(12:51):
access crypto in their whatever financial accounts that they were
using two years ago. If we can get that up
to fifty percent or one hundred percent in the next
three to five years, we think the space is going
to grow by an order of magnitude and you know
that's ultimately what our mission is as a company.

Speaker 3 (13:10):
I mean, kudos to you guys for doing that, because
it allows a lot of these institutions to hit the
ground running. They don't have to spend maybe a couple
of years doing R and D and building out their
own services. Coinbase has already established these products, they've matured,
you've gone through the fine tuning, and it's just ready
to go, like you said, turnkey.

Speaker 2 (13:29):
Yeah, exactly.

Speaker 1 (13:31):
So I'm curious is that's something that you're hearing or
seeing in conversations with folks in the space as well.

Speaker 3 (13:38):
Yeah, for sure. I've spoken to quite a few of
your partners and things like that, and really great to
see how you guys have grown. I started using Coinbase
back in like twenty sixteen, so as from a small exchange,
now it's publicly trade a company with all these great services. Yeah,
you're getting, you know, the clients and very big clients

(13:59):
to use your service.

Speaker 2 (14:00):
Yeah, it's an exciting time. We're very pumped about it.

Speaker 3 (14:04):
Let's talk a bit about the specific partnership. So JP
Morgan talked to us a bit about which services they're
going to use, and I know there's like multiple things.
There's the tokenization on baz, yeah, talks of crypto trading
and much more.

Speaker 2 (14:19):
Yeah.

Speaker 1 (14:19):
So JP is one of the most forward looking banks
and financial institutions on all things crypto and digital assets.
And you know, they have a very long history of
innovating in this space, building out you know, their own
blockchain and a number of different efforts. And we have
a long relationship with JP Morgan. We've been working with
JP Morgan for many years. We worked with them closely

(14:41):
on our I PO and a variety of corporate banking services.
But most recently the two announcements that we had was
one that's focused on our consumer business as well as
JP's consumer business, Chase, where we've partnered to improve consumer
access to crypto for all of JP's customers. And there's

(15:06):
really three primary dimensions to that. The first is that
Chase customers will be able to use their credit cards
to purchase USDC.

Speaker 2 (15:15):
On plan based.

Speaker 1 (15:16):
This is actually that might sound like a huge thing,
but for a long time, credit cards have not supported
crypto purchases.

Speaker 2 (15:24):
And as you know, in the.

Speaker 1 (15:26):
US, particularly, credit cards are the predominant form of payment
that consumers use. So that's The second is that Chase
card holders will be able to redeem their Ultimate Rewards
points for balances on Coinbase that they can use to
fund purchases, so they can take that value that they've

(15:47):
earned from their spend elsewhere and translate that now into crypto,
which we believe is a better form of store of
value for the long term. And then the third is
that we're exploring it direct bank integration with Chase so
that customers can directly link their Chase accounts to more
seamlessly transfer data and funds between Chase and quite bass.

(16:12):
That's on the consumer side, and separate from that, we're
also been working very closely with the JP team on
tokenization efforts to tokenize JPMD, which is a tokenized bank
deposit on Base.

Speaker 3 (16:27):
You know, I was smiling and shaking my head earlier
as you were saying those things, because having been here
since twenty sixteen, I remember the comments from Jamie Dimond.
I remember, you know, the red flags being popped up
if you use your credit card to invest in crypto.
Now it's like it's okay.

Speaker 2 (16:44):
Yeah, slowly then suddenly that I like to say.

Speaker 3 (16:48):
Absolutely, that's incredible, and you know it's going to help
a lot of people come on chain so to speak,
right to be able to participate in Web three and
a great place. I love that it starts with stable coins.
You can access US d C and sometimes it's just
something that simple and that can open up your or

(17:08):
you know, open the door for you to enter into
Thisay's acid class. So I really love that.

Speaker 1 (17:13):
Yeah, we're super excited about it, and for you, I
think there's a lot more that we can and we'll
do together with JPS. So you know, typically we stage
these things out, but it's a we have a long
standing relationship with JP, so this is just a start
and we're very hopeful that we can continue to expand
on the relationship.

Speaker 3 (17:31):
Hmm. And then the other bank that you're working with
is P and C. It tell us about that and
is it a similar relationship with JP.

Speaker 1 (17:39):
Morgan, Yeah, similar in some ways different than others P
and C.

Speaker 2 (17:44):
It actually falls into.

Speaker 1 (17:45):
That camp that I was talking about where you know,
they're hearing demand from their clients that want access to crypto,
and so P and C and Coinbase are going to
partner to enable crypto buy sell directly through P and
C to their end customers. And so that'll be a
white label type relationship where coinbas is going to leverage

(18:07):
and provide the technology that we've built for secure custody
and trade infrastructure, and power that through P and c's
platforms so that their users can directly access crypto.

Speaker 3 (18:22):
You know, do you think actually we back up, I'll
edit this part out, but to confirm you will be
custodying the assets, not the banks will be custodying it, right, Okay,
interesting do you think at some point, after using your
service and there you figure out the logistics of everything,

(18:43):
they may want to start their own uh, you know
trading and the look we mentioned earlier, that might take years.
But do you think that? And I guess it is
that's the risk of business, like you know, just can
do that at any point.

Speaker 2 (18:56):
Yeah, look it's possible.

Speaker 1 (18:58):
Ultimately, the custody technology takes many, many years to develop,
and even once you develop, it's constantly changing because hackers
methodology is evolved all the time. So you know, point
base has built this foundation for over ten years and
we're constantly on the bleeding edge upgrading our own methods

(19:19):
for key management and secure custody. So we believe that
in that relationship. You know, that is the best in
class platform that if it's not a core competency, it's
really outside of the scope to staff a huge team
to develop that denovo. But I'm sure someone will try,

(19:39):
and we wish them the best of luck on trying that,
Like we know how hard it is, so we're very
confident in kind of the defensibility of that layer.

Speaker 3 (19:50):
Talk to us a bit about how you're preparing for
the volume of transactions you may have to deal with
with building all these partnerships. You have more on and
off rams, more bridges being built to Coinbasis services. How
are you looking to scale latency, whatever it may be
to handle?

Speaker 2 (20:07):
Yeah, yeah, a good question.

Speaker 1 (20:09):
You've been in crypto announceince twenty sixteen, so you remember
the sign of the signal, like we're in a bear
market or a bull market.

Speaker 2 (20:17):
Is coinbas it down?

Speaker 1 (20:19):
You know, that's like, oh, it's a bull market coin
bases down, and you know, it's kind of funny. It's
funny for us to laugh on now in retrospects, right,
but like it was painful at the time and part
of Coinbas's growing pains as a company, But we've invested
significantly in just scaling out our technology platforms to support

(20:39):
orders of magnitude more scale. And we feel very confident
now in our foundations. And you know what does that
tactically mean? Like, over the last few years, we've completely
rewritten our matching engine and how we load balance orders
on the exchange. We've dissected what used to be a huge,

(21:00):
monolithic internal system into a ton of micro services. So
these are just efforts that we recognized and made a
very deliberate choice to invest in to enable orders of
magnitude more scale. So this is a constant effort will
continue to invest in these things because again, like I mentioned,

(21:24):
all these entities, all of this transaction volume is going
to come.

Speaker 2 (21:26):
In, So.

Speaker 1 (21:28):
The peaks that you plan for will seem like values
in retrospect at some point. So we're always kind of
trying to climb. The next time there was.

Speaker 3 (21:37):
An announcement that coinbase is looking to launch token iszed
stocks and prediction markets as well, will these banks be
able to access those products and in the same way
as they do the regular assets like bigcoin and ether
and so forth.

Speaker 2 (21:52):
Yeah.

Speaker 1 (21:54):
We generally when we launch products, especially as a first party,
the way that we think about it is coin based
just sort.

Speaker 2 (22:00):
Of customer number one.

Speaker 1 (22:02):
So we want Coinbase to offer those to our users
through coinbase. And why is because you know, historically we've
kind of been on the bleeding edge of offering these
products and it's a sign of product market fit. That's
like where we have our own users, our own distribution.
But then once we prove that product market fit out,
we want to make those products available to third parties

(22:23):
as well. And so as generally our principle for how
we develop new products at coinbase, and it'll be the
same for future products like the ones you mentioned.

Speaker 3 (22:35):
Yeah, that definitely makes sense. You want to test the waters,
make sure everything's working, then branch out to your clients. Now,
there were other announcements and I hope I'm pronouncing this right.
Open Markets and Liquiefy acquisition as well. Tell us a
bit about that and how you'll be working together and
so forth.

Speaker 2 (22:55):
Yeah, totally.

Speaker 1 (22:55):
And then today is actually a big milestone day because
we just anounce the closing of our acquisition of dare
a bit as well very early this morning.

Speaker 2 (23:05):
So yeah, a lot of good momentum on the M
and A side.

Speaker 1 (23:10):
So Open Markets is a team that was one of
the early innovators building an on chain perpetuals protocol, and
like we have talked about for our business for Coinbase,
we started mostly off chain, but providing access to customers
to hold crypto assets and buy and sell them. But

(23:31):
with Base and TBA and increasingly more of our efforts,
our goal is actually to pull more of Coinbase's business
on chain, and over time we anticipate that that will
be basically every layer of Coinbase, including our exchanges, markets,
all that kind of stuff, and the Open team is

(23:52):
going to join our efforts. That's working on verified Pools,
which is a AYC permissioned decks that's built on Base,
and the reason that that's differentiated or important is because
it's KYC permissioned, which is particularly important for trading of
regulated assets or real world assets that might find their

(24:14):
way on chain. So you know why, you while you
might be able to purchase the long tail of cryptotokens
on permissionless dex is without KYC, we do think that,
you know, interregulated ecosystem, certain assets like securities and the
like will likely require KYC of participants to actually engage

(24:34):
in those markets, and so we're excited to bring the
open team together with our verified pool's effort to advance
that vision. Liquefy, which you mentioned, is the leading token
table management provider, So you know, every startup uses a
cap table provider like a Karta or a share works

(24:54):
or something like that to manage.

Speaker 2 (24:58):
Ownership of equity in the company.

Speaker 1 (25:01):
And there's a similar idea for token based projects, which
is we need to understand who owns the tokens and
what are the vesting conditions for different token holders? Are
their tax considerations and withholding that's required if I'm paying
employees and tokens and things like that. And so we've

(25:22):
acquired liquefy and are integrating that into our institutional platform
to provide that service directly to a lot of those
token projects that use coinbases that are for custodian.

Speaker 3 (25:36):
Really great stuff. I mean, you guys are making some
really big moves and I love it. It's all it
all makes sense. Talk to us a bit about with
this twenty four to seven market. It never closes, right,
it's always on, and it's a truly global market. How
are you handling like staffing and will you use like

(25:57):
AI agents to help manage some of these things when
you have to sleep right, yeah, on and so forth.

Speaker 2 (26:03):
Yeah, very topical, very timely.

Speaker 1 (26:06):
You know, I think we are investing deeply in making
coinbas an AI native company, and it permeates basically every
function across the organization. We actually have an effort we
call them AI Acceleration Pods that we're going to deploy
to function by function to actually re architect a lot

(26:28):
of our processes with AI tools at the core.

Speaker 2 (26:34):
And this is going to be an ongoing effort.

Speaker 1 (26:36):
But when you talk about how do you meet the
moment for both a twenty four to seven market but
also just for rapid scale, we don't believe that the
appropriate way to grow is just simply by adding more heads,
but it's also just investing in what we have internally
and improving the ways that we work so that we're

(26:58):
executing more efficiently and in more automated fashion.

Speaker 2 (27:03):
And you've seen some of these tools come out to.

Speaker 1 (27:06):
Already for you know, over a year, most of our
frontline consumer response has been through an AI chatbot that's
been developed both in the house and using their party
tools that's fairly robust, and we're rolling out more things
on that dimension to continue to up level this.

Speaker 2 (27:25):
It's also very applicable to our compliance.

Speaker 1 (27:30):
Efforts as we think about, well, how do you predict
and forecast transactions that might be bad transactions or good transactions.
So yeah, huge area of focus for us, probably one
of our top five priorities overall.

Speaker 2 (27:46):
Operationally as a company.

Speaker 3 (27:48):
I love that. And I was recently talking to a
lad kind of a CEO of Robinhood about this. I
would love to log in to my apps. I use Robin,
I use Coinbase as well. But let's say log into
my Coinbase account and there's an AI I don't know
what do you call it, character or whatever? It is,
some sort of a bottle whatever, you know, whatever. I

(28:10):
want to customize it and it's good morning, Tony, or
good afternoon, Tony. Here's what's going on with your portfolio,
bam bam, bam bam. Here's some suggestions, here's some things
you should know about. And it's very customized to my
portfolio and how I look at the market and the
things I'm interested in, and it's very personalized. I can't
wait for that day.

Speaker 2 (28:30):
Yeah, do you want to work at coin based, Tony?
I think I think you got a good idea. Yeah,
that's a good one.

Speaker 1 (28:35):
I think that you'll see something like that in the
not so distant future. And you know, it's not too
hard to imagine how that interface ultimately becomes sort of
like the command line for how you manage your financial assets, transactions,
daily lives, right, And so I think every company will

(28:56):
go through this transition. We're trying to ensure that coinbas is,
you know, among the first and on the forefront of that.

Speaker 2 (29:03):
But yeah, I think you see the future to some degree.

Speaker 3 (29:08):
Yeah, I would love that. It would just make my
life easier as someone who is investing in crypto's thoughts
and much more. And I think a lot of people
will find that helpful, especially like let's say, Crypto Curious
or Crypto Nubies. We're like, I don't know what the
hell is happening here, but I want to get some
bigcoin in my profile. I want to get some etherorem
But if the AI can you know, help break things

(29:30):
down bite sized pieces, and you know, it's not folks
drinking from the fire hose, but it's helping them, it's
holding their hand along the way.

Speaker 2 (29:39):
Totally. Yeah, exactly. It's like an advisor or co pilot
in some ways.

Speaker 3 (29:45):
Yeah, yeah, yeah, that'd be really great. Well, well, Sean,
I hope you give me credit for that one when
it goes.

Speaker 1 (29:51):
Yeah, yeah, yeah, yeah, Well, I mean I might try
to hire you after this.

Speaker 3 (29:56):
You know, with all these great services. You know we
talked about the bank partnerships, financial institutions, many of them
have been US based. Are you planning an international expansion
on that front?

Speaker 2 (30:07):
Yeah, good question. International is a huge effort for US.

Speaker 1 (30:12):
We've invested in international for for many years, and we
have a fairly thriving business in the UK, Europe, Canada, Brazil, Singapore.
We've been recently making efforts to expand Coinbase into India,
which I'm excited about, and then also Australia. And then
with the derivid acquisition, Derrivid is actually solely x US

(30:34):
and so actually like takes Coinbase into many new markets
through a market leadership position, and so you know this,
the interest that we're seeing is definitely not restricted to
the US. We see a tremendous amount of interest from banks, brokerages,
FinTechs across a lot of the developed.

Speaker 2 (30:54):
Regions around the world.

Speaker 1 (30:56):
And you know, we've done a lot of work to
extend those same technology platforms to those regions and build
the regulatory foundations to actually be able to cater to
those types of partners there.

Speaker 3 (31:10):
And then talk to us a bit about your I
don't know if you can share it is, but your
plans to go into let's say, developing countries or countries
where people don't have proper access to financial services. But
let's say you have a smartphone, right, I think a
lot of people they don't have a computer. Everybody have
a smartphone and Coinbase offering these great services, being able
to access US dollars, stable coins, and so forth. What's

(31:33):
your strategy to, let's say, go to certain countries in
Africa or whatever it may be, or in Latin America
where they can get access to these things.

Speaker 2 (31:41):
Yeah.

Speaker 1 (31:41):
Well, the beautiful thing about crypto and a lot of
these on chain products is that they're globally available and
they're permissionless, right, like, anybody can sign up, anybody can
use them.

Speaker 2 (31:50):
All you need is a smartphone.

Speaker 1 (31:52):
And internet connection, and Base, as an example, is available
to everybody around the entire world. And as a very
I think community not just in the West and in
the large developed centers, but in every pocket of the world.
And then we recently launched the Base app, which is

(32:13):
more of a consumer facing self custodial wallet that's similar
to the protocol.

Speaker 2 (32:18):
Is available everywhere around the.

Speaker 1 (32:20):
World, and so we're really focused on those on chain
products and being engaged at the ground floor in a
lot of these developing markets and developing countries. We have
a team of over twenty five Based ambassadors that are
embedded locally in various community communities that are really focused

(32:45):
on engaging both with developers that are building applications on
Base and helping make that process as seamless as possible,
but then also introducing the Base app to a lot
of users, which you know, we think about the Base
app as what we hope will be sort of like
a mainstreaming moment for crypto, where you can have a

(33:07):
fully on chain application that is fairly robust and functionality.
You know, you have a full featured social network, payments, trading, messaging,
all directly in that app and all in a permissionless
and on chain way, and that hasn't existed yet. So
in true coin based fashion, we've kind of taken that

(33:29):
step first, and now we're doing the hard work from
a a baud in a gut to market perspective to
introduce people around the world to those products.

Speaker 3 (33:39):
Yeah. Absolutely, And I know it's going to take time,
and you know, to your point, you've got to have
those ambassadors on the ground. And the education part is huge,
right because a lot of this will be new to folks.
But I love it, you know. I that is something
that very much is a big interest to me because
I have family overseas. I would love to send them
stable core the USDC versus money Gram or Bang Transfer

(34:04):
and they take huge fees, but if I could send
them some stable coins and they can just hold it
if they want and earn the yield or whatever you
suspend it.

Speaker 1 (34:12):
Yeah, yeah, yeah, Well, you know, if you need an
invite to the base app, let me know and we
can make that happen.

Speaker 2 (34:20):
But you know that you can send and receive USDC.

Speaker 1 (34:23):
Directly through there and repay rewards on those on that
USDC as well.

Speaker 2 (34:28):
So it's a pretty attractive value proposition.

Speaker 3 (34:33):
Oh for sure. Now, Sean, you went through a lot,
But I'm going to ask anyway, what's on your roadmap?
You know, what can we expect in the next six
months or so?

Speaker 2 (34:41):
Yeah, totally.

Speaker 1 (34:42):
So Number one is we talked a little bit about
in our most recent earnings called that we're building out
what we call the Everything Exchange. So Coinbase is historically
been known for crypto assets, but we're going to broaden
that out to support other asset classes, including equities and
tokenized equities, prediction markets. So I think that you can

(35:02):
expect to see an evolution from pointbas especially as the
lines blur between what's a crypto product and what's not
a crypto product, into providing access to our customers to
anything that they want to trade or use. So that's first.
The second is bringing more of our users on chain,

(35:27):
but through a very seamless and intuitive product experience that
feels like you're traditional banking application or brokerage application. And
we call this the DeFi mullet, where you can have
on the front end just a mobile application that looks
like the coiningess application I get access to un chain

(35:49):
financial services. And we do that by through some clever
engineering and technology on the back end that actually seamlessly
migrates assets into a self custodial wallet, and then well
once it's in a self custodial wall, it can benefit
from on chain financial services. So we launched in partnership

(36:12):
with Morpho, which is one of the leading barrow lend protocols.
The ability for users to take out USBC loans against bitcoin,
and you know, the great thing about that model is
we're not taking any like balance sheet risk.

Speaker 2 (36:29):
There's no trust in Coinbase in that.

Speaker 1 (36:33):
Scenario because we're simply providing a technology interface between the
protocol and the user.

Speaker 2 (36:40):
But it's truly permissionless. So I think you can expect.

Speaker 1 (36:44):
Us to integrate more financial services, the ability to lend
out assets. The We recently enable users to trade deck
assets directly through the coin based application. But the broader
theme here in the bigger picture is just again blurring
the lines where we're making it more accessible for everyday

(37:06):
individuals and users to access on chain financial services in
service of our mission to bring the wall on chain.

Speaker 3 (37:15):
That's great. Well, I'm looking forward to those updates and
we'll have to have you back on as you know
they come to fruation. I did want to get your
take on, you know, the general crypto market. Obviously we
got like the market structure coming up the vote in September.
Hopefully that everything goes according to plan. But White House
cryptos are said around the end of September, I think

(37:36):
it bleeds into October. What impact do you think that
we'll have on the market, you know, maybe similar to
the Genius Act, just allowing more people to innovate and
build and so forth.

Speaker 1 (37:47):
Yeah, I think, you know, in many ways, clarity could be.

Speaker 2 (37:52):
Just as if not much more impactful as Genius. Genius
was the first, and so it's obviously a huge milestone.

Speaker 1 (37:58):
But if you think about what has really inhibited a
lot of development of cryptotechnology in the US in particular,
it's been a lack of regular of clarity around how
to classify crypto assets and what the requirements are for
various crypto assets. And so the clarity UH legislation, you know,

(38:21):
is really focused on market structuring and forming a very
clear definition for what is a commodity, what is a security,
what is something totally else? And with that in place,
I think that the regulators, the SEC, the CFTC and
others will have much clearer guidance on how to define

(38:42):
the rules and for how that is in force, both
in the US and beyond. So, you know, we're very
much looking forward to that over the coming quarters. We
think it would be a huge market of credibility for
the crypto space.

Speaker 2 (38:58):
It would also be great for innovation generally.

Speaker 1 (39:02):
You know, as part of one of my hats that
I wear at pen Bases, I helped start and run
point as Ventures, and you know, for many years there
it was a very stark environment where you'd speak with
the founder and a lot of really great founders were
basically just choosing not to start DeFi companies because they
were scared. They didn't want to take on the sec

(39:24):
as a small company. And I think that's totally valid,
and it's also a shame because you know, in the
US we are very prone to innovation, and I generally
believe that the more companies that exist, the more companies
that start, the more experimentation that happens, the better outcomes
that we will get. Not every company will work, obviously,

(39:46):
but you learn from trying new things and so encouraging
that is really important.

Speaker 3 (39:51):
Yeah, well said it seems like with and I was
thinking about this this morning, all of the respect inspective
on rams that we need for this acid class to
grow are here. Coinbase services helping the traditional banks and
credit card companies and much more to be able to

(40:11):
on Ram customers Trump just sign an executive order opening
up for one case to be able to participate participating
in crypto you have the ETPs. Of course, are there
other bridges that need to be built or is that
is that the final boss?

Speaker 1 (40:27):
You know, the big bridge that I would point to
that's probably not in a lot of people's radar. Is
right now stable coins are not treated as cash equivalent.
And what that means is that a lot of financial plumbing,
clearing houses and such, when they take a stable coin,
if they can take a stable coin to begin with,

(40:47):
they usually don't credit them one to one with a dollar,
and so that deters the usage of a stable coin.
So in terms of a bridge, what we would love
to see is that you know, these products that are
equivalent to a dollar or treated as such, because that
increases adoption and further penetration within the traditional financial system

(41:10):
where you could see a tremendous amount of global drivative
volume that uses USDC as a collateral as a form
of collateral, or Bitcoin as a form of collateral in
the future.

Speaker 2 (41:22):
So that would be.

Speaker 1 (41:23):
Another example of a bridge between how capital markets works
today and the crypto markets. And again just linking those
two things I think it creates a step function increase
in global adoption.

Speaker 3 (41:39):
Yeah, that definitely makes sense. I didn't I didn't think
about that and how important that is, and I wonder
not to overthink it. But you know, by twenty thirty,
are stable coins fully running in all the rails, the
payment rails, even in domestic and we don't the end
consumer doesn't need to know about it, kind of like

(42:00):
how we're talking here. We're not worried about the VIP
and all that, right, just it just works and we're
able to do what we're able to do. We have
lower fees, instant settlement, maybe better return yield and things
like that and interest. You think by twenty thirty stable
coins are powering all the payments.

Speaker 1 (42:19):
Yeah, powering all the payments is a big statement, I
would hope. So I think that you will definitely continue
to see permeation into the financial system. And again I
think that brought the broad theme is there's a blurring
of the lines, right, Like even the term stable coin,
it's a digital dollar, right, so like over time you

(42:40):
might just call stable coin a digital dollar, and you
have dollars, you have digital dollars, right, It's like you
have mail you have digital mail, we call it email, right,
and so I think even the nomenclature will evolve to
the point where I think right now a lot of
people think about them as like in two different buckets.
It's like I have dollars and I have stable points,

(43:01):
but over time that's just one bucket, right, that's cash equivalents.
So once you have that, then when you're making a payment,
you know you're not thinking, oh, I want to use
I want to go out of my way to use
a stable point for xoy z. It's just what's the
lowest cost, what's the fastest, and what's available and accessible
to me. And I think once we get to that world,

(43:24):
I feel very confident in the technological and underpinnings of
stable points to actually be able to win a large
share of payments.

Speaker 2 (43:32):
And so yes, one thing that we do look at.

Speaker 1 (43:36):
Is if you look at global total payment volume TPV,
like what the percentage is that is denominated in the
stable points, And it's small today, but it's growing very steadily,
and it's growing very rapidly. And I think if you
look at a chart for the growth in car usage
for payments, isn't a comparable example like you'll see a

(43:57):
similar arc, and we expect that you'll see some on
that dimension over the next four or five years.

Speaker 3 (44:05):
Well said, yeah, to the point of traditional mail versus email.
That's a great analogy. Yeah, I'm very curious to see
how this all plans out, but it's just gonna have
to be patient and watch it. Sit back and watch
it unfold.

Speaker 2 (44:18):
Yeah.

Speaker 1 (44:18):
Well, you're you're in the center of it all, So
now's the best time to be in the space and
you have a bird's eye view.

Speaker 3 (44:26):
Sean, great stuff. I got some wrap up questions here
for you. First, if you could create your own metaverse,
what would the theme be?

Speaker 2 (44:36):
My own metaverse? What would the theme be?

Speaker 1 (44:38):
You know, I always envisioned that is sort of like
this big library, kind of like a Harry Potter library,
and it's an empty library.

Speaker 2 (44:47):
But every book it sort of like opens up a
new metaverse, right, So it's sort of like you can
like teleport to a new place and it's kind of
like a nested world there where you can sort of
like be quiet, but uh go jump into different situations
that are happening in different and alternative universes.

Speaker 3 (45:09):
Nice rapid fire questions, favorite food.

Speaker 2 (45:13):
My favorite food. Uh, you know, honestly, right now, I'm
really into just a very good steak freet mm hmm.

Speaker 3 (45:20):
Favorite musician or bad.

Speaker 2 (45:23):
I love this artist, Toroy Law. He's from He's from
the Bay Area like me.

Speaker 3 (45:30):
Nice.

Speaker 2 (45:30):
Uh.

Speaker 1 (45:31):
Favorite movie coming to America Eddie Murphy movie back from
quite a while ago.

Speaker 3 (45:39):
Yeah, I remember that my cousin I used to watch it.
It's hilarious.

Speaker 1 (45:43):
Yeah, as a first generation immigrants, it really translated in
a in a different way.

Speaker 3 (45:49):
So same first generation immigrant as well.

Speaker 2 (45:53):
Favorite book, Favorite book series. Uh, there's a series by
Eoin Colfer. It's called Artemist Foul. Also sort of in the.

Speaker 1 (46:04):
Like sci fi fictional category, but I loved It's about
this younger kid, very clever, very conniving, living in kind
of an alternate universe, and it just has these very
special powers to make magical things happen.

Speaker 3 (46:20):
Nice And when you're not working a coinbaits, what are
you doing for fun?

Speaker 2 (46:24):
Over lately? You can usually find me on a paddle
part if I can find one.

Speaker 1 (46:29):
Yeah, I don't know if you've played paddle before to
any of It's kind of like tennis meet squash, and
I'm mildly addicted to it.

Speaker 3 (46:37):
So sean absolute pleasure. Love what coinbase is doing, and
like I said, I got to have you back on
because I think you're on the front, the forefront of
getting some huge partnerships in these things and bringing in
the business to coinbase. So thank you so much man
for joining me.

Speaker 2 (46:54):
Yeah, absolutely, this is great. Thanks so much.

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