Unlock the Potential of eSignature Lawfulness for Small Businesses in United States

How to eSign a document: e-signature lawfulness for small businesses in United States

[Music] well I have the pleasure of interviewing Brian Armstrong first of all I I want to thank you for being a Visionary in this space this is the biggest economic movement of my lifetime and uh you know it it from a technology point of view it is rivaling AI uh but I think the in institutional world does not quite understand that this movement is as big as that one and there will be probably convergence at some moment in time yes both crypto and ai go through these Summers and Winters and so I keep hoping at sometime we'll have a coordinated summer of AI and crypto at the same time but we'll see that would be nice uh so let's start with um your long-term Mission uh for for coinbase for crypto generally or digital assets as we are saying more and more these days yeah well we fundamentally see crypto as a technology to update the financial system the financial system is it's slow it's expensive there's unequal access around the world and the mission of coinbase is really to increase economic freedom in the world and so we're really passionate about this idea of how do we create Good Financial infrastructure for people all over the world that enforces things like property rights and sound money and free trade and the beauty is that smartphones are now so inexpensive you can buy one for you know maybe $10 $20 in anywhere in the world the poorest people in the world now have smartphones so if you have a smartphone and an internet connection you can now have access to Good Financial infrastructure property rights the ability to earn a living make a better life for yourself and your family and that's a really powerful idea because economic freedom is kind of this underpinning of of all progress right like more people are going to try to do good things for the world if they believe they can keep the upside of their labor and America sort of takes us for granted sometimes because we were an an anomaly historically but many places in the world that's not the case um if you do manage to accumulate some wealth it could be seized confiscated from you it could be devalued via inflation and so if we're actually able to increase economic freedom globally it would have an incredible outcome in terms of like it' been the curve of progress for all human so that's really what we're hoping to do with this technology yeah and it's interesting um we're watching devaluations around the world and they're pretty massive in big countries like in uh March Egypt devalued by 40% can you imagine 40% Nigeria over the last year 50% um and uh again I think we're seeing a domino effect much like the Asian crisis in the 90s um which people may and may not remember so where do you think or what do you think the biggest obstacles are right now for you to achieve your vision well in the US probably the biggest obstacle is regulatory Clarity definitely unfortunately the US is a little behind on this uh you know Europe has already passed comprehensive crypto legislation we've seen most of the G20 is actually already drafting or has implemented crypto legislation and so there's broadly this recognition that this technology is here to stay it has incredible Innovative potential we need to make sure we prevent consumer harm things that happened with other companies and everyone's aware of and so the US uh you know I just got back from DC a couple days in DC I met with uh 12 or 13 different members of the Senate um the Senate is very eager to move on legislation now after the house passed the fit 21 Bill the market structure bill with strong bipartison support more than two-thirds of the house voted for it and so the Senate now has a couple of bills um being drafted that they're hopefully going to turn this into law whether it's in this Congress later this year or the next Congress so we've got a lot of work to do there and um it's important America gets this right in in the absence of that Clarity I probably don't have to tell all of you um there has been a bit of this turf war between the cftc and the SEC the two Federal Regulators are these Commodities are they Securities you know our point of view is that the s um underlying assets are are Commodities there could be an investment contract or something like that on top of it uh that is an actual security like if a if a company is going to raise money that's a security there should be a path to register those uh broker dealers that can trade them and we'd like to work with the SEC to make that happen as well but if we don't have Congress step in and act the lack of clarity is just going to be weaponized and you know allow not allow the industry to thrive on Shore and how about obstacles then in the rest of the world MH what what is what do you see is there a quicker uh takeup uh of are embracing of this technology and these Commodities around the world well there's about 10 uh markets around the world where coinbase has set up local operations and each of those has a slightly different story right I give just to give you broad Strokes I mean you know in the it's funny in the UK and in Singapore for instance um they don't have this issue that we have in the US of having a separate Commodities and securities regulator they just have one regulator so for instance you know the FCA in the UK um this is a total non issue the question about Commodities and security is it never comes up because they just have one fedal regulator so it's not it's not poit politicized right um and similarly in Singapore that's that's the same issue so each country has slightly different um you know moments in time like Rishi sunk in the UK was incredibly Pro crypto and that government is now probably changing over um so we have to sort of at any given moment there's somewhere in the world where we see a big opportunity you know President mle coming in in Argentina for instance has been super pro crypto right so we basically we just in the global landscape we sort of see who's in office who's going to lean in and work with us we grow our business there and then when the guards change you know in who's in office um we get an opportunity a few years later and we grow it we grow it there so we're going to we have a very long-term point of view on this um whether it happens in any given year or decade in a certain country we know the trend is is clear long term right and then um back here in the US then uh so uh individual have have um have uh been been very focused on this space well before institutions right and and have participated in the movement um can you talk a little bit about um you know institutions what you're seeing uh from an Institutional point of view and um and actually why the takeup is perhaps so slow well I think you're correct that um retail dig jump into this space a little sooner over the last decade but I'd say in just the last year or two we've seen an incredible amount of institutional adoption and I feel like institutions are fully in it at this point um I mean we we released some stats in this state of crypto report that showed 56% of the Fortune 500 uh Executives report their company is working on something on chain in crypto right and so it's really it's the biggest companies in the world you know black rock is helping ize real world assets you know JP Morgan has an onchain project with uh called Onyx um you know there Google cloud is accepting crypto payments St judee's hospital and then you know finex like stripe and PayPal they're adding stable coin support So 56% of the fortune 500's doing something I think this is really here to stay it's already happening amongst institutions and you know coinbase can play a big role there too our our coinbase Prime product um is the most successful in the institutional space and we've got about a third of the top 100 hedge funds are are clients um a lot of them are also looking for that regulatory regulatory Clarity moment and I think when I talk to the institutional investors often they they'll say you know once we feel like there's regulatory Clarity which will not be some moment in time it's it's just a it's a gradual Trend that's happening um they're like that's what would cause us to put 5 10% of our uh portfolio in instead of a couple percent so that's interesting our different perceptions because um having just launched the spot Bitcoin ETF uh what we've seen is none of the major platforms have um approved it yet so the flows we've seen and they've been great um have either been just from retail or they've been donated by grayscale a lot of it was donated by gray scale but we um we're still waiting for an approval even from uh the platforms that do tend to approve new interesting different um financial instruments uh they're waiting and and maybe all this is is we need one and then there'll be a very rapid adoption because competitively it's it's going to be very important to have this new asset class we believe on on platforms yeah I I agree with you on that I think you could you could argue we haven't really seen the the real inflows happen even in ETFs and they've already been really good I mean there from the numbers I've seen there's far more demand in the ETFs than is being min every day from Bitcoin for instance which is a positive indicator but you're right I think like you know Morgan Stanley UBS some of these firms I don't they haven't really enabled um the ETFs where we'll see even larger inflows in the future potentially um I don't know why that is but the ETFs were actually is an area where we did get regulatory Clarity so this will happen in bits and pieces and I think it's an incredible First Step yes um and then uh let's get into products coin bases products which are the most most exciting products to you these days yeah well the first one is really um a technology Improvement that'll enable lots of products but you know if any of you haven't seen Bas um it's our layer 2 solution it's really important to help blockchain scale and so you know layer one uh networks were the first thing that happened in crypto they were they were kind of slow they were kind of expensive but you could see the potential of it with Layer Two coming online it's kind of like when the internet moved from dialup to broadband it's it's actually enabling things like you can now send usdcoin instantly anywhere in the world uh for free um and that's that's a that's a GameChanger for things like payments and remittance and um you know all kinds of things that just reduce friction in the economy um so that's one you know derivatives is another thing we we now have our derivatives products live both in the US under our fcm and internationally and our inter International Exchange um that's an important part of any sort of you know Capital Market and we we've seen really good traction there the last one I'd say is something we released something called our our smart wallet so this this one is it's a little bit technical still but a lot of developers have started to use it and it essentially makes the onboarding process for someone to get a crypto wallet in any kind of application much easier it's using things like biometric so you know in the in the past you had to remember this 12-word phrase and you had to save it in a password manager and sometimes people would you know put it in the wrong spot and they would lose it now you can really just um use a biometric like a like a fingerprint and boom you have a crypto wallet in any application and so we're starting to see crypto wallets get added into lots of different web 2 companies lots of web 3 companies that are kind of native on chain and really the you know what we're seeing just zooming out here is like crypto started as an asset class that people wanted to invest in and it's great it's you know more than trillion dollars and we've got uh over 400 million people globally you know have used crypto now about 5% of the GL global population we're now starting to see it go from an asset class to real world utility um payments and you know voting and decentralized social and having a direct relationship with content creators and their fans and all these kind of things are now coming online and so that's how we get it to be a billion people or more using this um and it's following kind of a similar adoption curve as as the early internet yeah it's it's been interesting um to do our own research on how many steps of the transaction process um crypto is going to reduce yeah the the number of steps just for a transaction to be authorized in the traditional world is nine steps and then transaction settlement I think is another six steps beyond that and each one of those is a fee a toll uh but when you're talking instantaneous peerto here that all collapses that tax goes away so I think uh I think people are going to get it there's a lot of frustration with that fee believe it or not yeah it's such a good point I mean sometimes people ask me you know well shouldn't coinbase why do you why are you interested in Defi and self custodia wallets wouldn't you want everybody to just have their funds on your platform and you know I think centralized exchanges and everything are going to be great for a long long time but the real potential and Innovation here is comes from these peer-to-peer transactions how do we eliminate intermediaries and that's crypto really kind of makes a lot of those intermediaries unnecessary because if you can do instant settlement um you don't have to have uh you know an intermediary with some sort of risk that is introduced with intraday settlement um if it's just real-time settled you can cut out the middlemen you can reduce friction in the economy and um it's important for that to happen on chain you know coinbase is is moving more and more of our products on chain we're trying to play in that space with self custodial wallets with defi uh to make sure that we enable the true Innovation potential because now it goes from just being you know an asset class that 10% of the world wants to invest in or so to being something that billions of people the majority of people in the world can benefit from I mean crypto should really be powering a larger and larger percentage of the of global GDP over time because they're just more efficient rails why wouldn't you know payments are like like water flowing to the path of least resistance why wouldn't more and more of it happen over time so my hope is that you know in 10 years we'll be sitting here and 25% of global GDP is is happening on crypto rails yeah and uh all of those steps that I described and the toll takers it is all about risk mitigation and it sort of look it's just a cluey system instead of you know a layer on the internet that developers did not build in the early 90s because we had no idea that financial services and commerce were going to take place on the internet internet right yeah so Well you certainly coinbase has you know the wind in its sales right now the stock has done very well I remember last year it was terrorized by the SEC at different points until you know the judicial system basically called the SEC out so very happy about that um I'd like to know how do you keep that momentum going how how you know in terms of of course we're an investor in the stock but the company in the stock and how do you keep it going and um what do you worry about now that you're seeing such good breakthroughs on the Regulatory and political front here in the United States what now is keeping you up yeah well we really want the company to be successful in any sort of Market environment you know adjusted even bit a positive in any Market environment so we've done a good job of shifting our Revenue you know 3 or 4 years ago it was like 95% trading fees right which can be quite volatile depending on if there's lots of volume or or not that quarter we've now shifted it to be more and more subscription and services Revenue which is which is more predictable um and that's allowed us to make it be you know it allows us to plan the business over more time you know with more predictability I think um we've been able to reduce costs quite a lot be very uh judicial about how we're growing the expens expense base but still invest in the next uh iterations from a Innovation point of view like the smart wallet and base and you how do we accept Commerce payments online how do we accept political donations in crypto how do we inject it into more and more parts of of the crypto economy the other big piece of the puzzle is international expansion so uh obviously we started in the US still our largest market but we we've now picked uh 10 large markets uh we call this our go deep markets um where we have these local Bo on the ground you know local licenses um local uh partners and we've started to make great traction um actually International in q1 grew our Revenue grew faster than in the US and so we've started to make that a bigger and bigger percentage of our Market in those those 10 or our Revenue in those 10 go deep markets we also have what we call our our go broad strategy which is with self- custodial wallets we can enter into the longtail of countries some of the big Emerging Markets um with self- custodial wallets coinbase wallet is is our product there so we sort of go we go deep we go broad um depending on how mature the market is the regulatory structure there and that's been a good strategy for international expansion yeah we we've been surprised at how quickly International has scaled I think it's 177% of your revenues right now um and starting with derivatives right that that's that that really gave you the big push I'd like to ask in terms of U and you described earlier how you're working with many financial institutions but but you're also going to disintermediate uh some of their business so can you talk about that Dynamic you know I uh you know I thought that there would be a lot more push back and then of course black Rock's um uh decision to partner with you at a time when we didn't even know Black Rock was friendly to crypto I think or they had just turned friendly so this dynamic between you know the traditional financial institutions that are going to see some of their businesses disintermediated uh certainly in the traditional banking world I suppose can you talk a little bit about that yeah so the smartest institutions out there they recognize that you know they're they're all innovators as well they need to stay on the Forefront of this and so they're recognizing the potential in this in this technology and many of them like we discussed they're leaning into it they're they're saying hey we're not going to sit around and wait for something to disrupt we want to be a part of that disruption and so that's just that's just the nature of business you always need to be disrupting yourself or someone will do it for you um and so coinbase you know actually it's great in financial services it's pretty common where you know you might technically be competitors on one product but you're a customer of the other product and so we're all kind of pretty collaborative in that regard coinbase has a developer platform um called CDP coinbase developer platform and a lot of the the core Primitives that we've built which you know help do custody and trading and integrating into into all these blockchains we've made those apis that we use internally available to third parties externally just like you know Amazon did with AWS and so I think a lot of Institutions are going to have an opportunity to use those if they want it's a way for coinbase to participate in the value chain but also help every business in the world come onchain um and of course if they don't want to use our platform they can build their own that's sort of the beauty of it but hopefully our tools are are good and and that'll allow us to participate in in their success as well so uh so they're looking at this as a way to increase their own productivity you know streamline their own costs am I right yeah I mean each institution is different but for instance you know Banks pay enormous fees to Swift they don't feel that it's it's a very efficient system um now the process by these you know there's a lot of inertia right there's there's a lot of people in the United States who still pay their rent every month with a paper check so sometimes these changes take a little while it's there's um it's a demographic shift too right there's it's a generational uh thing that we're seeing but there's a whole group of young people who are growing up today where you know they're never going to have um a bank account in the traditional sense with like a branch on the corner and a checkbook um their phone is their wallet they just want to have um a primary Financial account where they get paid and they can pay for things and they can just transact in a global economy and I think increasingly they're going to use things like um you know there's mobile money apps but I think crypto is a way for this younger generation to participate in something that they perceive as being more fair more free more Global um and for many of them they don't they just feel like the system doesn't really work for them the traditional system and they want to participate in this new system so my hope is that coinbase can be the primary Financial account for actually a next generation of people growing up yeah it's interesting um at ARK we are looking for we're trying to figure out who are going to be the winners in the digital wallet space because it is a winner take most opportunity that's why I ask you about the banks and the competition This truly is a win or take most if we use WeChat pay as a a model that was a bank branch in the pocket it was all kinds of financial services and commerce Commerce on it as well uh so that is why I asked the question I think uh the competitive Dynamic is going to be very interesting we have in our portfolio certainly coinbase and then cash app is going via Bitcoin into the rest of the world uh Robin Hood a different way and so forth so but we don't have any traditional Banks yeah well I I mean I agree with you we want people obviously to be using coinbase app but I think there's one difference between that in um in WeChat pay which is that um the crypto Protocols are open networks yes right and so the interoperability is actually a key feature where you know if someone is using coinbase in on one one end of the transaction and they're using another app elsewhere it should really work now crypto needs to get a little better at some of these um common standards there's there's a lot of fragmentation just like in any industry it starts off with lots of ideas and I think it'll consolidate down over time so but the interoperability is part of the strength of the crypto Network it's not like it's not like you know I have a PayPal account you have to have a PayPal account well that's hard to get really Global adoption of that but if if we each have a crypto account and you you're using a local app made in Venezuela or Nigeria it should work with the coinbase app as an open standard okay so you so do you disagree then that it's a a winner take most opportunity I mean look I think there you could say it's win or take most in each market you could say um I mean email email is maybe a good example because email is an open protocol too but you know Gmail works better if you also use Gite right like Google Calendar and Google Docs so I think there's a lot of opportunities for companies like ours to compete and build good products but ultimately the switching cost is a bit lower which makes it makes our job harder but I think it's better for the consumer and that's what'll actually cause it to win you know like a lot of people have tried to think about how might you um attack like the Visa Monopoly or duopoly with Mastercard or something and um I mean by the way I think they're actually going to be leveraging stable coins Layer Two so they're smart companies but if it's like you know coinbase versus Visa it's like we're probably not going to break into that space But if it's an open standard a global open decentralized protocol kind of like the internet or something I could see that disrupting um like an incumbent so it's it makes each individual company's job harder but it's also the most powerful thing about it that allows it to become a global standard yeah interesting okay on to the election uh right I mean it uh been quite exciting uh to to and you've been key to I think to spurring this movement so thank you coinbase uh uh for bringing us all along uh leading the effort in Washington uh so maybe can you talk a little bit about uh what's going on in Washington or the political Dynamic um it just seems to have turned so suddenly we had FTX in 20 22 and everybody said okay that's it you know this is never going to work no no no political no politician is going to sign onto this is just fraudulent and all of that at at the time I was saying no no no no wait a minute this proves the concept uh you know uh Sam be mrey didn't didn't like Bitcoin he didn't like decentralization didn't like transparency so I think that is where the wind has shifted did um and certainly in the legislative world as you mentioned earlier we're seeing big surprises in terms of I would say conversions we thought this was going to be uh you know a onep party issue it seemed like that at one point but that has changed why do you think it changed yeah well I think the core reason is that DC has realized this is a massive voter base in the US and that's what's really started to make it a bipartisan issue um you know there's 52 million Americans who used crypto we helped fund this uh C4 called Stand withth crypto.com a lot of people's attention in DC and so we're now in an environment where there are strong crypto Advocates on both sides of the aisle uh we saw recently for instance in the House of Representatives uh this fit 21 bill I mentioned got more than 2third of the house to vote for it so there's clearly a political will that we need we need clear rules in the US uh the current situation is untenable and you know in DC I just you know I met with the the 12 13 different Senators over the last few days there's bills going back and forth um being drafted there's a lot of urgency from Senate leadership to say how do we get this done now you know legislation's complicated the stars have to align you know any so I you know anytime you go and try to attempt one of these things you know you can never say if it's for sure or not but I can tell you this is one of the only bipartisan issues happening in Congress right now I mean the for anybody who doesn't know the Congress really has been only in place where they're passing they're doing must pass bills there's not a lot of collaboration um on bipartisan work and I would say crypto is the number one bipartisan issue it's kind of like the only thing that they're coming together to work on right now so that's really encouraging um it's really the voters that are in a democracy that are going to elect candidates which which represent their values and I think DC is waking up to that yeah and I think it's very important for the young vote and they're waking up to that um uh very much so H how has your own user base have you have you seen you know them writing in uh to to to Washington to to really help change Minds yeah I mean we've actually helped invite a bunch of Founders to go to DC um you know many of these Representatives they they haven't really ever met someone in the crypto space right and they don't realize that for instance in Ohio there's dozens of crypto entrepreneurs trying to build things in their state and there's there's sort of it's just like anything you know it's a relationship relationships matter right if you're just seeing something on the Internet you don't really know if it's real it's these these Founders are incredibly compelling in person to go meet with the representative and say you know I care about this and I'm in your district and um this is an important issue to me we got to get this fixed and there's just no substitute for that so um crypto is finally getting organized politically and it's such a mass um constituent of customers shareholders employees um they deserve to have their their views represented in our government um if you haven't signed up sign up stand with crypto.com and will will guarantee uh you know his attempts to uh to preserve that right and then uh mining he wants to bring it to America make it happen the rest of the Bitcoin mined make it happen in America so he's certainly captured this this wave and uh I think it's uh you know he's considered very divisive of course by some people but uh you know half of the population did vote for him and uh I think he's you know educating those who haven't who haven't taken a close look at what this movement is all about um I think it's a good thing just the bipartisan nature of this yeah both parties are recognizing they need to address this issue and I I think it's going to be actually one of the top issues like in the in this election so yes crypto's arrived it's arrived it's arrived thank you so much thank you for all you're doing to to make this new world happen thank you C [Music]