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<v Speaker 1>Hey, folks, I've got Brett tach Paul, who's the head

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<v Speaker 1>of coinbas Institutional with me. Brett, great to see you. Great,

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<v Speaker 1>see you too, Tony.

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<v Speaker 2>I gotta tell you I owe you a giant gread

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<v Speaker 2>of dat of gratitude. The last time we were together

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<v Speaker 2>was five years ago. It was in the depths of COVID. Yeah.

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<v Speaker 2>I'd just taken my job at Coinbase. I had never

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<v Speaker 2>done a podcast before. Yeah, you had a jinky setup

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<v Speaker 2>at home, so did I. I hadn't practice. And I

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<v Speaker 2>got to tell you, you were very kind to me

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<v Speaker 2>in the interview. And I can't tell you the amount

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<v Speaker 2>of constructive feedback I got. I'm tightening up my answers

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<v Speaker 2>and maybe maybe let's see if I can do a

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<v Speaker 2>better job this time.

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<v Speaker 1>Well, Brett, we've both gone into this incredible journey of

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<v Speaker 1>being better at interviews, right because to your point, I

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<v Speaker 1>was in a dark room you were. Yeah. But Brett,

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<v Speaker 1>amazing growth on Coinbass front, both on the retail and

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<v Speaker 1>institutional side. It's amazing to see how this company has grown. Uh,

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<v Speaker 1>you know, what are some of the things that you're

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<v Speaker 1>most excited about from an institutional adoption standpoint.

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<v Speaker 2>I mean this is a great interview for us to

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<v Speaker 2>go then and now. When I first joined coinbase, we

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<v Speaker 2>had a team of about five people. The only product

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<v Speaker 2>we really had that was up for institutional grade was custody,

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<v Speaker 2>and so you could you could store it safely, but

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<v Speaker 2>you couldn't really buy it at a great price. And

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<v Speaker 2>so if you if you fast forward, we made a

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<v Speaker 2>couple acquisitions to Gomi was the first one that helped

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<v Speaker 2>us build. It was the foundational layer for Prime. But today,

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<v Speaker 2>if I tell you what our product scope is, you

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<v Speaker 2>can think about it in three main verticals. So the

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<v Speaker 2>vertical one is really marketplaces. And so when I think

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<v Speaker 2>about marketplaces, the first thing that'll jump to your mind

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<v Speaker 2>is the is our US spot marketplace.

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<v Speaker 1>So we run that.

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<v Speaker 2>We have the CFTC regulated Futures Exchange, so we've made

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<v Speaker 2>progress there in terms of amplifying you know, volumes. We

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<v Speaker 2>have the Bermudian International Exchange, which has been around for

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<v Speaker 2>about two years now and it's gone from zero percent

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<v Speaker 2>market share and it's you know, peaked at maybe twenty

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<v Speaker 2>and we're doing you know, tens of billions a day,

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<v Speaker 2>So that's been great. That's been our foray into the

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<v Speaker 2>international PERP market, so it's been fantastic, also does Spot.

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<v Speaker 2>And then I'm sure as you know, we announced the

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<v Speaker 2>Derbit you know acquisition, which is based principally in envarn

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<v Speaker 2>now but has an amazing eighty five percent you know

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<v Speaker 2>market share and options and so for us, we maybe

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<v Speaker 2>come back to that later, but that was a very

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<v Speaker 2>important strategic sort of last piece of the puzzle for

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<v Speaker 2>the completion of the of the derivative product and platform.

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<v Speaker 2>So that's that's pillar one. Pillar two is what I

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<v Speaker 2>spent most of my time on. Pillar two is the

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<v Speaker 2>prime platform, and that's grown. Like I said, we just

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<v Speaker 2>had that core custody product, but now we added on

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<v Speaker 2>smarter order route, then we added stacking, then we added

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<v Speaker 2>a very comprehensive financing. So now we call that a

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<v Speaker 2>prime brokerage platform. And really that's the single place that

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<v Speaker 2>you can go to do all the things that you

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<v Speaker 2>need to do with crypto and so that for me

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<v Speaker 2>has been super exciting. That is the place that all

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<v Speaker 2>the ETF business that we wont is on that same

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<v Speaker 2>platform is the platform that services are high net worth clients,

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<v Speaker 2>and so I just want to make the distinction. Once

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<v Speaker 2>you're on that platform, all the clients have the opportunity

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<v Speaker 2>to get all the features. You can consume as much

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<v Speaker 2>as you want or as little as you want, as

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<v Speaker 2>robust security, as detailed as you'd like on complex workflows

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<v Speaker 2>or simplified ones, and so Prime is the main platform

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<v Speaker 2>that people on board to. Now the interesting thing about

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<v Speaker 2>that platform is, and you're going to hear more about

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<v Speaker 2>it today at the conference, is we're trying to expose

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<v Speaker 2>all the infrastructure that we've built and calling it as

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<v Speaker 2>a service. So I now we're going to talk about

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<v Speaker 2>that in a second, but think about everything we do

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<v Speaker 2>is a so custody as a service, wallet as a service,

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<v Speaker 2>trading as a service, and I have great, great hopes

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<v Speaker 2>for that business to probably one day eclipse actually the

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<v Speaker 2>size and skill what we've got now. So that's the

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<v Speaker 2>that's the main pillar. And then the third pillar is

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<v Speaker 2>coin based asset management, which is still in its i

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<v Speaker 2>would say beginning stages. We bought a business called One

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<v Speaker 2>River Digital and rebranded it SEBAM. It's in the process

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<v Speaker 2>of raising funds for things like bitcoin yield. They have

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<v Speaker 2>multi straft, they have credit opportunities, so they have a

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<v Speaker 2>suite of services which comes at a really good time

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<v Speaker 2>because that business was purchased you know post you know,

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<v Speaker 2>call two years ago, when we had a lot of

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<v Speaker 2>headwinds from a regulatory and other standpoint, and now with

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<v Speaker 2>everything that we're seeing, that business has a lot of momentum.

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<v Speaker 2>So those are the three the three pillars that's exciting.

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<v Speaker 1>It's amazing the growth that coinbas has had on that

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<v Speaker 1>institutional front with the acquisitions and much more given the

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<v Speaker 1>change in the regulatory environment towards crypto in the US.

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<v Speaker 1>Are you seeing a lot of demand from big banks

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<v Speaker 1>and institutions and things like that.

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<v Speaker 2>You know, I've been through a couple of phases now

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<v Speaker 2>where sometimes it's big cooin price, sometimes it's other things.

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<v Speaker 2>Right now, I would say it's it's all the above.

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<v Speaker 2>So it's the the staying power, the establishment of the

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<v Speaker 2>asset class, the building of demand for the investment case.

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<v Speaker 2>It's you're gonna hear a lot today about utility. So

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<v Speaker 2>we've talked about it for years, but you know, is

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<v Speaker 2>the stable coin payment moment finally here? And I think

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<v Speaker 2>it is. I think having Jeremy on stage earlier and

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<v Speaker 2>with Circle going public, I think is a great testament

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<v Speaker 2>to that. And then thirdly, it's regulation, and so never

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<v Speaker 2>have I seen I mean I've been I've been in

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<v Speaker 2>you know, call it regulated financial services for a long

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<v Speaker 2>period of time through bull markets, bear markets, Dodd Frank.

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<v Speaker 2>You know, I've never seen, ever, ever seen, and administration

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<v Speaker 2>turned so quickly from an anti to a pro with

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<v Speaker 2>the acceleration of real regulation that I'll propel the industry forward.

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<v Speaker 2>So now if you ask me if I'm seeing demand,

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<v Speaker 2>I mean, holy cow. So we managed if you think

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<v Speaker 2>about it in a world where it seemed like everything

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<v Speaker 2>was against us, in a world where everything was against us.

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<v Speaker 2>Stable coin volumes, We're able to grow in volume, Institutional

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<v Speaker 2>adoption grew in volume. ETFs came to market in an

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<v Speaker 2>unfriendly regime with record success. You had, I would say,

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<v Speaker 2>a tiering of the very largest financial players, thinking through

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<v Speaker 2>the fact that they must have a strategy, so they've

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<v Speaker 2>been building for years. I can name a few names there.

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<v Speaker 2>But then the second tier of players, there's a little

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<v Speaker 2>bit of a am I in this thing or not

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<v Speaker 2>in this thing? If I don't have the resources to

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<v Speaker 2>build it, what am I going to do? All of

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<v Speaker 2>a sudden, Now FOMO is kicked in like you've never

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<v Speaker 2>seen before. So every large financial services firm, venture firm, uh,

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<v Speaker 2>competing bank, upstart, brokerage, you name it is now interested

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<v Speaker 2>in finding what the accelerated path to getting involved is.

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<v Speaker 1>That's great to hear. Now, obviously you support issuers ETF

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<v Speaker 1>issuers like black Rock. Are you seeing more demand on

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<v Speaker 1>the ETF side or stable coins or for tokenized assets

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<v Speaker 1>or just simply trading crypto in different ways?

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<v Speaker 2>Well, we can all see the ETF itms are going

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<v Speaker 2>up day by day, and so really what that is?

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<v Speaker 2>And you know, personally, I love this because I hate

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<v Speaker 2>going around and trying to promote buying things. It's it's

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<v Speaker 2>it's not, that's not really what I do. What I

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<v Speaker 2>what really what I do is I build the tools

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<v Speaker 2>and services and to help people make smart decisions on

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<v Speaker 2>behalf of their clients. But there's no better, uh, there's

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<v Speaker 2>no better data point of demand than when what you

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<v Speaker 2>see from ets right, and so so I would say

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<v Speaker 2>it still feels like predominantly retailed them for the most

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<v Speaker 2>part is coming in. Institutional demand is building on top

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<v Speaker 2>of it, and so ETFs has been an enormous catalyst.

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<v Speaker 2>I would say, in a again, in an unfriendly regime,

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<v Speaker 2>to be the first building block for what comes next,

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<v Speaker 2>and so stable coin is now coming after with regulations,

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<v Speaker 2>so you need the same core infrastructure to do things

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<v Speaker 2>like send receive right, and so that's that's building the

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<v Speaker 2>demand picture on top, I would say the less imaginative

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<v Speaker 2>institutions that are still a little bit on the sidelines,

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<v Speaker 2>not sure if opening are brokerage to investment cases in

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<v Speaker 2>bitcoin is the thing they are interested in, things like

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<v Speaker 2>collateral management and the speed with which money moves around

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<v Speaker 2>the world, and so so stable coins is that is

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<v Speaker 2>another source of gravitational pull. And then tokenization is much

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<v Speaker 2>talked about. It's still a very eclectic list of things.

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<v Speaker 2>We're going to talk a little bit more later. That's

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<v Speaker 2>going to be feature in my conversation with with Blackrock

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<v Speaker 2>later so so so stay tuned there. But there's a

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<v Speaker 2>long list of things I think, some of which I

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<v Speaker 2>think are interesting to be tokenized. But I would say

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<v Speaker 2>a lot of the the the each of the each

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<v Speaker 2>of the issuers think of it that way that is

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<v Speaker 2>thinking about tokenization is thinking about it slightly differently. I'd say,

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<v Speaker 2>one one compelling value cases an asset manager who wants

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<v Speaker 2>to find new distribution channels, you know, just simply trading

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<v Speaker 2>tokenized stock could be interesting for you know, certain firms

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<v Speaker 2>to do follow on issuances. I'll leave that as a

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<v Speaker 2>glimmer in the eye. But you know, running full service

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<v Speaker 2>firms and doing cost reduction, there's a lot in there.

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<v Speaker 2>So I'd say it's an eclectic mix of motivations to

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<v Speaker 2>pursue tokenization. The one thing that I find is interesting

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<v Speaker 2>is that it seems that a lot of the leaderships

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<v Speaker 2>of these firms all believe that they should have some

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<v Speaker 2>sort of strategy towards tokenization.

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<v Speaker 1>So do you see these exchanges seeing excuse me, these

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<v Speaker 1>institutions seeing this as the next big macro trade, but

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<v Speaker 1>also technology that they need to build on to stay

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<v Speaker 1>relevant given that it's going to be the rails they're

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<v Speaker 1>going to power the financial markets.

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<v Speaker 2>Do you know I found Felipe Lafont was just on

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<v Speaker 2>stage earlier and he was talking about just the size

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<v Speaker 2>of the different types of asset classes and one of

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<v Speaker 2>the things, and Jeremy was on stage. He was talking

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<v Speaker 2>like his big picture of you. Jeremy's was interesting. He

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<v Speaker 2>was talking about how maybe disintermediation at banks would one

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<v Speaker 2>day really come to light and so if on the

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<v Speaker 2>topic of tokenization. I feel like maybe disintermediation and efficiency

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<v Speaker 2>of If you're a banker or someone that follows how

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<v Speaker 2>assets get created and distributed, there's a lot of friction

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<v Speaker 2>in the process, and so it's good for issuers and

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<v Speaker 2>good for investors both to have lower friction and lower

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<v Speaker 2>cost in a process. And so I see that as

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<v Speaker 2>really being an engine of growth for tokenization. That's where

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<v Speaker 2>I think actually the market will coalesce sure.

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<v Speaker 1>So Brett, obviously you guys have been doing an amazing job.

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<v Speaker 1>You've been growing at a rapid pace. What's on your

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<v Speaker 1>roadmap that you can share?

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<v Speaker 2>So now that we've got so the dearbit transaction we

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<v Speaker 2>talked about earlier was really important. So our high level

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<v Speaker 2>company objectives are going to be grow internationally, grow and

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<v Speaker 2>in derovatives. I want to capture the next wave of

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<v Speaker 2>institutional adoption. So the customer experience has to be a

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<v Speaker 2>great one across all those things. One of the things

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<v Speaker 2>that's really powerful and important about our platform is being

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<v Speaker 2>able to do all the things in one place. But

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<v Speaker 2>then just not the convenience of that and the operational

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<v Speaker 2>safety of that, but the efficiency of capital. Right, So

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<v Speaker 2>think about having cross margin across you know, purpse, options, futures,

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<v Speaker 2>spot and different things. And now that we have I

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<v Speaker 2>don't want to get too technical, but now that we

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<v Speaker 2>have options and we've longer dated markets, we have a

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<v Speaker 2>long list of take that in combination with the long

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<v Speaker 2>list of ETF products that would like to come to market,

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<v Speaker 2>you now have actually all the ingredients to do things

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<v Speaker 2>like structured products. So if you want new capital, institutional

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<v Speaker 2>capital to invest money in a marketplace that's still volatile,

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<v Speaker 2>right but with bitcoin adder near you know, all time highs,

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<v Speaker 2>what would you like to have You'd like to have

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<v Speaker 2>an investable product, or you keep things safe, you buy

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<v Speaker 2>at the right price, but also you have some assurance

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<v Speaker 2>that you're not going to lose everything, right, so you

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<v Speaker 2>want to be able to cap your downside, maybe give

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<v Speaker 2>up a little bit of upside. And so once you

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<v Speaker 2>have a full suite of financial instruments that allows you

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<v Speaker 2>to put these these pieces together, it allows new types

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<v Speaker 2>of new types of capital formation to come into crypto.

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<v Speaker 2>That may be a little bit of a tratfy you know, reference,

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<v Speaker 2>but it's a really important one because if you want

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<v Speaker 2>sovereign wealth funds and people that don't just you know,

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<v Speaker 2>buy pitcoin and hold and close their eyes and hope

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<v Speaker 2>for the best. You're going to have more sophisticated people

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<v Speaker 2>that want to have more tailored risk profiles, volatility profiles.

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<v Speaker 1>Et cetera. That's great. I know. One of the things

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<v Speaker 1>that has been talked about a lot is yield on

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<v Speaker 1>crypto assets. And folks have a long term view. They'll

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<v Speaker 1>buy their bitcoins and the ether and so forth, but

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<v Speaker 1>if once it's sitting there, they want to be able

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<v Speaker 1>to earn on it. So I think you may have

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<v Speaker 1>touched on it being able to create products around that

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<v Speaker 1>and for them to earn over time.

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<v Speaker 2>Yeah, So one of the things I heard coming out

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<v Speaker 2>of Bitcoin Vegas was yield. I mean, I guess at

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<v Speaker 2>this one everyone's decided to own pitcoin, So that's good. Yeah,

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<v Speaker 2>but now what do you do with it? And how

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<v Speaker 2>do you make you yield from it? And so our

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<v Speaker 2>asset manager CBM actually has a bitcoin yield product. They're

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<v Speaker 2>in the in the international market and raising money in

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<v Speaker 2>and around that, and so there's ways you can do

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<v Speaker 2>it more aggressively, less aggressively. But you can do covered calls,

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<v Speaker 2>you can do you can do basis trades. But what

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<v Speaker 2>I would like to see come into the marketplace. I'm

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<v Speaker 2>the sort of person that likes to have safe things

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<v Speaker 2>come in, have have the expected return meet the realized return.

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<v Speaker 2>So like I got the thing that I thought I bought,

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<v Speaker 2>and so I think bitcoin yield with you know, four

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<v Speaker 2>to eight percent targets feels like a reasonable way to

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<v Speaker 2>begin to offer that product. And so there'll be I

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<v Speaker 2>think a myriad of ways that people can do it,

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<v Speaker 2>and DeFi in all sorts of different ways, but it's

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<v Speaker 2>definitely thematic.

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<v Speaker 1>Oh that's exciting, Brett. We're gonna have to do a

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<v Speaker 1>longer conversation about this. So maybe it's a five year

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<v Speaker 1>anniversary when we do a longer podcast. Yeah, thank you

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<v Speaker 1>so much.

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<v Speaker 2>All right, great to see it's gone.