The Pomp Podcast - #439: Brad Garlinghouse on Crypto Regulation

Episode Date: November 26, 2020

Brad Garlinghouse is the CEO of Ripple.  In this conversation, we discuss crypto regulation, the US approach compared to other jurisdictions, whether Ripple would ever move from the US, how the SEC and OCC affect regulation, and what a Biden presidency could look like for crypto.  ======================= Crypto.com is the only all-in-one platform that allows you to BUY / SELL / STORE / EARN / LOAN / INVEST crypto all from one place. Join over 1 million users currently using the Crypto.com app. Download and earn $50 USD using my code ‘pomp2020’, or use the link https://platinum.crypto.com/r/pomp2020 when you sign up for one of their metal cards today. ======================= OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today.  ======================= Digital art is here, and it's real. NFTs are selling for hundreds and thousands of dollars. The only platform I buy on is Nifty Gateway, which is an official sponsor of the Pomp Podcast.They release content from the best NFT artists in the world twice weekly, and have featured many world famous artists including Kenny Scharf, Trevor Jones and WhIsBe. NFTs on Nifty Gateway are in extremely high demand, so if you really want one, make sure to be on the website as soon as it is released. Go to www.niftygateway.com/pomp and sign up for an account today. =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Brad Garlinghouse is the CEO of Ripple. In this conversation, we discuss crypto regulation, the US approach compared to other jurisdictions, whether Ripple would ever move outside the United States, how the SEC and OCC affect regulation, and what a Biden presidency could look like for crypto. Before I talk about our sponsors, I want to clearly call out that I know Ripple and XRP are both controversial. There's some people that like it. There's some people who don't. This conversation was hopefully trying not to get into those details and more so allowing

Brad as an executive in the space to talk about the regulatory environment and what he's thinking about in terms of his business. Now, some of the things that Brad talks about are great and other things I completely disagree with him on. But I do think it's important to allow people to hear from individuals what they believe, and then to have the debate online and with each other as to what is true, what is not true, what you think is a good idea, and what you think is a bad idea. So don't take everything that's said in this podcast to be something that I necessarily agree with. But also, I think it's important to present perspective so that you, the listener, can go ahead and make your own decisions. So with that said, let's talk about our sponsors before we

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an official sponsor of this podcast they release content from the best digital artists in the world twice weekly and they featured many world famous artists including kenny sharp trevor jones and who's b nfts on nifty gateway are in extremely high demand so if you really want one make sure to be on the website as soon as it is released you can go to niftygateway.com slash pop and you can sign up for an account you can participate in the auctions or you can buy on the secondary market again niftygateway.com slash pop go check them out and let me know what you think about Nifty Gateway's platform and about digital art. All right, let's get into this episode with Brad. I hope you guys enjoy this one. Anthony Pompliano is a partner at

Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Brad here with me. Thank you so much for doing this, sir. Absolutely. Good to be here. Nice to see you. For sure. For those that didn't listen to the first episode we did, maybe just give us a quick

kind of two minutes on your background and what Ripple does. So real quick, I've been in Silicon Valley doing tech stuff for 23 years. Moved out here at 97, and kind of .com 1.0. Always been kind of involved in leading edge and hopefully not bleeding edge stuff. And the first job I had out here was we were rolling out the first cable modems in the country. And then I was at Yahoo for a bunch of years.

I'm shortening this, but I was at Yahoo for a bunch of years and did a couple other things on the investment side of things. Joined Ripple five and a half, closing in on six years ago. Early days of crypto. And I mean, suffice to say, it's been just an incredible journey.

both crypto at large, but also seeing, you know, Ripple grow from kind of an idea that the germination of, you know, how we thought about applying these technologies, not in kind of experimentation and speculation, but hey, real utility, let's solve a problem. Let's be clear about who our customer is. You know, we now have publicly shared, we're doing, you know, closing in on a run rate of kind of $10 billion a year of transactions across RippleNet, about 20% of that through what we call on-demand liquidity, which are XRP-enabled transactions. We're continuing to see a lot of growth. We can talk more about the implication of COVID, but that's some of the high-level things. We're at 500 employees globally and cranking along.

Awesome. What exactly is Ripple and RippleNet, just for those that don't know that? Sorry. So Ripple is, in effect, when I say I grew up in Kansas, as you and I have discussed once or twice. And when I tell my friends back home, in effect, Ripple, the simple way to think about it, we're an enterprise software company and we sell software to banks, financial institutions, payment providers that enables them to do real-time cross-border transfers. Today, you know, we have different value networks. It is, I think, very analogous to early days of the internet, where sending an email between AOL and CompuServe, that was not interoperable. They were disparate networks and you couldn't send messages between them.

The internet comes along and technologies like TCP IP come along and SMTP and the ability to then have interoperable data networks enable things that we obviously rely upon today. In effect, Ripple is trying to do the same thing to make value networks interoperable towards the vision of enabling an internet of value, what we call an internet of value. And today, the most painful part of those non-interoperable value networks, I think, is really in cross-border transactions, where you're going cross-currency, cross-network, cross-institution. There's a lot of friction there. I often have used an analogy of an airplane, that if the fastest way you want to move money today from San Francisco, where I am, to London,

in is to actually get on an airplane and fly it there. That's just a crazy thing to say in a world you can stream video from the internet. So Ripple is solving that problem. RippleNet is the network of banks and financial institutions that are connected today that are enabling, I don't know off the top of my head, I think it's 60 plus countries where we have payment corridors today that continues to grow quickly. And yeah, that's Ripple and RippleNet. Awesome. So the reason why we wanted to talk is the crypto regulatory environment. A nice way to put it might be that it leaves a lot to be desired. There is everything from uncertainty and just kind of the unknown all the way to maybe some bad ideas that are out there. So maybe just walk us through as the CEO of a company that is constantly looking at both the United States crypto regulatory framework, but also other countries and other regions. How do you kind of see where the United States is? Maybe where does it kind of rank against other people? Good, bad, ugly? Just kind of give me your general thoughts to start.

Well, so first of all, I don't know if I said it up front, but thank you for having me on because I think talking about this stuff is super important for all of us to have kind of a common understanding. where we are. And I also will say, when we talk about the crypto regulatory framework, I think we do, as you in your question identified, have to parse the US versus other, it is specific to geography. Unfortunately, the US regulatory framework is not, it's really out of sync with what other major economies are doing. And you actually see in a very positive way, sorry, didn't turn off some of my distractions there. You see in a very positive way, some countries, I'll highlight in a constructive way, the UK. The UK has a very clear taxonomy. It's called the FCA, the Financial Conduct Authority, I think, really took a lead on

characterizing what different assets should be used based on the use case. I think that helped everybody in the UK know, as they thought about crypto, how to use crypto, how the rules for the road were clear. I can highlight in a positive way what MAS has done in Singapore, what FSA has done in Japan, Switzerland, UAE. These are all examples where there's clarity. And what's frustrating, I think, is here in the US, you see lots of different kind of constructs. I think you even tweeted about this, but there was a Department of Justice report, I don't know, three or four weeks ago, and it listed 70 to 80 pages and listed eight separate U.S. regulatory bodies, each of them with a different view about crypto as a property, no crypto as a commodity,

no crypto as a virtual currency, or no, could crypto be a security in some cases? And, you know, look, for the U.S., I think we celebrate the leadership the U.S. has had around the Internet of Information as we know it today. And it's in part because early on, back in the mid-90s, there was a clear regulatory framework that allowed people to invest with certainty, with clarity. And you've had a lot of investment come in and a lot of success stories that are well known. Without that here in the U.S., I think it's really hard for the U.S. to compete on a level

playing field with what's happening in some of these other markets. Absolutely. And when you start to think about in the United States, let's start with maybe the things that seem off, right? Or just their decisions that have been made or directions that were headed that, you know, might not be the best path. What falls in that bucket for you, right? So not the things that are uncertain or unknown, but are there specific things that you're like, look, you know, either you guys have a different view or you feel like other jurisdictions are at odds with a certain direction that the U.S. regulatory environment is headed? Yeah. I'm going to answer that question that you're going to think I'm trying to dodge it. I'm not. I want to give a preamble. Oftentimes,

when I answer my perspective on this, I get certain elements of the crypto community are like, oh, Brad just hates on Bitcoin. Let me be clear. And I said this to you when I was last on your show. I personally, in my own account, own Bitcoin. I'm long Bitcoin. I'm a believer, period. I also think the best way for Bitcoin and really all of crypto for long-term success is that we are intellectually honest and talk about what are the problems that might limit success in the future. And one of the things that I think is just, it is reality, the facts support it, is that today the U.S. has said, U.S. Securities Exchange Commission has said, Bitcoin is not a security. They've said Ether is not a security. And that has given them the

good housekeeping seal of approval. That allows entrepreneurs to say, okay, great. I can build upon that. I can invest in that. I can do that with certainty. For Ripple, because we use XRP in our tech stack, we will go and I've had this experience. I will talk to CEOs of other companies And they'll say, well, look, hey, you know, we need to, we're not going to work with enabled Ripple's products enabled by XRP until there's clarity there. You know, there's over 100, 150 companies working in the XRP ecosystem. And, you know, without that certainty, we have given, here in the United States, we have given an advantage to two technologies in Bitcoin and Ether that are today, by virtue of the mining capacity managed in China by a small number of miners, we're really enabling China to have an advantage. I actually happen to think the Chinese Communist Party has been extremely strategic. Like, I think they have been focused on dominating next generation technologies.

What we saw happen with 5G networks, as an example, we lost the 5G race, and I think we're in danger of repeating that mistake in the battle over what I'll just describe as global financial infrastructure and global payments. So, look, I think it's a long-winded way of saying we need a level playing field, not just for the many companies in the XRP community to compete effectively, but we need that for other projects as well. I'm not trying to be just kind of pro XRP, but I'm trying to look at all boats rise. I want crypto to do well.

Yeah. And I think part of it, the one difference I'd make there is like there are a very few number, but some, Bitcoin being one of them, that there was no kind of, hey, you give me money and I will sell you this token, right? So kind of the initial distribution was what many people would call quote, unquote, fair distribution or whatever terminology you want to use. The thing that I think you're highlighting is for pretty much the, I don't know, 98% or 99% of other projects that have some sort of business or commercial use to them, there's not a lot of clarity. And it almost sounds like it's not only just the final security, not security type deciphering, but also maybe there's even uncertainty around the framework that will be applied here.

Is that fair? Or do you feel like the framework is pretty defined and then the decision is the undefined part? No, I think both of those are undefined. I mean, look, I think early on, you know, there was this kind of argument that, hey, you know, Bitcoin is super decentralized and therefore, you know, it can't be a security. And you kind of look at that, you're like, all right, so let's help people understand how the XRP ledger is decentralized and how it is open source. And frankly, even recently,

there have been things that the XRP community have championed from the open source ledger of the XRP ledger that we have opposed that still passed. And if that's not a definition of what is open source technology, I'm not exactly sure what it is. But I think there was a perception that, OK, the first framework was decentralization. And that meant that Bitcoin got the good housekeeping seal approval and then not that long after ether got it and then there was that stopped and then it's like well maybe decentralization isn't the right thing because i think you know once you kind of educate people about how the xrp ledger works you're like all right uh you know let's okay let's yield that the xrp ledger is also decentralized well

it's like okay do people own different amounts and therefore that it's different and i just think it has been hard and some of the things that have been published that are intended to make it clear are frankly really long uh kind of frameworks that is like okay i don't know i'm pretty educated about all things crypto and i read these things i'm like all right wait a minute you know i'm not exactly sure how to do how to think about this and look i go back to what i said earlier it was just recently that the the doj came out with this report on cryptocurrencies and in talking in some ways how they can be used for illicit purposes but when just recently you're talking about eight separate US regulatory bodies, you know, it just makes it hard for companies in this space to

operate. For sure. I asked you last time, I'm assuming your answer has not changed, but your belief and the people at Ripple's belief is XRP is not a security. Correct me if I'm wrong on that. But what would the challenge to the business be if it was deemed a security, right? So like, I always think of it as like, there's almost like this path where you say, okay, your belief based on whatever frameworks are out there is XRP is not a security. If that ends up being the end state, you get the kind of, you know, the housekeeping that you described. I think you guys have like a pretty clear path as to like what you'll continue to go do and accelerate and kind of the positive impact on the business. What's the impact if whether rightly or wrongly, but like

there was a decision that like, hey, XRP is a security. Is that kind of the like, maybe not the death blow, but does that pretty much tie your hands and make it nearly impossible to conduct business in the United States? Or is there some alternative path, but maybe it's just filled with more obstacles and it's just more difficult? How do you look at that? Well, look, I look at it as one member, and Ripple's an important member of the XRP community, that it is my very strong opinion that it's very hard to look at XRP as a security. I've made lots of points publicly about why that's the case. Uh, I didn't think you'd change your mind on that, but I just wanted to give you the opportunity if you did, but go ahead. Fair enough. Uh, you know, I, I think if XRP were

deemed a security here in the United States that, you know, where you have other major G20 markets that have already taken a different view, it's kind of like, I'm not aware of any market globally that thinks XRP is a security. And so you think about, all right, so why would we here in the United States want to make a decision that's out of sync with other major G20 markets? Why would we want to create an uneven playing field that advantaged these Chinese-controlled technologies, particularly, frankly, in a Trump administration, whatever you may think about that? And I just step back and think, all right, is this the best path? Who are we solving for? And there's plenty of conspiracy theorists that are out there that have all kinds of conjecture about all kinds of

things. I just look at it and think about, look, you've got a bunch of companies here in the United States building upon an open source technology that isn't controlled by the US, isn't controlled by China, isn't controlled by Ripple. We should want to fuel and foster that. We should want to provide the clarity, the certainty, the level playing field. And I think that if there were a negative determination made, that would mean that, okay, in the United States, people would need to be thinking about if you trade XRP, well, you need a broker-dealer license. You also have examples which, like today, PayPal has announced their intent to support these things. And they have actually, my understanding is they have been relatively transparent that, hey, we're not

supporting XRP at the opening of PayPal support because of the lack of regulatory clarity. Well, all right. So that gives these Chinese controlled technologies where the Chinese Communist Party certainly has, if not control, heavy influence. I mean, again, I'll digress just to simply point out. Ant Financial, the largest IPO in history, is delayed by the Chinese Communist Party, let's not pretend that if the Chinese Communist Party wants to provide control or oversight in some way of these concentrated miners in China, I think that's not realistic. And again, I'm not necessarily even saying, let's just acknowledge it and let's decide, okay, does it matter? Is it critical? Let's not pretend it's not there. Let's acknowledge it's

there. But hold on a second. So there's a difference though between could they exert influence over miners that are a minority part of the network, right? Versus- Oh, not a minority. Of course they are. There's nobody who's got 50 plus percent control. Four miners in China have well over 50% control. But that's 200%. No, sorry. The combination of four miners have over 50% control. Yeah. Well, no, they've got over 50% of the mining hash power, but they don't have control

of Bitcoin, right? It's not like the Chinese Communist Party can change anything or do anything. There are miners. If you control a majority of the hash power, the miners are the masters. If you control a majority of the hash power, you know, we have seen 51% attacks on other blockchains. If the Chinese Communist Party, I mean, if what you're saying is you don't think the Chinese Communist Party could go into those four miners and say, hey, you need to do x y and z i mean i would i'll ask you is that is that the position that you're well i'm trying to understand what your argument is in terms of you're saying that the chinese communist party has the ability to essentially 51 attack the bitcoin network what for sure they do oh i i

disagree with that for sure all right hold on wait wait time out time out time time put a pin hold on pause we you i know you well enough and i think you know me well enough we're not going to change each other's mind on this so just put a pin in that one well let me ask two questions okay do you think the chinese communist party could if they wanted to control those four miners no but they can control the ipo of the largest i mean like by comparison of course no what they can do is they can shut the miners down right but like the chinese communist party does not control Ant Financial in terms of make the business decisions. What they did is they stopped the listing on an exchange, of course, but they control the exchange. They don't control Ant

Financial. If I come back to you with like maybe five examples where the Chinese Communist Party has actually made decisions at a more micro level. But here's a good example. Hold on. If you use the Ant Financial example, right? That would be like me saying that the SEC controls Ripple, right? Because- Well, personally, you just compared the Chinese Communist Party to the trump administration it's the sec okay well look i i don't believe that a comparison to how the u.s government works and how the chinese government works is a no i know my point my point being that uh when ant financial goes to conduct the ipo right it's very very well documented that uh jack ma said some things that sounds like it pissed off the ccp and there was

whether directly or indirectly uh you're not going to take the company public right now right was it a decision made and that was executed. Why it happens is besides the point, it's just the fact that yes, they stopped that from happening. That is, in my opinion, no different than if an outside regulatory body or the government stops you from listing on an exchange or doing something. Now, I think where people have the problem is why it happened, right? Like imagine if you were trying to conduct business and if you said something that upset somebody, then they would come after you type situation. That wouldn't be a good business environment to operate in. But let's go all the way back for a second.

Hold on. So if XRP was deemed kind of a negative ruling in your opinion, then really what it does is it might not necessarily hamper your ability to operate globally, but definitely in the United States, it would drastically change the way that you can operate. If not, even make it nearly impossible to do it based on how the system is built today? No, I mean, that's too far. Okay. Look, a lot of what Ripple does today in the United States, we can continue to do no problem. A component of what we do today is our customers of ODL, on-demand liquidity, they buy XRP from us. If, in fact, then that is a security, we would have to get a broker-dealer license. Anybody who's buying and selling XRP in the United States has to get a broker-dealer

license. The reality is what we would probably do is just say, okay, in order to provide certainty and clarity on a go forward basis, we would want to look at other markets, other jurisdictions where there is that clarity. And, you know, earlier in this conversation, I highlighted the UK, I highlighted Japan, I highlighted Singapore. These are all markets where you do have that clarity where you can operate with certainty and Ripple can keep moving forward. And I mean, frankly, most of our customers are non-US customers by a long shot today. And so we could absolutely continue to build the business and grow. We would no longer be a US taxpayer. We paid, I don't know, probably order magnitude a couple hundred million dollars in taxes here in

the United States. And I just think that it doesn't serve, I think, the US agenda to drive us offshore. So this is a really important point. I don't know if you guys publish this number or not, but if you're able to share it, the percentage of customers that are US versus international, I think most people, when they think of large companies, they think of them as like, hey, they started in the United States, they penetrate the US market, and they kind of internationally expand. And so the US is usually like a big portion of the business. Crypto is a little bit different, right? Where companies actually like they can be global on day one, the whole point of what you're building is that you can operate anywhere, right? And so you and

other crypto companies naturally have like much larger international customer bases than just a traditional company. Is that like a 10% of customers are in the US or more like 45%? More than 90% of RippleNet customers are outside of the United States. Wow. That's a huge number. Okay. Yeah. So look, cause effect. And one of the things that's interesting here, I can't know this, I'm speculating here, but if there was more clarity here in the United States and certainty, would that number be different? I don't know. And certainly one dynamic is we're solving a cross-border payments problem, which is more paying for smaller economies, because a lot of banks, a lot of financial companies here in

the United States, the percentage of business they do that's domestic payments versus non-US payments is different. Look, it all kind of goes back to, we need a framework that provides this clarity. I will highlight in a really positive way, and particularly these days, not many people are saying nice things about what's going on in Washington, but there's some legislation that was introduced before uh the election called the digital commodity exchange act and this would be a huge step forward in providing regulatory clarity and i think it would really bring the u.s to kind of equal footing with some of these other major g20 cftc i think put this forward you know i don't i'm not sure i would attribute to the quote cftc as much uh i don't have the

names right in front of me but you know this is brought by a number of reps uh and i do view this is pretty bipartisan. You know, it isn't just, you know, hey, what do Democrats think, what Republicans think? It's, look, we need this clarity. The bill was introduced, I think it was in the Ag Committee, and did, you know, got some traction, and I think will be revisited, you know, when Congress comes back in session in the spring. The reason why I mentioned the CFTC is I interviewed Chairman Tarbert, and we discussed it, and he seemed, like, relatively receptive to that framework. Let me ask this. If 90-95% of your customers are outside the US, and there's the lack of clarity in the US, is there a world where you just say,

basically, not screw the United States, but we're better served just moving everyone outside the United States and just operating the business everywhere but in the US? Or is that too aggressive of a uh kind of position to take look you know i i guess randomly mentioned before like i'm a kid from kansas uh we are a proud u.s company uh our preference would be to remain a very proud u.s company uh could we operate successfully outside the united states i think it's clear we could uh that isn't our and i also want to be clear you know we get lots of stones get thrown in the crypto community. And as you and I talked about, I was with you last time, I think we all should kind of like, look, all boats can rise. And even in my comments around

Bitcoin and the potential control of the Chinese Communist Party, I say that in a way of like, how do we actually acknowledge that? And what are the implications? And let's think about how we could address that. For me, I would like Ripple to stay a proud US company. If there are dynamics that limit our ability to be successful here, then of course, I have a fiduciary responsibility. I want to see Ripple be as successful as possible, and I want to do the things that will help achieve that. So there's going to be a change in administration, it appears. I'll say it appears because in 2020, I'm not going to think anything is official until it happens. But under a Biden presidency, does this become a better solved problem, or does it actually get worse?

Like, how do you kind of think of a Trump administration, a Biden administration, and what that means for the crypto regulation? Yeah, it's a good question. I mean, I think a lot of the stuff we have been talking about isn't a Republican or Democrat. And, you know, by extension, I don't think materially changes in a Biden administration. There's a lot of bipartisan support for, you know, using Ripple's point of view of like, hey, should the U.S. have improved underlying financial infrastructure? I mean, frankly, even as we saw through the stimulus that, you know, the ability to actually have low friction ability to distribute money was challenged. So I think it's a pretty bipartisan. The two things I think may change.

I mean, so one, I do think there's more and more understanding of the potential. I'm responding to your commentary. The potential for China's control is a factor that I think is rising to the fore. The second is, I think that, and this I think may change in a Biden administration, is the attention and concern from an environmental point of view about all things environment. And by extension, understanding that today, and again, I'm not saying I'm long Bitcoin, but understanding that today Bitcoin mining obviously consumes a lot of power. And how do we think about that? Are there ways that we could improve that?

I think you know well, Pomp, that Ripple has worked with regulators since the very beginning and somewhat in the earliest days of crypto controversially. and I don't think any administration change here in the U.S. is going to have a material impact or change. It's a bipartisan issue. Both sides of the aisle care about transparency for consumer protection. I mean, maybe one side cares a little more about environmental impact, but I think the macro trend lines here in the U.S., the macro trend lines globally are very positive for crypto, and I think that's one of the reasons why we're seeing the market overall do so well, And obviously with Bitcoin as a bellwether leading that charge, almost back to three-year highs, I think, and almost all-time highs, I remain very bullish. Yeah. What about Jay Clayton stepping down from the SEC or like a Brian Brooks?

He's temporary head of the OCC right now. Maybe he stays, maybe he doesn't. Right. Nominated to stay. Yeah. So what is kind of the, is there material change if either one of those, well, Jay Clayton is definitely stepping down and Brian may or may not stay. Like, does that have an impact? Or again, is this so much bigger than any one person or one organization? And it really has to be kind of a national, almost a focus, right? To kind of get this clarification. Well, look, I think I'll maybe comment first on Brian Brooks. I mean, under Brian Brooks' leadership, they've taken a very pro-industry stance. I think, yeah, the SEC has published several letters, and this is allowing banks to service crypto companies, even hold crypto. And that's a very big deal, I think. I actually think some of, when that was first announced, I think it is under-reported or under-understood, if you will. I think it's a really big deal and I think

it's very positive for the industry. And again, I think if we believe these technologies around crypto and blockchain are consequential and we want to put the U.S. in a position to lead that next generation, I think the leadership from the OCC and under Brian Brooks has been a very big deal. You know, what does it mean for Jay Clayton to step down? I don't know. You know, it depends a lot on who is coming in as the next chair and, you know, what priorities they set. I hope that we find ourselves with a clear understanding that so far the SEC has not provided a level playing field, right? In the balance, they put their finger on the scale a little bit and to advantage Bitcoin and Ether. And by the way, you have seen that since those determinations were made by the

SEC, Bitcoin, even in the period between Bitcoin's announcement and ETH's announcement two and a half years ago, Bitcoin outperformed. Then you add ETH into the good housekeeping and ETH outperformed the whole market, right? And that's just logical, right? That makes sense if there's clarity and certainty. And so, look, I think the SEC has tried very hard to get the abusive activity that was represented by the ICOs. Before you and I had met, I certainly was outspoken in my belief that ICOs were fraught with risk and likely to bring the ire of the SEC. I think it did. But I still think we haven't gotten that clarity. So they went after the tail of the bad actors, but we haven't really gotten that clarity at the head. There's a handful of clear digital assets being used in

this market, and I think we should have that level playing field. Absolutely. The last thing I want to end on is probably the biggest change between the first time we talked and now, which is there's a global pandemic and the Fed has decided to step into markets and everything that is tangentially related to COVID. How has that impacted both your guys' business, but also potentially, you think, the crypto regulation? So, you know, I think there's a well understood dynamic where a lot of trends that were, you know, preceded the quarantine were already happening. I just think that the quarantine and dynamics associated with that have accelerated those trends. And crypto is one beneficiary of that. The move away from cash

to more digital transactions. Certainly, the crypto market at large as an inflationary hedge has benefited from trillions of dollars of stimulus here in the United States and really globally. For Ripple specifically, we still expect growth on a year-on-year basis. One of the key metrics we look at is transactions on the network. How many transactions and how is that growth rate? And look, we expect growth to be about 5x year on year. Now, I will say that's not quite where we thought. We thought it would grow more than 5x. On the other hand, if you say to most people like, hey, we're growing at 5x year on year, you're like, holy shit, that's fast growth. So we're probably a little bit behind where I thought we would be. So I don't

want to pretend that COVID hasn't been an impact. But look, in many ways, remittances are as important as ever. The cost of remittances, the friction of remittances are as important as ever. And I think that bringing that to the fore and helping people understand how Ripple is solving those problems for banks, for financial institutions, for payments, I think is important. And I'm really pleased that the team at Ripple, I mean, it's been incredible to see. We have 500 people worldwide and just getting shit done in a different environment and firmly believing in the mission has, I think, helped in that regard. Absolutely. To close us out, what do you kind of think should happen with the regulatory environment? Is this a, I call it a national

decree? Like there's one body and they can just say, hey, here's the rules from now on, go forth and build what you want. Is there some other kind of solution that you're looking for? No, look, I think the DCEA would be a perfect example of the DCEA, I mean, the Digital Commodity Exchange Act that I commented about earlier, it would be a major step forward towards regulatory clarity. And I think it would provide, you know, allow U.S. companies to have, to be able to compete on equal footing. Look, I just want to keep emphasizing, we're not looking for the U.S. government to do something to advantage the XRP community or to advantage Ripple specifically. all we want is an equal playing field we want to level equal footing so that we can compete in the

market uh side by side with the companies that they have already done things to advantage yeah where can people find you on the internet uh twitter is probably best uh at b garlinghouse all right have you been answering tweets i know people got to be tweeting at you all the time i every once in a while much to the frustration of the uh communications team at ripple every once in a while, it happens mostly when I'm on a flight and I'm bored and I'll get on Twitter and I'll start commenting, which gives them a lot of angst that, uh-oh, what's Brad saying? But no, I get on there once in a while. The challenge is, of course, there's a lot of, I mean, frankly, it's a reflection of the politics in the United States. There's a lot of vitriol sometimes just

like, okay, come on. And I understand different people have different perspectives. I really do believe all boats rise here. And I spend way more time and energy thinking about how can I help other projects? How can Ripple help other projects? I'll remind you, Ripple has invested literally hundreds of millions of dollars, not on XRP, but in other projects across the crypto community. Yeah. The thing that I think is so interesting is people decide to attack or not attack uh and sometimes um there's very good reason and then other times there's uh you kind of are scratching your head as to why did why is that the good or the bad thing um so it's uh just a byproduct i think of crypto in general but uh listen brad thank you so much for doing this um

if you guys want to ask brad questions uh hopefully he's flying soon and he will respond to all your tweets i'm gonna i don't know when when you're posting this but i gotta if i get a slow afternoon and I'll go in there and reply to a bunch. All right. So if you guys want, tweet at Brad. I'll send him an email before we post this. He'll be ready to go for, we will obviously be super kind

and very thoughtful love letters, but try to ask serious questions and hopefully you guys can get some answers that I didn't ask. Brad, listen, thank you so much for doing this and we will have to do it again, my friend. All right. Good to see you. Go Kansas.