The Pomp Podcast - #670 Building The Future of Crypto with Brian Armstrong

Episode Date: September 24, 2021

Brian Armstrong is the founder and CEO of Coinbase, the largest publicly traded cryptocurrency company.  In this conversation, we discuss Coinbase, regulation, the SEC, bitcoin, ethereum, smart contracts, NFTs, DAOs, company culture, remote work, and operating a publicly traded company.  ======================= Polymarket is the world’s leading information markets platform where you can trade on the most pressing global questions and see unbiased, real-time data on what the market thinks will happen – all on the blockchain. For a limited time, sign up with referral code “Pomp” to get your first trade reimbursed up to $100. Click on the link to get started: polymarket.co/pomppod ======================= MiamiCoin made history this past week when the City of Miami Commission voted unanimously to accept an ongoing donation generated by the protocol valued at $5 million and counting. This is a historic event for a city government to embrace crypto instead of fighting it. MiamiCoin is the first token to be released by CityCoins, a community-driven project aiming to give people around the world a new way to support their favourite cities. This project is leading the way out of the crypto casino, and straight into crypto civilization. Want to get involved? Visit CityCoins.co to learn more about the project, or chat CityCoins.co to join the community discord and get involved. =======================

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. Now let's kick this thing off. Brian Armstrong is the founder and CEO of Coinbase, the largest publicly traded cryptocurrency company. In this conversation, we discuss Coinbase, regulation, the SEC, Bitcoin, Ethereum, smart contracts, NFTs, DAOs, company culture, remote work, and operating a publicly traded company. I really enjoyed this conversation with Brian, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is PolyMarket, the world's leading information markets platform, where you can trade on the most pressing global

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Next up is MiamiCoin. MiamiCoin made history this past week when the City of Miami Commission voted unanimously to accept an ongoing donation generated by the protocol valued already at $5 million and counting. This is a historic event for a city government to embrace crypto instead of fighting it. MiamiCoin is the first token to be released by CityCoins, a community-driven project aiming to give people around the world a new way to support their favorite cities. This project is leading the way out of the crypto casino

and straight into crypto civilization. MiamiCoin is built using stacks, meaning that it is built on top of Bitcoin with smart contracts. Want to get involved? Visit citycoins.co to learn more about the project, or you can click on the link in the description to join their community discord and get involved again miami coin handed the city of miami five million dollars by being built on top of bitcoin

and the city has agreed to continue to accept the donations moving forward pretty damn cool go check them out at citycoins.co or click on the link in the description to join the discord all right let's get in this episode with brian i hope you guys enjoyed this one anthony pompliano runs pomp investments all views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've

got Brian here with me. Thank you so much for doing this, man. Thanks for having me. This is great. Absolutely. Let's just start off with a reminder to folks about Coinbase, the business in terms of what your mission is as a business and then what the product suite looks like today? Yeah, sure. Our mission is to create more economic freedom in the world. And so I think crypto is probably the best technology out there to do that right now.

I got really excited about economic freedom a long time ago. I read about it and it's kind of this composite metric that looks at all the countries of the world and it tries to look at things like how easy is it to start a business? Is the currency stable? Is there free trade? Is there corruption and bribery in the economy

and stuff like that? are property rights enforced, basically. And when I first read the Bitcoin white paper back in 2010, that was kind of one of the first thoughts that went through my head was, wow, this might be this key to unlocking more economic freedom globally and going and creating better financial infrastructure for the world. So that's the mission of Coinbase. And we have a whole bunch of products with different customer segments. So we have retail customers, institutions and developers. On the retail side, we've got our app out there that has about 60 million verified users and helping people buy and sell crypto and then increasingly use it for more and more different

things. And then on the institutional side, we've got about 9,000 institutions signed up who are increasingly coming into crypto, storing more and more of their assets within crypto, which is great because actually a lot of the money in the world, majority of the money in the world is tied up in institutions, not in retail. And then lastly, developers. So we want to help this whole crypto economy and ecosystem grow. So we're building things like Coinbase Cloud, which is AWS for crypto. We're kind of externalizing all the services that we've built internally, like how to integrate with these blockchains and custody and trade and everything and make it so anybody can build their business on top of those. And then we're doing things like Coinbase Asset Hub,

trying to make it easier for people to create their own tokens and get them listed on Coinbase and maybe even eventually create DAOs and raise money and just change the whole way that capital formation happens with all these crypto startups that are getting built. So those are our three customer segments, and that's our mission. Economic freedom is a really interesting topic. And most people, I think, they talk about the assets, they talk about the technology, but they kind of lose the plot as to what the potential impact on a global stage can be. What is it about the economic freedom that you think kind of caught your attention or really kind of drew you to that specific idea, that measurement? Yeah, well, you know, I had

experienced this firsthand, um, in a couple of different ways. So one was that I had spent a year living in Buenos Aires, Argentina. I just kind of went there after college to try to figure out what I want to do with my life and sort of live abroad for a bit while I was working on a different startup. And one of the things I saw in that culture was just how broken, um, the financial system was. It was really holding people back, not only with inflation, which was kind of eroding the wealth, especially of the poorest people in society. Um, but it was also making it hard to like, you know, get a mortgage to buy a house, like businesses were all struggling to collect and send payments. It kind of created this atmosphere of despair and resignation, I would

say in the culture, like people just weren't optimistic or wanting to try, try cool things to go help people because they felt like I could all be gone tomorrow. It could all be taken away from me. So it was this like really insidious problem in that society. And other ways I saw it was, for instance, I was, I was an early employee at Airbnb. We were helping move money to people in the 190 countries, people renting out their homes and collecting payments from people who wanted to stay there. And I just sort of had a front row seat into how broken the global financial system was. It was this huge barrier to innovation. It had high fees, delays. Oftentimes, it was kind of felt almost like corrupt or just opaque in terms of how it would work.

And it was like, it just never made sense to me growing up with the internet where we had this global system, you know, you could send an email or a WhatsApp message. It would arrive instantly anywhere in the world for free. Why weren't payments like that? It's like, why was, why was every single country creating its own proprietary system that could be corrupted or manipulated or just have, you know, incompatibilities. So that's why I got excited about it. And I felt like economic freedom was this huge unlock. Basically it was, it was almost like solving a meta problem because, you know, you could argue things like the industrial revolution and some of these things that have happened historically, just by giving people the ability to, you know, if you do

something good for the world, you can capture some of the upside. That's a very simple, but very powerful idea. And arguably it's almost sufficient to get a huge amount of innovation and progress happening in society. So I'm very excited about, you know, how do you, how do you get better, more progress happening in society? How do you get more technology innovation and property rights and economic freedom are kind of a core foundation of that. So I felt like this might be one of those rare moments in history where a small group of people could take this brilliant technology innovation, Bitcoin, and with the proliferation of smartphones and the internet, actually inject economic freedom and property rights and good financial

infrastructure into all these countries all over the world, really even just from one company doing that. And that just, I couldn't stop thinking about it for a year. And so eventually I was like, all right, I got to try creating some kind of a prototype. And that's led to the origin of Coinbase. You made a good bet because that seems to be what is occurring as we're watching this all play out here. I should say before we have a conversation about the public company and some of the regulatory stuff, I've got equity exposure to Coinbase. Obviously, you're a shareholder in the business and nothing here is financial advice. But in terms of Coinbase, you've built a business that is today worth tens of billions of dollars and recently took the company public. Any

lessons learned from that process of going public, any things that have surprised you or, or downsides that maybe you didn't expect as well? Yeah. You know, so I actually, I wasn't sure that I wanted to be a public company CEO when I first started Coinbase because, you know, I'm an, I'm like an engineer product person by background. I felt I'd read all these stories about how once you take a company public, it's like, there's kind of activist shareholders and you have to spend, you know, I talked to some public company CEOs actually. And when I was trying to figure all this out and they were, some of them told me they spent 30, 40% of their time just talking with public market investors. And to me, I felt like, you know, this might be something that just slows us down and

how are we going to create great products? But I realized over time that, you know, there's many different ways to go public and you can actually create this in a way that's very beneficial to the company. So just to give you a couple of examples that are like very positive reasons, why, why to do it and why part of why we did it, you know, one of them is that, um, it's, a huge legitimizing force for not only your own company, but for the industry. So for instance, once we became a public company, a whole bunch of Fortune 500 companies started being more comfortable working with us, especially on the institutional side of our business and on the developer side. But I didn't realize and appreciate this until we went public, the level of

legitimacy that it actually applies to the company. Now, on top of that, it gives a whole bunch of liquidity to the early investors and the employees. I think over a million, sorry, over a thousand millionaires were created at Coinbase when we went public, which was an incredible statistic. So that was just hugely emotional and life-changing for so many people. And it turned out to be for me as well. And then it gives us, now that our stock has this kind of liquidity to it, it's given us a liquid currency to go out and do more international expansion and things like that. It also, by the way, it's much easier to raise money as a public company. You know, we've recently raised like $2 billion in debt, and the whole thing took about one week. I actually didn't have to go to a single meeting for that, although our CFO did a whole bunch of meetings. So my hat goes out, my hat's off to her. But yeah, there's some definite advantages of being a public company. So far, I've been really enjoying it. I'm planning to keep doing it for a long, long time. And I'll give a plug to the direct listing. We did a direct listing instead of a traditional IPO. I thought it was great.

I think we got better deal terms. We didn't feel this kind of pressure to underprice the stock for insiders. We wanted it to be a totally fair thing. We went out. So anybody on day one could retail institutions, anybody could bid and buy it at any time. And it was a fair market for everybody. I think the direct listing was a very positive thing. So I'd recommend that to other founders.

When you add in the economic benefits, the ability to fundraise and you not having to go to the meetings to raise capital. I could see why a public companies is, uh, is pretty enticing. Uh, the elephant, the elephant in the room now is, uh, there seems to be a ton of regulatory pressure, uh, both from actual regulators, uh, and also what I'll call more of kind of the politicians, um, or people who are elected officials. Uh, maybe let's just start with how you view regulation. Obviously as a public company CEO, uh, you're regulated by a ton of different organizations. There's all these different rules. Um, like how do you view the regulation and is there a thing as like good

regulation, bad regulation, or how do you look at this? Yeah. So this is a very interesting dynamic that's happening recently, but honestly, it's been happening for the entire time that Coinbase has been around nine years or so. It's just kind of the intensity keeps dialing up every year because crypto keeps getting bigger and bigger. And so generally I view this all as a very positive trend. In the early days of Coinbase, we made a conscious decision. We said, hey, we want to go out there and work proactively with regulators and educate them, get licenses, do whatever we need to do because we want this technology to go mainstream. I want there to be a billion people accessing an open financial system every day through our products and other companies to get

the benefit of this technology. And I knew that in most parts of the free world, this was not going to be outlawed or something like that. At least I didn't think that was very likely, but it would be regulated. I felt like society is not going to just allow this to proliferate completely unregulated. So over time, we went and we got money transmitter licenses and we started interfacing with all of the federal regulators. And actually today, Coinbase interfaces and interacts with 54 different regulators just in the United States. And we're actually in about 30 or 40 countries globally. And so we're very much a global company. And so we interface with similar counterparts in other places. So where is

this all going? I mean, for a long time, the crypto industry, I think, has been asking for clarity from the regulators out there and saying, you know, this is also new. And now I don't blame the regulators, by the way, for not coming out with a ton of clarity quickly. It's such a brand new thing. It actually might've been a mistake to come out with it too quickly because there are examples historically probably of regulation that's come out. It's like kind of overreacted or tried to define something too soon. And this space is evolving so quickly. So, you know, they kind of let it percolate. We sort of shoehorned the regulation into the existing frameworks that are out there, like money transmission. But now with the advent of all

this stuff, the government is starting to get more pressure and say, hey, what are we going to do about this? And so you're seeing this kind of dance that's happening, a little bit of healthy tension, I would call it, between the regulators now who are coming out and saying, all right, y'all, we need to get this figured out. What's unfortunate, sometimes they're kind of doing that through enforcement actions, which, um, I don't think is necessarily fair if they haven't kind of already just, um, you know, picked up the phone and said, Hey, here's our opinion on this. Like we want to enforce a level playing field across the industry. Everybody do this. I haven't seen that happen in some cases, which is a little frustrating. They're kind of going right to

enforcement, which I think sort of sets up a negative tone. Um, but regardless, it doesn't really matter if it happens via enforcement or, um, more internal dialogue and everything like that we'll eventually get to a place where we start to create legal precedents. Um, more of this stuff becomes clear and the court may end up having to eventually decide on some of these things, like which of these tokens are securities, you know, um, in the absence of clarity about that topic. I mean, we have, we have the Howey test, right. But the Howey test was created back in 1946, um, in a world pre-internet, you know, pre it was like post right after world war two. Right. So how could this Howey test apply to this brand new financial system we're creating basically

every founder and investor and their highly paid lawyers are all kind of trying to tease out like read the tea leaves about what this could possibly mean for their business. And it's created this kind of wide variety of interpretations and a completely ambiguous environment, which kind of stifles startups. And some of those startups have decided to go abroad to incorporate because of the lack of clarity in the US. So now we're sitting here in this environment where in the absence of that clarity, Coinbase went out and sort of, we created things like the crypto rating council. We created a very thorough digital asset listing process internally that looked at compliance and legal and security at cybersecurity. And we were actually pretty cautious about a lot

of the assets we added. You know, at the time that Coinbase had maybe 50 assets or so there was some of our competitors had hundreds of them, right. And now we have about a hundred assets total that we've gotten comfortable with many of them, other ones we've rejected. And so I would expect this whole environment is just over the next year or so. It's going to be a series of enforcement actions, a series of behind closed door discussions, legal precedent getting created. There will probably be broker dealer licenses incorporated, or I should say operationalized. Coinbase went out and got its broker deal license a while back, but we haven't operationalized it because there aren't any security tokens that our customers want to actually trade. And so maybe once we get that operational, then other crypto tokens will then go be pushed to register with the SEC. We actually want to make that easy as well through a product we have called Coinbase

Asset Hub and just make it super simple for any asset issuer to come form a smart contract or however they want to do it, create a new asset, register it with the SEC if they need to do that in the US, do a reg S offering if they want to do it abroad. So we want to try to make all this easier, more regulated. I think we're all pretty much aligned, even the regulators and the industry. There's just going to be a bunch of silly headlines and uncomfortable conversations as that all plays out. So I want to try to kind of summarize what I believe to be you're all's position, but if I misspeak, uh, correct me is basically, look, we want to play within the rules. We think regulation is generally good. Uh, but in some areas we don't know what the

rules are. And so we're trying our best, but if we don't know what those rules are, and then all of a sudden we get told, Hey, don't do that. It's kind of hard to operate a business with uncertainty. Uh, it feels like that's one kind of talk track or, or, uh, um, you know, viewpoint. Another is, Hey, there's things that we think should be allowed to that feels like the regulators are telling us they aren't allowed and we want to have a discussion and maybe there isn't a discussion at the level that you want to have it, or you're not getting guidance that you're looking for, et cetera. And then there's like this third world, which is basically like, hey, we do things as a publicly traded company in a regulated environment in the United States, but like look globally and

there's people doing all kinds of different things. And so there's like a global competition going on. How much does the U.S. want to over-regulate or regulate versus like wide open free markets and just let everyone go let the free market decide? Is that kind of a fair characterization of like maybe like the three points around regulation and where you sit? That's a really great articulation of it. Yeah. I do think that's really important to remember as well. The last point you said, which is that we are living in a globally, a global free market, right? You know, US citizens actually are going and using products that are created abroad increasingly because they're not able to get the stuff they want in the US. So that's a risk.

You know, I think the U.S. government, again, we're a global company. I talk to regulators all over the world. But one thing I noticed when I go to D.C. is that I think, you know, 50 percent of the people I talk to in D.C. roughly, they're still thinking of crypto as a risk. they think this is scary. This is dangerous. They have all kinds of misconceptions in their head about the percentage of activity that's for illicit purposes and all this, which is actually much smaller than most of them realize. It's probably about 1% or less, whereas the US dollar cash is like 3% to 4% illicit activity. But in their mind, they think it's like 50% illicit activity. So that's probably half the people I meet in DC. And the other half are, they realize that this is actually a huge opportunity. It's a hugely important new industry for the United States and every country around the world, and that they exist in a competitive environment where

the US needs to be attracting these entrepreneurs, getting these foundational companies built here. And that frankly, the American citizens really want these products and services. Tens of millions of Americans, this is not a fringe thing anymore. Coinbase has 60 million verified users, and we're just one company. So there's tens of millions of Americans who want to use these products and services, they're getting a benefit from it that they're not getting from the traditional financial system. And ultimately, you know, the citizens elect our government and the government appoints regulators and everything like that. And so I think that if they are too hard on crypto, basically it's going to become politically infeasible. They're not going to have

the will of the people behind that. It's almost like prohibition or something like that historically. Like you can't go out and like try to criminalize something that, you know, 50 million Americans are doing, you're just going to turn them all into criminals, but they're not going to stop doing it. And so I think that's the maybe the one of the big things that hasn't been realized yet on in DC. So I think a lot of folks who are listening to this hear about regulation, they feel that there is some tension between the companies in the space and regulators, both in the United States and also internationally as well. Various folks, whether it is the SEC, the CFTC, or some other organization, I want to use kind of the tangible example of the Lend

product that you all had, you know, kind of ideated on, you wanted to create and launch. There is this now infamous Twitter thread that you put together and put out publicly, kind of calling attention to the fact that you didn't think you were going to be able to launch it. And maybe just walk us through kind of how this process works. And, you know, both, I think, from if you can, what you think Coinbase is kind of doing to move towards a solution, but also maybe from the regulator standpoint, are there things that you think like, yes, they're doing this and that's actually a good thing. It's a fair thing to be doing. And if there's anything that they're doing that you think could be improved or changed. Yeah, sure. So the Lend

product was kind of an interesting example for us, by the way, that the Lend product is not really material to our revenue at this point or anything like that. But it's it's an interesting case because some of our competitors, great companies in crypto, by the way, have had a product like that out in the market for a couple of years. We've seen demand from our own customers to have it. And so we decided that we wanted to go out and put out a similar product. What was frustrating is that we proactively went to the SEC ahead of time. We've been telling them about our development of this product. And we felt like we had buy-in there. But as it approached our launch date, we suddenly saw a much different stance from them. And they came out and said, well, not only do we

have concerns, do not launch this. And if you do, we'll be suing you. And they sent us a Wells notice, which is kind of like a preliminary document before you sue somebody. So the product never launched. But I was kind of frustrated by that because I felt like, well, the goal of the SEC is to protect consumers and then create a level playing field. So number one, how are they protecting consumers in this case? I think a lot of consumers demonstrably have wanted to earn higher yields on their savings accounts and things like that. They're not really getting those products from the existing financial services. So that was one open question. And then the second one was, how are they creating a level playing field? Because it seems like other companies

have been able to do this, but Coinbase suddenly is not allowed to. Sometimes we're a more well-known company. We're a bigger company. And so we sort of get this scrutiny that other startups don't have. By the way, I kind of understand that the SEC is just one organization. They don't have time to look at every startup, but they kind of can look at the big ones. So we were stuck in this kind of uncomfortable position where the SEC would not tell us why they thought it shouldn't be allowed. They were very closed-lipped about that. I'm not sure why. Maybe they didn't want to tip their hand in some kind of litigation or something, but it just didn't feel collaborative or being upfront at all. And they were creating this unlevel playing field in the process. So at the

end of the day, we sort of talked to our lawyers about it and they felt like, what is our case here? We're being harmed. Should we proactively sue the SEC? Should we just enter litigation with them and try to create some kind of a legal precedent? But we felt like there was a lot of deference given to regulators in the court system. And we have, frankly, no desire to be engaged in drawn out litigation with any regulator, right? I consider that to be very much a last resort. We always want to be proactive and collaborative with people. And so we decided not to launch the product, essentially. We're going to wait and see what the SEC does in terms of the other products that are out there already in the market, where it's not a level playing

field today. I think we want to also just focus our efforts on maybe even more important things happening in crypto, like the questions around which of these tokens are securities and how is DeFi going to be used? There's, you know, these are the things that I guess we really want to stand behind and sort of say, these are the benefits to the crypto community that we want to go make sure there's a good legal precedent for. But I, you know, I, when I went to DC, I reached out to the SEC. I tried to get a meeting with them. They told me that they weren't meeting with any crypto companies. I was kind of surprised by that because there are so many different regulators out there. Every single one has been willing to meet with us and every

other branch of government, by the way. And SEC was really the only regulator that I was not able to get a meeting with as the first crypto public company in the United States. They weren't willing to meet with me when I went to DC. So there's something kind of strange going on there. I wish that we would basically all just be able to pick up the phone and talk about this stuff. It doesn't need to be in a combative stance. And whenever I see something like that happening, that I think is kind of inauthentic. And I tend to talk about it publicly. I want to put this stuff out in the ether so that the world can know about it and they can make up their own mind about how these things should play out in government. So I want to ask kind of a couple of different perspectives from

this specific situation, just because I think it's a good tangible example where people can understand both your perspective and also the regulators. As a publicly traded CEO, especially one that just came into public markets, if you went and you talked to somebody in the legacy finance world, they would say, oh my God, that is nuts to do a public thread and talk about the SEC, et cetera. How do you think about risk reward in terms of having the conversation and kind of pushing forward to what I think, based from what I understand you've said publicly and also elsewhere, is really trying to work towards a solution. How do you view that, moving towards a solution? And did you evaluate any sort of risk with kind of being more public, maybe so than,

than other people would? Yeah. So, I mean, look, there's no right answer here. Okay. So I'm not going to come out and say that it's the right thing to do, or it's the wrong thing to do. A lot of this stuff comes down to kind of gut at the end of the day. And, um, the way I thought about it was, um, you know, first of all, Twitter, Twitter is a funny thing. Cause if I had gone on to, um, CNBC or something like that and said the same thing, people would have probably thought like, oh, that was a healthy debate or dialogue. There's something about Twitter, which, you know, people, it's a very much like a West Coast and East Coast thing, right? So on the East Coast, the reaction to my tweet, I'd say was more negative. People were like, wow, how could he do

that? You know, he should be going through appropriate channels and, you know, Wall Street Journal or whatever. And people on the West Coast were like, that was the best thing I've seen, you know, all year. And they were like, finally, somebody is willing to just speak the truth about what's going on behind the scenes and put it out there in the open. Right. Um, and so I think there's just a cultural difference that's happening. Look, my, my, I'm not naturally a combative person. I'm actually like kind of conflict avoidant, right? Like I, my default is to go build genuine relationships with people, just try to work on stuff. Like, even if we disagree, there's a, there's a way to make it win, win, and just move forward. But if somebody is,

you know, if they're not going to meet with us to even have a conversation, which by the way, I still, my, my optimistic view is that we can change that. Um, we still haven't gotten a meeting with the SEC for someone, you know, high up there, Gensler to talk to me personally, but my hope is that that's still on the table. Um, and if I can't get that, then eventually I'm just going to go out and talk about it publicly so that people can know about it. I think it's a form of accountability, frankly. Um, and that's like the way that the, this is trending in the future. It's, it's going to be, companies are less going to be going through traditional channels, CNBC, Wall Street Journal, mainstream media, New York Times. They're going to be bypassing that and going direct to

their community via modern tools, blogs, podcasts like this one, Twitter, and YouTube, and all the modern tools that are out there. So it's an interesting cultural moment where West Coast companies, I think, are starting to take a different view on this than the East Coast. And when you look at it from the regulator perspective, it almost feels like one, like you said, there's so much stuff going on. I definitely do not envy being a regulator right now in terms of trying to figure out not only, you know, what is inbounds or out of bounds, but also just like what to go focus on first. I went to the exercise recently and said to myself, you know, if you're a regulator and you stack rank all the different things going on in this industry, like what do you even go look at first? It's hard to just do that exercise alone. And so are there areas where you think that regulators and crypto companies, a lot of folks who run other companies or investors in the industry, can kind of meet in the middle?

Like, what is that middle ground where you think you're like, OK, this is the activities that we should go focus on that can actually push this forward, get to solutions on some of these issues, and ultimately, I think, find some balance between the kind of economic empowerment, the innovation, the job creation, all the things that we know to be positive, but also satisfy whatever the concerns are of whether it's regulators, politicians, etc. Yeah. So I totally agree, by the way. I have a lot of empathy for regulators in this space because they have a very hard job. It's so new. It's changing so quickly. Frankly, I would have a very hard time getting out there and sort of publishing clear guidance on it. I think it's very difficult. But Coinbase has been thinking about what we can do to help here. In fact, when I was in DC, one of the most common things people asked me was, can you help draft something,

you and your lawyers help draft something that would be a proposal about how this industry could be regulated more efficiently, right? So that Coinbase doesn't have to have 50 plus regulators in just one country. And we don't have this kind of jump ball between the different federal agencies. So actually, we've been working on a draft proposal of a regulatory framework for the industry. We're going to be publishing that probably in the next two weeks or so. And it's meant to say not that we have all the answers, but it's a start to the conversation. And I think it could make sense to have one agency or basically a division within one of the existing agencies be the single point of regulation, a single federal regulator in the United States that can help this industry get a little bit of clarity so that this industry can be built in the United States effectively. And the U.S. can kind of maintain its position as a financial hub and a leader in technology with appropriate regulation in place.

So I think we basically all want to think the same thing. We want to help the industry grow, but have some reasonable regulation that's thoughtful. And I guess we want to try to be part of the solution here, not just engaging in antagonism. And so we're going to put out a proposal there. And I hope people are willing to come talk to us about it. One of the last things I want to talk about regulation and move on to some of the other aspects of the industry is in some weird way, heavy handed regulation or some stuffing out of innovation actually could be a tailwind in a weird way to Coinbase, right?

If all of a sudden Coinbase is a publicly traded company, sure, maybe you can't launch one or two of your products, but for the most part, you almost get entrenched as an incumbent crypto company and startups really struggle to compete. Like that would actually be beneficial, right? Coinbase is probably worth more money in that situation. Um, talk a little bit just about like almost in some way, uh, wanting clear regulation and competition being healthy, uh, and, and really driving innovation versus just you all going, which may be in the legacy system. Actually, this is what the incumbents do. They go and they advocate for a bunch of regulation that stops all competition and really entrenches them.

You know, you're so right. And I'm, I'm glad you brought that up. I think it's, it's actually kind of funny how the narrative gets set sometimes, or I think sometimes all nuance is lost in these conversations. And people sometimes look at it like, oh, the crypto people don't want to be regulated. It's actually kind of a ridiculous statement because number one, we already are regulated. We have been for eight years. We have over 50 regulators we interact with in just one country, the United States. But moreover, the point you made is exactly right, which is honestly, regulation would be the best thing to ever happen

to Coinbase, because we're the largest company who can shoulder that, you know, we have huge balance sheet, we have tons of lawyers on staff, we already have been leaning into regulation for many, many years, the people that it would harm, or the companies that would harm are smaller crypto startups. And it would honestly, oh, yeah, again, it would entrench these companies. It's like, you know, look at what happened is happening with like, kind of Google and Facebook and all these things, or, you know, the, the Dodd Frank Act, or you can kind of go back and look at all these industries, they basically just enshrine the incumbents. They sometimes harm innovation, which is bad. That's why I'm more against it. But it would almost be better for Coinbase in a weird

way. Yeah, it is. It's very weird. And I think, you know, you've obviously have a great appreciation for just like how complex this situation is. And we're just talking about what I'll call kind of the incumbent businesses or the entrepreneurs who run these businesses. We're talking about regulators, but there are a whole bunch of other people at the table as well. Everyone from the retail to the institutional investors. And you can see how very quickly many different interests all get intertwined and people are just trying to figure it out. Let's move on and kind of talk about a couple of different areas across the industry. I basically just want to throw out a couple of what I consider like the corners of the industry or areas where it seems like there's a

lot of intellectual and financial capital moving in a trend. And then you just elaborate in terms of what your thoughts are on that specific spot. And so maybe we'll start from the biggest and kind of move down to some of the newest or fringe innovations. First, starting with Bitcoin, Lightning Network, and a lot of what I think kind of you started out, and as you said, in 2010, when you read that Bitcoin white paper and economic freedom, how do you think about like the blue chip assets in the space and Bitcoin specifically, and how that has evolved since you first came across that white paper? Well, you know, Bitcoin is kind of what got me super excited about crypto in the first place. And I still am excited about it. I hold a ton of crypto,

or sorry, a ton of Bitcoin. But I think that it's going to be around forever as basically the gold or the money of this industry. I'm seeing adoption and interest across a lot of different assets. I think that's generally a good thing. Coinbase has always tried to be agnostic about which one wins and which one doesn't. We just want to basically serve our customers with whatever they want to do. So it's been... Actually, I always am a little frustrated seeing some of the tribalism that happens on online. And I always, you know, Twitter is kind of built for, um, conflict and warfare. And I don't think it actually represents what the majority of the industry feels, which is probably a much more nuanced view, um, which I know you have as

well. Uh, but yeah, I mean, Bitcoin's great. I've been, it's been really cool by the way, seeing some of the lightning network adoption just happening in El Salvador with like McDonald's and all these things. And so, um, I think, I think it's great. I think we should keep building that stuff. Is it fair to say in some way, and I've started to see this with folks who've been around for a long time, that Bitcoin early on was like incredibly intellectually exciting and they really dove into it and pulled them into this industry. And there's almost this sense of like inevitability to it. Like you said, you know, Bitcoin's gonna be around forever. And people who are builders, they start to become intellectually interested in other things as well. Doesn't mean they lose

interest in the original thing, but just like their aperture almost expands. Is that kind of a fair way to think about how your journey in crypto has happened? Yeah, sure. I mean, Bitcoin was a huge breakthrough, both in computer science, but also kind of economics and all these things. But it spawned a whole industry and a lot of other innovation that's sort of derivative of that work. And so I'm always kind of interested in what's on the frontier and what's getting the most adoption in different areas. So I think we're quickly going to end up, I mean, we already are in this world where the crypto economy is built of a number of different assets and blockchains that have different purposes, whether that's to be sort of gold or payments or security contracts or

gaming or derivative. So there's more and more things that are going to keep coming out. I think my guess is that we'll eventually be in a world where there's maybe dozens of blockchains, but there's millions or billions of tokens. And you could imagine all kinds of things that people use those for, right? Every organization that comes out, maybe even every individual or these NFTs and all this stuff, these are all, there's going to be so many tokens that it's like hard to even imagine where that ends. Last question on Bitcoin is Lightning Network. You mentioned the adoption, especially El Salvador, obviously, and also corporations there. Coinbase and many other exchanges, but Coinbase, I looked before, hasn't integrated with the Lightning Network.

Are there certain milestones or things that you look at and you're like, hey, once there's a certain amount of adoption or nodes or capacity or something that then you guys would say, hey, let's go do that? Or is it something you're just kind of monitoring and it's, you know, day by day is when you make that decision? Yeah, you know, so I was I was actually asking the team about this earlier and looking at some of the adoption stats of, you know, you can sort of look at how many how many Bitcoin are tied up in lightning channels. And you can look at sort of similar stats across other L2 solutions just to get a sort of a sense. But what I haven't actually been able to find is a good metric that just looks at, you know, how many transactions a day are happening on the different L2 solutions out there. And I think generally we want to be supporting all of them that are getting some reasonable threshold of attraction. You know, but if there's one that's like really breaking out, then that kind of helps us think about from a UX point of view, which where which ones to emphasize. because I do think there's essentially some sort of a cost or an overhead for the average person

coming into crypto. Like, you know, we need to expand the circle of not just like super sophisticated early adopters to like, what's the next level and the next level. So that's how we need to get billions of people into using crypto. And so there's a cost, the more sort of jargon and options that we throw at them in these interfaces. One of the teams that I spun up this year at Coinbase was called the protocol team and their whole job is just scale blockchains. Okay. That's like kind of the mandate of that team. And they're looking across all these different things, lightning and the ETH solutions and whatnot, and also just scaling it from, you know, how many taps do you have to do to like complete a payment, which I still think has way

too much friction. But the more we can get that kind of stuff working, I feel like it's going to be a huge unlock for the industry. How do we get the next 100 million or billion people using crypto? We've got to get the throughput, the scalability increased. I think it's just like going from 56K modems to broadband. It's going to be an order of magnitude increase in uses of crypto and therefore probably the value in crypto as well. Makes sense. In terms of the next big area is what I'll just call smart contract platforms. And it feels like maybe three or four years ago, it was Ethereum would kind of be the king there. Now, it seems like there's layer twos on top of Ethereum. There's a ton of other smart contract platforms that are popping

up. Obviously, a ton of people talking about something like a Solana recently. How do you look at those smart contract platforms, the competition among that, and then how Coinbase can kind of play in that space? Yeah. So, I mean, we're generally, again, we're blockchain agnostic. So, we're trying to add as many as we can that are both legal in the countries where we operate, but also, um, they have hit a certain level of sort of security, like cybersecurity. You know, there are certain times we see smart contracts where the key is held by one person or something like that. And they could actually yank everyone's funds or, or sort of change people's balances. Those are the kinds of things that we tend to push back on.

And we say, um, all right, Hey, this may not be ready. Or if we are going to put it on our platform, we, we make a giant kind of, you know, user disclosure around that to make sure people really understand the risks. But I guess I'm glad that there's more and more blockchains being created. I think that we are going to see them sort of specialize over time in what use cases emerge. I do think that, you know, I talked with CZ at Binance about this a little bit where Binance Smart Chain started to get a lot of traction. And in the one hand, I was like, well, this is great. We're seeing more and more adoption. I think it was actually a pretty clever solution in terms of how they got a fork of Ethereum to scale with fewer nodes. There's

always trade-offs around that. But the concern I had over it was that it seems like 50% or more of the governance tokens in this case are controlled by one company, Binance. And it's even in the name, Binance Smart Chain, right? Although I think he said they may want to rename it. So I do think it would be a bad thing if the majority of this activity started to get uh, created on blockchains that were more centralized. I think that's actually pretty dangerous. Um, so I really hope that we get blockchains built that are decentralized, but also scalable. Um, and we can kind of, uh, build, you know, the right, use the right tool for the right job. Yeah. When we think about, uh, things are being built on top of the smart

contract platforms, NFTs obviously is a huge topic of conversation. We saw, uh, various, uh, platforms having, you know, billions of dollars in sales in a single month. And it just feels like everywhere you turn, whether it is inside the crypto industry or outside of the crypto industry where we're seeing, you know, individual athletes, musicians, teams, et cetera, everyone with IP trying to kind of figure out where they fit into this. How do you look at NFTs and has Coinbase done anything there yet or any plans to do anything in the NFT market? Yeah. So I think NFTs are really an important trend in crypto. And what's cool, by the way, is that there's like a new important trend happening in crypto every three to six months,

it feels like. So like the pace of innovation just keeps picking up, which is really awesome. So NFT specifically, I mean, look, I've never been somebody who had that, that desire to like collect art or I never like really collected anything like in the way that people collected baseball cards or whatever. But that's, I'm sort of, you know, not a representative sample. I think there's a huge portion of the population that really loves this stuff. And I think that it's just going to keep growing. Like, you know, we probably are in a little bit of an NFT bubble right now, but I imagine just like everything crypto, it'll kind of come down, but then slowly grow from there. Like it's a very real trend. The other thing that I'm excited about is not just

artists and them getting kind of better economics in more direct connections to their fans and the resale value and all that, but also the metaverse, right? There's so many interesting things happening with games and virtual worlds where people I think are going to own more and more stuff in these virtual worlds. And they want it to be something provably unique that they can actually take off the platform, that they can sell if they need to, or transfer into another application. So anyway, long way of saying, I'm very excited about this. Nothing that I can announce today, but Coinbase is very excited about this space. And we're looking at a couple of different opportunities. So it's a real trend. I think it's going to be big for crypto.

So kind of tangentially related to this is things like gaming or social tokens and things that feel like whether they are NFTs or NFTs are used within them, et cetera. How do you look at some of that other stuff around the gaming and the social tokens? Are we going to live in a world where you almost have to become crypto educated or crypto initiated in order to participate in this stuff, which seems like today you've got to understand crypto to some degree to be able to participate? Or is it something more like the internet where people just show up, they use a platform. They actually don't know what protocols or underlying technologies are. As long as they can interface with it, it's good and they're a user. Yeah. I mean, actually, I think the more

that we can get away from the underlying complexity, the better from a global adoption point of view. Yeah. I mean, look at the internet as a great example, right? In the early days of the internet, you had to dial up with these modems and understand IP addresses. And it was very clunky, but the more that people were just like, you know, I don't care about the internet. I don't care about technology, but I just want to send photos to my family. And then now there are billions of people are using WhatsApp and all these things, right? So I think the same trend is going to happen in crypto. There's going to be probably a billion people in the world using crypto eventually, but a lot of them will not know anything about how it works underneath.

They realize that this is the best place to get my financial needs or my gaming. The games are better, like the identity system is better, it has more privacy, you know, hey, the value of my assets kind of go up every over time instead of being inflated away, right? Like these are the things they're going to care about. And they don't need to know what the underlying technology actually is. Makes sense. DAOs seem to be something that people now are really waking up to. It seems like every day I'm learning about some new DAO that somebody's creating. How do you view those? Is there something that Coinbase will do there or anything that you're personally interested it in? Yeah, I think DAOs are a really important innovation and it's also going to be a really big

trend. I mean, it already is, but I think it's going to be huge in the future. And so we're seeing all this really cool governance experimentation happening now, which I think is, by the way, if you zoom out long-term, people are always talking about like, what's a better form of democracy or how can we improve this? And I think long, long-term, this is kind of influenced by people like Balaji Srinivasan and whatnot, but we're seeing people move away from the country or the state that they live in as their primary source of identity and governance. And they're starting to think about these online communities as another thing that they really, truly identify with. And I think that's where we're going to see the most important experimentation

with new forms of governance. So DAOs are really important for that, how all communities and society could do governance, but also companies. And it's really cool to see people moving more money into these things. So one of the things we want to do at Coinbase actually is help people make DAOs more easily, right? In an ideal world, anybody should be able, without understanding how to create smart contracts and whatnot, come into a product that's really simple, publish a DAO, invite people to it, funds get allocated. Maybe there's standard templates of things that you might want to put in there like payroll or different voting systems. And then you can actually go out and raise money and market it to people on Coinbase

and the rest of the crypto community, this would be an incredible achievement, I think, because it'll just make innovation happen faster in the world. Today, the way that companies get formed where, you know, first of all, you have to kind of live in a city that has angel investors, which there aren't that many of them. So it's already sort of discriminatory by default. Then you have to interface with a bunch of lawyers, which can be expensive. And then you have to go through this kind of archaic process to eventually go public. and Coinbase went through it. I would much rather be in a world where any startup anywhere in the

world can go through the formation docs, kind of like Stripe Atlas or the new Delaware Secor, but it's much simpler. It's faster. You can raise money in a more egalitarian, fair way, and eventually even go public all on the blockchain. This is where I think we're going. And that's going to be a huge unlock for innovation. And DAOs are going to be, I think, like the new Delaware C-Corp. There's even some things about it that are, you know, not like the old system, which is that, you know, I think you could have collaboration of people who have never met each other. They don't even know who each other are, right? That's a pretty powerful idea, but the wisdom of the crowds could kind of allocate funds more efficiently. So anyway,

I'm very bullish on DAOs. I think that we need to make them like everything in crypto, much, much easier to use. And that's generally where I think Coinbase can add value. Like we're not the company who's going to put out the next big, like we probably would have never invented DAOs, but what we can do is make DAOs trusted and easier to use. That's kind of the value that we're typically able to bring to the ecosystem and then help get the next hundred million or billion people, hopefully eventually to use these things because they are now simpler to use and trusted. One thing that really strikes me in talking to you is you've thought very deeply about some of the, what most people would consider corners of this industry. If you weren't running

Coinbase and you were a founder starting all over again. Is there like one area where you say, hey, like this is where I would go explore first, or this would be like the idea that I think would be really interesting to pursue? Or is it all just, hey, we're just going to do it at Coinbase. And so you haven't really thought about that type of stuff. Well, I mean, Coinbase is definitely a multi-product company. So I feel very lucky. Actually, we have the ability to create new products from within Coinbase. And we do that with our 70, 20, 10 resource allocation. So 70% of our resources go to the core stuff we're doing. that makes most of our revenue, 20% are on these adjacent bets, and then 10% are venture bets.

So we actually built this really cool system internally. I'll answer the core of your question in a second. But we basically have a system now internally where any employee or group of employees can pitch a panel of people internally twice a year. And if you get one of the people on the panel, it's very important. By the way, it's one of the people. It doesn't have to be a unanimous yes. You don't need to get a yes from me even. Then you can get your 10% project funded. And we've done a number of those now. Some of them you'll see launching by the end of this year. But that's our way to kind of build startups within a bigger company and continue to be innovative. Now, I'm fine with lots of different models, right? So people can stay in Coinbase and

build these and keep their Coinbase equity and compensation. They could also leave Coinbase, by the way. I'm supportive of that too. We have Coinbase Ventures where we've invested in a number of employees who've left or even external founders. So anyway, back to your question about what would I create today in the crypto space maybe if I were to do another one. I mean, the thing is there's so many cool opportunities I think coming out in crypto. I think decentralized identity is really interesting. I think there's a bunch of virtual, like somebody should go make an Oculus app with a virtual world where you can have NFTs and digital goods. I think that there's a lot of interesting stuff happening with DAOs. So just going and staying on the

forefront of that, what's the next evolution of how these financial primitives and these DAOs are going to start to interact with each other? I think there's a lot of building blocks, even just payroll. Getting payroll working in crypto is a really big one. NFTs could be even easier for the average creator to use. So there's so many opportunities. It's more about like what people are actually passionate about. Like take the thing, if you're passionate about crypto, then what else are you passionate about? If it's art and crypto, maybe like the intersection of that is NFTs. If it's identity in crypto or governance in crypto, you can kind of find the intersection and what's the thing that is most applicable to you as a founder.

You mentioned Coinbase Ventures and you all have done quite a bit of investing. For what I've seen on various cap tables or deals that I've done, uh, you guys have invested in a lot of great companies. Um, is there ever a concern that Coinbase Ventures is almost like too good of an investor? Uh, and the equity of those holdings ends up growing to be, uh, too material, uh, for Coinbase or shareholder equity or anything like that. I think of it almost like the Alibaba problem with, uh, with Yahoo. Um, and how do you think through Ventures versus the core business? So let's see, in some ways, like, you know, it'd be great, right? If these things I think that I think that portfolio of investments we've made with Coinbase Ventures is going to be huge, it's going to be enormous. Now, I'd be a little bit sad if it ends up if we end up like Yahoo, I'd much rather we end up like Google or something, right. And so actually, that's, that's one of the big things that I talked to the team about internally is, if you're if you know, we were kind of one of the early crypto companies, and we got big. But that doesn't mean that we should be complacent or rest on our laurels. because, you know, Yahoo had like over 90% market share and Google was this tiny startup. They could

have bought it for, you know, probably tens of millions of dollars or something. And they, and they completely got beat by them. So I'm always sort of like paranoid about what is the next thing that we're, that's getting big in crypto that we're going to miss out on. I think for us, Coinbase to be relevant, we have to continually reinvent ourself. We have to continually disrupt ourself. We need to have enough. We need to strike this balance between, okay, yes, we're interfacing with all these regulators and it sounds scary and we're going to clean up the industry, make more clarity and all that. But at the same time, let's try new things. We can never sort of have risk aversion creep in to the company. And so we always say

one of our values at Coinbase is about repeatable innovation. That's part of why we do this 10% resource allocation and we have people come in and pitch. And even if I don't think it's a good idea, but somebody on the panel champions it, it'll get funded. This is all very deliberately designed for us to hopefully continue to be relevant and have a portfolio of products that, okay, maybe some of them don't work, but others are just getting huge over time. That's, I think, how we're going to become a very relevant and big company over many decades and hopefully, you know, many generations, not just like a flash in the pan that has a big meteoric rise and then becomes irrelevant. What you're hitting on here a lot of is kind of the cultural element. So

about a year ago, you put out a post, I can't remember if it was you personally or the company, but there's a post put out about Coinbase as a mission driven company. And there was a whole bunch of stuff addressing, you know, kind of social issues and how the company was going to handle that moving forward. But it also, I think, reinforced just the culture at Coinbase in general. Since that point, what have you learned? Are there positives, negative takeaways? Like, Like, how has that kind of evolved over time, knowing that, one, we've gone through an economic crisis, there's been a public health crisis, there's been a shift to remote work. Like, there's so much going on in the world. How has the culture evolved and how do you think of it today?

Yeah, so that was a very important moment for me as a founder and just in our culture at Coinbase, because that's a great example of how, you know, a company can, as it gets bigger, it can actually lose alignment. So all kinds of problems can happen in big companies, right? Like the benefit of big companies, you get more and more people. So you can accomplish more and more things, multiple products, hopefully increase the pace of education of innovation. But the challenge is that sometimes you get misalignment, you get miscommunication. You know, you think that as a leader, you're being clear and setting a direction, but it turns out different people interpreted it different ways and whatnot.

So this is a little bit of what happened last year, which led to that, which led to me writing that post, which was that, um, I increasingly was getting the sense internally that we were having division. We were not aligned about what we should actually be focused on. And it was in the middle of this kind of cultural zeitgeist about all of the social issues that were happening at that time, which were incredibly important things in the world. But the problem where I realized we were not aligned was that there was a small but quite vocal group of people inside the company.

This was not unique to Coinbase, by the way. Every single CEO I talked to in tech was really struggling with this same problem at that time and probably still to this day. And that increasingly vocal but small group within the company was saying, hey, I actually think that our mission means something different. We should probably change our priorities and spend more of our time internally debating these issues, but also taking action as a company to try to solve these issues. The things at that time were around social justice and police brutality, all kinds of things. So what I realized was that this was going to be a big problem for us because I had failed as a leader to set a clear direction and made the actual mission of the company clear.

And it was resulting in things like employees walking out, which had never happened at Coinbase over particularly contentious issues, which I felt were kind of unrelated to what we were doing as a company. So that was a moment where I finally said, you know what, I've got to get people back aligned towards the right mission. and that's going to be a bit of a painful process because I know not everybody agrees. And that's part of being a leader

is you have to kind of be willing to make a decision sometimes even if you know some people aren't going to like it. So I put out that mission-focused blog post. You know, when I was at the all hands kind of sharing it before the post was made externally, it was really tough. I was like almost crying actually while going through it because I knew people were going to be so frustrated

with it and upset. But ultimately we decided to make a exit package available to any employee who kind of wasn't on board with this new direction. That was my way of saying, hey, we didn't set clear expectations if this is where you feel like we should be focusing our time. And so let's make it a win-win. Let's have everybody end up at a good place. About 5% of the company ended up taking that exit package, which ultimately it was sad to lose colleagues, but ultimately it was a really good thing for Coinbase because now the company feels much more aligned. We don't spend our days in the office sort of debating all of the problems of

the world and getting into controversial stuff if it's not related to our mission, which is creating more economic freedom and using cryptocurrency to do that. So anyway, I would actually recommend it to any kind of founder out there or company that's struggling with this. I don't want to claim that it's the right approach for every company. Every founder and CEO has to kind of choose what kind of culture they want to create. But if it's not working for you internally, I do think creating a mission focused company that's much more specific about there's one big problem in the world we're trying to solve. And we're going to be focused on that. We're even going to be political about that, but we're not going to get engaged in everything else because it just creates

distraction and kind of anger division internally. I would totally recommend it as an approach. Kind of tangentially related to this is this idea of remote work and not having a headquarters. I know that you guys also publicly stated you are a remote only company or remote first company, and you no longer have a dedicated headquarters, talk a little bit about how, kind of being a mission-driven business, but also thinking about how you work seems to have been kind of top of mind as well

over the last 18 months or so. Yeah, so being remote first for us is another important step that we did. So remote first means, it's not that 100% of people are remote. We still have offices and people can go into those offices if they want, but everybody is required to operate,

even if they're in the office, as if in a way that's welcoming to people who are in a remote environment. The reason that we did that was that basically, I felt like during COVID, we tried it. It worked really well. In fact, it unlocked a couple of really important benefits. It had a few drawbacks, but I thought that the benefits far outweighed the drawbacks. So the benefits were that, number one, our hiring pipeline got much better. And so pre-going remote first, one of the biggest reasons people left Coinbase or did

not join Coinbase was due to location. It was commute issues, or they didn't want to relocate to be within commuting distance of one of our offices. So think about that. What percentage of people in the world were within commuting distance to one of our offices? It was probably less than 1% of the people in the world. So we literally 100X the top of the funnel of potential candidates that we could hire from, right? So that alone is just a huge thing. Getting top talent in the right seats is kind of one of the core things that has made Coinbase successful. And I think it will continue to be in the future put on top of that. Um, there's a lot of important benefits to employees if in that environment. So, uh, if you want to spend more

time with your kids, if you want to travel parts of the year and live in different locations, um, you know, these are all incredible benefits that I think, frankly, any company who doesn't start to offer these in the tech space, like, you know, manufacturing and retail and stuff, you have to be in one location, but for companies that don't have to do it, I think they're eventually going to lose their best people to remote first companies. Cause it's just such a huge employee perk. Now there are some drawbacks, right? To be totally fair. So one of the drawbacks is that it's not as fun. You don't feel this like social camaraderie that happens as much when you get into an office and there's kind of fun moments that happen at the lunch table and the water

cooler and all that. And there's serendipity, there's creativity, there's sparks of innovation sometimes that happen. But the way that we solve that is that actually once a quarter, at least once a quarter, people at Coinbase are still going to get together with somebody in person, And especially once we get more of the COVID stuff figured out, whether that's your team or it's just a bunch of cross-functional people who all happen to live in that city where you're in or various things like that. So we're going to get people together at least once a quarter. And I think that's our way to mitigate the drawbacks of it. So the last part you mentioned was around Coinbase and its headquarters in San Francisco. So, yeah, we made a conscious effort actually to say we don't have a headquarters anymore. Um, I think that's, that's actually pretty important in a remote first environment,

because if you do have one building where, um, the CEO or the executive team is kind of going into that office every day, um, as I quote, quote headquarters, it's, it sets the wrong tone from the top because basically anybody who wants to be close to the executive team or whatever, um, is going to start to go into that office too. And so it starts to make like a de facto in-office benefit. And so I wanted to kind of lead by example and not go into any, I don't go into any one particular Coinbase office. If I happen to be in a city somewhere, I'll step in there and say hi to people. But as a general rule, I'm not going into any one location. We actually very quickly after COVID, just naturally without even trying this, not a single one of our executive team was living in San Francisco. And so we said, you know what? Oh, and by the way, San Francisco had its own challenges at that time. I mean, there was a bunch of policies. Frankly, we didn't feel very welcome in San Francisco at times. Like the government there was just kind of a little bit hostile towards tech companies. There's a very weird cultural thing happening in San Francisco where, you know, it has the

heart of it is this amazing idea, which is people who are optimistic about the future and able to build it, which is what attracted me to San Francisco and why I still love it. There's a very frustrating and challenging thing happening where there's a, there's a negativity towards that within some of the population there. And there's like kind of like very punitive taxes, which make it like much more expensive, sometimes like $20,000 a year more for us to hire an employee in San Francisco and all these things which make no sense. So we felt like, look, if we're not wanted here, we're going to be a decentralized company anyway. Let's just say we have no headquarters. It's more in line with us

embracing decentralization as a crypto company anyway. And it's been working really well for us as well. So the last question I have for you, and I don't even know how you would evaluate this, but, uh, if you were thinking of starting Coinbase today, uh, would you do it as a centralized or as a decentralized type effort? Right. I'm assuming at some point this has kind of come up, whether it's due to regulatory stuff, whether it's due to remote work or whatever, but how do you evaluate like centralization versus decentralization around Coinbase itself? And maybe even like, could you decentralize the company in the future? Or how do you think about all that? Yeah, that's the funny question. If I was creating today, I mean, so I would definitely

go remote first. Um, I would definitely, I think I would lean more into some decentralization aspects in the sense that, um, like we'd probably just put a lot of our documentation we have internally. I just make it all public and just do it out in the open. I think it's like good marketing. It's good transparency. We might even be like higher pseudonymous people, you know, what I do it as a Dow. So I think the Dow, the Dow tools needs to still get a little bit refined, in the sense that I think you should have a DAO as probably like the governing body of these organizations. But in local countries where you operate,

you may actually still need a C-Corp that's like controlled by the DAO. There's a company called Research Hub, which I'm helping get off the ground. And it's creating an online community like GitHub for science. It's trying to help accelerate science and make it more like open source software.

And with that structure, we actually did go and create a DAO and a C-Corp. And it's been like a very interesting process for me to figure out what the future of the corporation is going to look like in that world. And so I'm sort of beta testing it there, trying to iron out a lot of the details. What's super frustrating is like, there's no well-paved road. So you have to spend more with the lawyers and they can't give you any kind of clear answer.

They're like, well, no one's done it before. So try this. It seems like a reasonable thing and we'll see how it goes. So I think my hope is that by learning from some of those experiments, like with Research hub, we can then go and productize this at Coinbase and make it easy for anybody to create that future type of entity in just like a simple interface. You don't have to spend tens of thousands of dollars with lawyers. But yeah, that's the direction I would head for sure if I were creating a company today. Yeah. It is absolutely fascinating to think about how quickly

all this has moved since you started Coinbase to where we are today. Everything from nation States adopting Bitcoin to talking about, you know, tangible things around DAOs and NFTs and all of that. And then obviously in the next, you know, five, 10 years, it'll be pretty incredible to see everything else that gets created. Where can we send people if they're interested in working at Coinbase, following you on the internet, or just kind of learning more about what you and the rest of the team are doing? Yeah, well, Coinbase is a great place to start a crypto career. If you're trying to learn more about crypto or you want to eventually even want to start a company, I think we're a good place for that. You can check out coinbase.com slash

careers. You can follow us on, on Twitter, obviously at Coinbase or, uh, myself at Brian underscore Armstrong. Um, so thanks for following us along and hopefully we can all keep building the crypto economy together. Absolutely. Well, listen, thank you so much for taking the time to do this. I know you've got a million things going on. Hopefully everyone enjoyed this and we'll definitely have to do it again in the future. Yeah, that was great. Thanks for the questions and the interview. That was cool.