The Pomp Podcast - Kris Marszalek, Co-Founder & CEO of Crypto.com: Crypto Compares Are Prepping For The Next Bull Run

Episode Date: November 22, 2019

Kris Marszalek is the Co-Founder & CEO of Crypto.com. In this conversation, Kris and Anthony Pompliano discuss the obstacles to mass-adoption in crypto, how companies are currently expanding product lines in anticipation of the next bull market, why Crypto.com recently launched a new exchange, and what it has been like living in Hong Kong recently given Kris' 15+ year history in the city. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. CRYPTO.COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine. Visit coinmine.com/pomp to get a Coinmine and earn crypto for powering a new world. ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

Whoa, before we get started, I want to go over the four sponsors for this episode who make all this possible. They're fantastic, so go show them some love. The first is the best URL in the industry, Crypto.com. They're a crypto platform with one goal, driving mass adoption. That's why we're all here, right? To get every human on earth a digital wallet and to get them using digital currencies. Crypto.com is helping people do that through buying, earning, lending, and a new card payment. Everything you could want is at Crypto.com.

They've been longtime supporters of Off The Chain and recently announced a new exchange. So go help them out, download their app from the App Store, or visit Crypto.com and tell them POM sent you. There's nothing better in the world than a company helping to drive global adoption of this new technology. Another part of global adoption is making sure that we secure the various blockchains with computing power. CoinMine has built the best consumer experience in mining. Hands down, no competition. If you want to help secure the blockchain and get started in mining, you can go to coinmine.com. Order a CoinMine, it'll arrive at your door, and you simply take it out of the box, plug it in, and connect to your Wi-Fi.

You'll be mining your favorite crypto in five minutes or less. It is honestly magical. I have one running right now here in the office, and it's super quiet, it's got no heat, and every person that comes in the office asks, what is that? Every single person asks. It's a CoinMine. The best part to me is that the CoinMind comes with a mobile app that's super slick and the company continues to push over-the-air updates to the device that add functionality, add tokens that can be mined, or increase the efficiency of the device. Similar to how Tesla does car software updates over the air, CoinMind's sending these passively to thousands of CoinMinds around the world on a periodic basis. Pretty damn cool.

When Farboot and the team pitched me on the idea of an Xbox or PlayStation-like box that could mine cryptocurrency in your home, I was immediately sold. I invested in the business, have a device personally, and keep telling people to go to coinmine.com so they can save a lot of time if they want to get started mining today. And CoinMine has a partnership with our third sponsor for this episode, BlockFi. BlockFi is one of my favorite companies in crypto because they allow users to deposit their assets in a deposit account and immediately start earning interest. Think about it. If you keep your digital assets on an exchange or in cold storage, you aren't benefiting from any yield on the asset. With BlockFi, they allow you to deposit crypto and then get paid interest on a monthly basis in crypto. Deposit Bitcoin and want to get your interest payment in ETH?

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So go check them out at BlockFi.com slash Pomp. Again, that's BlockFi.com slash Pomp. And that brings us to the last advertiser of the episode, eToro. These guys have absolutely crushed it over the years. Their founder, Yoni, was one of the original Bitcoin OGs and has been ahead of almost every trend in crypto. He built eToro to help people buy, sell, and trade cryptocurrencies. But he added a few twists, social trading, copy trading, and virtual trading accounts.

Social trading is a feature where every asset available on the platform has its own separate social feed where people talk about the asset, share trading ideas and analysis, and even include various charts or graphs. Virtual trading accounts is targeted at beginners. If you're just starting out and want to try trading with play money, eToro will give you a virtual account with $100,000 in it to test, learn, and get comfortable. And so then that brings us to copy trading, which is by far the coolest feature. This allows you as a user to select any other user's portfolio to copy. If you see someone on the platform you like, you can set your account to mimic their trades.

They buy Bitcoin with 5% of their portfolio. Your portfolio buys 5% Bitcoin. They sell 50% of their Ether position. Your portfolio does the same thing automatically. Copy trading is awesome. So go join the 10 plus million other traders on eToro and start trading all the most popular cryptocurrencies today. They're one of the largest companies in the space

and you can get started by going to eToro.com. Again, that is eToro.com where the entire team is ready to get you started in just a few clicks. And don't forget, go subscribe to the Off The Chain daily newsletter. You can go to offthechain.substack.com. I write a letter of news, analysis, and opinion every morning that goes out to more than 40,000 investors. See you there. What's up, everyone? This is Anthony Pompliano.

Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Chris Marzalak is the co-founder and CEO of Crypto.com. In this conversation, we discuss the obstacles to mass adoption in crypto, how companies are currently expanding product lines in anticipation of the next bull market, why Crypto.com recently launched a new exchange, and what it has been like living in Hong Kong recently, given Chris's 15-plus year history in the city. I really enjoyed this conversation, and I hope you do as well. 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 Chris here who's calling in from hong kong so thanks so much for taking the time to do this thanks for having me for sure and so you obviously had a a life before bitcoin and uh and crypto uh maybe let's start with uh kind of growing up in uh in poland what that experience was like oh that was quite fun um i don't want to bore you too much with you know my childhood days but there was a different country uh in the 80s

still you know before we switch to a democracy it was an interesting upbringing certainly lets you appreciate uh all that you can enjoy right now in the free world um but i'm just a company builder i've been building companies my entire life this is crypto.com it's my fourth startup got it and as you um started thinking more about bitcoin and crypto like What was the first moment that you saw digital currencies and kind of got excited? What kind of grabbed your attention? The first time I looked at Bitcoin was over Christmas 2013. So I just sold my e-commerce startup at that time for around $20 million.

And I was thinking, what should I do next? And the BTC price was going crazy at the time, so I looked into it. uh but then you know we all got goxed basically right soon after uh so i kind of forgot about crypto and the thing that brought it back for me was uh the dow hack in mid 2016 so i read an article in the wire about it and i was like 150 million dollars on something like this i mean isn't this thing supposed to be dead i mean that's what i was left off right right after the mount gox it seemed that crypto would never be able to recover after that and uh here we are so i looked at it and at that time i was just at the very uh early days of of of

for a business and we looked at entrance into getting distribution as a fintech startup through a debit card with like perfect interbank exchange rates kind of like you know reinvented banking and we combined it with crypto to turbocharge the the challenger bank offering uh and now it's been over three years and the thing came together quite nicely yeah and so let's talk a little bit about kind of the the challenger bank situation right because i think what most people have seen at least in the western world for sure is um we've got the legacy banking system that are not very technology enabled is probably a nice way to put it. But in every other aspect of our lives, we've seen industries that have been updated by the technology. So whether that's

user experience, that's functionality, et cetera. And now we're seeing this kind of like assault on the banking industry by technologists. And so that's coming from the crypto world, but it's also coming from more kind of fintech, right? So things that don't necessarily involve crypto or blockchain how do you see just on a kind of macro structural level um those challengers uh competing with the legacy banks who may have other advantages whether they're regulatory or um the capital resources etc you know um i think banks are the wonderful competitors i mean they're just so bad at it um universally hated i'm yet to find a person who will say i just love my bank you know it just doesn't happen in the real world right um so you're you're right that

uh they have advantages they have the balance sheets they have um you know all the licensing and all this stuff right um but startups are very good at uh starting with something simple and then getting distribution and then building all the things that the banks have today but we're building it in a way that's better, right? So when we started, we thought, okay, we're just going to offer a fair deal, transparent fees or basically no fees on your FX, no annual fees, basically not screwing your customers. It seems like it's a very basic thing, but banks just operate differently.

And other challenger banks that came mostly out of Europe, like Revolut and Monzo, I mean, we were starting, they were all like, you know, serious A-stage. Now they are like multi-billion dollar unicorns, but they follow the same principles. Give the customer a fair deal, make sure that you've got great UX, low fees. I mean, this is the ultimate combination, the financial incentive to join and get a new product and the user experience just doesn't suck. And that's enough. And over time, as you get distribution size, you're building all the infrastructure that the banks have today.

The difference is that some of the banks are running on AS400 mainframes even today versus we are built on much more advanced modern tech stack. Got it. And how much of those legacy banking issues do you think are customer service related? So just, you know, the kind of non-technological elements suck versus it's actually a technology problem. And if they had better technology, they could be solved. I think it starts with the culture. So there is lack of customer centricity. There's no risk taking. There's no innovating for customers.

And everything just flows from that. And large banking institutions are just, you know, full of people who are busy playing Game of Thrones rather than focusing on what to do for the customers, right? And everything flows from that. The kind of decisions they make in terms of their tax stack, the kind of products they build and, you know, designed by committee and all this stuff, right? And by the way, you know, I understand that banks have regulators on top of them and they need to be compliant and all this stuff. But even if you look at this, right, they're not doing a particularly good job. I mean, banks have been fined to the tune of tens of billions of dollars since 2009, right? So, even that thing is not done well.

So I think it's just a wonderful, if you were to pick a competitor, I mean, competing against banks, I think it's great. Got it. And how much of kind of that culture, that's a really interesting way to look at it. It's just like, hey, the culture sucks and they're focused on the wrong things. And so everything kind of top down from there is messed up. When you think through that culture, you know, compare it to the crypto culture. Is it things around like sovereignty, self-reliance, et cetera, or the other elements to it that crypto brings to the table that you think kind of put the crypto businesses or crypto native companies in a better position to serve customers? I think it's more about the culture of the company than the whole crypto ethos. So the basic stuff like having a sense of ownership, being focused on the customer, being really humble, the basic stuff, being a clear thinker, that's just missing in the entire banking environment. So I would just separate this completely. And in terms of crypto, we view this as kind of building blocks that we can use to come up with new value propositions for customers and give them more reasons to try out crypto and see if we can do a better job than a traditional financial institution.

But those two things are a little bit different. And I think that before you start talking about things like you can get the control of your money back or you can control your data and identity, which, by the way, we think is a basic human right. But before you talk about this kind of high-level stuff, for the mass market user, things that matter are what kind of value does this bring to me today, right? What kind of problem does it solve? i mean things like you just look at our offering right our our cards you know three four five percent cash back interbank rates no atm withdrawal fees um in terms of the the interest rate that we

offer much better than any bank would offer right so this is the stuff that people understand it just addresses their direct need today and it makes their life better today so after they actually get to use it and they see the product and you know they think it's great right they become advocates and then they start to you know be more open to understanding you know how does a what is a distributed ledger technology and how does bitcoin change the world uh but i i think if we want to have mass market adoption we have to start with the customer value first and technology needs to come second for sure and so as you kind of take that mentality let's talk a little bit about crypto.com and kind of where you guys originally started and what the vision

for the business was? Again, so we started as a company that wants to challenge the banks, right? And our vision today is cryptocurrency in every wallet. So we think that in terms of the impact, you would be hard-pressed to find anything else in the technology field that you can work on that can change how the society works.

arguably things are not really going very well recently you know you've got I don't know if you've seen the great hack but you know you've got you know people using big data sets to influence elections to erode

you know your democratic rights not to mention that you've got massive data breaches and all this stuff I think it's time that people really get back to control their money, data and identity. And blockchain has the potential to deliver on this promise. Of course, there's a long way from where we are today to when it's actually going to happen,

but Bitcoin has shown us that it is possible. For sure. And so walk us through kind of the products that you guys offer today, right? So as you think about building out a challenge or to the banks obviously there's kind of a couple of components right one is the the promise of uh better customer service better um kind of sovereignty for individuals etc two is the products you offer and then three is kind of the the regulatory um environment that you uh operate it let's focus on the products right now and just kind of walk us through the product suite that you guys have yeah so um at the center of it is a today is a custodial wallet um which is arguably one of the most powerful wallets for crypto you can find out we've got more than a million users

on it and you can do all the basic stuff like you know buy crypto fiat move from fiat to crypto from crypto to fiat there's like 50 coins on it you can earn interest on your coins you can get instant loans you know track your portfolio all this functionality is just beautifully designed product. And it's paired with a metal Visa card where you can move from crypto to fiat and spend it. So the card itself has got

great perks. You can get like 3-5% cashback on all transactions. You can get access to lounges for free, free Spotify, Netflix, something that matches the lifestyle of a crypto user today. But most importantly,

it gives people peace of mind because you know you've got access to your money uh it sits in crypto basically 24 7 365 it's very powerful and to complete the the ecosystem we're building our own public chain which essentially works as a replacement of payment networks like visa or mastercard and we just announced a cryptocurrency exchange where we'll have full institutional offering starting with spots then you know next share margin trading lending and derivatives so it's an entire ecosystem like essentially whatever you need for crypto just go to crypto.com and you have it all in one place got it and as you think through that product offering do you think um each one of those products kind of

replaces a product offering from the legacy world or do you think about kind of these crypto native products right things that maybe you can't do in the legacy world but through technology uh in this world you can build? That's a very good question. Look, we've we're quite pragmatic so I don't believe that in today's world you can roll out

this type of service, these type of services to millions of users globally without doing things like compliance security privacy. So we're building, we're investing heavily in this infrastructure that allows us to be innovative, but at the same time compliant.

I mean, we were like the first company in crypto space, globally it has ISO 27001 certification and cryptocurrency security standard level 3, PCI DSS, and all this stuff that keeps our platform compliant and secure. We are investing in it just because you have to. And, you know, realistically, people who are building even like decentralized finance protocols, they didn't technologically reach this level of decentralization, which would allow them to just say, okay, I don't need to get this license. It just doesn't work like this, at least not today. Got it. And, you know, one of the things that I keep thinking about is crypto, decentralized finance, et cetera, stands to be fairly disruptive to the legacy banking system and the financial system.

But it feels like those competitors, right, the people that the challengers are trying to disrupt, they're not even paying attention yet. Do you kind of get the same sense or do you think that they're actually paying more attention than we realize and they're kind of working quietly in the background? I think that we are, as the industry stands today, we are a super, super small niche. I mean, there is a little over 50 million people in crypto space globally today. So you're right that a lot of the, you know, almost everybody kind of ignores this, which is great because that gives us more time to build the technology and the infrastructure that you need to support a large scale business before bigger players go in.

That's great, I think, for us. The other aspect of it is that I think there's way too much tribalism within crypto space. I mean, everybody should realize how small we are comparing to the broad finance. I mean, from payments to finance all the way to trading, crypto is super super tiny today so we should all come together and instead of competing for this you know small relatively small size of a cake we should work together in

an open collaborative manner to expand the size of the market that's why we we always try to work on initiatives that grow this industry and grow the adoption of crypto rather than trying to just compete against players from within the industry. Got it. And as you think about that kind of collaboration, there's obviously a lot of things that you guys are doing. But one of the pieces that I want to spend some time talking through is the card and kind of the user experience that almost most people in the world are used to of pulling out a piece of plastic or metal and swiping it

has really allowed traditional companies to add various currencies behind that experience, various banking partners, vendors, etc. You guys are trying to really push that with crypto behind it. Maybe talk a little bit about how you're doing that and then what the reasoning behind making such a big push into the card really is. People understand how does a card work and having a Visa brand on top of it brings instant credibility and trust and brings instant utility of the product because you now can use it in 50 million locations.

And the perks are great, so it's better than what you're using today for your payments. It basically kills any bank card, just purely on how favorable the terms are. so i think it's a great uh tool to get people in because you know we are early adopters so we are very comfortable trying out new stuff figuring things out and by ourselves right people sometimes need something a little more familiar to get into it and once they're in you They can comfortably absorb more information about this whole crypto thing.

We are now live in AsiaPAC. We are live in 49 states in the US. We'll start shipping to 30 countries in Europe in January. So this is like the only crypto card that's available pretty much globally. And it's a really high quality product. So what we get out of it as a company is basically a very strong word of mouth. It's a conversation starter. It's just we see it clearly that people who have the card in their wallet, they just transact heavily on the platform and use other services.

Just makes perfect sense. Got it. And in terms of, you know, kind of competing on a product by product basis, one of the biggest things I've seen crypto companies run into is obviously the regulatory challenges and obstacles. You guys are based in Asia. You specifically live in Hong Kong. Maybe talk a little bit about how you think through the regulatory challenges that crypto companies, especially ones that are trying to provide true financial services, face. versus the kind of legacy banking world and maybe the advantages that they have there?

So we try to do it in stages. So the first thing you do is you partner up with people who already have licenses. So, for example, for a card issuing, we partner with Metropolitan Commercial Bank in New York who are a principal member of Visa, and if they have a banking license, then they can just issue cards all over the U.S.

We've got a similar deal with a $20-30 billion fintech player in Europe called Wirecard. So we just basically piggyback off their existing licenses and infrastructure to get the product to the market first and start getting distribution. Once you have distribution, and, you know, we are getting there because we already have more than a million customers on the platform, you can start getting your own licenses. And on one hand, you've got things like, you know, MTO licenses in the States or EMI licenses in Europe, but also, you know, you can become a direct partner with a company like Visa

for a principal membership. So as a startup, you need to think about what is achievable and how do you get to the market with the value prop for customers faster so you can get distribution so then you can be optimizing your cost structure and you can be in more control of your product and destiny by getting all those vices by yourself. But it's very difficult to do it from day one because it's a multi-year process. So now we've got a team of over 200 people around the world.

We've got customers on the platform and we're getting this stuff done by ourselves. but you need to do it in steps. Got it. And so let's talk a little bit more about kind of where we end up, right? So you've got these challenger banks that are going after the legacy banking system. There's this regulatory framework that exists. There's some people who will argue that the rules need to change. There's some people that argue the challengers need to play by the rules that exist because they're not going to change. But how do you see kind of these two different forces, right? The legacy world and the challenger banks kind of colliding in the future.

Is it a thing where legacy banks end up having to acquire some of these crypto startups and challengers? Or do you see there being a kind of a winner crowned and one or the other strategy ends up being victorious in the end? First of all, I think that the entire industry is going to be regulated just like traditional financial services. So if we fast forward three years from today, I mean, crypto trading is going to be fully regulated. All the services that are not banking but look similar to banking are going to be fully regulated. So we are already working on this to be ready. Whether there is going to be M&A activity, it really depends on what kind of scale we can reach or other players in this industry can reach. So if you look at the typical challenger banks, a clearly successful example is Revolut, right?

Revolut's got a user acquisition machine. They are not losing that much money. Capital is on tap for them. They can go from, you know, whatever they have, 6, 7 million customers now, they can go for 25 or 30 million customers globally. And they don't need to sell. they don't even have to ipo and then if you look at things on the crypto side you've got you've got companies that have robust revenue generating engines like look at binance two two years and a billion dollars in revenue right that's much more robust than the typical

challenger bank so there's absolutely no need for for capital right they can just grow organically uh so um i think these type of companies are going to be very expensive uh acquisition target down the road as they mature and as the regulatory frameworks mature over time so obviously right now and even in the last two years if you saw any deals in the crypto space there are massive discounts being applied because of the perceived regulatory risk over time this is going to be fully regulated so it's just this discount will not be applicable so that's the way i kind of look at it but for us at crypto.com this is a purely metaphysical conversation because we are building something that is by definition not for sale

yep and as you think through that like how do crypto corporations right or companies in this kind of global, decentralized, ethos-based world, how do they think about alignment with investors, value creation, value accrual? Do some of the core tenets of building a company change? Or do you as an entrepreneur think of a lot of the same types of mechanisms and aspects of company building? It just happens to be that the outcome changes where you're not looking for kind of the acquisition at the end? Yeah, I think it's a little bit counterintuitive.

I would say that fundamentals stay the same. You still need to build a great, great team. You still need to deliver a product that does the job for the client. And you need to generate revenues and

you need to be profitable if you want to have staying power. So I also, you know, I'm all for building solutions that are censorship resistant, right? But applying this type of philosophy, like, okay, let's have a decentralized team

and, you know, decentralized decision-making and decentralized governance, right? This is not how you build stuff at scale in the real world. So, you know, people should go back to the basics, I feel. For sure. And then you're sitting in Hong Kong. You've been living there for

15 plus years. Maybe talk to us a little bit about kind of the situation and kind of what you're seeing on the ground and given the kind of historical context you have over the last 15 years? Look, it's a tough situation. The society is really split. And what's happening here is really touching the very core of a human being, things like their sense of justice, right?

And when you go there, things just – they will never be reasonable, right? I've been here for now 16 years. Hong Kong is home for me. So, obviously, that's – it's very sad to watch this happen. It's arguably one of the greatest cities on earth. But I'm optimistic. I mean, I watch the news, but I remain optimistic. I think this too shall pass.

And if I've learned anything in my 16 years in Hong Kong, it's that you just don't bet against Hong Kong people. They're a very resilient bunch. Yeah. And do you feel like everyday life has changed? Or is it somewhat compartmentalized with the protests, et cetera, But the kind of average person, their life hasn't actually seen a material change. It used to be that it didn't have that much of an impact in our day-to-day life.

But in the last two weeks, things have deteriorated quite substantially, right? And, you know, it's at the point where nobody can ignore it. Hopefully, things will get better soon. Although one could argue that probably they'll get worse before they get better. So I'll give you some practical insights, right? Like, for example, in the last six months, you know, we've got like two days where we told our team that, you know, your safety is our priority.

There are going to be disruptions, citywide disruptions, right? So just work from home. Last week was quite intense. But, you know, the flip side of the coin is that, you know, We've seen that the investments and time and effort to build a very strong company culture where people take ownership of what they do and they take pride in what they do, regardless of us not being able to sit in the office for a few days. I mean, people didn't drop any balls.

So it was pretty good. Scoot, scoot! Want to know who has the best URL? Crypto.com. That's right. crypto.com they're a crypto platform with one goal mother mass adoption that's why we're all here we're trying to get crypto in every wallet crypto.com is helping people do that through buying earning lending and card payment everything you could want at crypto.com go help your boy out

tell them pomp sent you download the app or visit crypto.com pomp's got you always ever wanted to into mining and didn't know how? Don't worry, your boy Pomp's got you. Everybody got some electricity and Wi-Fi. All you got to do is go to coinmine.com. You buy a CoinMine. It's like an Xbox or a PlayStation that helps you turn your electricity into Bitcoin. That's right. You purchase it. It shows up at your doorstep. You pull it out of the box. You plug it in, connect to your Wi-Fi. Five minutes or less, you're mining Bitcoin. All you have to do is control it from the mobile app they provide. And then you receive over the air updates that add new coins and new features on a consistent basis. Kind of like how Tesla does over the air updates and updates the

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Go check out BlockFi.com slash Pomp. Again, BlockFi.com slash Pomp to sign up and start earning interest on your crypto today. You know, I always think about like there is a catalyst to social unrest. There are the means that are pursued to kind of show that social unrest. And then there is usually some sort of conclusion, whether that is a positive or negative, right? That there's very few instances in the world where social unrest has persisted for decades, for example. It feels like right now we've got a good understanding of the catalyst for what's going on in Hong Kong, and the media has done a pretty good job of covering kind of the ways in which citizens are showing their unhappiness. But what I don't hear a lot about is kind of the conclusion and kind of where realistically the social unrest can conclude.

Any thoughts there in terms of how you think this plays out? The reason why I didn't hear about it is quite simple, because nobody knows. So I choose to be optimistic. I think that this place has been through a lot over the last few decades, and it always comes out on top. and i think that this time will be no different uh hong kong will emerge out of this and it will emerge stronger um but you know how long is it going to take and what will happen between now and then the simple answer is just nobody knows yeah and um has there been any effect on uh your business uh either positive or negative in terms of the social unrest do you see um capital flowing

out of hong kong via crypto do you see um you know more people signing up uh or maybe you see the exact opposite effect that there's uh kind of more um concern either on a regulatory basis or due to the social unrest like what's kind of the impact that you're seeing yeah hong kong is a very small market for us we've got a global business so i can tell you that you know i've seen more impact from the restrictions that Argentina put on crypto purchases. We've seen a flurry of activity there, and there's not much difference in Hong Kong. I think the city has probably seen traditional capital outflows,

like people selling Hong Kong dollars and buying foreign currencies and trying to hedge their risks by moving capital out of the city into places like Singapore, for example, right? That's a very common strategy that has been happening for months, right? And that's to a certain extent the cost of letting the situation spiral out of control. But not much crypto impact today. Makes sense. And then in terms of kind of the future outlook for crypto.com,

maybe help us understand you know where you you see yourself going in the next kind of six to twelve months or the other things that are kind of on the horizon that you're thinking about or is it more of just execution on the things you already have on your plate and that's the focus hello so we just released our roadmap for 2020 so it covers all three key areas so payments finance and trading so on the trading front we're starting with spot exchange which is now in beta and it's going to be available to the public in December

then in the first half of the year we'll very quickly follow up with margin trading lending and derivatives in terms of payments we've got continued expansion globally for our card program

so we've got a Latin America plan for next year as well as Canada and a few other places to have really broad coverage of the card product and a global distribution network for that. On the payments front also, our public chain, which is now in testnet mode, we've got the second version of testnet out two months ago.

Next year is where we go to mainnet stage. So that's going to be a big milestone for the company. uh and on the finance front uh you know we are upgrading uh our card product so that you will no longer have to convert from crypto to fiat if you want to have access to cash we will simply extend credit lines based on uh the uh the funds you have in crypto in our in in the wallet in the crypto.com wallet so that's like in line with our ethos which is now if you distill it down to you know we want people to be long crypto and and short fiat so that's uh that sounds like an easy concept but if you want to roll it out globally and again there are implications on

you know the regulatory front licensing and whatnot so the trading activities with full institutional offering, the mainnet of our public chain, and an upgrade to the card offering. I just took the three core product initiatives for next year. Got it. And explain a little bit more about how that line of credit works. Yeah, so it's very simple. So let's say you deposit BTC or XRP or ETH or whatever, and let's say you've got $10,000 of crypto in total in the custodial wallet.

so if you want to spend on the card we'll just front all your spending for you and you can pay interest on whatever you use from this credit line and we're going to go for super seamless user experience

and friendly interest rates so actually you keep the upside from the digital assets that you have and you only pay the interest on whatever you spend so access to the cash without the need to sell your crypto.

That's what we're going for. Got it. And then I got to ask, you guys own crypto.com and have been longtime sponsors of Off The Chain, which obviously I and listeners appreciate. And I always call out that you guys have the best URL. How did you get the URL? Tell us that story.

You know, when we started and when we did a token sale in 2017, the first half, people very strongly associated us with the card. Because it's such a cool product, easy to understand, but over time, it became clear that what we're building is the entire ecosystem that is focused on driving crypto adoption. So we looked at the rebranding options and the easiest thing to do is just type in crypto.com into the browser and see what's there. And there was a lovely message from Professor Matt Blaze over there that's talking about, you know, the fact that crypto stands for cryptography and not cryptocurrency and that he doesn't advise anybody to use this as a vehicle of investment or speculation. So I sent him an email, basically, and that's how it started. and as an academic as you can imagine you know he's quite a character and a very outspoken one so it took us a while to reach an agreement but

the gist of it is very simple you know we always try to figure out what are the potential reasons for someone to say no and we just address them one by one and in my experience when people see that you actually put some thought into it when you approach them and try to understand their concerns, they will be willing

to engage and he held the domain for more than 25 years and there were hundreds of people trying to bite off him with uh you know and being so persistent that you know after the fact i

actually read some articles about it on the verge that people were actually stalking him at the at the university and you know calling his landline all this stuff crazy stories so he was quite adamant but uh we managed to to find a common common ground is there anything um that you can share in terms of what his uh his hesitancy was um or any doubt yeah so again i think he's he's he's just he's a very well-known um expert in cryptography right so i think you know um he wanted to make sure that this lands in in responsible hands and that he's free to express his opinions. And typically, you know, it's like if you look at this type of transactions,

there's, you know, so much legalese around it and so many restrictions on both sides. If you want to overcome this type of situations, You just need to, you know, understand each other and there needs to be a relationship of trust. And I think establishing that was critical. For sure. And then I'm assuming you won't answer, but you interested in sharing how much you had to pay for it? Yeah, I think it just doesn't matter. People always ask, but realistically, it doesn't matter because if we achieve one-third of what we want to achieve in the next 10 years, the euro is going to be priceless.

So, it just doesn't matter. Plus, we are legally not allowed to say it. That's a good reason, man. No. So before we wrap up here, one of the things that I want to spend a few minutes talking about is kind of this vision that you have, right, of every person in the world having a digital wallet. Right. And I think that it's one of the key pieces as to, you know, why you and I kind of saw eye to eye early on was that vision is really important. Talk a little bit about, you know, kind of how that happens and then what the impact on the world is, if we can get to that point. Yeah. So we believe that it's your basic human right to control your money, your data and your identity. And Bitcoin has demonstrated in a very powerful way that it is actually feasible.

It is possible. It's now done, right? Even, you know, you've got U.S. congressmen saying that crypto is an unstoppable force and every government that tried to stop it failed, right? So this can be done. It's very powerful. Now, the question is, can we take this insight that, you know, you can have this decentralized technology that eliminates the need for an intermediary? Can we apply it to other areas of life?

I believe really that the anti-Facebook for the lack of a better world is going to come out of the blockchain space. and society just needs it like I don't know about you but you know I've got my son is about to turn three if I extrapolate what is going on with

big tech and government overreach you know like 15 to 20 years I feel a layer on top of this you know the advancements in AI and we're ending up in a surveillance society that is very unhealthy

so blockchain has the potential to help us build a healthier fabric for the society and I'm not saying that crypto.com is going to get it all done but no, by any stretch of imagination

no, but we think we have a role to play to just making the size of this industry bigger so the next time when there is a guy who has some breakthrough idea you know i don't know an engineer living somewhere in moscow or in dubai or wherever right uh that he will get funded uh that uh that the technology will be adopted and it will be scaled and collectively as an industry we just change the world for for for sure and one of the things you just said they're super interesting to me right you put

ownership of money ownership of data but also you put uh identity and one piece i continue to think through is that the digital wallet can be the source of identity in the future um in this digital world you agree with that um or have any kind of nuanced views as to how that happens yeah i actually when i think about identity i don't really think about it as you know You know, the traditional sense of the world, like, you know, your passport or your Hong Kong ID or your driver's license. I couldn't care less about that, right? But these days, everything you do online is fingerprinted. And the large tech platforms like Facebook or Google, they know more about you than any government.

You know, they know more about you than your mother. They know more about you than you know about yourself. And if you add to it the ability to blanket coverage of entire cities with HD cameras, microphones, and AI on top of it, I think that's a very big problem. And I don't think it's very healthy. So how do we bring the balance back to the force in Star Wars parlance? How do we make it a little bit healthier? for the next generation i think that's uh that's one of the fundamental questions of our time got it and is your thought process here um you know over time there is a um evolution from those kind

of government issued uh identifications uh or is this a you know kind of abrupt decision by somebody who says uh hey you know what i'm going to kind of move over into the alternative digital world um and i'm going to uh exclusively operate there like how does that transition happen i think it's going to be in small steps and you'll see first of all you know governments are you know migrating to uh to blockchain tag just because it's easier to manage this type of stuff right and and there are some simple benefits to it but again

I don't think we can go away from this country by country issued IDs and what not very quickly it will be a gradual evolution I personally don't subscribe

to this nationalistic view of the world there's a lot of people in this space specifically who view themselves as citizens of the world more than a citizen of any given country and i think if you if you look at the like a couple decades down the road the world is going to continue to get smaller and smaller and the differences between us are going to be reducing as well so who knows i mean you can see like for example in europe right i mean i can take my polish id and just go anywhere freely within europe uh i mean it's uh there's it's it's not uh impossible to see a future where this can be

extended to cover the whole the whole the whole place for sure um before i get into the rapid fire questions uh what have you learned uh over the last couple of years building in the space like what's your one main takeaway that you could share with entrepreneurs yeah this time around because again it's uh it's my fourth company from day one we've invested very heavily and thought so much about culture and how not to screw it up uh and now three years down the road this is starting to pay huge dividends i'll give you a few stats like almost 60 70 percent almost 70% of our team has been recruited through personal referrals. So you build the team slower if you do it like this.

But it's just such a solid foundation to build on because people, you know, they work with each other before they know each other. There's already a relationship of trust. So it's much stronger and better teamwork if you build your company like this. So when I was in my 20s, I read about how important culture is for a company. But now I've seen it firsthand

that it just makes such a huge difference. And as it is today, great cultures are a competitive advantage. People come to work for people who come purely based on this. And of course, now I've got cool products. This is a cool space and whatnot, right? But a strong culture is so important. For sure.

For rapid-fire questions, what do you think the most important company in crypto other than crypto.com is? I don't think it's the company. It's just Bitcoin itself. That's a great answer. That's usually my answer. What one regulation would you change or improve if you could? I would kill the BitLicense so we can finally ship to our customers asking for Crypto.com's products in New York. I normally would ask what your most controversial thought is, but I got to ask you about the

controversial ads you put up all over San Francisco. Many of these are things like the $22 trillion money printing machine isn't going to stop anytime soon, or Plan B, et cetera. Tell us a little bit about that ad campaign. Yeah, I think we believe in what we do, and we want to connect with people like us. right so um by the way that the billboard about the 22 trillion printer you know which will never stop it's kind of out of date by now after three months it's already 23 trillion now kind of proves the point um yeah but this is about the crypto ethos and why are we doing this right at a very

fundamental level um i don't know if you've seen this like this is this a decade ago there was this powerful ted talk you know it's not what you do it's why you do it what's the most important book you've ever read the hard thing about hard things by ben horowitz it's just uh so authentic this is the life of a company builder and it's a true page turner and i actually very frequently give it away and uh to people i come across such a great book for sure um aliens believer or non-believer i'm a non-believer non-believer oh no statistically you know maybe there is something out there but statistically we also will never find out why do you think why do you not believe if statistically it's likely that there is something out there.

Look, I mean, the trillions of, of, I mean, the universe is big, right? But, you know, I just don't subscribe to this, you know, area 51 type of mentality that, you know, somebody visited us here and then had some impact on how we evolve. I think there's the random part of it, you know, evolution. that's i think this is more realistic view of things of course at the same time uh one of my favorite movies of all time is prometheus because i absolutely love the idea of space exploration and i'm a huge fan of elon right uh and the idea that you know that there is something there

i mean it's it's cool i i like this the the the intellectual aspect of it is very pleasant right uh but you know it's it's not something that i would believe in likewise you know i'm not religious i don't believe in god either that's fair what uh what one question you have for me to uh to wrap this thing up where do you get all the energy it's uh it's very similar to the answer that you had earlier about um things that, uh, things that I get excited about. Um, I don't hide that, right. It's kind of this, uh, this level of, uh, authenticity of what you see is what you get. Um, and so when I'm excited, you're going to know it when I'm mad, you're going to know it. Um, and, uh, I, I always lived

my life, uh, with kind of a couple of core, uh, beliefs. And two of those are, uh, one that enthusiasm is contagious. And so, uh, the more excited you are, the more, um, kind of positive you are, uh, the more that those who are around you, uh, kind of follow suit. And so you can change, um, you know, people's attitudes and outlook, uh, just through pure enthusiasm. Uh, frankly, even if it's fake, um, but, but, but, uh, especially when it's real, But the other tenet, I think, is that the hardships in life or the battles in life, if you will, half of it is literally just showing up every day, ready to tackle the day. And so I think a lot of people, they try to outsmart each other. They try to do all this stuff.

But I've just had a belief that if you outlast everyone else, you win. And so if you think about from an energy standpoint, it's just showing up and realizing, look, I don't have to be the smartest person. I don't have to be the fastest person. I don't have to be the first person in everything. But if I just have consistency and energy, that's going to put me way ahead of most other people. And, you know, that formula sounds pretty simple, probably even sounds cheesy to some people. But at the end of the day, it's a formula that works. And it's easy to identify, but it's really, really hard to execute. Because a lot of people, you know, I always joke and say, it's that random Tuesday where they're writing something or they're creating a podcast episode or a video. And for the last three weeks, they haven't gotten as much engagement or distribution as they want. Their ideas aren't kind of resonating with people in the way that they want. And they just say, you know what, I'm wasting my time. Right. And they walk away. Versus if you think about, you know, take the podcast, for example, I did 150 episodes in the first year. Right. And in the beginning, there was really not that many downloads. But over time, you build an audience and it just takes time and effort and showing up. And so if you look at the largest podcast in the world today, they didn't get started yesterday. Right. Many of them are, you know, four or five, some even 10 years old. And so it just takes a lot of consistency.

And so if you know that that's what it takes, then you just got to show up every day with energy. right and so uh however you do that for yourself whether it's you drink a bunch of coffee uh you get a lot of sleep um or you're just excited about what you're doing you know just show up and have the energy and the rest kind of takes care of itself i think you know i think you're i 100% agree with the the contagious nature of of your energy i think you're a great asset to the entire industry because you know we we need people like that with that level of energy i also agree that you know never ever giving up and just being tenacious and the grit this is this is how you win uh and it's actually much more rare than one would think for sure well it's um i tweeted the

other day i said you know persistence is a superpower and it's just this belief that um you know, you're chipping away at something. Right. And, uh, there's this great, um, image that I've seen, uh, and I've talked about it on a podcast before, but, but it's just, it's like seared in my brain and it is, uh, two guys. Um, each of them is in a separate tunnel. Uh, one of the guys is, um, at kind of the beginning of his journey, he's got a pickaxe and he's picking away at a, you know, a rock based kind of wall. And at the end of the image is, I think it's gold or diamond or something. And so he's got a long way to go. And he's really, really, you know, it looks like he's sweating profusely, and he's picking away trying to get

through that wall to get there, but it's a long way away. And the other guy in the image has already picked through the entire wall and he's got you know just inches to go to get to the diamond but he's got his pickaxe dragging on the floor and he's walking away and it's just this image of you know you never know how close you are to the breakthrough um and to me it is uh less about hey where's the finish line and it's much more about um if you focus on the process the results kind of take care of themselves. Right. Um, and so part of that process is you got to show up every day, got to be enthusiastic. You know, frankly, you got to try not to just be stupid. Um, is another one of my favorite kind of views of the world is if you just avoid making

dumb decisions, uh, the smart decisions, um, are the only decisions left. Um, and so that game of kind of probability is super helpful, but I think all of these things are just more around, you know how do people think how do they approach what they're doing and again that focus on process will will ultimately take care of the results absolutely no question about it as uh so many people who stop three feet from gold no question for sure well listen chris i really appreciate you taking the time to do this um like i said you've been an incredible supporter of uh of off the chain And then obviously, you know, really driving a lot of product innovation to get kind of adoption of Bitcoin and cryptocurrencies. And so I'm excited to kind of see as you guys continue progressing.

And I really appreciate taking the time to do this. Where can people go find more about the company and the various products? yeah there's uh an easy to remember url crypto.com or twitter at crypto.com uh there's a lot of news coming out every single week so it's it's a good place to stay in touch um and thanks for having me on the show today and uh yeah i hope that next time we can do it in your studio in new york city you got it man you uh you when you come to new york we'll definitely have to uh to get you on video you're uh you're prettier than me so at least people can stare at you oh that's just uh that's actually accurate but let's discuss this face-to-face next time absolutely all right man

sounds good we'll talk soon hey everyone pop here if you like this episode of off the chain and want to help us take crypto to the top of the apple spotify and other podcast charts please do us a favor and rate review and subscribe to review simply go to the off the chain homepage scroll down until you see the five blank stars taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts i appreciate you listening and see you next time on off the chain