00:00 Speaker A
Here with Brian Armstrong at the Coinbase Summit, Brian, good to see you here. You dropped some new products, but there was something you said on stage that caught my attention. You said that Bitcoin could become the world’s reserve currency because of the US debt situation, which is ballooning. How realistic is that?
00:27 Brian Armstrong
Well, it really is unclear at this point, but one thing that is clear is that democracies around the world are having trouble getting deficit spending under control. And you know, that can only, if you study history, right, the changing world order, different empires, like who had the reserve currency different moments in time, once you decouple currency from hard commodities, the inevitable story is they get overprinted and extend, right? And so I think right now, I, to be clear, you know, I want the US to remain the reserve currency status. I think a strong America is very important for the world, and I think cryptocurrency is helping the dollar enormously with things like USDC and stable coins. But if the debt situation doesn’t get fixed, I do think that eventually Bitcoin will have to become the reserve currency, for better or worse. It’s not going to be the Chinese RMB because I think they have their own debt problems, and it’s not a coincidence that as we’re seeing all-time highs in US debt, we’re seeing all-time highs in Bitcoin.
02:09 Speaker A
We had a great chart in there too in your presentation, but what is the, what’s the tipping point for that to happen? When debt hits a certain level, suddenly we have to worry about the world reserve currency being the US dollar?
02:28 Brian Armstrong
Yeah, I mean there’s not usually, it’s like one of these things like the frog is slowly cooked and you know, I think if you look at other countries in the past, it was maybe around 150% or 200% debt to GDP, things started to get a little wonky. And so we’re going to have to see what happens. I hope that the Congress, which is doing an amazing job by the way and on passing legislation in a bipartisan way for crypto, and this administration, the Trump administration, has been an incredible tailwind for crypto. They’ve done an incredible job. So, you know, I think there’s a lot to be grateful for, but if I hope that, you know, the US government can get the spending under control to preserve this American experiment.
03:43 Speaker A
Do you agree with with Elon that this tax bill that might pass, that could be the triggering point, that’s the triggering point for potential economic crisis?
04:06 Brian Armstrong
You know, I’m not, so I’m reading both sides on this and I don’t, I don’t know enough to say for sure to be honest with you, you’re a little, you’re asking questions a little above my pay grade, but I think, you know, this bill, it doesn’t have the full ability to touch on discretionary spending, there may need to be a follow-on bill to that. I hope that they’re working on that and make the best they can of this bill, maybe there needs to be separate legislation to to cut spending elsewhere, I don’t know.
04:53 Speaker A
What would a, what would a Bitcoin reserve currency mean to a company like Coinbase?
05:05 Brian Armstrong
Well, it would certainly mean increased adoption of Bitcoin, right? I think that our goal is to power more and more of people’s financial lives with Coinbase products and we started in trading, now we’re moving into all kinds of financial services like payments and borrowing and lending. And eventually, I think crypto and Coinbase can be a replacement for people’s bank account, right? I think that more and more of their financial life will happen on chain with Coinbase, and it’ll being bring new benefits and services to customers. Like why shouldn’t you earn four and a half percent on your checking account, right? Or why can’t you send money instantly anywhere in the world for free? Or, you know, why can’t you do, if you if you live in Turkey or Nigeria, why can’t you trade US equities 24/7 with perpetual futures, right?
06:18 Speaker A
It’s logical, right?
06:20 Brian Armstrong
Yeah, I mean there, there’s, sometimes there’s artificial barriers and middlemen taking fees and like that’s what crypto is all about, it’s about updating the financial system, bringing freedom and individual sovereignty to people all over the world.
06:42 Speaker A
I was reading some research on crypto from the JP Morgan team and they said the retail investor is looking for the next catalyst in Bitcoin. It made sense because it’s been a pretty big year, we’ve had the Bitcoin reserve, we have companies like yours putting out new products. But is the next catalyst for retail investors, that rising debt that you’re talking about. As this continue to go, continues to go up, why wouldn’t you want to own Bitcoin?
07:22 Brian Armstrong
Yeah, I do think the average person in America, even if they don’t quite understand, you know, interest rates and the yield curve, they understand that their money is worth less than it was five years ago, and they feel that something is inherently untrustworthy or broken about that. And so I do think they are looking for alternatives, and Bitcoin is probably the best answer, and it’s that’s why we’re seeing all-time highs in Bitcoin prices.
08:02 Speaker A
Take us through some of the products you dropped today because there was a series of them and I came away thinking the next reinvention of Coinbase is underway.
08:22 Brian Armstrong
Yeah. Well, for a long time we’ve been serving large financial institutions, you know, BlackRock, Stripe, PayPal, and, you know, large companies. But today we announced a product for startups and medium-sized businesses called Coinbase Business. It lets them manage a lot of their financial life, and we introduced a powerful set of payment APIs that allow them to pay vendors, contractors, even receive payments from their customers as revenue, and do all the accounting and tax treatment and everything in their Coinbase business account. So for a lot of startups, managing money and payments is a huge pain, it’s expensive. Eventually capital formation, all kinds of things will come on chain, but we’re starting with that Coinbase business account today, and those, that suite of payment APIs. Coinbase is coming into payments in a big way. We also on the consumer spending side, you know, we announced a partnership with with Shopify to power USDC payments for Shopify merchants, and we announced an Amex Bitcoin card, right? So it just shows that crypto is upending all aspects of the financial system, and Coinbase is shipping product at a startup pace.
10:01 Speaker A
Do you want to take the fight to credit card issuers? Is that the next frontier?
10:07 Brian Armstrong
Not that directly. I think that they play an important role in terms of the products that they provide around the world, and in fact, you know, we just launched a credit card with with Amex, we have a debit card with Visa, so we’re partners with them. But I do think over time crypto is going to cause the people to question the margins, right? And there’s a whole ecosystem that’s built there with lots of middlemen and lots of fees. If that can be done cheaper for the average customer and the average merchant, I think that the credit cards are looking closely about what is their stable coin strategy, and I think the smart ones, the big ones, will be participants in that, not left behind.
11:01 Speaker A
Brian, you started this day around a little after 10 o’clock on stage with Jeremy Allaire, of course CEO of Circle. That company’s off a really big debut. Are you still an investor in Circle?
11:22 Brian Armstrong
We are an equity holder in Circle, yep. And we’re the largest distribution partner for USDC, and so we have an economic agreement with them that is perpetually renewable, yeah.
11:41 Speaker A
How, how intertwined, how intertwined are you with Circle?
11:48 Brian Armstrong
Well, right now they’re the issuer of USDC, we’re a distribution partner. But our economic arrangement with them is substantial. I actually, I mean I think that the market may not be fully valuing that in Coinbase’s stock at the moment. But yeah, we’re, I think the big picture, it’ll all work out, and we’re excited about our partnership with them for the long term. Both Circle and Coinbase, we’re going to be trying to get more USDC adoption, and right now every bank and Fintech company and Fortune 500 is like a new announcement every day, someone’s thinking like how do we add these to make our business more efficient.
12:42 Speaker A
Would you ever want to put an offer into buy Circle? I mean, you’re already so intertwined.
12:51 Brian Armstrong
We would always consider it, but you know, obviously takes two people to have something like that happen, and you know, they’re, I mean they’re crushing it in the public markets, right? So it’s something we’d always consider if they were interested, but I think for now it’s going really well.
13:14 Speaker A
Since I last saw you, Brian, it was Davos, we were sweating, or we were freezing our butts off out in the, out in the mountains. But you were added to the S&P 500. Big moment I imagine for you and your company and your employees. How has that changed your investor base?
13:40 Brian Armstrong
Well, I think it’s, it’s made our stock less volatile, you know, for better or worse, when we went public, we had, we had a large retail interest, we had some hedge funds, we had also some really great long-term holders of our stock, like Fidelity and others. But I think that with the S&P 500 index inclusion, it’s kind of, I don’t know if it’ll create like a floor on the price literally, but I think it’ll have less volatility because something like 50% of all investment dollars are passively invested at this point, and they’re the largest index. So we’re very happy to see that happen. It’s also just a great moment for crypto in terms of increased legitimacy.
14:45 Speaker A
I was talking earlier with Carolyn Pham, acting CFTC chair, outgoing but still, she has that position. She made a good point that investors, bullish investors in crypto, need to remember there will be regulation, and not, there is no, there are no free rides.
15:18 Brian Armstrong
Yeah.
15:19 Speaker A
What would you tell the bullish investors on that front?
15:23 Brian Armstrong
Well, I think regulation will be a huge boon for crypto. So I very much, I mean we’re actively working all over DC, our policy team, and with this administration to try to get legislation passed. I mean, we think that that’s how we expand the TAM of crypto, and frankly that’s why a lot of people are now coming into crypto because they’re seeing the regulatory clarity is on the horizon. So my biggest thing at this point is we need to stick the landing and actually get the Stable Coin Act, the Genius Act, we need to get that passed into law, and also the Clarity Act that’s going through the House on market structure, we need to get that into law as well. And so the president has said that he wants both those bills into law by the August recess, and, you know, we really appreciate his leadership on that.
16:16 Speaker A
All right, we appreciate you having us here at the conference, Brian Armstrong, always nice to see you. We’ll talk to you soon.
16:24 Brian Armstrong
Thank you.
