Coinbase Global, Inc. (COIN) Earnings Call Transcript & Summary

All right. I think we'll get started now. Next up, we have Coinbase. We're very excited to have CEO, Brian Armstrong, Co-Founder and CEO, and CFO, Alesia Haas, thank you guys both for joining us today.

Yes. Thank you.

Thank you.

So I want to -- before we get started, I just wanted to make sure this is clear. Coinbase today may make forward-looking statements. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in Coinbase's SEC filings. The discussion today will also include references to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on the company's Investor Relations website. Non-GAAP financial measures should be considered in addition to, but not as a substitute for GAAP measures. Always wanted to read that.

I love our safe harbor. Thank you, Will.

Brian and Alesia, thanks for joining us today. Crypto moved so quickly. There's a lot to unpack today, but maybe before we dive into specifics, could you maybe just talk a little bit about what's top of mind for you?

Yes. I'd say the biggest thing top of mind right now is international expansion, and we're prioritizing our investments based on where we're seeing regulatory clarity around the world. So it's been really actually a positive trend. I'll put the U.S. aside for a moment. We'll come back to that. But if you look at the other G20 countries, 83% of them now have either already have crypto legislation in place or have it in progress. That's been a huge difference as just compared to a year or 2 ago. And so we're seeing the G20 fully embrace crypto legislation, having clear rules means that we're going to go invest more in those countries. So as an example, just last month, we launched in Canada. We signed a preregistration statement with the regulator there. We launched a new payment integration with Interac. Back in May, we launched our international Derivatives Exchange, where we saw regulatory clarity emerge. So you're seeing this trend of more regulatory clarity emerge that's causing us to go invest. Now, the U.S. is a little bit of a laggard here, right? And the courts have begun to create more clarity. It'd be better if the regulators had gone through a rule-making process and publish clear rules. But in the absence of that, we are seeing the court step in. So we saw with the Ripple case, Terraform now with the Grayscale ETF case, we've seen judges come to the foreground and say, these assets are not securities that was in the Ripple and the Terraform case. That's a key component in our case with the SEC as well. So I think that's a good indicator. And then in the Grayscale ETF court case the judge ruled that the SEC's actions were arbitrary and capricious and unlawful. And so it's really starting to say, okay, crypto deserves equal treatment under the law. It deserves to be treated on a level playing field, along with other financial services. And Congress, I think, is now looking at this and saying, we need to come in and act. And so there's actually 2 bills going through the house. One of them is a market structure bill for crypto that passed with bipartisan support, the House committees. We also saw one for stablecoin. So I'm optimistic on the U.S. The U.S. is going to get to the right answer. It's a big market for us. It's -- and we're the leader in the U.S. And so we're going to make sure the U.S. gets the right outcome as well.

Great. Well, maybe diving in, I think on the Q2 earnings call, you highlighted 3 main things that are top of mind for you, financial discipline, product excellence and driving regulatory clarity. So maybe we can kick it off on the product side. You've had a lot of product velocity more recently. How are you prioritizing product investments right now? And maybe touch on which of the recent product launches you're particularly excited about in the near term?

Yes. What we shared in the last few earnings calls that we have run the business more efficiently, where we can be EBITDA positive in any market environment. And so here we are in the crypto winter. And in Q1 and Q2, we did show that we were EBITDA positive, so we're living up to that. In the meantime, we have the ability to continue to invest in new products and move quickly. We -- 2 of them that just recently have been top of mind for us. One of them is called Base which is our Layer 2 solution. Layer 2 solutions are helping blockchain scale. So it's kind of layer -- the Internet moved from dial-up to broadband. And Layer 2 is an important way we get faster, cheaper payments that are going to enable new use cases in crypto. So our Layer 2 solution base had a really amazing last 30 days as it launched, and it's now the #3 L2 out there in just 30 days, growing nicely. The other big product announcement has been around derivatives. So something like 80% of all the trading volume in crypto is in derivatives. And we've made big investments here, both in our international derivatives exchange. We also got approved for our FCM license here in the United States. And so both of those are big efforts for us to continue driving derivatives trading. So lots of product velocity. As you said, the team is really fired up in these down markets to continue building. I think our long-term strategy about being trusted and compliant, following the rules, getting these licenses like the FCM license. It's been the right strategy long term. We've seen other competitors fall by the wayside because they tried to play fast and loose with the rules. That's something that we never were willing to do, and we played it for the long term, and now that strategy is proving out to be the right one.

So starting last summer, you made the pivot in terms of financial performance to target profitability in all market conditions, as you just said, adjusted EBITDA and free cash flow have improved significantly year-over-year. So how do you accomplish all of what you just outlined on the product side, while also focusing on cost discipline? And maybe talk about how this has impacted the operations internally and company culture and things like that?

Yes. I'll start off and Alesia, maybe add anything that you'd like. So we reduced our operating expenses 50% year-over-year from Q2 last year to Q2 this year. That was a really major effort and a major accomplishment and we did it across the board. We did it with headcount reductions. We did it by going and taking a hard look at our top 5 vendors, where we spend money, things like AWS by rearchitecting some of our back-end systems. We got our utilization of those CPU utilization, for instance, to be much higher. We looked at our marketing spend. We looked at everything with a fine tooth comb. And -- the good news is that with that 50% reduction in OpEx year-over-year, we were able to get to these EBITDA positive quarters, which is really good. Now the good news is we still have the ability to make some really targeted bets about where we think this -- we're long-term bullish. So we should be greedy when others are fearful. And the framework that we follow internally is we call it our 70/20/10 resource allocation, 70% of our investments are on the core. We're going to keep the main thing the main thing. 20% of our investments are on the strategic or adjacent bets. And then 10% are on venture bets, which are very small, they can have a higher chance of failure, but some of them could turn out to be really big in the future. And USD Coin for instance started off as a venture bet as just one example. And it's been really great for us in these markets. So that's a bit about how we think of it. I don't know, Alesia, anything you want to add?

No, I would say just to pick up on the how the company culture has evolved during this period. I would say that we are running more efficiently. The morale is strong. What we found is that by these more nimble teams and smaller teams we're actually driving some incredible efficiencies. So Base, like we shared has a team of 6. So these are incredibly high talent, high density being able to generate a lot of these results. And I think that we're really proud of the talent density we've created over the last year and the speed at which we're now operating. I think I would just want to underscore what Brian said though, we are investing for the future. And so there's many new things. We accept a high rate of failure at these new venture products, but we want to continue to follow what we see as our clients what they are seeking, what they want to access and making sure that we invest properly along that future scale.

Yes. Ironically, some of these -- the smaller teams were able to actually get more done than a big team. So I think a lot of companies learned that lesson in the last few years.

That makes sense. And then continuing on the theme of financial discipline. Has anything changed in your approach to M&A or your venture investing arm as it relates to the willingness to deploy capital? Like where might we see capital allocation opportunities for you guys?

So M&A has always been an important part of our strategy as has our venture investment. It's a huge credit to Emilie Choi, our President and COO, and she brought in this discipline to continue to make venture investments to us when she joined over 5 years ago. I would say that nothing has changed from our strategy from our ambition. However, the market has changed materially over the last 1.5 years. Fewer companies are raising. Lots of people raised money during the 2021 time period when valuations were high, and people have healthy cash balances. And so we're not seeing as many venture opportunities come to market. That said, we are still putting money to work. We're still investing in great teams, and we're continuing to see strong developers build an amazing products. On the M&A side, every product we look at, we look whether we build, whether we partner, whether we acquire and we look to acquire talent. We look to acquire customer relationships. We look to acquire assets in the case. We've got Xapo custody assets years ago now, and that was like the foundation of our custody business. or brand-new products like we did with One River to get into the asset management business earlier this year. So we're actively looking, but they're always in the spirit of building out our product road map and are going to be added to the business. And we are being very disciplined and prudent with what dollars we put to work to ensure that it's definitely additive to the business.

Yes. Makes sense. So -- you mentioned on the earnings call, you talked about being the most trusted platform in the crypto ecosystem. You just talked about following the rules, seeking regulatory clarity. Looking over the past year, I think particularly in the wake of what happened with FTX, also the bear market in crypto, the environment sometimes has led investors to question the safety and soundness of the ecosystem. How has that positioning as the most trusted platform in crypto benefited the company over the past year?

Yes. Well, I think we've seen a real flight to quality. And so these recent actions, while they've been -- there's a lot of salacious details people -- it's a trend right, people can't take their eyes off it, and that's been a black eye for the industry. I think Coinbase has been a net beneficiary of that because as I said, it kind of revalidated that our strategy all along has been the right one. I think in -- we survey our customers and something like 76% of customers view Coinbase as the most trusted brand out there, that is a huge differentiator for us. And really, our goal -- this technology is not going anywhere. It is a fundamental improvement. It's the most important technology that we have to update the financial system, which it's in a major need of an update, right? A lot of it is running on old-fashioned code, old-fashioned rules. We see T+2 settlement, right? We see high fees to do credit cards and wires and money doesn't move in the way internationally that we see with other technologies like messaging, right? And so this technology is not going anywhere. We have an opportunity to be the adults in the room, build reliable infrastructure and tools that can help this industry grow over time. And sure, there's going to be ups and downs in terms of court cases or every few years, we see some competitors kind of rock it up and they get big fast by not following the rules and then they blow themselves up, right? And in the meantime, there's dozens of other companies here in the U.S. and abroad that are helping build this industry in a thoughtful way. So it's a little bit you have to tune out the noise of like what gets the headlines that are salacious and where is the actual reality on the ground.

I just want to give Brian credit, though, since he founded the company being the most trusted was core to our strategy, and it really underpins everything we do. And as he said, as we see these other events in the market, it really continues to elevate Coinbase brand top of mind with our customers. And so we did see a flight to quality. We've seen more institutions on board quarter-over-quarter to our platform. Many of you may have noticed that when you look at the ETF applications on file, Coinbase was overwhelmingly selected as a key partner of top institutions to support them in these efforts. We continue to see our retail users hold their assets on our platform, and that does not change. We're not seeing outflows of customer assets as we go through these periods and these headlines. And so I think it is so critical. It's that we are being known as the place that is not rehypothecating your assets. Our financials are public, so people can see their assets are on our balance sheet, held one-to-one assets and liabilities. And I think that everything we do is really ensuring that we continue to earn our customers' trust day after day.

So maybe building on some of the recent actions you guys took earlier in the year around pricing. I think you guys took several pricing changes both the retail and the institutional side. What drove that decision? And maybe higher level, what's the pricing strategy over the intermediate term?

I'll start and you can add on to this one. So pricing has obviously been a top of mind topic for investors since we've gone public. And I will share that our pricing strategy hasn't changed, at least since I've been at Coinbase. And our pricing strategy is that we have premium pricing. We think we're offering a very unique product in the crypto space that we are offering that security, that trust to protect these assets. These are bare instruments at the end of the day. And so protecting a crypto acid is very different than protecting a U.S. dollar or security or any other financial asset. And we're providing the most crypto-native experiences. So we're offering staking, we're offering new ways to transact in crypto. And so that is a differentiated product amongst both traditional financial players as well as crypto-native players. So trust compared to crypto-native players and then the breadth of crypto experience compared to traditional finance players. And so that pricing reflects that. But what I would then say about our pricing is it's incredibly transparent. So we share with our users what the pricing is before they transact. Our retail users have the ability to choose the product that best suits their needs, whether it's a simple trading product, the advanced trading product, they can subscribe for Coinbase One and not have a fixed monthly fee for all of their trading activity. So there's a lot of choice, there's transparency, but our pricing is high. We did change pricing earlier this year, as you noted, and that was largely to react to the overall competitive environment. But as we've seen different market players, obviously, Shift, we felt that we could raise price and still maintain the revenue, and our goal is to optimize our revenue. The other thing I'll just remind everyone is what you see in our published financial statements is an output metric, it is a mix of a lot of activity and behavior on our platform that then drives what that blended average fee is, so we're not managing to that specific fee per se.

Makes sense. I think we've been in this period of really depressed activity levels for some time now. How do you think about catalysts for improvement in activity levels overall? And then I guess, how do you kind of contextualize the low levels of activity versus prior periods?

Yes. Well, we've seen a number of crypto cycles like this one that we're in. And so Coinbase is actually we feel normal in these environments. There's ups, there's downs. We've been through probably 4 of these cycles now. And as with any new technology that comes on the scene just like the Internet or AI, there's ups and down periods. So what we try to do is when we see a reduction in user interest or volume, we use it as an opportunity to kind of go build the next wave of innovation to improve our efficiency, our tech debt. And there's a couple of things that I think could really unlock that next wave, right? I mean, one of them is we've mentioned a number of times now, it's regulatory clarity, right? So we're working hard to do that. There's a website standwithcrypto.org, which has really started to bring together members of the crypto community to say, hey, we have an important voice here. Over 50 million Americans have used crypto at this point. That's 5x the number of people in America who have electric vehicles as one point of comparison. They're a major voting constituent in these upcoming elections. They want to donate to candidates that support crypto, they want to vote. They want to go to town halls and be heard. So we're helping organize that and get that regulatory clarity. That could be one of the big things. The other one is making the blockchains more scalable. I talked about these layer 2 solutions like Base that we recently put out. If we get an order of magnitude improvement and scalability around crypto, that will unlock a whole new set of utility and use cases like payments that we talked about, right? So it's less and less of a trading use case. The third one is probably just around making these user interfaces simpler, right? People will look back in tech history and they'll say, "Oh, that was the iPhone moment, the Netscape moment, when the Internet finally became usable". And when you're in it in the middle of it, it's actually -- there's not like some big moment, there's a thousand little things to get right, but people will look back and say, well, that was the moment only in hindsight, right? And so I think we're in kind of one of those moments right now where Coinbase is working really hard to improve the usability of crypto. Just to give you a small example, there's a lot of people in Web3 and they'll buy some crypto on Coinbase. They'll bridge it to Layer 2. They'll send it to a self-custodial wallet with a chrome extension in their browser. And it's like this incredibly high friction, difficult thing that only like technical people would be more comfortable with, and there's already a lot of people doing that. And so when I see things like that, I think, well, man, if we were to take those 5 steps and reduce it down to 1, how many more people would actually be using this. And so those are the things that are starting to come to fruition now in the crypto space, the UX, scalability, the regulatory clarity. In my mind, these are the most likely things to kick off that next wave of growth.

Yes. Can I just add on a little bit about what we've seen in this cycle versus the last cycle? So as Brian said, we've seen 4 crypto price cycles now over the last 12-ish years. And what is so important to us, and this is why we're unfazed by this is every peak has been higher than the last week. Every trough has been higher than the last trough. And we see huge new customer waves come in. So for example, in the last crypto winter, we didn't have institutions on our platform. It was de minimis in terms of activity for all intents and purposes. We used to refer to them as like the crypto native hedge funds, and they were all former Coinbase employees and friends basically, they were not like anybody who had not started within Coinbase. That could not be different -- more different than what we see today, which is large asset managers, large corporates, many, many folks are developing their own crypto offering. They're offering ETFs, they're starting to add crypto to their balance sheet. And so there's just been this wave of new market entrants. And that's the other thing that we see. So every wave brings in a new swath of market participants. Brian shared the stat that now 50 million Americans own crypto. That is a huge number. That is 1 in 5, that is 5x the number of electric vehicle owners in this country. So there's many different things that are like causing these catalysts, just the number of participants in this space. And I just think it goes without saying, though, that you're not going to see the names of BlackRock and Fidelity and others say, we're going to go put it on an ETF, just because it's fun. They're clearly seeing that demand from their end users as well. And so these are large distributors, obviously, of asset management products. And it just shows that this is going to be a wave. We need to focus on everything that Brian said, but we are very long-term believers that these waves will continue to grow adoption and use cases in this space.

Yes. In some ways, it is -- it's actually hard to feel like we're in a true crypto winter when bitcoin is over $20,000, right? And if you look back at these prior cycles, as Alesia mentioned, it's ups and downs, but at a new floor each time. And so yes, that's an interesting point of view, if you just zoom out more than a couple of years.

Yes, makes sense. You've mentioned a handful of times that new use cases you measure before we got on stage. I was wondering if you could talk through some of the use cases that you think Coinbase can play the most significant role in bringing about over the next couple of years. And then maybe talk specifically what I'd be interested in would be the digital identity, which I know you've spoken about in the past.

Yes. So people still think about crypto as an asset class where there's a lot of trading speculation, and that's certainly true. And I'd say if you go back 5 years, that was 95%-plus of the activity. In the last year or 2, that has really changed. And this is already true today. I mean stablecoins have become quite large, well over $100 billion of value locked up in stablecoins. People are using those for payments, a variety of different things. DeFi has gotten quite large. NFTs has gotten quite large. So these are all things that have already started to happen. Now as I mentioned with Layer 2 solutions, we're going to see, I think, another type of adoption of stablecoins and payments in a way that hasn't been done before. You're going to see it probably take off first in areas where the current payment system has the most difficulty or the most friction and that's things around cross-border. I think like small transaction amounts. If you want to send $10 or something like that to another individual in another country, in the traditional financial system that gets eaten up by fees and intermediaries. In crypto, you can send it right to their wallet in any country of the world with USD coin, it will cost a few cents. It arrives within a couple of seconds. And these kinds of -- payments are like water, they flow to the path of least resistance. And so as this kind of technology comes online, I think we'll see the growth of payments. You mentioned decentralized identity, so this is another big one. And it's kind of a mental shift that people are realizing now where they're thinking about crypto not just as a financial service technology to update the financial system. They're thinking about it also as a platform to build new types of applications that have nothing to do with financial services and decentralized identity is one of those. So there's now been, I don't know, about 3 million people or so who claim the decentralized identity. What is that? It's essentially it's an identity online that's not controlled by a big tech company like Google or Apple. It's something that they control. They want to control their own identity. And once we have decentralized identities with ENS or Ethereum Name system is kind of one of the more prominent protocols being used for this. What can we do with that? Once everyone has this decentralized identity? Well, you can start to connect people in a social graph. You can get decentralized social media applications. You could get a decentralized version of LinkedIn or professional networks. You could have messaging apps between these decentralized identities. You could have reputation protocols associated with those identities, kind of a modern-day version of a FICO score or merchants that you're paying could have decentralized review systems like Yelp. So this is kind of collectively referred to as Web3, the nonfinancial service use cases of crypto. And to me, this is a big opportunity on the horizon. We -- despite crypto prices kind of being up and down, we've actually continued to see more developers come into Web3 every year. That continues to grow even if the price is down. And so that is a really good indicator of where the future is going. It's many of the companies that Coinbase Ventures has invested in, and I'm pretty excited about those use cases.

Makes sense. You recently launched Base into mainnet in July. Could you give us an overview of that product? What are the pain points that's designed to solve? And then relative to other -- to some of the other Layer 2s in the ecosystem, how are you looking to incentivize development and scale the usage?

Yes. So as I mentioned, Base is a Layer 2 solution. What that means it's helping blockchain scale. So if you look at the Layer 1 of Bitcoin or Ethereum to do a transaction. It is global and decentralized, which is good, but it's slow and expensive. In Bitcoin, for instance, some of these transactions might take up to an hour to confirm. They'll usually cost anywhere between $5 and $25 per transaction. So that is not -- that's comparable to wire transfers or something. It's not really a new step forward in terms of payment -- reducing payment friction. And so Layer 2 solutions like Base, and there's a number of others that are out there have really started to have a breakthrough here in terms of reducing cost and making transactions confirm faster. We saw -- we've seen an incredible amount of adoption on Base so far. All the data is kind of public, you can go out there and look at the amount of value locked up in the different Layer 2 solutions. Base is now at about $376 million of total value locked up in it. It just launched on mainnet maybe 30 days ago. It's the #3 L2 out there in -- within the first 30 days, and hopefully, it keeps growing. So there's been a lot of developer interest. And I think just having a company like Coinbase engaged, especially in a way where we don't have some token behind it. We're not trying to do something that other companies in the space have done that was frowned upon. We're doing this to help grow adoption of crypto. And there are revenue opportunities for us as well. For instance, operating a sequencer on a Layer 2, we've been able to make revenue from fees, operating the sequencer fees. So it's been great. I think, I don't know, anything you want to add?

I think that the pain point, though, is just speed and cost, and that is what we're trying to drive here. And we definitely think that when you reduce speed and you increase -- I'm sorry, you reduce cost and speed that, that's going to create more developers coming to base, more developers means more activity on base, more activity means more revenue to be earned in sequencer fees and then also just creates indirect revenue opportunities for Coinbase because anybody who's building on chain, people are going to need wallets, people are going to need to buy crypto assets. People are going to want to learn about crypto assets. And so it then benefits our broader product suite. But it's important that our goal is to make Base decentralized. And so lots of other people will also have the ability to earn sequencer fees and participate in this ecosystem that we hope to build.

So Coinbase Prime has been another key area of investment for Coinbase. What are you seeing from an institutional perspective and their willingness to deploy capital in this arena?

That's a great question. So Coinbase Prime is our institutional offering. We have a unique offering that enables you to buy, hold, get financing products, trade all within one platform. So that acts very similar to a prime broker for all intents and purposes, except for nonsecurity and crypto-based tokens. What we're seeing is -- and we shared this in our shareholder letters, we've seen continued onboarding of institutions, so it's attracting more and more companies to our platform. We are seeing higher trading on Prime in Q2 versus Q1, so continued growth. However, I would say that we haven't seen the unlock of huge dollars putting to work on the institutional side. People are still learning, people are developing their strategies but it's a slow and steady up into the right trajectory with these Prime customers.

Yes. Alesia, we had a great line for this in one of our past shareholder letters, which is, it's like a coiled spring, right? So we're seeing a lot of these institutions on board, and there is that flight to quality. So that's been great. And we're seeing this kind of -- I think they're waiting to see when is the bottom end? When is the regulatory clarity? And then because they've all gone through the onboarding, that would probably lead to more activity down the road.

So continue with the theme on institutional, but also maybe bearing in a little bit to retail. You've announced that you've received regulatory approval for a futures clearing merchant license. I believe that allows you to directly deal with retail and crypto derivatives markets. And then you've also been investing in an offshore exchange. So how are you thinking about the derivatives opportunity from here?

Right. Well, as in the traditional financial world, a lot of the trading volume has moved in crypto to derivatives. And we want to make sure that we're playing in that, so there is a healthy market structure. We need to do that both in the U.S. and in all the other major markets of the world. And so we've invested in our international exchange. We've also gotten that FCM license, as you mentioned. And so we're in the process now of integrating that fully into our suite of products. We've got retail investors. We've got institutional investors. We've got market makers, hedge funds. And I believe that as we get that fully integrated into our product surfaces that will be -- we can become a major player in the derivatives space. So I think it's an important revenue opportunity for us, and it's an important part of having just a healthy market structure around crypto. It also -- it shows that where there is regulatory clarity, we will absolutely follow the rules, embrace regulation. We've sought out these licenses. And I think it shows that we're -- we have a real skill set around working with regulators all over the world.

So maybe one last on the product front, specifically on stablecoins. You've got a long-standing partnership with Circle, I think balance has peaked out at about $56 billion. More recently, have been in the $25 billion to $30 billion range. You recently inked a new agreement with Circle a few weeks ago, changing the way some of the mechanics work. What does the new agreement mean for Coinbase and then maybe talk broadly about future of stablecoins?

I'll start and please add on. So as you noted, we've had a long-standing partnership with Circle. We started USDC with them back in 2018, back on the time where there were no clear regulatory standards around stablecoins. And so we've learned a lot over the last 5 years. But this is just a continuation of our partnership and a slightly different structure, but we are business as usual. We're committed to growing the USDC ecosystem with Circle. What this unlocked is we then added USDC to 6 new chains, including Base, as Brian said. And so for us, this means is we can now hope that we're going to drive U.S. dollar-backed stablecoin payments for a few cents -- a few seconds, and that is going to hopefully revolutionize the way that people can contract in payment products. The rest of the deal is we've moved away from the Center Consortium. Circle is now going to be the sole issuer, we're a reseller, and we've just penciled out economics that make it much more clear. We share all the off-platform rewards equally.

Makes sense.

We also took an equity stake in Circle as part of that deal, which was great.

And is broadly how you're thinking about stablecoin developments from here in the market?

I mean look, I think stablecoins are really important. One of the big question marks around crypto was always, well, it's so volatile, how will people use it for payments or for settling contracts. And this -- stablecoins really takes that question off the table, right? And it shows that this is a way of improving financial infrastructure globally with crypto. I mean if people -- there's many people around the world who they struggle to get a U.S. dollar-denominated account. When you want to move money overseas or make venture investments or like there's many, many use cases like this, where people find the traditional financial system to be too high friction. And so USDC, especially when paired with Base and Layer 2 solutions, you can start to see this as a path where more and more payments are going to flow over crypto rails. Whether it's with the dollar, other fiats back stablecoins, euros, et cetera. You'll probably see FX markets develop with that. There's lots of banks who are looking for alternatives to Swift and things like that. You can imagine -- this is a great example of how crypto technology can really update the financial system globally.

You might know Visa's announcement on this point as well. So it is broadly viewed within the overall ecosystem of stablecoins can be an important new payment rail. That could be adopted by many corporates to look for more efficient ways to move money around the ecosystem.

Yes, that was just this week.

Maybe switching gears to the regulatory environment. The SEC case against Coinbase and separately against their case against Ripple, I think the Ripple ruling was viewed as a major win for the industry, for the ecosystem. You also mentioned the Terraform Labs case, the Grayscale case, how do you think about whether these recent rulings improve your position against your own battle with the SEC? And then broadly, how do you think about the prospect of an appeal to the Ripple case by the SEC?

Yes. Well, I think that we have been seeking regulatory clarity. And ideally, that would have happened in a normal rule-making process, and it would have just been published to the industry and the industry would have just followed that. Unfortunately, that didn't happen. And so the court system has been kind of a safety net, if you will, in our lovely U.S. system. We have different branches of government, which is great. And so the courts have been quite positive in this regard, clarifying this idea that the underlying crypto assets themselves are not securities. The judge in both the Terraform and the Ripple case ruled that. That's an important fact in our own case with the SEC. So we've now had multiple judges, give rulings on that. And then in the Grayscale case, as we mentioned, around this kind of fair and equal treatment under the law and the judge there kind of pushed back on the SEC's curtailment of the industry or delay of the industry unequally treating it under the law. So I think the courts are one way that this -- we can get clarity. And frankly, in our own court case with the SEC, we're very optimistic about our chances there. I think we have a great chance to win. But frankly, any outcome by the court would be creating more clarity. And so that which is what we've been seeking from the regulator all along. So okay, if the courts are one option that can give us that clarity, Congress is another option, right? And we're seeing these bills make their way through the house. As I said, the PHIT 21 bill, and then the stablecoin bill are both important areas that we can get that hopefully to resolution in the U.S. so we don't fall behind our G20 partners. And then as I mentioned earlier, we are bringing the crypto industry together kind of from an advocacy point of view, and there's these sites like standwithcrypto.org that are helping the community come together to be a real voting bloc, allocate donations, get educated on different representatives they have in our democracy, what is their position on crypto. So I think this is really kind of the crypto industry is growing up, right? We're looking at the kinds of lobbying efforts that banking, oil and gas, other major industries have and we're saying, how do we professionalize this? How do we make sure that -- the U.S. citizens, their voices are heard in our democracy and how do we bring that into a coalition?

Got it. Maybe just one final question, Brian. You recently put out a request to builders and published the top 10 ideas of crypto companies that you would start today. Can you elaborate on this idea and talk about what ideas you're most excited about?

Yes. So, it's a slightly strange thing to do, but there's so many cool things that can get built in crypto, and we have lots of resources, but we can't possibly be building everything kind of like the early days of the Internet. And so I decided to just put out 10 of the ideas I was most excited about in the hopes that various people out there would run with it. And then we're -- we had, I think, 150 teams apply to our Coinbase Ventures Summit that we're hosting later this year in California. And we'll probably invite 15 of those teams or 20 of them to come out, maybe we'll make some venture investments. But I put out a bunch of ideas. It's on our Twitter. I talked about, for instance, flatcoins, which is sort of the next iteration of stablecoins that could be a better form of money in crypto. I talked about decentralized reputation, how could that work with decentralized identity. I talked about how would an ads business look in Web3? Because in Web2, ads turned out to be probably the biggest business model with Google and everything. What would that look like in Web3? How can we surpass what happened in Web2? Avoid the sins of Web2. I talked in there about crypto games and how people want in-game items. I talked about network states and building tools for that. So there's a lot of really cool stuff on the horizon. If you want to see a bit of just future where the builders today are focusing, that's a great post to check out.

Great. Well, I think with that, we're out of time. Guys, thank you for joining us today. Really appreciate it.

Thank you.

Thank you.