Arjun, thanks for joining us. It's good to be back with you again. You have thoughts on a lot of things and I want to start a little off piece. You run a crypto exchange, you run a payment processor, you run a lot of things. I want to start with prediction markets, which have been very in vogue. They're crypto adjacent and they seem to be running the same regulatory playbook that Uber kind of pioneered and that you guys in the crypto industry kind of picked up and ran with, which is: I don't like this regulator, I like this regulator, so this guy is my regulator now. And they seem to be succeeding. What's your take on the space? Sort of where we are developmentally and any advice you have for Kalshi or Polymarket as they battle it out in the courts right now.
Yeah, I do think the question is flawed in that... Love it. You used Uber as an example and I think it's more: you've got a set of customers that want access to a service, and so how do you deliver to them? And then there's just natural monopolies, taxis in certain cities, that were sort of counterproductive. That's the Uber story. And then for crypto, we didn't have a regulator because there wasn't really a lot of rules in the first place. So it's not like you could walk into the SEC and say, 'Hey, this is our product. How do you regulate it?'
And same with the CFTC, on and off for at least for us 15-plus years. I think the difference is that for prediction markets, there are stipulations on what a futures contract looks like and what that means, what binary options are, what bets are, etc. And you've had some outstanding rules, especially in sports and gambling, between states and federal, for a long time.
This is the idea that the CFTC, just for those who don't know, actually is preempted—cannot regulate gambling. Can regulate anything else, but gambling is specifically carved out of their remit.
Sorry. That's right. And look, I think what you're seeing today at least is the administration and a lot of the agencies becoming more—I don't want to say forward-looking, but catching up with the times of today. So, just take the United States out. Outside the United States, you've got a pretty robust regime of different agencies or, in some cases, none, to be able to have companies build permissionlessly and be able to serve constituents or customers all over the world. So it actually makes the way in which we're structured today not everything. We always use a lens that we have to have consumer protection or investor protection, but a lot of the times we're not protecting them because we're not giving them access to any of these products. But prediction markets specifically—I think it's also at a personal level, many people think of it differently. The way in which I think about it and which our company thinks about it is that we don't want to engage in sports and gambling in the same interface or the same experience where you're trying to save your money. Finance is different from speculation—from speculation of a bad kind. Well, I mean, there's always a debate. We just think about that experience being different.
I mean, to me there's a fundamental tension inherent—there are two things that since the dawn of humanity we've sort of thought of as the sins and bad things to be regulated. One of those is gambling. And for a very long time we were very aggressive in how we regulated gambling. It was very difficult, it was high friction—you had to go to Vegas or you had to go to a reservation or what have you. And now that is not the case at all. It is literally in our pockets and it is incredibly easy. You have a lot of thoughts about Western society and the state of Western society. Is this not a dangerous thing, especially for young people, from where you sit?
So, I don't know if gambling is one of the seven deadly sins, but—but look, I think what's more important is how do you educate people to make their own decisions? So for example, if you go to Vegas and I lost all my money, that's totally acceptable. But for me to invest in a private company when I'm not accredited, that's not acceptable, right? So there's just these balancing acts that I think are really important: accessibility should be there first, and then we should think about what does education look like or licensing in some cases, depending on do you want to be able to participate.
I mean, personally or I guess institutionally, do you buy their argument that the CFTC is the regulator, that they're actually structurally different from sports books or anyone operating under a license in say Nevada or Massachusetts?
Look, I think if you take a step back, the CFTC regulates commodities and futures. And so these products, even if it's knowledge—the financialization of knowledge, whatever that knowledge may be. And if it's—someone call that insider trading in some cases. Not necessarily. The thing is, at the end of the day, we have platforms that don't exist on brick-and-mortar barriers. And so what does that mean? What does that look like in the United States? What does it look like in Canada? What does it look like in Africa, Asia, etc.? And so I would actually take a step back and say, you already have customers today in the United States that will use VPN, they'll use other entities, and they're doing the same thing outside the United States, which actually is some of the same debacles we've seen with other regulated financial services. If it's not regulated, if we're not forward-looking, if we don't do the necessary things to protect customers by creating market structure, for instance on the crypto side, then you're actually making it worse for US customers.
I'll use this as a chance to pivot towards Kraken. Do you consider them—when it's binary options around financial products, whether it's companies or asset classes—do you consider them to be a competitor to you now, or will they become a competitor to Kraken in the platform that you guys are building?
Look, I think when you say the word financial services, someone who's giving you an auto loan or you go to a bank or you go to a specialized lender—there's overlap. Some of them work together, some of it is co-opetition, there's competition. Kalshi, Polymarket, all these guys in the ecosystem—they are our partners, but they are also competitive in terms of eyeballs. And so I go back: the financialization of knowledge is where they sit, and they've got what I call a front page of the internet where you can take a bet, whatever that product may or may not be. And we sit in financial services, and there's a point at which we converge and work together, there's a point at which we compete.
But do you plan to work with whether it's Kalshi or Polymarket on things?
I mean, we're looking into it. I go back to the statement I said earlier: when it comes to sports, when it comes to typical gambling, those are not experiences that we plan to promote to any of our customers worldwide. However, if you want to take a bet on the pricing of Bitcoin, you want to think about what the earnings are going to be of Tesla or Nvidia, we want to be able to offer those products. And those are very specific to: you understand the company and you're willing to take a bet there.
Let's talk a bit about the business of your business. Some of your major competitors have been public for some time. I don't recall what your last private valuation was—in the tens of billions, I believe. Are there plans to take Kraken public soon?
Well, we confidentially filed.
I believe it's news, yeah. It's new.
Okay, so that is a yes. Are you—looking at the other floats that have come to market, some of which have done very well, others of which have not—what are you hearing from your bankers and as you talk to investors about the appetite for the space and how durable that appetite is should, as some expect, the House and Senate flip, should we go to a Democratic presidency? What are you hearing from them?
