Right. So, welcome to another fantastic Rose event. In fact, conversation. Tonight, we're here to have a great conversation on crypto assets. What are they? Well, we decided to bring in Fiona Rose member and the CEO of Ripple, Brad Garlinghouse. Brad, thanks for joining us.
It's really good to be here.
Tell us a little bit about what we're going to discuss tonight, but don't give away too much.
I'll give away too much. Look, I think that we are at an inflection point in the industry of crypto where it has touched many things but hasn't quite emerged. And I think tonight we'll talk about, you know, where it's come from, where I think it's going, why we're at an inflection point. It'll be good.
Love it. You heard it from the man, the myth, the legend himself, Brad. So, as we like to say, strap in. Get ready for another fantastic Rose conversation. Brad. Becky. Thank you.
All right, let's get into the reason why we're all here tonight. We're all here tonight because we want to have a really interesting conversation on another Zeitgeist topic, which is crypto assets. We're going to have a moderated conversation between Sean and Brad for about 40 minutes and then we're going to open it up to all of you 20 to 30 minutes of Q&A. The only thing that we ask is out of consideration for your fellow Rose members is that you ask one question and try to keep that question to I don't know 15 seconds in your ask and then that way we can all partake and ask more questions. So our moderator this evening is well Fiona Rose member, dear friend and the one and only Sean McManus. He is co-founder of M+P which is an advisory firm which advises a number of media, technology, finance and investment organizations on the intersection and interactive content and thought leadership programs. Before that he used to be at the Economist magazine where he ran all their events. So ladies and gentlemen, please put your hands together and welcome my friend Sean McManus.
Thank you Pablo. All right, thank you Pablo. I'm not sure this is on. Thank you Pablo. Thank you Pablo and the Fiona Rose team for having us here tonight. This is going to be fun. I am so excited to welcome to the stage the CEO of one of the largest crypto and blockchain companies in the world and also a Fiona Rose member, Brad Garlinghouse.
All right, let's get into it.
So, we're going to have a short conversation as Pablo mentioned and then turn it over to questions. So, please start to think about what you'd like to ask Brad. And by the way, how many people in the room are operating or investing in the crypto space? Okay, looks like over half. So, we have a very sophisticated audience as usual. And we'll try to make this conversation both accessible and elite which is the Fiona way. And Brad, you're very good at that. And by the way, when you ask ChatGPT to sort of talk a little bit about what Brad Garlinghouse is really like, it says you're just a pragmatic kind of no hype sort of plain spoken Midwestern dude from Kansas.
Rock Chalk. Let's go. Jayhawks. There's one out there. I know there's one out there. There she is. I met her on the way in.
But you're not fooling us, Brad. We know you're a killer. And case in point to that, just a very quick background, Brad joined Ripple as chief operating officer in 2015 and very quickly became the CEO about a year later to focus the company on enabling fast low-cost cross-border payments using blockchain technology. Ripple's network is used by many of the major global banks that all of us have heard of along with the leading payment providers and financial institutions worldwide. Ripple also has a token called XRP, which is expected to go way up in 2026. You heard it here first, so you might want to get your phones out. XRP serves as a bridge to facilitate liquidity across different fiat currencies, and we can talk more about that in a minute. Before joining Ripple, Brad was at the intersection of tech and digital media, serving in leadership roles at Yahoo and AOL, and was the CEO of the popular file sharing app Hightail. So, let's give another round of applause to Brad Garlinghouse.
I love this already. We're just getting you warmed up. You just returned from Davos. Just narrowly escaping the invasion of Greenland. So thank you.
We flew over on the way back. I saw it out.
Everything seems to be okay now. And we're going to get into the crypto conversations that you had at Davos in a minute, but what would you... This is a very typical sort of question to ask this week to CEOs. What was the mood like in Davos this week, Brad?
Well, by the way, thank you for that introduction. It's great to be here. So I've been to Davos six or seven times and each year I feel like there's a bell of the ball. There's some thematic thing going on. Not surprisingly, the thematic... I mean AI was the bell of the ball. Everything AI, you couldn't avoid it. And I think that's kind of the hype cycles that go through new technologies and we're in the middle of that with AI. Not that it's not... I'm not even opining on is it where it is in the hype cycle but it's certainly in that. I mean the other dynamic, you know, Trump obviously was there yesterday. And this year I felt Davos was more political. And there's some well-covered... Howard Lutnick, Christine Lagarde walked out, Gavin Newsom, Scott Bessent, you know, some good colorful stuff that went on.
And so, that I thought was more so than some of the years I've been there. And look, the US obviously, Trump is resetting some of the particularly European relations and that was certainly at the forefront. I mean for Ripple and all things blockchain, we engage in certain areas and kind of try to avoid others and I ran into Gavin Newsom and having been in California for 25 years, he said hi and there's a photographer taking pictures and I was like, 'Oh shit.'
You're not the only Californian who's been fleeing to Miami lately. So I know he's frustrated, but you did make news in terms of your interaction with Brian Armstrong who many of you know, CEO of Coinbase and well known as a Bitcoin maximalist, right? Yeah. So just tell us like our friend Michael Saylor by the way, I don't think Michael's here tonight but Brian Rose member. Tell us a little bit about what happened on stage between you and Brian and how that played out.
Well, look, I'll start by saying there are only a few really large consequential crypto companies in the United States. Coinbase is clearly one of them. In that context, I have a ton of respect for Coinbase. I have a ton of respect for Brian. Now that being said, I think what was undercovered is there's some legislation that has been moving through first the House last summer trying to get through the Senate, what's called a market structure bill. The fundamental thing that's trying to be addressed there is how should we regulate digital assets? Are they a commodity? Are they a currency? Are they a security? And Brian had some very strong reactions to the markup or the almost marked-up bill that came out of the Senate Banking Committee last week. And I think almost all of the crypto community was behind the bill in a positive way and that it's not perfect but you know I'm fond of saying that perfection is the enemy of progress or perfection is the enemy of good. There's no perfect bill and the risk is by blowing it up you end up with no bill and the industry... I mean people talk about the US, we want... you know Trump talks about he wants the crypto capital of the world to be the US, it's not. The US is behind. And so when I see that happen, that's super... I felt Coinbase was being a little selfish about their own circumstances. They derive a ton of money from a particular stablecoin, Circle stablecoin and he kind of blew it up and I'm hopeful it comes back. Now the onstage part, I mean, look, I think Brian probably would say the same thing about me that I said about him. Like, you know, there's mutual respect. But he definitely is all in on Bitcoin, Bitcoin, Bitcoin. The only thing I'll say, you know, publicly or semi-publicly about this. This is weird for me. So, you run an exchange and about 50% of your trading volume is Bitcoin and 50% is other things. If half of his trading revenue went to zero, you are... Yeah. Like, you know, so the idea of being a Bitcoin max, it's like I don't get it. And I believe very much in a multi-chain world, there's going to be different technologies that solve different parts of industry problems. And I'm surprised by sometimes... yesterday on stage he and I were on stage together with the finance minister from France, the CEO of Standard Chartered and the Euroclear CEO and he was advocating for, you know, we left the gold standard, we should move to the Bitcoin standard. You know, I didn't see that one coming and I was like, huh, I'm not sure he enjoyed my reaction but I also was just like I don't know that that's helpful.
Well, I think your reaction was that there will be tanks in the streets to protect sovereignty.
Yeah. I mean, look, what I said, and this is I think a really important point when you think about crypto. So, I mean, early on Ripple journey, this 2017, 2018, we had Ben Bernanke, the former Fed chair, speak at one of Ripple's customer events and Bernanke said something that really stuck with me. And his point was, this is, you know, quite a few years ago in the crypto journey. He said, 'If the crypto industry thinks that they're going to disrupt or somehow change or restrict the ability for a country to control their own monetary supply,' and what he says, 'they will roll tanks in the street because once you lose control of your monetary supply, you lose sovereignty.' And this has happened in a lot of countries and obviously not kind of G20 countries, but I'll pick on Argentina where we're here. It's basically a dollarized country, it's been... the value of the currency has been reset to zero more than once in our lifetimes. But I think it's an important point to understand that if a government can't control its monetary system, they cease to be an independent sovereign nation in a certain way. And I think one of the mistakes the crypto community has made is fiat currencies aren't the enemy. The dollar isn't the enemy. The yen's not the enemy. These things are going to converge. And Ripple very much is trying to position ourselves as the bridge between decentralized finance and crypto and traditional finance. And that's why we build technology that are effectively bridges between those. And I think that's the direction of travel. And I think those who think there's, you know, one winner that Bitcoin is going to be the new gold standard, I think that's just not... I don't think.
Well, Brad, I mean, we kind of veered down a bit of a philosophical path, but I mean, isn't it true that a lot of these guys actually would celebrate the notion of no public sovereignty? I mean, right. I mean, this is a different... I mean, this is the Balaji sort of network state, you know? So, anyway, we've been... this is where I think I may personally have strong libertarian beliefs. I may not. If you're building a business, you have to be pragmatic about what are sacrosanct rules and there's certain things that exist within not just the United States but every major economy. If anybody here works in finance you know what the initials KYC stand for, know your customer. Do we really think we're going to allow anonymous transactions at scale? It's not going to happen. And so I think the crypto community sometimes champions things that may be religiously compelling and interesting but if we want these technologies to benefit society and democratize certain parts of... give access to banking, give access to brokerage in a way that hasn't happened in the past. Let's stop pretending we're going to fundamentally change basic principles of how the financial system works.
Well, you're obviously a decelerationist and we'll see what happens to you.
This is why ChatGPT I guess said that I was a pragmatist.
You're so pragmatic about it. Seems reasonable to me, but I'm sure we have some people in the room that might disagree. You said that Ripple will be the bridge between DeFi and essentially traditional finance. So Larry Fink who by the way is really the guy who saved Davos this year. I mean he's the co-chair, brought Davos back from kind of the brink of scandal after the founder Klaus Schwab is kind of exiting and representing BlackRock made a very profound quote this week which was that the two mega trends that'll define our era are AI and tokenization. So Brad, what does that say to you in terms of the embrace from the financial institution community about where we're going?
Well, I think we should dissect a little bit like why is tokenization a big deal? You know all of us in our daily lives we've become almost complacent to the friction that happens in various financial transactions. Ripple started in kind of solving this cross-border payments problem. You know, if you're wiring money overseas, there's a lot of friction. It's slow. It's expensive. But when you think about a lot of financial transactions, there's a lot of middlemen, you know, intermediaries that are taking maybe it's very small amounts of money, but anytime you have an intermediary, it's slowing things down. It's costing you money. And what blockchain technologies fundamentally allow you to do is to remove intermediaries, which makes it faster and cheaper. And so tokenization, you know, to me is just the manifestation of moving parts of financial transactions, commercial real estate. You know, I made the point yesterday at Davos. If you live in, let's say, Lawrence, Kansas, and you wanted to invest in commercial real estate in Miami, and you've got $50,000 you want to invest, you have no option. There's no way you can take that. You could buy a REIT, but that REIT's not going to just be a Miami REIT. So, if you tokenize a commercial building here in Miami and you wanted to put $50,000 in a tokenized commercial real estate project, oh, okay. That's easy to get your head around how that would work. So, I think that when I talk about the democratization of investments, banking, like that's what I'm talking about. When you tokenize things, it actually allows it to be managed for a much less friction in terms of moving it, fractionalizing it, all those things become very easy.
And what about... and what role are these large financial institutions playing in that? I mean, we all are aware of kind of the crypto ETFs that have popped up over the last couple of years. But a firm like BlackRock, I mean, how important is it that they embrace this and what does that do for Ripple?
Well, I mean, first and how important is it that BlackRock embraces it? I mean, I think you have to start and answer the question of Larry Fink as one of the most prominent kind of leaders of financial services in the country came out with kind of pro-crypto comments at the same time Jamie Dimon and Warren Buffett are saying it's rat poison. That's a big deal, right? Because, you know, it is particularly... I feel like very clubby in the financial services business having somebody like Larry Fink endorse or at least not say it's rat poison. Maybe it's a low bar expectation but that in and of itself is a lot of progress. Now the second thing is, I mean I should know this off top my head but BlackRock has, you know, trillions of dollars under management. I don't know, one, five, six trillion.
So but you dissect that, all the amount they have under management, they can tokenize things on their platform and they've started to do that in small scale but even at a small scale the Bitcoin ETF they launched was the most successful ETF that's ever launched in terms of capital coming in. And again, I think that's demonstrative of how much interest there is in these assets. And luckily we've moved away from the Biden administration kind of war on crypto. And that did I think put the US behind other countries. But I think that the BlackRocks and Larry Finks of the world are leaning in is an endorsement and of course they have so many assets under management. If they start to, you know, experiment and roll things out, I think it's gonna accelerate the adoption.
Game changer. Yeah. So, let's... and I do want to dig into some of the current regulatory models that are emerging and you've been making some public comments about some different acts that are going through Congress. So, we'll ask about that. But you also started a bit of a frenzy on Twitter this week because you were liking some posts about your token XRP that... Pan's paying attention to the detail... that people were really paying attention to. So, first of all, tell us a little bit about the role that XRP plays in the broader ecosystem for you and then talk a little bit about what happened on Twitter this week and how you respond to some of those kind of meme experiences.
Yeah. So let me zoom out from it. I'll talk about kind of my view on crypto largely. Look, there's a lot of things happening in crypto. I think a lot of them have been net bad for crypto. So the NFT craze and the Bored Apes, like I personally, you know, was like listen, I don't see how that creates value. More recently, the memecoin craze, like I don't really get it. I talk a lot about like I think any technology and any token, it has to have a real use case. It has to solve a problem. Or I just kind of don't get it. I got a lot of flak years ago because I came out and said in that context I said something negative about Dogecoin. This is the same time Elon Musk was talking positively about Dogecoin. And again, you got to understand Dogecoin was done. It was created as a pile of dog shit. Like that's the moniker. It was like... And I'm like, look, I don't think that's good. I said something about it's not good for crypto. I will say Dogecoin now has enough liquidity and interest and momentum that I think it's here to stay. But most cryptos if you don't have a use case, it's not solving a problem. Like I don't get it. Ripple uses XRP to solve a cross-border payments problem. XRP is extremely fast on a per transaction. It's extremely low cost and as much as I am bullish on Bitcoin, Bitcoin is not a payments tool. It's slow and expensive per transaction. And when you think about payment opportunities not just for cross-border but you get into AI payments and how you could have literally agents paying other agents, you could have micro payments of fractions of a penny that is not going to be solved through a Bitcoin blockchain. Like that's not technically pragmatic. So we very much think XRP can solve a lot of those problems. But I'll also be the first to admit there's things XRP is not good for. And you should... I mean even when I have meetings in Davos. I'm like look you really should be talking to fill-in-blank. We're not really the right solution for you. Now the last thing you asked about, look I go on Twitter, I try to be careful about how I engage on Twitter or X. But I'll go and like certain tweets and occasionally I'll retweet something. And some people got really excited because I liked some tweet that said something about XRP millionaires should give back. I didn't even know what that was. I mean I don't pay enough attention... like I just... I don't take it that seriously. I'm just reading it. There are people on the Ripple team in the comms group who get very upset when I do stuff like that but you know it's okay.
Brad, what are stablecoins?
Stablecoins are a tokenized version of a fiat currency. So I mean quite simply today 99% of the market of stablecoins is the US dollar stablecoin. The largest and most popular is Tether, domiciled in the US. The second most popular is Circle's which is called USDC. But these are digital representations of a dollar. By tokenizing them and digitizing them, they're easier, faster, cheaper to transact. I mean, one of the things that's interesting, which actually another Miami company or Miami-based company, MoonPay, they approached Ripple actually at the Trump inauguration. They had a liquidity challenge and realized on a Sunday they needed $50 million. And you can't wire $50 million on a Sunday. Ripple loaned them... I mean, the CEO has talked publicly about this, so I'm not sharing anything he hasn't said, but Ripple loaned them $50 million for three or four days because they had a liquidity problem. If we hadn't had stablecoins kind of available, we couldn't have solved their problem.
Wow. Yeah. So, where... I know you're really leaning into this technology and so where... how does that play out for you from a corporate perspective?
Well, so our customers are banks, financial institutions, payment providers. I want as large a share of wallet as possible and when we go to a bank or a payment company and say hey... so we go to a customer and say hey we can solve your payments problem to get into the Philippines let's say you're going dollar to Philippine peso. Well it could be that XRP is the best bridge asset for that purpose or it could be that no, a stablecoin is going to solve that problem better. And what I don't want to do... I want the customer to be happy right? Ultimately I got to solve the customer's problem. If I'm not doing that effectively then I don't get any of the share of wallet. So what we do at Ripple is we say look we're going to solve this problem. We're going to figure out is XRP the best bridge asset or is a stablecoin the best bridge asset. We launched our own stablecoin because there's a period of time where we were minting 20% of all USDC. We were using it in our payment flows for institutions and we're like wait a minute if we're minting 20% of all USDC we're the largest minter, why don't we enter this market ourselves? So we launched our own stablecoin just over a year ago. It's now about a billion... it's the fifth largest now at about a billion five and we're super happy with the momentum there.
