Welcome to another amazing conversation within the Fian Rose project. Today we have gathered to talk about crypto assets. What are they? We decided to invite Fian Rose member and Ripple CEO Brad Garlinghouse. Brad, thank you for joining us.
Tell us a little bit about what we will discuss today, but don't show all your cards.
I won't show all my cards. Listen, I think we are at an inflection point in the crypto industry, where it has touched many areas but has not yet fully taken shape. And I think today we will talk about where it all started and why we are at an inflection point. It will be interesting.
Wonderful. You heard it from the legend himself, Brad. So, as we like to say, fasten your seatbelts. Get ready for another amazing conversation within the Fian Rose project. Brad, thank you.
So, let's move on to why we are all here. We have gathered here to have a truly interesting conversation on the current topic of crypto assets. Sean and Brad will hold a moderated conversation lasting about 40 minutes, and then we will give the floor to all of you. 20-30 minutes for Q&A. The only thing we ask, out of respect for other Fian Rose members, is to ask one question each. And try to keep it under 15 seconds. This way we can get more people involved and ask more questions. Today's moderator will be Fian Rose member, our dear friend, and the one and only Sean McManus. He is the co-founder of M + D, a consulting firm that advises a number of media, technology, financial, and investment organizations on engagement, interactivity, content creation programs, and thought leadership. Before that, he worked at The Economist / MT magazine, where he led all events. So, ladies and gentlemen, let's welcome my friend, Sean McManus.
Thank you, Pablo. Okay. Thank you, Pablo. I'm not sure this is on. Thank you, Pablo. Thank you, Pablo and the Fian Rose team for having us today. It's going to be fun. I am very pleased to introduce you to the CEO of one of the world's largest cryptocurrency and blockchain companies, and also a Fian Rose member, Brad Garlinghouse.
Thank you. Thank you, good to see you.
Okay, let's get started. Let's go. So, we will have a short conversation, just as Pablo said, and then we will move on to questions. Please think about what you would like to ask Brad. And by the way, how many people in the room work or invest in the crypto sphere? Looks like more than half. We have, as always, a very sophisticated audience, and we will try to make our conversation both accessible and elite, in the spirit of Fian. And, Brad, you are great at that. And by the way, when I asked ChatGPT to tell me about Brad Garlinghouse, it replied that you're just a pragmatic, no-nonsense, straightforward guy from the Midwest, from Kansas. Rock Chalk, go Jayhawks. But I know there's one girl here somewhere. There she is. I met her on the way here. But you won't fool us, Brad. We know you're a killer. And as proof of this thesis, a brief backstory. Brad joined Ripple as COO in 2015 and became CEO a year later to focus the company's efforts on providing fast, low-cost cross-border payments using blockchain technology. The Ripple network is used by many major global banks that we've all heard of, as well as leading payment systems and financial institutions around the world. Ripple also has a token called XRP, the price of which is expected to rise significantly in 2026. We're breaking this news to you first, so get your phones out. XRP serves as a bridge for providing liquidity across various fiat currencies. And we can talk more about that in a minute. Before joining Ripple, Brad worked at the intersection of technology and digital media, holding executive positions at Yahoo and AOL, and was also the CEO of the popular file-sharing app Hightail. Let's give another round of applause for Brad Garlinghouse.
Thanks, I'm already liking this.
We're just getting started. You just returned from Davos, having barely avoided an invasion of Greenland. So thank you.
We flew over it on the way back.
Wait, look, I think it's all okay now. In a minute, we'll move on to the conversation about cryptocurrencies that you had in Davos. Which is a very typical question to ask company executives this week. Brad, what was the mood like in Davos this week?
By the way, thanks for the introduction. Glad to be here. I've been to Davos six or seven times. And every year it feels like something special is happening there. Every year there's some main theme. It's no surprise that the main theme, I mean, AI was AI in everything. And there's no getting away from it. I think it's a kind of hype cycle that accompanies new technologies. And we are right in the middle of it. I'm not saying what stage of the hype cycle we're in, but we're definitely in one of them. I mean, there was other momentum as well. Yesterday, of course, there was Trump. And you know, this year, in my opinion, Davos felt more politicized. Well, you know, Howard Lutnick, Christine Lagarde, Gavin Newsom, Scott Bessent. In short, there was a lot of interesting stuff. Yeah. And I thought there was more politics this year than in previous years when I was there. And you know, the US is obviously restructuring relations under Trump, particularly with Europe. And that, of course, was in the spotlight. I mean Ripple and everything blockchain-related that we're involved in. There are areas where we are actively working, and others we try to stay away from. I ran into Gavin Newsom, and having lived in California for 25 years, he said hello to me, and there was a photographer nearby taking pictures. And I was like, 'Well, damn, you're not the only Californian who has moved to Miami lately.' So I know he's upset.
But you really made the news with your interaction with Brian Armstrong, the CEO of Coinbase, whom many of you know as a Bitcoin maximalist. Right? So tell us, since our friend Michael Saylor, by the way, I don't think is coming today. He's not here, but tell us a little about what happened on stage between you and Brian, and how it all ended.
Well, listen, first off, I'll say that there are only a few truly large and significant crypto companies in the US. Coinbase is certainly one of them. In that sense, I have great respect for Coinbase. I have great respect for Brian. However, despite that, I believe few people paid attention to the bill that passed the House last summer and is currently moving through the Senate. It is called the market structure bill. Its primary goal is to define how digital assets should be regulated. Whether they are commodities, currencies, or securities. Brian reacted very sharply to the bill that was almost approved by the Senate Finance Committee or the Banking Committee last week. And I think almost everyone in the crypto community reacted positively to this bill. It's not perfect, but as I often say, perfection is the enemy of progress. Or perfection is the enemy of the good. There are no perfect bills. And there is a risk that if it is criticized, it won't be passed at all. And yet the industry, meaning the people, are talking about the US. We want the US to become the world's crypto capital, as Trump says. But that's not the case. Yes, the US is lagging behind, yes. Therefore, when I see this happening, I am very glad. It seemed to me that Coinbase was a bit selfish regarding the situation. They make huge money from a specific stablecoin, USDC on BlackRock. And you know, it sort of fell apart, but I hope it can still be saved. Now, about what happened on stage. Listen, I think Brian would say the same thing about me as I said about him. You know, mutual respect and all that, but he is definitely consumed by Bitcoin, Bitcoin, Bitcoin. The only thing I will say about this publicly or semi-publicly. It's strange to me. I mean, you have an exchange where about 50% of the trading volume is Bitcoin, and 50% is other assets. If half your trading revenue is zero, you're finished. Yeah. Well, you know, the idea of being a Bitcoin maximalist is lost on me. And you know, I am a firm believer in a multi-chain world. There will be different technologies solving different industry problems. And you know, sometimes it surprises me. Yesterday on stage, we were appearing with the French Finance Minister, the CEO of Standard Chartered, and Euroclear. And he advocated for, as he put it, moving away from the gold standard to a Bitcoin standard. You know, I didn't expect that, and I don't think he liked my reaction, but I just thought it wasn't very helpful.
Well, I think you reacted by saying tanks would be in the streets to protect sovereignty.
Yes, I mean, and this is, in my opinion, a very important point when it comes to cryptocurrencies. At the start of Ripple's journey in 2017 or 2018, Ben Bernanke, the former Fed Chair, spoke at one of Ripple's client events. And he said something that really stuck with me. And his point was this. This was quite a while ago, at the very beginning of the crypto journey. He said that if the crypto industry thinks it can disrupt, somehow change, or limit a country's ability to control its money supply, then yeah. And he said they would roll tanks through the streets, because once you lose control of the money supply, you lose sovereignty. Yes. And by the way, that has happened in many countries, certainly not G20 countries, but for instance, in Argentina. We're here, right? You know, this is essentially a dollarized country. In our lifetime, the value of the currency has been wiped out more than once. Yes. But I think it's important to understand that if a government can't control its monetary system, then yes, it ceases to be an independent sovereign state in a way. Yes, and I think one of the mistakes of the crypto community is that fiat currencies aren't the enemy; the dollar isn't the enemy, the yen isn't the enemy. These things will converge, and Ripple is trying hard to position itself as a bridge between decentralized finance and cryptocurrencies on one hand, and traditional finance on the other. That is exactly why we are building technologies that effectively act as bridges between them. Yes, and I think that is the direction of development. And I think those who believe there is only one winner and that Bitcoin will become the new gold standard, I think that's just... I don't think that's...
Well, Brad, we've kind of veered off into philosophy a bit. But isn't it true that many of these guys would actually welcome the idea of an absence of state sovereignty? I mean, that is something completely different. That's, well, basically, that's something like Balaji's network. The state, you know, in any case we, here is what I think, perhaps I personally have strong libertarian convictions, or perhaps not.
If you are building a business, you must pragmatically approach the question of which rules are immutable. And you know, there are things that exist not just in the US, but in any major economy. If any of you work in finance, you know what the initials KYC stand for. Know Your Customer, know your client. Do we really think that we will allow anonymous transactions on a large scale? That will not happen. Yes, and I think the crypto community sometimes advocates for things that are perhaps religiously appealing and interesting. But if we want these technologies to benefit society and democratize certain areas, providing access to banking and brokerage services that didn't exist before, let's stop pretending that we are going to fundamentally change the basic principles of how our financial system works.
Well, you are obviously a proponent of 'slow down,' and we will see what happens to you.
That is why ChatGPT probably said that I take a pragmatic approach to this issue. To me, that seems reasonable, but I am sure there are people in the room who might disagree.
You said that Ripple will become the connecting link between DeFi and traditional finance. And Larry Fink, by the way, is skipping Davos this year. I mean, he is a co-chair who brought Davos back from the brink after the scandal that erupted following founder Klaus Schwab's apparent departure from the company. And you know, a BlackRock representative made a very profound quote this week, which was that the two mega-trends that will define our era are artificial intelligence and tokenization. So, Brad, what does that tell you in terms of the financial institutions community's understanding of where we are?
Well, I think we should reflect a bit on, for example, why tokenization is of such great importance. You know, we have all become almost indifferent in our daily lives to the friction that occurs during various financial transactions. Ripple started by trying to solve the problem of cross-border payments. You know, if you send money abroad, there is a lot of friction; it's slow and expensive. But when you think about a large number of financial operations, you realize there are many intermediaries who take, perhaps, very small amounts of the money. But whenever you have an intermediary, it slows down the process and costs you money. And blockchain technology essentially allows you to eliminate intermediaries, which makes the process faster and cheaper. And so tokenization, as you know, for me is just a manifestation of the moving parts of commercial real estate financial transactions. You know, I expressed this thought yesterday in Davos. If you live, say, in Lawrence, Kansas, and want to invest in commercial real estate in Miami, and you have $50,000 to invest, you have no choice; there is no way you can take it. You can buy a REIT, but that REIT won't just be Miami real estate. So, if you tokenize a commercial building here in Miami and want to put $50,000 into a tokenized commercial real estate project, it's not difficult. That's how easy it is to imagine. So I think when I talk about the democratization of investment, that is exactly what I mean. Banking. That's what I'm talking about. You know, when you tokenize something, it allows you to manage the asset with much less difficulty regarding its movement, fragmentation, and so on. All of this becomes very simple.
And what role do large financial institutions play in this? I mean, we all know about the crypto companies that have appeared over the last couple of years, but for a company like BlackRock, how important is it that they support this idea? And what does that mean for Ripple?
Well, first of all, how important is it that BlackRock supports this idea? I think we need to start by answering Larry's question. Imagine one of the most influential leaders in financial services in the country making pro-crypto statements, while Jamie Dimon and Warren Buffett call crypto rat poison. Yeah, that's a big deal, isn't it? Because, you know, it's like entering an elite club. If you work in financial services and someone like Larry Fink supports you, or at least doesn't call crypto rat poison, then maybe it's not that much. But in itself, it is a big step forward. Now, second. I should know this by heart, but BlackRock has trillions of dollars under management. I don't know, 1.5 or 6 trillion, yes, that is a large amount, but if you divide that sum by the number of assets they manage, you find that they could tokenize assets on their platform. And they have started doing this on a small scale. But even at that small scale, the Bitcoin they launched became the most successful in terms of capital inflows. And again, I think this shows how great the interest in these assets is. And you know, fortunately, we have moved away from the Biden administration's policies directed against cryptocurrencies. And I think that set the US back compared to other countries. But I think BlackRock and Larry Fink supporting this idea is a kind of endorsement. And of course, with so many assets under their management, if they start, let's say, experimenting and implementing new solutions, I think it will accelerate crypto adoption, it will be a game changer.
Yes. So, let's talk about some of the current regulatory models that are emerging, and your public comments regarding some of the bills being considered in Congress. We will definitely ask you about that. But this week you also caused a stir on Twitter by liking posts about your take on XRP. The market pays attention to the details. People really took notice of that. So, first, tell us a bit about the role of XRP in your ecosystem, and then a little about what happened on Twitter this week and how you reacted to those memes.
Yes. So, let me step back from that topic and share my view on cryptocurrencies in general. Listen, there is a lot going on in the crypto world, and much of it, in my opinion, does not benefit cryptocurrencies. For example, the fads with NFTs and bored apes. Personally, you know, I thought, listen, I don't understand how this creates value. And more recently, there was the memecoin boom. I, for one, don't understand that. I often say that, in my view, any technology and any token must have a real use case. They must solve some kind of problem, otherwise I just don't see why they are needed. Many years ago, I was heavily criticized for saying something similar in context. I spoke negatively about Dogecoin. That was at the same time Elon Musk was speaking positively about Dogecoin. And again, you have to understand that Dogecoin was created as a bunch of dog. That is literally what it was called. It was a joke. Yes. And I'm like, 'Listen, I don't think this is good.' I said it was bad for cryptocurrencies, but now I will say that XRP has enough liquidity, interest, and momentum to stay in the market. But for most cryptocurrencies that have no use case and don't solve any problem, I don't get it. Ripple uses XRP to solve the problem of cross-border payments. XRP is very fast at processing each transaction and it's very cheap. And as optimistic as I am about Bitcoin, Bitcoin is not a payment instrument. It is slow and expensive when processing each transaction. And if we talk about payment capabilities, it's not just cross-border payments, but also payments using AI, where one agent can pay another. There can be micro-payments worth a fraction of a cent. This is impossible to solve using the Bitcoin blockchain. From a technical point of view, it is impractical. Therefore, we believe that XRP can solve many of these problems. But I am also willing to admit that there are things for which XRP is not suitable. And you should, I mean, even when I have a meeting in Davos, I'm like: 'Listen, you better talk to someone else. We are not a great fit for you.' Now for the last question you asked. I go on Twitter. I try to be careful about how I behave on Twitter or X, but I go there, like some tweets, and, you know, sometimes I retweet something. And some people were very happy when I liked a tweet about how XRP millionaires should share. I don't even know what that was. I don't pay much attention to it. Well, I just, you know, don't take it seriously. I just read that in the Ripple team, in the PR department, there are people who get very upset when I do things like that. But, you know, that's okay.
But Brad, what are stablecoins?
Stablecoins are a tokenized version of fiat currency. In other words, simply put, today 99% of the stablecoin market belongs to stablecoins pegged to the US dollar. The largest and most popular of them is Tether, registered outside the US. The second most popular is Circle's, which is called USDC, but these are digital representations of the dollar. Thanks to tokenization and digitization, transactions with them are faster and cheaper. Interestingly, one of the companies based in Miami, MoonPay, reached out to Ripple during Trump's inauguration. They had liquidity problems, and on Sunday they realized they needed $50 million, and on Sunday you can't transfer $50 million. Ripple provided them with a loan. I mean, the CEO has spoken about this publicly, so I'm not revealing anything new. But Ripple lent them 50 million dollars for three or four days because they were having liquidity issues. If we didn't have stablecoins, we wouldn't have been able to solve their problem.
Wow. Yes, I know you are actively adopting this technology. How does this reflect on you from a corporate perspective?
Well, our clients are banks, financial institutions, and payment systems. I want our market share to be as large as possible. And when we go to a bank or a payment company and say, 'Hey, we can solve your payment problem, for example, to the Philippines. You are converting dollars into Philippine pesos.' Well, maybe XRP is the best bridge asset for this purpose, and maybe not. And a stablecoin will solve this problem better. I don't want the client to be unhappy, right? Ultimately, I have to solve the client's problem. If I don't handle it effectively, I don't get any market share. That's why at Ripple we say, look, we will solve this problem, we will figure out what is better: XRP or a stablecoin. We launched our own stablecoin because for a while we were issuing 20% of all XRP. We were using them in our payment flows for organizations. And we were like, 'Wait a minute, if we are issuing 20% of all XRP, it means we are the largest issuers. Why don't we enter this market ourselves?' So, a little over a year ago, we launched our own stablecoin. Now its capitalization is around a billion. And it ranks fifth in capitalization with a figure of about 1.5 billion. We are very pleased with the growth rates.
So, a lot of this will depend on what other countries do. At the beginning of our conversation, you said that the US is lagging far behind in terms of crypto adoption in general and, of course, stablecoins and such. Which countries, especially when you are in Davos or working in other parts of the world, seem truly forward-thinking to you?
Well, two countries come to mind that figured it out quickly. They did it earlier than others and benefited from it. Guys, can you hear me? The sound keeps cutting in and out. I can't even say, 'Oh, that's even better.' Okay, good, thank you. Alright. Like that. So, two countries come to mind that I think have surged ahead. They moved quickly and provided legal certainty — that's Singapore and the UAE, the United Arab Emirates. And both countries, I think, have attracted a lot of entrepreneurs and capital because of this. And that is why we opened offices and are actively working in Singapore and Dubai. Yes, you know, for 4 years, like some other companies, we didn't address this issue, but, you know, we spent 4 years in litigation with the US government, and essentially, for 4 years we didn't hire anyone in the US because all our clients were abroad. You know, I would say that we ultimately won that case, and it sort of opened up the opportunity for us to work in the American market. But, you know, I think that both Singapore and the UAE deserve credit for their foresight on this issue.
