I'm here at the Miami conference, the PIF. This conference is sponsored by the sovereign wealth fund of Saudi Arabia, and I'm talking right now with the CEO of Ripple, Brad Garlinghouse, who's been a friend of this program and a regular on the show. We so appreciate you joining us once again, Brad.
Great to be back as always.
And of course, here we are at a moment in time after massive volatility, not just for the broader markets, but for crypto in general. So, how has that impacted your business that we've seen this drop off in valuations? What are you seeing?
Yeah, the crypto market's definitely kind of ended the year last year with some headwinds and it started this year in kind of a flatish and I think a lot of eyes are on what is US regulation going to look like and is it going to get done for Ripple? At our core, we've been on a tear. Our business has been growing very quickly. We do care deeply about the health of the crypto markets overall, but to some degree our technology, it's just a piece of our technology. And so we made two big acquisitions last year. Both were over a billion dollars. And both of those have really overperformed our expectations. A company we bought now called Ripple Treasury, which is a treasury management platform. Think of it as a dashboard for CFOs, the ability to manage liquidity around the world. That is way ahead of our forecasts for both the end of last year but also even Q1. We're going to have a record quarter. And then we bought a prime brokerage business, the largest non-bank prime brokerage business. It was called Hidden Road, now called Ripple Prime. They also have tripled their revenue run rate since we announced that acquisition. So super happy with both of those. But all of that is in service of how do we make XRP as a digital asset more useful, more trusted with higher utility. You know, that is our north star of how we think about the world.
Let me go back to some of those acquisitions because you are expanding your business with all of these different revenue lines right now and giving you this moat. This is important to investors. Tell us about how CFOs are reacting to Ripple Treasury and also in terms of prime brokerage. I mean this gets you in a completely new business.
Yeah, for sure. So Maria, I think it is a fascinating time and place and in part because of what's going on with stable coins. You have boards of directors and CEOs and companies whether it's Fortune 500 or Fortune 2000, they're asking their treasurers, they're asking their CFOs saying, 'Hey, what are we doing with stable coins?' Last year, G Treasury, the company we bought now, Ripple Treasury, they orchestrated 13 trillion of payments. 0% of those were through a stable coin or crypto. That's the opportunity. And as we slowly integrate the ability from those dashboards, say you're making a payment to the Philippine peso, you can send it to the traditional rail, it'll take 3 to 5 days, it'll cost this much. Or you can send it, it will be there in one minute. And giving the treasurer and the CFO that option is really, I think, the unlock. And again, we're seeing a ton of interest. And it's partly because people are more aware of what's going on in stable coins in general. You had $33 trillion of stablecoin trades last year. It's, you know, this is kind of as Citibank analysts called it, it's the ChatGPT moment of crypto is that people are seeing stable coins as the entry point into other blockchain-based and crypto solutions.
Absolutely. And it's also enabling so much transaction for individuals and businesses across the world which we had not seen before.
For sure. I mean people sometimes don't fully I think understand is the unlock for that small business that has contractors around the world or wants to work with a consultant and you know being able to facilitate cross-border commerce in a low friction way. We have called it Ripple from the beginning of time, we need to enable an internet of value. The internet allows us to move information around anytime any place but value still... I, you may have seen just last week PayPal announced you can finally after 13 years you can finally move money from Venmo to PayPal. They own both, but before you had to go through a bank to get back in. The interoperability between payment networks is happening and it's going to unlock a lot of opportunity and really financial success for a lot of companies.
That's the key and that is a great example. After 13 years, we finally actually see this happening. Now look, we've got to also talk about policy because policy has enabled this. And we saw last week the Securities and Exchange Commission and the CFTC say, 'Look, we are coming up with a specific framework and identifying what's a security, what's a commodity.' How important was that?
I can't overstate that was a massive step forward and I partly say that with the backdrop of in the industry, we lived through four years of a Biden administration that was waging a war on crypto. This never made sense to me. Like crypto is a digital technology. Like it's almost like saying we're going to wage war on email. We don't like email, so let's wage war on it. It makes no sense to me.
Well, they waged war on oil as well, right?
Yeah. So they waged this war on crypto and you had agencies like the SEC who instead of engaging in thoughtful rule making, they just sued. It was lawfare. It was you just let's attack these companies and drive them offshore. And so I think what it was nine days ago that the SEC and CFTC came together this joint announcement and made a big step in just acknowledging here are 16 digital assets which we can concretely say are commodity digital assets. That is a huge step forward compared to where we've been now. We certainly want to see more. We want to see this codified in law in case there is another... The former chair of the SEC was a guy named Gary Gensler who I think really did act in bad faith around this. We need...
Very political and very much influenced by his ultimate boss Joe Biden. And so we want to make sure that we can't have another Gary Gensler moment where they try to weaponize policy in a way that is about politics, not about what's good for the United States.
Which is why we need to see these things codified and we need to have Congress's role here. And that's what we're waiting for right now. We had the Genius Act that's sort of in the books. We don't want to reopen that, by the way. I know some people would like to, but then there's the Clarity Act. Tell us how important these two pieces of legislation are and what they do for Ripple and the overall industry.
So, the Clarity Act, I was on your show not a little over a month ago and I predicted that we'd see the Clarity Act signed by the end of April. I'm going to say that the likelihood of that has gone down, but I said by the end of... but I'll say by the end of May. So, give me an extra 30 days there. Everyone's still at the table. We're still making progress. Ultimately, there's going to have to be a compromise on this key issue around how rewards are managed. And like Ripple doesn't actually personally have a dog in that fight, but we think to get Clarity Act for the industry, for the US to be competitive, for these entrepreneurs not to move offshore, for crypto capital and investment not to move offshore. We need the Clarity Act to get done. I am very optimistic. I was at a dinner two days ago in Washington DC, sat next to people who are much smarter than I am about how law gets made. I'll say, you know, watching the sausage getting made here has not been pretty. But, they gave me more optimism that we are going to get there. And the point that one gentleman said to me, he's like, look, when people are at their most frustrated is when you finally get it done because people will compromise.
Yeah. And from this White House, we're seeing amazing leadership to push this forward. And so, I think we're going to get there. It's just taking a little longer than we thought. So what happens to Ripple once clarity gets passed?
Well, it won't change Ripple's business too much. What it does is it unlocks the banks in the United States who have been a little bit fearful about should I lean into this industry. What if there is a future Gary Gensler and then how am I going to have to unwind things? So if we get that codified into law, it's an unlock for the banks around the world. It's particularly in the United States. So, we have seen banks say to us, look, we understand that you won the lawsuit and you have clarity that XRP is not a security. And last week, obviously, that's another great step forward, but if we get it codified into law, I think you'll see more of the largest financial institutions in the United States and really the world lean in more to this industry.
