I think that right now obviously the institutionalization of crypto is very clear in every facet. You can see it when you come to a conference.
I think you can make the argument that you started it.
I guess a little bit, you know, if we got one piece of credit, maybe that would be a good one. So look, I'm CEO of BitGo, trying to make it so you could secure digital assets. To be honest, I'm not sure we as an industry—I won't take full blame for it—have succeeded in this. There's still far too many breaches and failures, but I think we have made a lot of inroads. Anyway, the early days was very much about security. Who gravitated toward that? Of course, businesses. We've called them institutions. I think for about 10 years, the types of businesses that used our products 10 years ago was a little bit less institutional than what Goldman would call institutional. But yeah, look, we started this. I think maybe we're the ones that turned institutional to be a sexy thing in crypto. Before that, everybody was talking about retail.
Well, when you were starting, did you ever imagine that by 2026, we would be—you know, it's BlackRock on stage and Goldman Sachs and JP Morgan and the United States government is talking about how to secure their assets, which by the way, I don't think they've done a tremendous job of from what I've heard. But, you know, is this where you saw things going and on what timeline?
Well, you were around fairly early as well. Look, I mean, I don't think anybody had any perfect roadmap of like when would you see various players come into the space, but no, it's always been the goal and the expectation. And by the way, to this day, I think it's getting clearer than ever that Bitcoin of course is going to be the settlement currency of the globe. People cannot trust, governments cannot trust other governments, and the one thing that you can trust is the thing you don't have to trust at all. So I don't know, to some degree the vision's never been clearer. The timeline of exactly when things would go, it's been slower, right? So we did not anticipate becoming a regulated entity when we started. We thought we would do software. We would sell that to banks, financial institutions. They would pick it up and deploy it under their licenses and it would be great. But you know, by 2016 we were growing frustrated that nobody was doing this. And in fact we had a group, a client, CME Group. They're at this conference, which I see them doing quite a bit right now. We had an early engagement with them back in 2016 doing a thing called Royal Mint Gold. I don't know if you remember that one. All right. Launched it. It was successful. It was fine. You know, they ended up taking it down for not related to BitGo. But they wanted a custodian. We weren't a custodian at the time. So they searched high and low for somebody that would store the keys on their behalf. Couldn't find somebody. And that was really actually the impetus for us to say, 'Okay, we have to make this shift. Go from pure technology company into financial services.'
I would imagine now it leaves us at an interesting crossroads where you've been doing this forever. There's crypto incumbents who obviously are masters at security and custody. But now the big boys want to custody these assets as well. To some degree they actually weren't able to because of the regulatory and legislative environment. They certainly can. So you know, how do they approach that when you're talking to institutions now? How do you say you should be custodians with us rather than BNY Mellon or State Street or themselves in some way?
Well, technically, I mean, I hate the word custody with BitGo. You know, people think of us as a custodian. Yes, we do custody, but we do far more than that. And being custodian by itself is not where we ever wanted to be or where we consider to be. What we do call it today is infrastructure. We've got multiple layers. We've of course got the technology security layer. We've got a custodial layer. We've got a services layer. We operate some of those on our own to take them to market, but we also sell those completely through APIs to our clients that they can use and deploy under their own stack. So, of course, we're talking with all the institutions right now and we have a number of engagements where they're using our technology to do exactly that.
What are you seeing them most interested in? Obviously, as you said, you have the full suite, right? Top to bottom. They can plug in trading services, custody services.
Yeah. Right. Right. Right now, you can see, look, Morgan Stanley just came in very famously in the last few months, moving aggressively and quickly. They clearly want to make crypto trading available to all their retail clients. I don't know their exact size, but it's a huge—I think they said I think it was 8.5 million on E*TRADE or something was the announcement yesterday. Look, and we can't say Morgan Stanley without remembering to mention Fidelity, who deserves the most credit because they did it all the way back in 2016. And of course, BlackRock did it several years ago, launched the ETF, most successful ETF ever, with the Bitcoin ETF. What are they all looking for? They're looking to trade with their clients. Actually, they're completely envious of the 130 plus basis points that Coinbase extracts on every trade from their retail clients. And they want to do—they came in at 50. Yes, they came in at 50. They're like, 'Hey, we don't need 130. We'll take 50.'
Actually, I found that because they did the same with their ETF. They came in at 14 bips under everybody else.
Yeah. Sorry. You were saying—well, I guess at BitGo actually, we think everybody, whether you're retail or institutional, should get the same price. So, why is it that institutional gets this price somewhere down in the neighborhood of five basis points? And yet, when it's retail, we think it's okay. Especially when we're talking about digital technology, right? This should actually be the same price. So the idea that you're charging 50 basis points, look, I'm glad they're coming in. They've got a unique position. They've got a large distribution channel of their own. They will charge what they will charge. But ultimately, hopefully where we land with our asset class is that retail gets treated first class, same price.
If you're interested.
Now, I know what gets me excited every morning to wake up. I'm sure it's the same for you. I just have to see what's happening with the Clarity Act. You know, I die. I wake up in the morning, I'm like, man, what's the regulatory and legislative environment look like today? So, how does it actually affect you? Right? I mean, we get every single day we get a new headline July 4th, May, whatever, you know, how much does this actually impact your business, I guess, or and then more on broader the industry. Do you think we need it?
So, in order for us to operate, you know, Clarity Act doesn't pass, it's actually not going to affect our operations really much at all. I think for everybody at this conference though, you need clarity. So you know, we just went public earlier this year and part of that public company IPO roadshow process is you meet with tons and tons of investors and these investors have mostly been on the sidelines for digital assets. Obviously, there hadn't been a lot of digital asset public companies in the previous administration. So they just haven't seen a lot. And they're all asking like, 'You must be really excited about clarity.' And I was a little surprised by that. But the answer is pretty—or the reason why they're thinking that way is pretty simple. They see this as the legislative stamp of approval for our asset class. And they feel like it must not be ready to go until that's there. And I think this is a pretty common understanding for those that haven't been living and breathing digital assets for the last 12 years. You know, they're new to this and they've seen a lot of negative news. But once we have clarity, that is a legislated we want to see digital assets have a path and it puts that forward. So it's good for all of us because it allows everyone to participate. I think when you look at Morgan Stanley coming in, they are already making a prediction bet that they think it's going to come in. I think for firms like theirs, it's pretty difficult to actually make that leap where you come into a digital asset space in a heavy way when there's not that legislative path forward.
It's interesting that in 2026, we still look back to laws from 1936 to determine what we can and can't do. I wonder if in 3000 they'll be looking back at 2026 and questioning the decisions that we made with the Clarity Act. Is there anything in there that maybe concerns you or think we could get wrong?
Well, look, I mean, Clarity really sets a process where CFTC is going to start putting together the rulemaking which will go behind whatever market structure is assigned to digital assets. So there's still 12, 18, 24 months of work to be done even once it is passed. Market structure means something different to every person you ask. So that definition matters a ton. There's some that want to be able to just have completely verticalized stacks that do everything. There's others that want the exact same model that we have in traditional finance today. And then there's the question of what can you do that's better. My own personal belief is that market structure is about mitigating risks to the capital markets. US has the best capital markets on the planet bar none. Over 50% of the capital market value is right here. We worry about China becoming a massive economic force which they will but they are not even in the running to displace US capital markets. So as we put forth market structure and I hope what the CFTC comes up with is that which will mitigate the risks which could take down the capital markets. So I'll give you two examples of what I think is important in capital markets. Number one risk is custody risk. That might sound selfish from BitGo's perspective, but it's really not. You know, exchanges in traditional finance, whether you're talking about CFTC markets, whether you're talking about equities markets, hold no assets. They never custody the assets. And imagine if they did and they had a loss of the assets and the capital markets went down. That would be devastatingly bad. Now, it turns out with assets prior to digital assets, they might be tricky to custody, but they're not even close to how tricky it is to custody digital assets where we've got North Koreans, where we've got nation state actors trying to hack and steal 24 hours a day, 7 days a week. So, custody risk, taking down the capital markets, that's something we should protect against, which is why the verticalized stack that some in our industry are advocating for because it's good for their business probably isn't the best from a risk mitigation point of view. The second thing is one that hasn't really plagued the digital asset markets as much, but that's counterparty credit risk. Now, the reason this hasn't plagued our markets so far is actually mostly because we've had a pretty restricted, you know, still growing, still maturing asset class. But with the regulatory now getting clearer and clearer, people are quickly moving into that. And you know, humans, we like leverage. We like to play with leverage until it blows up. All right? Right. So imagine if the New York Stock Exchange had been doing what Lehman Brothers was doing. 2008 would have been instead of a devastating story, an extremely devastating wipeout of capital markets. So you can't have exchanges do that activity. And the heart of the capital market is the exchange. So unfortunately, you know, exchanges tend to lead to monopolies. Monopolies is not a four-letter word. I know we hate the word monopoly. You can't have—it's fine. Look, in the equities world, it used to be just New York Stock Exchange. Now, it's still NASDAQ, New York Stock Exchange at 75%. CME, of course, very much monopoly in the derivatives world. It's just the way it works. Whoever has the most buyers gets the most sellers and it's a blessing. So, if you believe, Larry Fink, that all assets are going to be digital, then you have to believe that the future capital markets are going to be digital and you can't be taking counterparty credit risk inside the exchange. You just can't do it.
