CEO, Ripple
Brad Garlinghouse Says Stablecoin Market Cap Will Hit $3 Trillion by 2031
At CoinDesk's Consensus, Ripple CEO Brad Garlinghouse joins the stage for a wide-ranging conversation on the future of crypto, ...
About Brad Garlinghouse
Brad Garlinghouse, CEO of Ripple, has been active in media appearances discussing the company's legal history, regulatory developments, and industry growth. In a podcast recorded at the University of Kansas, Garlinghouse recounted that the SEC's 2020 lawsuit against Ripple nearly forced the company to close, describing the legal battle as a "parking ticket" that would have cost significant money. He stated that he met with SEC officials four times between 2017 and 2019 without a lawyer, and that no one suggested XRP might be a security, which he called "distasteful and maybe even unethical." Garlinghouse also discussed the "Peanut Butter Manifesto," a document he wrote at Yahoo advocating for focus over spreading resources thinly. Garlinghouse has been a vocal advocate for the CLARITY Act, which he said would provide regulatory certainty for the crypto industry. He criticized JPMorgan CEO Jamie Dimon for opposing the bill, calling Dimon's comments "negligence" and accusing him of trying to protect JPMorgan's profitable payments business. Garlinghouse noted that 90% of crypto trading occurs offshore and argued that clear U.S. rules would bring activity onshore. He predicted that the stablecoin market cap would reach $3 trillion by 2031, and expressed optimism about Ripple's acquisitions and its new AI developer toolkit for XRP.
Transcript (37 segments)
B
Brad Garlinghouse0:00
And what they will say is, 'Look, I'm compelled by the technology, but I don't want the next Gary Gensler to change their position.' And Paul Atkins has been incredibly positive, I think, for the United States and certainly for the credibility of the SEC. But there will be another Paul Atkins after Paul who we don't know, you know, which side of this argument they're going to fall on. Hopefully, the trend line has moved far enough we don't go back no matter what. But codifying into law means you kind of can't go back.
T
Tom Farley0:34
I'm not the only one excited to hear from Brad Garlinghouse. Place is filling up. Huge star in our industry and somebody for whom the big news is from you.
B
Brad Garlinghouse0:46
No, the big news can be from you. We need another CoinDesk consensus exclusive. So, I want to go right into it. By the way, he has liberty to ask me questions as well. I'm the moderator, but we agreed back, you decided it's going to be a two-way interview.
T
Tom Farley0:59
So, Brad, I want to go back just a bit of an icebreaker. It's actually something I've always wondered. So, for those of you who don't know, Brad had a very successful career, Silicon Valley, was an adviser to Silver Lake. He was well known for some of his strategic antics, and then all of a sudden he takes a job working for the CEO of this company, you know, that nobody's heard of, doing relatively nothing. True. What is it that got you to say, 'I'm going to Ripple in 2015?'
B
Brad Garlinghouse1:31
Well, I will tell you one quick story on this. Mike Arrington, who's a kind of well-known pundit as well and now also kind of in the crypto industry, he said to me when I took the Ripple job, he said, 'Brad, in a long list of shitty decisions, this is the worst.' That is a true story. Now, it turned out not to be the worst. Look, I have always been attracted to and drawn to kind of what is the next generation of technology. I was on the bleeding edge of voiceover IP at a company before Skype, before even around the kind of nettophone era. So I've always been drawn to that. And I, you know, at the time I was looking in 2015, I could have gone and taken a safer bet, but it just kind of felt like I want to do something more interesting. I said to friends that I think, you know, you've had some success, you can take a little more risk and I felt like if I just went to another, I had an opportunity to go to be a senior person at Uber. I'd known TK Travis Kalanick for a lot of years and I was like this seems like a way more interesting bet about where the world's going and to put a dent in the universe as the Steve Jobs would say.
T
Tom Farley2:38
Incredible, incredible decision. A little luck, I'm sure, but a little skill. Just a similar situation for me. I started full-time as CEO at Bullish three years ago this past Saturday. And this was a moment if you remember when I agreed when CEOs were in jail or on the run or you know soon to be indicted and my father said to me now you were the CEO of the New York Stock Exchange and now you're doing this. Are you sure son? Are you sure?
B
Brad Garlinghouse3:07
And look at you now. I mean so talk about your, I'm going to reverse the interview. I mean your own journey like that was a high risk. People did not know Bullish and even now I think Bullish is emerging and I think this deal you've announced today is only going to accelerate that.
T
Tom Farley3:20
I got a little lucky in the sense that I actually left the New York Stock Exchange for other reasons. I have three young daughters. I had basically forgotten their names. That job, you know, didn't allow me to spend time with them. And so that was largely the reason I left. But I had invested in CoinDesk around this 2015 time. If you remember, I put $10 million of New York Stock Exchange money into it, which is why I was so interested that a lot of people thought that was a dumb investment, but I was interested in blockchain. So, I kind of stepped back. So, for me to then jump into crypto, it wasn't like I was leaving this perch of running the stock exchange, if you know what I mean. It was a lower risk transition.
B
Brad Garlinghouse3:58
I agree with that, but I think, you know, I've gotten to know Tom better over the years, but knew him way back when as well. And when he took the job, I remember thinking Tom is an example of the kind of executives we need in crypto to kind of elevate the industry overall, which I also think is relevant as the acquisition you've made. It's an accelerant to the whole industry.
T
Tom Farley4:18
I appreciate you saying that. So, let's get your take on another topic near and dear to my heart as well and many in this room. The Clarity Act. So, I actually we had an investor call this morning. I made some of my own comments which perhaps I'll share alongside you. What should, first of all, are we going to get a Clarity Act? And by what I mean by that is in this year before Congress quite possibly changes and number one and number two how important is it to you and to the industry from your perspective?
B
Brad Garlinghouse4:52
So I think yes we're going to get the Clarity Act. I said a little bit controversially maybe in February that I thought the chances were around 80%. Notably the prediction markets now put it at about 80%. So, I'm feeling vindicated a little bit because it took a dip along the way. Look, it's still not a done deal. I do think in context of the timing, the key is going to be the next two weeks. Does it get into a markup process in the Senate Banking Committee that hasn't been scheduled yet, but there's talk that it'll happen either week of next week, May 11th, or the week of May 18th. Candidly, if it doesn't happen, then I think the likelihood's going to drop precipitously because I think if it gets into midterms, it's going to be too much of a loaded issue. And then if post the elections in the fall, I think the likelihood that it gets picked up is even lower. So, either I think something happens in the next couple weeks, meaning it gets out of committee to the Senate floor, or it doesn't, will be very telling.
T
Tom Farley5:52
But how important is it? So like we there's two scenarios you just laid out. One is we get it and the other is we don't get it. Does it matter? What, you know, how important is that?
B
Brad Garlinghouse6:04
I think it matters a lot for the industry. And I think, you know, you and I get the privilege of meeting with senior people at investment banks, commercial banks in the US and what they will say is look I'm compelled by the technology but I don't want the next Gary Gensler to change their position. And Paul Atkins has been incredibly positive, I think, for the United States and certainly for the credibility of the SEC. But there will be another Paul Atkins after Paul who we don't know, you know, which side of this argument they're going to fall on. Hopefully the trend line has moved far enough we don't go back no matter what. But codifying into law means you kind of can't go back. Now, I will say as an odd dynamic here, although Ripple has been a very vocal and I personally have spent a lot of time in DC advocating for this, we have clarity for XRP. We fought $150 million legal battle over four years with the SEC to have a federal judge write in her decision, XRP is not a security. That's clarity for XRP. But I think for the industry to really move forward in the United States, you need something like the Clarity Act to make it clear about other digital assets as not being securities. I'm curious what you said though on your investor call.
T
Tom Farley7:19
Just a quick anecdote before I tell you that. I grew up, my father is actually a federal judge and for those of you who aren't aware to take the federal government to court and win a final decision, did anybody see the Knicks beat the Hawks in game six. They beat him by like 60 points. That's the kind of ass-kicking we're talking about that Ripple gave the SEC and that was a...
B
Brad Garlinghouse7:46
I appreciate that. Thank you. Thank you.
T
Tom Farley7:48
It needed to happen and it needed to happen. I won't say more. I'll tell you what I said on my investor call and I'm curious to get your reaction to it. I'm close to what's going on in Washington as well and I do think this stablecoin yield portion of the bill was quite important. There's been a compromise that's been reached. I don't love it. I'm sure the big banks don't love it. That probably means it landed in a relatively okay place. But I get the sense our brothers and sisters in the digital asset space are continuing to actively fight almost against this bill just because they can't rally around say, 'Okay, now's the time. Let's get it done. Let's finalize the DeFi language. Let's finalize the ethics language.' And I think it's time as an industry we kind of shut the hell up in terms of fighting against this bill and we say, 'Okay, it's time to move. Call our local senator and get this done.' I'm curious what your reaction is.
B
Brad Garlinghouse8:43
I mean, Tom, you and I are in violent agreement on this. You know, in January I tweeted out something to the effect of, you know, perfection is the enemy of progress. I agree with you. Do I think the Clarity Act as drafted is, it's moved a little bit since January, but do I think it's perfect? Hell no. I challenge you to show me any piece of legislation that we would call perfect. And there's trade-offs and compromises, but I do think clarity is better than chaos. And we have been living particularly with a I think a not well-intended SEC under Gary Gensler. We've been living with chaos where it's just, you know, regulation through enforcement and you didn't know where they were going to focus their enforcement battle. And as you already pointed out, taking on the federal government, you have an unlimited budget of the federal government to come after you. And a lot of players other than Ripple would have folded. In fact, a story that I don't think is well told is one of the key strategic mistakes the SEC made was picking on Ripple because we were strong enough to stand up to them. It still took some cojones to do that, but you know, I think they made a bad strategic decision as opposed to building more case law, going after weaker players and getting them to fold, capitulate.
T
Tom Farley10:00
So Brad, you have built a company that's very innovative and growthy and you've used inorganic growth, so-called inorganic growth M&A to build your portfolio. We too in our own smaller, more humble way but exciting way.
B
Brad Garlinghouse10:19
By the way, it's not smaller. The largest digital asset acquisition ever is the deal you announced overnight.
T
Tom Farley10:25
That one was bigger. That was bigger. Yeah. Thanks for...
B
Brad Garlinghouse10:30
That's why I feel like I should be interviewing you today. Like this is your day.
T
Tom Farley10:32
No, I appreciate it. I appreciate it. So, and I've loved your acquisition strategy. I'll just say it unabashed in part because I know the protagonist. I know you and respect you and consider you a friend, but so too Mark Ash of Ripple Prime. So too Renat Veriki, who's depending on the day, one of my best friends who are the most annoying people in the world to me. We grew up together. But I love it. Can you just give us, I have a couple particular questions. Give us a high level. How's the acquisition strategy doing for you?
B
Brad Garlinghouse11:04
Yeah, look, I think Ripple and I would say now Bullish has taken a bit of a contrarian view relative to some crypto companies in their acquisition strategy. And I think a lot of crypto companies are buying other crypto companies and saying intra-chamber. And I think what I've seen Bullish do and certainly what Ripple has done is say we're going to go outside the echo chamber and accelerate bringing those non-digital asset native companies on-chain. And as you know well, I'll use Ripple Treasury formerly GTreasury as the primary example here. They processed or orchestrated about $13 trillion of payments last year. 13 trillion.
T
Tom Farley11:41
I had to ask Brad. I said, I want to make sure I heard that right. It's not really 13 trillion of payments.
B
Brad Garlinghouse11:48
Now, what's interesting to me isn't just it's a massive number and that's the opportunity. It's that 0% of those payments went through a stablecoin or through a digital asset last year. The opportunity is bringing that over time. And again, the last thing we want to do is for those customers, the American Airlines of the world, I mean, these are big, ranging from Fortune 50 to, you know, midsize companies who are benefiting from a dashboard to manage their liquidity, to manage all of the interactions with bank accounts around the world. That's a great business that's growing, but it is bringing them along the journey gently. So, okay, you're making a, your American Airlines making a fuel payment into the Peruvian sol. Okay, today that's going to take you four days and it's going to cost you this much because there's only one correspondent bank that'll enable that. Tomorrow it's like, oh, we could just in a UI in the interface of GTreasury, now Ripple Treasury presenting, hey, we can do that in real time at this cost and having a treasurer who's managing that payment make that trade-off. And it's going to be crawl then walk and then run. And those 13 trillion, you know, I'll go out on a limb and say five years from now, you know, I'll say 30% of that in five years will be on-chain in some way. And I think that is the opportunity.
T
Tom Farley13:01
I think it's also the opportunity Equinity. Like I think the powerfulness of like accelerating adoption by buying the largest I think transfer agent out there in terms of real world assets bringing things on-chain, I think it's profound. It's exactly, so what Brad's talking about is we, for any of you who haven't seen it, we announced we're acquiring this business, Equinity, this morning for $4.2 billion. And it's exactly as Brad described. It takes me back when I was a young man. I got my first big break and I got put in, I was terrible at it. I was so inexperienced. I got put in as the CEO of the New York Board of Trade and Intercontinental Exchange, this little technology company, really good at electronic trading, bought this business with zero electronic trading, zero growth. It was all floor-based trading, hand signs and carbon copies, and you put them together, and it was just to the moon immediately. You introduce electronic trading to this longstanding business with great customers and sticky flow. That's what we've done with Equinity. That's what you've done with your two verticals. With Equinity, they have 3,000 issuer customers, and Equinity is the transfer agent for their certificated shares, you know, old world traditional shares. And what's the speed of those transfers? Now, you're going to accelerate that dramatically.
B
Brad Garlinghouse14:22
Instantaneously. We're going to show on this stage later today. It happens instantaneously. So I'm not a visionary, you know, I am not even close, but I'm good at copying and I watch what we did at ICE and I watch what they do at Ripple and I like this approach as well. It's analog meets digital and it helps that you can buy it at a reasonable price as well these acquisitions.
T
Tom Farley14:45
So here let's break some news here. Tell us when your IPO or financial transaction will be.
B
Brad Garlinghouse14:53
We have continued to build. We have obviously made some big acquisitions last year. This year is very focused on integrating those acquisitions benefiting from that kind of bringing those pieces together both the Ripple Prime business as well as what we call Ripple Core which is kind of our payments and stablecoin business. So not going to break any news today. You know, no imminent plans to be a public company. And look, there are times when it's like, okay, I wish we were, but there's also times, you know, Coinbase announced today that as a public company, there's a lot of pressure on cost management. They're cutting 14% of their staff. You know, I think that's partly as a public company, they got to be very reactive to what's happening on a quarterly basis. And you know, that sucks for the 14% of their employee base that's getting laid off.
T
Tom Farley15:40
I just want to add one thing. I could have said this at the outset, apologies. I'm the chairman and CEO of a company called Bullish. Bullish owns CoinDesk which is putting on this conference. CoinDesk has a number, has a media business. I am not on the stage as a journalist at all. I do not reflect the views of our newsroom. I am hopelessly, I want to know where you're going with this. This is good. What's the preamble? Because I've gotten before like oh you should say that you're a, you're conflicted. I'm totally conflicted. I'm a customer. They're a customer. I'm not a journalist. So moving on as a journalist, I want to get, I want to get something out of this as a headline. What's your next acquisition? Like how are you thinking about your M&A strategy and what can we expect from you guys?
B
Brad Garlinghouse16:26
Look, I think in the short term, you should expect nothing. And I mean that genuinely. Look, we bought, well we did five acquisitions last year. Three were pretty small but two big ones both over a billion dollars. And you know now the high water mark 4.2, you really set the stage. But, you know, we brought on a 50% increase in our headcount through those acquisitions. And look, it takes work to integrate. And I'm very proud of the fact, I mean, as you know, having seen a lot of this, most acquisitions don't work. GTreasury organically, standalone, they had a record Q1. They signed up more customers in Q1 than in their entire history. So, like it's incredible. There was more customers in Q1. And that's obviously they're distracted through an acquisition yet they still signed up more customers in that quarter than any quarter previously. So it's a big deal and on top of that that just means more opportunity that the 13 trillion is growing and so far we haven't really done the work to cross those. So I mean it genuinely like we would look at small acquisitions kind of tuck-in product acquisitions but we made two big strategic bets last year and we're going to focus on that for now.
T
Tom Farley17:36
Our time is running short and I'm hoping to slide in at least one more topic, if not multiple. You've been early on stablecoins. You guys have a very successful stablecoin, not to mention the stablecoins that run across XRP rails. Where are we going with stablecoins? Does 300 billion, I don't know what the market cap is, 300 billion round numbers, is 300 billion three trillion in some number of years? If you know, are we going to kind of plateau or what? Help us see into the future here.
B
Brad Garlinghouse18:06
I mean, I think we've seen a bit of a plateau and the GENIUS Act which we haven't talked about, but it is the clarity for stablecoins as an unlock. The Circle IPO which is very successful was a moment where CEOs, boards of directors are asking their CFOs, hey, are we using stablecoins? Are we benefiting from this? The economy is 24/7 365 days a year, but our payment infrastructure isn't. Stablecoins are 24/7 365. Stablecoins are going to continue to grow not just domestically but outside the United States. Giving people access to a more trusted currency like the US dollar is very compelling. If you are in Peru as the example we were using earlier, right? I'll say yes to the three trillion and I'll say 2031 we'll hit three trillion in market cap.
T
Tom Farley18:56
All right, that's news. Brad Garlinghouse says three trillion in '31. Last thing, if you have anything, do you want to add anything on XRP? Anything going on there that you want to highlight? I forgot to bring it up earlier.
B
Brad Garlinghouse19:08
No, I appreciate it. Last week was XRP Las Vegas, a kind of annual conference that the community puts together. It was the most vibrant, the most well attended, the most active. It was awesome. And I see some people here in the audience who were there also. We're seeing, you know, more activity on-chain and ranging from real world assets to collateralizing, like you name it. So, I'm very bullish and honestly I'm bullish on, yeah, I'm bullish on Bullish and look I'm bullish on crypto broadly like there's so many macro factors institutionally that are lined up and yes I agree that people say yes that's true Brad but you know Bitcoin's down 50% or whatever 42%. Yeah, I get it. And XRP has underperformed what I would expect. And, you know, let's just hold on for a year and, you know, I'll come back and join you on stage here a year from now. Let's see where we are.
T
Tom Farley20:00
Cool. As Will Ferrell says in Anchorman, he's kind of a big deal. This is a big get for us. So, I'd appreciate an extra warm round of applause for Brad being up here.
B
Brad Garlinghouse20:10
Thank you.