# Coinbase Institutional Strategy: Tokenization and Stablecoin Payments

**Podcast:** The Milk Road Show
**Published:** 2026-02-05

## Transcript

My recollection, the last number we reported was over 500 billion in assets.
You know, the slight majority of those now is actually in our institutional business that would put Coinbase on the scale of you know some of the largest banks in the world.
All right, good morning, everyone.
Welcome to the Milk Road Show, the daily crypto show that keeps asking banks a very simple question.
Why are you still doing this the hard way?
Today is February 5th, 2026.
We are recording this on February 4th, the day before.
And if you are paying attention to what's really happening in crypto outside of just price action, the tokenization of everything is in full swing in TradFi is migrating on chain.
And at Milk Road, we believe this is one of the biggest technological and financial trends that are happening right now, maybe ever.
Uh and we want to understand that further.
So we're bringing on the guy who's behind the scenes, making it all happen.
Today we are joined by Brian Foster, who leads crypto as a service, ETFs, and government at Coinbase to talk about how institutions are actually moving on chain.
And today's episode is brought to you by some Turn Crypto Tax Chaos into Confidence and Bridge, send stable coin payments, instantly simple, global friction free.
Awesome.
Well, I gotta ask this title, Head of Crypto as a Service, ETFs and Government.
Who gave you that title?
Was that like did you choose that?
Did Coinbase choose that?
Where'd that come from?
We gotta do that.
Did you just do everything?
Yeah, we have a bunch about that, Kyle.
That's a that's a symptom of um maybe taking on a a few more jobs than I should be uh over the year.
Um, um, in in all seriousness, Coinbase is doing so many things and growing quickly.
And so I know we'll get into that on the call, but that's uh that's what you're seeing there.
Yeah, absolutely.
Well, look, let me give the let me tee up the episode to the listeners first and for you, but then I I think I might just want to ask you what the heck's going on on markets because um there's a lot of red candles out there recently, and so we'd love to get your opinions.
But I think just to tee off the show and what we're gonna discuss is I think most people think about Coinbase as sort of like the crypto exchange, or really now I guess it's like the everything exchange um for retail investors that's sort of you know competing with Robinhood, let's call it.
Um, but I think what many are missing about Coinbase is also becoming sort of the bridge for institutions, you know, to move their operations, their assets, their services, uh, and all that stuff on chain.
And that's really what I want to focus the conversation on today, not necessarily the like the everything trading app that um also people know Coinbase for.
So we will dive into that before we do.
What's your take on what's going on in markets?
Sure.
I'm excited to talk about all of that.
The markets have been pretty interesting the last couple of months, so definitely return to volatility.
Look, we are um, you know, very long-term oriented at Coinbase.
I certainly am oriented that way personally.
And I think it's not, you know, the first time we've seen volatility in in Bitcoin and some of the, you know, some of the major focus areas within the crypto market.
But I think look, volatility creates opportunity.
And it's moments like these where you have to ask yourself, are you in it for the long term?
Right?
Do you see this secular trend of digital assets um really impacting all of finance capital markets and payments, which I know we're gonna talk more about.
You know, for me, that the answer is a resounding yes, and you have to figure out how to navigate the volatility short term.
But it's a great time to focus.
We we hunker down and do a lot of our best work when I think people get distracted by volatility.
And right now we're certainly full steam ahead at Coinbase.
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Nice.
Love that.
So, you know, and this thing, it's a good segue to what our discussion is, because I think when a lot of people think of crypto, they just think of like trading digital assets.
They're just trading this random stuff, whether it's meme coins or Bitcoin or or L1s or whatever.
And the thing I always come back to when you have that long-term review is like, what is it that we're actually trying to accomplish here with blockchains and with crypto?
And is that trend still intact?
Are more assets still moving on chain, right?
Um, and are more institutions moving on chain, or more people moving on chain.
If the answer is yes, then there's no real reason to be so scared on what's going on in the markets.
And so I think we all understand the whole like retail using crypto and trading crypto and you know, using DeFi.
Help me understand institutions.
There's all this talk of institutions are coming on chain, their assets are coming on chain.
What does that actually mean?
Um, what are they actually doing when they come on chain?
Why are they coming on chain?
Can you sort of like think high level here and just like walk us through what that really means?
Yeah, absolutely.
I think so much has changed in the last, you know, five, six, seven years.
The market's really transformed.
And what we're doing today is much broader than what we were doing, you know, just a few years ago.
So maybe just starting by rewinding the tape for how we got here.
Sure.
Really, when I joined Coinbase about six and a half years ago, most of our energy was focused on building great products to help people access Bitcoin and major crypto access assets as really part of their portfolio in a new financial asset class connected to this exciting technology trend of blockchains.
And um that was a really you know invigorating time to be working on the market, but in retrospect, like super narrow, right, compared to all of the things we're doing today, spanning um payments and tokenization and really now the whole portfolio and much more of the core plumbing that um that impacts um markets uh globally, right?
So this thing's gotten way broader, right?
We've moved way beyond the kind of early days of just you know Bitcoin and crypto access.
And I think that our approach as we've dealt with institutions and seen them you know coming in one by one over the years, has been really to keep pace with the evolution of those other trends, starting with um you know Bitcoin and crypto access, and that's very much a trend that's alive and well today, but keeping pace to meet them as they have new demand on things like stablecoin enabled payments and tokenizing the rest of the portfolio, right?
Securities, commodities, and now of course starting to think about prediction markets.
So our job really in a client-facing business is just to be responsive to that demand and help keep pace with the markets to get our clients what they need.
Can we apply that back to the product or the like the the the revenue streams that you guys are actually doing?
So it started with sort of access to Bitcoin, um, which is basically you know, custody for ETFs, right?
BlackRock launched the Bitcoin ETF, Coinbase custody it for them.
Same with, I don't know, like 90% of the ETF providers, same with for ethic and and so on.
So okay, there was the first one of the first things you guys did for institutions, and then you started talking about more whether it's like payments and stable coins and tokenizing.
Walk me through what those actually are and what the the products are I guess that or the services are that Coinbase is providing.
Sure.
Great question.
I'm going to map it to those three kind of thematic areas that we really focused on, right?
Which is number one kind of Bitcoin and crypto native crypto access as a financial asset class.
Number two, payments and specifically stablecoin enabled payments and number three tokenization.
So starting with access to crypto as a financial asset class, we really set out to take everything we learned from building this big retail business and saying, okay, let's provide super powerful but simple and easy to use tools that are geared specifically to the needs of institutions, right?
And that meant institutional grade custody coupled with an algorithmic prime brokerage and a financing capability.
And these are just you know fancy institutional institutional terms for saying I need to support like the whole trade life cycle make it really easy for me to access these markets in a high octane way that's going to pass muster with my compliance and risk department, et cetera.
Right.
So really leveling up everything we learned in retail to nail that institutional opportunity around Bitcoin access.
So we built the custodian for safekeeping.
We built a prime brokerage for uh trading access that powers our you know first party clients like asset managers and hedge funds, but also you know supports a lot of our brokerages who work with us and build on Coinbase as a platform.
And also, as you mentioned, the ETF business.
So that's really the short version of how we set out to kind of meet the market on this access play.
Really, the second trend that we're laser focused on is this notion of stablecoin enabled payments.
And this has been an incredibly exciting one over the last two years or so, where I think the market's transformed from stablecoins being viewed as a sort of crypto native tool to help people move money around for the purpose of enabling trading into something that's actually part of a solution that large corporations and large payment service providers need to get a job done, which is to prove their money movement rails globally.
And that's a super powerful phenomenon.
I think if I were being self-critical and reflecting on some of the growing payments that the industry had to go through, we had to get out of that mode of just thinking about those crypto native native Lego bricks of here's a wallet, here's a stable coin, here's a blockchain, and learn to package that all together into a solution that really resonates with those major, major client archetypes I just mentioned.
I think the industry's come incredibly long way on that in the past you know year or two.
And it's it's really go time now for this trend.
So Coinbase is hard at work at that.
We have a huge initiative focused on stablecoin enabled payments.
Um, and just like we had that moment, I think, where we activated the really large asset managers and hedge funds for Bitcoin trading, we're now at that same moment, I think, for stable coin-enabled payments.
And it's a really exciting time to be working on that.
Um, the third, the third trend quickly, and just mapping it to the products of tokenization.
This is an interesting one where actually the sort of technical problem set here is like, in a way, the easiest thing to do in this part of the market, right?
It's really about obviously some important regulatory work that's getting done in Washington, DC to create, you know, structure and rules around how these assets are going to be able to move in the markets and be treated, but also about sort of interfacing with the incumbents and the traditional financial institutions that today are dealing with a lot of these assets, right?
And so this trend is huge from a sort of progressable market perspective, um, but a grind in terms of we need to unlock these things from a regulatory perspective and from interfacing with you know the traditional uh capital markets players to be able to get this where it needs to go.
Coinbase's role in that is of course, we've said we want to be the everything exchange and ultimately a partner and a distribution point for anybody who wants access to all kinds of tokenized products, but also we're providing tools that help people easily create new tokenized products to store them in a custodian that's digitally native, and of course, to move them around on base, um, you know, our our blockchain and also other blockchains we support.
Um, and then of course, we want to ultimately participate in the markets as well and help people be able to trade these assets.
And we're at, I would think, of you know, kind of mile five or six of that of that marathon on the tokenization.
Interesting.
So we'll we'll go through each of these three, I think one by one and kind of like dig into the details a little bit further.
Um, because I think they're both, as you kind of said, both massive opportunities, all three of them.
Uh not both, all three of them.
So access was the first one, um, which is the one you guys have kind of been doing the longest.
Um, you guys probably measure this by like, I don't know, assets under management.
Do you have a ballpark range of like how how much you guys are holding or how much you guys are custodying for right now?
And can you can you share that or is that disclosed?
You actually can't say that right now.
We we've been public about that.
So like a good public company employee, I'm gonna recommend that people see our um our our public financial statements.
But um I recollection the last number we reported was over 500 billion in assets.
Um the uh, you know, the slight majority of those now is actually in our institutional uh business.
I think in excess of 300 billion is what we most recently reported, and then another, you know, 200 odd billion in retail.
Um, but again, I encourage folks to see the latest uh public numbers that we've uh that we've disclosed.
And so, you know, another interesting way to think about that is um someone pointed out recently um that you know that that would put Coinbase at the scale of you know some of the largest banks in the world.
And so we really have taken this this responsibility of operating as a scaled player for some of the largest clients, clients in the world uh uh to heart.
Well, you brought that up.
I was actually gonna say the same thing, which is why are they why institutions come to you guys instead of, you know, why aren't they do this themselves?
Why don't they custody their own assets or why don't the big banks do this on behalf of them?
Is it just you guys were there first?
Have you guys like figured out something proprietary?
Like, what's the moat that you guys have here and and why does everyone keep coming back to you guys?
It's a great question.
I think that it there's a couple things that go into this.
And it's uh, you know, there's not one simple answer.
I would say the biggest thing is um, first and foremost, it's about trust, right?
And so I think this is viewed correctly by a lot of the market participants as uh frontier market for them, right?
So a lot of the firms we deal with have been around for a very long time.
A lot of them are risk adverse, they're proud of the businesses they've built.
And there's a lot of people uh whose you know careers are on the line to be good stewards of their firm.
And they're looking at a relatively new market compared to you know how their firm might think about uh the world, and they're saying, you know, hey, I I want to participate in this growth trend, but I need to do it in the right way.
And I need it to be compliant from a regulatory perspective.
I need it to be absolutely ironclad from a security perspective.
And who can help me get there?
And you know, enter Coinbase, I think that look, we have the track record from security and a compliance perspective that resonates and helps helps them check those very important boxes, but we also have the experience technical and product perspective to do things that are really, really hard, right?
And this is this is a key thing.
Like crypto infrastructure is hard.
I think it's hard to find the specialized talent that can build it out well.
And then there's economic equation of how do you want to spend your marginal, you know, 50 or 100 million dollars of budget, right?
Do you want to kind of reinvent the wheel on some of these things that have now been matured and hardened at uh Coinbase?
Or do you want to quote unquote quote rent some of those pieces and get huge leverage out of that, get to market faster and have a more compelling commercial story?
So it's kind of all of those things together that lead those clients to us.
Makes sense.
And is there a lot of demand for this?
Like, is this a thing that you guys are looking at saying, oh, every institution, or maybe it's not every, but like so many institutions want more of this right now.
And this is like a big thing that's growing within Coinbase.
And I'm not asking to like so that the listeners can value Coinbase.
It's more so you can start to think about what's happening in this industry in general and sort of tradfy.
Like, are they really wanting more of this, or is that sort of slowed down after the initial, you know, sort of ETF launches of Bitcoin and ETH?
You know, it's funny.
I would say when I first got into this industry, the planning functions and the execs at a lot of these firms were understandably very I would say uh impacted by the sort of month-to-month volatility, right?
Say, like, okay, if I am I gonna bet on this thing that is in the in just when it was just about the access play for maybe Bitcoin?
Like, like am I gonna bet on this thing that's a small portion of my business and that is you know at the time was very volatile, knowing that, you know, who who knows, is it is it gonna be there in six months, a year?
And that's a very different discussion discussion then um you know, than it is today.
Where number one, you know, the the breadth of ways that this market is touching your business has increased, right?
It's now about access and payments and tokenization.
So you have to take the trend much more seriously.
But number two, it's just been going on for longer and it's impossible to ignore.
And so we don't really have conversations anymore uh where I think our partners or or potential clients are dubious about the kind of long-term trend.
The question's more center around, you know, where do I start?
What is the right sequencing?
And how can you help me shape my strategy to make to make sure I nail this in an efficient way?
Those are fun conversations.
Um, so that's really how things have shifted in the past you know, couple years.
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Let's move.
You brought up stable coins there.
Let's move on to the stablecoin.
You called it actually more stablecoin and um stablecoin enabled payments.
Um and so this is quite interesting.
So I'd love to learn learn more about that.
Of what institutions are starting to adopt this, they're starting to want to use stable coins and payments, and it doesn't have to be specific names, unless you can name them, but more like what types of institutions, I guess, or what types of companies and corporations.
Um, and then I want to get into your stablecoin as a service product and like what that actually means and why that exists.
But let's just start a kind of set the stage of like who's using this and why.
Happy to do that.
So I will say we have announced a handful, a small handful of our largest partners in this category.
And we're dealing with uh some of the largest financial institutions and payment service providers uh in the world, which is super exciting.
So we've announced work with uh with Citi, uh Citibank uh PNC as well, and some of the largest fintechs and PSPs.
So I would say that, you know, the way just before we zoom in on payments, the way broadly to think about how Coinbase organizes its client business, we have a first-party business, right, where we directly face retail and institutional clients, right?
Through the Blue App, if you're a retail clienter or a custodial app, or the Prime platform if you're a hedge fund or an asset manager.
And then over here separately, which is the business that I look after, we have really the infrastructure business, right?
Or what we colloquially call crypto as a service.
And that is about providing our partners with tools to enable, you know, stablecoin payments and crypto trading if you're a brokerage, right?
Or a or a wirehouse uh or tokenization tools if you're an asset manager needing to create these things or or custody them and move them around.
And so the payments focus for us from a client-facing perspective right now is predominantly living in that second category where we're providing a combination of infrastructure Lego bricks to help these large payment services providers, banks, and fintechs take advantage of the sort of magic of global 24-7 super fast settlement that comes with uh stable coins, but make it feel seamless and easy for them and make it fit into their existing workflows.
And so that's the work that we're doing.
And I think where this is going is for those firms, they're gonna make it feel just like any other payment rail, like an ACH or a wire, you know, in all of their product surface areas, and abstract away these crypto sort of nuances to their users.
And the user ultimately should just feel that magical benefit of I just sent a payment across the world, super cheap, super fast, near instantaneously.
And that's amazing.
Stable coins and the wallet infrastructure and the blockchain components happen to be the tools that allow you to get that job done.
Right.
And so are they just using USDC in the background or are they wanting to create their own stablecoin?
Because obviously we've got you know, USDC, USDT are the most popular from Circle and Tether, but you've had PayPal launch their own.
I think it was Fidelity last week that announced they were going to launch a stablecoin.
So in terms of where this is going, or at least what you're seeing so far, is it I'll just use the existing ones that have the liquidity already, or do these companies that you're working with want to launch their own?
Is that why you have this stablecoin as a service product?
It's a great question.
The answer is it's a mix of both.
And so I think different types of clients and actors right now are approaching this problem a little bit differently.
So, you know, everybody broadly understands the benefit of a thing that's working well, like a USTC, right?
Which is at huge scale in the crypto market, widely used.
It has a brand, it's trusted, it has great um, you know, regulatory oversight and uh and controls on the back end in terms of how collateral is managed at very large, well-known banks.
And so um people gravitate to that and understand that value proposition.
And a huge chunk of the market says, I'm just gonna use that thing that's working well and is known.
That works great for Coinbase, USDC is integrated into all of our tools and infrastructure.
It's a very easy starting point.
We also have some other types of firms who say, you know what, I understand all of that, but also like the brand value of having my own thing with my name on it is important to me.
And to that we say, great, we have a second sort of flavor of ice cream for you in the platform of stable coins, and and that is um what we're calling stable coin as a service.
And what we've really endeavored to do with the stable coin as a service capability is to say we're gonna give you all of the underlying liquidity and tools and interoperability that comes with USDC, but allow you to just toggle that branding piece to make it feel more neighbor and give you a little bit of the best of uh the best of both worlds.
Now, this is like a relatively new offering for Coinbase that we just went public with uh recently, but it's getting a warm reception from a lot of our a lot of our partners.
So it's essentially USDC, but wrapped in the brand of X Company that wants it.
And then somehow, and I don't know how much you can speak on this, but somehow maybe Circle's taking a cut, you take a cut, and then the company that's issuing it, or I guess it's you guys issuing it, but the company that's putting their brain on it, takes some sort of cut as well.
And that's where the kind of value accrues from it all.
But it's it's within their branding.
That's roughly right.
Yeah.
Coinbase has the flexibility given our position in the market to make sure economics work well for our partners.
But we really think of it, yes, as best of both worlds.
You get everything that you would get with uh SDC from that kind of liquidity and interoperability perspective, but you also get the brand.
So zooming out, I don't know, five years from now, 10 years from now, do you think that there's just like hundreds or thousands of dollar stable coins?
Or do we somehow abstract that all away and it just goes back to it's just a dollar, but there's something behind it?
Um, how do you how do you see this all playing out?
Because already it's getting so fragmented with so many dollar stable coins.
Um, and it feels like it's only going to get worse uh or better, whatever you want to call that.
Um, but how do you see that playing out in I don't know, five years?
I I agree.
It's something we think a lot about.
We're we're very much um, you know, product nerds here and and I I think have a bias where it's let's optimize for the user experience that makes sense.
And fragmentation is um is not necessarily easy for users, right?
Or you don't have to think about this asset or that asset as I'm uh as I'm approaching uh, you know, a simple action like making a payment, right?
And so I do think that in the long run, for these things to really work at scale, we're gonna have to abstract all of that away.
Right.
And we're working into that with the the magic trick of the stable coin as a service play is that because it's running on all the same rails as USDC, we are able to do that abstraction uh much more easily as are our uh partners.
But I think, you know, like anything, when it's early um and you have a sort of you know network effect and market driven uh uh sort of substrate here on which all of this is built, it's gonna have fragmentation out of the gate, right?
There are incentives for players when they see greenfield to try new things and can I kind of straight out my turf in the long run?
You know, history tells us that these things tend to reconsolidate um over time.
And we've already seen that power law start to take effect with the assets that are working well.
So it wouldn't surprise me if you know five years from now we're looking at a much, much larger market cap and sort of flow uh in the stable coin market, but still have that steep power law and consolidation around a couple dominant assets.
Right.
Okay.
Speaking of you're expecting it to be a much larger market cap.
I was gonna ask you, what are your growth expectations for stable coins?
And this does not have to be financial advice, it doesn't have to be Coinbase's opinion.
I'm curious on yours because you know, Scott Besson, I think came out you know, is it late last year and said he expects in the next I think is five years, um, we're gonna be up at like close to three trillion uh in terms of stable coins, right?
Um and so he's seeing some pretty incredible growth.
And I'm just curious, uh, and then we also have the Genius Act that came last year as well.
Uh and so you know, ideally that's gonna help to proliferate this further, at least in the US.
Um, so curious if you can comment on both of just like do you agree with Scott Besson or do you have a different take in terms of the size and the growth trajectory of stable coins?
And then how does the Genius Act either help or facilitate that?
Sure.
Yeah, as as you said, not financial advice uh but I think in terms of the trend and the addressable market opportunity here you could easily you know squint your eyes and see a world where we're at you know 10 or even 100x of where we are now um you know in the next decade um that would would not shock me at all I think when you look at these kinds of trends there's a lot of parallels here to the uptake on stable coins that map to what we saw with Bitcoin and you have this kind of grinded out early phase where the largest players who really control uh flows of assets need to get activated and they need to get comfortable with the infrastructure and we're doing that right now the cat that kind of dirty work of grinding it out and helping uh the people really feel comfortable around you know compliance and security and a fundamentally new thing and although some of these firms uh you know were onboarded into the market vis-a-vis the initial interest in Bitcoin there are also a lot of new um PSPs who maybe didn't participate in that part of the trend and so for that part um of the market, they're actually looking at this sort of crypto stack, if you will, for the very first time.
So there's a little bit of a time there um once you get all those pipes flowing, that's where things get really interesting and it's sort of, you know, I think of the sort of activation of um all of these major PSPs and the super easy to use product formats like cards, which are taking off um what's a PSP, by the way.
What's a PSP?
Human service providers.
Yeah.
Thank thank you for for checking me on my corporate drug and good.
Yeah.
Yeah.
So when you the there are those moments of act of activation where you get a new category like that to come on that I think of as like you know the ETF moment, but maybe for for payments that can really grow the market orders of magnitude.
And we're we're in the thick of that you know grinded out phase of dealing with those players right now.
I see.
I think last year 2025 we had about a 51% growth in stable coins.
So do you expect 2026 to be something similar or do you think we're starting to get through the the grind phase that you just mentioned and it's like the pipes are bigger and we can start to see this stuff flow more or like what are your expectations around that?
It's always hard to I'm I won't share a specific number with you.
But what I can tell you is there's two like it it's funny on on a backward looking basis a lot of the stable coin activity centered around actually trading enablement right.
So I think if you look at the backwards looking data you do see a bit of a correlation between some of the overall um investing and trading related crypto KPs and or data and some of the stable coin growth numbers.
What I expect to happen is as the payments-oriented use cases start driving a greater share of growth in this part of the market, um, maybe that trend over time will will decouple a little bit, right?
From from the kind of Bitcoin trading and those and those other data points.
And so what I can tell you is as we grind it out to activate more and more of these pure play payment services providers and fintechs that are laser focused on the payments piece, you should start to see you know volumes um tick up there.
And of course, like the demand side of this from ultimately from consumers who are going to pay in stable coins and merchants who are going to accept them are gonna have to drive a lot of this as well.
You have to really get the whole ecosystem activated, not just one pipe in the middle.
Do you guys work at that level too?
Like obviously you're working with the banks to like figure out how they can operationalize stable coins or launch their own stable coin.
But you know, there's the there's the use case of just every company in the world that wants to do payroll globally, which makes way more sense to use stable coins.
We in our company, we have 60-something employees, and about 30% of them, um, because we have two companies, the marketing agency and and Milk Road, about 35% of them, I think today are paid in stable coins.
Uh, and a lot of our invoicing, like a lot of our clients, pay us in stable coins as well.
And honestly, it's so much better.
We hate when we have to do a wire or I have to go sign something at a bank.
It's it makes no sense to me when we can just use stable coins.
So, do you guys also deal with those, like just normal companies that maybe aren't even crypto companies yet that are already starting to adopt stable coins for like payroll and things like that, or or that's sort of out of your guys' wheelhost?
It it absolutely is.
And we got to remember, Kyle, that to have a follow-up conversation now and peek out together on what you guys are doing, right?
And so we'll love to help you and talk about some of those tools that that you might be using and see if there's anything we can do at Coinbase for you.
But but yes, um, this category of of payroll um and you know enabling um enabling payroll for you know 1099 workers or or or or anyone really is a really exciting category.
And we're actually well down the path with a lot of the major players in that market.
We have not announced yet um all of those names, but it's a it's a fantastic category.
We find that a lot of people do want to be um paid in stable coins.
Um and the you know the payroll providers are interested in having another option that makes this uh easy and a little bit faster um you know for their clients.
Interesting.
Yeah, excited to see that that play up more because after just doing it ourselves, we're like, how's the world not doing this yet?
You know, like it's uh it's it's wild.
And um it's one of those things where the UX is just actually good now.
And so it actually works better than the TradFi world.
So um, those are the kind of things you want to see.
Let's jump over to to the tokenization side.
So this is sort of the third bucket that we talked about.
Um I guess let's first, and this is maybe kind of the the the newest thing, but also the thing that is really starting to get highlighted a lot, you know, Larry Fink's going on saying that we're gonna tokenize tokenize everything.
Um, and so it's becoming quite popular.
Maybe give us the high-level notes of like, what does this mean, first of all?
Why are institutions doing this?
Um, and then again, I guess you can talk about your product, which you guys recently announced as well, um, tokenization as a service.
Like what is it that you guys are actually doing for them?
Why aren't these companies just tokenizing it themselves?
Like, what is it that Coinbase actually does?
Sure.
This is a really exciting trend.
And the simple way that I think about it, you know, for your audience is it's really about the rest of the portfolio upgrading all of those assets, whether they're you know securities, commodities, real estate or something else, upgrading them to be able to live on blockchain rails and benefit from you know smart contract programming, the ability to be moved around the world um instantly, just like the stable coins, right?
And improve uh improve settlement.
And so that's a simplification, but this is a this is a very easy way to think about where we're going with um with tokenization.
And as I mentioned before, this is a market where you need some some major unlocks for us to really, I think get to where we think we're gonna go.
Um, but I think we're in the process of of making those those unlocks happen, right?
Around the regulatory piece and of course, um, you know, interfacing with the world of of traditional financial services.
In terms of Coinbase's role here, we really do uh we really do a handful of things.
So we have to help you if you're an asset issuer, a big asset manager, we have to help you with the actual act of creating the token itself, right?
Getting that analog format, formatted asset onto the blockchain in the tokenized format.
So create it, um, store it safely in our custodian, which is already scoped to do that and today can hold a wide variety of digital assets, not just um, you know, Bitcoin and native crypto assets.
Um, you have to be able to move it for settlement, right?
And that's where the blockchains themselves come in.
Coinbase has base, of course.
A great uh solution for that is an L2, but we are a multi-chain uh platform and support a wide variety of other chains.
Um, and then finally, you have to be able to you know distribute and provide markets uh for these assets.
And ultimately, Coinbase has an ambition to um you know to play a key role uh there as well.
And so though those are the kind of things we're focused on, the tools for, you know, the creation, the storage, the movement and settlement, and ultimately the distribution markets and our products map to those um key kind of parts of the value chain.
And we're working with the folks, whether it's the asset issuers or you know, the other um, you know, custodians and and exchanges um to make sure that we can do those things effectively for clients.
I guess you guys are well positioned for this one because you already have the custodian business that you've built the trust on and you've built sort of the moat on that for so many years now with digital assets, it only makes sense to start to do that with everything else as you wrap it and put it on chain, um, which I think is is quite interesting.
You mentioned there's, you know, we've all heard of tokenized equities.
So like stocks coming on chain, uh treasuries are coming on chain.
There's private credit that's coming on chain.
You mentioned real estate, obviously, dollars are coming on chain through stable coins.
Um where do you think obviously stable coins is probably the fastest growing one here and will be for for some time.
What do you think is next?
What do you think is going to be the next big thing that gets tokenized?
Is it is a stocks like we're all talking about?
Or do you think there's, I don't know, too many regulatory hurdles or just things we've got to figure out before that can happen?
Like, where do you see this tokenization thing really growing to start over the next you know year or two?
Outside of dollars.
Yeah, it's a great question.
I think that what the largest players in the market generally are going to be responsive to where the demand is, right?
And I think it's safe to say point Coinbase has not been um public about our exact order of operations, you know, by asset clients, but I can say that you know, generally we're responsive to client demand.
So if if you zoom out just uh separately from Coinbase for a second and recognize that probably a lot of the large players think that way, it'd be reasonable to expect that there's going to be a lot of energy around tokenizing, you know, equities and ETFs, which are just you know major, major uh sort of demand sources out there in the market.
And then probably you can go down the list sort of by um by size to think about um where the sort of lowest hanging fruit of of demand will be.
But I have to say that just you know, simply replicating um the parts of the portfolio that are easiest to access today and putting them on on um sort of the upgraded tokenized rails is to me only a small fraction of the story.
The must much more interesting part of this equation um is actually what new types of products are gonna get created in combining certain assets or taking advantage of the programmatic nature of having a thing on chain in the first place to create better products for investors, right?
And that's the part that gets me really excited.
I think we're super early um in that journey.
And you'll you'll notice if you look at what products have actually been tokenized today, people have started with, in a way, the kind of most boring, most liquid, largest products.
So I think we're going to go on a journey of doing the obvious thing where there's a ton of demand and the things are large today, but I'm excited to see what new products are going to get created that are novel and useful for investors and take advantage of those product properties.
When you're speaking to these institutions that are looking to tokenize their assets, there's two ways that they're going right now, from what I see is some want to tokenize on a public blockchain, like Ethereum or BATE, right?
Or Solano, or you name your blockchain.
And then there's some that are wanting to tokenize on a semi-public or semi-private type blockchain.
Um why are they doing one or the other?
Which way do you think this is going to go?
Like, what are the conversations you're having when it comes to this?
Um, and which one wins out?
Well, Coinbase has a very uh public view on this, which is that we're pro um public blockchains.
And I think um, you know, Coinbase is a firm that has Silicon Valley roots.
Many of us um, you know, in our exec team and our leadership team were kind of close to the action as as we saw the internet come of age um and believes that, you know, we believe that ultimately these um public and open source chains are gonna accrue the most value because they're super easy to build on for developers.
They're inherently global and they're a great interoper interoperability benefits, just like we saw with the internet protocols, right?
And so that that's our sort of default orientation.
I think the way that the market has handled this, when we think about the large institutional uh clients, um, not just the buy side, but also the sell side, the banks and the brokerages, they came into this first from a place of being a little bit constrained uh by what they were actually allowed to do, right?
And so for a large bank to touch a public blockchain for the first time, although to you and to you and me, that might seem like no big deal.
We wake up and do that and it's fine.
That that's a big deal for a large bank that has to get comfortable with that from a compliance and a security perspective.
It's a totally novel surface area for them to think about.
And so I think in the earlier days of this journey, when a lot of them were starting to think about all of this for the first time, and when there was less regulatory clarity and maturity generally in the market than there is today, the natural impulse was let's start in a sort of controlled permission environment that I know will pass muster with my compliance and risk teams.
So we saw a lot of that in in sort of, you know, the 2015 to 2020 era.
Um what's changed recently in the last few years is that the demand side of the equation on public chains is now um irrefutable, right?
It's there, it's staring you in the face.
This is where pretty much all the value is accrued.
It's where all the clients are, it's where all the money is.
And so you now have a very clear business case, number one, and number two, you just have more comfort uh from these very large financial institutions as they've as they've been forced, you know, by their clients pulling them on the demand side to start to reckon with these markets in the first place.
So even the most conservative financial institutions are now recognizing they have to be on public chains or at a minimum, they have to be able to interoperate uh with them as well.
Right.
As all these assets move on chain, uh all these like TradFi assets, let's say, you know, equities like I don't know, NVIDIA or Tesla or name your favorite stock or ETF.
Um, and as treasuries and all these things come on chain, do you see the world playing out where they start to get integrated into the DeFi applications that we know and love in the crypto space today, whether that be you know, Morpho or Aerodrome or Ave or whatever, and we start to be able to like take a loan permissionlessly out against our Tesla stock, you know, on top of base, um, using Ave or using Morpho or something.
Like, is this the world that you think is going to start to happen with all these TradFi assets?
Um, or or how do you see this sort of playing out?
I absolutely think that's going to happen.
And in fact, it's already underway.
Um, the the answer is that for different types of market participants, they're gonna draw a perimeter around where they expose their products that's consistent with their own sort of risk appetite.
Right.
And so for um a Coinbase, we've been doing this a very long time.
We have the compliance framework and the understanding and the regulatory oversight and the technology that we're very comfortable with a firm as a firm dealing with on-chain native environments, right?
We're comfortable with Dex's, we're comfortable with smart contracts.
So we're very excited to be at the bleeding edge of that.
I think for some of the more conservative firms that I was kind of mentioning in our in um just a few minutes ago, they might draw a narrower um perimeter.
And we're seeing a lot of that.
It's kind of concentric circles to stay.
I'll start here.
I'm gonna first deal with maybe venues that have direct oversight from specific regulators and allow my products to live on those, like some of the centralized exchanges and brokerages that we all know well.
Um over time, I think as they get more comfortable with those native on-chain environments and non-custodial wallets, they're of course going to want from a commercial perspective to take advantage of all the distribution and demand in that channel as well.
It's just for some of those firms going to be a multi-stage rocket.
Take time.
Yeah, absolutely.
Um let's let's just kind of I'm gonna ask just a couple more questions and we'll wrap up here.
Um and I think I've got two that I that I want to make sure I ask.
One is it's interesting the list of names that you said you guys are working with, and I have a few written down.
Um these are public that you've tweeted out, which is City, Chase, PNC Bank, JP Morgan.
Um, these are some of the biggest banks in the world.
And it's kind of interesting because you know, these financial services that you guys are offering to the banks, generally you'd think the banks would offer, um, but they're not, uh, at least not yet.
And I'm curious, how do you guys see this sort of competition playing out?
Like Coinbase was obviously so early.
So you guys were first um and sort of led the way on this.
Are you starting to see that banks are gonna start to offer similar services to what you guys are?
Is this a good thing?
Um, or do you think they're all just coming to Coinbase?
Because like we don't know what we're doing here.
So please just help us.
I love this question.
It gets back to the heart of the kind of two general areas that Coinbase is operating in with respect to um, you know, our client businesses, right?
We have our first party business where we directly acquire clients, and then separately where I spend all of my time the infrastructure businesses, right?
Which are partnership with those institutions.
And so what we've decided really as a firm is that look, we're building tools uh and trying to drive growth in the the largest markets uh in the world, right?
Which is really all of financial services and payments.
And this is a huge opportunity.
And our goal is really to bring as much of that market as possible on chain as quickly as possible.
We know that we're gonna build great first party products for those clients who we go acquire directly, but the scope of our ambition to really grow this market is much broader than that, and we're not gonna get there with only our first party products.
So it makes sense to complement that business with the infrastructure plan, which is to say partners of ours like JP Morgan Chase and PNC and City and BlackRock and up and Shopify and others have incredible client businesses, incredible distribution, incredible products.
We we love and accept that.
And what we're saying to them is we're here to help you.
We think that's awesome.
We're going to give you infrastructure and tools and advice to the extent that you want it to help you really jump headlong into this market as well.
And so the two businesses are very complementary in that way.
I think you know, for Wall Street, uh cooperation is a is a very normal uh thing that everyone's comfortable with.
You have maybe, you know, JP Morgan's um you know prime business is is servicing Morgan Stanley's uh you know, investment management arm, right?
That's a very this is a very natural um motion.
And I think people are looking at Coinbase in in the exact same way.
So we're here to kind of earn the trust of those partners.
And we have a view that um, you know, by working with Coinbase at the infrastructure level, you're gonna be able to build the very best products and the firms that get that and understand um that value proposition, I think are really excited to partner with us.
Very cool.
Uh we'll wrap up with this.
Crypto moves very, very fast.
And so I'm sure the conversations you guys are having with institutions are changing on a yearly basis.
I mean, from 2024 to 2025, you know, Trump taking office, the whole idea of crypto in this on-chain world completely flipped overnight, basically.
And all of a sudden it was like, oh, I can have that conversation.
I'm just curious from 2024 to 2025 and now into 2026, how are the conversations changing across these these institutions?
Whether it's just like the level of people you're getting to speak with within there, their trust within the this industry, their curiosity, like however you can conceptualize that, please just help us kind of understand how it's changing and how fast.
The short answer is it's gone from you know uh a sort of contained conversation in a part of the firm to a very urgent conversation at the very top of the firm.
Right.
And that's a function of what we started talking about in this conversation, which is that this now impacts for a large financial institution, this digital asset trend impacts every corner of your business, right?
So there's no there's no more kind of head in the sand.
It's a you know this is a five alarm fire but also a huge opportunity.
And so um that's been super exciting.
The tone has totally changed in the past couple years um in response to that um to that recognition.
And then of course just you know the types of things we're talking about have uh evolved radically beyond just how do I think about Bitcoin or or Ethereum to okay I'm trying to globalize my payments business.
Can you help me do that Coinbase?
Right?
That's a type of conversation we were not having um two years ago and then certainly on tokenization as well.
Let's look at you know the entire product complex in my asset management arm.
How do I bring that on chain?
That's that's an incredibly exciting one that we're having um we're having now that you know was not the case like a year or two ago.
So the short short answer is no shortage of super energizing conversations, and now they're happening at the very top of the house.
So we got a bunch of busy people at Coinbase trying to keep no doubt, no doubt.
Well, awesome.
Brian, thanks so much for joining.
This is uh this is a great conversation to get kind of the the inside scoop of what's happening both at Coinbase, but just more in the institutional world in general, which I think our audience doesn't always get a get a look into.
So I really appreciate you coming on and sharing this.
Uh and uh yeah, we'll have to get you back on to give us some updates as uh as things go by because I know things are moving fast.
Awesome.
Thanks for having me, Kyle.
Great chatting with you.
Cool.
Thanks, Brian, and thanks everyone for listening.
And we'll see you guys in the next episode.
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