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[Music] I thought you should have the middle okay this works all right hello everybody my name is tanaa mckel I am a crypto reporter at CNBC we have several obviously but my coverage focuses a lot on markets and investing Trends which includes things like pay payments and stable coins which is why I'm um very excited to be here with Brad who is Brad garlinghouse the CEO of Ripple thank you glad to be here thank you for nice to see you in person yeah so yeah Ripple a big point of interest for me um and I

don't know who's in this room I know this conference has been going on a long time and many people are returning to this but I have been covering the space for 10 years so I know that there are always a lot of newcomers here um Ripple has been around for a very long time in crypto industry terms it is uh payments company very Global Payments company uh closely tied to the xrp coin which you can get a little bit into um which is of course one of the biggest by market cap um a lot of

attention recently because of the sec's lawsuit against you I heard a partial victory in last year uh a partial Victory but kind of a landmark uh victory for the industry are there any updates on that you want to address before we move on session we won't spend all of our time uh having been up on this stage in previous years it's always been a topic uh so as tonight I was referencing uh the key part of the case the SEC suit us kind of what is xrp their allegation being that xrp is a security uh

the judge ruled last summer that xrp quote in and of itself is not a security the SEC announced about uh right around two weeks ago that they're appealing but what I think is misunderstood is they're not actually appealing that part of the decision so for us like the biggest win and as you described The Landmark part of the win is really the SEC has tried to take the position that a token can in and of itself be a security and the courts have consistently ruled that that is not the case and they uh in the

appeal what they're really appealing is this idea around programmatic trades programmatic sales as to whether or not that in uh represents an investment contract and the idea being that if it's a programmatic trade it's Anonymous buyer Anonymous seller that there can't be a contract there their contention is there can be you know look as you go up the appell at courts uh it gets harder and harder I think for the SEC we're very optimistic about where we stand on this and again the good news is no matter what xrp the law of the land is

xrp is not a security the one last thing I'll say about this that I we were talking about backstage I think is super frustrating a little bit you know mind-numbing is so is the SEC going to litigate every token you know we have Clarity they've said bitcoin's not a security they've been a little nuanced about eth I guess now they're saying it's not well first they said it's not then they said maybe it is they're going to Wells notice and now they're saying it's not xrp a federal judge has said is not but everything else

is kind of still up for grabs you even had the head of enforcement from the SEC who left about two weeks ago after he left contradicted what gendler is saying and saying like we need legislation we need Clarity and I think the good news is there appears to be momentum you know with the fit 21 Act passed in the house this summer in a bipartisan way uh there appears to be some you know momentum around that so maybe we'll we'll get that uh sometime soon um and then as you mentioned at the top of course

earlier this month uh the agency did appeal part of that decision so is there anything um any updates there that we need to know uh I mean nothing you know that that will progress it'll take you know call it a year to kind of go through the system that I think it'll be interesting uh the filing work that they'll have to do kind of comes out in January by then of course we'll know if there's a what the presidential election yields it'll be interesting to see uh if there's a a shift and you know they

could abandon that appeal they could continue with it I I think and I think obviously many federal courts have agreed that the sec's war and kind of gendler's Reign of Terror on crypto uh has been misguided and I think they've gotten kind of SmackDown by several courts with language I mean in our case it was uh quote and I'm quoting a judge and saying is that the SEC has fail failed to follow a faithful allegiance to the law uh in another case they described the SEC as it relates to uh this is a grayscale case

they're being arbitrary and capricious you know I look I think many in the industry have asked for many years like we want to follow the rules we need to have clarity about what the rules are and the SEC has changed the rules some you know their own interpretation of the rules have changed at times and you know anyway it's frustrating I've already said many things about this and I will say many more I'm sure well thank you um I I with that out of the way do you want to back up a little bit so

like I said Ripple has been around a long time I wonder if you could just reintroduce the company to the people in the room and anyone watching on live stream I think that people he Ripple sometimes um and make an automatic association with xrp can you just reintroduce the company say what Ripple does um and what its place is in the US fintech industry so Ripple's vision from the earliest days this even predates me Chris Larson the co-founder of the company really articulated this vision for enabling an internet of value to allow value to move

the way information moves today and so you know how do you catalyze that vision and ripple started by focusing on the payments and the payments industry and if you kind of dissect the payments industry you go to where's the highest point of friction crossb payments are the highest point of friction crossb payments today are kind of largely speaking built on the Swift ecosystem which is slow it's expensive it was architected 50 years ago uh the airor rate is quite high and it's kind of like in an age of the internet why can't we have something

better and so we have been working with banks and financial institutions around the world uh to 95% of our customers are non- us financial institutions uh which is partly a reflection of the US SEC Dynamic but uh we continue to focus on that kind of infrastructure layer we had demand from our customers and acquired a company about a year ago in the uh Enterprise custody and so we count some of the largest banks in the world using our custody technology but we are not a consumer company we are an Enterprise infrastructure company around kind of

all things blockchain and we intend to kind of stay at that level as you introduced uh xrp is part of our technology stack uh and we have always had a kind of a vested interest in catalyzing and investing in and seeing the xrp ecosystem Thrive uh we think I I am definitely not one that I would call a maximalist around crypto I frankly I've shared before I own Bitcoin I own eth I own xrp uh I think there's going to be a multi-chain world xrp is exceptionally good at payments it's very very fast on a

per transaction basis and it's very very low cost on a per transaction basis it scales much better than some of the other uh layer one chains how does price action in xrp affect your business if at all you know it turns out it it doesn't really uh if you do the math and we have a whole white paper we published on this but if you look at the volatility of a low volatile asset like a a fiat currency but you hold it for let's say three or four days to settle a swift transaction it turns

out you have more volatility risk in a low volatile asset as compared to an xrp transaction because it's a highly volatile asset but it's a very very fast to transact so it turns out there's less volatility risk now in the traditional Fiat World there when you go to a bank to wire money someone's hedging that currency risk for three or four days and you're buy you're paying for that uh currency risk you're locking in a rate in advance you don't have to do that in the crypto world because it's so much faster if the the

volatility say got much much much worse you could have a situation where you could have new participants in the market emerge to kind of sell that product uh so you mentioned just now that most of your business takes place outside of the US you've reintroduce the company how do you view Ripple's role in helping shape Fair fintech regulation here in this market you've heard of fair Shake yeah Fair well uh the introduction of the word fair so Ripple is one of the companies that is behind a super pack called fairshake it's one of the largest

packs in this election cycle although we have indicated I think the other you know coinbase has been active in fairshake as well as andri and Horwitz we're kind of the three anchor uh there's been a few other supporters as as well but you know I I use the word Fair all that we're looking for is a fair Shake we you know there's a lot of misinformation and frankly I don't mind saying look Elizabeth Warren is out there spreading misinformation and lies about crypto she will tell you that all you know all crypto activity is illicit

activity the facts do not bear that out and so all we have asked for is a fair Shake I I think crypto should be bipartisan and the fair Shake super pack supports people on the R and D side it's been important to me it's not a coincidence I'm wearing a purple tie today uh I you know I I so we have been very active because we haven't had those clear rules of the road and I think no matter what happens uh in a few weeks here we will have a more pro-innovation Pro crypto Congress uh

that gets elected what have your um conversations in DC been like just for you know even before election season have you how engaged with Regulators have you been it you've been around for a long time so what are those conversations like no I'm saying Ripple is original pillar yes pillar I like that uh I mean I've made far more trips to DC in the past few years than I did the years before that and by the way I I look back on that and I I regret that like I think we made a mistake by

not leaning in earlier uh and we're trying to make up for lost time to some degree leaning in how well I mean part of it is just education right it's it's showing up here and look I'll I'll speak freely in a very private audience you know it doesn't help that you had Sam bakman freed showing up on Capitol Hill with cargo shorts and you know like selling something that turned out not to be exactly what was represented that hurt the whole industry that hurt Ripple uh and so it kind of counteracting that and showing up

and representing that look we are serious people there's a lot of people in crypto a lot have been on stage at during this event there's serious people doing serious things and the market obviously has has grown a lot and so when I I show up here part of it is uh evangelist uh Advocate Diplomat Ambassador uh and you know I will also comment and you and I talked to us a little backstage but it's still interesting to me how the US is behind other countries uh I I spent a significant amount of my time talking

to central banks and Regulators around the world uh and whether we're talking about Japan or the UK or Singapore or the UAE or Switzerland even Brazil Brazil uh that's not to mean Brazil's bad it's just including Brazil you know the US is a lagered and for reasons that don't really make sense and I think it does get back to this kind of misinformation that it's been you know I think the gendler reign of terror you know mixed with the Elizabeth Warren uh you know spreading misinformation it's that crypto's The Boogeyman and it's just it's just

not the case and so I think it's important for the industry to show up at events like this and make sure people understand how these Technologies at their core can be used to benefit citizenry to used to benefit businesses reducing costs increasing speed you know I truly do believe blockchain is going to rewire lots of parts of the financial ecosystem Ripple's focused on our piece within that but you I'm I'm excited to see lots of other companies here representing so you do business all around the world you understand the rules of the road in those

jurisdictions because they are clear and because you've put in the time so are is there anything that you've learned from abroad that could be applied here oh sure I mean you know look uh let's use the UK I mean the UK was early in coming up up with a kind of a taxonomy of how they defined different tokens uh certainly in Japan I I mean look I just think the US for whatever reason this SEC has failed to do the work like you know I remember early in gendler's tenure he went out and hired a

whole bunch of more litig if only he had used those budget dollars to hire some people to codify and write down and work with Congress to legislate hey this is new and it is a little bit different the Hoy test as much as you can try to twist it into knots or branches of a tree orange tree like it just doesn't quite fit so that's okay let's sit down let's let's let's write rules let's not try to act like no no we have the rules we need I mean gendler goes and testifies before for Congress

that we have the rules we need and you know the the crypto Community just won't follow them well the good news is the courts don't agree now that's slow it's frustrating and back to what I said earlier do we really want to go litigate every token and that appears to be how you know gensler's you know it's like hey maybe it's a power try to get more power I don't I don't really get it it doesn't feel constructive it doesn't feel like he's working for the US citizens all right so we're closing out on this

election here in a couple of weeks can you say what exactly is at stake here for crypto cuz and I talked about this backstage too but it seems like for an industry that you know has always said it's nonpartisan and has evidence of growing bipartisan support in Congress um the vibe seems to be throughout election season increasingly partisan very like do you do you agree that Trump would be very very good for crypto and Harris would be very very bad for crypto um what exactly is at stake you know come November 5th and is it

as dire as uh it's been made out to be I guess look I I do believe this is the most important election since I I I've been in crypto a long time you pointed that out a few times uh I think this is the most important election we have had and uh but I also believe no matter what happens we're going to have a more Pro crypto more pro-innovation Congress than we've ever had I think no matter what happens we're going to leave behind a failed approach from the Biden Administration uh it hasn't I mean

it has been an attack and it isn't just the SEC you know look the OCC is hostile towards crypto the treasury is hostile towards crypto the the idea that people say chokepoint 2.0 and just to Define that you know that their choke point 1.0 is this idea of the banking industry uh was debank a industry around payday lending and these things it wasn't legal and actually they lost court cases later on but choke point 2.0 is the crypto industry and individuals within the crypto industry are being debanked I personally have been debanked I got a

call not that long ago from you know one of the major banking institutions i' had had an account with for 25 years and they said you have five days to move your money why and they were actually super honest they're like look you are a notable person in crypto and having notable people with crypto and banking the crypto industry means more scrutiny from federal Regulators so we don't want it now that's not legal but it's also like okay fine there's other Banks that'll Bank me that's but imagine if you extrapolate that out in more Banks

and if I actually was cut off in the banking system for the sole reason that I'm the CEO of Ripple you know that is a hostile Administration and I think no matter what happens in this next election we will have a reset we can debate the magnitude of that reset and there's lots of disagreement about that obviously Trump came out early and very aggressively in a pro- crypto and said he's the crypto president kamla and team team Harris have been more nuanced uh this week I think I think it was this week uh they had

some of the most constructive things they have said publicly but look I I also I do think you know KLA Harris is from Silicon Valley I think she has generally been Pro technology over the years she has been relatively quiet on the topic but I think no matter what happens we're going to see a reset we're going to see forward progress and uh I certainly looking forward to that yeah so you are wearing a purple tie so you're not here to make any endorsements I I did endorse John Deon yesterday I mean I'd already given

money to him so uh but look Elizabeth Warren I think has been the most destructive towards this I mean she has a web page on her campaign that says I'm I'm building a crypto an anti- crypto Army it's it's like okay I'm against the technology I I've made the joke before like why why would somebody be against a technology it's like saying I'm I'm against email but you're for email it doesn't make sense like you could say I'm against how crypto is being used or I'm against something but like to be against a technology like

Technologies inherently are just neutral Technologies they can be used in lots of different ways so I I don't get that uh and I I think that the citizens of Massachusetts deserve better than uh somebody who by the way she won't take meetings with the industry either like at least learn at least be willing to engage and have a a dialogue so uh I think I think we all as citizens of the United States deserve better and what would you tell uh whoever becomes next president would be sort of step one and heal in the crypto

industry you know uh I think that the key will be you know who are the people they appoint into various places and again I I I don't think you can do worse than Gary gendler uh I I I I think he's that bad for the industry it's just I don't think he's playing fair by the rules I think he's been disingenuine with the industry uh I don't know I I can't say enough negative things but so look I I think the key indication will be who gets appointed uh to run the OCC who gets appointed

to run Treasury and some of the key positions in treasury who's going to be appointed to run the cftc and the SEC and you know I I it'll it'll be telling as to uh what what the direction of travel is for the next four years but I again I'll really emphasize anybody who doesn't believe no matter what we're going to end up a better place I think is not paying attention I also a guy who I really respect in the crypto industry Dan Morehead one of the things he said to me he runs a group

called panta capital and if you think I'm old in crypto like he's I don't think you're old in crypto he's ancient he's like yeah you can tell him I said that but you know one of the things he has said that I really agree with is when we look back on this period of time in the United States as it relates to crypto it's going to look like a speed bump the inevitable March of crypto and blockchain Technologies is going to continue and and 10 years when we look back on what the US how the

US got it wrong for years and years and years and why we got it wrong it's going to be a speed bump and this industry is going to continue to thrive uh I I truly think it's inevitable it's a nice positive note to end on we're not ending the session but I am tring subject um I want to ask about your stable coin um Ripple USD launching we have a soon soon good um why why now it's it's such a hot topic right now and it is interesting with you know the the rate cutting cycle

and with the state of regulation in the US in the upcoming elections so why and what why now and what is it designed to do uh you know compared to some of the more dominant ones in the market well so a couple factors I mean one as you introduced earlier like at its core Ripple is a payments company that's where our we started and it it turn we've been using stable coins in some of our payment flows for years uh there was a period of time where we were actually responsible for minting 20% of all

usdc and so we kind of stepped back and looked at that and we're like okay wait a minute you know uh particularly by the way when usdc about 18 months ago deegs by about seven or eight% and uh we kind of started to ask ourselves like well wa wait a minute you know should we participate in this market given uh I I think all of these things are driven by utility like solving real problems and it's just speculation I I I don't think that's a long-term success story uh so we got interested and started paying

attention uh the two other macro factors I'd point out I I really do believe today the stable coin markets about 160 or1 170 billion dollars you know some smart people think that's going to be a lot bigger in five or 10 years you know measured in trillions so you know say 10 to 20x as large uh and so there's a lot of growth there and so I I think that you know for us playing at the Enterprise level institutional level and the payment flows there's a natural opportunity to do so and so I think as

the market grows There's an opportunity for us to enter that market the last thing I'll say which relates to our previous I know we left the earlier conversation but just briefly you the largest stable coin out there is tether and tether actually has a a really good track record of being a stable coin I mean it's pretty uh you know its volatility away from a dollar has been better than almost anything but tther also has gone out of the way to be offshore non us and I I think that has made it unfriendly for us

regulators and I think as the market grows and you have the uncertainty of the the largest player having 70% is of the market I think that may shift a little bit and I think that the market overall is going to grow and so we felt like there's an opportunity for ripple to to enter that market are you do you intend to go up against a tether or usdc I look I truly mean I think this is a huge market and there's going to be lots of coopetition uh I I it may be that we continue

to use usdc or usdt in certain payment flows but inherently if we're launching a stable coin I mean I'd be disingenuine to not say are we going up against them yeah I mean you're this is a new stable coin uh and you know inherently we're competing but I I don't look at it as I think tether tether is not going away usdc is not going away and I think you know usdc has uh been quite successful ful as being transparent and regulated and really trying to be a leading light as a regulated player and so

I I think they both will continue to succeed uh but again I think it's a big Market I think we can take some share and you know for our use case and and focus on that how if at all does that change your us presence it it it'll be dollar backed are you engaging with Regulators on this that look like yeah so we acquired a uh a company I can't remember when it closed but called standard custody which has a trust a New York nydfs trust license uh we're in the process uh we won't go

live until we get the green light to do so under the trust license uh but we are already operationally ready we've done you know lots of uh operational testing with a whole bunch of launch Partners uh including exchanges and market makers uh and so we're we're excited about uh the early momentum even though we're not live but the the key you know you ask when are we going to go live we will go live as soon as our reg we work with Regulators we will only do kind of frontf footed compliant regulatorily appropriate things there

are good rules of the road on this one so let's follow the rules of the road and so when uh we get the green light from the regulators and our kind of lenser license as a lensey I don't know if I got that right but uh we will go live then and I asked this before forgive me if I missed it but because you are not a consumer facing company um um you know the use Cas stable coins are exploding right now so they are mostly used for trading we are starting to see that other

use cases for stable coins are emerging in popularity what would the purpose of RL USD be well so it goes back to we are already serving you know lots of institutional Enterprise clients again I used the data point we happened to be 20% of all usdc minting for a period of time and so we kind of felt like well wait a minute like we could play in this market the thing I I I also operation chokepoint plays into the growth of stable coins because it's the on-ramps and off-ramps that are a problem for a lot

of crypto players and because the US government has been so hostile and there by extension banks have generally been hesitant to bank the crypto industry you have this problem around on-ramps and off-ramps and stable coins serve part of that solution to you know manage those onramps and off ramp I was actually just going to ask with the closures of Silver B bank and signature last year do you how much do you think that that's affected this explosion in stable coin popularity now uh for sure it has impacted I mean again to just to put some

color on that whoever's on the same page you know that uh silvergate was shut down by the government in part because they told them they could only bank and this is this is not me making this up this is in court filings you can go read about it they said basically we won't allow you to have more than 15% of your business be crypto companies and that basically meant they couldn't be solved given that they're mix of customer based and so they had to shut down so the US government kind of forced silvergate as a

bank banking crypto companies to shut down you know I I I believe there will be lawsuits about that before it's all said and done but you know there's no doubt that the fact that uh you had a pullback from banks that were serving this industry it fueled demand and an increase in activity around stable coins mean you could see the math around that you know some of those things happening now there there was also a shift in market share and again the ironies of the US government doing things that isn't it's just like you guys

got to think through this so you you you you debank the US industry so what happens usdc which is more regulated more compliant its market share goes down tether's market share goes up and tether so we're we're pushing activity offshore so we're pushing activity to less regulated less you know uh all the kind of things the US says they want to protect consumers what have you but we're doing things that push it offshore like what like this not smart um we are coming up on time so to cap it off uh and thank you for

all of your insights your advice to fintech startups at this point in time in this precarious regulatory environment which you say is only getting better regardless of what happens in the next few weeks what is your advice to ftech service incorporate outside the United States look I I hate saying that I'll be honest you guys I grew up in Kansas I'm a like I'm a pro us guy but look if if I'm honestly giving advice to an entrepreneur who wants to meet with me and talk about a fintech crypto related company you don't know what

the rule you can hire the best lawyers the most expensive lawyers and spend a ton of money and you still don't know whether or not the SEC is going to sue you and like if you go to the UK and incorporate in London you know what the rules of the road are you have a welcome a constructive engagement with the Central Bank like it's it it's just apples and oranges like I I can't I was just in Japan we were talking about this the the welcome reception the warm reception Ripple gets in going to Japan

versus you know here in it is changing and look there's people on both sides of the aisle that see this and understand it and are fighting hard to change it but I I feel Resolute the Biden administration's approach to crypto we we look back on this we will realize that we did the United States a disservice and a key technology that we should care about over the long term give it up for Brad garlinghouse thank you thank you so [Music] [Music] much all right thank you