Q4 2024 Coinbase Global Inc Earnings Call - Q&A
At this time, I would like to welcome everyone to the Coinbase 4th Quarter and Full Year 2024 Earnings Call. All lines have been placed on mute to prevent any background noise.
Speaker Change: After the speaker's remarks, there will be a question and answer session and to ask a question, please press star 1 on your telephone keypad. Anil Gupta, Vice President, Investor Relations. You may begin your conference.
Speaker Change: Thank you. Good afternoon and welcome to the Coinbase fourth quarter and full year 2024 earnings call. Joining me on today's call are Brian Armstrong, co-founder and CEO, Emily Choi, president and COO, Alesia Haas, CFO, and Paul Grewal, chief legal officer.
Speaker Change: I hope you've all had the opportunity to read our shareholder letter, which was published on our Investor Relations website earlier today. Before we get started, I'd like to remind you that during today's call, we may make forward-looking statements, which may vary materially from actual results.
Speaker Change: Information concerning risks, uncertainties, and other factors that could cause these results to differ is included in our SEC filings.
Our discussion today will also include certain non-GAAP financial measures.
Speaker Change: Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on our Investor Relations website. Non-GAAP financial measures should be considered in addition to, not as a substitute for, GAAP measures.
Speaker Change: We are once again using Say to enable our shareholders to ask questions. In addition, we'll take live questions from our research analysts. And with that, I'll turn it over to Brian for opening comments.
All right. Thanks, Anil.
Speaker Change: Crypto's voice was heard loud and clear in this recent U.S. election and it's the dawn of a new era for crypto. President Trump is moving fast to fulfill his promise of making the U.S. the crypto capital of the planet and the most pro crypto Congress we've ever seen is now leading the charge on stablecoin and market structure legislation.
Speaker Change: Given the U.S.'s leadership here, the rest of the world is taking notice and will be under pressure to embrace crypto adoption.
Speaker Change: So it's hard to overstate the significance of this change that's happened in the last few months. We have a number of new opportunities in front of us now to go build in 2025.
Speaker Change: Let's talk about our financial performance in 2024, though, just to get started here. And it's incredible. I mean, Coinbase had an amazing 2024. I'm very, very optimistic on this next few years. In 2024, our total revenue more than doubled to $6.6 billion.
Speaker Change: with $3.3 billion in adjusted EBITDA, making two straight years of positive adjusted EBITDA.
Speaker Change: By the way, if you look back, five of the last six years we had positive adjusted EBITDA now, so we're completing this transition to being an all-weather company that can show positive adjusted EBITDA.
Speaker Change: Our subscription and services revenue had an outstanding 64% year-over-year to $2.3 billion.
driven by USDC, Staking, and Coinbase One.
Speaker Change: Our international revenue share reached 19% in Q4, and this is due to the
Speaker Change: for payment rails and localization. We've got a repeatable playbook now that we can launch in these new markets and get them to contribution margin positive. And so we're going to keep doing that in more markets.
Speaker Change: And finally, we're just so well positioned to capitalize on these new regulatory tailwinds. It's been incredibly validating of this long-term strategy we've taken at Coinbase to be the most trusted and compliant, and it's finally paying off.
Thank you.
Speaker Change: All right, so let's talk for a minute about how crypto is now going mainstream, the regulatory environment, there's clarity on the horizon.
Speaker Change: Every time you think about that, you should think that this is really PAM expansion for Coinbase. Coinbase is going to be the platform that's going to power many of these companies that are coming in and trying to integrate crypto. And we like to say that on-chain is the new online. It's a little bit like the early 2000s when every company had to figure out how to adapt to the internet.
Speaker Change: Up to 10% of global GDP could be running on crypto rails by the end of this decade and Coinbase is going to be the preferred partner to come in and build this for many of the companies out there because we have the most trusted and scalable infrastructure with the longest track record.
Let's talk a little bit about our priorities in 2025.
Speaker Change: So 2025 is going to be about growing revenue with our existing products, it's going to be about driving utility in these new categories where crypto is getting to scale, and it's going to be about building the foundations to power this next decade of growth.
Speaker Change: So first, we're going to be driving more revenue in our core businesses. Let's deep dive into that.
Speaker Change: Trading is often where we start with here. That's the earliest thing that we got into in crypto with Coinbase.
Speaker Change: And we're going to continue to expand on that leadership position. So we'll be delivering best-in-class derivatives trading as part of our global offering.
Speaker Change: We're going to be accelerating asset addition as clarity emerges there. We're winning more and more advanced traders on our platform and I'm really proud to share actually that we reached an all-time high for both U.S. spot and global derivatives market share in Q4. An incredible outcome due to the hard work of the team.
Speaker Change: So 2025 is looking very good. It's off to a very good start here.
Speaker Change: We also have a stretch goal to make USDC the number one dollar stablecoin. We're very bullish on stablecoins. We think USDC has a network effect behind it.
Speaker Change: And the compliant approach that they've taken is, I think, going to be really defensible long term. So we'll be accelerating the market cap growth of USDC with more partnerships and leaning into new use cases like adding payment support across our product suite.
Speaker Change: We'll be accelerating our international expansion by replicating that successful playbook that I mentioned in these new high-growth markets and growing subscription services revenue by going on offense with insto and retail staking.
Speaker Change: you know, growing our assets under custody for our custody business. I expect it'll be a banner year for Coinbase One as well, especially in our international markets. So that's our first prong of growing revenue with our existing products.
Speaker Change: Next, we really want to drive utility to get this next wave of mass adoption going for crypto. We think crypto is much, much more than just an asset class that people want to trade.
Speaker Change: There's going to be daily use cases for everybody in the world as crypto updates the global financial system. And one of those big categories is payments.
Speaker Change: You know, we're already at scale, I'd say, on stablecoin payments. There was $30 trillion of crypto stablecoin volume last year. That was up 3x year over year. And so we're moving with haste to integrate crypto payments across our entire suite of products.
Speaker Change: We think that'll be a big business over time. And we're also solidifying base as the number one chain for building, for startups to build on chain and large companies.
Speaker Change: We're going to continue to lower transaction fees on base. We're going to accelerate the flywheel with retail users and there's a really nice tie-in here where CDP or Coinbase developer platform can provide a lot of the tools to help these these companies integrate with base And so that's been a great time
Speaker Change: On CDP specifically, you know, we're going to keep making sure that it's the leading platform for any company to develop applications on chain. And I think that'll allow hopefully thousands of companies to come integrate, and PointBase can power a lot of that behind the scenes for them.
Speaker Change: Okay, so we talked about growing revenue, we talked about driving utility, the third prong here for 2025 is about scaling our foundations.
Speaker Change: And we've got a world-class policy team. They're laser-focused on getting some landmark crypto legislation passed.
Speaker Change: We're going to continue to support standwithcrypto.org, hopefully get that to 4 million advocates by the 2026 midterms, so we're not taking our foot off the gas there. We're also, we announced further donations to Fairshake, SuperPAC, to support pro-crypto candidates in 2026 and beyond.
Speaker Change: So there'll be lots of policy efforts continuing, and not just in the U.S. by the way. This will be taking place in a number of countries.
Speaker Change: And then we're also going to continue to scale our back-end services. As crypto continues to reach new all-time highs in transaction volumes, every time we hit a new order of magnitude, we have to re-architect our back-end systems. And this is what supports our own products, but it also is supporting many, many third parties now.
Speaker Change: So all the above is how we're going to expand our lead and define the future of crypto.
Speaker Change: And in closing, I just want to remind everybody, I hope everybody appreciates this, I mean, we're really entering a golden age for crypto here. The opportunity in front of us is unprecedented to update the financial system and increase economic freedom around the world.
Speaker Change: The regulatory overhang is lifting, governments are leaning in, and we're shaping the next chapter of crypto from trading, to payments, to consumer apps, and beyond. 2025 is going to be a very good year. I'll turn it over to Alesia now.
Thanks, Brian, and good afternoon, everyone.
Alesia Haas: As Brian shared, fourth quarter was a strong quarter for Coinbase and we wrapped up a great year.
Alesia Haas: I'm proud that we executed on our three financial priorities, we diversified our revenue, we generated positive adjusted EBITDA, and we maintained operating discipline while we invested opportunistically to achieve our business goals.
Alesia Haas: So let's dive into our results. All comparisons I make will be on a quarter-over-quarter basis unless I note otherwise.
Alesia Haas: Starting with a macro backdrop, crypto markets rallied subsequent to the U.S. elections, given the election of the most pro-crypto Congress and President in history.
Alesia Haas: Underpinning this, in the quarter we saw average crypto market cap increase 33% and crypto asset volatility increased 27%.
Alesia Haas: With this backdrop, our Q4 total trading volume was $439 billion, up 137%.
Alesia Haas: Our consumer trading volume was $94 billion, up 176%, and we outperformed the U.S. spot market, which increased 126%. As Brian shared, this was an all-time high.
Alesia Haas: Consumer transaction revenue was 1.3 billion dollars up 179 percent. We saw strong growth in both simple and advanced trading volume. Our mix of consumer trading volume was very similar in Q4 as compared to Q3.
Alesia Haas: During the quarter, we listed 13 new assets, including popular meme coins like Pepe and Whiff. Further, we invested in trading experience improvements, platform stability, and collectively these efforts, in addition to the market conditions, drove our MTU growth of nearly 24 percent.
Up to 9.7 million MTUs.
Alesia Haas: Nearly half of our trading customers in the fourth quarter were either new to Coinbase or resurrected from over a year ago and we're pleased to see these market participants come into the space.
and Anil Gupta. Thank you.
Alesia Haas: Our institutional trading volume was $345 billion, up 128%, also outperforming the U.S. spot market.
Institutional transaction revenue was $141 million, up 156%.
Alesia Haas: In the fourth quarter, we saw strong adoption of the prime product suite across custody, trading, financing, and staking. Our top clients are engaged with most of these products in 2024, and our onboarding pipeline remains robust.
Alesia Haas: Our prime financing products had all-time high loan balances in the fourth quarter in connection with the strong market conditions and we see elevated trading amongst clients who are using financing.
Alesia Haas: Turning to our subscription and services revenue, which reached $641 million, up 15%. Our revenue growth was driven by higher asset prices and USDC market cap, as well as native unit inflows across staking, custody, and the USDC within our products.
Alesia Haas: I want to touch on two points within subscription and services. First, our stablecoin revenue declined $21 million, or 9%.
Alesia Haas: We are super pleased to see USDC market cap increase and our on-platform balances grew substantially during the quarter. However, the lower interest rate environment and the impact of a new USDC ecosystem participants more than offset this growth.
Alesia Haas: Second, other subscription and services revenue grew $33 million or 56%.
Alesia Haas: This was largely driven by Coinbase One. In early December, we announced Coinbase One exceeded 600,000 paid members, and we've continued to see strong growth since then.
Switching to expenses.
Total Q4 operating expenses were $1.2 billion, up 19%.
Alesia Haas: Our expense growth primarily was driven by higher transaction expenses in connection with higher trading activity.
Alesia Haas: Technology and development, general and administrative, and sales and marketing collectively grew by over 84 million dollars or 10% quarter-over-quarter due to high performance marketing spend, higher USDC rewards, and some policy related spend in the quarter as we pursued advocacy efforts within the crypto space.
Alesia Haas: Our fourth quarter adjusted EBITDA was $1.3 billion and net income was also $1.3 billion. Net income benefited by $476 million in pre-tax gains on our crypto asset investment portfolio. The vast majority of this gain was unrealized.
Alesia Haas: I want to note that on an after-tax basis, this represented $357 million of gains.
Alesia Haas: Lastly, our USD resources grew to $9.3 billion by the end of the quarter. Our strong balance sheet gives us the resources and flexibility to invest in the business, provides capacity for acquisitions, enables us to invest in more cryptoassets, or opportunistically address the capital structure via share or debt repurchases.
Alesia Haas: Generally, we believe building a strong balance sheet provides us maximum optionality to capitalize on whatever opportunity we find as they arise.
Alesia Haas: Before we get to Outlook, I want to highlight one important change in disclosure.
Alesia Haas: In January, the SEC issued Staff Accounting Bulletin 122, which rescinded the Gensler-era SAB 121, which in turn required us to record customer cryptoassets and liabilities on our consolidated balance sheet.
Alesia Haas: We early adopted SAB 122, which repealed SAB 121, and it reverses that requirement.
Alesia Haas: As such, we are no longer reporting safeguarded customer assets and safeguarded customer liabilities on our balance sheet.
Alesia Haas: In its place, we've reinstated assets on platform as a key business metric, which reports the amount of crypto in USDC we are securely storing on behalf of our customers.
Alesia Haas: The only material change is the location of where we disclose customer assets in our audited financial statements.
Alesia Haas: As of December 31st, we had $404 billion in total assets on platform, approximately 12% of total crypto market cap.
Alesia Haas: You can see our Assets on Platform is included in an audited footnote within our 10-K.
Alesia Haas: Finally, I'll close with a few comments on our outlook for Q1.
Alesia Haas: We've had a strong start to the year and have generated roughly $750 million in transaction revenue year to date.
Alesia Haas: We expect Q1 subscription and services revenue to grow sequentially and be in the range of $685 to $765 million.
Alesia Haas: We expect growth to be driven by higher stablecoin revenue, continued growth of Coinbase One subscribers, and the higher average crypto asset prices we've seen so far in the quarter.
Speaker Change: With regards to stablecoin revenue, Brian mentioned earlier our stretch goal to make USDC the number one dollar stablecoin. I think it's important to note that we hope to achieve this over the next few years.
Speaker Change: We expect Q1 technology and development and general administrative expenses to be in the range of $750 million to $800 million.
Speaker Change: On sales and marketing, we expect the range to be between $235 to $375 million.
Speaker Change: Where we fall in this range will largely depend on whether we continue to see attractive performance marketing opportunities and the product USDC balances, which drives USDC rewards.
With that, Anil, let's go to questions.
Anil Gupta: Okay, so we'll take the top three questions from the FAY portal. The first one is how did the liquidation event that took place in early February affect Coinbase users?
Alesia Haas: Were Coinbase users mostly buyers of that, or have you lost users as a result of the violent price action that took place? Alesia?
Alesia Haas: Well, I need to laugh at this question a little bit, because volatility has been inherent to crypto. The price actions we saw in February are no different than the price actions we see on an average week or an average month within our industry.
So the markets recovered quickly.
Alesia Haas: And I think it's really important to note that our retail users are long-term hodlers. We tend to see them hold for long periods of time and opportunistically come in and out of the markets when they see market conditions that are attracted to them. So there was no meaningful impact to our business as a result of the February volatility and market dislocation we saw in the broader markets.
Speaker Change: Second question. Regulatory headwinds are shifting to tailwinds. Base is skyrocketing to be the top layer 2. Broad USDC adoption.
Brian Armstrong: International perps business is booming, AI leader, CDP is the AWS of crypto, and the inclusion of Coinbase in the S&P 500 potentially coming soon. Any other promising growth drivers to highlight, Brian?
Brian Armstrong: Thanks for the question. I promise I didn't plant that or upvote it myself, but I think what the question is touching on here is that we are a multi-product business.
Brian Armstrong: a diverse stream of revenue from different product lines that we have out there. It's something I'm really proud of, actually, that shift that we've made to having a retail platform, an institutional platform, a developer platform. And so that bodes well for, I think, the TAM of what we can get to over time.
Brian Armstrong: You know, you asked about promising growth drivers to highlight. One of the things we try to do in these earnings calls is...
Brian Armstrong: only talk about things which are now live. And I don't like the idea of announcing Vaporware, but I can assure you there's lots of things we're working on internally, which I'm not ready to announce today. I guess, you know, I'll just go back to a couple things that I am particularly excited about that I mentioned previously.
Brian Armstrong: And one is just this next act for crypto. It's no longer just an asset class. People are using it daily utility for more and more things.
Brian Armstrong: You know, BASE is powering crypto utility across a whole wide range of apps.
Brian Armstrong: Payments are taking off with stable coins as I mentioned, you know, things like prediction markets are providing real real-world utility lots of people who
Brian Armstrong: They weren't previously specifically interested in crypto or trading, but they're finding it as a new source of truth out there.
Brian Armstrong: You know, and then I'd say our international expansion is also really exciting right now, and lots of M&A opportunities. Some of it we'll just do organically as well. We have this
Brian Armstrong: playbook now where we've been able to get contribution margin positive in I think all the countries we've launched in actually at this point, so that just tells me we should be doing more of them and we're going to go build out this world-class trusted trading and financial services infrastructure in as many as many countries as we can.
Thank you. Thank you.
Brian Armstrong: Great. Final question. What are some initiatives that are now possible to explore under the new regulatory regime?
Brian?
Brian Armstrong: Yeah, it's really been a sea change and it's been great. I feel like we have access to all the relevant decision makers and folks in government now. That doesn't mean they're always going to do what we want, but at least we can get meetings and share our point of view. They can take input from all the relevant parties to
Brian Armstrong: come up with clear rules. So, you know, one that I'm really excited about is perpetual futures.
Brian Armstrong: Most crypto trading actually happens with financial futures outside the U.S. and the U.S. was really far behind on this.
Brian Armstrong: We made this point to folks many times in the last administration. We couldn't actually get approval to do it in the U.S.
Brian Armstrong: I'm hopeful there's a path to do that now in the U.S., which would bring a lot of the trading volume back on shore.
in this new regulatory regime.
Brian Armstrong: I'm also pretty interested in tokenized securities and equities, the traditional securities and equities out there.
Brian Armstrong: I think that it offers a lot of promise to consumers around being able to trade 24-7.
Brian Armstrong: People internationally who maybe don't have easy access to this being able to trade trading fractions of a share
The clearing and settlement could happen real-time, a number of...
Brian Armstrong: The whole thing could be simplified and optimized if it was happening on chain just because crypto is a way to update the financial system. So that's a pretty promising area that I think could be exciting over time for the whole industry. You know, prediction markets I mentioned.
Brian Armstrong: the media and what's happening in the world and so people are trying to figure out what's true and I think prediction markets are pretty interesting way to get to get truth about what's actually happening in the world, not just around elections, but all kinds of things.
Brian Armstrong: We're seeing more and more partnership opportunities. Traditional financial firms, tech players are all reaching out in 2025 with this new regulatory environment.
Brian Armstrong: M&A is legal again in the United States, so sort of jokingly I'm saying that but you know There's an incredible pipeline of companies out there that could make sense to to purchase as well So yeah, a lot of good things on the horizon
Speaker Change: Thank you. So with that, Sarah, let's take our first question from the line, please.
Speaker Change: Thank you. Your first question comes from Owen Lau with Oppenheimer. Your line is open.
Owen Lau: Good evening and thank you for taking my questions and congratulations on a great quarter. So when I look at your December and January market shares for US spot crypto, it looks like you started to take shares away from your competitors.
Owen Lau: There have been many lower cost products out there since 2021, like FTX and now SPOT ETF. Could you please talk about how you can still gain shares, not just one month or two months, but through the cycle, and what makes Coinbase different from other platforms? Thanks.
Speaker Change: Thank you for watching. Please subscribe to my channel. I upload weekly. See you in the next video.
Speaker Change: Yeah, well, thanks for noticing that. You know, we were really proud to see that we did hit an all time high for both US spot and global derivatives market share in Q4. And, you know, look, crypto is on the rise, there's going to be lots of companies that are integrating crypto, we think that's a good thing. We think that that's
Speaker Change: To get more and more of global GDP running on crypto rails We're gonna have to have every bank, every fintech, every payment platform around the world begin to integrate here And so Coinbase, we want to do that on our platform But we also want to power this across all the other countries and companies out there
Speaker Change: And so, we're very focused on playing a role in that with our developer platform.
Speaker Change: So, you know, our share did grow quite a lot. I think that just speaks to the trust that people have in Coinbase as a platform. But we don't see it as a zero-sum game. We're trying to grow the size of the Pi 100x for everyone.
Speaker Change: And we believe that the underlying efforts that we're making to add assets, to consolidate
Speaker Change: continue to improve the user experience, our platform stability, and effective marketing will continue to position us well to gain share over the long term.
Speaker Change: We've always had experiences where a certain week, a certain month that our share falls off due to different trading pairs being popular in the market that we may not have either on our platform or the right pricing for, but what we see is over the long term we can durably gain share and retain and grow users on our platform.
Speaker Change: The next question comes from Devin Ryan of Citizens JMP. Your line is open.
Devin Ryan: Thanks so much. Hi, Brian. Hi, Alesia. A question on international derivatives, obviously just gaining kind of massive traction there and another great quarter of growth.
Devin Ryan: It seems like the fees there are quite a bit lower, obviously, and so I also appreciate that might make sense as you're taking share at this type of rate. But I'm curious, as you think about take rates in derivatives kind of longer term, should we expect that they would kind of hold the line with where they are now, or could there be an opportunity to actually increase the take rates as you get to kind of a more mature share? Just curious kind of how to think about this opportunity longer term as you continue to grow it. Thanks.
Speaker Change: Thanks Devin. So right now we're focused on building liquidity and building trading volume and we are providing incentives to various market participants and we're focused on building that depth of liquidity in each of the order books as we put them on the platform.
Devin Ryan: So yes, I do believe that over time our fees will evolve and become more mature as we gain this to the scale and market position that we seek to have, and that right now we are not focused on monetizing at the top.
Devin Ryan: of the range. That said, we're going to monetize this competitive with the market, and this is a lower-priced product than spot trading, and so you can see us be in a competitive market position here, but not at the current levels that we are today.
Thank you for watching!
Thank you. Bye-bye.
Speaker Change: The next question comes from Benjamin Budish with Barclays Capital. Your line is open.
Benjamin Budish: Hi, good evening and thanks for taking the question. I was wondering if you could unpack a little bit of some of the, you know, the activity, the trends you're seeing in some of the either kind of new to Coinbase or resurrected customers. Can you talk about, you know, what is the sort of activity level? Are they coming over with large accounts? Are they engaging in a lot of trading? Or is a lot of the trading coming from your sort of backbook of existing customers? So what does that cohort look like? And maybe similarly with Coinbase One, you know, what is the activity level of like of the new traders? You know, how would you describe that group? Thank you.
Speaker Change: All right, I will start this and Brian, please feel free to add on
So...
Speaker Change: We don't break out details on our customer cohorts in general, but what I would say is that new users tend to come on for either new coins that we list or they come on as first-time users of crypto where they're typically buying Bitcoin or Ethereum or large market cap assets. Those tend to be two waves of new user adoption.
Speaker Change: New product or new into crypto, but we're actually seeing those just the benefits of our effective marketing program and we are really
Speaker Change: proud to say over time, our marketing has always been effective at a very good return on customer acquisition. It's a one-year return on investment. And so that cost of customer acquisition, we get paid back within a year. And so that's the trading activity that really typically drives that return.
resurrected users. These were users that
Speaker Change: We've always had on the platform that have already said, oh, I'm interested in crypto, but I'm not a daily active user I'm just someone who was buying and hodling and they tend to re-engage whenever you see
Speaker Change: higher volatility, higher price, and crypto in the news, and those tend to be similar trends we've seen over time with our users on our platform. They're more engaged in these kind of more peaky market conditions.
Yeah.
With regards to Coinbase One,
Speaker Change: We opened this product up internationally, and so a lot of our growth has come from making Coinbase One more attractive around the world, more available around the world, with new benefits. These are users who are actively trading.
Speaker Change: typically every single month, because they benefit from no trading fees by having this monthly payment that they make to us. So these tend to be more active users and we tend to see Coinbase One users more deeply engaged with all products on our platform.
Speaker Change: Yeah, I think just to add to that, people who are holding crypto and they're not checking it that often maybe, and then the price ticks up.
They'll resurrect, they'll come back.
Speaker Change: to check on their balance. But every time they do that, there's an opportunity to put other products in front of them. Maybe they want to get a loan on their Bitcoin. Maybe they want to have a Coinbase card. Maybe they want to earn staking.
rewards and so
Speaker Change: maybe do payments to peer-to-peer payments or anything so there's more and more products we can put in front of them every time they come back and you know so it's all of the above I think is really the short answer to your question there those users coming back are doing everything
Speaker Change: The next question comes from Ken Worthington of J.P. Morgan. Your line is open.
Hi, good afternoon. Thanks for taking the question.
Speaker Change: We have a more friendly administration, which you noted, the White House repealed tab 121 right out of the gate.
Speaker Change: As we look forward, what are the more or most important pieces that Congress and regulators have to get right in order to get a constructive market for developers and markets that we're hoping to see?
Speaker Change: Yeah, I'll share a few thoughts on that and then maybe Paul, if you want to add anything.
So, the first part of it is really market structure.
Speaker Change: legislation being passed and you know another word people use for this is
is token classification, which is essentially answering this.
Speaker Change: age-old question of which of these are commodities, which of them are securities.
Speaker Change: which of them are payments or currency stable coins, and which of them are something else entirely that's not regulated like artwork or collectibles.
Speaker Change: And so, if we can get that token classification clarified in new legislation, or if Congress can really do that, I think it would open up huge pools of capital to flow into crypto. All kinds of good things happen. Startups can start to build.
Speaker Change: So that's the first piece is market structure or token classification. The second piece is around stable coins and we really want to see a clear framework emerge.
Speaker Change: to have dollar backed stable coins be issued in the United States with clear legislation behind it. You know, we want to make sure that there's a state pathway.
Speaker Change: For those it doesn't have to just be done federally. We want to make sure that you don't have to be a bank Although you could to issue a stable coin. I think if you're not doing fractional reserve You shouldn't need a banking license. You could get for instance a trust company
Speaker Change: You'll need to pass audits that show you have 100% reserves, things like that, so those would be key pillars of a stablecoin bill. Beyond that, I think it would also be great to see...
Strategic Bitcoin Reserve in the United States.
Speaker Change: We need to make sure that there's fair access to banking services, things like Operation Chokepoint don't happen again.
Speaker Change: And just I'd say broadly there's almost like a bill of rights for the American citizens that they The right to self-custody and to own crypto and to use it These are foundational principles that we're hoping would come out of any legislation. Paul, anything I missed?
and Anil Gupta.
I would just underscore, Brian, that the need for
Speaker Change: a Functional Bill of Rights, and fortunately I think the Executive Order
that the president issued.
Speaker Change: provides really a nice foundation for that. You saw things like
Speaker Change: statements that commit to protecting lawful blockchain activities and promoting dollar-backed stablecoins.
Speaker Change: Critically ensuring fair access to banking services. So I think the the bones are in place to support that and we're also Quite encouraged by the early work of the crypto task force the SEC
Speaker Change: under which or by which Commissioner Peirce, I think, has made it very clear she intends to move and move fast on providing real guidance to the market and especially to builders.
Speaker Change: what they can expect and what process they can expect when they come in and meet with the SEC in the months and years ahead.
Pete Christensen: Next question is from Pete Christensen with Citi. Your line is open.
Pete Christensen: I'd love to hear your thoughts on how do crypto-natives build up the value proposition for consumers to trade on crypto-native solutions. How does that value proposition or that differentiation evolve versus all-in-one?
trade-fi kind of solutions that are out there.
Thank you.
Thank you.
Speaker Change: Yeah, well, you know, a lot of people come to the platform initially, they're, they're curious about crypto. Coinbase has the most trusted brand, we've been around the longest, we're dedicated to crypto. And so that's the entry point for a lot of folks. We also do a lot of traditional marketing, we do a lot of
Alesia Haas: You know, referral marketing and growth programs within the company, which are very effective and positive ROI. You know, we try to target that one year payback period that Alicia mentioned.
Alesia Haas: And so as they come in and they that's sort of often people's first foray into crypto They start to learn a little bit more about it, and then they start adding on other products right this is where
Alesia Haas: They might do payments, or staking, or borrowing and lending, or coin-based cards.
Alesia Haas: And eventually, you know, we see businesses onboarding as well, and they're using it for their own purposes.
Alesia Haas: And so you can see the there's often the thing that gets them in the front door to start with but then they start to realize there's a broader potential here and they start to think about Coinbase as a
Alesia Haas: primary financial account where they can participate in this new economy. Today, only about half of a 1% of global GDP is running on crypto rails, but we think that that could expand dramatically by the end of the decade and you know that starts where things start to get really exciting as this is
Alesia Haas: a foundational account you might have for the you know your participation in the global economy. So I'm not sure if I answered your question directly, we could talk about there's crypto native competitors, there's traditional trad5 competitors, there's some that are specific each category out there, but you know if you have any further follow-ups just let me know.
I think just to double down on that.
Alesia Haas: The way that we look at the competitive set is we are a crypto native competitor that plays deeply in and has leaned into the values of
Alesia Haas: Leaning into regulatory, leaning into security, leaning into ease of use.
Speaker Change: And I think one of the things that Brian realized very early on was that being crypto-native was akin to being digital-native back in the day. If you look at something like...
Speaker Change: traditional retailers who added digital as a feature, it was never nearly as impactful as building from the ground up digital native the way a company like Amazon did.
Speaker Change: And I think that that benefits us because even if you are, as Brian described, you know, somebody who's curious about crypto you come in
Perhaps you're curious about Bitcoin.
Speaker Change: You're then, you come into Coinbase, you have a good experience, perhaps you try other assets, perhaps you try staking and are exposed to other crypto native features.
Speaker Change: and having that, the rails and building blocks for that, including things like base and wallet and USDC, I think provides us with a much stronger, durable, competitive advantage over time.
Speaker Change: The next question is from Patrick Moley of Piper Sandler. Your line is open.
Patrick Moley: Brian, a few weeks ago you posted on X and said you felt like Coinbase needed to rethink its listing process given the sheer volume of tokens that are being created.
Patrick Moley: on a daily basis, a lot of which I would assume are kind of these meme tokens where you're seeing a lot of trading being done. So could you maybe just expand on those comments and talk about how you see your listed token offering evolving from here? Thanks.
Patrick Moley: Yeah, thanks for reading that and bringing it up. I do think it's an important transition that...
Patrick Moley: The industry is going through where we're seeing more and more tokens being created and I think that's a really good thing It means people are using crypto for lots of different use cases
Patrick Moley: And it's actually, you know, by some estimates, we're at about a million tokens a week here. And, you know, many of those are lower quality or meme coins. But it speaks to just the volume of what's happening here. It's a little bit like, you know, the early days of the internet.
Patrick Moley: You could list all the major websites on a single directory and eventually you needed Google search to sort through because the internet just got so big. And that's a little bit what we're seeing with crypto.
Patrick Moley: So, what this means for Coinbase is that we need to deeply integrate decentralized exchanges into our product where
Patrick Moley: I think the customer won't really know or need to care.
Patrick Moley: about whether it's trading on a centralized exchange or a decentralized exchange. They just want to look up an asset and maybe...
Patrick Moley: participate in that. But we also need to balance giving people, the customers, access to what they want with
appropriate disclosures and consumer
you know, something pretending to be that asset or...
Patrick Moley: You know, it's a little bit like, again, searching through, there might be a hundred thousand results in Google, but you kind of want to only look at the first page.
Patrick Moley: or if you search for some product on Amazon, there might be thousands of them, but you wanna buy the one with the best reviews. So I think there's a variety of ways that we can balance that consumer protection with giving customers access to the broad range of assets out there.
Speaker Change: The next question comes from John Tadaro with Needham. Your line is open.
John Tadaro: Thanks for taking my question and congrats on the really strong quarter. Brian, I have a broader question about the the overall vision for Coinbase to maybe become something a lot bigger than a crypto brokerage. The two areas I see are stable coins and the tokenized real-world assets, which you've discussed some. You know, you could see a world where a lot of that transfer activity ultimately happens on base.
John Tadaro: So, one, just do you agree with that vision, and then two, is there anything more specifically you guys can do to push both of those segments?
and Anil Gupta.
Anil Gupta: Yeah, well, that is definitely the plan. I think, you know, like I said, people are coming, coming to crypto to think of it as an asset class, they could trade and over the last 10 years, it was the best performing asset class out there.
John Tadaro: But it's already become much much more than that and for people who don't use crypto every day They sometimes don't fully wrap their heads around that But you know if you look at that stable coin volume at 30 trillion dollars of volume last year it grew 300
our three acts year over year.
John Tadaro: You know, if that continues, it's going to be a really a meaningful portion.
John Tadaro: of GlobalGDP. And so that's a huge one that you mentioned, you know, and tokenizing real-world assets or traditional securities. I mean, eventually, you know, real estate, the debt markets, like private credit, everything should come on chain.
John Tadaro: It's really just a more efficient way of transferring value, and it can do real-time settlement and eliminate various risks that are out there in the ecosystem. So, I mean, there's lots that we can do on this front.
John Tadaro: I mean, in the broadest sense, the thing that we're doing is we're trying to make all these products trusted and easy to use. I think that's where we differentiate the most on our brand. We see in surveys that they do trust the Coinbase brand the most. It comes from our track record of compliance.
John Tadaro: security, design, customer support, a variety of things go into that trust. And then we're trying to make it easy to use for the average person. So they may not understand quite how to access a decentralized exchange through DeFi and worry about private keys and addresses and bridging and all these complex topics.
John Tadaro: But if we make it simple, we think there's an order of magnitude more people who will come and use our products.
You know, on stablecoin specifically, for instance, we can...
John Tadaro: I think we can really fuel a lot of that growth by just driving more partnerships with global and local players like Stripe and Yellowcard.
John Tadaro: to do more global adoption. You know, we've been adding a number of additional stablecoin trading pairs on our platform.
John Tadaro: You know, we've been offering rewards to our customers when they hold USDC. So, it's almost like having a checking account and a, not even a savings account, it'd be like a high, I guess like a, you know, something that pays much more like owning short-term treasuries or something. But you can have that in just one account. And these are things we can do to help drive adoption of these various things. So...
John Tadaro: Yeah, I mean longer term, it's like we want to be the primary financial account for many people in the global economy And so that you know, you could compare that to a brokerage you can compare it to banking You can compare it to a payments company. I think it has aspects of all of those things in in the limit here That's the aspiration and so
John Tadaro: That's a pretty exciting opportunity and one can think about what the value of that might be over time.
Speaker Change: The next question comes from Dan Dolev of Missouho. Your line is open.
Dan Dolev: Hey guys, great results out there. I just wanted to ask about, I think you mentioned kind of global
contracts.
Dan Dolev: earlier so I think you know your competitor was talking about sort of
Dan Dolev: This is a big market of political betting or any betting. Is there any view here to use Coinbase as a platform globally to do something similar? Thank you.
Okay, I think you're referring to prediction markets.
Dan Dolev: We have nothing to announce today on that front, but I do think prediction markets are very exciting. I touched on it a little bit in my opening remarks.
Speaker Change: I think really the United States but the world kind of got a wake-up call on these prediction markets in this in this recent election I think it was some of these were like that in the top few Downloaded apps in the in the app stores during the election and they called the election correctly Far in advance of every other traditional source that was just flat wrong
Speaker Change: And so this is answering a big question. Crypto is like the answer to this major question people have in society today, which is how do I know what's true? Everybody's worried about misinformation. They're worried about bias.
And the beautiful thing about these prediction markets is that...
Speaker Change: People have real skin in the game, and so I actually think it's a better source of truth
Speaker Change: than what we're seeing in many traditional media publications. And if you look at the surveys, you know, around people's trust in institutions, it's like the traditional media, etc., it's at an all-time low.
Speaker Change: So, it's just one more example where I think crypto can provide an interesting solution. We're interested in looking at it more over time.
Speaker Change: One of the things about Coinbase is that we're not necessarily always first to market with the cutting-edge products
Speaker Change: and we're actually comfortable with that position. We've watched, for example, international markets that are more deregulated.
launch products that then we can we can adopt here.
especially with the good favorable regulatory climate here.
Speaker Change: Or, you know, there's just a swath of different products that come out and we can watch as they resonate or don't resonate with users.
Speaker Change: That's one of the reasons that we've invested so much in Coinbase Ventures. It allows us to get ahead, to have multiple plays, to plant many seeds, and then as those things potentially sprout, we can take advantage of them either by buying, building or acquiring or partnering over time.
Speaker Change: The next question comes from Bo Pei of U.S. Tiger Securities. Your line is open.
and Anil Gupta.
declined during periods of surging trading volume. However, this quarter
Speaker Change: Despite trading volume nearly tripling, the retail feed rate actually increased slightly.
Speaker Change: sequentially. So could you just provide more insight into this dynamic? Was this primarily driven by a rapid increase in derivatives revenue or changes in stablecoin trading phase or other factors? That's my first question.
Speaker Change: So this quarter we just saw strong growth of both simple and advanced trading and so we didn't see any disproportionate contribution from either one of them which is why the fee rate was largely similar quarter over quarter. So we just saw growth across the board.
Sara Woods, and then the second?
Speaker Change: Go ahead. Yes. Thank you. Yeah. Thank you. And second question is about competition So yesterday an online trading platform reported I think 400% year-over-year growth in crypto trading volume How do you view the competitive landscape in this environment specifically? How do you plan to compete with peers that offer a broader range of trading products beyond crypto?
Thank you.
Brian Armstrong: Yeah, so this is Brian. I can share a little bit how we think of it.
Brian Armstrong: So we really want everyone to come into crypto. I keep saying this and maybe people don't really believe me, but it's really true. We're trying to get the global financial system updated and have more and more global GDP run on crypto rails.
Brian Armstrong: We think that that's a more efficient, fair, and free world. It will accelerate progress and it creates economic freedom and we're going to have to have
Brian Armstrong: every bank, every payment company, every brokerage, etc. integrate crypto into their platforms. Now Coinbase can be the primary financial account, we can be the most trusted product out there for many people. We can also power a lot of this for other companies and so
Brian Armstrong: We're genuinely not that worried about the competitive landscape. I mean, we have to make sure we're meeting our customers' needs, but I...
Brian Armstrong: The way we do that is by going and talking to our customers. We don't necessarily look at what other people are doing. We want more and more people to participate here. We want to power those solutions for them. And it's just whenever you see new companies coming into crypto, you should think that is great for Coinbase. It's TAM expansion.
It goes back to my thing about
But
Brian Armstrong: We we think being crypto native and having been here for this long is a huge competitive advantage We actually weirdly welcome everybody coming into the space We think it's good for the whole ecosystem when there are free markets when trad5 competitors and others
Brian Armstrong: further validate the industry for their customers. And I think one of the things Brian said I remember at the at the IPO roadshow is we zig where they zag. We've always been about crypto first and we think it benefits our customers and it benefits us over the longer term.
Brian Armstrong: We're focused on the on-chain economy here and the crypto aspect of it, but that's going to grow to include more and more of the total financial system in all asset classes.
Sarah, we'll take one more question.
Speaker Change: Thank you. Our final question will come from Alex Markgraf of KBCM. Your line is open.
Alex Markgraf: Thanks. I'll try to squeeze in two here if I can. Maybe just one model one first as it relates to the sales and marketing outlook. Understand the logic in terms of the wider than usual range. Just curious, is that wider than usual range? Is that a new approach to
Alex Markgraf: forecasting that line or how you're communicating that to us, or is it more a function of market conditions as you're going through the planning process?
Alex Markgraf: This outlook is a function of the current market conditions. We saw wider opportunities to deploy marketing dollars post-election. We've seen great variance week to week as we've gone through the last
you know, eight weeks.
Alex Markgraf: And we wanted to recognize that the next six weeks of the quarter could be quite volatile. And so we wanted to capture an outlook that didn't give us any restraints on the business, that we saw great opportunities to put money to work to acquire new customers, but also communicated that it could be wide. So just a function of what we see today.
Speaker Change: Okay, understood. Thank you. And then, Brian, maybe one on CDP, when you talk about companies building on-chain.
Speaker Change: Maybe just could you paint a picture of sort of non-crypto native participation today and how you would expect that to evolve in a backdrop where you know there is clearer regulation and legislation in the near term. Thank you.
Speaker Change: Yeah, well, a lot of the early adopters of CDPR are startups, but if you're talking about, and they're doing interesting things with AI and like payout solutions and a lot of things sort of more native on chain.
Speaker Change: But if you're asking about non-crypto native adoption, and by the way, Coinbase Prime has a great API solution. A lot of parties are using that.
Speaker Change: So there's various actually ways we can serve them. It's not only CDP, like various institutional clients can automate pieces of their Coinbase Prime account with an API as well. But I think what it'll look like over time for the non-crypto natives, the Fortune 500s of the world, et cetera.
Speaker Change: You know, first they'll come in and they'll say, okay, for just...
Good treasury management, inflation.
Speaker Change: risk mitigation, we should hold percentage of our balance sheet in Bitcoin. That's just a way, that's the new golden standard, right? It's just going to become like a best practice, and we can help them with that.
Speaker Change: I think then they'll start to think about, okay, how much am I paying in B2B payment fees?
paying various vendors.
Speaker Change: You know, and where might there be, like, financing opportunities? Cross-border payments, these kind of things, are areas where crypto can really provide a better solution.
Speaker Change: and so I think they'll integrate from like a treasury management payments like those sort of things from the fortune 500 now some of them will actually go even further than that I think and they'll start to say
Speaker Change: Okay, how do we issue our reward points on-chain? How do we allow members of our community that are, like, some new product they're launching to participate in a sense of ownership around it or governance around it, right? Others might...
Speaker Change: Like if you were building, you know, Reddit or Uber or Airbnb today, you'd probably You'd want the early users on that platform or Wikipedia or anybody contributing to a community or a product You'd want to have the early users of that platform
Speaker Change: earned rewards or have governance rights over it, just like the employees working on it, right? And so you can imagine new products being launched in those categories. So.
Speaker Change: Yeah, I think eventually it'll integrate into many different companies in different ways, but you know crypto is many different things and we can provide those services through our through CDP, Coinbase Prime, etc.
and Anil Gupta.
Speaker Change: Great, that's it for today. Thank you all for joining us and we look forward to talking to you again next quarter.
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Speaker Change: Go ahead, please. Mr. President, you are meeting Prime Minister Modi of India this afternoon. What kind of trade and tariff relationship would you like to have with India? India traditionally is the highest, just about the highest tariffed country. They charge more tariffs than any other country. And I mean, we'll be talking about that. But again, whatever they charge us, we're charging them. So it works out very well. It's a beautiful, simple system.
Speaker Change: And we don't have to worry about, gee, we're charging too much or too little. But traditionally, India is right at the top of the pack, pretty much. There are a couple of smaller countries that are actually more. But India is a very, very, they charge tremendous tariffs. I remember when Harley Davidson couldn't sell their motorbikes into India because of the fact that India, the tax was so high, the tariff was so high. And Harley was forced to build, I guess they built, I don't know. That was.
Speaker Change: a while ago, but I think they built a factory in India in order to avoid paying the tariffs. And that's what people can do with us. They can build a factory here, a plant or whatever it might be here. And that includes the medical, that includes cars, that includes chips and semiconductors, that includes everything. If you build here, you have no tariffs whatsoever. And I think that's what's going to happen. I think our country is going to be flooded with jobs.
Speaker Change: price is going to go up short-term long-term necessarily I mean not necessarily but I'll tell you what will go up is jobs the jobs will go up tremendously we're going to have great jobs jobs for everybody this is something that should have been done many years ago China did it I mean China did it at a level that probably nobody's ever seen before if you manufactured a car you couldn't send it into China the tariff was so high so everybody went
Speaker Change: It's no big secret. So we're going to see, but it's going to mean tremendous amounts of jobs. And ultimately, prices will stay the same, go down, but we're going to have a very dynamic country. But if prices go up, Mr. President, because of these tariffs, who do you think voters should hold responsible? Oh, I think what's going to go up is jobs are going to go up and prices could go up somewhat short term, but prices will also go down.
Speaker Change: prices for some things, many things, it could be all things will go down, ultimately will go down. Mr. President, the timeline here, sir, there's a period of time for a review, a report, 180 days. What's the earliest date that you think tariffs will actually be implemented? Well, I would say, maybe I'll ask Howard to answer that because he's going to be the one that's implementing. What do you think? Our studies should be all complete by April 1st.
Speaker Change: on April 2nd if you want, so I think we'll be ready to go on April 1st, and we'll hand it to the President and he'll make his decisions. But remember, if they drop their tariffs, prices for Americans are coming down. Our production's going up, and our costs are going down. Remember, it's a two-way street. That's why it's called reciprocal. Have you spoken to any American CEOs directly about this? Are they calling you and asking for... Many love it.
Speaker Change: This is going to be the thing that makes our country really prosperous again. And this is going to be what pays down the $36 trillion in debt and all the other things. And this is going to be, this is an amazing day. I think there's going to be a very big day and in a very positive way for our country. Yes, please. You talked about the VAT in the EU before and your concerns with how the EU treats you. Do you have a number in mind on the European Union? Do you have an idea of where that number is going to land?
Speaker Change: which we're considering to be similar or the same as the TAF. Plus they charge lots of fees and, you know, they're doing something else. European Union's been very tough on our companies. They sued Apple, they sued Google, they sued Facebook, they sued many other companies and American companies and the kind of numbers are staggering. And the court system over there is not very good to our companies.
Speaker Change: billion dollars in a penalty, a court case that was really shocking because most people thought they would have won that court case, people that watched it. So they've been very tough. Airlines have called me up and they said could you help us with Europe because they're charging us so many different fees. I got a call from the head of American United and other airlines saying every time we land a plane we get just absolutely killed by the European Union. And so
Speaker Change: They haven't treated us good. You know, we think the European Union is wonderful. We all love Europe, love the countries in Europe, but European Union has been absolutely brutal on trade. Canada has been very bad to us on trade, but now Canada is going to have to start paying up. And Canada has been tough on the military because they don't have a very, they have a very low military cost. They think we're going to, you know, protect them with our military, which is unfair. So Canada is going to be a very interesting situation.
Speaker Change: Would we pay $200 billion a year in subsidies to Canada when they're not a state? You do that for a state, but you don't do that for somebody else's country. So I think Canada is going to be a very serious contender to be our 51st state. There was obviously a delay in implementing those tariffs.
Speaker Change: It just sets up so good for them. Look, the people would pay much less tax than they're paying right now. They'd have perfect military protection. They don't have any military protection because they essentially, because, and you take a look at what's going on out there. You have Russian ships, you have China ships, you have Chinese ships, you have a lot of ships out there. And, you know, people are in danger. This is a different world today. It's a different world. They need our protection. Yes. You mentioned Elon Musk and the efforts that he's undertaking with your report.
Speaker Change: Will he secure any new government contracts while he is working on DoE? No, not if there's a conflict. If there's no conflict, I guess what difference does it make? But we won't let him do anything having to do with a conflict. Are you personally checking to make sure there's no complicit in this? Yeah, I am. He answers to you. Sure, he does. First of all... Checking to make sure there's no complicit in this. Yeah, I am. He answers to you. Sure, he does.
Speaker Change: They are not being paid for in my opinion almost all of NATO. And now I had the bad moment with the press when the press said, well, does this mean you won't protect him? And I said, I won't protect him if they're not paying. But because I said that, the Secretary General, as you know, said it was the greatest thing he's ever seen because the money came pouring in. But they don't treat us right on trade. They don't treat us right on the military either.
they wouldn't be able to succeed as a country.
Speaker Change: exact same amount that they were much higher. They were approximately five times higher and they lowered them down to the exact tax that we're charging. That took place like yesterday and the day before. Is that a correct statement? I think so. Yeah. Do you expect any exemptions or waivers? I don't expect that. No, this is a simple system. I mean, there wouldn't be any. And in the case of Apple, I gave them a waiver or exemption in my first term because Samsung was in South Korea.
Speaker Change: and Samsung didn't have to pay the tax because it was a tax on China and Apple makes a lot of their product in China so I did that because it wouldn't have been fair but now this applies to everybody across the board. This is a much simpler way of doing it, much better way. You had that major call yesterday with President Putin in Russia. President Zelensky responded today basically saying any agreement they won't accept unless they're made with Ukraine. Will Ukraine
Speaker Change: Part of it. We would have Ukraine and we'd have Russia and we'll have other people involved. A lot of people... A lot of forks in the... A lot of forks in this game. I'll tell you what, this is a very interesting situation. But the Ukraine war has to end. The young people are being killed at levels that nobody's seen since World War 2. And it's a ridiculous war and it has said, we had a good talk with President Putin who I had a good talk with Zelensky. Very good talk.
Speaker Change: and somebody said, oh, I should have called Zelensky first. I don't think so. I mean, we have to find out whether or not Russia wants to make a deal. I know that Zelensky wants to make a deal because he told me that, but I now know that Russia wants to make a deal. Did you ask Secretary Henderson to walk back his comment yesterday saying Ukraine won't join NATO and won't go back to pre-2014 borders because of the targeting shifts you could use? No, I didn't. Somebody told me that, but I thought his comments were good yesterday and they're probably good
Speaker Change: You're going to have a war now, and I was right about that. This is a war that would have never happened if I were president. You don't think it's his fault, not President Putin? I think Biden is incompetent. And I think when he said that they could join NATO, I thought that was a very stupid thing to say. I thought when he said, well, it depends if it's a minor incursion. In other words, it's OK if Russia does a minor incursion. I thought that was a very foolish thing to say.
Speaker Change: The other thing that got it started was how badly Millie and these stupid people, bad generals, how badly they did with Afghanistan. I was going to pull out, but we were pulling out with dignity and strength and we were going to take our equipment with us and everything else. They are, I mean, what they're doing is, what they did with that, I think Putin looked at that mess and he said, wow, this is a great time, I'm going to go in.
Speaker Change: I'm not blaming Americans, but I will say what they said had a big influence on his deciding to go in. Yeah? When Elon Musk met with Prime Minister Modi earlier today, did he do so as an American CEO, or did he do so as a representative of the U.S. government? Uh, are you talking about me? No, Elon Musk. Oh, Elon? I don't know. They met.
Speaker Change: I think autos are coming soon. I think they're all coming more or less at the same time. And it's not going to be a big shock to the system. But what it's going to do is it's going to
Speaker Change: When they heard me make that statement that they thought I was going to win the election
Speaker Change: We're going to lose our shirt. So they stopped building. That's the impact that tariffs have. Again, you know, I say it and I say it loud, but it's the most beautiful word. But now I say religion, love, and a couple of other things are more beautiful because I got a lot of problem with the fake news when they said other things are more important. God is more important. But these are the words. But I would say it's number four or five. To me, it's the most beautiful. And I'll tell you what, I think really reciprocal tariffs, those two words.
Speaker Change: reciprocal makes tariffs really fair it would be all auto import? I don't need any exemptions now because you don't need to with reciprocal you don't need to good question, Gavin Kleiger has arrived at the IRS do you have any updates on the TikTok negotiations? yeah, we have a lot of people well, I have 90 days from about two weeks ago
Speaker Change: Mr. President, those workers arrived today, Gavin Clagger and others arrived today at the IRS. Do you expect to close the IRS, or what are you expecting? No, I don't expect it, but I think that the Internal Revenue Service will be looked at like everybody else. Just about everybody is going to be looked at, so they're doing a hell of a job. It's an amazing job they're doing. And, you know, that force is building these, I call it the force of super geniuses,
Speaker Change: And, you know, they go up and they talk to some of the people about certain deals and the people get all tongue-tied, they can't talk. Because these people get it. They're very smart people. We need smart people. Yes. Brian? On tariffs, sir. Yeah, Brian? Yes, sir. Mr. President, I know that during the campaign, it was huge in Pennsylvania as far as bringing back manufacturing. Right. Have you talked to any CEOs since the tariffs were announced on steel and aluminum? What's the feedback? They are in love with it.
Speaker Change: all through the roof. That's why I didn't want U.S. Steel to make a deal with Japan or anybody else. I think it's going to do great. But I think maybe more than anybody else, the steel companies and aluminum companies, they're in love with what's happened. And this will eventually be the car companies and chip companies. We have to have chips made in this country. Right now, everything's made in Taiwan, practically, almost all of it, a little bit in South Korea. But everything, almost all of it is made in Taiwan. And we
Speaker Change: We want those companies to come to our country in all due respect, you know, they took the business away. Taiwan took our chip business away. We had Intel, we had these great companies that did so well, and it was taken from us, and we want that business back. We want it back in the United States, and if they don't bring it back, we're not going to be very happy. And you mentioned pharmaceuticals as well, and China, that's national security to bring that back.
Speaker Change: pharmaceutical and drug business back into the United States, where it should be, right? Sir, on tariffs, are you concerned that the countries that would be most affected, like India, would just shift their trading to China? No, I'm not concerned about anything, really. I mean, I'm just doing what's fair. This is a very fair thing. This should have been done a long time ago. I would have done it, but then COVID hit. I was getting ready to do this years ago, and first time we had the
Speaker Change: this was going to be the thing that I was most waiting to do but it was awfully hard to do this with Italy and France and Spain and these all those people were dying and then we put tariffs on I have a I have a big heart. Sir on Ukraine when Putin says that he really wants peace do you believe him? Yeah I do I believe he wants peace I believe that President Putin when I spoke to him yesterday I mean I know him very well yeah I think he wants peace I think he would tell me
Speaker Change: didn't. I'd like to see peace. I believe that he would like to see something happen. I trust him on this subject. I think he'd like to see something happen. I think it could have happened a long time ago. I think Biden, number one, it shouldn't have started.
many of them.
Speaker Change: Almost all of them, but many of them and this should have been done by Biden years ago This should have never been allowed to happen. I know he's a friend of yours He's a friend of CNN. That's why nobody watches CNN anymore because they have no no credibility Find a buyer in the United States for tick-tock. Do you think Xi Jinping will authorize the sale of it? I'm gonna make it worthwhile for China to do it. I think so I mean I got to know tick-tock because during the election I ended up with 36%
higher than my opponent.
and very.
Speaker Change: fair and I think the image of TikTok is different than it was before the election. I think people saw it and they view it as a positive not a negative. I think it'll be China's advantage to have the deal be made. Yeah. How much money do you think you'll raise from tariffs on an annual basis? That's the most interesting question. I think it'll be a staggering amount. Um, it will be the external, I call it the external revenue service.
Donald Trump: I don't know, I think it's a name devised by a few of us, but I think it's going to be a staggering amount. The number one trillion floated in meetings with senators, is that a number you thought of? I don't know, but already, the Senate's saying, well, wait a minute, you know they're looking at some of the numbers and they're saying, whoa. Look, we want to... I say America first, I say make America great again, that's what we're doing, this is... I think it's the most important thing I've signed, I've signed some very important things, right to try was so important, I mean...
Donald Trump: A lot of important things. Space Force, the biggest tax cuts in history. This could be one of the most important things that we've ever signed. Do you expect the Russians and President Putin to attend the summit in Saudi Arabia? Eventually, yeah. Not quite yet. It's a little early. They're having a meeting in Munich.
Donald Trump: tomorrow Russia is going to be there with our people Ukraine is also invited by the way not sure exactly who's going to be there from any country but high level people from Russia from Ukraine and from the United States I'd love to have them back I think it was a mistake to throw them out look it's not a question of liking Russia or not liking Russia it was the g8
Donald Trump: And you know, I said, what are you doing? You guys, all you talk about is Russia and they should be sitting at the table. I think Putin would love to be back.
Obama
Donald Trump: and a couple of other people made a mistake and they got Russia out. It's very possible that if that was the G8, you wouldn't have had the problem with Ukraine. And if I was president, you definitely wouldn't have had the problem with Ukraine. Russia would have never attacked Ukraine. But you ask a very good question, the G8. It used to be the G8 and then these people threw them out. And I was arguing with Trudeau and with numerous of the people.
Donald Trump: of Japan, agreed with me 100%, and some of the others did too. But I got there, it was the G7, as you know, they had already been terminated. I think it would have been very helpful, and it still would be helpful to have Russia be a part of that.
Donald Trump: And I think if they were, I don't think you would have had the problem that you have right now. Russia is part of the G20. They kicked them out, of course, because they illegally annexed Crimea. I mean, how would you have responded if Russia invaded? Russia took Crimea during Obama. They took, they took... Now they're looking to take the whole thing. Then they took a big chunk of...
Speaker Change: Land and people as you know during Bush, and now they're trying to take the whole thing during Biden you know the only one that didn't give him anything is Trump They never took anything with Trump nothing not two inches of property of of land but Crimea was Obama
Speaker Change: and then Bush gave them a lot, if you remember. And then, in fact, it's just sort of a standard little phrase, and Biden's giving them everything because this is a war that shouldn't have been had.
Speaker Change: And the only one that didn't give him anything is Trump. That's the way it is. What's your message to Wall Street about these tariffs? There's been some nervousness on Wall Street about the impact. No, I mean, it hasn't been very much. And I think it's going to make the United States stronger. And in many ways, it could make other countries stronger, too. You know, other countries want to have a strong United States. They want to have a strong America. And I think it's going to make us very, very strong, much stronger.
Speaker Change: John Lear, Anil Gupta, Paul Grewal, Anil Gupta, Anil Gupta, Paul Grewal, John Lear, Anil Gupta,
Speaker Change: I tell people all the time, you know, the question is, who's going to have the first meeting? Where are you going to go? I say this to Putin, to President Xi, I say to everybody, never bothered me, you know, I'm willing to say I'll go first. It doesn't matter. It's the end result that counts. So it doesn't make any difference. When do you want to have a conversation about global defense, betting you, China?
and Anil Gupta.
Speaker Change: We were talking about de-nuking, de-nuclearize, de-nuking, and President Putin and I agreed that we were going to do it in a very big way.
Speaker Change: There's no reason for us to be building brand new nuclear weapons. We already have so many you could Destroy the world 50 times over a hundred times over and here We are building new nuclear weapons and they're building nuclear weapons and China's building new nuclear weapons and China's trying to catch up because you know, they're they're very substantially behind but within five or six years, they'll be even and And we're all spending a lot of money that we could be spending on other things that are actually
Speaker Change: hopefully much more productive hopefully there'll never be a time when we need those weapons if there's ever a time when we need nuclear weapons like the kind of weapons that we're building and that Russia has and that China has to a lesser extent but will have that's going to be a very sad day that's going to be probably oblivion. Do you see that as separate conversations or do you see one giant summit with you, Xi Jinping and Vladimir Putin? I could see that let things calm down a little bit you know when I left we had
Speaker Change: We had no Russia going into Ukraine, they'd never would've done it. Putin never would've done it. And I came back and we got like... The whole world is blowing up. So... When we straighten it all out. Then I want to... One of the first meetings that I want to have is with president Xi of China, president Putin of Russia. And I want to say let's cut our military budget in half. And we can do that. I think we'll be able to do it.
Speaker Change: slowing down stopping and reducing nuclear weapons in particular and also on not having to spend the kind of money we're all spending on weapons military weapons generally. I think my question is would you have a meeting separately with each of those leaders or would you try to bring them all together? Well you start off separately and yeah that's what was happening I was dealing with President Putin we had really an understanding where we were going to denuclearize what a beautiful term that is right denuclearize
Speaker Change: as what a great thing if we could do that and we were gonna he he really liked the idea and so did I and we had then called China and China was very open to it and then COVID hit and then we had a rigged election but now there was no rigged election now we have a an election that was too big to rig so my whole theme was too big to rig and they tried but they didn't pull it off. As far as the reciprocal tariffs would you also direct agencies
Speaker Change: to study the impact they would have on prices in the U.S.? No, there's nothing to study. There's nothing to study. It's going to go well. The United States is going to become a very, very strong economically country. Yeah? Mr. President, in the past you have spoken against BRICS. India is part of BRICS. Do you want to dismantle BRICS or do you want the U.S. to be part of BRICS? I don't care, but BRICS was put there for a bad purpose. And most of those people don't even want to talk about it now.
Speaker Change: Biden, in particular, I guess he said that, oh, they have us over a barrel. They don't have us over a barrel. We have them over a barrel. If BRICS wants to play games, those countries won't trade with us. We won't trade with them. And if any trading gets through, it'll be 100 percent tariff, at least. You know what? When they hear that, what do you think they're going to do? They're going to say, look what happened to BRICS. They didn't want to talk about it. They don't they don't even want to admit that they were a member of BRICS. That's what's happened.
Donald Trump: F. Kennedy Jr. get confirmed. He's going to come in here and be sworn in. Mitch McConnell has now voted against several of your nominees. He voted against RFK Jr. as the next health secretary, citing conspiracy theories. What's your reaction to that? Well, I feel sorry for Mitch. And I was one of the people that let, he couldn't, he wanted to go to the end and he wanted to stay leader. He wasn't, he's not equipped mentally. He wasn't equipped 10 years ago mentally, in my opinion. He'd let the Republican party go to hell. If I didn't come along, the Republican party wouldn't
Donald Trump: right now. Mitch McConnell never really had it. He had an ability to raise money because of his position as leader, which anybody could do. You could do it even. And that's saying a lot. But the fact is that he raised money and he gave a lot of money to senators. And so he had a little loyalty based on the fact that as leader, you could raise a lot of money. Senators would call me and they say he wants to give me 20, 25 million. Can I take it?
Donald Trump: I don't even call it loyalty. He was able to get votes, but I was the one that got him to drop out of the leadership position, so he can't love me, but he's not voting against Bob. He's voting against me, but that's all right. He endorsed me. Do you know that Mitch endorsed me? You think that was easy? He had polio, obviously. I don't know anything about he had polio. Are you doubting that he had polio?
Donald Trump: All I can tell you about him is that he shouldn't have been leader, he knows that. He voted against Bobby, he votes against almost everything now, he's a very bitter guy.
Donald Trump: Marco Rubio has done a fantastic job. He's been a great Secretary of State. They're all doing great. But we're going to have a swearing in today and maybe we're going to have a second one because I hear we have a couple of them coming up. And the man behind me is doing