Blockchain Provides the ‘Universal Truth’ Needed for AI Finance, Coinbase Says

I'm here with John Dagostino, head of strategy, Coinbase Institutional.

Thanks so much for stopping by, Patricia.

Thank you for having me on in the capital of capital on the show of shows.

Oh wow, I don't know where to go from there.

We could just be like, thank you, goodbye, but I'm going to put you on the spot a little bit more.

So you know.

Everyone's just talking about connecting the global network here.

What's the one part of the old school finance system that crypto needs to fix right now?

So to be simple about it, speed, speed is, we think about, you know, we've gone from like T+5 to C+3 to C+1.

And just like improving the 100 yard dash time, even though the increments get smaller as the years go by, they're no less important.

So to go from settling in hours or days to seconds and minutes unlocks.

Unbelievable value across across both retail and institutional.

It gets people their value and their money faster who desperately need it, and it unlocks billions of dollars in margin utilization for institutions.

So I think if crypto payments, if you just think simply in terms of speed to transaction closure, you dramatically transform the industry.

And when are we going to see that?

Well, here's the Good news.

We have it now.

We have the potential to do it now.

You can send hundreds of thousands, if not millions of dollars of value on base for fractions of that of the cost to send it over the traditional financial rails, and it settles in seconds.

So the technology, like most things, the technology is there now.

The regulatory environment and the trust and comfort are catching up.

All right, so when do we see that?

If I could predict that, if you had a crystal ball, I love it.

I'd probably own this place, but I think, you know, I like to think in terms of 2 to 3 year horizons past 7, who knows, right, right under 7, if you can't predict, it's probably not going to happen, but we know the luxury of being a Coinbase is we know the institutions are dramatically testing out this infrastructure literally as we speak.

Coinbase.

Made some big, big announcements recently of partnerships with PNC Bank, JPMorgan, Citi, etc.

Those aren't speculative announcements.

Those are actual real announcements of infrastructure being built, tested as we speak.

And the good news is I've never known society to be offered a more efficient service and not eagerly and aggressively demanded.

So as these big, big institutions test out.

Our infrastructure on a white label basis we call it crypto as a service.

I'm very, very confident as soon as their clients see how much simpler, easier and faster it is, they'll demand it and that's when things move very, very fast.

All right, that is good to know.

So the other buzzword here of course is AI.

You can't have a conversation without it.

So for you, what is the core priority is it making trading smarter or crypto ecosystems safer?

I mean, I know you're going to say both, but so that's the easy answer, right?

But I'm super lucky in this position because I get to work at Coinbase, which is the ecosystem center.

For all things crypto and amazingly I have a fellowship position at the largest AI lab at MIT, so I get to see what the smartest of the smartest are doing there.

And so my answer is there's two things happening that are incredibly important.

One is simply efficiency.

So if artificial, the simplest way I know to think about it is artificial intelligence is scalable intelligence.

Blockchain is scalable truth.

That's why the two work so well together.

You do not want an infinitely intelligent engine analyzing, for example, KYCAML a million times faster than the average human could without having a universal source of truth, and that's what blockchain provides.

So think about just very simply AI is scalable into infinitely scalable intelligence.

Blockchain is infinitely scalable truth.

The two work together in that way.

The second The second way is, and this may be a little further down the road, is at some point in the 3 to 7 year future there will be agentic agents, these agents making value-based decisions on our behalf, simply buying things without our immediate approval.

So you'll say to it's a simple example, you'll say to an AI bot, do end of year tax loss harvesting.

That's a relatively programmable, simple function.

If the stock is down X, then sell.

Probably they can do things like that without getting beyond the guardrails.

If that's happening across the globe billions, billions of times per day, it's really, really hard for those agentic systems to use traditional financial rails.

Try getting your AI engine to open up a bank account at Citi, for example.

That's challenging.

So they can use crypto much more easily, fungibly, in a much more liquid, simplistic way to batch all those transactions and then maybe settle to the fiat rails once a day or twice a day.

So we hear Elon Musk talking about how cars will start to do microtransactions.

So if I want to merge, our cars will speak to each other and I'll pay you one that has to occur on crypto rails that can occur across traditional financial rails.

So one is intelligence plus truth.

The second is speed of transaction.

So since we are here at ADFW, what is the biggest This lesson that you've learned so far from how things are done here versus the US or globally.

So I've been coming here for 25 years.

Um, I think for the last 5 to 7, Abu Dhabi and the UAE are turning into the place I always knew the role that it plays on a global basis.

I, I always knew it could, which is the word I think about here is harmonization.

So we've had this big shift in the US in the last 6 to 9 months to go from being one of the most regulatory, inhospitable places in the world to do innovation like AI and crypto to one of the most friendly, and that's wonderful.

The EU, I think, is a little bit behind, but they have, you know, rule sets like the MICA rules which are, which are fantastic, and the UAE and Abu Dhabi have led the way.

But what the UAE does, it allows for a place of harmonization where I think it's really honestly one of the last places in the world where you can go to dinner and you can see individuals, leaders of businesses from every country in the world sharing a meal.

And that promotes, I think, social harmonization.

It also promotes regulatory harmonization because by the UAE being so forward moving and aggressive, it quite frankly creates FOMO amongst all the other global regulatory agencies, and they want to play catch up.

And by playing catch up they harmonize the regulatory ecosystems, and that's what allows global businesses to actually go all in.

If you're a Bank of America, if you're a Goldman, if you're a bank Santander, to have an asset class be allowable in one part of the world may be fine.

The US is a big market, but what really is interesting is if your global clients, institutional clients can invest everywhere at all times with regulatory harmonization, so you're not worried about running afoul of regulations in one jurisdiction versus another.

The UAE is the leader in promoting regulatory harmonization around the world.

Because they're they're they're the dog leading the race and everyone's playing catch up.

I love that FOMO harnessing human nature.

And finally, before I let you go, if you could just flip a switch and unlock the floodgates of institutional capital, what would it be?

I think it would be that.

I think there would be a probably in the UAE, probably in Abu Dhabi, a global meeting, an Algonquin roundtable of regulatory agents, and we've got, you know, incredible people like Paul Atkins.

Now we've got Mike Selig at the CFTC.

I would love to see in the UAE all of the global regulators SEC, CFTC, ESM, all of them show up, get on the ground, speak as collaborators in the capital of capitals, and try to get to some aggressive, fast, regulatory harmonization, and then you would see the biggest global unlock possible.

Well, that's something to look forward to.

Thank you so much, John.

Thank you.