JPMorgan Chase is partnering with Coinbase to allow customers to directly link their accounts, earn rewards, as well as trade crypto.
This means the world's largest bank in terms of market cap is integrating directly with DeFi.
It's also an example of crypto as a service.
It allows businesses to integrate digital assets related services directly into their platforms.
They could do so quickly and of course without building their own blockchain.
All this makes it a lot easier for both institutions.
And retail traders to adopt digital assets.
Brian Foster joins me now live here on the trading floor of the New York Stock Exchange.
Brian is global head of crypto as a service for Coinbase.
Great to have you here.
Good morning.
Thanks a lot, JD, for having me.
You brought the momentum.
You brought the good vibes on this Thursday, which we needed because as soon as you sat down, markets turned positive territory.
That's how we rolled today.
That's right.
Thanks for being here.
Expand on crypto as a service.
A lot of people are familiar with software as a service.
What does it look like through the lens of crypto?
Sure thing.
So a lot of people know Coinbase for our first party branded products.
We obviously have a very large retail focused business and a direct institutional business.
With the crypto as a service business, what we're really trying to do is hold out a platform that helps other financial institutions who want to build their own products by leveraging our infrastructure, and we make it really easy for them to do that.
How would you say Coinbase is most effectively competing in the crypto as a service space?
Well, the single most important thing that we do is safeguard assets very well.
So we're proud to be the largest custodian in the world with hundreds of billions of assets on our platform, safeguarding the ETF complex as well as assets for the US federal government.
And so security is number one.
I'd say the second message that's really resonating with a lot of the financial institutions right now and crypto as a service is just the ability to scale over time.
So with Coinbase we have a super wide product portfolio spanning spot trading, derivatives, custody, financing, stablecoins, data, and now tokenization coming soon.
Well, and so these large institutions know that when they partner with Coinbase at an infrastructure level, they're going to be able to grow into something large over time, generate more revenue, and build scalable products for their clients.
As you talk about all the opportunities that are in the space right now, is this sort of where you always envisioned the puck would be over the last few years, because I feel like these are the sorts of conversations that we've had for a long time and say, well, one day we'll get there where the institutional adoption will be much more to the forefront.
Is this sort of how you saw things evolving?
I think that's right.
I think for a long time in the US it's been a struggle for some of the largest regulated banks and brokers to participate in the market because of regulatory headwinds, but recently those headwinds have become tailwinds.
And so while we've been great at addressing some of the large buyside clients and other financial institutions around the world, what's novel right now for the first time is that these large banks and brokers are coming into this space.
That's exciting and it's an opportunity for us to partner and help grow the market.
Do you have any concerns that the embrace of crypto as a service from the brokerages from the big banks that they kind of threaten Coinbase's market share in the space right now?
I don't think so.
I think we view this as a high growth market and positive sum opportunities for partnership.
So just like how we thought about the ETFs, we saw that as a pie growing moment where the ETF issuers benefited and Coinbase did as well.
We're taking that same infrastructure and partnership approach here.
We think we're going to build a bigger pie and more access for more people around the world participating in crypto is usually a good thing for Coinbase, so we're excited about it.
What more should people know about the partnership between Coinbase and JPMorgan and what excites you about that partnership, Brian.
Sure, there's a few things that we've publicly announced so far with JPMorgan, and it's incredible that a firm of this scale is in the market now, so we're very excited about it.
One is really a partnership between our two retail businesses, and that's about helping provide access for JPMorgan clients to have more seamless methods to fund crypto accounts, and that's through a direct linkage via API between our two retail platforms and also accepting. credit cards as a pay in method for our retail platform.
We've also enabled the ability for our retail users to use Chase Ultimate rewards points on our platform, which is, which is another exciting element of this.
Beyond that, the other piece we've announced so far is supporting JPMD, JPMorgan's deposit token on base, our L2 blockchain, to help make that asset much higher throughput and interoperable with the ecosystem we've helped build around base.
How are you still?
Being crypto treasuries and that entire ecosystem continued to evolve.
It's a wild market.
We're certainly seeing a lot of activity there and many companies entering the space.
I think of this as just another access play.
There are different types of investors who need different types of products.
We now have spot products.
We have derivatives.
We have the ETFs.
We have other structured products, and now we have treasuries as well.
And so I think of this as just another thing that's about access for certain types of.
Right now this model seems to be working well.
Many of these companies are trading at a premium to nav, and investors see an opportunity there and also I think some tax benefits for getting assets into these products.
So just like these many other products that the industry has created over time, we can think of these treasuries as just a new access point for certain new types of investors.
What do you see as being the key priorities for the big institutions when it comes to the ecosystem, the landscape of crypto treasuries overall?
You know, I think that what these firms really need is super reliable custody, great trading capabilities.
If they're stakable assets like for the e-focused treasury companies, they're going to need a way to stake all of that securely.
And so these companies are getting smarter about finding great infrastructure and tools to Make sure that they can build great and safe products for their clients, and Coinbase is very proud to be supporting this category as well.
While I still have you, what is one reality of this amazing world that's ever evolving that you're in that you would want more people to know about or more investors maybe to pay a bit more attention to?
You know, I think the growth that's happening right now around payments is incredibly exciting.
It's actually the reason I got into this space in the first place.
I think the trading market has been so fast paced and exciting and candidly profitable that a lot of the developer activity concentrated initially around that use case.
Now that we have really high throughput on blockchains, super cheap settlement, and L2s like base working well, payments can suddenly work globally at scale in crypt out.
So we're spending a ton.
Time focusing on products that provide global payments use cases for retail and businesses alike, and I'm really excited about that category.
It is so remarkable to be having these conversations today.
I felt like we've had a decade plus build up to the landscape that we're in right now, and you're the awesome guest to help us better understand what's at stake and where we are in the evolution of all this technology today.
Brian Foster, global head of crypto as a service for Coinbase, thanks a lot for being here.
Good to have you.
Thanks for having me, Judy.
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