Brad Garlinghouse Ripple CEO Interview

Ripple CEO Brad Garlinghouse discusses the SEC lawsuit, Gary Gensler as the new SEC chairman, Ripple ODL, XRP Adoption, Bitcoin and much more.

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Interview Transcription

Tony Edward: Hi, everyone. Welcome back to the Thinking Crypto Channel. I have a very special guest with me, Brad Garlinghouse, the CEO of Ripple. Brad, great to be speaking with you today. 

Brad Garlinghouse: Tony, honored to be here. Thanks for inviting me and putting a lot of questions out to let people participate. That was great. 

Tony Edward: Well, Brad, everybody wants to talk to you about Ripple and XRP. But I want to take things back a bit, and I want to learn about you and where did you grow up? Where are you from? 

Brad Garlinghouse: I’m originally from Kansas. I grew up there. I was born there, went to college at the University of Kansas, a proud Jayhawk. Although I sometimes have to pretend we don’t have a football team. It’s just all about college basketball. I’ve lived in California now for 24 years. I still describe myself as a Kansan first and foremost. 

Tony Edward: Got it. And tell us about your time in Silicon Valley. You were at AOL, you were at Yahoo. How did you get started in Silicon Valley, and how did that lead to you ending up at Ripple? 

Brad Garlinghouse: Yeah, I’ve always been a bit of a techie and did encoding early in my career or not career, but really in school, I guess. And when you come out of school, and I finished Business School in 1997, and the internet is booming. I do think and as I’m sure we’ll talk about given last week’s news with the Coinbase IPO. I remember where I was the day that Netscape went public in 1995. And the expression when in Rome, if you are interested in this segment of the economy in the late 90s, you wanted to be in the Bay Area and in Silicon Valley. And so I moved out here in 1997. And, as you pointed out, I’ve done a few different positions at smaller companies, bigger companies, and spend a little bit of time on both the investment side of the world as well as the operating side. 

Tony Edward: Got it. And when you were at Yahoo, you famously penned the Peanut Butter Manifesto. Can you tell us a bit about that and where you see Yahoo today since you [inaudible 00:02:33] 

Brad Garlinghouse: I’ll start by saying I have such a fond set of memories from my experience working at Yahoo, the people, the culture, in many ways, was just a really fabulous time. I do think like many companies, you spread yourself thin. You get excited about new opportunities and at that time, Yahoo, I think was a little bit confused about what it was trying to be. And was it trying to be a search engine, was trying to be a content platform with Yahoo News, Yahoo, Sports, Yahoo Finance, and even fantasy sports stuff. And then, of course, Yahoo had a robust set of kind of application products like Yahoo Mail. At the time, Yahoo Mail was much bigger than Gmail. It actually continued to grow after Gmail launched quite substantially. But it’s sad for me to see kind of what has got — Yahoo now, as many people know, has been absorbed within the Verizon media empire. And I think relative to where it was back in the early 2000s it’s not quite the same, but I’m still a loyal user of some of the Yahoo products. 

Tony Edward: Wow. I heard some news recently of Yahoo Answers. I think they’re sunsetting it which kind of made me sad. It’s such a huge part of the internet legacy. 

Brad Garlinghouse: Yeah, yeah. I think that Yahoo Answers is one. Yahoo Groups used to be in my group at Yahoo, I ran everything from the homepage to Yahoo Mail and some other things. And Yahoo Groups was my organization and we actually sunsetted Yahoo Groups when I was there. And the reason why is and I think the reason I’m bringing this up is I think the internet and then social media, as we know it today could learn from this. Yahoo Groups, we realized that our ability to — the cost relative to the benefit of monitoring Yahoo Groups were the abusive behaviors and the illegal activity made it untenable. Like we couldn’t really operate the service efficiently. And, as I have said, very publicly, and I think you may know, personally, I sued YouTube and Ripple sued YouTube because so many people were impersonating me using Ripple’s brand to scam people. And I think a number of the social media platforms really can and should be more a part of the solution than I think they have been. I think that the platforms have been abused in ways that have hurt society in some ways. And you may also know, there’s a really powerful documentary on Netflix called The Social Dilemma, which I thought was really impactful and made sure my kids watched it. 

Tony Edward: Yeah, it’s certainly a problem because I get impersonators on my channel and it’s on Twitter, it’s on Facebook. It’s hard to keep up with. It’s kind of ridiculous at this point. Hopefully, your lawsuit is going to force some changes, but we’ll see what happens. 

Brad Garlinghouse: Yeah. I think it brings attention to it. I don’t think it’s going to force changes, but I think — what I find most frustrating, it sounds like you’ve experienced also is, you identify someone pretending to be you and trying to scam people and you report it. And it takes days and sometimes even weeks for it to come down. I actually had one time, it’s kind of funny. I did tweet about this, it’s quite some time ago, but I reported a fake account on Instagram with someone impersonating me and Instagram wrote back saying, “Hey, we looked into this. Thank you for reporting it. We take it seriously and we’ve concluded that this is not an impersonation.” And you’re just like, “Wait, that’s a picture of me.” You gotta be kidding right now. 

Tony Edward: Well, certainly the industry that we’re in, blockchain could certainly solve that, right, if the profiles were created and tagged to the blockchain, and that verification is there. 

Brad Garlinghouse: Yeah. It’s kind of funny, you mentioned this. When I first joined Ripple, and I just passed my six-year anniversary of the company, we actually were working on three different — it also interrelates with the Peanut Butter Manifesto comment. But Ripple is working on three different kind of go-to-market initiatives leveraging the XRP ledger. One of them was a global ID project, the idea of using a blockchain or identity management. The other one’s a smart contract platform which I think somewhat infamously [inaudible 00:07:09] spent some time as an intern sleeping on the couch of our CTO at the time, Stephane Thomas. And the third was payments related and shipping cross border payments. 

And we decided to pick one and focus and those kind of — The lesson I had learned around the Peanut Butter Manifesto of really decide what you’re going to be great at and invest heavily and grow that segment. But the global ID, to your point, leveraging a blockchain for identity management, I think is a very real opportunity. I think it’s a hard one to do well, in part because whether we like it or not today, the government owns our identity, right? If you say to someone, hey, verify your identity, generally, you’re going to look for a passport, some sort of state-issued identification, a birth certificate, all those things are issued by the government. And so I think to do identity well today, I think there has to be some collaboration and partnering with government entities, which makes it maybe a little harder to scale and grow in the way that I think some technologies can. 

Tony Edward: Sure. And I’m assuming you’re up to speed with what Greg Kidd is doing, obviously, a Ripple ambassador and global ID and the work they’re doing on that front. 

Brad Garlinghouse: Yes. And look, nothing would make me happier than to see that be massively successful. To the point you and I were just talking about, it would help. The Instagrams and YouTubes of the world would point out how hard their job is. And if Greg Kidd and team are successful, I think that’s good for those platforms also. 

Tony Edward: Got it. So, I want to know about Michael Arrington, he has published some interesting photos of you, you feeding goats, and all kinds of things. How did you become friends? And are we expecting more releases or ICOs or something of your photos? 

Brad Garlinghouse: God, I hope not. [inaudible 00:09:02] of the goat photo or the boy scout photo was a particularly embarrassing one. But Mike, I consider a good friend. I’ve known him for probably a couple of decades. And kind of early on in his creation of TechCrunch, and a Ripple employee who now works at Ripple and Kirsten Haller first introduced Mike and I. And one of the things I’ve always liked about Mike is he will speak truth, and even if it’s a controversial truth, his truth sometimes. But I think sometimes that’s an underappreciated perspective in other people. And so, I may not always agree with Mike but I always respected his opinion and I always have appreciated his friendship and really enjoy spending time with him. 

Tony Edward: So, on that note of photos of you and things along those lines, the dichotomy of working at Yahoo and being in Silicon Valley to now being head of one of the companies that is getting maximum visibility, and now you have means and conspiracy theories. And I’m so curious to get your perspective, how do you feel about that? How do you and Chris and the other folks at Ripple, and how do you handle that? 

Brad Garlinghouse: Well, I’m going to maybe answer a couple different ways. I mean, for what it’s worth, I view myself as a pretty private person. And my personal side of my life, I try to keep pretty private. Look, I have been vocal, and I don’t try to be private as it relates to my professional position. And I’ve certainly been vocal about my strong opinions around what’s going on in the crypto industry, regulation, and certainly, I’m sure somebody will spend a good amount of time talking about. Most of the memes, I just find to be comical. And like, I admit, sometimes I have a sense of humor, and I like to have fun. And so I think, sometime, maybe it was over the weekend, or maybe last Friday I was reading Twitter, and somebody talking about there’s got to be a movie of this story, which would not surprise me at this point, nothing would surprise me. And I just was kind of joking around as to see who people thought would play me in a movie, which there are some pretty funny answers out there. 

Tony Edward: Got it. Got it. So, I want to ask, before we go into the SEC, and Ripple and XRP, and so forth. What was your first encounter with cryptocurrencies? Was it Bitcoin? How did you hear about it? And what are you holding in your crypto portfolio? 

Brad Garlinghouse: You know, I attended a conference hosted by a gentleman named Auren Hoffman and Peter Thiel called Dialog. And the conference has kind of evolved since the earliest days. But it was a conference in Utah 2012 or 2013. And there’s various kind of — it’s not so much a conference where you have a presenter presenting something to 100 or 1,000 people. It tends to be a small group of maybe 10 or 12 people around a conference table where one person has been designated as leading the dialogue. And there’s topics that you always know nothing about. And it’s an interesting cross-section of government, [inaudible 00:12:24] military, and techies. And there was a session in 2012-2013 on Bitcoin. I’d never heard of Bitcoin. And some of the people I consider — the people I respect the most, even today, as early visionaries around what Bitcoin could mean, and what digital assets could mean. And I remember returning to the Bay Area after that conference and buying some Bitcoin. And today, I’ve talked about the fact that I’m long Bitcoin, I remain a bull, and I’m frankly, very bullish on the future of Bitcoin. And then, of course, I have plenty of exposure to XRP as another digital asset. 

Tony Edward: Got it. So, no, Ethereum nothing else, no Cardano or anything like that? 

Brad Garlinghouse: I don’t view myself as a trader, and I think some people who they’re traders, and they’re doing lots of these sort of things. I’m very busy with all things Ripple. And so I think to do that, well, you kind of have to pay more attention to what’s going on. I guess I am miss — one thing I should, in full disclosure, before I joined Ripple, I was an angel investor in a company called Protocol Labs, which is behind Filecoin. So, I think having exposure to Filecoin also. 

Tony Edward: Got it. All right. Let’s switch gears and talk about the SEC lawsuit and everything that’s going on. I have quite a few questions. But things are moving so fast, so rapidly. And could you give us a state of the union here? Where are we at? What discussions are you having with the SEC right now, the case, and all that if you can’t? 

Brad Garlinghouse: Sure. And look, as you and I talked a bit as we organize this, there’s some questions I may explicitly dodge and just say and there’s other I may just kind of answer around it. Suffice it to say, I think it’s very clear that what I said at the very beginning of this when the SEC announced their intent to bring the lawsuit. I think the SEC is wrong on the facts. I think they’re wrong on the law. I think how we have seen this play out is demonstrating some of that. This is not a — I actually agree it has moved a reasonably good clip. But by the same token, the engine of the justice system isn’t necessarily super fast. And so we’ve got a long way to go. I remain hopeful that as time progresses, there’ll be additional opportunities to engage the SEC in conversations about what could be a constructive outcome here that provides the clarity that frankly, Ripple and I have sought for a long time and even pounding the table about. But also, it gives the entrepreneurs and investors and here in the United States, the ability [inaudible 00:15:38] these markets and continue to grow them here at home. 

There have been a couple of pretty consequential rulings from the court in the last couple three weeks. I think, to me, the most important one amongst those was the judge’s decision to allow discovery around the SEC’s decision to determine that — to publicly state anyway, that Ether is not a security and that Bitcoin is not a security. And I think it’s even interesting, like why they wouldn’t — why they thought that if we want to provide clarity and transparency to the market, let’s provide that. Let’s actually do that. And so I was pleased that the judge ruled in our favor on that one. 

Tony Edward: Do you feel there’s some sort of conflict of interest here on Jay Clayton’s part, given where him and Mr. William Hinman the places they find themselves now at in connections to Ethereum and so on and so forth? 

Brad Garlinghouse: Yeah. Look, suffice to say it’s super frustrating. Obviously, this was a decision that was made, literally the day before Jay Clayton left his position. I think it’s very clear, Jay Clayton, was not a friend to the crypto industry. And I think this was a — I think his legacy will show that. And doing this thing before he left, I don’t know, I’m not really that much of a conspiracy theorist. Certainly, the optics on some of the decisions that Jay Clayton has made since then, and certainly Bill Hinman has made since then, don’t look great. The fact that Simpson Thacher is a member of the Ethereum Enterprise Alliance, and he’s getting paid by Simpson Thacher while he’s there, those things don’t look great. But I’d like to believe that now that we are in front of a neutral fact finder or in front of a court, that we’ll get to the right outcome. And I think that the facts will bear that out. And I think — I’m pleased about kind of how it’s going so far. 

Tony Edward: Got it. And what are your thoughts on Gary Gensler? Obviously, well versed in crypto, he’s taught at MIT. He’s spoken about Ripple and XRP, Bitcoin, and so on, so forth. What are your thoughts about him coming in? And have you already started talks with him? 

Brad Garlinghouse: Look, I think relative to as we were just talking about with Jay Clayton as chairman Gary Gensler comes in as truly very knowledgeable. I mean, literally, he taught the class. I mean, that’s somewhat tongue in cheek, but somewhat seriously. And so the fact that he was teaching at MIT about cryptocurrencies. And as you have seen, gave lectures about things like XRP, I think, is incredibly valuable to the whole industry. I don’t think Jay Clayton deeply understood some of these technologies. When Bill Hinman announced that Ethereum was not going to be viewed as a security, one of the things he hung that on is this idea of we’re on decentralization. But I think they very quickly realized, well, the XRP ledger is equally if not more, so decentralized. And so that became, “Oh, let’s not talk about that anymore. We’ll talk about other things.” And I think, frankly, back to the discovery, I think some of those things I expect, we will see, as we get more and more discovery from the SEC. 

Tony Edward: Got it. What do you think about John Deaton, the attorney John Deaton lawsuit on behalf of XRP holders?

Brad Garlinghouse: That came as a surprise to me and I think everyone at team Ripple. And it’s fascinating to watch it. Because when the SEC decided to bring this lawsuit, despite having been warned by a previous SEC Commissioner, there’s a massive destruction of value, right? About $15 billion of value went out of the XRP market. And obviously, many exchanges here in the United States halted trading of XRP. 

Tony Edward: So, want to ask you about, in your mind, what’s your ideal scenario outcome here given that we have this lawsuit, we have a neutral party of the judge in place, Gary Gensler coming in, what would be your ideal outcome? 

Brad Garlinghouse: Well, my ideal outcome or my pragmatic outcome? I mean, look, and I’ve seen, actually people on Twitter talk about this. I want closure, I want clarity. For people who have followed this before the lawsuit, I’ve been saying for at least a couple years, that we have lacked clarity in the United States. In contrast, you’ve got major economies around the world, like the UK, like Japan, like Switzerland, like Singapore, I mean, these are not really small economies, these are big economies with robust government infrastructure that have provided the clarity that allowed entrepreneurs, that have allowed those that would choose to speculate in digital assets to do so with that clarity and certainty. And here in the United States, we haven’t had that. And so someone had said, well, maybe — there’s a quote in a Twitter tweet — roughly someone had said, “Well, if they walk away from the case, we won’t have the certainty we’ve been looking for. Maybe we want to keep the –” We want to get to the closure. And I kind of agree with that. We’ve been asking for that for two or three years. 

We’re now, for better or for worse, we’re on a path to get it. And it’s unfortunate, it has to come from the courts. For better or worse, the SEC has not gone through their rule making processes that would provide the certainty even for Bitcoin or Ether. And one of the reasons why I said when the SEC first filed this lawsuit that this is an attack on crypto is because if you’re going to say that about XRP, where is that dark line where this isn’t, that isn’t? And I think as more and more people are finding it’s a slippery slope. Even last week, I think Barry Silbert came out and said it would be, I’m paraphrasing here, but roughly speaking, he said that it would be dangerous for US Exchanges to unhalt or relist XRP. And at the same time, he was removing XRP from one of his funds but adding Chainlink, I think. But the clarity doesn’t exist for Chainlink. It’s one of these like, “Well, wait a minute. Did you really think through all that?” 

And it’s one of the reasons why we have tried to really educate the crypto market at large that this isn’t good for the whole crypto industry. And really, I think, how do we all work together and help create legislation, help create that clarity and that certainty? So, my ideal outcome, clarity and certainty are first amongst them. How do we get there? Well, as quickly as possible I want to get there with the SEC so that Ripple can operate effectively, so that lots of other companies that are operating in the XRP ecosystem can operate with that clarity and certainty. But at this point, given they have decided — they did decide to file the lawsuit, I think we need to either reach a clear settlement that provides that clarity and certainty or let the judge make that decision. 

Tony Edward: Sure. And do you see another avenue, let’s say the SEC, can’t get their act together for whatever reason, that Congress has to step in here with a token taxonomy act or change the law or President Biden, whatever, just something happens on that front; do you see that as a possibility as well? 

Brad Garlinghouse: Oh, for sure. Zero doubt about that. I mean when there aren’t clear laws, it’s Congress’s job to provide clear laws. And [inaudible 00:24:00] and I don’t have anything nice to say by the SEC today. There is a rulemaking process through which they could go about, they chose not to do that and use enforcement as a way to try to create clarity, which I think is extremely inefficient, and really bad for, in this case, Ripple and really, the entire XRP community. But there was something called the Digital Commodity Exchange Act introduced in the last session of Congress and in the I think, agricultural committee. And I hope that either that or something very similar, and I’m not sure anything’s been introduced yet. But I expect there will be new efforts to solve this through legislation. And I think that could be even a more efficient path than what we’re dealing with through the court system. Because the court system will make a determination as soon as it gets all the way there about XRP and did Ripple engage, or did I personally or Chris Larson personally engaged in selling unregistered securities. But that won’t solve the problem for everyone else. It’ll provide a precedent. But really, I think if we could get clarity through legislation that could be very powerful for the whole industry. 

One more thing, and I know I’m rambling, but just bear with me one sec. Having been a student of the internet back in the late 90s, one of the reasons why the United States was such an early investor and leader in the internet technologies, and companies around it is because there was that clarity, there was certainty. And when they have those things, investors and entrepreneurs come into those markets. And instead, what we have here, in the United States, we don’t have those things. And so you see a lot of that happening outside of the United States, which I think is unfortunate for here in the United State. You mentioned the UK having a very clear tax — I think they call it the token taxonomy act or something like that, that really differentiate different assets by use case, which I think did provide leadership in the UK. And I think Singapore has [inaudible 00:26:07] leadership, and Japan is another example. 

Tony Edward: So, on that note, with the lawsuits and all — I remember you tweeting something about getting some more great hairs and things like that, obviously, a stressful situation. Has Ripple lost any customers, has this put a roadblock in gaining new customers? Can you tell us about that? 

Brad Garlinghouse: Well, look, I actually — there is a little bit mostly good news here. I think we publicly have shared that we’ve signed over 20 new customers since the SEC brought their lawsuit. We processed about 3 million transactions last year on RippleNet, which was up 5X year on year. We expect continued very strong growth this year. And so in a lot of ways, I feel really good about that. About well over 90% of our customers going into this lawsuit were Non-US customers. And of the 20 plus that we’ve signed, none of them have been US customers, not surprisingly. But Ripple has always been a very global company. As we talked about earlier, XRP trading has always been very, very global with XRP liquidity and about 200 exchanges around the world. We have, though it has caused some headwinds here in the United States. Very well known, our partnership with MoneyGram, we both kind of mutually agreed to step away from for the time being. But we also as I already commented, we’ve been able to grow, in some ways accelerate our growth. We’ve made a couple of big deals, one, Tranglo, we’ve acquired about 40% of a pretty large payment provider in Southeast Asia. They’re probably doing about 20 million transactions a year and about $4 billion of value. So, we hired an amazing leader in Southeast Asia, Brooks Entwistle who joined us from Uber, which has been great to kind of jumpstart some of that leadership as well. 

Tony Edward: Yeah, no. So, you mentioned Tranglo, [inaudible 000:28:12] Novatti, if I’m saying that, right, is a new customer of yours. They will be leveraging ODL. 

Brad Garlinghouse: Correct. Yeah, I mean, look, ODL, On-Demand Liquidity is the product we offer that allows customers to tap into XRP as a way to shuttle liquidity. Our customers have loved it. We have a lot of demand for it. Obviously, in the SEC’s actions, United States have kind of stymied that. But Azimo, Novatti, these are all customers who are benefiting from ODL, and even despite the SEC’s actions continue to do so. 

Tony Edward: So, I ask about, and I know you probably can’t talk a lot about this because things are under NDA and all that. But I’m certain you’re speaking to banks in the United States and payment service providers in the United States. Have those conversations been put on hold given the lack of clarity as a whole, even before the lawsuit? Can you tell us about the dynamic of that? Is it like, hey, we’ll talk to you six months from now, once this is all over whatever it may be? 

Brad Garlinghouse: Yeah, I mean, look, I can talk about this directionally. I mean, for certain here in the United States, it has been a constant headwind in the past years. And it went from being a headwind to just hey, we’re going to stop. For US companies to engage, particularly US public companies that are regulated by the SEC, it takes some real conviction and risk tolerance to do that. Now, in the court, the SEC has actually somewhat ironically said that they have not taken the position that the secondary markets are selling to unregistered securities, and that don’t blame the SEC for that. I mean, I think they said this as part of the John Deaton case that he filed in Federal Court in Rhode Island. But, their argument and retort to his case was, and I’m paraphrasing, of course, but like, “Hey, don’t blame us, blame the exchanges. The exchange is the ones that delisted it, not us.” And you’re just like, come on. You’re supposed to be working for the people, you’re working to protect investors. To me, it didn’t feel like consistent with the mission of the SEC. 

Tony Edward: Sure. And I think they’re hearing about it on Twitter. [inaudible 00:30:38] different handles, which I think rightfully so. Now, given the evolution of Ripple as a company, the adoption of XRP worldwide, different companies building on the XRP, ledger, so on and so forth. What’s the vision as of today for XRP? Is it still the bridge asset use case, micropayments with coil, web monetization, things like that? Can you give us an overview? 

Brad Garlinghouse: Well, I mean, you did a pretty good job right there. I mean, yes. Look, XRP is an extremely efficient digital asset, for payments in particular. For Ripple, as a company, we’ve started with cross-border payments, and using XRP, around On-Demand Liquidity. But Ripple, also, we’re expanding in your last year, I think in either late Q3, early Q4, we announced a product of line of credit, and kind of start playing in the lending space. Which is really an extension of some of the services we were already offering to those same customers. And you should expect that we will continue to think about that customer set, and how we can continue to add value. And you know, more to come on that and we’re excited about what that holds. 

One of the things I’ve talked publicly about a little bit is, I was — because we have a long-form interview here — when I was in business school, Jeff Bezos in 1996, came to our class and he talked about Amazon. And he talked about Amazon, the bookseller, and Amazon was competitive with Barnes and Noble and Borders Books, and that was it. And I’ve said, I view Amazon is to books as Ripple is to cross-border payments as something that, I do believe there are many compelling use cases, there are many compelling vertical opportunities, vertical markets, to apply blockchain technologies to. And the XRP ledger is an extremely efficient blockchain. And so there’s many other use cases that we think about, and we think we could apply our expertise in enterprise sales, as well as the efficiency of the XRP ledger to solve some of those problems. And so I’m excited about what I think will be ahead. We’re almost 500 people strong, and trying to hire 150 or 200 people from now until the end of the year. So, we’re still certainly in the face of some headwinds from the United States SEC, we’re still investing heavily in growing. 

Tony Edward: I’m excited to hear that. And there’s a question that came from the community, and I have to ask, and I’m interested as well, the central banks that you’re currently working with and private ledger and issuing CBDCs on the XRP ledger and things along those lines. What can you tell us there? I noticed probably not a lot, but as much as you can hint to or — 

Brad Garlinghouse: Yeah. I’m not going to hint, I’m just going to [inaudible 00:33:46]. Look, first of all, I hope everyone who follows Ripple closely and follows the XRP community closely can appreciate when we’re working with large banks, really any customer, we try to respect any announcements to respect what they want to announce when they want to announce it and things like that. And so sometimes that’s frustrating for us. I remember there’s a certain patent filing that came from one large bank that referenced Ripple in a certain way, and it has generated a lot of questions, and I didn’t have much to say about that. There was some attention because some central bankers schedules are public information. So, I’ve seen the rumors out there. 

I’m going to go back to what I said earlier, the XRP ledger is extremely efficient, it’s extremely scalable, and you can issue other assets on the XRP ledger. And so, I have said publicly we often are asked by central banks to come and talk to them about whether it’s the XRP ledger, or about how we think about the future of payments using digital assets. And because of our unique position with really compelling technology, the ability to offer a private version of the open-source technologies XRP ledger, central banks can create and manage their own digital currency. So, again, we have [inaudible 00:35:23] yes, we’re having the conversations with many banks, many central banks around the world. We did some research, I think we publicly shared that we think about 80% of central banks around the world are actively investigating one way or another what CBDCs could mean for their technology or for their economy? So, we’ll continue to do that. And when we have announcements, we’ll certainly do so. 

Tony Edward: So, I recently interviewed Chris Giancarlo, former CFTC Chairman, heading up the digital dollar project. What are your thoughts on — Look, China looks like it’s beating the US at this point when it comes to CBDC. And do you see the dollar losing reserve status as a result and look, small island countries that have got their CBDCs live already? What are your thoughts on the entire situation? 

Brad Garlinghouse: Well, I guess first of all, I don’t think it’s fair to compare a tokenized dollar to what some small economies have done. It’s just like not even the same. It’s a much more complicated topic. There’s no doubt in my mind that the Chinese Communist Party has been very strategic and I think very smart about how they have approached this. I thought, some of you I’m sure, you have seen, and I’m sure that your viewers have seen Peter Theil’s interview last week or maybe the week before talking about the implications of what’s going on in China, and even the potential implications of Bitcoin. Look, I tried to look at how do I solve a customer’s problem and how do I create value for that customer? I do think about big picture where this could go and where it could end up. But I think sometimes people spend so much time talking about the vision and not enough time talking about, okay, what do we need to do tomorrow? How do we actually catalyze these things? 

And look, one of the reasons Ripple has been successful is because we try to balance the big picture, we have a vision around enabling an internet of value, and around enabling XRP as that bridge asset that can be universal. But in order to get there, you got to have a really clear blocking and tackling kind of bit by bit. And so I think the US has, from a macro point of view falling behind in this industry. I’m not saying that about should the US do a central bank-issued digital asset. I’m more just saying when there’s not regulatory clarity, dollars and entrepreneurs go elsewhere. And you have seen China provided leadership here. What’s the long-term implication for the dollar as a reserve currency? I think it’s much too early to opine on that. 

Tony Edward: So, there’s been mentioned and talks like that the Fed payments now, I think, has endorsed Ripple and the technology and the work you guys have been doing. Has there been ongoing conversations with them? Are you supporting them in any way with coming up with a CBDC or whatever it may be? 

Brad Garlinghouse: We’re talking to lots of governments around the world. 

Tony Edward: Okay. 

Brad Garlinghouse: If I start commenting on specific governments and talking about that, it’s like — well, I’m not — it’s a game that’s like, look, I’m not going to provide transparency and clarity to kind of all those pieces. And suffice it to say, again, I’ll go back to just the XRP ledger is extremely efficient. It’s efficient from a cost per transaction, a speed of transaction. And look, one of the things we haven’t talked about today, the energy footprint of these technologies, it matters. It really, really matters. I’ve always been someone who has cared about how do we do well by the environment. And the reality is that some proof of work as a mechanism for validating transactions requires a lot of energy. I’ve given props to the Ethereum community for their migration. And we announced last week, the crypto climate accord of which many participants, including Joe Lubin, from the Ethereum community, are very actively supporting, which I think it’s phenomenal. 

Tony Edward: So, and you often get criticized because of this. I think you mentioned before you hold Bitcoin, you’re bullish on Bitcoin, but the idea of proof of work is what is the issue, right? It’s not that okay, you’re inherently angry at Bitcoin or you don’t like Bitcoin. But rather the process of validating transactions and payment, it’s not scalable, obviously, lots of energy. So, that’s what you’re trying to emphasize and that there’s a better technology out there, for example, like the XRP ledger. 

Brad Garlinghouse: Yeah. I mean, I hope — it’s not so much — the last part of what you said is a little bit different than what I’d say. But one of the things I believe in life is that the first step to solving a problem is admitting you have one. And if you don’t admit something’s a problem, then you don’t focus on solving it. And I think when — I get criticized for a lot of things, some of them I — I don’t even know what to say about some of them. But this is one where it’s like, look, I’m very bullish on Bitcoin. I’m very, very bullish on Bitcoin, period. That doesn’t mean I can’t also think that the mechanism for proof of work and the fact that 67% of mining happens in China on almost entirely coal-powered energy. Look, I think we just all should care. Could the Bitcoin blockchain use other mechanisms for validation? Yes, it could. I’m not saying it should, I’m not saying — Look, at the end of the day, I’m very bullish on Bitcoin. And I think Bitcoin doing well is good for the entire crypto industry. 

Tony Edward: Got it. Now, there’s a question that came from the community about the XRP escrow. This is often a hot topic of discussion. And after doing a lot of research and understanding the escrow and the setup that you have there, what’s the plan for the escrow moving forward? And could that — There’s a question that comes up, could you burn some of it? Is that a possibility? Distribute it to other authorities, whoever I don’t know. What’s the plan there and the vision for that? 

Brad Garlinghouse: Well, look, first of all, I think there’s some — two answers to this. One, there’s some misinformation out there, right. And some people like to position the escrow somehow Ripple dumping XRP in the community. It makes no sense for Ripple or any of the people around Ripple to dump XRP. Right? That’s not in the best interest of XRP ecosystem of which Ripple is a very important piece as am I? So, look, I think, the way the escrow was set up, it was done with the intent of let’s provide maximum transparency, let’s make sure that people totally understand what’s happening here. And I’ve used it as a kind of a call to action for others in the crypto industry to be equally transparent. And in some ways, I think that transparency has come back to bite us a little bit ironically and frustratingly. But look, I’m always open and interested in new ideas that are good for the XRP ecosystem. I don’t rule anything out. And I think, to the extent that there’s things that make sense for the XRP ecosystem, then certainly, Ripple would look at that. 

Tony Edward: Where do you see Ripple in three to five years? 

Brad Garlinghouse: Well, I mean, I’ll probably borrow from what companies have already said at the most macro sense, Ripple has had a vision that Chris Larson articulated. And I remember interviewing with him when I joined the company. And from that first meeting, he talked about this idea of an internet of value, to truly let value move the way information moves today. And I think we all have been kind of desensitized to how much friction there is in payments in all aspects of our lives. And if you really can reduce that friction to zero or close to zero, I think you can unlock a lot of compelling opportunities. And that vision around Ripple has not changed. 

And I think, certainly, we think about how do we go from you moving billions of dollars through RippleNet and billions of dollars through our On-Demand Liquidity product to add zeros behind that, and over the next three to five years, we hope we can grow into those. But also, as I said, I think we think about how to leverage the XRP ledger for other compelling use cases. And there certainly are some that we are investigating. There’s some that we kind of watch. There’s some that we’ve invested in. I think we very publicly shared that. I think if we aren’t the largest independent investor in crypto, we’re close to it. And we [inaudible 00:44:41] a lot of other crypto projects. Some of them don’t involve XRP because I genuinely believe like all boats can rise. 

Tony Edward: Sure. So, I have to ask this question because we had the Coinbase IPO this past weekend. I want to get your thoughts on that. And when Ripple IPO? 

Brad Garlinghouse: I said 14 or 15 months ago at Davos, at the World Economic Forum, I said, look, I didn’t think Ripple will be the first crypto IPO and I also said that I certainly [inaudible 00:45:12] be the last. I do think the Coinbase IPO is kind of a Netscape moment for the crypto industry. And I think we’re going to continue to see an immense amount of value created over the next, I’ll say 10 years in the crypto industry. And I think Coinbase was kind of a harbinger of things to come. Now, the tricky part well, the Ripple part of that question is, yeah, the United States, if we were to go public here in the United States, through an IPO process, the United States Securities Exchange Commission has to approve that. As you may have noticed, we’re in a little bit of disagreement right now with the Securities Exchange Commission. So, I think we need to resolve one before we spend too much time on the other. 

Tony Edward: God got it. I’ll leave it at that. There is another question, but I don’t think you probably — you won’t be able to answer it. All right. I want to switch gears a bit and talk about the market as a whole. Obviously, we’re in a bull market, we had a run-up, but a huge correction over the weekend. But it seems to be recovering a bit. What are your thoughts on how the market has grown since you entered in and started working at Ripple? And Bitcoin, I think getting a lot of adoption, people putting on their balance sheets accepting as payment, Tesla. We just started Time Magazine doing the same thing. What are your thoughts on that? 

Brad Garlinghouse: Well, so look, if I zoom out as far as possible to when I got — well, when I first got exposed to Bitcoin, at the Dialog Conference, years and years ago, like, wow we were somewhere, I don’t know where we are today, but we were at $2.2 trillion within the last handful of days. And I think the breadth of activity from the developer community is just astoundingly positive. And I think bodes extremely positively for what’s ahead. I also think, and as many people predicted, and part of the vision for some of these technologies you have into money supply here in the United States grew about 25% year on year. Expect, given the stimulus we’re seeing happen right now, we should expect it to grow about another 20 or 25%, next year. When you take an asset, and you make a whole lot more of it, and you devalue what was already there, that’s called inflation. And so I think there’s going to continue to be some macro trends, which are very positive for the crypto industry at large. And I’ve given up trying to predict the short-term gyrations that happened, sometimes things happen, or you think the price of a particular crypto asset might go up and it goes down. And so predicting the short-term dynamics is really hard. But, again, I take a big picture look, and I think the crypto market has a long way to grow to reach maturity, and I think that bodes well for the future. 

Tony Edward: And there’s so many things that are happening, NFT’s obviously, multiple digital asset projects popping up here and there, different cryptocurrencies, central governments are putting together the CBDCs. So, it seems like we’re moving to that token economy, a full digitization of everything, artwork, money. And I want to get your thoughts on that because you’re on the building side. And do you see anything new on the horizon that you guys are paying attention to? Like, you know what, I think this might be the next thing that might be big in the crypto industry and blockchain industry. 

Brad Garlinghouse: I mean, I’m going to dodge that question. I’m just going to tell you right now I’m dodging that one. Not because I’m not trying to answer it, it’s like, I’m not going to share here’s what Ripple thinks are the next kind of big misunderstood or not fully seen opportunities. Look, NFT’s are here to stay. I think, as you said, the tokenization of many, many assets I think is underway. And I think that’s exciting. I think it does go back to something we talked about earlier around the energy consumption of proof of work. If you have — I think the [inaudible 00:49:39] NFT’s is really around the longer tail where it is going to matter if you have $50 a gas fees associated with an NFT transaction like that’s going to limit the market. It doesn’t matter when you’re buying a $100,000 piece of artwork, but it does matter when it might be you trying to trade a $100 baseball card. So, I think — I didn’t see the explosion around NFT’s coming, if you will. It certainly has exceeded what I would have guessed. 

But I also — I’m a big believer. To your point, you’ve commented a couple times around more and more people are accepting different crypto assets as payment. Look, I think there is an interesting irony that Tesla has been such a leader, — Well, they have been the leader around awareness of carbon emissions from obviously cars. Yet, by the same token, understanding that the implications of Tesla and SpaceX and Elon Musk, who clearly has done more for protecting the planet from carbon emissions, and probably any other person that I know of, then leads into an existing framework that is around proof of work that produces a lot of carbon. So, I think that what we saw with companies like MicroStrategy and Tesla, I think I tweeted out when MicroStrategy announced what they had done, I think I tweeted out something like, they may be the first but they certainly won’t be the last. And I think that still remains true today. 

Tony Edward: On the note of carbon footprint, do you feel at this moment, it’s a necessary evil because of the larger evil of, I don’t know, money printing and the super centralization of different aspects of government and so forth. That while Bitcoin is not getting rid of banks, and so on and so forth, certainly not, but does give some power back to the common folks and the decentralized nature of the internet. 

Brad Garlinghouse: Well, I want to make sure I understand — Well, sorry, when you ask that question, I make sure I understand it ‘cause I’m not sure I totally picked it up. 

Tony Edward: I think you said kind of the juxtaposition of Tesla being about the environment, and so forth, but yet Elon adopted Bitcoin, right. My point is, is it fair to criticize Elon and Tesla, given that Bitcoins pros, I think, we certainly understand the cons and that needs to be fixed, but the pros outweigh the cons at this point. 

Brad Garlinghouse: Oh, yeah. I mean, again, I’m going to keep emphasizing, I am not trying in any way, shape, or form to try to attack Bitcoin. I mean, there’s a full-throated, I am bullish on Bitcoin, period. I’m very bullish. That doesn’t mean we can’t be intellectually honest and think about how can we do something better? 

Tony Edward: Sure. 

Brad Garlinghouse: Do I think Bitcoin and all the benefits of Bitcoin, as you pointed out, the decentralization pieces are relevant? We can, I know, some people yell at me for saying this. But just this past weekend, as you probably followed there were some blackouts in China, which took the hash rate down by 20 to 40%, which also coincided with a big drop in the price of Bitcoin. We can debate a little bit some of those decentralization points. Suffice it to say, all I’m trying to point out is I think we just need to be intellectually honest, and not try to fight with each other about things that we — I want to spend the time convincing Janet Yellen that she’s wrong, I want to convince Bill Gates that he’s wrong when they make comments about, I think Bill Gates was quoted as saying roughly a Bitcoin transaction is the least efficient mechanism for a payment that man has ever created or something like that. Like, let’s prove him wrong. Let’s also acknowledge that Bitcoin has some things it’s probably really good at and there’s other digital assets that might be really good at other things. 

Tony Edward: Right. Okay. So we’re running up on time, so I’m going to wrap it up here with some rapid-fire questions such as what’s your favorite food? 

Brad Garlinghouse: I eat more ice cream than anyone you know. 

Tony Edward: Favorite musician or band? 

Brad Garlinghouse: Kygo. 

Tony Edward: Nice. Favorite movie? 

Brad Garlinghouse: Wedding Crashers.

Tony Edward: Good one. 

Brad Garlinghouse: [inaudible 00:54:11] Wedding Crashers come out earlier in my life. I think that’s — I’m too old for that now. 

Tony Edward: Favorite book? 

Brad Garlinghouse: One book that actually was pretty formative for me, I read it around the time Netscape went public, was a book called Snow Crash by Neal Stephenson which was an early kind of sci-fi or not artificial reality but kind of — I can’t remember, I’m spacing the words. But anyway, fabulous book. You should read Snow Crash if you haven’t. 

Tony Edward: I’ll definitely check that one out. And when you’re not a Ripple doing your CEO duties, what are you doing for fun as a hobby? 

Brad Garlinghouse: That’s a tough one. I have kids, I’ve got a job, I don’t have a lot of time. I guess I’ll say just because it’s right after ski season I was able to hit the slopes a couple times this season and really enjoyed some skiing time. 

Tony Edward: Awesome. Well, Brad, a pleasure chatting with you, and thank you so much for taking the time to speak with us today. 

Brad Garlinghouse: Absolutely. I enjoyed it. Thanks a lot for all you’re doing and the leadership you’re providing, providing this information out there. 

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