The man who co-wrote HTTP/2 just IPO'd a crypto bank, with Mike Belshe, CEO of BitGo

[on-hold music] Welcome to another episode of 51 Insights, today with Mike Belshe, CEO of BitGo. Mike, welcome to the show. Thank you. Good to be here. Yeah, likewise, Michael.

Uh, excited to have you here for many reasons. You helped build the internet we use every day. You co-created HTTP2, the protocol that loads every webpage on the planet.

Then you turned to crypto's hardest problem, getting institutions to trust it, and with your company BitGo, now that now custodies over hundred billion US dollars in digital assets.

You went public in January as the first crypto IPO of 2026, and you hold the federal bank charter from the OCC. Mike, welcome to the show. I'm excited to have you here. Well, thank you.

I should have you, uh, read off our statement more often. It's great. [chuckles] Yeah. So, Mike, you've been in crypto for a long, long time. You've been building before most people even know what Bitcoin was.

What does it feel like to watch what was once a fringe idea become a regulated industry with bank charters and IPO? Well, um, I, I guess I'm proud of, of where we've gotten. So we started in, in 2013.

I guess I, I first heard about Bitcoin probably 2011, 2012. Like many, you first hear about it, and you're like, "Eh, that'll never work. It must be a scam."

And, uh, then eventually you kinda dig in, and look, I, I really encourage anybody to look into it. I was never really very interested in, like, how our monetary systems work, how our markets work, any of that.

It's been a, a fascinating set of times since then where just had to dive into all of these aspects, and there's a lot to it, and there's a lot we can change and make better.

Back in, you know, 2014, 2015, it was definitely more fringe, as you say, and at the time we, we kinda wondered, you know, is the, is history gonna record us as geniuses or fools?

And at the time, I think it was a 50/50, could be either way. These days I think less fools. Um, and uh, I think people are seeing more of the, of the value and the benefit.

And I'm also actually really proud that the industry is making an impact. Uh, you know, you mentioned HTTP, and I did that when I was- I was- I was lucky to be at Google.

Um, I was one of the first 10 guys on the Chrome team, and kinda towards the end of that, we were focused on how to make the web itself, the protocols we use, faster. Um, the origin of Chrome was

that there were standards for how to make browsers work better so you could run desktop apps on your browser, like this one right now.

We're in a browser doing full video conferencing, and that wasn't possible back in, I guess it was 2008-ish when we were getting started, uh, 2006, 2008. And we just wanted to make it so that, that you could do it.

And, and, and you think about crypto, it's having an impact on traditional markets already.

You know, we have the New York Stock Exchange saying they're gonna go 24/7, um, other markets starting to move towards those types of things.

And then, of course, we've got the largest asset managers with Larry Fink as the s- the head of BlackRock, Abby Johnson, the head of Fidelity. They're fully in on this.

They believe that pretty much all assets are gonna go digital. So it's exciting to see that these early primitive ideas that were fringe are now being considered by the top brains in the entire global economy.

Um, uh, and you know, I didn't even mention the government yet 'cause I, I, I don't think that much about the government, but, um, you know, obviously there's a lot of, uh, a lot of crypto on their minds too.

And what was going on in your mind when you started BitGo? What was the initial motivation of building a custody service for crypto, and how has that changed over those past 10 years?

Well, I never wanted to go build a custody service. Uh, I never wanted to be a banker, yet here I find myself, I guess, as the head of, like, seven banks-ish.

The, the, the goal at the beginning was how do we make this secure? So people were losing their Bitcoin. You know, sometimes it was simple things like you forget your password.

Sometimes it was losing a hard disk, sometimes it was getting hacked. So we pioneered this thing called two out of three multisig, which is still the gold standard of how you secure Bitcoin to this day.

We've expanded not just multisig, but we do MPC and all kinds of other technologies as well now. But the goal was let's make it so people don't lose their money.

And what fascinated me in those early days was really the concept of self-custody. If you look at our financial systems and pretty much any jurisdiction,

you know, people are not super satisfied with the innovation and what they get out of their banks. And on one hand, that sounds like an indictment of the banking system.

It's probably as much of an indictment of the regulatory overload that's been put onto these, these, uh, these companies.

But what I liked about self-custody is this concept that, you know, you and the bank can both participate in the same system on equal footing.

And I think this is probably the most underrated and yet most important part of digital assets as we go forward. Fundamentally, I believe most

individuals and businesses will opt in to use digital banks like BitGo in the future, and that's because securing money is hard. It's always been hard.

You have the option today to store cash for all of your wealth if you wish, and you could build a vault, I guess, and put bars on your windows and hire a security guard. I'm guessing you don't do that.

I'm guessing you have a bank account because it provides a whole bunch of safety. So most people are gonna gravitate that way. And if we are not careful, we could lose the self-custody access.

To some degree, this would make regulators' jobs much easier. It's that peer-to-peer part which is the hardest part. I'm not saying it's a bad part. It's, it's the hardest part. But by having that peer-to-peer component,

that's what allows us to always keep the financial institutions, the middlemen- On their toes in a way that they have to be doing a good job, otherwise you can just pull your money out and you're on equal footing with them.

So anyway, I'm excited about what we can change there. There's transparency aspects to what we're doing. There's openness w- to what we're doing. We're in a global economy. Of course, we need a global financial system.

Um, all of these things are true. There's a lot of exciting, you know, problems. Um, so yeah, it's exciting time. One of the things I mentioned at the beginning was a federal bank charter approval.

So just to put that into perspective, most crypto companies chase bank charters for legitimacy. You actually got one among a few crypto companies.

What does that change for you operationally that people outside the industry don't appreciate? Well, actually, it, it, it doesn't change as much as you might think. We are the oldest standing, uh, digital asset custodian

of all. So we were the first ones to build it all the way back, twenty eighteen.

Um, you know, what happened was started very much on this technological journey of how do you secure the assets, and really expected that the traditional financial system would take that technology and deploy it underneath their own, uh, their own regulatory frameworks and licenses, etc.

We had this little company called CME Group, you might have heard of them, as a client, and we didn't have any custody. They really didn't want to hold the keys at that time.

Uh, they had an ambitious project that they were working on, and there was just nobody that would hold the keys. Banks wouldn't touch it. Uh, there were no custodians that would touch it.

They ended up holding the keys on their own, um, and the, the pro- the project went very well. That was where we really kind of said, "This is the last straw."

We'd h- we had heard this kinda over and over again, and we said, "Look, if we wanna be the master of our own domain, we wanna be in control of our own future, we just have to take on this step."

So that was when we went into full regulatory status. I remember having an all hands at the company when we got our first license.

Our first license was a South Dakota State license and, uh, told the company, "Look, this is a big change. We are no longer a technology company. We're a financial services firm." Um, and we had to do that shift.

It's an important mindset to shift.

Look, we are now fiduciaries for other people's money, and what you do as a fiduciary when you're taking care of people's money is, is different than technology firm, especially here in Silicon Valley, where I think Facebook made the mantra of move fast and break things to be popular.

On one hand, there is a place where that's the appropriate answer. When it comes to people's money, not so much. So, you know, it changes the, the way we think about things.

Anyway, the, the, the OCC charter, really, it's the best license that we can get here in the US. It, it removes any question from anybody being able to work with us. It also,

politically, there's still a little bit going on with, you know, some anti-crypto, so having it at the federal level instead of having it at the state level makes it so we don't have to fight fifty different states with different types of views.

Um, that's kind of an American thing. Um, and, uh, other than that, it didn't really change that much. We've already been doing it.

So we've known that as a digital asset bank, I mean, you know, we have a target on our back from some people that are concerned about, you know, digital assets breaking their industry or whatever.

And so we've always run at the highest, highest caliber.

I think we bunt-- run above the standards that are set by some of our, uh, some of our competitors and peers that have been in the business of banking for, for much longer than we have.

Um, and then lastly, uh, it's not the only custodial license that we have. We have seven around the planet. We run them here in the US, we run them in Europe, we run them in Middle East, we run them in Singapore.

So we have a playbook which aggregates all of the requirements from those regulators, um, and puts it together into our platform. I mean, there's a few jurisdictional differences, of course.

Um, but in general, we've been doing this for a long time. It doesn't change anything, but it does give us the status that frankly, the next wave of institutional investors need. So, so we're excited about that.

And can you just expand for us a little bit on that transformation of BitGo. A couple of years ago, you were primarily a custodian, and now you've become a full-service provider. How does that look like?

What's the BitGo of today, and why did the transformation happen? Sure. Well, to be clear, it's not like we had some excitement about let's go be a custodian. I think that's a fairly boring place to be.

It's a means to an end, but not the end. It was never the end. Really, it's been an evolution of how do we build really good handling of financial services for crypto. That's always been the mission.

And when you look at the industry, not everyone has spent as much time on the foundation as we have. And again, this is money. If you ever needed a strong foundation is when it comes to money.

At the bottom layer, we have a very serious two out of three commitment to everything we do. That's basically a super high security level. That's the self-custody wallet platform.

We run, uh, I don't know, eighty layer one, layer twos. We run thousands of, of, of tokens, but we provide a very strong commitment to the security of that bottom layer.

And then on top of that, we put this custodial layer, and from there, we can build. Remember, the foundation of the traditional financial world, the, the custodians there, they're a hundred years old each.

State Street, BNY Mellon, JPMorgan, these are not companies that are only ten years old. We've had to build in, in a, in a thirteen-year period.

We're one of the oldest firms in, in the space, but we've taken the time to build that foundation. With that foundation in play, we're able to finally do, I think, the more interesting things.

We pioneer market structure before the law even has to be set, and we're doing these things because it provides our clients better safety and better value. But now we get to kinda that, that next layer.

So we've also had a, a first-hand view of what happens when you don't have market structure. So, you know, by having built this foundation first, initially, we build that People like what we do.

Now we're dedicated to cold storage. It's internet money, but, you know, the way you secure it is you take it off the internet. Now, by the way, we still have a duty of great service to our clients.

People associate cold storage with being slow. It is a little bit slow. Guess what? For billions of dollars, you kinda want that part. But we also still have to be fast.

So we've built ways that we can get money out within minutes, uh, out of, out of, out of the custodian. And, and there's a whole bunch of security things that, that go around that. But once you build that,

you're kind of an island if you don't have market structure, and we don't have market structure for crypto. So what that means is, like, people choose BitGo.

Th- we did-- they did the, the security analysis, they did the SOC audits, they did the regulatory audits. They looked at us in every single way. They decided they like us.

But if they stored money with us, and then they wanted to do something as simple as, say, trade it, and to take it out and put it on some rickety exchange somewhere, and we've seen exchange after exchange, you know, fail 'cause they didn't have that good foundation.

Well, that's a terrible trade-off. Market structure is what solves this problem.

You should be able to have both security and liquidity, and you should be able to have choice of where you store it, where-- who is your bank, and, you know, who is your broker.

And yet what's happened in crypto without market structure, you don't get any of those things. You have to pick one vendor. He's the same vendor for the buyer and the seller. He takes care of all the plumbing in between.

As long as it works, I guess it works okay, but obviously there's been a number of cases where it failed. So anyway, we see that. We've been building to solve that problem, I think more than anybody else in the industry.

In traditional finance, custody and prime brokerages are strictly separated to prevent conflicts of interest and protect client funds. How does BitGo solve that?

Well, you can do custody and you can do financial services. You know, one, one thing,

if you go back to my, you know, 13 year ago self, I would be sur- I would've been surprised to see how many affiliated companies there are in BitGo.

So we've got BitGo Holdings, which is, you know, our primary company, and within that we've got subsidiaries.

Like I said, we've got seven different trust companies, so those are organized somewhat geographically, but, uh, those are all independent companies that are part of BitGo.

They're related, um, and so you might think that it's ripe for abuse. Like, you know, Mike Belshe could just go and manipulate all of these. It's not true. So the reason it's not true is because of the regulators.

The regulators care very much that each one of those entities is operating in its own domain with its own controls, is not just under the thumb of some US controller that's doing whatever they want with it.

So when we're regulated by BaFin in Germany, they take it very seriously that we have management and controls in Germany that are not just we're operating at the whim of BitGo US.

All right, so the same thing applies even in the US as we do financial services, whether it be trading or whatnot, that's through affiliated parties, our own subsidiaries.

And, and those controls are all separate, and our regulators care tremendously about it. So what's in the bank is banking activity, uh, and that's the custody, 100% reserve, all that.

Um, that is not influenced at all by what's going on elsewhere. And then

maybe a little bit to my own personal belief and, and style, look, we're trying to operate these things in a way that is safer than any bank that has ever come before. And so it's 100% reserve bank.

And you haven't had a lot of those in US history. I think some of that is historical based on not having had computers and not having had the option, but other parts of it is about risk.

And I do think when you look at how financial markets have moved over the past, probably mostly the last 30 but 50 years, um, there's a lot of risks being taken, and

I personally believe some of those probably ought to be looked at and scrutinized, things like how rehypothecation works, if you're familiar with that term.

Um, but those are things that we don't partake in, um, inside of these, these regulated entities at all. Um, and we think that that makes us safer. And Mike, let's switch gears for a bit.

I still remember I visited your headquarters in 2019 in the midst of Silicon Valley, a true US company.

Now you're global, you're all around the world, and you just announced that you are launching custody as a service across all 30 EEA countries in Europe today. Can you unpack that announcement for us a little bit?

Well, let me tell you about what that is. So we call it Crypto as a Service. Uh, we've been doing it here in the United States for, for quite some time, and it's similar to Software as a Service.

You're probably familiar with that. Software as a Service, you know, we provide web services, we provide some client software, provide sometimes some hardware for the cold storage. We sell that to our clients.

And the difference between SaaS, Soft- Software as a Service, and CaaS, Crypto as a Service, is that when it comes to money, if you just apply Software as a Service to it, the client still has to have licenses and regulatory frameworks and compliance and AML, KYC, all that kind of stuff.

What happens with CaaS is we take on that duty. So it's Software as a Service plus our regulatory capability.

That includes, and it varies in jurisdictions, the ability to custody assets, what type of assets you can custody. It includes the ability to trade assets.

It includes customer understanding of AML, KYC, transaction monitoring, all of these things. We wrap those together into what we call Crypto as a Service.

So now clients that might be new to digital assets, they can come to BitGo, they can sign up for this service, and they can get both of these. So typically we're institutional based.

That means business-to-business based. We work with other businesses more than we work with retail. We work with retail only a tiny bit. But our clients, they have large retail bases, and so we're B2B2C.

So they go and they sign up their, their clients.

Their clients, through API, get a full Regulated down at the bottom, that foundational li- layer, that fiduciary protected bankruptcy remote segregated custodial account, which is the, the maximum security and regulatory safety that you can get.

It's all cold storage, by the way.

And then on top of that, we can now do staking, and we can do trading, and we can do borrow and lend and things outside of the bank, but through affiliate parties, and then all of that can be enabled as well.

So in Europe, it took a little longer to get some of the regulatory capability to offer this service, but it's the same service that we've been offering in the US, um, and allows businesses to grow, um, and then use, leverage the regulatory capability that BitGo's built over the last ten years.

And how do you look at those different jurisdictions? I mean, Europe has the MiCA regulation. Uh, the US has now been moving with the Genius Act, Clarity Act, hopefully soon coming.

How do you look at these jurisdiction in terms of institutional demand but also regulatory environment? Look, I think we all need to have a little bit of empathy for the regulators with digital assets.

It's definitely very different than what happened in traditional types of assets, and so they're having to think about things they haven't had to think about before. Stable coins is a, a new innovation.

Global access is a new issue, peer-to-peer, side-by-side, like we were talking about earlier. These are all new concerns that the regulators haven't really had to confront before.

So it's no surprise that across the globe, you see regulators picking different approaches. They're not quite sure what to do with these things. Do I need to have these assets actually stored on my soil?

Is it okay to have them virtual? Some of these are issues that have been dealt with, you know, previously in oth-other cases. Um, other times, this is, this is all new.

So we have to roll with the punches is the lo-long and short of it. You know, in the US, the regulatory changes quite a bit.

It was just eighteen months ago that the OCC was closed for business, the SEC was closed for business, the FDIC was closed for business, um, and now all of a sudden, they're here and they're working.

So what's exciting about the US changes, both Genius and then hopefully Clarity soon, is that it's a legislative path forward.

And by the way, we just did this IPO roadshow and, you know, as part of that, we talked to hundreds, interviewed literally hundreds of potential investors. All of those guys are traditional investors.

You know, they invest in all kinds of companies, from crypto to everything else, and their familiarity with digital assets is very little, but they, they overwhelmingly said to me, "You must be really excited about Clarity.

It's gonna really increase your business." It kind of surprised me how much they said that, but it gives you a clue into their, their, their thought process.

Their thought process is that, hey, as soon as the US government says that this has got a legislative path, then all of a sudden your business grows.

Look, we've been growing our business without having that clarity, so it will help. And then lastly, to, to rate it, relate it to Europe, again, licenses are different there.

You've got the EMI license, electronic money in, in Europe, which is for, for stable coin stuff. It's different than what's in the US. It's got different rules.

Um, I think there's gonna be some interesting things that happen globally where different regulators claim particular regulations which will be inconsistent with others.

I fully expect there's gonna be some point in time where, like, maybe just as an examp-- it could be Europe and the US and, and Japan, you add up the three regulations and it is impossible to comply with all three at the same time.

Um, I'm, I'm sure this will happen at some point and it, it, it'll be a little bit comedic. Um, it'll be a little bit painful. We'll roll with it. Look, we work with a lot of regulators.

We're regulated in Singapore, we're regulated in Dubai, we're regulated in Germany, we're regulated in the US, South Korea. We will, we will figure it out and, uh, hopefully we get to a good result for the industry.

Mike, you went public in January twenty twenty-six. Uh, what was the real reason for the timing? Was it market conditions, internal pressure, competitive necessity or something else? None of those.

I wanted to get out as fast as we could October-ish last year, but you might recall the US government decided to take a little vacation, um, an unplanned vacation, I guess, and it delayed everything for a couple of months.

But the reason we wanna do it is because the SEC process, for all of its faults, it puts a total spotlight on every aspect of your business.

And you can go look and read three hundred glorious pages of filings that we put out. I think it's three hundred. I'm not quite sure. It, it's long.

You can go read that and you can get a very good understanding, uh, of BitGo's business.

The next wave of digital assets is bringing everybody to the table, so we wanna bring traditional finance, the most conservative firms, to be able to work with companies like ours, and we think being a public company is the best way to do it.

It's a lot easier for those firms to interface to public companies than it is to interface to private firms. Many of our private competitors are, uh, maybe most are, are losing a lot of money.

Um, and you know, it's difficult to suss that out as a public company. You know, can I use this company, uh, that's a private company when I can't really see exactly how well they're operating?

And of course, we've provided audits to our clients, uh, for years. We do SOC audits as well. Um, but there, there is a much, um, brighter spotlight on the company by being public.

Look, I think Coinbase, um, you know, great firm, but

they had a monopoly on being a public company for the last four years in the US and I definitely heard on the roadshow from a whole bunch of folks, they said, "Oh yeah, we do a little bit of digital asset, but we, we use your competitor because they were a public firm."

Um, and that was the decision factor. It was not we thought they were great or anything. I mean, and they're a fine firm.

I'm not trying to criticize them, but the reason they got the business was just because they were public. Um, so, so look, we think that's gonna be good for our business and that's the number one reason we did this.

Mm-hmm. Your stock hit twenty-four dollars on day one and now it's around ten dollars, uh, a month later.

As a newly public CEO, how do you manage the tension between, uh, long-term infrastructure building versus quarterly earning pressure?

Look, one of the interesting things I'm dealing with right now, uh, I'm not allowed to talk about the stock price. Um, I'm not allowed to talk about

information that's not yet public, so I have to be super careful when answering this question. I, I guess to answer it, I'm gonna give you a philosophical answer rather than a a, a specific one.

The value of any company on the day before they went public to the day after they went public didn't actually change that much. However, their stock price might make it seem like that's true.

What we're really thinking is long term, and you can go look.

There's a quote from Warren Buffett, I think it's something-- I'm gonna butcher this, but something to the effect of terrible indicator in the short term and, uh, an okay in, in the, in the long term.

I for- I forget how he phrased it. Um, but basically what he's saying is that, like, think long term, and we think long term. Look, we've been doing this for thirteen years. We've been doing this longer than anybody.

Sometimes people ask me, "Hey, you know, now that you've done this, is that, like, what's next for you?"

What's next for me is to go do this for another thirteen years and make sure that we make sure that digital assets are ubiquitous everywhere, and we are going to upend the way markets work today to a much safer, stronger, more transparent, more inclusive market than ever before.

And we have not accomplished that yet as an industry or as a company, so there's just a lot more to do. And what I'm thinking about is, like, there's a distraction to the stock price. Let's try not to worry about that.

Let's continue to, to hunker down, work on the products, delight our clients, and, uh, and that's the, that's the plan going forward.

BitGo also custodies, uh, the reserves for USD1, the, the Trump family-linked stablecoin. How do you separate the political brand risk of, of that partnership with BitGo's institutional credibility?

Well, this political tie is, is nonsense anyway. Um, so look, I d- I don't wanna play politics. Digital assets are not political. They shouldn't be political.

It's a shame that they've gotten to the level of politics that they, they have. I think, um, you know, my own interest in politics is solely because I'm trying to make my business be successful.

I've never, I've never had a political bone publicly. I have political opinions, but they're mine. Business and politics don't, don't really mix.

Yet when it comes to power and money, which are kind of the same thing, of course there's gonna be some, some natural overlap. Look, the USD1 team, the World Liberty team, they've been great clients.

They are responsibly moving forward with building a product that works. Um, they just announced maybe two weeks ago now that they're doing, you know, real-time proof of reserves.

So BitGo has a hand in, in a bunch of that. We, we help. We do twice-a-month audits of this thing, and that's with top-tier auditing firms. Uh, you can go see it on both BitGo and the USD1 website.

Then we programmatically connect all the reserves so that they can show a real-time proof of reserve. So basically, you're getting a real-time look programmatic capability. Now, how much should you trust that?

Look, it's programmatic, so you can see it, but obviously you-- what you want is the guy that's looked at the next level of detail. He comes in twice a month.

Once is at the end of the month, so that you have the end-of-the-month audit.

The other one is at a random point in time to make sure that, like, nobody's playing with the money mid-month and then just putting it back at the end. So you can't really do better than this.

There's no bank on the planet that does a twice-a-month audit, and yet here we have these stablecoins that, that do. So more broadly, stablecoins are a massive innovation

that I think are going to change the way we think about what's possible with banking, and I know there's a lot of concern. Uh, to some degree, it's political.

I think it's really there's some that are protecting their business. There's some amount of just, like, because it's money, it's hard to move and should be hard to move market structures.

But the idea that we need the same banking model that was in use two hundred years ago is, of course, a flawed idea. We can do better.

We did need, at some point in time long ago before computers, we had to have these depositories they're called. So mentioned we're a bank. We're not a depository. Most people probably don't know that term. A depository

takes your deposits and then lends them out.

Because bankers over the last, you know, two hundred years from time to time screw this up and lose the deposits, that has caused us to put regulatory and more regulatory and more regulatory on top of it.

You might have heard the term safety and soundness of a bank. It's kind of a squishy thing. Wait, how do I know if you are sound, right? That's not a objective thing.

That is a subjective thing, and yet that's what we do with depositories today. So BitGo's not a depository, but we are a reserve bank. We hold all the money in reserves. Happy to prove that any which way.

I think, you know, blockchain's transparency, audits, all these things are consistent. We want you to know we have the assets. Stablecoins are also a reserve type of-- not a bank, but a product.

And all of a sudden, we can take retail money, and we can put it into a stablecoin. It's 100% reserve. We prove that with audits, with even real-time reserves. You ought to be able to get the risk-free rate.

Here, here's where I think the depositories have failed you, the consumer. The risk-free rate is 4%.

It's called the risk-free rate because it's considered to be the lowest risk investment you can make in America, and it's backed by the full faith and credit of the US government.

And yet the bank is giving you 0.1 to 2.0% while taking risks. Now, there's some that would argue that this all comes down to the cost of credit. Okay, so think about it, right? What do the banks do?

Well, on one hand, they take your money, and then on the other hand, they lend it out, and when they lend it out, they lend it out at some rate. So maybe they lend it out, let's say, 10%.

If they have to give you back 4%, then that means they only make 6, right? If they only have to give you 0.2%, then that means they get to keep 9.8.

So some people say that the reason banks should give you such a low amount is so that you can subsidize the cost of somebody else's credit. Look, I call BS on this.

I do believe that it's imperative that our markets have liquidity, and lending is a huge important part of this.

But the idea that retail depositors are the guys that are funding somebody else's credit, I, I just call BS on this point. Um, all right, so I've gotten far astray from your, your question.

I, I think I'm answering the political part of your question a little bit differently. I think what it is, is there are politics and money,

po- power and money, th- they, they go together, and there's some that have been doing business in a particular way for a very long time.

They like this idea of paying the retail guy nothing and then subsidizing the other guy's credit or subsidizing their own pocketbook. I think they do both. We think there's a better way.

We think you should be able to do these reserve stable coins. They're absolutely better for the retail depositor. They are lower risk. They are-- They should be able to give you interest.

They are twenty-four hours a day. There are almost no fees. There's no nickel and diming. Like, all that stuff goes away and can be done electronically, and I think that's the real fight.

The real fight is that it's traditional ways of doing things versus not, and regulatory capture. That's what they want, regulatory capture.

Yeah, and, and speaking of answering my question, you actually just answered my next two questions, which was, first, you said that interest-bearing stable coins are inevitable and that the banking lobby will fight it.

You just answered that. And my second question is BitGo is also rumored to be launching its own stable coin. Is that a reason why you're doing that? Look, we've been doing stable coin as a service for a while.

That's been public. Yeah. Um, I can't talk about future products, so I can't quite answer that question. But in general, like, we're very big fans of what's going on with stable coins.

I think there's gonna be some interesting evolution here. Let's see, a couple of points, uh, are interest. I- I've been asking people this. I'll ask you- Mm-hmm... a question.

Which would you rather use, an insured bank or an uninsured bank? Definitely an insured bank. Insured bank, right. It sounds better, right? All right. Well,

in order to really understand this question, you should, you should say, "Well, why does it need insurance?" So the-- I mention this because it's in the Clarity Act.

You'll, you'll see reference to insured banks, and what they're talking about is FDIC insurance, Federal Depository Insurance, and you're only eligible for depository insurance if you're a depository.

That means you are taking those deposits from retail and lending them out to others. And the reason you need the insurance is because you're taking risk with the money.

So BitGo, as a hundred percent reserve bank, we're actually not eligible for FDIC insurance. But we don't need the insurance because we hold the reserves.

So look, all banks have some amount of operational risks and certain other types of risks.

But when it comes to, like, did you actually have the money for the depositor to get back at any point in time, we are absolutely lower risk than any depository.

So ironically, an uninsured bank is actually safer than an insured bank because the insured bank is taking risks that need insurance. Now, the ins-

th- th- the traditional banks are gonna fight this, and they're like, "No, FDIC is like a known institution, and it's kept people safe for," I don't know how many years. A lot of years.

My point is that actually, in the case of a hundred percent reserve bank, being uninsured is not, is not a problem.

It's because the model that we have is just better, and people are holding on to old ideas when they think that that's not true. Anyway, I diverged from your question. What was the other part of your question?

My question was wh- what was the reason why you might be building a stable coin? And then also, why did you state publicly that interest-bearing stable coins are inevitable? Oh, inevitable? Okay. Yeah. Let's see.

First off, on, on building stable coins, there's just a lot of innovation that's left to happen. Yeah. Once we have

interest that can be given back to the holder of the coin, which it is inevitable, and I'll, I'll tell you why in a second. But the idea that we need all these stable coins is, is gonna, um, be different. So today,

if you want to get into the stable coin market, you have two choices. Um, A, you can use the incumbents, USDT or USDC. Both of those keep all the money for themselves and don't pass it on to your base.

And if you're thinking that you're gonna introduce stable coins to your own set of clients, maybe you've got a distribution channel of your own, um, you're like, "Well, why, why would I take the money that's with my group and then give it to this other guy?"

So you're like, "Aha, I'll be an issuer myself, and then I'll keep the money."

So this is gonna cause a proliferation of people that wanna be issuers because who doesn't wanna be the issuer if you get to keep all of the interest? And right now, you know, the risk-free rate is relatively high.

So anyway, there's gonna be now a p- a lot of different stable coins, and then you'll have conversions between them. Imagine a different world

where interest is allowed to go to the holder of the coin, and I think that stable coins are about like ETFs in terms of the overhead. So BlackRock runs the Bitcoin ETF.

They charge a twenty-five basis point management fee, zero point two five percent, and for that, they handle all the operational components, the regulatory components, the audits.

Um, and I think that running a stable coin is similar, right? You've got some amount of re- regulatory obligations. You got some operational work that you gotta do. You got some audit work you gotta do.

It's very, very similar. I think twenty-five to fifty basis points kind of is the right, uh- value that they're providing, um, relative to the stablecoin, and then having the issuer keep 4% doesn't make sense.

So eventually we'll get there. Uh, somebody comes out with a coin, they manage it for, let's say, 50 basis points just to make it a little bit easier, uh, and they pass the remaining three and a half percent on.

As soon as that's there, now all of a sudden people aren't like, "Oh, we need to create a new stablecoin.

I could just use that one, and then for a small fee I can pass all this benefit on to my distribution channel," right? So I'm not taking it away from my customers anymore. And by the way, of course this is gonna happen.

Uh, there was a lot of concern and brouhaha about, you know, T-bill-backed money markets back in the early '70s. Initially, the banks wanted to stop it. They said, "There's gonna be a run on the bank.

It's gonna be terrible." And while it's true that today there's a significant-- there's a couple trillion bucks in, uh, T-bill-backed money markets, but it hasn't caused a run on the bank.

I think there's plenty of opportunity for fixing credit markets. I think actually blockchain-backed credit markets are gonna solve the second leg of this problem. So depositories, right, they have two things.

First, they take deposits from retail, and second, they lend it out. Both of those can be massively improved, uh, thanks to basically the blockchain. So these things are gonna come. It's inevitable.

The US will have to be competitive in the global market. And one of the maybe the best things about digital assets is that because they are global,

if you don't make it work in the US, it'll just be made to work somewhere else, and the value leaves America. So of course, we should make it available in America.

Okay, so you're saying interest-bearing stablecoins will come. They will be part of, uh, CLARITY Act. So GENIUS is what prevents interest on stablecoins. That was already done, right?

And really, anybody that wants to talk about stablecoins I think should talk about amending the GENIUS Act. CLARITY is supposed to be about market structure.

Now, what's happened is, you know, some parties realized that they left a loophole where reward systems can be used to give interest back to the holders.

And of course, uh, you know, Circle and Coinbase are doing this at scale. And so some are trying to block that.

So they're trying to put that into CLARITY, which has now shifted the focus inter-internally to CLARITY away from market structure and over to stablecoins, which we already litigated with GENIUS, and we should just, in my opinion, talk stablecoins over there on GENIUS.

That's what's related there.

And look, I guess the political law-making world works the way it works, and so what I want and what I say should be is not necessarily the way it will work, and I guess that-that's just life.

But I think CLARITY will pass. I don't know what it's gonna have in terms of changing GENIUS or changing rewards, et cetera. I actually kinda don't care.

Um, I think we need to move forward on CLARITY, and both the stablecoin legislation regulation and also the market structure legislation regulation need to move forward, and they will evolve.

So we might go through a period where we continue to have no interest to retail or holders. But I think the right side of history is that it's your money, and yes, you should get [chuckles] the interest on your money.

And the idea- Mm-hmm... that passing laws to prevent that, I mean, you can just see at face value it's, like, against the American people. Yeah, so, so just spinning your argument further, like, two scenarios.

One scenario is, uh, there will be no interest. Everyone has incentives to spin up their own stablecoins versus the other- Yeah...

scenario where we ha- we will have an interest, and the bigger players right now, obviously Tether and Circle, will come under massive pressure because they have, have to give up their margin. Could be.

Look, I mean, good news is they get to compete. I think Tether gets- Yeah... a lot of credit. You know, A, they started, by the way, when there was a zero interest rate environment. And if you go outside the US,

there's a ton of people using Tether. It is, is really getting prominent. It could become, like, a real network rail without any further changes.

So look, I'm, I'm sure they will adapt as the market changes, but they have a, have a, a strong network effect advantage. And then also

they provided a product which was basically a non-US product when the US was punitive to digital assets, and that was a value also.

So they, they did a very good job on a number of fronts that are different than providing interest. And yeah, we'll see how it competes, you know, kinda on the go forward. Mike, uh, last question.

Looking forward now into that new phase, that new market phase, at least, for crypto, 2026, '27, what are you personally looking forward to for BitGo, but also personally in, in digital assets?

Well, look, I think digital assets have the opportunity to change how all the markets work for the better. They make them more transparent. We can reduce the risk.

We can start to think about how all the markets built on top of the existing rails work. I just got a insight into kind of the IPO process.

I'll tell you, you know, it's the single worst way to price a new entry stock that I think anyone could even dream of. But it's been done this way for years, and it's something you only do once as a company.

So it kinda leads everybody to keep going down and falling off this cliff. Um, but [clears throat] sorry, that's the wrong analogy. That sounds, sounds different.

What I meant to say is, uh, they force you down this path, which isn't very good. We can do better. Um, the, the things that we need is we do need CLARITY to pass. We need the market structure.

We need it codified in the legislation. That's what's gonna make it so that everybody feels they can participate. And then I hope we continue to see regulators like Paul Atkins at the SEC, like Jonathan Gold at the OCC.

These guys have taken a different approach to what they do than the, the previous folks in those roles did.

Specifically There's one model which is companies try to do various products, and then you just smack them down and you say, "We don't like that." And instead of saying like, "Okay, wait a minute."

We've got every financial leader from Larry Fink at BlackRock to Abby Johnson at Fidelity. Now we've even got Jamie Dimon at JPMorgan saying that these products are gonna be part of what they offer.

So regulators ought to be listening to that and saying, "Look, this isn't, this isn't small potatoes here. This isn't like a fringe anymore. This is real serious people.

We are going to allow them to build products on digital rails, and we are gonna set initial guardrails for how, how to make that work, and then we're gonna iterate on like, 'Hey, if we see a problem, we're not gonna come to you and just smack you down and say bad and fine you to, to oblivion.'

Instead, we're going to help refine the rules and figure out what the right thing should be," et cetera. Um, you know, BitGo is absolutely here to play by the rules.

You know, we want to stop all of the same bad sins that Treasury and FinCEN want to stop. So we're fully on board with helping. All we're asking for is like, "Look, tell us what you want us to do. We'll meet that bar,

and then if there's any problems, you know, tell us what those problems are, and we'll meet that next bar. But don't just lock it out," which is what happened previously.

So anyway, I'm looking forward that we will never see that again, that this will not be political- Mm-hmm... that it's just money. These are tools for how do we save and invest. And I think one last thing. Mm-hmm.

America could amend the Bill of Rights in a, in a very interesting way. Every single person has the right to earn money, store money, and then spend that money at a similar value. This is what you expect of your money.

You almost think it should be a right, but the government is uniquely situated to screw that up. And we're blessed to be in America, where, you know, the US dollar has been the strongest, the best at preserving value.

It's been so good that other countries have just moved completely onto the dollar like El Salvador and Panama.

But other countries, Argentina, have gone through massive waves of hyperinflation multiple times because of a failure of this simple contract, the right to save the money,

to then later be able to spend that money at similar value. Mike, a great ending and great call to action. Thank you so much for coming on the show. It was a pleasure to have you here.

Where can people learn more about BitGo and you? Uh, well, thank you for having me.

BitGo is super easy to find, B-I-T-G-O dot com, and I'll be around there if you, if you wanna find me, but hopefully, hopefully BitGo is more interesting than I am. Yeah. Mike, thank you.

I wish you all the best with BitGo, and see you soon. Thank you. Bye-bye. You obviously like this video enough that you got to the end. Listen, do me a favor.

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