20VC Are the SEC Overreaching with its Approach to Crypto Should Gensler Step Down How do US Elections Impact Crypto Markets How Did SBF and FTX Impact Crypto Long Term and more with Dave Ripley, CEO @ Kraken



In a candid conversation on 20 VC, Harry Stebbings interviews Dave Ripley, CEO of Kraken, to discuss the cryptocurrency landscape, including the SEC's flawed regulation by enforcement approach and its implications for crypto exchanges. They delve into Ripley's journey into crypto from his days at Boston Consulting Group, the evolution of Kraken, and his transition from COO to CEO. Ripley defends crypto's utility against Stebbings' skepticism, highlighting its value as a hedge against inflation and its efficiency for cross-border payments. They also touch on the impact of U.S. elections on crypto, the potential of crypto as an underlying infrastructure for consumer transactions, and the future of remote work. Ripley shares personal insights on balancing life as a CEO and father, and the duo debates the need for crypto in a world with evolving financial services.

Summary Notes

Regulation by Enforcement Approach

  • The speaker believes the SEC's regulation by enforcement approach is flawed and will not be successful.
  • They mention specific cases where the SEC has not seen success, including with XRP and Grayscale.

"The regulation by enforcement approach is completely flawed. They won't be successful. They've lost in XRP, they've lost the grayscale kind of continue to not see success with these actions, so they won't be successful."

The quote criticizes the SEC's strategy of regulating through enforcement actions rather than through clear guidelines or legislation, pointing out past unsuccessful attempts to regulate entities like XRP and Grayscale.

Introduction to Harry Stebbings and Dave Ripley

  • Harry Stebbings introduces the podcast episode as a discussion with Dave Ripley, CEO of Kraken.
  • Mentions the use of AI tools like Notion and Digits to streamline workflow and accounting, respectively.
  • Introduces Navan, a travel and expense management tool that offers savings and rewards.

"This is 20 vc with me, Harry Stebbings, and today's show is a slightly spicier one than usual. I've long questioned the true utility value of much of crypto, and so today I sat down with the CEO of one of the world's leading crypto exchanges to discuss this, whether the SEC is overreaching and the impact of us elections on crypto markets. And so with that, I'm delighted to welcome Dave Ripley, CEO at Kraken, most recently valued at a whopping $10.8 billion in 2022."

Harry Stebbings sets the stage for the podcast, introducing the topics of crypto utility, SEC's potential overreach, and the impact of US elections on crypto markets. He also introduces Dave Ripley, emphasizing the high valuation of Kraken.

Dave Ripley's Entry into Crypto

  • Dave Ripley's engagement with crypto began over ten years ago while at Boston Consulting Group.
  • His interest in returning to the tech industry and potentially founding a company led him to learn about Bitcoin from his future co-founder.
  • Ripley describes his in-depth exploration of crypto's technological, economic, societal, and governmental aspects.

"So about ten years for me. Just over, actually. At the time I learned about crypto, I was at Boston Consulting Group, large strategy consulting firm, and I was interested to get back to the tech industry. Also kind of had in the back of my mind, potentially founding a company individual who I learned about bitcoin from happened to end up being my co-founder."

Dave Ripley recounts his initial exposure to cryptocurrency through a colleague at Boston Consulting Group, which sparked his interest in the tech industry and led to the founding of a company with the same individual.

Founding of Glidera and Acquisition by Kraken

  • Ripley founded Glidera in 2013, a company providing APIs for Bitcoin wallets to integrate buying and selling features.
  • Kraken, a partner of Glidera, eventually acquired the company, and Ripley joined Kraken following the acquisition.

"In 2013, I founded a company, Glidera, and that was a crypto company. We basically provided some tools, APIs to let all of the bitcoin wallets at the time add bitcoin buying and selling into their apps. Kraken was one of our partners."

This quote explains how Dave Ripley's company, Glidera, contributed to the cryptocurrency ecosystem by offering tools for Bitcoin wallets and how this led to a partnership and eventual acquisition by Kraken.

Transition to CEO of Kraken

  • Ripley discusses the planned CEO transition at Kraken, which occurred over a year and took place last spring.
  • He mentions the challenges of not having someone immediately fill his previous COO role and the regulatory environment in 2023.

"We talked about a CEO transition for quite some time, not even just months, but on the order of year plus. That happened last spring. So it's really been probably just over a half year."

The quote details the timeline and planning behind Dave Ripley's transition from COO to CEO of Kraken.

Challenges as CEO

  • Ripley faced the challenge of not having a replacement for his COO role upon his transition to CEO.
  • He notes the difficulties posed by the regulatory environment, particularly with the SEC in the US, and contrasts it with regulatory progress in Europe, the UK, and Canada.

"One is when we made the transition, there wasn't actually someone to come in and fill my old role as COO. Day one have made for an interesting start, and we were well down the process to actually doing that, finding someone."

The quote addresses the initial operational challenge Ripley faced as the new CEO of Kraken, highlighting the gap left by his previous position as COO.

SEC's Focus on US-Based Companies

  • Ripley observes that the SEC appears to be focusing on US-based companies.
  • He reaffirms his view that the SEC's regulation by enforcement approach is flawed.

"It's clear that they do appear to be focusing companies that are us based companies, at least in the case of the SEC."

This quote underscores Ripley's perception that the SEC is particularly targeting US-based companies in its regulatory efforts.

Regulatory Landscape and SEC Approach

  • Regulatory practices differ globally, with Canada, Europe, and the UK having structured systems for companies to register and provide services.
  • The SEC in the U.S. has been resistant to adopting a similar approach.
  • The SEC's resistance to the global regulatory approach remains largely unexplained.
  • If the SEC's approach were successful, it's unclear what the implications would be for cryptocurrency exchanges like Coinbase and Kraken.
  • The SEC has not been successful in their actions against XRP and grayscale, casting doubt on their future success.

"But I think it's more fundamental than that in that their entire approach is completely off. And so the right approach is what we see everywhere, what we see in Canada and Europe and in UK, where their parliament or legislatures work to put in place proper laws, the regulators work to implement those laws."

This quote emphasizes the speaker's view that the SEC's approach to regulation is fundamentally flawed compared to other jurisdictions that have established systems for implementing proper laws and regulations.

"Yeah, if the SEC is successful. So it's almost tough to answer that question because they won't be successful."

The speaker expresses skepticism about the SEC's chances of success in their regulatory actions, implying that the SEC's track record doesn't suggest future success.

Gary Gensler's Leadership and SEC's Mission

  • Within the cryptocurrency sphere, there are no perceived positive steps or clarity from the SEC under Gensler's leadership.
  • There's a lack of guidance and steps towards investor protection, which are part of the SEC's mission.
  • The question of whether Gensler should step down is raised due to these perceived shortcomings.

"I mean, look, you know, at least within the cryptocurrency sphere, we don't see, know positive, any positive steps, any clarity and guidance, any frankly, positive steps for investor protection or any of the goals that the SEC is."

The speaker criticizes the SEC's lack of positive action and clarity within the cryptocurrency sphere, suggesting a failure to meet its mission goals.

Presidential Election and Crypto

  • The presidential election is seen as significant for the future of cryptocurrency in the U.S.
  • Many candidates are pro-crypto and pro-bitcoin, suggesting a favorable long-term outlook.
  • The current president has not commented on bitcoin, but his team has.

"So, look, I can't tell you who's going to win this election, but over the coming set of elections, we will have a pro bitcoin, pro cryptocurrency president."

The speaker predicts that future U.S. presidents will be supportive of bitcoin and cryptocurrency, which is expected to contribute to the growth of the industry.

Branding and Marketing of Kraken vs. Coinbase

  • Kraken has started to invest in marketing, which has driven growth in their products.
  • Coinbase is recognized as a consumer brand, while Kraken is known among those more familiar with crypto.
  • The speaker discusses the evolution of Kraken's marketing and its impact on the company.

"I think there's a couple of different things just on the evolution of Kraken products. And one of the things we've done even more recently is actually start marketing."

This quote reflects on Kraken's recent foray into marketing and its effect on the company's growth and product evolution.

Commoditization of Marketplaces

  • The speaker argues that the cryptocurrency marketplace is not becoming commoditized, as it is difficult to establish the foundational aspects like security and compliance.
  • Many companies have failed or disappeared in the attempt to establish themselves in the market.

"It's extraordinarily difficult to get all the foundations right. Security, reg, compliance, all these different pieces."

The speaker highlights the challenges faced by companies in the cryptocurrency space to meet foundational requirements, which counters the notion of commoditization.

Cryptocurrency Myths

  • Common myths about cryptocurrency include the belief that it has no value.
  • All currency functions as a system of records, and bitcoin is considered a reliable ledger.
  • The speaker defends the value of cryptocurrency by comparing it to traditional currency systems.

"It has no value. And right, when someone makes that statement, there's like, okay, so this person hasn't done too much reading on history, which is not that."

This quote addresses the misconception that cryptocurrency has no value, suggesting that critics lack historical understanding of currency.

Utility Value of Cryptocurrency

  • The speaker asserts that cryptocurrency is inherently superior as a form of currency, though infrastructure and adoption are still developing.
  • There are differences in payment access and technology across the globe, with some regions having drastically different experiences.
  • Financial services industry costs are highlighted as a burden on consumers, which cryptocurrency could potentially alleviate.

"The delta in which how well it performs as a currency, frankly, I would assert that it's inherently superior for almost everyone in almost every place."

The speaker claims that cryptocurrency has inherent advantages as a currency, although full potential is yet to be realized due to current infrastructure and adoption levels.

Financial Services in Emerging Markets

  • Emerging markets often experience significant financial service costs.
  • Innovations like M-Pesa have been revolutionary in parts of Africa, surpassing some European and US financial products.
  • Neo banks are successfully addressing traditional financial challenges, as seen with Nubank in Brazil.

Actually, M Pesa has been an incredible innovation in large parts of Africa for many years. It's well ahead of a lot of european and us financial products and tools.

This quote highlights M-Pesa's success and its superiority over some Western financial services, emphasizing the potential for innovation in financial tools within emerging markets.

The Role of Cryptocurrencies

  • Cryptocurrencies like Bitcoin could serve as a hedge against inflation, a problem prevalent in many parts of the world.
  • Bitcoin's fixed supply makes it inherently non-inflationary.
  • Dave Ripley acknowledges the volatility of cryptocurrencies but notes the historical trend of Bitcoin's value increasing over time.

And I just keep going, what else are these currencies supposed to do? One of them is to hold value and one of the things that we've seen to varying degrees is substantial inflation.

Dave Ripley discusses the function of cryptocurrencies in preserving value amidst global inflation, suggesting that they can serve as a stable store of value.

Cryptocurrency as an Investment

  • Both individuals and institutions like Wall Street banks, hedge funds, and endowments are investing in cryptocurrencies.
  • The growing adoption of Bitcoin for various use cases contributes to price fluctuations.
  • Cryptocurrencies are seen as a long-term investment with significant potential.

And so we see individuals doing this, we see big Wall street banks and hedge funds and big investment funds doing the same kind of investing, or even endowments.

Dave Ripley explains that a wide range of investors are engaging with cryptocurrencies, which contributes to their volatility but also signifies their perceived long-term value.

Cryptocurrency for Cross-Border Payments

  • Cryptocurrencies offer a faster and less expensive alternative for cross-border payments.
  • Bitcoin and stablecoins are currently used by clients for international transactions.
  • Cryptocurrencies are likened to the Internet in terms of their broad impact and potential for specific use cases.

There's many of them, I think one where we see even our clients using cryptocurrency today, bitcoin and other stablecoins are for cross border payments, and it truly is substantially faster, substantially less expensive than any other means they have available to them.

Dave Ripley notes the practical use of cryptocurrencies for cross-border payments, highlighting their speed and cost-efficiency compared to traditional methods.

Future of Crypto Adoption

  • The future of crypto may involve consumers using crypto-based services without being aware of the underlying technology.
  • Service providers might simplify the user experience by hiding the complexity of crypto transactions.
  • Companies are using cryptocurrencies for payroll, leveraging liquidity services like Kraken for the backend.

I think we're starting to see that in places there will effectively be a set of service providers or companies that obfuscate away, frankly, a lot of the complexity that still exists there.

Dave Ripley suggests that the future of crypto will involve simplifying the user experience to the point where the complexity of crypto is not a barrier for consumers.

Cryptocurrency in Business Operations

  • Cryptocurrencies are becoming a popular choice for global payroll solutions.
  • Small businesses and freelancers are increasingly using crypto to pay contractors internationally.
  • The complexity and cost of setting up global payroll systems make cryptocurrencies an attractive alternative for smaller entities.

We certainly do, and there are quite a few. The use case, largely, we come back to the global piece. Setting up global payroll is incredibly difficult and complex, and only large companies really do it successfully and at reasonable cost.

Dave Ripley discusses the growing trend of businesses using cryptocurrencies for payroll, especially when dealing with global payments, due to the ease compared to traditional methods.

Cryptocurrency as an Alternative System

  • Cryptocurrencies provide an alternative to traditional financial systems, not a completely new concept.
  • The existing financial transactions and systems have been in place but cryptocurrencies aim to offer a better option.

y isn't coming out and being like, hey, the world has never known transactions or financial transactions or payments or money or what have you. Right? I mean, this is of course not what's happening. It is the alternative better system, not something hasn't existed before, if you will, at a fundamental level.

This quote emphasizes that cryptocurrency is not introducing the concept of financial transactions to the world; rather, it's presenting itself as a superior alternative to what already exists.

Balancing Fatherhood and CEO Responsibilities

  • Dave Ripley, with three young children, relies heavily on his wife Laura for support.
  • He spends a significant amount of time on his company, Kraken, and benefits from the flexibility of working from home.
  • Kraken's global remote model has been advantageous for balancing work and family life.

The reality is I spend an enormous amount of time and energy on Kraken. I actually spend a huge amount of time and energy. Family, I mean, of course, work from home helps. Our global remote model that we've had forever helps with that.

Dave Ripley discusses the importance of his wife's support and the company's remote work model in managing his dual roles as a father and CEO.

Remote Work Model

  • Dave Ripley acknowledges a trade-off with remote work, where in-person benefits are balanced against tactical advantages.
  • Remote work eliminates commute times and allows for flexible structuring of the day, which can lead to increased productivity.
  • Harry Stebbings expresses concern about the impact of remote work on young people's mental health and social needs, though he understands its benefits for parents.

There's probably a trade off. To the extent that you can be there in person at any given day, at any given time, there are benefits from that. It's like, okay, so what's the counterbalance to that? There's a bunch of tactical basic stuff. Commute time for individuals, allowing them to kind of structure their day, week, month, however they see fit is really helpful from a flexibility and frankly get work done.

Dave Ripley acknowledges that while in-person work has its benefits, remote work offers practical advantages such as saving commute time and providing flexibility.

CEO Improvement

  • Dave Ripley identifies communication as the area he needs to improve most as CEO of Kraken.
  • Transitioning from COO to CEO requires broader communication with the entire company and externally.
  • He admits to having a weak social profile which he is working on building.

I think that probably the biggest piece is communication. So as coo, I'm kind of like communicating with teams and in a more narrow space, but really communicating to the full company. 2000 plus started to do that, need to do more of that. And frankly, this as well. Communicating even externally. Outside of Kraken. I don't really have much of a social profile. Starting to build a little bit of that, but it's pretty weak right now.

Dave Ripley reflects on the need for improved communication within and outside the company, a responsibility that has grown with his role as CEO.

World Concerns and Changes in Perspective

  • Dave Ripley is concerned about the increasing number of conflicts around the world.
  • Harry Stebbings shares a change in his perspective regarding the quality of food and its over-processing by large corporations.
  • The conversation touches on the impact of food production practices on health and consumer habits.

Yeah, I think it's probably the various different conflicts that we see. Are we seeing more or fewer as we go forward?

Dave Ripley expresses his concern about the prevalence of conflicts globally, questioning whether there is an increase or decrease in such events.

Painful Lessons and Company Pivots

  • Pivoting a company to focus on new areas requires quick action but also deliberate communication and execution.
  • Failure to communicate and execute changes deliberately can lead to confusion and inefficiency within the company.

Is one of the things that we've had to do a lot this year, is pivot the company to focus on new in different areas as things evolve. We did a lot of that, maybe reasonably quickly, which was a good thing, but didn't really communicate and execute it deliberately enough such that it probably caused a lot of flail for the company.

Dave Ripley discusses the challenges of pivoting a company's focus and the importance of clear communication and execution to avoid internal turmoil.

Personal Legacy and Future Vision

  • Dave Ripley would choose the word "friend" for his tombstone to highlight the importance of individual relationships alongside worldly impacts.
  • He envisions significant growth for the cryptocurrency industry and Kraken over the next five years, serving more clients with expanded products and services.

Yeah, our friend? I think it a little bit simple and basic, but I think that's something that's pretty prominent and important is, yes, there's all these things that we do to try and impact the world meaningfully, but I think kind of like the individual relationships are just as valuable and important.

Dave Ripley shares his belief in the value of personal relationships and their importance in one's legacy.

Notion and Digits Promotions

  • Notion is a tool that automates tedious tasks like summarizing meeting notes and is used by many Fortune 500 companies.
  • Digits is a full-service AI accounting company offering accurate financial services with in-house CPAs.
  • Navan is a travel and expense solution that rewards employees for saving money on business travel.

But using them means switching back and forth between yet another digital tool. What was supposed to simplify your workflow just made it way more complicated. Unless, of course, you're in notion.

Harry Stebbings promotes Notion as a solution that simplifies workflows by automating tasks, contrasting it with tools that complicate the process.

They're a full service AI accounting company, and if you're in need of an accountant or looking to switch, there's no better solution than digits.

Harry Stebbings endorses Digits as a superior solution for accounting needs, emphasizing the efficiency and accuracy of their AI technology.

Navan rewards your employees with personal travel credit every time they save their company money when booking business travel under company policy.

Harry Stebbings explains the benefits of Navan, a travel and expense management app that incentivizes cost-saving behaviors among employees.

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