#81: Coinbase IPOs with Brett Tejpaul

Craig Stephens (0:00)

Coinbase built its name on crypto, but it's quietly turning into something much bigger. They call it the Everything Exchange. This year, it started offering stock trading, and now it's giving retail customers access to IPOs. My guest today is Brett Tejpaul, co-CEO of Coinbase Institutional. Before Coinbase, he spent a few decades at Barclays and JP Morgan. He joined Coinbase in 2020 to stand up the institutional side of the business, which laid the rails for stable coin adoption and tokenization. Welcome to the Access IPOs Podcast, where we explore opportunities to invest in the world's most innovative and disruptive pre-IPO companies. I'm Craig Stephens, founder of Access IPOs. And in today's interview, we get into how Coinbase landed in the Oura S1 filing. And I loved Brett's answer to this question because it was so on brand. Even though the Oura IPO was postponed, Coinbase has lined itself up to participate in upcoming IPOs going forward. So keep an eye on your Coinbase account to see which deals land in the coming months. We talked about how IPO allocations are going to be handled on the platform and how allocations might be ready for a reinvention. And we also touched on the debate around flipping policies, why the banks want them and why retail investors don't like them. And since I don't know too much about it, I use this opportunity to ask my guest about the tokenization of pre-IPO companies. That's something that's happening in different parts of the world, it's not quite ready here in the US, but it's something that's coming down the line. And then finally, Brett was around during the Coinbase direct listing. So I asked him about that, what things were like at that time of the company's history. That's enough of the intro, let's get right into the interview. Brett Tejpaul, co-CEO of Coinbase Institutional, thanks for joining the show. Happy to be here, Craig. Tell us first of all, a little bit about your role at Coinbase.

Brett Tejpaul (1:51)

Sure, I got here seven years ago after 17 years at Barclays and 10 years at JP. As co-CEO, I'm responsible for the four exchanges we have. So Coinbase is probably best known for its consumer brand, but the actual functioning, the running of the exchanges itself is within the institutional portfolio. So we have the US Spot Exchange, a futures exchange, as Chicago, Bermudian Exchange, it does Perps Options and Deribit, which we bought last year for to enable options in Perps and Spot as well. So four exchanges. The institutional business is best known for its institutional prime offering.

So that's the bundled offering where you can safely store, stake or yield on USDC, trade derivatives, Perps, Options, Spot.

You can do all the things that one wants to do with a crypto asset or financial asset eventually. And then the last part of the portfolio is an asset management business as well.

Craig Stephens (2:52)

So we learned last week or last month that Coinbase is going to be offering IPO access to its retail customers. What does that mean for where Coinbase is going in the future? I've read about the Everything Exchange, that Coinbase is a crypto native platform, but you're moving into stocks, you started offering a stock trading earlier this year, and now IPO access. So how does that fit into the big picture here?

Brett Tejpaul (3:19)

Well, I'm going to go super big picture first before we get to IPO, so I'll get there. But super big picture, I've been here seven years, and over that seven years, the first phase of the mission was really to enable the first wave of institutional trading and custody. So we built the product platform and we did things like Smart River routing, agency trading, principal trading, a whole product suite that eventually manifested into the prime platform that it is today. So the first chapter is about the first movers, macro funds, endowments, corporates. We've got, I'm sure, a long list of interesting clients that you know all about. That was phase one. Phase two was ETFs coming to the US, and Coinbase is absolutely dominant there. So we are the dominant institutional global platform. We've got 90 percent market share across all the ETFs that were listed. I'm sure that you know about our partnerships of Grayscale and BlackRock and Strategy, and there's a long, long list. But that was phase one. What's interesting about this next phase that we're just getting into is, again, keeping side of the big picture. Last week, I was just in Cybos, which is a payments conference, and we announced a huge partnership with Citibank.

Crypto big picture has been saying, better, faster, cheaper, it's going to disrupt the existing financial space, but how is it going to happen? That Citibank partnership is huge because what happens is, we wanted to manifest Stablecoin payments internationally, domestically as well, but we still had to jump into the banking system to do it. You begin by wiring to a bank account, then wiring to your Coinbase Prime account, then executing an international exchange via Stablecoin. But on the other end, whoever received it, still had to actually then go to a bank to withdraw funds. That process, although when you're on crypto rails, it goes like this one second, one set one second anywhere, instantaneously, well, you still had this on-ramp, off-ramp thing, they call it the Stablecoin sandwich. The importance of Citibank is that we've activated the US, the UK, parts of Europe and eventually everything. But now you have a Citibank virtual account. It's an account, but in it, merchants can accept payment in things like Stablecoins. And behind the scenes, what's happening is where Citibank and Coinbase are doing the exchange of dollars to Stablecoin, Stablecoin to dollars. So for the first time in all these years, we have this industrial, faster, better, cheaper, is going to happen. That's important as a holding place for the next part of the conversation. We're going to talk about what else you can trade on crypto rails. But remember, you have to do things like money moment, the ability to actually buy a stock, the ability to do collateral management for things like leverage. So that's a really big part of the picture. So this is the year that stable coin payments, I think, are really going to manifest and ramp globally with the US in front. So that's important.