In this episode of Brand2Brand, Thomas and Veronica will journey into the mysterious and alluring crypto exchange space. Despite the vast riches some are predicting, cryptocurrency trading still strikes many investors and certain foreign governments as more of a money-making scheme than a sound financial strategy. In America however, consumers, experts, and the United States government are warming up to crypto’s potential global economic impact. For this episode, we’re pairing off two higher-profile industry leaders: Coinbase and FTX. Both brands spent millions on Super Bowl ads and taken on powerful partners and sponsorships in the sports world, and your hosts are looking past the buzz and the hype to see if crypto is here to stay - or another bubble bound to burst.&nbsp;

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TRANSCRIPTION FROM AUDIO PODCAST:

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Veronica&nbsp;&nbsp;

You're listening to Brand2Brand. A not-so-serious marketing show for serious marketers. With your host, Thomas Stirling.

Thomas

Hey, all you cool cats and kittens. Today on the show we're picking the crypto conversation back up. We'll look at brands like Coinbase and FTX to examine the role these exchanges play in the marketplace. Alright, let's kick things off.&nbsp;

Back in the studio, again. Third official crypto episode since we last talked. I mean it's been almost a year now? So much has changed. So much has evolved. And in recent news, not so bleeding edge, but the Biden administration put out an Executive Order intended to address most of the risks and opportunities of crypto. Very interesting to watch.

Veronica

Very interesting. So interesting to watch.

For those of us that have so much faith in government, it'll be very interesting to see a bunch of 70-year olds gathered around a computer googling crypto.

Yeah, that's why it's - maybe that one's less exciting for me today. I was just thinking about the last time that Zuckerberg talked to the Senate and he had to explain how the internet works. That was enlightening.

Well, I mean, I think no matter what, this is good news for crypto. It’s good news, arguably for many different financial market conditions in general. At the end of the day, if crypto is gonna grow up from a $1.5 trillion market to a $15 trillion industry, ultimately, there's gonna need to be some regulation.

For the longest time, I think a lot of people were like, "Eh, it's crypto. It's a fad. It'll die out. We don't know much about it. So too volatile. I could never have been one of these boys.”

Well, you still are -&nbsp;

Don't tell the people. So I think - first of all, this was called the "Crypto Bowl" (this year's Super Bowl). So you're seeing -

Bringing it back to the last episode - one of my favorites.

Seeing one of the premier advertising events of the year for the country led to an Executive Order from the President. I don't think you can ignore that the technology that is powering cryptocurrency or the opportunities that crypto brings that. And to think it's going away is very naive.

Yes. I think what's so interesting about all of this is watching China move to basically make crypto illegal. It gives us an opportunity as Americans and as the United States to own in some ways, the crypto economy and set the rules for what a crypto future might look like. And I think with that, let's get into it.

Alright - Coinbase, or FTX?

I am taking FTX.

Of course, you are.

Why?

Because they're the cool kids at the party. Less known cool kids though, because Coinbase is really where it's at. I just turned it around.

I'm like, "Wait a minute?”

So why FTX?

It is because the CEO is a fucking badass. I'll just say one thing that will make you understand why I absolutely adore this person and why I think he's so badass. He is a vegan who sleeps four hours a night, who is the richest person in cryptocurrency right now. Most of his wealth, he has said repeatedly, he will donate to charity eventually based on a philosophy called "Earning To Give".

I mean that just - it sounds like he's highly leveraged a personal brand with a lot of these attributes. But I mean, who knows, maybe not sleeping 12 hours a day? He's the richest guy in crypto.

He could be eating beef. He could be sleeping 12 hours a day. He could be lying and get to the end of life and have a change of heart, and be like "Actually, I'm gonna pretend I can take this with me.”

I'm pretty sure I saw that guy at the Capitol Grill with a nice big steak and a huge Budweiser.

In his private wine cellar in the basement. FTX has only been operating since October of 2017, so the fact that we're even talking about the budgets - not that it’s a huge claim to fame - is that Superbowl ad. We're talking about it, people are talking about it side-by-side with larger exchanges like Coinbase, I think really says something about the company that he's built.&nbsp;

Speaking about the Super Bowl ad though, I feel like we have to play this for the listeners. Because you know I'm not sure if - if that's why - it could be this ad. This ad's pretty flat.

Audio Clip

"I call it the wheel" "Hmm. What does it do?" "It rolls." "Yeah, so does a bagel. Okay, a bagel you can eat. One of the worst ideas I've ever heard." "Like I was saying, it's FTX. It's a safe and easy way to get into crypto." "Yeah...I don't think so. And I'm never wrong about this stuff. Never."

Don't be like Larry. Don't miss out on crypto or on NFT's.

Alright, so clearly I love the concept of this very altruistic CEO and his newer crypto exchange. And we're looking at the likes of something like Coinbase. Of course, you're taking Coinbase.

I mean, I use Coinbase. So it's a natural fit. And you know what having - if I was looking holistically - and for our listeners, I feel like it'd be doing a disservice if I didn't say, between the two of them that FTX kind of has a little bit of a better platform. But I'm already using Coinbase, so why switch? There's not a huge amount of value in me making the jump for somebody that's new? I mean -

Are you going to start to get ads like wireless providers that are "When you switch to Coinbase…”

"Switch to our crypto-wallet and save a bundle by bundling your crypto into one place with all your NFT's.”

I'm not excited about that (laughs).

Who the heck knows what's gonna happen? We are in such early days in this industry. And I think that's what everybody needs to remember, right? Even with all these legislative changes, ultimately - well, I shouldn't even say legislative changes. It's an Executive Order saying, "Hey, we should really take a look at that thing we've been talking about for a while." That's really all it amounts to, but it does signal that the US has not ruled out that crypto doesn't necessarily have a long-term place in the market systems. You know, obviously, China had a chance to look at it. China looked at it and China decided "No, no, no, this is too dangerous for us." And the US, I think this is just gonna continue to be a positive move for crypto, but Coinbase started in 2012. You know, while FTX might be a better product, Coinbase has a moat around their brand. Ultimately, they have been so popular - such a proliferation, it's sort of like the stranglehold that Amazon has over online retail or Airbnb, Google, Apple, Facebook, Tesla. You know, these brands become synonymous at some point, this concept of this economic moat. They've been at it for so long, they have such a huge stranglehold around customers. That's why you're seeing all these crazy provocative ads for other brands. And when you mentioned the CEO, you mentioned a lot of positive things. I mean, the CEO of Coinbase came across a white paper on Bitcoin in 2010. This was after working at IBM, Deloitte, he was at Airbnb for a little while and he said, "You know what, it's time to make a change", and he made the pivot, and he jumped. Let's play the clip.

Audio Clip

"I'm Bryan Armstrong, co-founder and CEO of Coinbase. Coinbase is a company with an ambitious vision to create more economic freedom for every person in business. Everyone deserves access to financial services that can help them create a better life for themselves and their families. This idea is why we founded Coinbase. With the mission of building an open financial system for the world."

I think one of the things that’s been blowing my mind - we're obviously talking about FTX, newer to the space - Coinbase has really established as you put it, an economic moat. Crypto is still dominating the startup culture, and there are still startups that we're seeing pop up and new brands that are trying to break into this space and start their own exchange or start their own coin.

100%. And, they are doing just fine. Do you how much Coinbase spent on their Superbowl commercial? They paid a whopping $14 million for a one-minute long ad. And it ended up getting hit so many times - 20 million people used the code - that it temporarily crashed the app.

In 2021 they hired a former Facebook Global Head of Brand and Product to join Coinbase as their CMO. And she had said when she was first taking the position, her goal was to make Coinbase more visible to the masses. What better way to do that than troll people with a nostalgic Super Bowl ad?

Oh, my God. I mean, it's so funny. You hear the video, you talk about how they want to create. And I mean, you know, people that are in the crypto space - they want to create this financial system that isn't dependent on a government and otherwise. But then their company is actually sitting down with regulators. They met with the SEC chairman to discuss, and ultimately they want regulation and they want financial institutions to be able to protect customers. Specifically, in December of last year, the heads of these organizations - CEO of Circle, CEO of FTX, CFO of Coinbase - all testified and explained the importance and the need for regulation.

Meanwhile, the CEO - SBF (Sam Bankman-Fried) - of FTX moved his headquarters to the Bahamas. He was originally in Hong Kong. He moved to the Bahamas because the Bahamas passed a forward-leaning crypto Bill regulating the industry. Is there a world where FTX could become an American company based in the US if regulation that the CEO thought was good for cryptocurrency?

Well, that's another part of the Executive Order. There's a huge push towards keeping this investment and innovation in America. With that, let's play just a little excerpt of the hearing. So for this clip, we've got the CEO of Bit Fury Group, Brian Brooks, talking to lawmakers about digital assets back in December of 2021.

"A national policy agenda that takes crypto compliance seriously should assess whether it makes more sense to continue to keep crypto activities largely out of the regulated financial system, or whether it makes more sense to bring them inside the system precisely so that they can be supervised and operated with appropriate levels of risk management. Second, Americans deserve to know what our national policy is for a decentralized Web3 powered by crypto assets. Treating crypto as a single unitary activity whose main feature is a need for financial regulation would be like treating the original internet in the 1990s as primarily a tax policy issue. We didn't do that then. What we had in the 1990s - with respect to Web1 - that we lack today with respect to crypto is a comprehensive national policy predicated first on the notion of Do No Harm to the emerging network. Today, instead of focusing only on micro questions, such as whether a particular token is a security or whether a particular exchange-traded fund may be offered, it would be worthwhile for the elected branches of government to grapple with the bigger questions."

I'm going to cut it there. I know, that's a lot. I wish that I could cut to the shots of the members of Congress that are just like "Ugh...stop talking to me about crypto." (laughter)

But what he's touching on is how important this is. I love the strategic imperative tying it back to Web1, when the internet sort of first came out. It's sort of an interesting challenge in the crypto space, to both support and love decentralization, then be going to one of the biggest governments in the world and saying, "Hey, could you guys come in here and just verify this market for us?

They're like, "I don't need you Mom, I'm moving out. (pause) Do you have 20 bucks for gas money?"

"If you could just co-sign on the apartment for me, that would really help out."

One thing that's really interesting - we talked about the Superbowl ads - we have to think about the marketing choices that some of these companies are making. FTX particularly has touched on creating - similar to the same vein of the Superbowl ad - really strong sports partnerships. Their ambassadors are Tom Brady, Steph Curry, Trevor Lawrence, David Ortiz. They're really just dominating this idea of creating these emerging athletes and their strategic partnerships.

They have absolutely attacked that brand problem by bringing on major celebrities to usher people in and this concept of Don't. Miss. Out

I think their brand's big enough where they got me.&nbsp;

Okay, why don't you put your money where your mouth is then and actually do a little digital unboxing in a gown?&nbsp;

COINBASE vs. FTX: Will The Crypto Bubble Burst?