Launched in 2012, Coinbase has quickly established itself as the benchmark exchange platform in the United States. But the company, which claims almost 90 million users across the globe, wants to expand well beyond its core market, particularly in Europe. We spoke to Nana Murugesan, who is responsible for the company's international development. Exclusive interview!
The Big Whale: You joined Coinbase 2 years ago, and have quickly become one of its heavyweights. How do you explain this?
Nana Murugesan: I've been interested in cryptocurrencies for a long time, but it wasn't until I joined Coinbase that I totally switched over to this industry. Before that I spent ten years at Samsung and Snapchat, where I worked on mobile payments and everything to do with content creation.
These two experiences helped me understand just how much the world is changing, both in terms of payments and content creation. We've already forgotten about it, but just a few years ago it was almost unthinkable to pay with your smartphone. People were reluctant to use Samsung Pay, Apple Pay, Google Pay, but eventually everyone switched over. Our belief is that we're in the process of experiencing the same thing with crypto-currencies.
This switch will go even faster because there is simultaneously the emergence of a creative economy, which has enormous potential. Today anyone can create online, and cryptocurrencies make it possible to own this new digital universe. I have two daughters who are 10 and 14, and I can tell you that they have a very good grasp of the world we're about to live in.
What interests you most about this world?
I think the impact of cryptocurrencies is far greater than anything I've worked on before. Cryptos are improving the current economic system, especially the current financial system. The financial industry is the last one that hasn't evolved in the last few decades, so it's both necessary and very exciting to contribute.
You're in charge of Coinbase's international and business development. What exactly is your mission?
My mission is to get people to use our services, quite simply. To achieve this, I have two levers: the first is international business, i.e. outside the United States. As an American company, the majority of our users are in the United States, but since we want to take on 2 billion users, we can't be satisfied with the American market alone. We need to go much further, and that's my role.
The second lever is business development. I'm working on partnerships to develop our services around the world. We're a big company, but we can't manage everything on our own. We're working with Circle on stablecoin. On the payment side, we're working with banks and with developers for our Base (Ethereum Layer 2) protocol. We also need to cooperate to grow.
What is your strategy for expanding abroad? In Europe, there are already major players like Binance, Bitpanda or Kraken?
We have a fairly simple strategy, which is "Go Deep and Go Broad". We defined this strategy 18 months ago and we are in the process of deploying it.
"Go Deep" means that in markets where there is clear regulation and a stable environment, we want to develop "in depth". This is the case in the European Union, for example, with MiCA regulation . The regulations are clear enough for us to want to develop strongly in the European Union.
When the strategy is "Go Deep", our ambition is to be the market leader, and this is the case in Europe. This is obviously also the case in the UK.
In America, in addition to the United States, Canada and Brazil are markets where we also want to be the leader. Australia is also one of our priorities. We have teams on the ground in all these markets 🙋♂️.
Does this mean that other countries are not a priority?
We are obviously targeting them, but other countries align with our "Go Broad" strategy. In this case, the idea is to start with one country and then serve others.
A good example of this strategy is our derivatives platform that we launched in Bermuda, which is a highly respected jurisdiction, especially in crypto-related matters. It is from this platform that we address other markets. It is through the combination of these two strategies, "Go Deep" and "Go Broad," that we are able to expand globally 🌍. "Go Broad" is just as much of a priority as "Go Deep."
Do you have a list of countries you refuse to go to?
One of our compasses is the Heritage Foundation's Index of Economic Freedom . This index tracks the level of public freedoms, particularly economic freedoms. If you look at the countries where the Index is highest, you pretty much have the list of countries that correspond to our "Go Deep" strategy.
Inversely, there are countries where this freedom is less, and where regulatory clarity is almost non-existent. Our aim is to be in as many countries as possible, but that doesn't mean we'll be in every country. It's a subtle balance to strike, because there are also issues of reputation.
You want to accelerate in Europe, especially in the European Union. How are you going to do this in concrete terms?
By continuing to do what we've been doing for the last few years: weaving our web. We have already obtained registration in several European countries. We were among the first to obtain a licence in Germany in 2021. Last year, we were registered in Ireland, the Netherlands and Italy. We are still waiting for registration in France and Spain.
You don't yet have a European headquarters. Where do you want to set it up?
We're waiting to have all our registrations before deciding where to set it up. Whatever happens, even if we decide to locate our European headquarters in one country or another, we're not going to abandon the others.
Our aim is to have a presence throughout Europe, even if MiCA only requires registration in one country. We're going to hire throughout Europe because each country has its own specific characteristics. I was in France a fortnight ago. This country has incomparable advantages in the world of NFTs and blockchain technologies. There are a lot of very good projects and the community of creators is particularly active. We also have several projects in France.
What are they?
I can't talk about them yet.
Which companies are you working with in Europe?
We try to work with everyone. Obviously with Web3 companies, but also with companies in the traditional economy. For example, we have signed a partnership with Borussia Dortmund in Germany. It's a partnership on the brand side.
We're also working with payment players to make it easier to buy and sell cryptocurrencies via Coinbase. We have a partnership with the UK's TrueLayer to handle payments and money transfers in Europe. We also work with PayPal and Block.
PayPal, Block... Many of your "European partners" are American!
There are also European partners.
How many customers do you have in Europe?
This is not a figure that we give. Worldwide, we are one of the leaders (the company claims almost 90 million users, editor's note), and it's the same in Europe.
What I can tell you is that Europe represents 20% of our business. It's by far the 2nd region of the world for us, behind the United States 🏆.
What is your main market in Europe?
It's the UK, then comes Germany and after that France.
Why the UK?
There's obviously the language issue. We're an American company, so there's something natural about the UK. But we want to develop further in other countries like Germany and France.
You have customers in many countries. In the United States, Europe, Asia... Do you see differences among your customers depending on geography? Do they want the same products?
There are indeed differences, because the maturity of the markets is not necessarily the same everywhere. But what is clear is that there is a global demand for a more extensive offering, with more complex products. We're seeing this in Europe in particular.
Many Europeans only use Coinbase to buy and sell cryptocurrencies, not more. How do you explain this?
Our aim is to get as many people as possible into cryptos, so we've created the simplest possible application to use. And from that point of view, I think the mission has been accomplished. There's nothing simpler than using Coinbase.
The problem is that once they want to really invest in crypto-currencies and use more complex financial products, your customers go to other platforms like Kraken, Binance, and before that FTX...
This is indeed a topic, and we've had a lot of feedback from users on this point. Some people want much more complex, much more advanced services, and we have to be able to offer them.
That's why we launched Coinbase Pro this summer. We are going to push the platform in Europe. In the UK, we've just launched a month-long 'zero fees' campaign, and we're going to do the same in the rest of Europe.
What are your ambitions with Coinbase Pro?
We clearly want to be number 1. The aim is for traders to use our services because they are better and safer.
How are you going to achieve this?
Investors want to work with platforms that offer them the best services, with complete confidence. That's what we've been trying to create with Coinbase for over 10 years.
Since its inception, Coinbase has diversified beyond buying and selling cryptocurrencies. What are your other activities?
Today, only half of our business depends on what is broadly known as cryptocurrency trading. Coinbase was built on retail trading, but for several years now we have been diversifying all the time.
We are present in stablecoins with Circle (Coinbase has invested in Circle, which issues the stablecoin USDC). Stablecoins are an essential tool for cryptocurrency adoption, so we're betting a lot on them, and not just on the USDC (dollar), we also want EUROC to grow.
What are your other non-trading activities?
There are a lot! There's our "yield" business, which allows our customers to invest their cryptocurrencies and receive a fee for doing so. The situation in the US is not yet very clear on this subject. The US regulator (SEC) wants to control things more, but we feel that things are moving (read the interview with Paul Grewal) , and in the right direction.
We also obviously have Base, which is our layer 2 on Ethereum. It's brand new, but we're relying heavily on this protocol to provide a tool and services to the community. And finally, there's the subject of our digital wallet, Coinbase Wallet. We're working on it to make it easier for our users to move from the world of cryptos to that of traditional currencies, and vice versa.
How are things going in the US?
As you know, things aren't simple in the US (read our dossier) . We have several regulators: there's a regulator for equities, another for commodities, not to mention the fact that there are regulators at federal and national level...
But we're very pleased to see what's been happening over the last few weeks. Things are moving forward, particularly in Congress. Several pieces of legislation on the sector are coming through. The aim is for there to be as much clarity as possible on crypto.
Politically, things are still not that simple. What other channels do you use?
When there is no politics, there is justice. We can use the levers of the law to defend our interests and those of the industry. This is what we have started to do, and what we will continue to do.
