This is Leaders in Finance, a podcast where we find out more about the people behind their successful career. We speak with the leaders of today and tomorrow to discuss their motivations, their organisations and their personal lives. Why? Because the financial sector could use a little more honest conversation. We’d like to thank our partners for their ongoing support. They are: EY, MeDirect, RiskQuest, Kayak and Roland Berger. Our guest this extra episode is Country Director for a crypto exchange platform with $154 billion traded per quarter. It is a trading platform, right? “We actually are a one-stop shop for everything within the crypto space.” She does regret not buying crypto in 2015. “That is okay, because I am a representation of the next billion people that we ultimately want to get in this ecosystem.” And she’s happy with the digital assets maturing. “People are starting to understand and are committed longer term to digital assets. That is super exciting to see.” Our guest this extra episode is Elke Karskens, Country Director for the Benelux and Nordics at Coinbase. Your host is – who else? – Jeroen Broekema.
Jeroen: Welcome to a new extra episode of Leaders in Finance. This week, we have Elke Karskens, she’s the Country Director Benelux and Nordics at Coinbase. Welcome, Elke!
Elke: Thank you, happy to be here, thank you for having me.
Jeroen: Elke has an impressive career in various leadership positions. Currently, she’s active at Coinbase, as I said earlier, where she holds the role of Country Director for the Benelux and Nordics region. Prior to this position, she was with Facebook/Meta, as well as with Skype. Elke is 38 years old, has three children, is married and lives currently in London, but is relocating to the Netherlands. That is a short introduction about you, Elke. But I would love to know, how do you get from Skype to Facebook/Meta and now to Coinbase?
Elke: That’s a good question! First of all, thank you for that very accurate introduction. My entire career, I have been in consumer technology. Back in the day, I actually started off at TomTom here in the Netherlands, I was born and raised in Amsterdam. I started off working at a navigation provider, TomTom, which I’m sure some of you – depending on the age category of the listeners – are familiar with that. But that was really my first introduction into tech. Back then, people were still navigating and getting around by using maps. But the introduction of this portable navigation device, TomTom Go, which was the first device that they introduced for the masses, fundamentally changed how people were getting around and navigating. That was the first time that I basically got introduced and saw the impact that technology can have, and the excitement around technology as well. Back then, when the TomTom Go sold out, our customer support was completely overwhelmed, and you couldn’t get your hands on the devices. It fundamentally changed how people were getting around. So that was my first feeling of what technology can do and how it can fundamentally change people. From TomTom, I ended up going to Skype and again, that was another company that introduced technology that fundamentally changed how people communicated. Right now, we’re all familiar with having the ability of just giving somebody a video call and seeing them. But back then, that was rare. When you were travelling, or you had family members living abroad, it wasn’t that straight-forward of staying in touch. You very often had very expensive phone bills associated with calling your cousin in New Zealand. You’d have to schedule an appointment when you were calling them, let alone being able to see them. So when Skype was introduced, that fundamentally changed how people communicated. It reduced that barrier, it was truly the next best thing to being in the same room. And it was a spectacular journey to have been part of. And I like that, I like the impact that it had. When I spoke to people and neighbours, they were like, “I can finally see so-and-so who is living abroad.” Whereas before that, that wasn’t really possible. So I spent about four years at Skype, and then a recruiter from Facebook got in touch. This was in 2010, things were going super well at Skype, I was loving being in consumer tech, one of these super hot brands, et cetera. But I decided to have the conversation with them anyway. They ended up making me a job offer, but this was in the days that companies like Hives were still super big here. So I remember family and friends saying, “Are you sure that’s the right thing to do?” It was this American company that nobody really had heard of, we had these huge super local players here. And I thought, “You know what? Let’s do it.” And that turned out to be the best career decision I ever made, being part of that journey. I joined Facebook in 2010 or 2011. Back then, we were based in the UK, we only had seventy employees. We hadn’t even launched our mobile app. Back then, Facebook was just a website to stay in touch with whomever you wanted to stay in touch with. Having been part of that journey has been truly foundational to my career, and having been part of that journey. Despite everything that happened at Facebook post 2016 with Cambridge Analytica, fundamentally, the company was laser-focused on making the world more connected and playing a role and being a part in that journey was fantastic.
Jeroen: Before we move to that last step to Coinbase, what were the kinds of roles you had at these businesses?
Elke: I joined Facebook as the Head of Marketing for their developer platform. So we basically had a different set of tools and services available for developers. So at scale, we tried to drive adoption of that. I then moved into a role where I was more responsible for product marketing for utility products. So again, that was more on the B2B side. But also back then, consumer products with a utility angle were super popular, if you think about Facebook groups, et cetera. With them, I ended up moving to the US, so I spent about four years in Silicon Valley at the heart of Facebook, which was absolutely incredible to experience and be part of that and part of tech in that era as well. And then, when my husband and I decided – because we had two kids in that period – to come back to Europe, a very natural opportunity arose. Because this, as I mentioned earlier, Cambridge Analytica had happened in 2016 and the value that people saw that they were getting from Facebook and the subset of products that were a part of that started to decrease a little bit as well. There was a perception, and I think there still is today, that Facebook is for slightly older generations, et cetera. But basically, because there was not a lot of brand loyalty that people felt back then with Facebook, the blue app, I was asked to basically lead our marketing for our software brands internationally. That was a super exciting opportunity because that meant in a market like the Netherlands or Germany, how do you really fundamentally change the perception and the value that people see from an app? But when you think about a market like Brazil, it was really all about establishing WhatsApp as the main messaging platform. But then in Southeast Asia, for example, it was more around digital literacy, how do you address that? This was also when false news was starting to get bigger and bigger, and digital literacy in a lot of markets is very real. How do you explain to people that not everything that they see is fundamentally real? So those were super interesting challenges to tackle. And then, after having led our international marketing, I decided that it was time for a change. I wanted to get out of the marketing function a bit as well, I moved over to Workplace. Workplace is a product that basically Facebook for work. It’s like a knowledge management solution, having one place where businesses can communicate with each other, where information is being stored. But also the connection is incredibly important, especially for the longevity of organisations where the next base of employees is less traditional than what organisations were used to in the past. When you think about millennials and even now, Gen Z, it is incredibly important for them to understand, “What’s the purpose of the company? How can I contribute as an individual? Are my ideas heard? Am I being recognised?” So ensuring that businesses have technology embedded that really creates openness and transparency and helps build a certain type of culture that can stand the test of time was something that we deeply believed in. I’d say that Facebook is a company that was one of the leads alongside the other big five tech companies where the employee culture is very much at the heart of the business. And the employees themselves are considered to be the most important asset.
Jeroen: Are the current Facebook and Meta employees as proud as you are, you think?
Elke: Back then or now?
Jeroen: Currently.
Elke: I think a lot has changed, to be honest with you. I was obviously there through the rise of the company, it’s been tough with the redundancy cycles that they’ve seen across the board. But I think fundamentally, if you look at how companies are run, like Google and Facebook – I should Meta now – I left before they called it Meta.
Jeroen: You’re still allowed to call it Facebook!
Elke: I’m still calling it Facebook, I think I’ve earned my credits there. It’s not just the benefits, but I do think it’s a culture that is very different and much more positive in many ways. I think what you find in companies that are run in a lot more of a traditional way, are much more top-down. Are they as happy today as five years ago? Probably not. I think that’s likely a consistency across the board in corporates today, given what we’ve all just been through in the past 18 months.
Jeroen: That makes sense. And then, as I said, you moved to Coinbase. In my preparation, I listened to a couple of the things you were featured in. It was interesting to learn that you didn’t know much or close to nothing – I don’t know if I’m right – about crypto and everything.
Elke: Correct.
Jeroen: How did you end up with Coinbase?
Elke: That is very true. I am definitely not a crypto native, I do obviously now regret being in the space not having bought Bitcoin in 2015. But that is okay, because I am a representation of the next billion people that we ultimately want to get in this ecosystem. So I’d heard about crypto, but the first time I was properly introduced to crypto and understood that there is a much bigger use case for crypto beyond that of a diverse investment strategy was actually at Facebook. Because in 2018 they internally announced the plans they had for Libra, a stablecoin project, with the intent to be able to create access to financial services and tools for those in developing markets. That was the first time I thought, “There is a lot more to blockchain technology and the impact that can have at a societal level”, versus it being – as I said earlier – a diverse investment tactic. Which probably still holds true today, I think if you ask most people that are holding crypto today in more developed markets like ours, it’s probably because they want to diversify their investment tactics. It’s probably not entirely driven with this deeper purpose and vision of changing a financial system as we’ve known it for the last hundred years. But it can really offer a different type of solution, a very meaningful one, especially when you look at markets where the fiat stability is not there. Stablecoins, for example, offer an amazing haven of stability. So there is a lot more to crypto than what you might experience on your Instagram and TikTok feeds, which is a lot of screaming, “Buy, buy, buy, sell. These are the top tokens, get rich quick!” Crypto has a promise that is actually super meaningful.
Jeroen: We’ll definitely get to that later. I’m just curious, because there were apparently people who were saying, “What are you going to do with that American company?” when you joined Facebook. Were these same people or new people saying, “What the heck are you going to do now?”
Elke: Yes, absolutely. People were like, “Crypto? Isn’t that just gambling? Why would you do that? Why would you leave a company like Facebook?” In your career, you reach a certain point, “What’s next? Am I going to stay here for life, or is it time for me to be part of something bigger?” I fundamentally believe that in ten years from now, when we reflect, “What changed technology”, we’ll be part of the pipes as we understand it. And we’re early still, we are so early. And being part of hopefully the next ten years of the chapter on how this is all going to play out and the role that Web 3 will play, I’m super excited about it. Initially, I was always a bit scared, “What does this space really do? I don’t have a background in this.” But I think if you’re competent, and you’re smart enough, you can pick most things up. And I’m fortunate to work alongside some of the smartest people.
Jeroen: You started learning about it, right?
Elke: Yes.
Jeroen: Were you surprised about things when you started learning about it?
Elke: Yes, I was surprised about it. Once things were explained in laymen terms, things end up making a lot more sense. And you don’t have to be a deep crypto native or a day trader in able to be respected and comfortable within this space. And I took really small steps. I decided, “I want to find my next role within the Web 3 space.” So I started doing my research, I actually joined a group here in the Netherlands, a group of women like myself who were interested in the space but didn’t know much about it. We ended up educating each other by bringing in external inspiration, learning together and very much being part of a safe space where you can actually ask questions that I may not feel comfortable asking in front of others.
Jeroen: This group you’re referring to, is that all before you joined Coinbase or knew you were going to join Coinbase? Or was it in preparation for your job?
Elke: Sort of. We’re getting quite personal, but I had my third kid and, in the UK, your maternity leave is a little longer, so I had made the mental decision that after almost twelve years at Facebook, it was time to leave. I had my mind set, I wanted to basically get into the Web 3/Blockchain space. And that’s also when I started learning a little bit more about it. So it went as intended and I eventually ended up getting hired at Coinbase.
Jeroen: The reason I’m asking is that when I was looking at your resume and everything in preparation, you see TomTom, you see Skype, you see Facebook and you see Coinbase. And every time, apparently, you have quite a good feeling of relatively small businesses – it’s all very relative, Facebook was already a huge business, but it’s much bigger today and definitely Skype and TomTom that were much smaller than when you left – what the next big thing is. Or is it just luck?
Elke: I don’t know. I hope in ten years from now we’re right, and I’ll be here again, and you’ll be like, “Elke, you were right about making that move back then.” I think there is a little bit of luck in it as well. I can’t predict the future at all. All I know is that I’m excited about what it is that I’m seeing, the potential that it holds, and I took a step in a certain direction. Facebook was definitely a little bit of luck. They practically reached out to me, I was having a great time with Skype, I could’ve stayed there another five years. But this was a little bit more intentional, and I think the more mature you get, the more intentional you do become in the steps that you are taking and the types of companies you want to work for. For me, it’s incredibly important to work for organisations that operate in the right way. Being in a licit company means that we have certain responsibilities, compliance and safety are first in everything that we do and build. So it was very intentionally for me to go to an organisation like this versus trying something a lot smaller and perhaps a little bit more risky as well. So there was more intent behind joining an organisation like Coinbase. In addition to that, the leadership at Coinbase – we’ll get to Coinbase, obviously, in more depth – the executive team is the real deal, in my opinion. I listen to a lot of podcasts, I love a good podcast, of Brian, his vision, his beliefs. And when you look at the leadership team across the board, these are people who have built things in the right way in the past. That in combination with the fact that it’s a company that has compliance at the forefront and is in the blockchain space felt like the right way forward.
Jeroen: I’ll definitely ask more questions about Coinbase, actually quite a lot. But one more question about you, there could be many questions, you have a very interesting career, and it’s amazing what you’ve done so far. I’m just curious, being Dutch, a lot of listeners of this podcast are Dutch or related to the Netherlands somehow, having worked for a US company and now again, is that very different from what you have seen? You’ve had TomTom as maybe your only experience, but I’m sure you have a lot of friends and other people here where you can compare working for a US company and a Dutch business, what would you say?
Elke: I think working in tech is different to working in a more traditional corporation. And what comes with that is the employee experience itself. Having worked in an American company where we do engage with either Dutch vendors, et cetera, the stereotypical holds true. It’s very direct, I remember working with a vendor. This was around a time when I was involved with an FA conference. The guy who was leading the organisation was so direct and my entire team was like, “What is he talking about? This feels super uncomfortable.” I was like, “No, it’s cultural. You’re asking a question, and he answered your question.” But I think over time, I have softened up a little bit, having worked at big American tech companies. There are certain communication norms that are slightly different.
Jeroen: Can you name an example of something that you think is quite different? Or that a lot of Dutch people actually get wrong in their communications with American businesses, for example?
Elke: I actually find Dutch communication super refreshing because you know exactly where you stand, people tend to hold true to their word, they are quite direct in the answers they give to certain questions. I’ve walked away from many meetings and conversations with some American colleagues and companies where I walk away thinking, “Okay, great. We got to an agreement on x, y and z.” And a day later, you get a follow-up e-mail, and I’m like, “Wait, we just agreed on that and that is what we discussed.” So, sometimes either the questions aren’t intended to really get the answers that they want, people just say something for the sake of saying it. As well as the way people respond, there is a lot of starting with the positive and then slowly they end up really getting to the crust of what it is they’re trying to communicate. So it’s a lot lengthier.
Jeroen: I think it’s good to talk to people before you start working for a business from another culture. I remember very vividly working for a British company that if people tell you, “It would be really nice if you can finish this assignment before Thursday”, that means you better get it done before Thursday. Whereas some Dutch people may think, “I can hand it in on Monday, that’s fine.” But it’s not.
Elke: Yes, totally, you’re right. I think understanding that is an enormous change. Skype was a Swedish/Estonian company, they were more Dutch at times than the Dutch are, if that makes sense. Working with developers based in Estonia was an entirely different experience as well, to say the least. Even more direct, even shorter. Again, different cultures, different ways of communicating, different norms. You learn a lot and by understanding you can add value.
You’re listening to Leaders in Finance with Jeroen Broekema.
Jeroen: Let’s learn more about Coinbase. The way I love to structure that, if that’s alright for you, is looking at the different stakeholders. Because otherwise, I just ask you about Coinbase and you can talk for a long time, which is great. But maybe structuring it a little bit would be helpful. Maybe we can start with the customers, who are the customers of Coinbase?
Elke: To be very Dutch, we’ve got a lot of customers. For those of you who are less familiar with us as a product and a company, we’re a global crypto exchange. We were founded back in 2012 by Brian Armstrong and Fred Ehrsam. Despite what most people think about Coinbase, we actually are a one-stop shop for everything within the crypto space. Most people are probably familiar with the very easy and safe way of being able to buy, sell and trade assets. We have about 240 assets available on the platform. Today, we keep on adding assets to it. But we offer a lot more than that. For people that, perhaps a bit more like myself, who are not crypto natives or people that are interested in getting started within crypto, we have a very easy solution. But we also do offer a product called Advanced Trade, which is basically an interface for day traders, for people that are really deep into crypto as well, which a lot of folks are not familiar with. On the consumer side, we basically offer a product for crypto beginners and crypto intenders, a very safe way of getting involved. But then we actually have solutions as well for a much more advanced audience. and also within the consumer world, we offer payment methods that people are familiar with and that are customised at a local level. In the Netherlands, being able to offer iDEAL is incredibly important. When I ask any of my American colleagues, “We really need to get this iDEAL payment method integrated”, they are like “I-what?” But here in the Netherlands, when iDEAL isn’t enabled, it’s just an absolute no-go.
Jeroen: And in terms of customers, you said a lot, but do you have some numbers?
Elke: We don’t share customers at the market level any more.
Jeroen: And globally?
Elke: We have hundreds of millions of users, but we stopped breaking them down specifically in earnings.
Jeroen: Let’s put it in another way, being the head of Benelux and Nordics, is that an important part of the business?
Elke: It actually is, believe it or not. International is a huge focus right now for the business. If you look at our business, about 20% of our business is international. But when you look at crypto, 80% of crypto usage is international. That isn’t entirely aligned. Brian made a very intentional decision of focusing and growing the international business moving forward a lot more. We have something what he refers to as our ‘go broad and go deep’ strategy. What that really means is that there is a set of markets that we fundamentally believe we need to go very deep in. The Netherlands is one of those markets. It’s one of the fastest growing and one of the biggest markets for us in Europe as well as globally. We fundamentally believe that the Netherlands is a market that matters. If you were to stack rank the top markets here, the Netherlands is 100% in there. It’s a testament, my appointment is a testament of that actually being the case. And it isn’t just myself that they have asked for this role, but we’re building out a team here. We’re hiring engineers, product managers. In time, we’re looking at commercial functions as well, so investments are actually being made at a market level. Because we believe in the Netherlands.
Jeroen: It’s good that the country manager or the CEO of Benelux and Nordics is very optimistic about the market. I would be surprised if not.
Elke: There are reasons for that, which we will get to in a second as well.
Jeroen: But just to finish the stakeholder customers, institutional businesses, are those also customers?
Elke: Absolutely, yes. On the consumer side, as I mentioned, we have a very stable platform. In the institutional side of the business as well, we offer trading solutions for institutions, obviously custody. We are the custodian of choice for the biggest global financial institutions across the board. But then the developer ecosystem also really matters. Because our mission long term is to get a billion people within this space, and you can’t do that by yourself. So the developer ecosystem plays an incredibly important role in really broadening the net of getting people engaged with on-chain technology. We recently launched Base, which is an Ethereum layer too. The intent behind that is very much to attract the next million developers and hopefully that will become a bridge to bring in the next billion people online. Fundamentally, consumers, institutions, financial institutions.
Jeroen: Governments as well?
Elke: Yes, of course.
Jeroen: As customers?
Elke: If they are interested.
Jeroen: Individuals, institutions, businesses?
Elke: If they’re interested, absolutely, of course. But for us, regulators and policymakers play an incredibly important role in how regulation is being shaped. I would say that we’re one of many, but probably the biggest one that is doing a very intentional job in engaging with policymakers and regulators around the world.
Jeroen: I wanted to get to that, that’s another stakeholder in a moment. But that’s fine, I was just curious because in terms of the customers, you hear about these governments that have officially started using Bitcoin or something. I thought maybe there are some governments that are openly saying, “We are a customer at Coinbase”, but I don’t know.
Elke: They are definitely a part of all organisations if you would look at governments as organisations that are finding their way within Web 3 technology, and we are there to serve them. But fundamentally, it’s consumers, institutions and then developers.
Jeroen: Makes sense. And then getting to that other stakeholder, your colleagues. How many people work with Coinbase?
Elke: We have over 3400 employees worldwide. We are active in over a hundred countries right now. We have a lot of employees in the US, we have a lot of employees in India, all around the world. The UK is actually our second-largest market from an employee-base perspective. We have about 150 employees there. Ireland is very big for us as well, a lot of our upper rations are based there. And in those ‘go deep’ markets, including the Netherlands, is where we’ll also be building out these pots of people that have a deep understanding of the local market.
Jeroen: You’re building a team here, right? How many people are you already?
Elke: It’s myself and one engineer, but we obviously are leaning on product and engineering resources that are shared globally. But we’re hiring two more engineers here, we’re hiring a product manager, and then the intent is to also start adding some commercial functions here.
Jeroen: And you’re going to run it from here as well for Belgium, Luxemburg, and the Nordics? Or are they going to be different hubs as well?
Elke: No, we’re going to start off with these teams being based in the Netherlands. Again, because this is the market where we see the biggest growth and potential. It’s obviously a lot easier to serve Belgium and Luxemburg from here as well. But I think in time, if you want to get it right, you need to ensure that you have people who understand the market and understand the culture. So my personal ambitions and intent is that in three years from now, we obviously also look at ensuring that we serve the Nordics in the right way by having folks dedicating to those markets. If that will be from the Netherlands or from a city in Sweden or Norway, I’ll let you know.
Jeroen: Good! Another stakeholder, the owners. You already mentioned the founders as well as the fact that you’re publicly listed. Is there anything else to say about the ownership of the business?
Elke: I’m not sure if there’s more to say on that front.
Jeroen: Are the employees owners as well?
Elke: We are owners as well, yes. We all have a stake within the company, which is part of our benefits, which is fantastic.
Jeroen: These are real shares, or are they also in crypto?
Elke: No, they’re real shares. Depending on what type of role it is that you come in, we get equity. So you have a vested interest in the company. As I said, the company was started by Brian Armstrong and Fred Ehrsam back in 2012. We went public on the 14th of April 2021. I actually wasn’t at the company back then. Our leadership team is a very diverse team, which is pretty incredible when you actually look at our leadership level and especially when you look at a lack of diversity in crypto altogether. Our COO, Emilie Choi, is a female. Our CMO, Kate Rouch, was actually ex-Meta as well. Our CFO, Alesia Haas, is a woman. So we have a very diverse leadership team at the top, which is impressive to see and something to be proud of.
Jeroen: And I think it’s important for you as well to join?
Elke: Absolutely. For me as a woman in tech and then perhaps more so now one in finance/crypto, working in an organisation where we have diversity at the top is amazing to see, and it sets the right example. Hopefully, not just for the employees within the organisation, but the industry a little bit broader as well. That’s the leadership team.
Jeroen: That’s great! I just run through the different stakeholders to keep going in my structure. You already mentioned the regulatory side of things, being really important to you. How are you regulated? That is probably a podcast in itself, but do you have some broad lines on how you guys are regulated? That would be nice to hear.
Elke: Of course. Regulation looks different, and you are right, I’m not a regulatory expert at all. But if there ever is any interest in crypto regulation broader, my policy and legal colleagues would be more than happy to come and speak to that a little bit more. Crypto regulation looks different in different jurisdictions. If you look at the UK, for example, Rishi Sunak has made it very clear that he wants the UK to become a global crypto hub. So a full-blown crypto regulatory framework is being introduced in the near future. But they are already making some very significant steps towards introducing regulation for crypto. The existing financial promotions regime, which is a regime that has consumer protection at the heart, that has been in effect for the last twenty years has since October of last year actually scoped crypto asset service providers within that regime as well. Meaning that everybody who operates as a crypto asset service provider in the UK has to comply with the rules of the financial promotional regime. And even though people think about financial promotions as probably an ad that they see on Facebook that says, “Buy crypto now!”, the way that regime is interpreted is much broader, and it really applies to every single service that a UK consumer can be exposed to. So it’s a good example of steps being taken in the UK towards regulating crypto. Obviously, here in the Netherlands as well, crypto asset service providers need to have a registration with DNB, which Coinbase has as well. We were granted our registration in September 2022. But the regulation does look different.
Jeroen: Here it’s more focused on AML risks, right?
Elke: Yes, it is.
Jeroen: Or pretty much only that.
Elke: Yes, correct.
Jeroen: Would it be helpful for you if DNB would also start to regulate full-blown, as you mentioned, what is coming up in the UK? Would that be good?
Elke: I think we’re about to see that because of the introduction of MiCA. MiCA is a pan-European regulatory framework that is very comprehensive. Crypto asset service providers can decide to either apply for it or not. It would be a passport that basically gives you the legitimacy to operate within the European Union states in one go.
Jeroen: Are you guys happy with MiCA?
Elke: We are super happy with MiCA. The European Union is once again setting a true example on how to do things properly. What this framework fundamentally is going to provide is clarity, clear rules around what you can do and what you can’t do. And it gives organisations like ourselves that framework to say, “This is where we can develop within, and we can’t step outside of that.” So having those clear borders is better for consumers because fundamentally it gives them that protection, and for most regulations it creates a sense of protection. And therefore comfort to start getting into the crypto space.
Jeroen: I guess as an incumbent, it’s also great in another way, because it keeps out a lot of potential competition as well. Or is that not true?
Elke: I think what you’ll see in the market, you’ll probably end up seeing a lot more consolidation because not every organisation will have the ability to actually get their registration come through. So from a competitive perspective potentially, but I think what’s way more important is that it has consumer protection at its heart. Therefore, it creates safety and the comfort of safety to start engaging within crypto. I don’t know what your friends and family or even what your personal situation is like whether you’re dabbling into crypto or not, but the fact that it feels unregulated is very often a blockage for people to start engaging. I can fundamentally say that most of my friends are not into crypto because they’re scared. They’re scared of what they read in the media, what can happen with their funds, et cetera. Because it isn’t regulated across the board and this is going to give a sense of safety and security. I think the approval of the ETF that happened a month and a half ago is also a big step in that direct. It legitimizes crypto in a way that it never has before. So we’re very excited about the arrival of MiCA. Unlike the US, the regulators have been working with organisations like ourselves to help shape this. So it’s less through enforcement and more through collaboration, which is a good thing.
Jeroen: Not long after the whole FTX and all the trouble started, that was just before you joined, right?
Elke: It happened right after I joined, actually. I was about six months into the job.
Jeroen: Sorry, I put it in a wrong way. You weren’t aware of that, and then that all came down.
Elke: It did, yes. I don’t know if fascinating is the right way to describe it.
Jeroen: Were you concerned about Coinbase as well?
Elke: No, not for a second. Not at all. But I was concerned – and I think we’re seeing the repercussions of that – with the impact that it had on the industry. It validated for a lot of people who were already concerned about crypto not being regulated in the right way and the volatility of it. And for those people who actually ended up engaging in this space and lost a lot of money, it hurt them as well. So it was obviously a monumental moment in crypto.
Jeroen: What did it do to Coinbase?
Elke: I think fundamentally it harmed the reputation of crypto. At a reputational level, it basically really harmed us across the board. And that makes it difficult for a business, when less people are buying crypto or selling or trading, the less money we make. So fundamentally less people were engaging within the crypto ecosystem, which isn’t good for business, but maybe even more importantly so, it also isn’t good for us ultimately being able to achieve our mission. Which, again, does have that real human impact as a promise long term.
Jeroen: Did it have financial consequences for you as well?
Elke: We did reduce the workforce, which was actually prior to FTX because of the downturn of the market when we started entering the bear market. Financially, it didn’t fundamentally impact us. Obviously, we saw some of our numbers decline, which you can look up as well in our cordially earnings. But as an exchange that has been through bear markets and challenges before, Brian always says – I’m not sure if the quote is unique to him – “Things are never as good as they seem, and they are never as bad as they seem.” So even when we were going through this episode and at the individual level you might have concerns about what’s going on, the leadership team has always been bullish that this was just a chapter within our journey.
Jeroen: Is it much more fun now, given the extreme rise of all the cryptos at the moment? Not all, but many of the famous ones?
Elke: I’m not sure if it’s more fun. I personally like seeing the price going up in Ethereum as well, and I’m happy to see that people are starting to understand and are committed longer term to digital assets. So I think that is super exciting to see. But from an organisational perspective, it is business as usual, and it had always been throughout that period as well. We had continued to be focused on building the safest and most secure products, nevertheless. But it is pleasant that all of a sudden you have friends and family asking, “What should I be buying? Maybe I should start investing.” At a personal level, it is pleasant versus being grilled, “Why do you–” Grilled is not the right word. People question, “Why did you make a decision to go within this space?”
Jeroen: I just keep up with the stakeholders. In terms of competition, it seems to be a very fierce competition in your world. Is that also how you experience it? You are really big, you haven’t mentioned numbers yet, but I saw some numbers. I don’t know if you have the latest, but do you have a lot of competition?
Elke: I think competition can take different shapes. You can have competition at a hyper local level, there is competition within certain parts of our business. Fundamentally, we are one of the biggest exchanges in the world, we have overall a hundred billion in institution assets under custody. We were the custodian of choice for nine out of the twelve ETF-applications. We have hundreds of millions of customers worldwide. But of course, there is competition. Because we might not be offering exactly the type of interface that a user is comfortable with. It might be that one considers our fees to be too high compared to what they can get locally. It all matters and depends on what is important to a customer. Therefore, the exchange that they do decide to engage with, being for buying crypto once in a while versus all the way to day trading or as an institution who you decide to do custody with.
Jeroen: Do you think the local competitors here, without naming them all, for example the Dutch case where you have bol.com dominating the market in a completely different space and then Amazon comes in and everyone is concerned at Bol.com, “How is this going to work?” Ultimately, it worked out quite fine, so far at least, for them. Is that also the case here, you think, with competition? That they see you guys coming in, this large player from the US, dominating big chunks of the global market? Do you think they are worried that you guys are here?
Elke: I don’t know. I think you should ask them that question themselves. What we fundamentally recognise is that you have some incredible companies here. You have players here that have built a business for the Dutch with a Dutch founding team, that are offering products and have been for a really long time. They have done a spectacular job at that. And I think there is a lot to learn from a lot of these players on how they’ve approached the Dutch markets and some of the products. And the services that they offer that we might not. Are they concerned with our arrival? I’m not sure, you should ask them that question. We have been impressed with what we’re seeing here across the board.
This is Leaders in Finance with Jeroen Broekema.
Jeroen: A bit broader than Coinbase, a lot of the listeners of this podcast and a lot of the CEOs I talked to, I would easily say most of them are non-believers in crypto. They think it’s the new Tulip Mania, if that is the right translation into English, but you know what I am referring to.
Elke: Say that again?
Jeroen: The Tulip Mania, it was a long time ago, when people were buying all these tulips for extremely high prices, and it turned out to be worth nothing at some point. I think most of the banks and insurances at C-level, they still don’t believe in crypto at all. I think it’s fair to say because I speak to a lot of these people. Why do you think that’s the case? You guys are really big, you see the promise, but apparently, there is this big group of people that don’t see the promise at all. Maybe to make my question even lengthier and complex, I wonder how you look at people that are saying, “I think the technology is really interesting, I think it holds a lot of promise, but I don’t believe in crypto”?
Elke: That’s an amazing question. I think, first and foremost, crypto and blockchain technology don’t have to be for everyone and for every institution. I think some organisations are more traditional in how they operate. They have a longevity that others don’t have. The way they think about the future and the role that innovation plays is different. Not every company believes that social media is the answer to being able to connect our user base, or that it is the advertising platform that they are looking for. Others only believe in digital, if you look at marketing tactics, some organisations still buy TV where others basically say, “TV is a waste of time.” There are different positions that you can take on certain things. I think fundamentally, if you do look at the market cap of Bitcoin today, it’s over a trillion. That isn’t something that is completely ignorable and is going to go away any time soon. The same with Ethereum. I think probably the hesitation to go much deeper into blockchain technology Web 3 and then more specifically crypto within that, is most likely because of a lack of regulation around it. And fairly so, I think especially large financial institutions, you’re dealing with money and people’s money and real money. And it has to be taken very, very seriously and done in the right way. So if you do not comfortable as an organisation because of the regulation around it, the time might not be right. I think my first hypothesis is that it is because of the lack of regulation, and hopefully MiCA is going to change some of that perception. And then it is fair that crypto has been a lot more volatile since its incubation than a lot of other assets. But to take a step back and talk about volatility a little bit broader, if you look at the share press of Meta, I’m just going to keep on going back to Meta right now, it’s at an all-time high now of over $500. But a year and a half ago, it hit $80. That volatility has been greater than the volatility of Bitcoin in the past 18 months. But their product set is perhaps more comfortable and familiar as well. Time will tell.
Jeroen: It’s interesting, because I’m just playing the devil’s advocate at the moment, but a lot of these people I talk to say, “When I buy a share at Meta, at least there is a clear asset. There is cashflow, there is a business, there are people and everything.” People is maybe not the right time, but there is at least cashflow, let’s take that one. And to hear them say, “There is nothing behind it. There is some technology, but it’s very vague, and it’s not clear what it could be used for with my stake in crypto.”
Elke: I understand that as well, but at the end of the day, something is worth what somebody else is willing to pay and give for it. A painting itself, its value isn’t based on the fabric that it was painted on or the cost of the paint or the cost of the frame. There are other aspects that weigh into something being considered as valuable as they are. So when one doesn’t believe in this, that is fine.
Jeroen: Is it ultimately the technology, is that the actual asset? The technology of how the crypto is built and the technology that can be used for crypto, but could be used for a lot of other things as well. Is that ultimately the asset, or is it the development itself?
Elke: It’s the value that a particular asset holds, because the technology itself is decentralised. The technology isn’t owned by anybody. And there are benefits to that as well, which is why the promise of blockchain technology is so beautiful in its own way, because it solves all of these real-life problems. But to say that the technology itself is the asset and therefore that is what you should invest in, it’s a promise that the technology holds that one would consider it to be of value. But it’s a good question, I appreciate it.
Jeroen: It’s different for me as well. As you’ve said in multiple podcasts, it’s quite complex for people that have no background. Because that’s what I am always curious about, if I put you in a room with ten CEOs, is it a lack of education or is it a matter of taste? As you said, it’s maybe not for everyone. Or is it just education? I’m always somewhere in the middle. I feel like people need more explanation and if you talk to people like you, maybe you get more education, you understand better what it actually is and the complexity of it. You see the opportunities. Or is it, “I just don’t like this kind of stuff”?
Elke: It’s perhaps a combination of both. On the first point, if you look at crypto investment within TradFri right now, the majority of large institutions have or are starting to explore that space already. There is a little bit of hesitation. I think from an educational perspective, the crypto industry itself, we are not doing ourselves a favour by the complexity around how concepts are being explained. The jargon around it, the full-blown ‘crypto bro Lambo-vibes’ vibes, that doesn’t bode well with a particular audience. I think education is absolutely key as well. And we have internal teams that are focused on specifically the institutional side of the business to help bridge that gap a little bit as well. But it is difficult. I had to explain to my daughters, “What do you parents do at work?”, what it is that I do. It’s difficult to boil it down to something an 8-year-old understands.
Jeroen: It did help me, maybe not an 8-year-old, to start buying some. At least you have a feeling of how it works and how you buy it and what you need to do for that. That’s a starting point, and obviously, there is so much out there for free to learn about. But it’s not easy.
Elke: Absolutely.
Jeroen: As you said, there are a lot of words you never heard before. I only learned about staking a few years ago. I had never heard of it before.
Elke: Totally, I think you’re absolutely right. At a consumer level, you’ve never bought crypto. Go ahead, open up a Coinbase account. Deposit €10 and just buy some BTC. But one of the biggest barriers that we do see with people entering into crypto is the lack of knowledge and education. What we do try to do is offer really broad educational content to help get people comfortable with terminology like blockchain and crypto. At the most basics, we provide a lot of information at the individual asset level as well, so people understand what it is that they’re buying or aren’t buying. So it’s a lot simpler once you actually get started, like it is with most things. Once you give it a go, and you don’t need to invest a thousand euro straight away. For €10, you can basically go ahead, or even less, and buy your first cryptos.
Jeroen: If you look at the near future or maybe the longer-term future, what are some developments you think are interesting to watch?
Elke: Good question. I’m personally interested in seeing how the developer space and ecosystem is going to evolve. I’ve mentioned earlier already, we’ve launched Base, which is an Ethereum layer two, a secure and cost-efficient layer. It basically gives developers and ultimately those that will engage with what ends up being built into the ecosystem. We’re very safe and secure.
Jeroen: Just to make sure, what’s layer two?
Elke: Think about it as a development platform on top of the blockchain. So a developer can basically build an app, think about it as an app in the most simple way, on top of this layer two that I as a consumer can then engage with. But the transaction costs are much, much lower with these solutions built on layer two. And costs do matter, especially if you’re only engaging with a certain amount of funds. The transaction costs can add up as well. So it’s cost-efficient, it is very low. Base is an area that we’re really excited about. I think another thing that I’m excited about is the partnership that we announced earlier this year with Yellow Card, which is an African exchange. And the intent behind that is really being able to bring USCC to a very broad audience, providing security and, more importantly, stability. I think it is something along the lines of 50% of the African population. So really being able to see the promise of stablecoins coming to life in markets where there is a greater need for that. I’m personally very excited about that as well. And then finally, as we talked about to some extent, is MiCA, the regulation of that, how that is going to play out and come into force and seeing the ripple effect that is ultimately going to have on consumers. I’m excited about that.
Jeroen: Yes, I can imagine. It’s really interesting. By the way, it’s a complete detail, but for a long time it was called MiCAR, everybody called it MiCAR and then all of a sudden in the last year, everyone is calling it MiCA. It’s really interesting.
Elke: What happened? The ‘R’ just dropped off.
Jeroen: It’s very interesting! But anyway, the last two questions from my side. One is: let’s say I or someone else wanted to start working in the crypto space, what would be tips for you? Where to start? If I were a woman, I could join your women who work in crypto, but what are the things you would have as tips for those people?
Elke: Not a promo for us, but first check out the Coinbase careers website. We are hiring across the board right now. Make sure that you to some extent understand what Web 3 and blockchain are about. And also within what industry it is that you want to work in within that space and to make that a little bit more crisp. There are a lot of Web 2 companies that are thinking about what their long-term Web 3 strategy is going to look like. So you can have a role within a Web 2 company that is focused on Web 3, which is very exciting. Or the other way around, you actually do start exploring what the opportunities are within Web 3 organisations. Despite them being Web 3 inherently, they still need experience of what one might have had in a Web 2 world. At the end of the day, marketing is still marketing and marketing is still done in today’s world in a certain way. If you’re in finance, finance is still required in an organisation, that being Web 2 or Web 3. Or maybe recruiting is a better example, fundamentally it comes down to, “Are you interested in the space? Are you excited about the long-term promise that it holds?” And then being intentional about looking within a Web 2 world or within the Web 3 world itself, leveraging the expertise that you might have from a different area. A good starting point is always looking at the BC-community where they are putting their dollars today. What investments have what companies had? In case that stability matters to you. And larger exchanges like here in the Netherlands, as I mentioned. There is a lot of excitement in the crypto space specifically as well, there are some awesome local players that are hiring. So be proactive about that. I’m not a recruiter, though, as you know.
Jeroen: But you also mentioned your competitors, that is good!
Elke: Of course!
Jeroen: My last question is: I’ve asked a lot of things, you’ve given great answers to those questions, but is there something we’ve missed that we should have been discussing or should have absolutely mentioned in this conversation?
Elke: It’s definitely worth mentioning, especially in my role looking after the Netherlands. The entire Benelux, but the Netherlands is my priority market for now, this is truly a market that we as a company are excited about. Because the crypto adoption is high here, especially when we compare it to other markets, more than two million people in the Netherlands are holding crypto today. That’s 15%, maybe a bit more, of the population. Crypto enthusiasm in the Netherlands is the highest in Europe, based on a recent report from CryptoSlate. So there is something happening within this market that we believe in and are excited about.
Jeroen: Is it because it’s such a digital country? Is that the reason?
Elke: I think that is one of the reasons, totally. I think it is a digital country, I would say we do have trade in our roots and nature. Quite entrepreneurial spirited as well. We’re seeing the Netherlands as a market where the crypto enthusiasm and intent is just higher and bigger than in a lot of other markets as well. So we’re excited about the future.
Jeroen: It’s interesting, two million people. It could well be eight or ten maximum, if you take all the kids out, that’s four times or something.
Elke: Yes, that’s true. But you need to be an adult before you can open up an account here.
Jeroen: With 18 million people, I’m just thinking how large this market could be for you.
Elke: Yes, that’s true. I think it depends a bit on how much people will end up believing in crypto longer term.
Jeroen: Elke, thanks a lot for taking the time.
Elke: You’re very welcome, thanks so much for having me!
Jeroen: It has been wonderful, and it’s great how you’ve answered all these different questions. Listeners cannot see it, but I’m pointing to it now, we have a small present for you to thank you for joining us. We’ll put a couple of things in the show notes of the things you mentioned during this conversation. Thanks again for taking the time and for your great answers.
Elke: Thank you!
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