SEC and CFTC clarity and the case for Ethereum, with Coinbase's David Duong

Transcript

But if you're looking at pure global liquidity, and I'm talking about like M2 liquidity worldwide from central banks, balance sheets, other stuff, like we should have been higher. What's up everybody? It's LG here and welcome to the Milk Road Show, the daily crypto show that still hasn't figured out how to position for what's next because we don't even really know what that is. Today is March 27th, 2026. We're recording on March 26th. Last week, there was a sneaky little uh I wouldn't call it ruling, but clarification, let's say, in the US that maybe snuck under the radar for many investors. The CFTC and SEC put out some clarifications, let's say, on how digital commodities should be classified, and it kind of seemed favorable for non- Bitcoin assets, as in alts. Today, we're going

to get into that, what it means for the short and long-term future of our tokens, and how crypto looks right now compared to other assets. It looks good. All that and more with one of our favorite guests, David Dwong, global head of investment research at Coinbase Institutional. Today's episode is brought to you by Sherland, trade real estate like stocks and Nexo. Earn interest, borrow and trade crypto. David, he's back. We're back. We got a lot to unpack. Okay, so we're going to get right into it. How are you? >> I'm pretty good. How are you? >> Uh I'm I'm ready to roll, man. I feel like I feel like we're we're in holding pattern in crypto. We're waiting to see what's going to happen in the world. Uh, but under the radar, like I was saying, I think I think there are some really, really great things happening. And I

wanted to ask you, David, because we didn't really cover this on the show, and I previewed it in the intro. Um, what exactly was this clarification that came from the CFTC and the SEC about digital assets? I I I need you to kind of explain it to me. >> Yeah. I mean, unless you've been living under a rock in the crypto space, and, you know, let's face it, there's new entrance here every day. You probably know that there's been a question about whether in the US at least crypto is defined as a commodity or a security. And [clears throat] last week or at least it was on March 17 CFTC and SEC clarified how federal securities laws apply to crypto assets. So, you know, over in the last four years prior to the current administration, we had this

regulation by enforcement approach in crypto. And it's a really stark change because now we have this formal taxonomy coming from the SEC which explicitly classifies whether tokens should be qualified as digital commodities or securities. And actually, not only did they set the guidelines that classify how these tokens actually can be qualified under each kind of uh category, but they also named certain tokens and actually said Bitcoin, ETH, Soul, Cardano, like etc. like XRP like these all are considered digital commodities now. So, it really creates a lot more transparency for people who want to add crypto to their portfolios.

>> Whoa. Okay. So, that was it. Was Bitcoin named in there? >> Yeah, Bitcoin. Bitcoin's been known for a while obviously, but like yeah, a lot of other tokens as well were named here. >> Okay. So, the main question I guess for the last couple years was was would they be classified as as digital commodities or securities, right? And they are now coming out and being like these are digital commodities. So they will not So what's the implication is that they're not taxed like securities or that you don't have to uh like how what is that I think that's kind of like a big question is like what what's the difference really uh on the on the legal side?

>> I mean a lot of it's going to be conventions in terms of reporting and other things. First of all like how does it define a digital commodity? So a digital commodity is defined as something that deres value from the programmatic operation of a functional crypto system. So that's the first condition. The second condition is that the ordinary supply and demand dynamics of that token uh matter and you know that's important because this is separate from the expectation of profits from you know the managerial efforts of others which is I guess legally speaking like it's not a not something that deres a revenue stream from the effort uh of the people working inside that protocol.

So, I think that this really emphasizes that a digital commodity doesn't inherently grant you anything as far as passive yield, any claims on a business enterprise. Like there's nothing that says that like if you're buying a token, you have claim to like future income, profits, assets. and they're just being really clear that like we are trying to offer protections for the people who are doing the stuff >> and we want to make it clear that if they are buying a token, this is what you're getting. So just having that I think is very very helpful for institutional clients particularly who want to enter the space but so far they've been hesitant because if they do so they don't want to be hit with like a

lawsuit later on. Everything you're listening to today is also covered in our daily crypto newsletter. And on Sundays, we even recap the best parts of the entire week's worth podcast. So check it out at the link below. Right. Okay. So would this apply to people uh also launching tokens like or to companies that want to launch tokens? Is this is this helpful for them >> or is it only only kind of back? Okay. So so it would be for for new new entrance into the ecosystem as well. >> Yeah, I think it's a more favorable interpretation. uh and you know like this has been a question from the people who are running these protocols because you know like if they're running network activities for example like they don't know how to qualify things and this has

been really tough because like you know we know in the space that there are a lot of layer ones for example that deal with protocol staking well how do we treat that you know they didn't know like before like under like which conditions those things could be recognized as you know whatever revenue or this you know like th this you know things like Ethereum particularly I mean this this was really a pain point for them so now I don't think there's a as big a question mark as to like oh man is this like an existential concern we have to worry ourselves about because we aren't professionals in US securities law or can we just do what we want to do which is like you know have a layer one

and have a network and have people use this kind of stuff and I think now they can just focus on the latter >> [snorts] >> So, does this does this create a more favorable environment for I guess people to invest in these chains? Like, do do you think that this like unlocks some kind of secret floodgate somewhere where people would be like, "Okay, I can finally buy ETH." >> Well, I think it definitely gives people a clean regulatory wrapper in a way that they didn't have previously. Uh, so I think it will spark more demand. I don't know if it's going to open up the floodgates per se. I I'm resident to say that anything can and you know that's not just like because of of crypto and the regulatories environment. It's

because the macro environment is also pretty hazy right now. But you know I think on the demand side certainly you know these are going to add to the demand channels that we already have like the spot ETH ETFs the digital asset treasuries that are demand syncs in the space. Um, I think this will just kind of add to that because now you're going to have larger institutions. And, you know, adjacent to this as well, you're also hearing that, you know, soon we're going to be allowing like crypto to be included in 401ks and other retirement funds in the US. Um, I think that these two things going hand in hand because then it unlocks more capital that could actually enter the crypto space.

>> Are there any other digital commodities besides crypto? like is that is that is that a new name that has been created for crypto or is there something else similar? >> It's really used to just kind of refer to crypto and it's going to be curious how wide a net this is going to be because there's other stuff happening in the space too, right? It's not just like all the tokens that we already have. Um I think at once upon a time like we would have just been happy to get this clarity and say like oh great that means DeFi definitely is going to be grandfathered in or we know what like DeFi is going to be and even if it's a security we're fine with that as long as we just have the clarity but now we're getting other stuff like token tokenization of real world assets and

all this stuff. Uh so we'll see how far this extends and you know we heard from uh SEC chair Paul Atkins that even with this taxonomy uh he wants to be very clear that we will need to get a final decision coming from Congress on a market structure bill to really you know solidify all of this stuff like he he's offering the framework uh but to really you know solidify all this stuff we need to get a law passed. Is this something you expected with Paul Atkins as the SEC chair? Is this is this something that people were were thinking about? Cuz I didn't even know I didn't even know this was happening or that this would come out >> to some extent. Yes. I mean, there's been a lot of progress coming from both the SEC and the CFTC. And you know, also

last week they put out a memorandum of understanding that really suggest they're working cooperatively. You know, this is very different from the Gensler era where it seemed like there was always this push and pull between the CFTC and the SEC. And you know, we could talk all day about the history of those two entities because this isn't a new thing. Uh, but you know, this is a lot more cooperative than what we've seen in the past. So, I think that they are definitely trying to create a level playing field so that people can actually do this stuff. I think that, you know, this is kind of what we had from Hester Purse and Hester Pur has really been driving this effort within the SEC. So, I I think that this is, you

know, definitely part for the course in terms of trying to get us to a better place as far as being able to trade crypto. >> Got it. You mentioned in your in your newsletter that kind of broke a lot of this down and and a lot of other stuff we're going to talk about, which was the was the um Coinbase institutional newsletter. It comes out, I think, every Friday or once in a while, but um this is last Friday, March 20th. Um you you you said specifically this shift is likely to benefit altcoins that demonstrate genuine economic activity possibly to the detriment of alts whose valuation premium may have primarily been their perceived regulatory safety.

So that's really interesting to me. I don't know I I don't know if you want to name names but maybe you can help clarify like what what exactly those two those two are. Are you talking specifically like this will be good for tokens that actually have revenue that have the protocols that actually generate revenue versus ones that don't and kind of have been just trying to fit into the safe rapper? >> Well, you know, I don't want to say our pigeon hole tokens into just those two categories. There's also it's like a vent diagram and there's overlap for certain tokens that actually meet regulatory requirements and are able to kind of offer the rewards. But what I'm kind of alluding to is the fact that I think within the crypto space and this is probably a product of more

institutions kind of stepping in. We are paying a lot more attention to fundamentals and this has been ongoing. This has been a change that I'll probably peg over the last 12 to 18 months, but really it's been concentrated in the back half of like uh the recent history of crypto. and we're more focused on hey which ones are going to offer us revenue and previously we accepted the fact that regulations didn't permit some of that revenue sharing uh but we've already seen like unis swap had that uh vote on like December 26 of 2025 saying like okay we're going to include this in the the token value and you know there need to

do some financial engineering by creating the burn mechanism for But Hyperliquid was a big example of this. Like one of the the big shifts came where people said, "Oh, this is great. This token actually is increasing activity because people want to do pers and they're offering this by actually burning token supply." So I think that this is kind of the the trend that people are kind of getting to. But certainly there was a premium on the regulatory side of well you know if I'm a institution and I want to be on the right side of regulatory safety then I'm going to be buying what I know won't draw scrutiny from a regulator and that would have a valuation premium attached

to it but it wouldn't be the token that I necessarily wanted to buy. it was just a token that I could buy and I think that we're going to see that change slowly kind of progress uh as these developments happen. >> Is this this is a question that just kind of occurred to me kind of based on what you're saying and I don't know this might be totally irrelevant so you can say that too. Does this kill airdrops? You mentioned Hyperlid. Hyperlid is is the greatest airdrop of all time. But does this basically like prevent any of future protocols, current protocols as well? Because even someone like Hyperlid has like, you know, 38% of their supply that they've bought back and they still have never released. Does this basically try to discourage them from doing

anything like that to of releasing I guess what under a security would be perceived as some kind of dividend or something like that or how does that fit in? It's a good question and I don't think they're fully resolved that part just yet. Uh I think that you know airdrops are part of the conversation. Um and I don't know if it's going to be phrased exactly in in those terms, but certainly you know they want to make sure that if you have something that looks like a dividend payment, well then you need to start treating it as such. But there, you know, I found this very interesting because they're also leaving this path towards well hold on a tick because if you're going to do that, you also need

to say that there's a centralized entity behind it that you know you could actually you know produce a quarterly statement or you know the equivalent of a of a 10K for example. But you know like there's a path from being centralized to decentralized uh where certain things could fall under one category or another. So it's not as clear-cut as just saying like okay all this stuff all this kind of activity is banned this kind of activity is not. there could be changes over time as well. And you know, this is very unique to crypto and they're kind of acknowledging it.

>> Mhm. feels like I I had really thought about this in a while and all this institutional framework stuff that we've been covering on the show that's been happening in the last, you know, a couple months and years, but it it does feel like [laughter] it does feel like things like airdrops will slowly go away because it's this this funny magical way of giving people money that it doesn't doesn't really seem to fit regulation uh like uh the way that things have gone. But that's [snorts] more of the DJ and me talking. Uh I want to ask you uh David in your newsletter you also discussed ETH um sort of related to this uh sort of not as well but ETH is one I think one of the biggest question marks there are in the industry right now right because Bitcoin has this uh you

know a lot of great cases for it a lot of good uh reasons as this as this store of value right and we've talked Bitcoin and gold and all that kind of stuff but Bitcoin is always going to be kind of like the main story for for crypto in terms of the leader in price cap and and everything else but ETH is in this kind of weird no man's land right or you go on And you see people saying like, "Hey, if you bought ETH five or 6 years ago, you have you're holding the same amount. You're nothing has changed for you, which is obviously disappointing probably for some investors who have held." Um, but you made some really interesting cases in in in your newsletter about what's going on with this the supply of ETH in terms of supply uh that's out there, the demand

for it, as well as what's staked. Can you kind of give me kind of like an update on the state of ETH? I feel like we haven't had that on the show in a while. Yeah, I mean obviously the texonomy news is great because it kind of gives ETH more of a clean kind of regulatory uh you know pass than and I think that have already been there but it's just nice to see that in print you know but also over the last week we saw that BlackRock launched a staked ETH ETF and that combines the spot exposure and the staking income inside a single rapper. Um, and I think Black Rockck said they intend to stake roughly 70 to 95% I believe of like their ETH holdings under normal conditions. Um, and they will keep a liquidity sleeve unstake,

but in practice that means that they're effectively becoming a structural buyer of ETH. More ETH is going to be locked up as well. Uh so you are not only seeing that that demand is going to pull in and buy more ETH but simultaneously you're going to be removing those ETH uh tokens from active circulation because more of that is going to be staked. So I think that that was a massive development uh that you don't really see priced into ETH and I think that you know it's it's a big one because on the demand side of things it will start to change how these things are set up but also uh you know coming up we've got ECC I believe at the uh end of March early

April and there's a talk that's you know I I was looking at the uh the thing like yesterday the uh the agenda there's a talk called like issuance the cost of inaction And my suspicion is that this is going to explore, you know, the current Ethereum issuance landscape, validator incentives, long-term sustainability for east monetary policy because these have been big overarching concerns that the community has had for a while. Um, I've certainly brought it up to like the people I know at the Ethereum Foundation. So, I think that they're prepared to address this. I would expect a big announcement coming about what's going to happen with the potential ETH supply in the future. Oh.

Oh, wow. I don't know that I don't think that's alpha, but that's that's uh that's something we definitely haven't heard. Okay, that's that's very interesting. And that's ECC, right? So, next week. So, I think it's I think it starts like Monday or something like that or maybe on the 1st. >> Yeah, I think it's March 30th. Yeah. >> Right. Okay. Yeah. So, it's Monday. Oh, it starts Monday. Okay. So, that's that should be coming pretty soon. Very interesting. The way we build wealth is changing. Stocks, savings accounts, real estate, that playbook [music] is getting rewritten in real time. Nexo is the platform built for what's next. It's an all-in-one digital wealth platform where [music] you can earn interest on your crypto, borrow against it without selling, and trade a wide range of assets all in one place with [music] 24/7 support and institutional grade security. Oh, and by the way, Nexo is

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>> I mean, part of it is the fact that, you know, if you're looking around, if you're a multi-asset portfolio, for example, you've been raising a lot of cash recently because of the uh because of the geopolitical concerns uh that have been ongoing for the last 3 to four weeks. No surprise. uh you know we looked at the Bank of America fund manager survey for example and the cash positions have risen like massively like over such a short period of time there were previously I want to say like 3.4% now they're up to like 4.2 4.3%. Um, which means that people are selling.

Like a lot of those portfolios are saying crap, like we made a lot of money on gold, precious metals, some tech stocks. Let's sell that stuff because we need to have cash on hand given that things are looking uh a bit concerning these days. Interestingly enough, dollars have also been strengthening. And you know, like I think a lot of people have kind of attributed this to the fact that like well, you know, of course the dollar is stronger, like it's becoming a safe haven again. And that's sort of the the the issue, but really it's just math, right? Like oil prices are higher. Oil is priced in dollars. If you need more dollars to actually buy like more expensive oil and also ship

it, because now the shipping costs have gone up, insurance costs have gone up, dollar demand is going to go up. >> Yeah. >> What's interesting though is that as the dollar has gone up, Bitcoin has been tracking it higher as well. Um, and I mean that from a kind of risk adjustment perspective. Uh but also, you know, like it's been holding pretty steady within that 70 to 74 75 kind of range. Not quite breaking that 75 we needed to cuz that's kind of the critical level. Um but like I would say that it's interesting, you know, to to see Bitcoin becoming not necessarily a store of value again. Uh but definitely a lot more resilient than everything else that's happening. like everything is

moving three four standard deviations and Bitcoin's like what's going to cuz I'm track here sideways that's not a bad place to be. I think that like, you know, yes, maybe if you're holding right now, you'll be like, "Oh, I'm disappointed that it's not moving up." And we always want that direction higher. But I think that as a narrative, a lot of institutions are going to look at this and say like, "Crap, everything else isn't paying. Private credit's terrible, equity is terrible, I'm losing money on gold and silver right now." Hold on, maybe crypto is the right place to kind of park some cash for a little while. Uh, so I I'm thinking that increasingly you're starting to see that this narrative could be very supportive for us, >> especially now that it's a it's a

digital commodity, right? And now that all the other crypto assets are commodities, we've seen commodities do things they've never done before. Why not do that to crypto? [laughter] Oh man, that would be that'd be pretty wild. Um, I I wanted to ask you within that too, David. Uh, do you do you feel like crypto has a way of front running liquidity issues or front running these types of changes? Because it does, and that's kind of referring more to the fact that that crypto and Bitcoin took their slide months before what we may now be on the precipice of, which is a larger market slide.

>> Yeah. I mean, I think it was very endogenous to what was happening in crypto. the events of both 1010 as well as February 5 uh to some extent but you know like it feels like crypto was kind of front running but really it was kind of moving to its own beat and unfortunately a lot of market structure issues kind of took it down plus some stuff on the you know OG side as well I mean like I think a lot of people weren't paying attention on Bitcoin for example but there was this debate between V30 on OP return that the uh core devs actually put into production starting October 10th coincidentally or not coincidentally enough. Um and then you know there was the like uh the BIP

110 proposal coming from the Bitcoin miners predominantly which you know like that would have led I think that vote is still up for grabs but like that could lead to a soft fork in Bitcoin and we haven't seen a soft fork in a very long time. It's just something that's uncomfortable uh for a lot of people. And the fact that they changed that threshold from, I believe, like 99% to like 55%. I mean, there was just some strange dynamics that even if you weren't paying attention, I mean, it's possible that this kind of stuff was kind of feeding through into some of the price action. So, I think that this kind of stuff was probably more important to us. And you know as we were kind of breaking through like break even costs for Bitcoin miners for example like the break even cost for Bitcoin miners

somewhere around 87 88,000 you know obviously we've been at 70 for a little while now or even a little bit lower we've seen over the last like few months but like that's also a problem for the people who are offering these guys loans for liquidity sake but if you're looking at pure global liquidity and I'm talking about like M2 liquidity worldwide from central banks balance sheets of stuff like we should have been higher >> like actually all that stuff was trending up and typically Bitcoin is a way to absorb a lot of that liquidity so >> it didn't like if it wasn't for some of those indulgence factors I think that's probably what would have happened >> okay that's a good take different that's a good that's a good change what kind of

what I was saying I like that you you you did say and I guess you kind of referenced it as well but in your um in your newsletter you said anyone who wanted to sell likely already sold in recent months. This also means Bitcoin, specifically in crypto, more broadly, may prove to be more resilient than other asset classes for the time being. I guess that's kind of what you're explaining, right? Is that we're running out of sellers in crypto and that we we're we're proving crypto's proving to be most likely one of the most stable assets in a very unstable time. Yeah, I think that there is a new narrative that's being crafted for Bitcoin at the moment. And I don't know, it's hard to say whether this means there's a lot more upside in Q2 or if we're just kind

of trend sideways for a little time longer. Obviously, there's other things going on, you know, like I mentioned like the regulatory issues and things like that. I think that I I thought that a lot of that had been fully priced in. Clearly, not all of it. I think there's still some kind of concerns that people have, but like that can also kind of resolve itself in Bitcoin's favor or crypto's favor. Um, so I think that's the stuff I'm going to watch, but for now it feels like we've really kind of established a pretty decent floor. And you know, like I I think that you know, doesn't kind of stop us for if there's another deleveraging event or something negative. You can never say a for sure but it feels like a lot of the bodies

have surfaced now to the to the water you know top of the water and we kind of know who was hit who wasn't some of the market makers etc. So it feels like day by day like a lot of those liquidity issues leverage issues that we saw at the end of Q4 last year you know we're we're started to correct them. >> Is that you know what's funny is how is that the only analogy we have is bodies surfacing to the water like is that why does it have to be so dark? Do you say that in meetings with institutions? Like do you say is that a term everybody uses? It's very >> I don't know, you know, like and that was the first thing that popped in my head and I just said, >> you say it a lot of other people say it.

That's just like the common vernacular. And it's just it's very it's funny to me that we're like it's got to be it's got to be something really twisted and morbid that we can use. It can't be anything else. Um okay. Uh last thing I want to jump on, David, is uh you guys released as well uh your 2026 institutional investor uh digital asset survey. Um really quick before we there's a few points a few things I want to ask you about in this. What exactly is this survey? Because you guys you guys do a lot of reporting. So I just want to uh frame it before before we go into it. >> Yeah. So we do this survey at the start of every year and we work together with EY Parthonon and this is our investor outlook 2026 survey. It uh mainly talks to institutional clients. This was

conducted over the course of January. We had around like I believe like 350 or so kind of respondents. Um and it's good just sense check of like how are people feeling about crypto? Do they want to add to their uh kind of positions inside of crypto? Uh are they more worried? Uh do they think that crypto prices are going to strengthen or weaken over the next 12 months? um what are their their top concerns or you know beliefs about what's going to be the catalyst for the year? [clears throat] >> What are what are their what are their top beliefs that they think are going to be the catalyst for the year? Well, first of all, it's interesting because, you know, given the fact that this was conducted in January 2026 and we had just seen the events of 1010 and other

stuff and a lot of, you know, market volatility, we were like, "Oh man, I don't think we're going to see like an increase in terms of what people are going to say and how they feel about crypto." But we did. That's really interesting. Like 73% of respondents actually said they plan to increase their digital asset allocations uh this year. and 74% actually said that crypto prices are expected to rise over the next 12 months. So just right off the bat I think it came off as pretty optimistic. But you know like a lot of them have cited regulatory compliance as something that they're watching you know like they're they're thinking about custody they're thinking about uh how do they implement the stuff of your institution. So, you know, it used to be

that cost was the biggest factor, but now it's really about how do we make sure that KYC AML stuff is all in place so that we can actually sign on and trade the stuff, >> right? Okay. Are these are these institutions that are currently in crypto currently have positions or body ts or or they are these are more ones that are waiting? >> It's a mix. Uh so it's not purely like uh some of these are some of the respondents are already inside of crypto and so we do ask them the question too of like well do you want to increase your allocation from where you currently are. Um so you know like but some of them might just be new entrance into the space or not have an official position

yet. >> Got it. Okay. Yeah makes sense. I think that's that's kind of what I'm trying I guess what I want to understand is like how much uh you know you're saying that the these are the maybe the same people the same institutions that are are getting flush in cash right now. So I'm just trying to and obviously they they responded to this before maybe the current situation of the last two months uh or even the last month and even before the February 5th kind of u draw down. So I think I'm just trying to understand like how much how much do they have to deploy once there's some more uh regulatory clarity about what's going on.

>> Yeah. But yeah, you're right. I mean this is before like Supreme Court decision came out on AIPA tariffs. This is before the Iran conflict and you know like no one has an edge right now on whether this is going to continue or where this is going to end. Um but you know it's more just a sense check of like well generally like you know back in the day these conversations like we roll it back like two years ago and like people would always ask about like oh what do you think about illicit activity risk inside of crypto you know and they're like there's no like centralized authority so couldn't this like be like uh manipulated in some way and now like like those concerns are like down by like 10 percentage points like like

those institutions that used to be spoken to that kind of They're no longer asking about it. They're just like, "Yeah, yeah, it's cool." Like, "Tell us about like, I don't know, the boring stuff. What do you think like uh position sizing should be in the space? What do you think about liquidity?" You know, like I think that's a good thing. Like, you know, the the quality of the bar has gone up, >> right? Yeah. That's what I was going to say. I think it's a good way to frame it is that two years ago FTX is still fresh in everyone's mind. Is is crypto one big scam? Like that's clearly like the narrative. And then now it's like well are we going to get enough regulation for this for me to be comfortable deploying many billions more. You know it's I think that that's a it's a very

different way to look at it. Um and clearly you know just looking here at slide 10 I think this this kind of really paints that picture perfectly is that the largest concern I guess of holding people back is uh uncertain regulatory environment security of asset custody. What does that what does that actually mean? Because that also has a pretty large um much larger uh concern uh 33% in in January 2025 and 66% in January 2026. What specifically is that David?

>> Yeah. Uh well I mean there's a few things like this kind of goes in line with another slide here uh which is also kind of talking about how regulated products are becoming the you know preferred way a lot of institutional investors are trying to access crypto and it kind of just speaks to the fact that many of them want to hold these assets but they want to do it in a way that is compliance friendly. You know it's a a compliance framework that they understand. So because ETFs tend to come with more regulatory certainty than you know trading spot for example they've been more happy kind of trading these regulated rappers but you know custody uh is a conversation that you know it's

changed a lot over the last year like compliance security uh these have are now like the the top priorities for a lot of institutional investors and I don't mean by a little I mean by like a very wide margin like when we ran the survey a year ago like you know the valuation of that was like somewhere around 25%. That jumped to like 66% in like one year. So like I was saying before cost used to be like kind of like one of the the the biggest issues that people had about this stuff. That's fallen to the bottom of the list. Now a lot of these institutions are building operating models that they want to keep.

So they are kind of choosing partners and that is where kind of custody kind of fits in here. um and they they want to do so with the mind of like well how do we kind of keep this compliance focus in place. So I think governance durability matters a lot more now to a lot of these institution participants which is you know a good thing for us. I mean I say that as as a good thing for Coinbase because you know we're building out our crypto as a service kind of business. uh we are already serving on 270 clients uh through that 150 government agencies. So that you know compliance infrastructure uh is really what a lot of people are looking for these days.

>> I like that. Yeah. And I think I think even just looking through some of these other ones there's a lot of uh kind of other encouraging things kind of what we were saying before is that um even here in the middle financial crime/usage in illicit activity is down from 25% to 11%. And again, this is just the the level of are you concerned about this as a reason to uh I guess invest in crypto or get into crypto or or you know hold digital assets. So that's that's significant like we were saying that that stuff has faded. Um and then also I like lack of fundamentals for valuation is down 31% to 24%. So clearly people starting to see uh the fundamental story right of of all this stuff. So that's

that's really encouraging. Um, the last slide I want to touch on, there's a lot of other great stuff we could talk through here, um, is uh, the the juiciest one, which is the proportion of investors holding non Bitcoin ETH cryptocurrencies is expected to increase to 56% in 2026. Basically, I'm assuming this slide is like what do they plan to to potentially acquire, right, David? >> Yeah. Yeah. And you know historically institutions have mainly centered on the largest cap tokens and most of them just wanted to trade Bitcoin. But increasingly I think with the themes that are percolating in the space like AI agents, agentic commerce for example, I think more and more institutions are thinking well hold on a tick. There's

other stuff happening under the hood. If I want to get access to perpetual futures for example, well should I be looking at the hype token? you know, like we saw Hyperliquid just launch S&P Ps for example. Um, so now like people are realizing like this is a way to get exposure to like gold S&P equities like all this stuff over the weekends at week nights like uh like this is something that actually has value or utility to it. um adented commerce like you know we've got X42 now MP like all these other standards like you know like we saw that Meta actually made that moldbook acquisition like more and more people are thinking about this stuff and it is directly tied to crypto so I think

that this is partly why you're also seeing that like given how beat up altcoins were at the end of last year maybe there's some opportunities for a lot of institutional investors if you're looking >> listen man Ripple Ripple is up from 18. Okay. Oh, no. These this is a different chart actually. January. The first one is January 2026 and the blue one is 2026 plans. So, it's basically showing like in January versus how much they have. Um, oh, are you allocated to currently and planning to add its allocation? So, it shows like how much they have or do they have this now and are they planning to add? Uh, and one of the biggest gaps here is Ripple [laughter] XRP where there's 18 to 25%.

So maybe uh maybe I don't know maybe some insight there to to things that'll go down later in the year. Great. Well, this is awesome, David. Thank you for sharing all this, man. I think it's it's always great to have you on the show. Always very refreshing uh and always painting a really a really great picture of of um you know, why things are really really healthy in our industry. So, thank you, man. >> I love being here. Thanks, man. >> That's it for today. Uh if you guys want to check out David, I guess are David Dog on on X, right? Is there any Yeah, David Duog. Very easy to find. Uh David has been very a lot more active on X lately which I really appreciate even with uh a Coinbase institutional podcast as well that you guys can check out. So make sure you do that and also subscribe

to all their publications a lot more of this great work. So thanks David and uh I'm sure we'll see you again very soon. [music] >> Yeah, thanks for having me. Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel and join the Milkro Daily and Pro Newsletters and [music] start investing like the top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky.