Good morning, everyone. I'm Devin Ryan, head of financial technology research here at Citizens. Thank you for joining us today. And we're looking forward to this conversation. James, I think you've joined us in probably three or four years now, and the ups and downs of crypto. You keep coming back. So I think that's, from my seat, we definitely appreciate it. And I think the title here of this panel conversation, Fireside, is why the sky isn't falling in crypto. So, James, maybe to start here, James Granetsky, CFO of Exodus Movement. If you could just give a quick background of what Exodus Movement does, and then we can get into the conversation. But great to see you again this year.
Thanks for coming. Thanks for having me. Great to be here. So, Exodus, you know, we've been around since 2015. And, you know, we started as a multi-chain, multi-currency digital asset wallet. And we've, since then, kind of started with that background and grown. And now we provide, you know, we still have, obviously, the multi-chain wallet. But with that, we've built an industry-leading exchange aggregator for digital assets. And, you know, we also are moving into payments and lots of other things going on as well. But that's really high level.
Yeah, great. So I think what I want to do in this conversation is kind of differentiate between, you know, prices, crypto prices have been volatile and have gone up a lot over the last couple of years. But you just look at the last six, nine months, we've come back down a fair amount. So I think people are trying to figure out what's going on with prices. But at the same time, there's been a lot of progress in the industry around, you know, regulatory. You know, we have Genius Act passed around stable coins in July. The Clarity Act is still seemingly progressing. in the Senate around market structure, I think a pro-crypto SEC and CFTC. And so talk a little bit about what you're seeing in the industry that's making you feel, I think, constructive around the progress. And then I'm going to want to talk about what Exodus is doing as a result of that as well.
Yeah, that first question is an interesting one. I mean, I'm getting older, and I've lived through a lot of these different industries and different environments, regulatory and whatnot. And yeah, we've gone from four years of literally trying to kill my industry to now just abjectly supporting it. And it's because of that, you're seeing so many different things. Obviously, from the regulatory front, you mentioned the Genius Act. That is starting, you know, that regulatory clarity in and of itself, and we're not even there yet. Clarity Act is coming. But just that regulatory and the SEC, as you mentioned. So you're starting to see people that you've never seen before. Obviously, you've got the big banks, the JP Morgans, other people starting to get into stable coins and starting to enter, figure out how to use that and payments, blockchain and crypto payments and how to tackle that, especially with the legality now that around Genius Act. But then we're starting to see just lots. The building has never really stopped in the industry. but the thing that did stop was the capital because say you know private equity people of those you know you know you get a little bit beyond VC and people were not going to touch crypto with a thousand foot pole because the government was trying to kill the industry so now you're starting to see things like private equity coming into the market you're starting to see you know much more public companies obviously IPOs etc ourselves included and so you know because of that, the capital coming in, the building that's already there, and the new entrance from traditional people and others, the building, everything is massively accelerated.
Yeah. So, can we talk about what Exodus does in the evolution? So, obviously, maybe explain for the audience that is less familiar, like the wallet infrastructure and what that does, and then want to get to kind of where we also are today. You guys have done some acquisitions and you've been building quite a bit over the past year so help set the stage for kind of what the firm is is coming from and then we can get to where you're going sure so we started
self-custodial uh three three kind of principles self-custodial digital asset wallet so self custody you know no one can to no one at exodus can touch our users money um and that's kind of a result of the financial crisis and the crypto ethos then you know uh design and customer experience So, you know, we want to have the best customer experience. And then the third one was multi-chain. And so being able to support Bitcoin, Ethereum, Solana, all the different chains, we support about 40 of them. Because of that, we are able to support millions of different tokens. And then if you start to get into the stablecoin world, what people don't really understand is that stablecoins, to work, you have to have a wallet. You cannot use a stablecoin if you don't have a wallet. And so the other thing that people don't understand then is that stablecoins are on multiple different chains. So there's stablecoins on Solana, stablecoins on Ethereum, stablecoins on Cardano, et cetera. And by coming from a base of natively supporting so many different chains and cross-chain work as well, that's really hard. We make it look easy, but it's really, really hard. And it's going to be very important if you see a world where, like I do, I think that every single, like, small coffee shop now that has 10 different locations and then does a gift card, someday they'll be, with Genius Act, someday they'll be able to issue their own stablecoin. And so you're going to see thousands, hundreds of thousands of different stablecoins out there on God only knows how many different chains. And we are, you know, in a leading position to be able to support that world.
So I guess talk about that. What is your wallet? How does it differentiate from other wallets in the market? Who is using your wallet? How do you get those wallets into consumers' hands? And then want to get to kind of the rest of the infrastructure of what you guys have been building here as well.
So our wallet, I mean, most of our users are actually outside of the U.S. And we've grown mostly through word of mouth. We've had some social work that we've done and a little bit of advertising. But for mostly, it's just been, hey, we built a great product that's really easy to use and it's very useful. and people tell their friends. And so that is how we've gotten to where we are now. Obviously, we're looking at more, because of the opportunities that we see in front of us, we're looking at more things like different marketing things that we can do. And then I think you touched on some of the other things that we figured out. We figured out over 10 years that the things that we built that are very hard, So that multi-chain, cross-chain functionality, that is exceptionally challenging. And we just thought everybody could do it, but it turns out most people actually can't. And so we kind of, we've gone and done sort of the AWS, you know, the Amazon AWS model. And we've taken some of that infrastructure that we built to support our own products and gone out to others like Ledger and, you know, MetaMask and others in the industry and said, hey, you know, you should, you can use our infrastructure and everyone will win. And so kind of a B2B2C play.
And so I don't know if you can give any stats. Like, how many people have the wallets? And then what is the plan to roll it out into more consumers? Are you going B2B or B2C? Or how are people getting access?
So our last reported numbers were about a million and a half monthly active users on our base wallet platform. Obviously, with that B2B2C, so like the Ledger and the MetaMask, that adds millions and millions of potential users on those platforms through that side. But I think, you know, we've recently announced our Exodus Pay product, which is designed to, we'll start more, not necessarily, because right now, people that use our product are very, not very, but they're more crypto native than say, you know, my wife or, you know, somebody like that. You know, she's in healthcare. She doesn't, you know, she, you know, crypto is not, you know, she's not native by any means. And so, you know, we see a world where because of this stable coin, the Genius Act and stable coins and just the openness to innovation that you see right now, we see a world where that will underline the financial system in a mainstream way. And that's what we're building towards. So our Exodus wallet right now is very heavy in the consumer or crypto native. Exodus Pay will get more crypto adjacent. And then eventually it will move into the mainstream and you know we think it could be something everyone
could use you know worldwide yeah and so maybe talk about the payment infrastructure and what you can do with it and then is the connection point do you connect through banks or brokers or how do people how do you get your wallets into many millions of additional consumers hands so that to your point you now can actually have a wallet self custody and then use that if it's a stablecoin or other crypto or maybe over time other digital assets to actually do productive
things with it? I don't think there's one entry point. I think there's going to be multiple and that's where we're working. I mean obviously we've already got the crypto native down and that entry point is solved. But then there are a number of other, there's another, I mean you mentioned brokerages, tokenized stock. We were the first public company to have their common stock tokenized on the blockchain. So we've been following that and we think that you know, there's been a lot of announcements, you know, New York Stock Exchange, DTC. So that's coming as well. So absolutely see that coming. You know, to talk about acquisitions, you know, we just announced acquisition W3C, which is Montevade and some banks' assets. And they are a credit card issuer in the UK and Europe and elsewhere around the world. And so, you know, That is an entrance to get into hands of people with a credit card, right? And so we're looking to have multiple different points on that payment stack, if you will.
So coming back to some of the volatility we've seen in prices, is that affecting usage that you're seeing with the customer base? Are they stepping in and are they maybe buying more in their wallets? What type of behaviors are you seeing amidst kind of some of the recent volatility?
So, I mean, this is, you know, the company's been around since 2015. I've been since 2019. I mean, I'm just about pushing my seven-year mark. And I would say that this activity is actually pretty normal. You know, this is something we're very used to, this volatility, especially in the price And so the behavior that we typically see in these times is when Bitcoin dips, we personally, I mean, we look at volatility as a feature, not a bug, because obviously, you know, people move in and out, they'll move from a stable coin to Bitcoin. And so that drives exchange volume. So we actually appreciate dips as long as we get a jump, a nice high volatility spike on the upside as well. But in times like this where Bitcoin trades in a range or in the other assets that trade in a range, we see two things. One, we see our fiat on ramp. So we see a jump in people buying Bitcoin with getting money out of their bank account and buying. And then I think the other thing that we typically see is there's because we have such a large breadth of assets and chains on our space on our platform you know we see other pockets of interest so you know for a while there was Zcash and some of these privacy coins and those were hot so so I would say that the market as a whole there's always areas of the market that are going to be hot you know even like Pax Gold for example like that I've seen that coin has been trading with gold so you know there's there's different pockets of the market that are always going to be, you know, hotter, even if, say, the big ones, Bitcoin and Ethereum and whatnot
are down. Yeah. When you think about the roadmap for the company, are there any, you've connected in payments, like what other capabilities are going to expand the addressable market for the business today? And then are you seeing customers say, hey, we'd love if we had this capability, access to something specific. And so you can either build that or maybe that's another acquisition opportunity for you in the future?
I'd say for the second part of that question, yeah, that is absolutely what we are working on with the W3C3 acquisition. The idea of being able to swipe a credit card and have money come out of a self-custodial digital asset wallet, as well as provide functionality for the likes of Kraken and their crack card and OKX. And I think that what you will see over time, and at Exodus as well, is there's functionality that needs to happen, but the world is still fragmented. So the regulatory regime in Japan or the Philippines is going to be very different than Germany or, I don't know, pick another country. So because of that, there is still going to be a lot of opportunity at a local level worldwide. So to create a worldwide product with localized ability to interact. I'm sorry, the first part of the question?
just the ability to potentially add more if it's an acquisition target or something that will connect, how you will connect to it.
Yeah, I think that there's going to be, I just think in general, there's going to be a large amount of consolidation in the industry as well as the innovation, right? And so, you know, we will keep, to have that vision, to really have, you know, a worldwide product with numerous entry points on the stack, whether that's be through a credit card, whether it be through a local bank transfer or, you know, any of the other rails, but to have that and to put a self-custodial spin on it and a worldwide spin on it. You know, one of our acquisitions was down, we did an acqui-hire down in South America. And so, you know, we're starting to see, you know, interact on a more local, you know, ex-US level, you know, as well as the things we're building as a U.S. company.
A lot of this conference is about implications of AI on business models. Obviously, a theme we've been talking a lot about is AI plus blockchain having 24-7 instant settlement, cryptographic. Obviously, cryptography is important, I think, for agentic activity. What are you guys doing around AI, whether it's in building the product or even in the finance function as well at the firm? How big of a theme is this going to be for Exodus?
It's ubiquitous, universal, whatever the word is. It's everywhere in Exodus, both with how we look at our product and about how we build our product. And so we have been early adopters. And frankly, just as everyone at Exodus uses AI. and we have just seen the leaps and bounds, the difference between even in the last three months, the models are getting so good and so much better. It's hard to just describe the amount of productivity gains and differences that we've seen just in building our own product and accelerating our own roadmap. But then, of course, adding into it, like you mentioned, you know, agentic payments and things like that, because that world is right around the corner.
I guess I want to stay on that theme. Where do you think we are, and are you guys building in the functionality so that I think this future world of agentic to, you know, humans can be involved, but in certain cases, maybe they won't be involved, and that could be, you think about billions of agents, Circle had earnings this week, and they talked about that, having billions of agents transacting both with humans, but also agent to agent, and that could be a huge multiplier on the number of transactions. Is that something that you can build into the wallet functionality and actually have wallets that agents can have without having human intervention around that? Or where are you going on that right now?
Yeah, absolutely. We see that. That is absolutely in the near future. We completely agree with that thesis and are actively building towards it. I guess I will say that. But I will also say that, you know, that is a very logical, you know, step for Exodus, especially on the stablecoin and the crypto side. I think the interesting piece is, you know, we also have that, you know, with the moves that we're making on the credit card side of the world as well. You know, I think that, you know, we fundamentally believe that stablecoins, you know, eventually that will be the native agentic payment system. But, you know, we see in the near term, you've got to meet the world where it is. And Visa and MasterCard have done an amazing job building their networks over the past 30, 40, 50 years. And, you know, so there is still immediate value in that. So, you know, our goal is to give agents, consumers, you know, either or or both, give them the choice and the opportunity to use the payment rail that works for whatever that AI agent is trying to accomplish for you.
I want to shift a little bit to, obviously, Exodus is public. Talk about the financial profile, growth targets, how you're thinking about the progression of the financials of the company, and then kind of the next step function in growth. Kind of where is that going to come from, in your opinion?
I think if we go back and look, it's an interesting, we have a very interesting profile because, you know, our company was founded. One of the advantages, somebody just asked me earlier, like, how does a crypto company get started in Omaha, Nebraska? Like, well, you know, it's the two people in Nebraska that knew about Bitcoin. You know, they got together. But the challenge that they had was they needed talent, right? And so they looked worldwide. And to solve the solution of paying people in multiple different countries around the world, that's how we all ended up getting paid in Bitcoin natively, right? And so we also set up all of our exchange aggregator. Most of our revenue actually gets paid to us in Bitcoin. I'd say 99% of our revenue gets paid to us in some form of crypto. And so because of that, and because we have our founders and our leadership team, we do have a focus on generating, having a profitable operation and generating cash, and in our case, actually generating crypto. Because of that, over time, we built a very large Bitcoin holding. So to the perspective, a lot of people have looked at us as a digital asset treasury company. And that's not true. We happen to be a company that has a large digital asset treasury. And so you've seen over the past couple of months that we've put that treasury to work with the acquisitions, etc. And obviously, with the large amount of opportunity that we have, we see a lot of other opportunities as well, both from an M&A and then marketing, etc.
Is there a level of Bitcoin on the balance sheet that you guys want to hold? Or is it more just optimized opportunities? And so if you can grow faster with using that capital and converting it to something that's productive.
It's absolutely the latter. I mean, we are, you know, we, the Bitcoin is there to, you know, to help. It's there to, one, for operations. But then, you know, with the amount that we have, it's there for, you know, opportunistic growth opportunities.
So to come back to kind of the financials, what KPIs from the outside should we be telling investors here to be most focused on? as you look out over the next couple of years? And again, where do you want to see this business in a couple of years? How much growth can we expect?
I'd say from a KPI perspective, you've got the three areas, right? I mean, you've got our main business, which is the number of users that we have, the amount of transactions. In the future, you'll see the stablecoin transactions running through our pay product. So we'll keep an eye on that, like what kind of transactions are going through there, how many people are using our main B2C app. But, you know, and we are, as we build that app and as we, you know, and like for our Grateful Hire, our Grateful Aqua Hire, for example, you know, some of the things that they have brought to the table. And as we incorporate those into our product set, we also see more opportunities. So I'd say that's obviously the first, and it's pretty straightforward. But the second one is opportunities around that B2B2C, that AWS model. We have a history of building things for our main product and then being able to see where it's useful for everyone else in the world. And so I'd say that's the second area, which would be what products. Obviously, there's our main ExoSwap product, which is already about a quarter of our exchange volume. And we want to see that grow. But we also want to see the number of products that we add to our product suite, if you will, on the B2B2C side. So that would be the second metric. And then the third one is related to that. And that would be, you know, the M&A. And what different pieces of functionality do we pick up over the next 12 to 18 months? And how do we incorporate that in?
And what do you need to do to participate in this theme of tokenizing other assets, obviously stable coins, crypto on the platform? but to be able to participate in stocks and have other assets that are accessible for your customer base. And then where do you want to, like what layers do you want to participate in? Just the custody piece or do you want to be in the business of tokenizing assets and where else can you play?
I think the hardest part for us is actually not where can we play, but it's what do we say no to. But the area from the tokenized, like take tokenized stocks, for example. um you know we already have a a platform where people can store just about any tokenized stock um but the challenge is going to be more to your point about custody versus not i think what ultimately what we're waiting for is the rest of the world to catch up and and it's and as i mentioned with ai and then with the regulatory environment the rest of the world is catching up from an idea perspective very very quickly and so you know we we believe that there will be many more opportunities for us because we've been thinking about these for years, right? We've had tokenized stocks since 2021. And so we've been ready and building and waiting, and now it's just a matter of, okay, is the ecosystem, is the, you know, are the, you know, the New York Stock Exchange, you know, announcing that they're going to have tokenized stock trading, you know, but they're not quite there yet. Well, when that happens and when, you know, you see the ecosystem catch up, we'll be ready to jump in.
So just we have a minute left. Just talk about probably the mood within the firm right now. Volatility and prices at the same time. It's been probably a record year of kind of development of the firm, and now we're getting finally the pieces coming into place to actually kind of take the business to the next level. So maybe just give us a sense of kind of how you guys are feeling and the optimism over the next year.
I would say, yeah, obviously we're extremely optimistic. You know, the challenge is, you know, Bitcoin's been trading in a range and it's off its high. You know, a little bit extra, you know, if Bitcoin was at $200,000, we'd be even more optimistic. But, you know, we've been through this many, many different times. And so, you know, again, I live in the Omaha area, so I have to court Warren Buffett, you know, and we want to be greedy when others are fearful. So oddly enough, if, you know, it's almost like today the price is up and I'm almost like, crap. You know, if only things would go down a little bit more, then, you know, we could go in and we could be extra greedy. Right. So so I would say I would say, yes, we're we're with the regulatory and AI tailwinds are it's it's you know, I know we've talked about it, you know, ad nauseum, but you just can't it just can't be overemphasized the impact that it's going to have over the next few years.
it's a great place James thanks for coming back again this year and looking forward to following the next year and having you back again so thank you so much and thank you everybody for listening appreciate it appreciate it thank you everyone
thank you everybody