coindesk.com
The reins of power are changing hands at cryptocurrency exchange Kraken.
Dave Ripley, the former chief operating officer who was tapped as interim chief executive, sat down with CoinDesk TV to discuss the departure of founder Jesse Powell, who led the exchange since its establishment in 2011.
For years, Kraken has served as an institutional on-ramp into crypto in the U.S. and a bastion of the industry’s anti-state ethos. In 2015, for instance, the exchange decided to exit New York State rather than apply for the onerous “BitLicense.” Under Powell, who will stay on as board chairman, Kraken championed a “decentralization first” mentality as it hired prominent bitcoiners, funded industry research and lobbied governments.
Read more: Kraken’s Jesse Powell to Step Down as CEO of Crypto Exchange
“With all of the dynamic aspects of crypto it’s tough to say nothing will ever change. But the one thing I can say for certain [is we] will be steadfast and unwavering on our mission, our values and our culture,” Ripley said.
Earlier this year, Powell came under fire for supposedly fostering a toxic workplace culture, where women, BIPOC and other diverse employees felt out of place. The exchange, most recently valued at $10.8 billion, is working to find a balance between its early “pirate” values and an increasingly professionalized industry.
In the interview, Ripley also discussed what the crypto winter could mean for investors, the possibility of Kraken becoming a publicly traded company and bitcoin maximalism. The transcript has been lightly edited for clarity.
Why did Jesse Powell really step down? What happened? What’s going on over there?
It’s been a while for him – 11 years since the founding of Kraken – and he’s interested in taking a step up, as we’re referring to [it], to become the chairman of Kraken. I think the company’s at a different level of scale. He wants to focus on a couple of more narrow areas going forward, mainly industry advocacy, which is broader than Kraken itself, [as well as] thinking harder about product innovation.
We’re in the middle of a downturn in the markets. As you step into this role, how are you approaching that?
This isn’t our first bear market by any means. At this point, I think we’re built for this. It’s not our first rodeo. We’ve done a lot of things over the history of Kraken to prepare for the volatility and dynamic aspects of the crypto market and we’re feeling pretty confident about this market. We’re in a great position. We have an incredible team, we have a scalable product in operational business, we have a strong balance sheet. We've continued to hire throughout this year and we’re continually reassessing hiring plans in moderating growth appropriately to match what's best for the business. We're in great shape to further strengthen and fortify the business during this period.
There have been some loose timelines about perhaps entering the public markets along with fellow crypto exchange Coinbase. Where do the IPO plans stand given market conditions? Given this change of leadership, is that still on?
No specificity on IPO plans that we can share. We haven’t done a huge amount of equity fundraising in Kraken’s history. We’ve done some. And we do have our eyes set on this being a meaningful part of the business going forward. Both private and public funding are out there for us. We are definitely gearing up to engage more and more with external investors in the coming years.
Jesse [Powell] set a very loud tone about what he wants Kraken to be like. Is that going to change with you … or do you expect it to stay the same? What’s your take on company culture?
With all of the dynamic aspects of crypto it’s tough to say nothing will ever change. But the one thing I can say for certain will be steadfast and unwavering on our mission, our values and our culture. I was incredibly involved in defining how we really see our mission and vision going forward. This is frankly a source of our success and a source of our potential success moving forward as well.
We’ve seen a number of mergers and acquisitions in the space and we’ve seen exchanges look to NFTs [non-fungible tokens], as well as offering banking services. Through this bear market, what is your vision for the company as you step into the CEO role?
We’re bullish on the crypto space. We think innovation is going to continue. We’ve seen significant breakout innovations, including DeFi [decentralized finance] then followed by different use-cases for NFTs and we’re really bullish about the potential use cases out there.
In the coming years, we’re going to enter an interesting period where a number of these different use cases reinforce each other and that’s where we hit escape velocity. Where does Kraken sit in all of this? We’ve historically been a bridge from the traditional finance world to crypto and we’re looking to continue that as our main contribution to the ecosystem. We’re going to look to build that bridge deeper and deeper into the most exciting and interesting use cases in crypto.
Are there any sights set on acquisitions?
We do, but we can’t disclose all of the specifics or company names for an M&A. Generally, where we’ve focused on [mergers and acquisitions] more recently, has been on the new product and technology and innovation side. Our biggest acquisition today was Staked [a non-custodial staking services platform]. We jumped out fairly early in the staking services space and that acquisition helped fortify our technology and our infrastructure. We’re going to be launching an NFT marketplace in the not too distant future, [which] would be another area where we’re looking for M&A opportunities.
How is Kraken navigating the murky waters of regulation?
We invest enormously in this space and we have a legal team led by Marco Santori. We’ve also built out a policy team recently [and] this group works out the forward-looking engagement with both regulators and lawmakers and that team is now 10+. Marco’s team overall is 50+. As we get to market with different types of products and services, we have our core compliance team [that] is close to 300 [employees]. We have another 300+ across operations, working in and around compliance.
Where we sit in the ecosystem, being a bridge from TradFi to crypto, it’s fundamental for us and it’s critical that we have this and do this as we see more regulators coming into the fold. We’re looking to proactively engage with all of them and we have been.
Read more: I Don’t Understand Bitcoin Maximalism / Opinion
Are you a bitcoin maxi? Does bitcoin maximalism prevail at Kraken, culturally? Where does Kraken fit within the broader exchange ecosystem?
Affectionately, we call our team “Kraken Knights” and we have a number of Kraken Knights that sit on both sides, that are [either] bitcoin maxis and some that aren’t.
Kraken, as a company, we’re very supportive of being multi-token. We list about 200 tokens on the platform. We view ourselves as being impartial to these various different technologies and that’s where we sit as a company in this space. Our culture and values are predicated on what we refer to as crypto values: economic freedom, inclusion, equality, global perspective.
A lot of those values are pervasive among bitcoin, but then more broadly across crypto. Given that we have that view on the space and we have a lot of people that have been in crypto for a long time, we do have a lot of OG crypto individuals as clients, but I don’t know if we necessarily have more bitcoin maxis as clients. Perhaps, that could be.
Read more: It’s Time to End Maximalism in Crypto