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Background
Mint Season 2 episode 6 welcomes Reuben Bramanathan, an expert on all things crypto law, product management, fund management, and more. Having worked at Coinbase from 2015 to 2017, Reuben has seen the industry evolve at a rate in which many don’t have purview. Now, he’s helping build IDEO CoLab for collaborative impact where he and his team connect organizations to shape technology’s impact on the world.
In this episode, we talk about:
- His take on JPEG summer
- How NFTs are introducing the mainstream into crypto
- Securities laws regarding fractional NFTs
- What opportunities in the space most excite him and IDEO CoLab
- Fair launches for creator coin
- NFT consumer applications
- What will eat web3?
…and so much more.
Thank you to Season 2’s NFT sponsors!
1. Coinvise – https://coinvise.co/
2. POAP – https://poap.xyz/
3. Socialstack – https://socialstack.co/
4. Celo – https://celo.org/
5. PrimeDAO – https://www.prime.xyz/
Interested in becoming an NFT sponsor? Get in touch here!
Give me a quick background on yourself. Who are you? What were you doing before crypto and kind of where are you now?
I almost can’t remember what I was doing before crypto. It feels like a lifetime I’ve been around since about 2013 was a lawyer by training and working in a big law firm, found out about Bitcoin through some friends, got deeper and deeper into it. Ended up leaving that big law firm to start a small law firm focused on Bitcoin in Australia. It was 2014. And through that just kind of got deeper and deeper. I joined Coinbase in 2015 as one of the first lawyers there. Also did a bunch of product management work at Coinbase and started some new businesses, including the index fund there. And through that I realized you know, law was my profession and the set of skills that I had, but crypto became my passion.
I ended up leaving Coinbase in 2019 to start working with companies deeper in this space in DeFi and more recently NFTs social tokens and using my regulatory and legal background to help solve some problems at those earlier stages, help founders build, navigate some of those tricky issues. And through that got connected with the team at IDEO. And so now I’m full time investing with IDEO. But also, you know, we, we just spend a lot of time with the companies we work with and yeah, solving some of those hard problems that early stages.
Yeah. I think one thing I really like about your story is obviously getting started at Coinbase, which I’m curious about. How has that shaped your career in crypto? Getting started at like one of the best firms to work at in this space?
It was amazing. It was an incredible journey. A lot of ups and downs and, you know, living for that hyper-growth, and seeing those cycles in crypto is definitely, it gives you perspective. Every time that something new or exciting or traumatic happens, I think our tolerance to chaos is much higher because, you know, you kind of live through that. In those early days at Coinbase, the crew, there was incredible, just some phenomenal people to work with and to kind of have been there was just a blessing. And then to have that experience, as I said through the cycles, is really setting up a lot of former Coinbase folks to go out and go on to do even greater things.
Yeah, for sure. Obviously the first person that comes to mind is Antonio from dYdX. You also have a few people that kind of bridge from Coinbase who started their own funds. And it’s cool to kind of see your journey and help so many founders solve really critical problems, whether it be regulatory problems, tokenistic problems, right. What part of the crypto sphere, cause you’ve dabbled, you’ve also consulted, and you’ve also launched you on social token, throughout every experience, what have you found to be like the most rewarding one so far? What have you enjoyed doing the most?
Yeah, that’s a great question. I think what I enjoy most is just being there alongside the builders the folks figuring out the new stuff and that’s in my career that’s been the one thing that I think I’ve done right, is I’ve always managed to seek out the people finding and building the new stuff. And so for me, it’s kind of being there alongside them, whether it’s a, a tricky regulatory issue. The decision around, you know, the right move for communities some, you know, product-related stuff as well. I think that just, you know, just having been around long enough, I’ve been able to help a bunch of people. And honestly, through that, I learned as well. And I feel like you know, the companies that I’ve advised, I’ve learned as much from them as they have from me. So that’s just such a rewarding thing about building new stuff in uncertain territory together.
Yeah, for sure. I wanna pivot kind of to where we are right now in the marketplace. People are coining it as a JPEG summer. We have the cool cats, the board apes, the punks record level transaction volume across OpenSea and all these NFT marketplaces. And it’s kinda like NFTs are having their moment of fame again. How do you feel about everything that’s happening aroundJPEG summer?
Don’t forget the penguins. For sure. It does have some parallels with DeFi summer. Just that euphoria where so many new people are coming into the space and coming in for new reasons, you know, for so long people only got into crypto through Bitcoin through that digital gold narrative. And then even after that, you know, we had all the other coins at the peak of the 2017 cycle. And then DeFi summer really peaked because people came into crypto for DeFi. Not just for you know decentralized digital gold assets, but because of the new things that are being built, the new ideas of the borrowing and lending and decentralized exchange protocols yield, farming, all these things. People came in for different reasons. And we’re seeing that again in a different flavor now, which is even more powerful because as it turns out more people care about culture and art and communities and sport and gaming than do about finance. Right? So there’s a new reason that people are getting into crypto and that’s, what’s most exciting to see new people who wouldn’t have really gotten into Bitcoin or Ethereum or any other crypto for crypto sake, they’re getting in for the sake of the content and the communities and the new networks that have been formative of people. So I think, you know, you can kind of hone in on any individual NFT project. You can see the explosion of punks. Obviously you can look at party DAO just recently in the stuff that’s been built there. Rationalize NFTs. All of these are indications that there is demand from normies to come into crypto for different reasons.
One, how sustainable are all these profile pictures? And two, do you think it’s a good intro for new people to come into crypto and to experiment like this type of bubble, this type of chaos, this type of a casino? What do you think about that?
So answering the second question first, I think. Yes. I think there’s obviously, you know, some, some danger in a lot of like the frothy bubbly price, speculation stuff, but I think that’s always been the way in crypto. What attracts people is something that’s hot, that attracts attention and necessarily that means there’s price speculation, because everything in crypto is inherently financial or fnancializable. So that just means that that speculation is a measure of the attention coming in. And like I was saying, it’s really exciting that people are coming in for a lot of the cultural and art reasons as well. So it’s just another on-ramp into crypto. And I think that one of the things we’ve been talking about for a long, long time is how do we bring crypto to the mainstream? But really the question that we need to be asking is how do we bring the mainstream to crypto and NFTs have proven that this is one pathway. And of course it’s janky to set up Metamask and secure your private key and figure out gas and all that stuff. But people are doing it and people are doing it because they want to be a part of crypto and they want to be a part of space. So that’s not to say that, you know, we can disregard UI or all the, you know, making it easier for people to kind of onboard. But, the reality has always been in crypto that people find a way because they want the product so much. So as to how sustainable that is, that’s a great question. I think like anything in crypto, that’s going to be just more and more peaks and troughs and volatility. You know, there was a great post by Fred Wilson again this week that whether this version of NFTs is the exact version of the future, that’s up for debate, but it’s, it’s beyond debate now that NFTs are going to power web three and the internet of the future. What the internet was always supposed to be.
One thing that I see increasingly happening is, well, it’s obvious that these NFTs have market value. Obviously, people are trading them right, making money from them, flipping them, whatever, raising the floor, sweeping them, all these different tactics to kind of manipulate the market. But at the end of the day, the big bet here is that every form of media is going to end up becoming an NFT. Right? It’s going to have a level of ownership. Do you agree or disagree with that for starters?
A hundred percent agreed. Every form of media including every content, every piece of content, every post, every story, every fleet, every library, everything, whether it’s specifically an NFT or not, it’s an on-chain action that’s going to be cataloged, recognized and available to form your social profile in the future.
So, okay. We both agree on that. I think many people also agree on that concept, but right now, the tools in the onboarding products that are in place for Metamask to all these alternative crypto wallets, they don’t play on that narrative. Right now they’re focused on onboarding users to play and mess around with ERC-20s. Right? The second you open a wallet. Specifically Metamask who focuses on the Chrome extension. You have all your ERC-20s. You don’t really see your NFTs, even though they do store them. So the onboarding process on getting people to consume these NFTs, these media files, whether they be land rights, whether they be future PDFs, whether they be MP3s from an NFT album or an NFT film, that’s not in place right now to actually enjoy and consume. Have you seen companies kind of approach that problem? What do you feel about that?
Yeah, I think that’s definitely a huge area of opportunity to build products that let users really dive in there. I still think that it’s not the most pressing problem. I think because people are still finding their way into crypto because they want the product as janky as it is. And I kind of look at more things like security. You know, especially at the user end. I think that’s one thing that wallets could really focus on and do better in addition to, you know, improve user experience. But yeah, for sure. We’re going to see new wallet infrastructure. We’re probably going to see an evolution of the wallet to the profile. And we think about that a lot at IDEO. The wallet is a very financial lens to look through the way you interact with cryptocurrency. And like you say, you know, if for many people, the primary action to do with NFTs has to do with content rather than finance, then that experience should look different. But again, it comes down to that, you know, secure private key management. And then how do you translate that into your collection, your profile, your gallery, your display. So there’s going to be a few different ways to approach that, whether it’s a more lightweight wallet that kind of plugs into more fully-featured galleries or metaverses or spaces or something all in one. Yeah, that remains to be seen.
Why are you so excited about the security side? What is it about it that gets you going?
I would say I’m not thrilled by it, it’s just something that needs to happen. Both at the protocol level, the contract level and the user level. I think that’s one thing. I mean, you know, you can train or you can educate people to go through the clicks and the stages to send and bid and all that stuff. But if they haven’t backed up their private keys in a secure way, then that’s the fundamental problem. So I think that, you know, it’s great that the hardware wallet space is evolving. It’s great that user education is evolving. But I would say that’s still the main area of concern rather than just, you know, a nicer user flow.
When artists are trying to experiment with the NFT route and trying to take it one step further beyond just selling a JPEG or an MP3 file and really allow their fans to kind of go on their journey with them financially, how can they do that today without kind of like crossing the red flags of the SEC?
Yeah, it’s a great question. And I think, you know, music is a great example of an industry with very entrenched or big power structures that don’t always serve the artists. In fact, most of the time they don’t. And you know, again, it’s ripe for disruption where we now have a technology which enables artists and creators to engage directly with their fans, directly with their communities. Whether that’s through music as content, whether it’s through NFTs or other kinds of multimedia that, you know, they want to sell or give away or share with their communities, we’re going to see actual on chain, tokenized, royalties. That’s coming. You know, it’s just a matter of time. It’s going to be as disruptive to the industry as the internet was to the media, or as the press to Hollywood. I think that, you know, this is the true promise of web three, that this technology is here. What that means in the short term is that there’s still a lot of resistance from the traditional legal structures to anything different. So, you know, your example is a great one. What if an artist wants to share their upside with their community? What if they want to take them on the journey? There’s still limited ways in which you can do that.
One example, which I was really proud of because I worked on with the RAC so I can and what we did for RAC was we actually did an airdrop of his token to all of his past supporters. So went back and looked at people who had supported him through Patreon people who had been to one of your shows, bought much band camp, like all of the other ways that he’d built this community around him, folks that supported him in the past, and he was able to give back to them through the token. So it wasn’t an ICO, it wasn’t a sale, it was just given away. And he kind of aligned himself with his community that way. And then going forward, you know, those tokens can be used for other incentives or you know, collaborations or people in the community participating and supporting him you know, token data that says there’s a bunch of stuff you can, you can do. But I think that the long story short is, when it comes to a creator or an artist, actually giving back to their community, that’s a much more fundamentally less risky way than if they’re extracting value from their community. So, we could do a whole session on securities law and how we test that, but the TLDR is, I think that kind of aligns nicely.
What you’re explaining or describing from what I’m understanding is the utility component behind RACs token, the access component. And is that kind of like more where you’re leaning towards.
It’s a little bit about utility but it’s also about what the community expects and what they have to give up to participate in it. So if you’re asking them to buy your tokens from you, that starts to look like an ICO. If you’re giving them tokens or you’re letting them earn tokens, or you’re kind of well, you know, creating an economy where everyone shares in that value, that’s much less likely to be a security. And I I’ve written a little bit about this and some of the other things you can do within the community to make it about sharing the value rather than extracting value.
Very, very fascinating. And you talk about token gated content, and this is something that I’m personally very excited about, that we haven’t seen kind of experimented with to the fullest extent. I think the most prevalent example when listeners think about token gating content, and what that means is, when you buy a bored ape, you have the bathroom that you can unlock and you have this shared canvas that everybody can contribute to a pixel of art to the whiteboard, right? Every two, 15 minutes, whatever the time interval is. What other forms of token gated content, have you seen, that’s quite exciting that you think other creators can kind of implement or start tinkering with in their communities?
Yeah. There Are plenty of examples of, you know, token gated discords or telegram channels or forums streams, all this stuff is going to be token gated. That’s not to say that, you know, that’s the only model but it is one. You know, especially for creatives with a large audience you know, being on the inside, feeling like you’re part of the, the inner circle, I think can be really valuable for those token holders, but there’s also, again, NFTs being, you know, inherently public by default and that content being public. And the more that that content is shared and referenced, you know, the more valuable it becomes. So that is kind of the other end of the spectrum. So for a creator . It’s important to think really carefully about what you want to gate, what experience you want to create for your inner circle of fans and supporters, and then what you want to make public and the different trade offs between those two models.
Yeah, I think you’re right. All of these collab land bots, these Coinvise bots. These POAP bots, right? All these things contributing, whether you’ve participated at one point in time in a community and what that allows you to access, it’s a very powerful thing that we see more in like web two and a mass level, for example, like subscription, right? If you subscribe to an only fans account, you get access to certain perks, right. And if you upgrade there’s tiers to it, which is a very known model, but now it’s integrating it on the token front, right? One thing I want to talk to you about is this infrastructure bill that came out recently that made headwinds across crypto Twitter. For those who don’t understand it, can you give us a quick brief of what was kinda driving people crazy. And how do you feel about the infrastructure bill and kind of where it stands right now?
Yeah. First of all, the biggest takeaway is that the folks that are lobbying for fair and reasonable regulation for crypto, they’re super important. Donate to coin center and support blockchain association. These folks are doing great work. And what they were able to do was take this infrastructure bill, which is about like bunch of other stuff in the economy, but there was an amendment part of it which would treat basically everyone in crypto as a broker. What the intention of the bill is to make sure that the people who are actually brokers, Coinbase, other exchanges, centralized custodians, requiring them to report on user transactions, just like every broker in the U S has to do. And no one was disputing that, but the problem was the bill was so widely drafted that it could have included miners , validators, people who had deployed smart contracts or running DEXs, lightning operators, basically anyone who touched a crypto transaction, would make them into a broker. Which would mean that they had a responsibility to report the identity, the cost basis, all this stuff around transactions that they simply don’t have access to and they’re not in a position to do that. So I tweeted it. It’s actually not existential for crypto, right.
Crypto itself, well, it doesn’t care because the actual app, you know, the functions of the network , doesn’t really get impeded by these folks having to do more compliance, but it’s a huge problem for the crypto industry in the US. It would force a lot of these operations offshore, or it would mean that it’s simply not practical to run a node or a validator from within the U S in a way that people off shore could easily get around. It is trivial. So we’re still in a stage where that might go through and then there’s a few more stages after that in terms of whether the treasury and IRS would actually seek to enforce that against people who write contracts or simply validate, but it’s just really bad policy and it was a shame to say it rushed through so quickly.
I agree with you. I think it obviously stirred a lot of chaos across crypto Twitter, and I called my Senator and I read that script and did that whole process. And, my next question to you is, how does this affect creators in that future vision of what crypto wants the creator economy to become? Like if that went underneath the rug and that passed, right? Thankfully it got the attention of people who care about crypto and believe in it wholeheartedly beyond just the transactional component. But what does this mean for the future of the creator economy?
Yeah, it’s a great question. I think this specifically even in the broadest interpretation, shouldn’t include creators who are just selling NFTs or who are part of communities or running tokenized communities. But the broader issue of regulation, I think again, it comes back to securities law. Can you launch a token, can you launch, you know, a brand or fan or community token without running a foul of the securities laws? You know, my take in general is that the creators are the folks who have really been historically underpaid for the work, the content they create, the communities that they build and, you know, there is a narrative around crypto enabling and empowering creatives. It’s a way that for the first time, they’re actually able to realize the value of the content, of the work that they produce. And so there’s a stronger argument, you know, for these folks to be able to monetize than there is for, for example, you know, like a 2017 ICO, that’s just trying to, trying to pump its bags. That’s not to say it’s going to be smooth sailing. There’s probably going to be still a lot of gray area around social tokens. But to me, at least there is a stronger narrative for creators and like anything in crypto, the principle of decentralization and community contribution actually aligns pretty well with the securities law. The more decentralized the community is the more different participants you have that are adding value that are creating content, the less likely it is that your token is going to be a security. If you’re just one personal brand or team that’s doing everything, that’s actually more likely to make your token a security, because you are centralized. You’re the one responsible for adding the value and the rest of the token holders are more passive. So the more active, more engaged, and collaborative your community is, the less likely your token to be a security.
How do you feel about everything that’s happening around fractionalization and kind of where they clash and the legal system?
Yeah, there’s definitely still a gray area. Having said that, I think a fractionalized NFT is in general less likely to be a security than most ERC-20 tokens. And the reason for that is you buying a part of a whole and the whole is the content. It is the NFT, it’s the punk, it’s the API, it’s whatever. And your expectation of profit, and this is the Howey test, but you’re buying into this collectible, or this original, and you might speculate in the value of that original, but that’s much different to speculating on the value of a protocol or of a new asset that has a central team building. I still always thought that the NFT in general, your expectation of profit is due to the rarity or the demand for that asset, for that piece of content rather than, you know, the efforts of any other one person. So it’s not to say that it’s all in the clear. But I think around, again, back to this narrative of art and design and culture and content, this is simply the monetization of stuff that hasn’t been able to monetize on the internet very effectively before. And that’s very different to ICO’s and pump and dumps and rug pulls.
Why from a real-world example fractional art is a security, but from the digital world example, it’s not?
Well, it comes back to investor protection at its fundamental level. If you fractionalize the Picasso, someone’s got to hold the original, it’s gotta be in a vault somewhere. They’re responsible for that centralized point of custody. And yeah, you want to make sure that that actually exists and it’s not, it’s not a scam. But that’s very different to a fractionalized NFT. You know, anyone can verify instantly that it exists. Obviously, it’s non-custodial, so those same kinds of risks are not present in a fractionalized NFT in the same way that a fractionalized real-world asset is. I mean, there is certainly a possibility that a fractionalized NFT could be a security, if the way it’s marketed is like, you know, marketed like an investment, that’s going to have value-added because there’s going to be, you know, things built on top of it or whatever. But I think if we live in a world where an artist can’t sell an original NFT fractionalized from the start, then that’s a huge problem. Why shouldn’t an artists be able to sell 100 fractionalized NFTs as opposed to one original. The one original is clearly not a security. It’s a piece of art. So if we live in that world, I think we have a problem. I don’t think we’re there yet. I think that’s kind of the worst case outcome, but if you think about it like that, why shouldn’t a creator be able to sell the work in a thousand pieces rather than one piece? It’s the same outcome.
Should creators be approaching their token sales, their NFT sales from a fair launch point of view, or they be approaching it from doing a private raise before publishing it to the community to get involved?
Yeah, it’s a great question. We started fair launch capital last summer at the height of DeFi summer because there was an opportunity and there still is for people to raise funds in different ways. Whether they raise from the community, whether they raise from private backers or whether they don’t raise at all. And there’s still the things that are uniquely enabled by crypto blockchains are kind of self-sustaining in the way that they kind of pull capital, and then that capital gets allocated to projects within that ecosystem. So we definitely have seen that capital, those gains recycled into new projects. As the artist, I think that again, you know, for so long, they haven’t been able to really realize the value of their work. So I don’t think we should have an expectation for artists to kind of give away their work for free. But you know that there’s definitely opportunities if that’s what they want, if they want to give something back to their community, they can give away tokens. They can give away NFTs.
Some interesting models where, you know, there’s rather than a full, you know, unlimited open edition. there’s one of X, but then there’s, you know, another kind of you know, a replica of that, that’s its own edition that gets given away so that the folks that can’t afford to bid on the original or the one of 10 or the fractionalized, one of a hundred to do that. But other fans can still have a derivative or a print the equivalent of a print of the original that they can own as well. So there’s so many new frameworks and new possibilities that can be explored. I think that’s one of the most exciting things.
What are some of the more pressing issues in crypto that have yet to be seen?
Yeah, I think like I mentioned at the start, security at all levels. It’s still such a huge one. So we’ve been investing in some great projects in the infrastructure space in terms of security audits, bug bounties insurance. And we’d love to see more in the user experience space as well. So that’s , I guess probably number one. And then again, like there’s always still more efforts to kind of bring mainstream users into crypto. Having said that, I think, you know, the NFT summer is proving that that people are coming in. I think now, it’s almost like we do look still for the pain points. We look for the things that are really painful for builders, entrepreneurs, users, and solving them. But we also just see this like massive blue ocean of new opportunities. And we love talking to founders who have a big vision of how things will look in three and five and 10 years. And so, they’re also working on something that’s a pain point. One example is everything around DAOs . So DAOs run effectively like traditional businesses. They need, you know, HR and payroll and operations and treasury management and accounting that simply doesn’t exist and those tools need to exist right now. So that’s one, that’s clearly a pain point. On the investing side you know, we spun out syndicate protocol, which is really focused on making it easy for people to spin up any kind of collective investment vehicle on chain or off chain. So those are some examples of pain points, but on the other side, you know, looking at things that are happening in the NFT space seeing what happened with party DAO and you know, enabled by the auction house Zuora built. That’s like truly new primitives and new markets that are coming.
Final question for you. I know you’re a big fan of the development of the internet and the transition from web two to web three. You’re very vocal about that. One thing that I like is to pick apart the development of the internet. So web one was very much read-only, right? Web two made that transition and created social graphs, social networks, and connected friends online. Web three is entrenched by this primitive form of internet money, right? Ownership, decentralization. And they’re each like collectively eating one another. What do you think is going to eat web three?
Nice. Yeah. Huge question. I honestly hadn’t thought about it. I think we’re still many years away from the full web three vision, although we’re starting on that pathway now. And the thing about web three is that, you know, when people own their own content and data they can choose which platforms to use. They can choose where to share it and how to surface, but they still own it. At the same time they own the platforms that they’re using. So community ownership is we believe, fundamental to web three, the ability for users to own and control and have a say where the direction of those platforms goes in. So I guess after that, you can kind of extrapolate and see basically, you know, new platforms being built by communities rather than by centralized teams. The tooling just being there from day one, the pseudonymous economy being really part of web three and just, you know, enabling anyone anywhere to contribute, to start something, to contribute to something else no matter where they are, what they look like, which regime they live under. I think that’s really where we’re heading and that’s one of the most exciting things about web three.
Every single thing that you just mentioned is with the intention of bringing everything on chain. Right. Well, what happens when everything is on-chain and what risks does that kind of propose? And I think that kind of ties into what will eat web three? Once all that data is on chain, what comes after that?
Yeah. I mean, maybe there’s just an AI revolution where the bots are so much more effective at interacting with the chains than humans are. And yeah, maybe that’s when we kind of transcend into the, into cloud or the matrix or whichever utopian or dystopian future you want to want to believe in. But yeah, I think that at that point, Society looks much, much, much different. Both in terms of how we will participate in the economy and then how governments and, and traditionally logical operations, like the role that they play will obviously look very different as well. So that’s a deep future episode, but I can see that the, the seeds are already laid.
I think that’s a perfect place to end off Ruben. Thank you so much for being on mint before I let you go quickly, plug yourself where we can find you and everything that you’re working on.
Thanks so much, Adam. It’s been amazing. I’m on Twitter at @bramanathan, hit me up. My DMs are open any time.
