Brian Armstrong, Coinbase

**David Senra** (0:02)
How much of your job is building political power as an advocate for like the crypto industry?

**Brian Armstrong** (0:07)
Yeah, I mean, I don't have to go, but I think it's worth it for the business. I don't mind going, I like doing in some ways, I like doing it. There's some pretty interesting people there. So I go about once a quarter, maybe once or twice a quarter recently, because we're right at the crux of this key moment for market structure legislation. But I'd say over the last few years, yeah, about once a quarter.

**David Senra** (0:25)
What's the key moment for the market structure?

**Brian Armstrong** (0:27)
Well, the crypto industry has been working for a long time on getting in the Senate. A whole bunch of people have been trying to get this piece of legislation passed. In the House, it was called the Clarity Act. In the Senate, they're drafting their own version of it. But it's essentially clarifying this question about which of these crypto assets are commodities versus securities. And someone might say, well, why does it matter? It matters because in the United States, we have two different federal regulators, a CFTC and the SEC. The CFTC regulates commodities, the SEC regulates securities. And so it turns out in the past, this ambiguity about where crypto assets sit between the two federal regulators, that lack of clarity was really weaponized by Gary Gensler, the former SEC chair, and Elizabeth Warren and people like that, who tried to, in my view, unlawfully kill the industry in the United States. So in other countries where we operate, like in the UK or in Singapore, they only have one federal regulator for financial services. So they actually don't care whether these are commodities or securities. It's a totally parochial issue in the United States that's like this turf war between two federal agencies in the past. So anyway, we just decided we need to get legislation passed by Congress to clarify once and for all which of them go in which bucket so that a future Gary Gansler couldn't come in and try to kill the industry.

**David Senra** (1:39)
So what was the lawfare they were trying to do?

**Brian Armstrong** (1:41)
Well, okay, so long story, but essentially, this was around like the 2020, 2021 time frame. Coinbase, we decided we want to become a public company. We had been operating for about nine years at that point. And we went in and went through the normal process with the SEC, you have to describe your entire company, how it works, how do we decide which assets to list, which do we not list. At that time, we wanted there to be a path to have crypto securities be traded. Simply to think of it as a security is like a way to raise money for a company that you want to start. A commodity is something that's decentralized, kind of like oil or gold or copper or something like that. So Bitcoin is decentralized, nobody controls it, everyone pretty much agrees Bitcoin is a commodity. But there were people issuing tokens which were raising money for different projects they were doing, that were in various stages of decentralization. So was it a commodity? Was it a security? And then Gary Gensler, the SEC chair at that time, my understanding is that he and Elizabeth Warren essentially decided they wanted to use this to curtail the crypto industry. And if you want to know why.

**David Senra** (2:45)
Why?

**Brian Armstrong** (2:46)
Well, okay. So Elizabeth Warren is, in my view, she's a socialist. She believes the government should be running all financial services. And she had essentially found a way to bypass Congress and have a lot of influence over financial institutions, like big banks. And she did-

**David Senra** (3:03)
How would she get that influence?

**Brian Armstrong** (3:04)
Well, she would appoint regulators that could essentially go in and pressure the banks to do things that Congress had not necessarily authorized. So under the Constitution, only Congress is allowed to make laws. But the regulator is given some discretion about how they implement those laws. So you can imagine, let's say you're a bank, and you have your bank regulator, and they come in, they can choose to lose your paperwork and not approve something for 90 days, or two years, or five years, or you can have a good relationship with them and they can approve things. So let's say they come in and they start to ask you, hey, are you guys serving crypto companies? And you say, well, yes. And they say, well, that's not illegal per se, but we're gonna have a lot of questions about that in the next exam that we do of your bank. We have deep concerns about the risk that this might introduce. Suddenly, everyone inside the banks getting the message real loud and clear, like, ooh, maybe they don't like us doing this. Now, is it illegal? No. But the bank's regulators, if they say jump, you sometimes want to say how high, right? And this was the kind of extra judicial pressure that Elizabeth Warren was able to create on banks. She did it, by the way, in a bunch of other industries too. Like, she got them to stop giving loans to, like, oil and gas and, you know, firearms industry and some things that she... It was like her own political agenda, basically. So she got kind of her hooks into these banks, had a lot of influence over them. Suddenly, crypto comes along, which is a new system operating outside of that. And she didn't like it too much. And so she asked my understanding, this is kind of what other people in the Congress told me, is that she asked Gary Gensler to go hard on crypto and try to really curtail it in the United States. And that's what he did. He created a bunch of lawfare, essentially. We'd go in to meet with him. We did maybe 30 times. We met with the SEC after becoming a public company, where they allowed us to become a public company. And we'd say, hey, we're here. We'll tell you anything you'd like to know. Just tell us what are the rules. We're here to like, we're trying to build this industry in America. You tell us the rules, we follow the rules. That's how it's supposed to work. And they would say, we're not going to give you any advice. Go talk to your lawyer.