- Armstrong said that when he visits Washington, DC, about 50% of the people he speaks to look at the crypto industry as a risk
- “We’ve been leaning into regulation for many years. The people and companies it would harm are the smaller startups. It would entrench these companies. [Regulation] sometimes harms innovation, but it would be better for Coinbase in a weird way,” he added
The intense demand for crypto industry regulation keeps ratcheting up because the crypto industry keeps growing, said Brian Armstrong, co-founder and CEO of Coinbase on Thursday.
“Generally, we view this as a positive trend,” Armstrong said during The Best Business Show with Anthony Pompliano.
However, Armstrong noted that when he visits Washington, DC, about 50% of the people he speaks to look at the crypto industry as a risk.
“They think ‘this is scary, this is dangerous,’ they have all kinds of misconceptions about the percentage of activity that’s for illicit activities,” he said. “In their mind, they think it’s like 50% illicit activity,” he added.
While about half of the lawmakers in DC have misconceptions about crypto, the other half have realized that the crypto industry is a huge opportunity, Armstrong said.
“They realize this is a hugely important industry for the United States and every country around the world. It exists in a competitive environment where the US needs to attract these entrepreneurs and get these companies built here. Frankly, the American citizens want these products and services. This is not a fringe thing anymore,” he added.
Coinbase currently has over 68 million verified users globally, across over 100 countries, which is up 58% from 43 million users at the end of 2020. But Coinbase is just one of many cryptocurrency companies facing regulation, Armstrong noted.
“There’s tens of millions of Americans that want to use these products and services and they’re getting a benefit from it that they weren’t getting in the traditional financial system,” he said. “Ultimately, the citizens elect our government and the government appoints regulators and so on. So, if they’re too hard on crypto, it’s going to become politically infeasible. They’re not going to have the will of the people behind them,” he added.
“It’s almost like prohibition”
Armstrong compared the cryptocurrency industry and its regulation to the Prohibition Era in the US that lasted from 1920-1933, which made alcohol illegal.
“It’s almost like prohibition, historically. You can’t go out and try to criminalize something 50 million Americans are doing. You’re just going to turn them all into criminals, but they’re not going to stop doing it,” he said. “So I think that’s one of the big things that hasn’t been realized yet in DC,” he added.
But in regard to regulation, Armstrong noted that he and Coinbase want to work with regulators to educate them and come up with long-term solutions for the industry. When he visited DC recently, he said many regulators met with him and some were receptive. But when he tried to meet with the US Securities and Exchange Commission, “they said they wouldn’t meet with crypto companies,” he said.
“If someone won’t meet with us to have a conversation, my optimistic view is that we can change that. My hope is it’s still on the table. But if I can’t get that, I’m just going to go out publicly and talk about it. I think it’s a form of accountability,” Armstrong said.
What happened with Lend?
In early September, Armstrong shared a series of Tweets and a blog post that revealed Coinbase was threatened with legal action by the US Securities and Exchange Commission if the exchange went ahead with plans to launch its lending platform.
“We always want to be proactive and collaborative with people, we decided not to launch the product essentially and we’re gonna wait and see what the SEC does,” Armstrong said on the show. “It’s not a level playing field today,” he added.
Coinbase is one of the largest cryptocurrency companies in the world and “regulation would be the best thing to ever happen to Coinbase,” Armstrong said.
“We’ve been leaning into regulation for many years. The people and companies it would harm are the smaller startups. It would entrench these companies. [Regulation] sometimes harms innovation, but it would be better for Coinbase in a weird way,” he added.
Separately, earlier this week, Coinbase COO Emilie Choi confirmed speculation sparked by another Tweet thread from CEO Brian Armstrong that the exchange will be working on a regulatory proposal to submit to US lawmakers, Blockworks reported.
“The things that we should all care about are — first and foremost — transparency and integrity,” Choi said while speaking at Messari’s Mainnet conference on Wednesday. “And the reason that we went out with that tweet storm before is because we didn’t feel like there was transparency and clarity to the way things were being regulated.”
As some tensions pan out between regulators and the crypto space, Armstrong believes that the industry will eventually get to a place where there will start to be legal precedence that will protect crypto companies from behemoths of Coinbase’s size to brand new start ups.
“We want to be a part of the solution,” Armstrong said.
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