How Crypto Became Too Powerful for Washington to Ignore | Coinbase’s Faryar Shirzad

Yeah, I was at Goldman 15 years and then came over five and a half years ago.

Well, recall that I joined Goldman in late 2006. So, that was a period in which nothing could go wrong on Wall Street and nothing could go wrong at Goldman Sachs. And fast forward 24 months later, and we had the greatest financial crisis in a century. And so I've had a bit of a track record of walking into calm waters and then all of a sudden like a Category 5 storm comes along. But the reason I actually came to Coinbase was, you know, I helped Goldman get through the financial crisis and all the global effort to revise the regulatory framework around the financial system. And I thought this was actually going to be a lot of fun to do two things. One is to architect the rules around how crypto technology and digital assets were going to be integrated into traditional finance. And two, I thought it was a chance to go back to—I joke to people that it was a chance to go back to 1997 and be the guy that walks around and explains to everybody what the internet is. And so even though I didn't anticipate kind of the chokepoint and the intensity of the political attacks that crypto faced, a lot of kind of the hard journey of trying to explain to policymakers what the right regulation is is something that I went through once before in the traditional sector. And so it's all very familiar, to be honest, and not nearly as emotional as it was in the traditional sector just given the intensity of the politics coming out of the financial crisis.

Yeah, I thought it would take about this long. I didn't expect that it would be as intensely political as it would be. And so when I joined Coinbase, Brian Armstrong and I had multiple conversations about what the project would entail. And he initially talked a lot about starting a grassroots movement among crypto users, something to what ultimately became Stand With Crypto. And I said to him, "I think that's a decent idea, but we really need to focus on just selling the technical side of what blockchain technology can do and why we need to adapt traditional finance, why policymakers have to change the regulatory architecture to allow for the new technology." We were both kind of right. I was right that the substantive element of what we've had to argue has been really important. It's become grounding particularly internationally as we advocate for crypto clarity. But he was very right in the sense that the power of crypto is in the community. There are tens of millions, hundreds of millions of people who've adopted crypto as an asset class or in other ways, and you need to bring them into the political discourse. Eventually I got around to doing exactly what Brian had said from day one, and it's become part of our superpower as a lobbying force and an advocacy movement with regulators in the US and globally.

Oh yeah. No, you're totally right. Although the one sort of nuance I would add to your timeline is that recall that the entire first year of the Biden administration was pretty neutral on the crypto issue.

Totally. No, exactly. Plus, Gensler for the first year, at least twice on Capitol Hill in testimony said, "Hey, I at the SEC have no authority to regulate this sector. This is something Congress needs to take action on, but I as the SEC chair under existing authority, I have no power under the statute to regulate crypto as a market." It was only about a year in of that first term that he then flipped and said, "Oh, wait a minute. No, no. I have all the power that I need. Every crypto asset just about is a security and I'm the guy who needs to regulate all of this." So it was sort of a period of optimism like you said, but also the regulators kind of standing back and saying, "Hey, Congress, you should kind of figure out what to do here." After a year it became insanely politicized and that went on through the remaining three years of the Biden administration, and then we had the flip. I think the one thing that as an industry we've been pretty good about, and I know at Coinbase we've been extremely focused on this, is avoiding crypto becoming partisan. Everything is so tribal in Washington that if you allow an issue to become a reds or blues issue—red shirts, blue shirts, Republican, Democrat—it's kind of the end of the issue. It doesn't matter if it's apple pie or motherhood or whatever it is. If you allow yourself to get partisan, then half of Washington will be trying to kill you at any given time, and you just got to avoid that sort of thing. So I feel pretty good that we haven't allowed crypto to get partisan, even though the Democratic Biden administration was very hostile. The Republican Trump administration was very hostile. Most Republicans are friendly. Most Democrats are still figuring it out. But I'm not willing to concede that we're partisan yet.

That's right. As you know, the Senate is super complicated. And just even taking a bill up and debating it and then having a vote on it requires a series of procedural steps that require 60 votes. And so there are 53 Republicans, 47 Democrats. That means Republicans can't push this across the line all by themselves. You have to get Democrats to join Republicans, and that's what this whole kind of enterprise has been about. The House, on the other hand, as you know, is a majoritarian institution. So even though we've racked up huge numbers of Democrats on the House side—so for example, Clarity came over with 78 Democrats joining I think every Republican in sending that bill over—in a way, it doesn't matter that you have bipartisanship in the House; it's critical in the Senate. And so this whole effort to remain nonpartisan has ultimately been organized around getting past the first couple of procedural votes in the Senate starting at 5:00 on September 15th. And I'm cautiously optimistic that we'll succeed. And I think part of that has been the discipline that we've maintained in not allowing the issue to become fully partisan.

No, we're not taking Republicans for granted at all. I feel very good about getting just about every Republican. But ultimately, if you had to kind of sequence what you have to do to get a bill through, you got to lock down the majority and you got to get as many of those 53 Republicans as you can. And part of the reason you need to do that is because for every Republican you lose, it takes pressure off the Democrats to step up and take a constructive vote because they can turn around and say, "Well, look, you couldn't even get to 45 Republicans. Why do we need to bail you out? You guys control the White House. You guys control the Senate. We're not here to bail you out. If you can't even get past mid-40s, then we're not here to help you out." And so we aren't taking any Republican vote for granted. There are 53 Republicans. Mitch McConnell has missed the last several weeks because of illness, so who knows if we'll have him back. You've got a couple of senators like Josh Hawley and Rand Paul who typically go their own way regardless of what's on the docket. And so can you count on them? Maybe, maybe not. Then you're down to 50. And then you've got a couple of Republicans who are nervous about the community banks in their states. And so a lot of this will depend on whether the President leans in as hard as we hope he will. Bernie Moreno, for example, has already several times publicly said that he can rock-solid guarantee that all 53 Republicans will show up and vote for that first procedural vote. If that were to happen, I wouldn't be surprised, but we're not taking that for granted and we're trying to get as close to 53 as we can. And then that makes it harder for Schumer not to produce seven, eight, nine Democrats. And if you produce seven, eight, nine Democrats, you have what's called a jailbreak situation, which is a funny term, but the idea is if you have an issue that's kind of hard for a party to vote on, if you get past six, seven, eight members who are going to vote for it, then you have safety in numbers and then you kind of have what they call a jailbreak where like five, six, eight, nine others will jump in with them.

Exactly. And so my guess is we'll either have 58 where Democrats just won't bring enough votes to get us across the line, or we get to like 69 or something. So it's going to be one or the other.

Well, if you're not calm by disposition, it's a good way to have a nervous breakdown.

Because politicians don't like to commit, because any important vote is a choice they have to make between different people, some of whom are going to be happy on whatever decision is made and some people are going to be really unhappy. So, the first thing you have to kind of understand when you're dealing with members of Congress and their staffs is, for the most part, they don't want to make a decision on this issue. Now in crypto, you've got a lot of them who are now kind of on the record. They're all for the team; they're going to be there hell or high water. But for those folks who don't spend a lot of time thinking about the crypto issue, you have to kind of meet them where they are. And that starts with recognizing that they'd rather not make a decision if they don't have to. And so you just have to kind of force it. And then the second is you have to make sure that you address their concerns where they are. So, what does that mean for national security-minded senators, for example? You got to make the case as to why dollar strength, dollar supremacy, controlling the next generation of the financial system has got to be built in the United States. And that happens to be true, but it's also particularly resonant with national security hawks. For people who are worried about consumer protection, scams and frauds, you have to make the case that this is the best consumer protection bill. For those who are worried about innovation in the United States, you have to make the case that the Biden administration drove off a massive percentage of open-source code software developer activity offshore and we need to bring that back. And you just sort of take those arguments one by one and then repeatedly come to the realization that for all the time that we've spent on this issue, there are a whole bunch of decision makers who barely know what crypto is, barely understand what's at stake, and it's up to you to realize that even though you've watched the movie a hundred times over, they haven't watched it yet. And you need to kind of carry them through the arguments.

Well, that's the funny thing. I never had this when I was at Goldman, but it's been one of the funnest things about crypto because my job is global, so I deal with ministers and regulators around the world. And it's always one of the funnest things for crypto: you walk into a room, you meet with a minister, you meet with a regulator, you meet with a senator, and you can always kind of look around the room and there's somebody in that room, even with a hostile politician, among the staff who is all in on crypto and has drunk the Kool-Aid. And you just have to know to read the room, and you'll discover how much of a generational issue it is because it may be that the minister or whatever doesn't quite get what the issues are, but the staff do, their kids do, their nephew does, or whatever it is. And so I think that's such a privilege being in an industry where you're speaking on a generational level. And that's why I kind of made that joke about being in crypto is like being in the '90s and being the guy who explains what the internet is, because people didn't really know what the internet did in the '90s. They kind of got it; they thought, "Okay, maybe emails are better than paper correspondence." But this video call, everything else that we all do on the internet is now kind of an assumed part of our life. And I think digital asset technology is exactly on that same trajectory.

No, I think this is kind of the underreported story of crypto as a political force. We did two gigantic things in the 2024 cycle, and all credit to Brian Armstrong for essentially putting us on this path. One is we created a gigantic super PAC. And so almost every story you read about crypto's power as a political movement is focused on the fact that we had a very large super PAC that we funded that went into some big races and invested heavily in support of pro-crypto candidates. The part that's massively underreported is that at the same time, we created Stand With Crypto, which is a giant grassroots organization. We're up to three and a half plus million grassroots advocates, and that is an extraordinary number of the public who've signed up to be an advocate on behalf of an issue that resonates with them and they care about. And I think that's the power of crypto. So when people started thinking about the 2026 cycle, you had a lot of other industries—AI and other kind of interest groups or industry groups—who looked at crypto and said, "Oh, you write a check, you set up a super PAC, and boom, you win." And I think one of the really interesting things, Scott, is if you look at crypto's track record versus some other groups, you'll find crypto has done dramatically better. And that's because it is a resonant issue. If I could kind of go down a rabbit hole which I think is really interesting, one of the big reasons Donald Trump won in the 2024 cycle is that he and his team had an extremely sophisticated strategy built around what they call low-propensity voters. So these are people who the Trump team thought they could get to turn out and vote even though it was constituencies that normally don't show up to vote, don't normally turn out, and don't normally vote Republican. And yet Trump and his team decided to organize a lot of the campaign around the low-propensity voter, and so he went out and said no tax on tipped wages, no tax on overtime, and then he added crypto to that issue, in other words embracing the crypto sector. And that approach ultimately got Donald Trump a huge subsegment of voters who most experts thought were not gettable, and most experts certainly thought Republicans could never get them to vote on their side. But Donald Trump was able to show that it's a viable strategy. Now he's doing that again, and I think that's part of his continued commitment to it because he understands it's a resonant political issue. And so when I talk to campaign experts, Democrats and Republicans, when they are dismissive of crypto, I always say to them—this is for the more campaign professionals—that you are essentially making a bet that the low-propensity voter doesn't matter in the '26 cycle, and that crypto is not a resonant issue for them. And polling and voter data tells you the opposite. So, it sounds like I'm taking you down a rabbit hole, but if you're a campaign professional and you're trying to figure out how to unlock that margin of victory in these tight races, whether it's presidential or congressional, you have to take crypto seriously. And I think that's why we are and we'll be an enduring political force.

Totally. And some of these progressive groups have put out voter surveys and they'll ask voters, "What's the most important issue to you? Cost of living, public safety, education, health care, global security, crypto?" And then they'll come back with the data from the voters and they'll see crypto ranks below public safety and quality of schools and access to healthcare. And I think that's accurate, but it misunderstands the voter because crypto is almost like a cultural issue for most people, particularly young people. The existing financial system is one that they don't feel works for them. It doesn't serve their interest. Now, is a financial system that doesn't work for you more important than public safety or your kids' schools? No. But is it the kind of issue that tells you a lot about a candidate? So, if you, Scott, are fighting crypto, you're essentially defending the status quo, right?

Yeah. I did an interview with a very progressive news outlet and they said to me, "Well, you guys have spent a lot of money." I was like, "You tell me how to take on an entrenched industry with the reach and depths of the traditional financial sector." And I worked in a traditional financial firm. Now Goldman is a bit different than some of the more kind of traditional banks, and actually to their credit, they're lobbying actually quite hard in support of clarity. So I think they deserve tons of credit for that. But traditional industries—the word "traditional" means a lot of things, including long-standing relationships with politicians and decision makers, and—

regulators. And if you have a disruptive industry like ourselves that wants to come in and create space for consumer choice, that's not going to happen without a fight. And that requires spending and requires public, you know, political mobilization and, you know, all that stuff that you've seen.

I feel pretty good about it. You know, my view kind of goes up and down. I would say as an industry, we've done everything we possibly can to get this to this point. The bill came over from the House with, you know, every Republican, 80 Democrats, which by Washington standards is massively bipartisan. There's been like 250 pages of Democratic priorities added into the bill. You had an agreement between the White House and Senate Democrats to nominate Democrats to the SEC and the CFTC, which was a breakthrough because President Trump hadn't nominated any Democrats up until that time. And then you've got the President having agreed to a package of ethics restrictions that for the first time in history apply to the President of the United States explicitly. That's a very powerful package.

So, I feel pretty good about our getting through at least the first procedural vote. And then I think if we get past that first procedural vote at 5:00 on September 15th, I think the momentum at that point will take us across the line. But you never go into these votes knowing what the outcome is. A lot of senators are going to play their cards close to the vest. You'll never know what the actual tally is until you call the vote. And so we're ready to call the vote.

Well, I mean, think about it. I mean, there's senators I've talked to who are like, "Oh, yeah, your crypto thing, I'm all for it, but you know what? I need permitting reform for, you know, I don't know, whatever..."

Yeah, "I want a stadium." I've done a fair amount of legislation. There was a joke from back in the day—I don't know if you remember when NAFTA passed—this was a hugely controversial bill. And there was the ranking Democrat on the House Ways and Means Committee at the time, Charlie Rangel, kind of a legendary politician. He had this great line. He said the vote buying by the Clinton administration has gotten so bad that he came across a member of the House who had already gotten two bridges in exchange for his vote, and now he wanted a river. So, that's exactly how I imagine it.

No, I think that's the right list. I think DeFi and the exchange issues, I think they'll get resolved before the vote. I feel pretty good about the fact that those will get addressed before the vote. The banking issues, I have a sense that the White House and the President are going to lean in hard on this. So I think at the point where Republicans have to show up and hit that 50 mark or 51 or whatever it is—in other words, showing like the Republican caucus has shown up—I think the banking issue will resolve itself. And then at that point, the spotlight will turn to the Democrats, and it'll all turn on exactly what you said, which is ethics.

Has the President done enough from their perspective to allow them to go back to their base voters—the Democrats go back to their base voters—and be able to say, "We were able to get something historic and unique out of the President"? And I think they've already gotten that, ironically enough, but politics is politics, and they need a bit more, and we'll have to see whether the White House can get there.