Coinbase’s Emilie Choi & Axios’ Dan Primack

Emily Choi is president and COO of Coinbase, a leader at the frontier of crypto and finance. She's helped navigate volatility, regulation, and the mainstreaming of digital assets. Her vantage point shows how traditional markets and blockchain economies are converging faster than ever before.

Yeah, so I was at Yahoo back when it was cool. Nobody young believes me. But I was there when there were some of the best minds, I think, in Silicon Valley who ended up leading the company. It's actually a good tale of what not to do because some of the brightest people in Silicon Valley, like Jeff Weiner, whom I followed to LinkedIn later, were there. And one of the things that I noted at that time was that we were in a read-only environment. So in the beginning of the boom of the internet, there was a lot of consuming static web pages, and then we moved in the social networking era to reading and writing, so interactions on the internet.

And then the era of crypto is more about how you take ownership, tokenization, how you take ownership in what you're doing. So in the Facebook era, you know, you might have just put a bunch of content up about your profile. LinkedIn too, where I was, you didn't derive tons of monetization value from that. Whereas in crypto, you actually have tokenomics. You take ownership in that. And so I think that internet of money is a very powerful concept. And I think what's going on right now in the economy and with young people, I think it's going to be incredibly important for us to think about how that can capture the zeitgeist of what people are really feeling in the economy right now.

So when I think about the benefits of crypto, it's 24/7. It's instant settlement. It's global. There's no middleman. These are the benefits of it. And so I think when you think about different pieces of the legacy financial system, it's the costs, the time, the fact that it's extremely fragmented, that you wait three days for a wire, that you can't wire money to somebody in India very easily without a ton of costs and time. And so I think all of this stuff is going to be deeply optimized by crypto.

Everything exchange means that we want to offer our customers everything they want to trade, consume in a crypto-native way. And we worked really, really, really hard for clearer regulation and policies. We're in the middle of that. The Genius Bill got passed, which was huge, and now we're working on a market structure bill. But what I think this has opened is everybody wants to offer and consume these types of services to their users.

The irony is we really, really, really worked hard for that policy to open up, and now we have a slew of competitors in the space. We don't look at it as a zero-sum game. We genuinely don't. We actually think that there's just going to be tons of TAM. I always think about that old like Uber TAM analysis back in the day where they were just looking at one little segment, not thinking about the bigger opportunities. And so we actually think that having all these different competitors in the space opens it up, validates it more. You have to remember, I mean, for the longest time, we've been considered kind of a fringe industry. But there are 52 million Americans who actually hold crypto. So it's just there's been like a narrative violation.

I think it all moves on chain. The timing and everything has to be very clear. Like here's an example: like a self-hosted wallet, which is fully on chain, you have to know your private keys. And what that means is that you have to be an incredibly advanced user who understands, who's willing to like kind of be fully responsible for what they own in custody. If you lose it, you lose it forever. And so I think there's stages to get to this stage.

Yeah, I think we can find bridges to it. But I don't think, I think like everything, it doesn't happen overnight and it's not an extreme. It's we build to it.

I do. I think when I think about our value prop for forever, it was about being the fiat-to-crypto bridge. And Brian Armstrong and Fred, some of the original founders, they counterintuitively leaned into regulation and compliance back in the day because when you're touching people's money, you have to make sure that you're touching it in the right way and that you're KYCing it and that we're following all the AML rules. This was not something that many others wanted to do. And so I think we have natural core competencies and things that are really, really thorny and grungy to do.

I predict so.

You know, there's a really funny thing about crypto. I don't know if this is true in internet. It might be. But you'll have these little like bursts of interesting activity and then they'll die and you're like, 'Oh, that's it. It's over. It's gone.' And then it'll come back in some other form. So in other words, yes. Like I think it's another form of the ICO era, but there was clearly demand. We weren't compliant at the time of the whole industry because there were no rules of the road. And now it's like we have some rules of the road and so we get to actually offer.

Well, I think there's more enforcement there. Yeah. So for context, the last administration was god awful. It was regulation by enforcement. There were no rules of the road. There was a catchphrase that they used like, you know, 'come in and register,' but it was kind of a joke because nobody actually knew how to register. There was no vehicle to do that. Now, I think Paul Atkins has actually kind of started to lean in and put some frameworks out there, but we definitely need regulation. Like this is an industry who is ironically asking for clear rules of the road so that we can comply and actually make sure we're following these rules.

Yeah. So this is a little esoteric, but here's an example of one of the rules of the road. We want it to be clear what the SEC owns and what the CFTC owns. In other parts of the world, there is no like weird kind of dichotomy between these two things, like what is a security versus what is a commodity. We have that in the US, and in the last administration, these two agencies were absolutely fighting for their own fiefdoms. It was awful, and that was part of the thing that we got stuck in the middle of. So that's an example of something that would be clarified in this new structure.

I think there's all sorts of things that we can revisit in the future about like what, you know, there are things that we're probably not even thinking of today, but market structure is just a foundational thing. You know, I'm really proud of the crypto industry. After FTX imploded, we were persona non grata. Everybody hated crypto. Elizabeth Warren and these other types were attacking the industry. I thought our banking rails were going to be cut off. I mean, I had like a stomach ache every single day that I came into work. It was awful. I can't describe how horrible it was. And one of the things about crypto people is like we are made of steel. So like we got our act together. We came up with a super PAC in the industry to show our might. We built a grassroots organization called Stand with Crypto that has millions of members. In case you haven't noticed, crypto people are very vociferous.

And they would show up at town halls and like we vote, and there's a structure where Stand with Crypto rates Congress people based on their crypto stance. So like we got really, really loud about everything. And so this tops-down, bottoms-up thing actually really, really worked. You're going to see the AI industry do something very similar because we finally made it known that like we weren't going to stand for any of this BS anymore.

There's never enough time. That's why we have to get market structure done now. We just have to, like, we have to make sure that if there is ever a very, very strong anti-business type of government, that the rules of the road are laid out foundationally. It's the most important thing we can be doing right now.

Yeah, that seems right. Because they were operating offshore, like we were getting so much smack from everyone. Why? How do they only have 40, 50 people and they're doing all this stuff, and like you guys have this huge compliance organization? What is wrong with you? I mean, we got it from everybody, and we kept doing all these bottoms-up things. We were like, are we crazy? Like, to go to process this many customers, you have to have this level of compliance and all this kind of stuff. We're like, it just doesn't add up. So we thought we were like living in an alternate universe. And then, but it turned out that a lot of the companies that were offshore were able to operate much more freely without rules. And so it wasn't a huge surprise when they crashed.

So we made a check. You should talk to our policy team for more specifics. We made a check to the National Parks nonprofit, and that we don't know how the information even got to... maybe I'm wrong. We've had national parks since Coinbase was created. I don't think you guys gave money to the Grand Canyon Foundation. We, you know what, we give a lot to different foundations now. And so the specifics of it we weren't aware of, but I also frankly don't even have a problem with it because I think if you go to DC, there's a lot of buildings that need to be updated. And so if private industry has to do that, it is what it is.