Paul Grewal - Future of Crypto: New Rules and Advocacy Insights

Something like 52 million Americans have now owned or transacted in a cryptocurrency or digital asset, and the crypto voter spoke with a very loud voice just a few weeks ago in November. I think what we're going to see over time, not necessarily on day one but over time, are sensible rules from agencies like the SEC to govern how securities transactions involving digital assets can be offered lawfully here in the United States. I think we're going to see new legislation passed by Congress in short order that defines a market structure for crypto and provides for rules for things like stablecoins and ways to promote those innovations. I also think it's important to acknowledge the other element you touched upon, which is there's a more productive, positive attitude among many of the nominees and individuals who've been elected to office in the last several weeks and months. They understand they have a responsibility to keep Americans safe and to make sure consumers are protected, but they want to see crypto flourish here in the United States. They're looking around the world, seeing other countries and jurisdictions race ahead with sensible rules and standards. Governments are encouraging crypto developers and companies to come build in their countries. These American elected and appointed officials are saying, 'What are we doing? We invented much of this stuff here in the US. Why are we giving away this commercial and strategic advantage for no apparent reason?' I think we're going to see a return to a more balanced view and a more pro-innovation view that applies to crypto the same as any other technology. It's going to be extremely productive and exciting.

I do think we have a unique approach to engaging with the crypto community at Coinbase. A lot of it has to do with Brian's vision that in this modern climate and media environment, we have the tools available to go directly to our customers and community members and speak to them as peers, as opposed to top-down through intermediaries. I'm now in my third decade of practicing law, and I love being a lawyer every day. I'm proud to be the chief legal officer at Coinbase. Never in my wildest dreams when I took this job did I imagine that so much of the most important advocacy I would be engaged in would be in the form of a tweet, a post on LinkedIn, or a conversation on a podcast, as opposed to in court at the podium making formal arguments. It's critically important that the crypto community understand where Coinbase stands, what we're doing, and why we're doing it. Brian more than anybody else has made it clear that part of our responsibility is not just doing the work, which is critically important, but explaining the work. There's no better way to explain it than to get on X and post about it, or come on podcasts like yours and talk about it. That's a big part of what we do.

You mentioned the revolving door. This is a longstanding tradition in Washington DC of people going into government, regulating industries for a period of time, and then leaving government to go represent those same industries in interactions with the very agencies they were just working at. That's the way things have worked in Washington for many decades. Crypto prides itself, and Coinbase certainly does, on doing things its own way, in a more principled way than maybe some others. When Brian Armstrong, our CEO, observed this practice and saw that it had now come to crypto—that many of the individuals responsible for this regulation by enforcement campaign at the SEC were now leaving the SEC, going to law firms, and approaching us asking to represent us in our engagements with that same agency—it struck him as off, as unprincipled. Even though many counseled us that this is exactly how you play the game—you hire the people who just left the agencies to go talk to their friends and peers to represent you—he said we're not going to do it that way. It not only struck him as unprincipled, but also as contributing to this swamp that so many across the country have had such a negative reaction to. So Brian and Coinbase wanted no part of that. The piece where we went a little further is that we not only said to ourselves we weren't going to be a part of this, but we thought it was important to be very public and explicit in sharing that view with the wider legal and business community, so that everybody understood clearly where Coinbase stood. That's why we spoke so explicitly about this. I confess I was a little anxious about that because it's not normally how things are done, but I've come to learn over working for many years with Brian that what ultimately matters is what's right. The reaction and response from others, including many in crypto following our lead, has been extraordinarily supportive and positive. That's been tremendously gratifying for us as a company.