We're recording live today at Coinbase's State of Crypto Summit in New York City. And perhaps very fittingly, we have Coinbase's Chief Legal Officer here with us, Paul Grewal. Paul, welcome to the show.
Thanks, Heli. It's great to be here with you all.
Great to have you. We always start off by asking our guests, what does crypto in America mean to you? And I feel like you'll have a great answer for this.
Crypto in America to me means freedom. Plain and simple. Freedom from constraints, freedom from limitations, freedom from governments unnecessarily and unduly burdening the right of individuals and organizations to transact with one another. So, freedom above all other things.
Much different than the last four years. The last four years were certainly about much less freedom.
Earlier you did a conversation with David Sacks, the White House AI and Crypto Czar, and during it you mentioned that we're in an unprecedented moment. It's kind of about defining what is the moment today. How would you characterize it as the Chief Legal Officer at the largest crypto exchange in the US, and do you think we're actually tapping into the moment correctly?
Well, I think the moment that we're having first and foremost is a moment of opportunity as we were talking about just a short while ago. It wasn't all that long ago that for many of us in the industry, there was a legitimate question as to whether we would be allowed to exist here in the United States. And we've worked through the court cases. We've overcome the hostility from regulators. And we're now in a new era where when I walk into the Securities and Exchange Commission, I'm actually allowed to go upstairs and given the opportunity to make my case to the commissioners and staff who are working hard on sensible rules for crypto. Between that and a new environment in Washington more generally, on Capitol Hill, at the White House, I think it's a very different time.
And you think the trust is coming back from American founders other people operating? They feel like they could actually walk into the SEC's office?
Well, I think trust has to be earned. And for many, the wounds are still pretty fresh, if I'm being quite honest. One of the points I made a lot in the last four years was that too many American innovators, too much American capital was moving overseas because people didn't want to deal with the risk that if they came in and registered, as Gary Gensler used to encourage, their reward would be a subpoena on one hand, a lawsuit on the other. So I think for a lot of folks it's going to take a bit more time before they fully trust that they can come in and have an honest conversation without being treated in that manner. But I do think that trust is coming back. Today's event, for example, I think is a great confirmation.
Paul, I want to ask you about that previous period. We obviously had a ton to cover in current events, what's going on now, but you guys were one of the only organizations, maybe you and Ripple really sort of fought it out from start to finish with the SEC, and you guys obviously didn't shy away from the fight. You put an enormous amount of resources into that. What do you think about the tactics? Because I know we'll get into legislation and where we go in terms of rulemaking and the future of the SEC. What do you think about the way the SEC approached a lot of those smaller projects who couldn't necessarily fight the fight, but you guys could in that time period?
Well, if I'm being completely candid, I thought it was outrageous and atrocious because it was obvious to me that case after case, the goal was never a full and complete airing of the legal concerns the SEC had with a particular project. The goal was simply to drop a federal lawsuit on a project that might only have one or two founders and a few thousand dollars of capital and essentially to bludgeon them into settling and ultimately submitting. And that's not how American law is supposed to work. People have good faith disagreements all the time about what a statute means or whether a particular business activity or product or service runs afoul of federal laws. But the way those disputes are supposed to be resolved is through good faith arguments before a neutral judge or jury. It's not supposed to be that the full authority of the US government is brought to bear such that the only option is to surrender. So moving beyond that is maybe one of the greatest accomplishments of the last few months.
He definitely moved beyond that. We saw Coinbase's lawsuit with the SEC got dropped a few months ago, and you guys were kind of the first, right? Started the ripple effect, so to speak, and then dropping investigations, dropping other lawsuits in litigation. But you guys did file a FOIA request with the SEC. You have a couple of FOIA requests, and this one in particular, Coinbase wants to find out the exact monetary damage of the regulation by enforcement regime. How is that going? Where are you guys with the FOIA request at the moment?
Well, it's going more slowly than I would like, but I tend to be pretty impatient about these things. We are making real progress, as it turns out. One of the reasons why Coinbase has engaged in such an aggressive FOIA strategy with a number of agencies, not just the SEC, is that I personally think it's really important that we not gloss over what happened the last four years. There was real damage done to real people just trying to start a new enterprise and in most cases just realize their part of the American dream. The way the previous administration went about trying to crush that dream, I thought was wrong, not just illegal but wrong. So the way we avoid that same history being repeated in the future, because governance comes and goes, there could be a son of Gensler lurking out there somewhere, the way we avoid that or at least minimize that risk is to tell the story and to get the documents out that show what happened, who was responsible, what tactics they relied upon, and in that telling hopefully shine a light on how we can avoid repeating that same experience again. We're committed to seeing it to its logical end, even if with a much more cooperative and productive SEC things remain relatively slow going in terms of producing those materials. But I think we're going to get them and we're going to be able to tell the story.
Do you feel it's Coinbase's responsibility to shed that light for the whole crypto ecosystem, not just yourselves?
Yeah. I really give a lot of credit to our CEO, Brian Armstrong. It would be very understandable and indeed reasonable for him to say, 'Let's just focus on what Coinbase needs and what Coinbase requires in order to run our business.' I think Brian has always had a view of this company as more than just one actor among many. He sees us as a leader. He wants us to act as a leader. So if that means putting some of our resources on issues that go beyond just Coinbase, that really affect many others in the crypto industry in important ways, he's willing to do that. I'm certainly excited to do that, and we're committed to making sure that we see all that take place.
