Chief Policy Officer, Coinbase Global
Coinbase’s Faryar Shirzad in conversation with Steve Clemons
Faryar Shirzad, Chief Policy Officer of Coinbase, speaks with Steve Clemons, Editor at Large of the National Interest, during a fireside chat on the future of finance, the implications of the GENIUS Act, and why global banks are beginning to pay attention to crypto.
On December 4, administration officials, members of Congress, business leaders, economists, and innovators came together for the inaugural American Growth Summit to map the forces reshaping the American economy and explore what they mean for the future of growth.
Presented by Citibank, Coinbase, NVIDIA, The National Interest, Tyc...
About Faryar Shirzad
Faryar Shirzad, chief policy officer at Coinbase Global, appeared on the podcast Early Returns to discuss cryptocurrency regulation and the industry's political landscape. Shirzad described the GENIUS Act, which he said creates a federal regulatory framework for US dollar stablecoins, allowing peer-to-peer transactions using crypto technology without intermediaries, making payments cheaper, faster, and safer. He also discussed the Clarity Act, which he characterized as a bipartisan legislative priority that designates the Securities and Exchange Commission and the Commodity Futures Trading Commission to provide a regulatory framework for crypto trading. In the conversation, Shirzad stated that under the Biden administration, a small group of progressive members and regulators were "unambiguously trying to destroy the industry and drive it offshore," leading Coinbase to build what he described as the largest political operation any industry has built to defend the rule of law. Shirzad also noted that Visa has integrated crypto technology into its processing systems, citing Visa's statement that stablecoin-based settlement could help build resiliency, speed, and scale. He encouraged listeners to visit Coinbase's public policy landing page for materials produced by his team and the Coinbase Institute. The podcast host introduced Shirzad as someone whose career journey included serving as a White House advisor and a Goldman Sachs executive before entering the crypto space.
Transcript (39 segments)
S
Steve0:01
Let me invite to the stage Faryar Shirzad, chief policy officer, my good friend at Coinbase. I'm gonna make something happen here.
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Faryar Shirzad0:11
Do you know so he can get you a crypto wallet so fast?
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Steve0:16
I thought you were going to do it.
F
Faryar Shirzad0:19
Is he going to fund it?
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Steve0:19
Steve will fund it. Exactly.
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Faryar Shirzad0:21
This has actually worked out pretty well for me. Like one millionth of a Bitcoin or something, you know, depending on... I don't have much of it. There's a funny story. Well, I'm not going to get into the story. Turns out I had like a penny of Bitcoin at one point because I sold all my Bitcoin way too early, but that penny became worth like $10 over a period of time.
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Steve0:44
Just think about that. That's the power, right?
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Faryar Shirzad0:46
Just think about that and cry if it'd been any more substantial. But anyway, thank you very much, Neil. I'm really glad. No, sit right there. Far, it's great to have you join us. Thank you for helping to host today and open this session. We've had an extraordinary array of minds coming through here and talking about the economy. I'm very excited about the dramatic innovations going on in the fintech space broadly, but also with stablecoins and crypto. I think there's a lot of noise out there and there's real stuff. President Trump and this administration passed the Genius Act, and I just saw something happen empirically: central banks around the world began paying attention in a way they would never touch this subject. I had two Federal Reserve bank governors of the United States Federal Reserve call me and say, 'Steve, if you do another program on crypto, we're happy to show up,' which would never have happened a year ago. So it's pretty interesting to see what's going on. I'd love you to help: one, I want our friend here, Neil Bradley at the Chamber, to really become very literate in everything crypto, and you can help. But secondly, I'm interested in what the Genius Act achieved and where your crystal ball says what opportunities will open up from an American growth perspective.
No, I'm very happy to be here, and it's good to be here with Neil. I think he underplayed how helpful the Chamber has actually been to crypto and to Coinbase. We're a very proud member of all the various parts, including the litigation folks who were amazing and very helpful to us when we were under siege during the Biden administration. So big shout out to Neil and his colleagues. For a lot of people who don't know crypto, crypto is fundamentally an information technology breakthrough. It does the thing that the internet was unable to do. If you're an internet technology expert, you'll know there's an error code called X42, which was embedded by Mark Andreessen and the folks who developed the initial internet to allow for value transfer, because the internet is built on a series of decentralized protocols that allow you to transfer data peer-to-peer without the need for an intermediary. Obvious early use cases are email and texts where I can send a message to you without needing the postal service or an intermediary. What the internet couldn't do is transfer value. If I wanted to send you a dollar, there was no way to know that I had a dollar, no way to send it so you took possession of it, and no way for you to tell the public that you're now in possession of that dollar so you could spend it with another person. Crypto created a technology that allows you to create a unique digital token. That token can be a dollar, a bitcoin, an auto title, your mortgage, your identity, anything you tokenize.
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Steve3:54
Could be your membership dues in the Chamber.
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Faryar Shirzad3:56
It could be your membership dues in the Chamber. It allows a person to transfer it on a peer-to-peer basis through a decentralized protocol without the need for an intermediary. So I can send you a message thanking you for whatever, or you can send me a message thanking me for mowing your lawn and then send me $10 in that same message, and that transaction could be executed. It sounds simple, but the impact is transformational. When the internet was created, a lot of people said it's kind of cool but is it that big a deal? Crypto is going through the same thing. The first generation of adoption is an efficiency play. Our payment system costs over $200 billion in the US alone. The average household pays about $2,000 simply for payments. We can take that efficiency out of the system with crypto technology.
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Steve4:50
And then the next generation would be programmability for transfer costs.
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Faryar Shirzad4:55
Just payment various bank fees, credit card fees, you name it. All of those are embedded. People in this audience don't feel it, but regular folks do.
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Steve5:04
Wow. Wow. That's why it's so transformational. I'm so glad you guys are here today. Big round of applause. Neil Bradley, EVP of the Chamber of Commerce. Good to see you.
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Neil Bradley5:13
He's had enough of crypto. But I want to just say thank you, Neil. I want to say what did the Genius Act do? Because what did it take it to a higher level?
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Faryar Shirzad5:24
Well, it did something very simple. It said that if somebody wants to be an issuer of a stablecoin, they should abide by a whole series of federal regulatory requirements, and they assign the job of overseeing the stablecoin sector to the Office of the Comptroller of the Currency, which is one of the bank regulators in the US. So if I'm going to be an issuer of a stablecoin, I have to apply to the OCC, be registered, have reserve requirements, capital requirements, audits, and do the whole thing. It's a straightforward legal regime, but it took years to get there.
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Steve6:06
So we're there now, but there's a part two we're trying to talk about, right? The Clarity Act. What is that? What is part two and why is it important?
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Faryar Shirzad6:15
Well, if I could just stay on part one for a second. The bill was signed in July as you know. In the months since July, in the US alone, there's been over a hundred separate announcements by different banks, payment processors, credit card companies, and corporates on adopting and integrating stablecoins into their payment systems.
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Steve6:37
So City is one of them.
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Faryar Shirzad6:40
City is one of them. Bank of New York, JP Morgan, we're partnering with City and a number of big banks on the implementation, Stripe, Shopify, Visa, Mastercard. The adoption is fast even before the bill goes into legal effect. What the stablecoin bill didn't do, what the Genius Act didn't do, is provide clear rules for crypto trading. So if I want to create a new crypto token, how will that be regulated, and is it the SEC or the CFTC, and who does what? Congress is in the process of getting those rules right.
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Steve7:22
What do you think is going to be the net economic benefit? I know you've talked about the transaction fees for families, but there's got to be more.
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Faryar Shirzad7:29
Like a lot of new technologies, it's fundamentally efficiency. It's an efficiency and productivity play. You take all these inefficiencies embedded in the legacy system and begin to eliminate them. That alone is a big productivity driver and GDP driver. The next generation, as I mentioned, the first stage of adoption is an efficiency play. The next stage is a programmability play. People are implementing all sorts of smart contract solutions where you could potentially, you and I and a group of friends could decide to go to dinner and do something simple like organize a stablecoin-based payment smart contract that governs our night out at Cafe Milano, for example.
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Steve8:21
My restaurant. Yeah, I'm speaking to my audience here.
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Faryar Shirzad8:24
And make sure the payment takes place. We avoid the hassle of processing; payment goes to Cafe Milano, they don't pay credit card fees, they save two to three percent. But there are more profound things. The Trump administration, to its credit, is putting government data on the blockchain. The Commerce Department is doing this with economic data, and the Labor Department will likely follow. If you have data issued by the government on the blockchain, people can build smart contracts, including event contracts, derivative contracts, and capital markets activity based on verifiable data.
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Steve9:12
You know, I've known Faryar for decades. One of the things...
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Faryar Shirzad9:17
Even though we're both like 29.
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Steve9:18
Yeah, maybe even younger. But what's really interesting is to hear your enthusiasm and literacy in this. It's a whole new world with new lingo and norms. You used to be at Goldman Sachs, which used to be a cool company.
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Faryar Shirzad9:38
Right.
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Steve9:40
So there's Goldman. If any of you from Goldman, don't tell David Solomon I said that, but Goldman Sachs is now kind of fuddy-duddy compared to what you're doing. You were President Bush's international economic policy adviser, and I'm sure the crowd you hung out with... You're interesting because you're with all the old conventional Republican economic thinkers, but you're the only one I know who's moved over to the other side so strongly. Are they looking to you for guidance to understand the lingo? Because there's a sociological change in finance, and you're on the spear of it, but a lot of others wouldn't follow half of what you shared.
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Faryar Shirzad10:27
It's funny. When I was approached by Coinbase, I actually...
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Steve10:33
Did you have to go to an education camp?
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Faryar Shirzad10:34
Well, I talked to Brian Armstrong and some of the other execs. The lucky thing for me was I understood quickly that very simple point about what crypto is: it solved a problem that finance ministries, central banks, and governments have been trying to resolve for 20 or 30 years—how to take the inefficiency out of payments. The implications are profound. For me personally, when I was approached, I thought this could be really fun. It's like going back to 1997 and being the guy who gets to explain what the internet is. That's what this job feels like. A lot of what I'm talking about, we'll look back with amusement once the tech is implemented more broadly. But there are bumps from here to there. And Goldman, by the way, is an excellent company. We work with them.
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Steve11:30
I think they're an excellent company too. But for the record, we are on C-SPAN. In terms of American growth, the other part that really intrigues me, and you and I have been around the world together talking about this in front of powerful audiences, is the rest of the world is sniffing what we're doing. They're sniffing what you're doing. They're interested but not sure. Some countries are jumping in whole hog. We had a dinner where I couldn't keep the central bankers out. We said we'd have a dinner for 50 people in two days, and then crypto boom. What's going on internationally? Do you expect the uptake rate internationally, inspired by what's happening in the US, to be as profoundly quick, or are there villains in that story?
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Faryar Shirzad12:17
No, it's moving quite quickly. The Biden administration tried to kill the sector and drive it offshore for reasons that to this day don't fully make sense. But the Singaporeans, UAE, European Union, Brazilians, and others recognized an opportunity. The Swiss, many others. Since the Trump administration came in, everyone understands this is going to happen. If you understand the technology as a breakthrough in value transfer, and at the moment stablecoins—these dollar-backed crypto tokens—are 98% dollar-denominated. For those involved in the IMF World Bank meetings...
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Steve13:02
Is it a way of making the dollar great again?
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Faryar Shirzad13:05
Pierre Yared mentioned there's about $280 billion of stablecoins in circulation. City anticipates the market cap of dollar stablecoins to go up to two to three trillion. Others think it could exceed three trillion. Each dollar issued as a stablecoin is backed by short-dated Treasuries, so as Pierre mentioned, this is an enormous catalyst for the dollar—a big demand driver for US government debt at a time when the US needs demand for debt. But it's also, if this is the architecture of payments, it will become a huge driver. Other countries are now nervous and trying to be proactive to ensure that a GBP pound sterling stablecoin is on the landscape. The ECB has a different solution. Countries around the world are looking at putting their own currencies on the blockchain so it's not just a dollar-dominated ecosystem.
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Steve14:16
Well, this is fascinating. This is the American Growth Summit, but I'm sure some of you will sneak to Davos. Anyone going to Davos? Anyone willing to admit it? We got a few hands. Coinbase is going to have the biggest branding on the promenade, right? We're going to be doing a lot of discussions there. Let me know what you're going to be doing. Faryar, I want to thank you very much for supporting today's conversations and making this real for us. People are trying to conceptualize the building blocks of growth and think about these new innovations. Thank you so much.
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Faryar Shirzad14:51
Thanks for having me. It's a great event. Thanks Steve.
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Steve14:52
Ladies and gentlemen, Faryar Shirzad, chief policy officer from Coinbase.