How Crypto Champion, Faryar Shirzad, and Coinbase Are Advocating for America's Digital Future

Oh, thanks, Jan. I'm super happy to be here. The one part of my bio you left out was that I was editor of one of the journals at UVA, and you were the chair of our advisory council, and that's where you and I first met many years ago. So, I thought make sure we include that. It was a really important moment when I got to meet the legendary Jan Baron, and you were extremely helpful as we had all sorts of ambitions to make the journal particularly relevant in whatever the elections were that were going on in that year that I was the editor, and thrilled to kind of be back with you here.

Well, my family story is sort of the quintessential American story. My dad was an Iranian diplomat under the Shah, prior to the Iranian Revolution. And so, he was a diplomat in London, where I was born, and he had a variety of postings. We came to the US in 1973, I guess, and he was a press officer at the embassy. He then went on to become consul general in New York, and then in Houston, and then in New York, and it was in New York when the revolution happened. I think I was 13 years old, and we got the opportunity to stay and move back to Washington, where my father had bought a house when he was a press officer, and we opened a delicatessen and a food store in Bethesda to make ends meet, because we sort of went from diplomat life to having no money life. And, you know, I think I learned from my father about how exciting it is to be at the intersection of policy and international stuff. And so, eventually my career took me there in my own version of that. So, you know, I was naturalized as soon as we were eligible for that. So, I'm a naturalized American citizen, extremely grateful to this country for everything it did for me and my family. And then, more recently, I'm a father of two amazing boys in Washington, and very happy to find myself where I am now.

In the White House, I was the Deputy National Security Advisor for International Economics, which was a job I didn't know existed, but I think maybe one of the coolest jobs in government you can have. You know, you have the privilege of sitting as a deputy in the NSC and the National Economic Council, and you help staff the president and help coordinate the agencies on international economic work. And so, when I was leaving, you know, my own background was in trade policy and trade law, even though my job was much broader in the White House, Goldman Sachs recruited me to come and join them. And at the time, they didn't really have a government affairs office of any scale, and I kind of came in without portfolio, but not long after I came to Goldman, the financial crisis happened, and like every financial institution across the planet, Goldman was faced with regulators, finance ministries, central banks, bank regulators, everyone sort of deciding that it was time to re-architect the entire framework of financial regulation globally all at once. So, I was asked to be the first global head of government affairs at Goldman Sachs. Our team went from a handful of people to 10 or more times that, and much of what I did at Goldman was organized around navigating the financial crisis and then the post crisis regulatory stuff that follows with the Dodd-Frank Act in the US and equivalents in Europe and Asia plus a big network of global standard setting bodies and that all actually became really relevant to crypto because crypto's going through a similar version of that. All the architecture of financial regulation came under reassessment and re-examination and redesign after the financial crisis. So it was a lot of like figure out what first principles are and a lot of financial regulation was formed over decades and so there's a lot of lost memory as to why our rules are the way they are for traditional financial institutions. And so when I had a chance to come to crypto it was sort of a parallel to a version of that in the sense it wasn't policy makers needing to redesign an existing system but figuring out a new system for a new technology. And so that was what was attractive about that. So there's been a lot of parallels between my Goldman experience and my crypto experience which I'm happy to talk about.

Yeah, I mean I hate to admit it because everyone's, most people's crypto origin story involves some kind of version of reading the Satoshi white paper and recognizing what the future's going to look like and being a kind of a historic pathfinder. Mine was not that story at all. I got a call from a recruiter and I actually didn't really know much about Coinbase. I Googled it quickly while he was talking to me and I was like, well I don't know. And he said, no no you really need to talk to them. And I don't know if it was love at first sight or what but it was very apparent that I needed to jump on the Coinbase rocket ship and I'm so grateful that I did.

Well, if you think about the traditional financial system, in a way it's actually useful to think of the traditional financial system as it existed 60, 70 years ago where every stock, every bond, every derivatives contract, every loan, every everything was sort of recorded in paper form. And much of the financial system involved different intermediaries whose job it was to maintain large file cabinets storing whatever the relevant certificate was, whether it was a deposit certificate or a stock certificate or whatever. It's just like those retirement forms for government workers that apparently are stored in a salt cave somewhere in Pennsylvania, right? And actually if you think of it in paper form, it actually is more illustrative of how the traditional financial system works. Now, a lot of it has been digitally recorded and a lot of the movements are digitally, but fundamentally much of the financial system is built on the predicate that you need a whole bunch of intermediaries to store and record your interest in a thing. So, whether the thing is a stock certificate, or cash or whatever happens to be. And so, what crypto does, I'm kind of jumping around, but I'm going to answer your question. What crypto does, crypto is an information technology breakthrough. So when the internet came about, it did a really cool and important thing which was allowed you and me to send peer-to-peer without an intermediary information. So I can send you a note, you and I can do this video call, people can listen to the podcast. They can post and transfer information seamlessly peer-to-peer. That was the breakthrough and the data moves across a decentralized protocol governed by a loose network of developers, engineers, and foundations. That's how the internet worked. What the internet did not do is to figure out how you move a thing of value. So if I want to send you a dollar in an email, I can send you a picture of a dollar, I can send you a picture of a hundred dollars, but you're not going to have the dollar. You'll just have a picture of a dollar. I can send you a picture of a stock certificate, and the only way you get it is by me asking an intermediary to send that, have my bank, my exchange, my brokerage send the stock certificate to your bank, brokerage, or whoever. That's how the system works. So the internet was a giant breakthrough of moving data that represents information, but it couldn't allow for the movement of value. Crypto is a technology breakthrough, an information technology breakthrough that figured that conundrum out. And what crypto allows you to do is to create unique digital tokens, and those tokens can be anything. They can be a dollar, they can be a stock certificate. And so what it does is essentially takes the magic of the internet and applies it to value transfers. And so the first token that was created was Bitcoin, and people now invest in Bitcoin, and the market cap is enormous. It's the best performing asset in the last 10 years. The value went from zero to $110,000 per Bitcoin. But, in a way, that's kind of distracting as to what crypto is. Crypto is the information technology breakthrough. The most visible manifestation of it is this token called Bitcoin, but there are billions and billions of dollars being spent right now to figure out how to create tokens that represent other things of value. Your driver's license, your mortgage, your deed to your house, your title to your car, your stocks, your bonds, your derivatives transactions. And once you tokenize all those, they can move seamlessly peer-to-peer. And what Coinbase does is build the infrastructure for tokenization and transfer of tokenized things on a peer-to-peer basis between individuals.

Yeah, what Coinbase does is it basically helps people wherever they are on their crypto journey. It's sort of as me. So, most of our customers come to Coinbase because they want to trade crypto, but they want us to intermediate it. So, they'll download our app, they'll hold their balances in a way that we manage for them. And so, if they lose their password or whatever, we can help them. And we have an order matching engine that helps connect buyers and sellers. So, much of what Coinbase is is actually much like a traditional bank brokerage in the sense that we allow people to buy and sell and we manage and intermediate that. So, that's a big part of what we do. But, we also similarly custody. So, we're the world's largest crypto custodian. So, if you have crypto and you're nervous about losing your keys or what have you, you can give it to us and we're the largest custodian in the world of crypto because it's a very complicated information security exercise to do that. But, at the same time we're also building the tools for people to not use and not need an intermediary like Coinbase. And so, we essentially are the whole complex of how people want to interact with crypto whether they want to use an intermediary or whether they don't, we build the tools for them.

Exactly. So, you can come to Coinbase and there are a number of other exchanges that provide similar services and you just download the app and you do what you would do when you sign on to any other financial app and we're regulated similarly to a lot of the financial apps. We are subject to the bank secrecy and AML controls. We do checks on our customers to make sure they're not subject to some sanctioned block or whatever. So, much of our business is very traditional in that regard. But, lots and lots of our customers come to us because they want to have what we call crypto first solutions. So, they don't want to have us intermediate. And so, we have a wallet which is basically a piece of software that you can download from us. You can get similar wallets from other people, but it's essentially we call it the TBA wallet and you can basically go on there and immediately access decentralized exchanges allow you trade crypto peer-to-peer, but not go through Coinbase and do that. And so it's a bit of a mind-bender because as soon as people think they understand what we do or what crypto does, you hear a different version of it. But it's like trying to explain the internet early on. Like is the internet like is it an email or is it a text or is it a website? Is it a video call or what is it? It's a technology and crypto's a technology, too.

Yeah, so that's a really good question. So it's confusing because like I said, crypto's a technology and it can manifest in a million different ways. So just at the moment people think they've figured it out then another manifestation of the technology comes up and it gets confusing. I would think of crypto tokens like websites. Anybody can set up a website and your website may be extremely well curated and provide enormous value and be worth visiting and investing my time in, but my website might be frivolous and dumb. But the technology of allowing people of having people build websites is a very democratic one and so your website maybe was born and we all thought it was dumb, but you iterated on it and developed it and it became better. And so people's affinity to a token or whatever is just whatever the market bears and so I would say that's kind of one frame of reference to think about it. But fundamentally, each time somebody issues a token, they're generally building a crypto network that then they issue a token that provides governance rights with regard to that network. So if you have Ethereum, if you have an Ethereum, you have governance rights with regard to the Ethereum network. And so for the 95% of the market cap of crypto is all concentrated in maybe eight or nine tokens. So yes, there are tens of thousands or more crypto tokens out there, but the overwhelming 90-something percent of crypto activity is really concentrated in eight or nine tokens. And those tokens represent two different types of networks. One is Bitcoin, and Bitcoin has become adopted globally as a store of value that competes with gold. So, people that just now adopted Bitcoin and feel like it's a safe place to put your money because it operates under a protocol that governs how much Bitcoin can be created, limits the supply, and the adoption is now so comprehensive and global that people feel like if you live in a hyperinflationary economy, or you have another reason why you want to store your money somewhere where you feel like it's safer than your domestic investment options or currency options, you would invest in, and that's Bitcoin. And Bitcoin is 50, 60, 70% of the market of crypto. The rest of the big crypto tokens, Ethereum, Solana, and others, are what they call programmable networks. So, much of the applications that are being built in crypto to facilitate take payments, to facilitate social media, to facilitate whatever, are being built on those eight or nine other networks that have huge adoption. And so, there's a race going on to build networks that can match the processing speed of traditional payment networks. So, right now, the largest payment processors in the world are, in terms of volume of numbers of transactions are Visa's number one, I think, and maybe MasterCard's close second or something like that. And they can process millions of transactions per minute or tens of millions. I don't know what the exact number is offhand. And so, what crypto networks allowed you to do is allowed you and I to transfer an Ethereum token seamlessly, but they couldn't get scaled. You couldn't build an application on Ethereum that match the processing speed of the computers that underlie the Visa network. And so, what people have done, including Coinbase, is building networks on top of things like Ethereum, which is what we did, that allow you to have the peer-to-peer transaction capabilities crypto, but at speeds that begin and pricing that it begins to approximate the big payment processors. And then one of the big important things that happened in crypto about a year ago was that Visa announced that they were actually integrating crypto technology into their processing systems. And they've issued a really thoughtful paper on this and they basically said, 'We think' I'm paraphrasing, obviously, and they said this in a much more nuanced, sophisticated way, but we think we've reached pre-peak processing in terms of our ability to scale our processing networks and we think stablecoin or crypto-based settlement can be a unlock for us to build resiliency, speed, and scale that can augment our capabilities.' And to have somebody with the sophistication of Visa say that, I think is really important. So it's really it's easy to kind of look at a coin that people wonder like why are people buying the Trump coin or whatever they're buying, happy to have a discussion about that, but I think there's a lot of huge news that's being broken every week, including by companies like Visa who recognize that the technology is the future and are integrating it into their traditional systems.

Exactly. I think that was said perfectly. So, the GENIUS Act is a piece of legislation that Congress just passed a couple months ago that creates a federal regulatory framework on the issuance of US dollar stablecoins.

Yeah. So, remember I said that crypto allows you to create a token and then trade it peer-to-peer without an intermediary. Maybe the most important token you can create is the dollar, US dollar. So, right now we have dollars in paper form and we also have the dollar manifested in digital form, but what you don't have is a version of the dollar that could be transferred between two people without the need for an intermediary. And so, the GENIUS Act was essentially a sort of a bet that just like we moved huge parts of the economy to the internet that we're going to move huge parts of our economy into tokenized activity and the dollar being available in tokenized form allows people to transact peer-to-peer using crypto technology. At the moment, there's about 180 billion US dollar stablecoins in global circulation. They annually turnover on the order of three to four trillion dollars in terms of the turnover over the course of the year. A lot of analysts, Citi Bank, Citi and others expect the market cap of stable coins to go from the 140 billion or 180 billion right now to something on the order of one to two to three trillion dollars. And what a stable coin is is a token that represents a dollar. So, if I'm an issuer under the genius act, I'll be regulated by the Office of the Comptroller of the Currency, which is the national bank regulator in the US regulatory system. Subject to a licensing and regulation by the OCC, an issuer can get customers like you and me to come, we give them a dollar and they give us a dollar token. And then once you and I have our dollar token, if I take you to lunch or if we go to lunch and I cover you, you can send me $20 peer-to-peer in an email or whatever without requiring the bank to intermediate that.

You can use what is known as your crypto wallet. So, you can, so I have a wallet, you'll have a wallet, and I'll just send it from my wallet to your wallet seamlessly.

That's right. And so, like right now, if you go to like I get my haircut at a barber shop that I pay by Venmo. And so, when I get my haircut at the end, I scan a QR code and I pay with Venmo and it feels seamless and instantaneous. But payments are actually an extraordinarily anachronistic and antiquated system in the United States. So, even though it feels like the barbershop got my $35 instantaneously, but what Venmo is actually doing is extending credit on my behalf and putting money into the barbershop's bank account for me, and then I pay a fee for them to cover me as the banks chug along and move my dollar from my bank account over the course of three, four days, five days to Venmo's bank account. And to cover them for having extended credit and paid the barbershop on my behalf.

That's right. With crypto and tokens, it would be instantaneous.

It would be instantaneous. So, the first gain of crypto is that it just provides efficiency. We have an incredibly high-friction, slow, and cumbersome payment system in the United States. So, the ability under the Genius Act now to under US regulation issue dollar stablecoins and transact simple transactions or big complicated transactions now going to be made cheaper, faster, safer, and there's no settlement lag, which creates risk in the financial system. Anytime you have a lag between a transaction and its final settlement, that's a period of risk that exists. And so, that's the first benefit of crypto. The second benefit of crypto, the more important benefit is you can essentially program the money. So, rather than, we can enter into a derivatives contract, and every day in derivatives contracts, they reset every day. So, as the market moves, you and I can have a derivatives contract that's based on the movement of I don't know whatever, let's say pork or something. And every day the contract that exists between you and I will resettle, and it may be that one day I owe you a dollar to get us back to balance or you owe me a dollar. And all of that involves thousands and thousands, tens of thousands of people on Wall Street whose job it is simply to execute that settlement. We can create a programmable derivatives contract where that settlement occurs instantaneously, that the smart contract underlying the derivatives trade between the two of us immediately allows for that resettlement to occur without that back-end processing. And there are any number of other applications. So, for example, people talk a lot about AI, and there's something called agentic AI, so the ability of asking an AI to go buy airline tickets for you or whatever or engage in transactions. AI needs a digital native payment mechanism to execute a transaction on your behalf. And so, if you've got an AI protocol that's job it is to figure out your inventory management system and to source stuff for you and buy it in real time so that you don't have the sort of inventory management overhang that a traditional system would have, and you've got AI managing it for you. It needs a payment mechanism, and crypto technology allows you to use tokenized dollars or tokenized whatever to pay, and your inventory is represented in tokenized forms, and that's how the AI will be able to process the information that you've given it.

Yeah, the business model of token issuers is pretty simple. So, if I'm an issuer of a token, what I do is I create a token and I make sure that it's The technology is actually more complicated than it sounds, but let's say I just create a token and it's freely movable among multitude of networks. So, as I said, crypto is a bunch of different networks, and so you want to have your dollar be able to move across what they call chain hop and operate across multiple networks. So, you'll decide, okay, my dollar stablecoin is something you want to invest in. For me to issue that stablecoin, I have to go to the OCC, the Office of the Controller of the Currency, and get a charter as a stablecoin issuer, and they'll ensure a bunch of things. One is that there are liquid reserves backing the token that I issued, so that you have rights as my customer to show up anytime and hand me that token back and say, 'Give me my dollar.' And I have to give it back to you. There are audit requirements that apply to me as the issuer, so I have to do regular audits, and I have to do public disclosures, and any number of other things.

No, we don't issue a stablecoin, but we have a very close commercial partnership with Circle that issues the largest US regulated stablecoin. And so, we accommodate other stablecoins as well, but we have a commercial interest in USDC, US dollar coin, which is the biggest US issued dollar stablecoin.

The genius act is going to be very catalytic on that. Right now, what we're seeing is a lot of interest on the part of big multinationals who are trying to repatriate large balances from across the country into the United States. So, cross-border payments are probably the most high friction, most expensive way to move money. People don't fully understand how complicated it is to move a dollar from one country to another. And with the stablecoin, you can do that within seconds for minimal costs. And so, you're seeing big companies like JP Morgan, WePay, Stripe, others essentially offering corporate clients the ability to move.

It has a token. I think it's called Onyx that they essentially have said, because the technology, Jamie Dimon's been very critical of crypto, but he actually has hundreds and hundreds of people working on crypto technology-based infrastructure upgrading. And so, they're a very fierce competitor in crypto. And they're working on Not in crypto, like crypto like buying and selling whatever a meme coin or something, but on the payment side, they're extremely interested in it.

So, the two big legislative priorities were at stablecoins, so making sure that there's a regulatory framework at the federal level for issuing a dollar token. And what clarity does is it regulates the trading of crypto. So basically says, 'If you're a token issuer and you're trying to raise funds off of your token, you're subject to this and that regulation.' And it designates the SEC in some instances and the CFTC in other instances. So these are the two market regulators we have in the US. It essentially directs them to provide a regulatory framework around how crypto should be traded.

The US is the only major market in the world that has two different market regulators. So we have the CFTC, which is the Commodities Futures Trading Commission, which regulates commodity derivatives and futures. And then we have the SEC that regulates the securities market. And so in every other jurisdiction in the world when they've had tried to deal with crypto, I mean not everyone and not every country has done this, but in most major economies, it's actually not that complicated an exercise because they'll ask the market regulator to create rules for how crypto is traded. And they basically adapt the existing rules to the technology because like as I said, much of the rules are organized around assuming the presence of an intermediary. And so if you don't have an intermediary, you have to reimagine how the regulations are organized. And so what most countries have done is essentially say, 'Hey market regulator, figure out how to regulate the crypto markets.' And they more or less land generally in the place. In the US it's super hard to do that because we've divided commodities and securities into two different agencies, and those agencies are overseen by two different committees in the House and in the Senate. And you know this, Jan, better than anyone, there's no sharper dividing line in Washington than turf. And so what you had in the Biden administration is you had a pitched battle between the SEC and the CFTC over who would regulate the space. And in particular, you had an SEC chairman who decided to go to war with the industry. He spent the first year as chair saying he had no authority to regulate crypto markets and Congress should pass legislation, and then spent the three years following trying to destroy the industry and drive it offshore purely for political reasons. And the chaos of that and the trauma of that has led to the Clarity Act, which I'm very proud to say every Republican, I think, and 78 Democrats do vote for it in the House. So it's If you were looking for bipartisanship in Washington, crypto is the most bipartisan major issue in Washington right now.

I actually very much enjoy it. It's a big spectrum that you find among members of Congress. For the vast majority, obviously, there's just a lot of explanation. But what's really fascinating is that in almost every instance, even with members who know very little about crypto, there's often a staffer or a relative or a child or a son or a what have you who's very much into crypto. So it's very typical to come across officials who've had some personal exposure to it through their staff or their family members, and that's always helpful in the conversation. The other thing which is actually worth underscoring is there are a handful of bitter enemies of crypto, which I still to this day don't understand, who've been trying to destroy the industry. But there's a larger, probably a small but much larger group who are actually so crypto forward that their technical skills are actually beyond my own. And so, there's a real diversity when you go up to the hill and talk to members about the crypto issue.

Yeah, it's a good question. So, I joined Coinbase in 2021, and my job was to figure out how to tell the story of crypto to policymakers so that we could get good, sensible regulations around the sectors that would protect consumers and promote innovation. And so, I did all the things that you normally do when you do government relations, policy advocacy. You know, we did white papers and deeper dive documents, and we talked to members and held roundtables and did all sorts of things. At some point in the middle of 2023, we realized that there was a small group of progressive members of Congress and the key regulators in the Biden administration who were unambiguously trying to destroy the industry, drive it offshore, and were targeting individuals in the crypto sector through regulatory action. And so, if you talk to a group of crypto people, not just big company people, but grassroots people, you'll find it very typical that anyone who's got involvement in crypto, in many instances, there a significant percentage of them lost bank accounts, couldn't get mortgages, couldn't get auto loans. It was one of the most disgraceful uses of political power in American history targeting a disfavored group of people purely for political reasons. And so, at that point, we realized that we had an existential battle that we were in the midst of, and there was no amount of white papers that were going to solve the problem against the enemies that we were facing. And so, we built the largest political operation any industry's ever built. And the way I put it is that we built this large political operation to take the politics out of crypto. And so, what we did is two big things. One is we launched this thing called Stand With Crypto, which is a grassroots organization, which now has about 2.4 million Americans who signed on as advocates. So, 2.4 million, which, Jan, you'll understand how enormous that is. And these are people typically who signed off off of our app or off of the app of other exchanges. So, these are real people who actually went through a complicated onboarding to sign up as advocates. So, that 2.4 million gives you the scale of how big the grassroots movement is around crypto. And then, the other thing we did is that we were very significant donor to the super PAC Fairshake, which did spend enormously in certain races, including in that Ohio race. So, we're very proud of having done it, and we're very proud, frankly, to have stood up for the rule of law, because what the average crypto people were facing under the Biden administration required a response, and we were able to help deliver that response. And I feel, in a way, that was it was an enormously patriotic thing to stand up for in defense of people who were being victimized by the administration. And I'm really pleased that we were able to be helpful in that regard.

Well, we'll take a close look at it, but one thing I would say, Jan, which is important to underscore is so the Stand With Crypto organization, 2.4 million advocates who've signed up. Stand With Crypto is it's not what's and you'll understand this better than your listeners will, but it's a 501c4 organization. So we launched it, but it's an independent group. They surveyed their members, the registered voters among that 2.4 million were 60% Democrat and in the 2024 cycle, 54% voted for Donald Trump. So gives you a sense that and a lot of the discussions about crypto and politics are very much focused around the spending and the super PAC and what have you, but one of the things that the Trump campaign understood is that there is a voter base that will vote on the crypto issue and I think that was part of the reason why that was part of the sophistication of the Trump campaign. They understood voting groups better than the Biden team did for sure and then maybe the Harris team didn't have the time to kind of get their arms around it, but yeah, the crypto voter was formidable in 2024 and decisive in some races and they'll be decisive again in '26. We'll be there to help them.

There's an endless amount of information online, obviously, but I would recommend that people come to coinbase.com and we have a landing page there, which is coinbase.com/public-policy. So, coinbase.com/public-policy, where we have a lot of policy insights and materials that my team produces and we've also created this thing called the Coinbase Institute, which produces explainers and backgrounders and informational videos and things like that and you'll be able to find all of that at coinbase.com/public-policy.