Keynote Q&A Discussion with Paul Grewal

Thank you for having me, Bruce.

Thank you for having me.

Let's do it.

No. What's the next question? Look, no, not at all. You describe me and my company as sitting in the bullseye. Peter, of course, connotes a certain prize at the end of the process. I would perhaps pick a different word: crosshairs. That's certainly what it felt like even days or weeks into joining Coinbase in the summer of 2020 and certainly by the time we got to the fall of 2024 it was quite a fraught and even perilous time for the company. Recall that we were at that point in time several years into a pretty sustained campaign on the part of not just the SEC, which I think has captured the lion's share of the attention, but many regulators all around the world, whose aim was nothing short of driving digital assets and cryptocurrency at least underground, if not entirely out of existence. We were, as you alluded to, in the middle of a very uncertain presidential and congressional campaign and certainly a large part of the strategy for Coinbase and I think for the broader crypto industry was to think about and approach our issues with governments and especially the US government, not only through the lens of lawsuits and litigation, but also through engagement in a number of different campaigns, particularly for the House and Senate to change the dynamics on the hill.

Well, make it. I knew we would make it. I knew we would survive in some form or fashion because we had really built the entire company on a foundation of adaptation and engagement with governments regardless of how friendly or hostile they might be. So survive I never had any worries about that. Thrive, absolutely. The reality was that I think that if the last four years were any indication and the past would be prologue, we would be looking at unprecedented headwinds in terms of being able to fundamentally operate our exchange here in the United States. And as the United States goes, still to a large degree, so goes the rest of the world. And much of our topline revenue outside the United States I think would have also been at some great risk. So for many years at this conference there were panels on digital asset enforcement. That's not a panel this year. Right. So, one lasting memory for me in particular from the prior administration, which is actually suddenly starting to feel like a long time ago, and I wonder whether it feels like a long time ago for you too, is the video response to the SEC's Wells notice that you and Brian Armstrong recorded, two of you just sort of standing there quite stoically, defiantly. And now today the discussion is all about policy and legislation, future rule making, market structure, really very different discourse obviously. So what is it like for you, as a very public-facing CLO of a public company in this space where you're working really collaboratively now with people in Washington rather than kind of against them?

Feels a little better if I'm being quite honest. You brought up the video that Brian and I recorded not long after we received the Wells notice from the SEC in 2023. I will say when I attended CLO school, I don't recall a lecture on YouTube as a channel for advocacy, but we took a very different approach with that response. I think it has now been adopted or accepted much more widely than it ever had been before that in large part because we understood that our audience included a number of different elements that I think go far beyond just judge, jury, or even enforcement attorney at the SEC.

I was going to get to that. That was certainly something that was going to follow had things not gone as quite as well as they had. But I will just say that even as we were very much in wartime at that point, the ground had been laid for a much more collaborative, positive, productive, engaging relationship with not just the commission but other agencies well before that. In 2021, we put out the first serious proposal for how digital assets, I think, could be regulated across the United States. In 2022, we petitioned the SEC for rules that would finally provide for some framework for crypto that would meaningfully permit companies like ours to register in the way that we had invited to do for some time. Not long after that, we brought our own offensive litigation against the SEC when they sat on our application for months, even years saying nothing in response. And so, all of that was in anticipation of a better day coming, Peter, that once we were able to move past this very adversarial and even hostile posture would allow us to talk about what is the right way to regulate this market, what is the right way to think about market structure and ultimately write rules for assets that range from Bitcoin to Ethereum to stable coins that could be meaningfully applied and adopted in ways that would promote the development of the industry and at the same time protect investors.

Fascinating is one word I suppose. Yeah.

Yeah. So, the politics of legislation at least in crypto I think are worth paying some attention to. And while we are exceptionally pleased with the progress we made even last week with the Senate Banking Committee, finally marking up a market structure bill that we think lays the groundwork for legislation passing in the next few months.

Not only viable, I am predicting it will happen.

Yeah. Choose to do with that information what you will on whatever app you may choose or prefer. But look, again I come back to this common theme of laying foundation in wartime for the peace that ultimately will come. The market structure bill, the clarity act as you point out, went through the house last year and passed the house last year on a massively bipartisan basis. She had 70-some Democrats joining almost every Republican to finally enact rules for crypto that would define standards for issuance, token classification, market structure more generally in ways that would be nothing less than historic. And so while the Senate was not able to move on that same piece of legislation last year, we were very eager to reinvigorate that progress in the new session that began earlier this year. And were able to move it through the Senate Ag committee as well as the Senate Banking Committee in I don't want to say record time, but near record time certainly in my living and professional memory. So all of that's to say there is a certain doggedness you have to have in this line of work particularly when it comes to crypto that allows you to continue to keep at it and try to move things forward even when political winds can shift or other political priorities can take over. That's what we're seeing here with clarity and that's why I am willing to say on the record and in public we're going to get this thing passed this year.

Yeah. So the I mean probably the most prominent issue that I think has achieved the most received the most attention with respect to the negotiations was a debate I'll use a neutral term to help you out Peter over whether or not intermediaries like Coinbase but including many others could issue rewards for stable coins. Now, you might ask yourself hearing that, I thought we just passed a stable coin bill last year. And if you ask that question, at least to yourself, you would be right. We believed and continue to believe that Congress resolved the question of rewards, who could issue rewards to whom, by whom, and all of that when they passed Genius in 2025. Unfortunately, our friends in the banking sector disagreed with that and pushed hard to reopen that issue as part of this market structure bill. The long and the short of it is that over the course of a number of weeks, the White House brought everybody together literally in a room at the Eisenhower building. They didn't quite lock the door, but they took away our phones and made it clear we would not be able to use the restroom whenever we wanted in an effort to really force a conversation between the lobbyists representing the banks on the one hand and a number of us from crypto on the other. And over the course of those discussions, it became clear frankly and from my perspective that many of the banking trades were much more focused on killing rewards entirely than reaching some sort of accommodation that would allow us to pay out for activity on the platform involving stable coins on the one hand while addressing whatever concerns they had about deposit flight on the other. Fast forward to the Senate. Even though the White House talks were largely unsuccessful, Senator Tillis, Senator Alsobrooks, two members of the Senate Banking Committee really grabbed hold of this issue and took responsibility for forging a consensus around this as part of the bill markup process and we were successful in getting to what we think was a reasonable accommodation of the concerns that the banks raised while preserving the rights of intermediaries to issue these rewards. And so on that basis, we were able to take that one but important issue off the table and address those issues that remained all in the leadup to last Thursday's vote in the banking committee.

Yeah. And it's not what they teach you in civics class or when we all watched Schoolhouse Rock. But it is in fact how legislation often does get done.

Securities lawyers will not go for want. There will be plenty of work for us all to do in the months and even years to come for sure.