Brian Armstrong, CEO of Coinbase (PIECE OF MONEY) sheds some light on his company's upcoming work. Armstrong talks to Yahoo Finance Editor-in-Chief Brian Sozzi about the company's recently launched base layer 2 blockchain network and things like flatcoin, which he says Coinbase isn't working on yet, but is interested in .
One of the problems facing the crypto industry is the lack of regulatory clarity. Armstrong says the industry has several avenues to seek clarification, including through the courts, Congress and the CFTC. He also suggests there could be a new SEC chairman in 2024. Armstrong said to Sozzi Earlier in the interview, it would “certainly help” the industry if Gary Gensler were no longer SEC chairman, which would likely happen if a Republican beat President Joe Biden in 2024. As for 2024, Armstrong believes crypto could be a “hot topic” in the race for the White House, with Americans holding candidates' feet to the fire to hear their positions on the issue.
Click here for more of Yahoo Finance's coverage of the Goldman Sachs Communacopia + Technology conference.
Video transcription
RACHELLE AKUFFO: Well, regulation around crypto has been making headlines lately with the SEC filing lawsuits against several big names in the space, from Ripple Labs to FTX. And this has significant impacts on crypto investments.
This may be why some crypto exchanges are starting to seek more regulatory clarity around the world, at least that's what Coinbase Chairman and CEO Brian Armstrong told our Editor-in-Chief Brian Sozzi at the Goldman Sachs Community and Technology Conference. Listen.
BRIAN AMSTRONG: Well, I think stablecoins are a very important stepping stone. So, in broader cryptography, it is the most important technology to update the financial system. We saw that 67% of Americans think the financial system needs a major update.
Crypto is the best opportunity to achieve this. So yes, we are going to have decentralized cryptocurrencies like Bitcoin. We're going to have things like Ethereum that will build new, completely decentralized application platforms. But if we need to bring people in, sometimes we have to meet people where they are. And so if they want to use US dollars for now, that's great.
We now have US dollars circulating on more efficient and more global crypto rails. They allow you to make cross-border transactions or send small amounts to people, regardless of the country they are in. So all of these things are going to help the crypto ecosystem grow and achieve this decentralized vision.
BRIAN SOZZI: I think you posted a tweet recently. I really like it. You said bear markets are the best time to build. So what else are you building at Coinbase? What should an investor expect on the platform in a year?
BRIAN AMSTRONG: Yeah, well. I don't want to announce anything in advance here. But we've talked about some important issues recently. So we launched base, which is our layer two solution that helps blockchains scale. We need to reduce costs and confirmation times to be truly competitive and payments take the path of least resistance.
The less friction you can make, the more payments there will be. We have also invested heavily in our derivatives platform. You know, I've spoken about it internationally and then in the United States as well. So we will continue to emphasize a few of them.
I also published a blog post talking about some of the future ideas on the horizon. And a number of our venture capital investments could go into things like that. But I talked about flat coins, which are sort of the next iteration of stablecoins that are maybe more tied to CPI or purchasing power. I talked about…
BRIAN SOZZI: A flat piece?
BRIAN AMSTRONG: Yeah. The flat piece is…
BRIAN SOZZI: Where is it? Has this just developed? I've never heard of a flat piece.
BRIAN AMSTRONG: Yeah, that's a new thing on the horizon. A few teams are working there. We're not building anything in this area yet, but we're interested. And how might decentralized reputation protocols work? Or, in online games, people now want to own their in-game items and wonder how network states could be governed? And so there are lots of cool ideas. I also blogged and tweeted about it.
BRIAN SOZZI: Where is Coinbase in terms of trading volumes? Do you see this improving?
BRIAN AMSTRONG: Well, it's gone down a bit. I would say since obviously, the 2021 highs and things like that. But we are not unfamiliar with these cycles. So we see that when prices go up, obviously there's more interest for retailers. What is interesting about this decline in the market is that we have actually seen a sort of flight to quality.
So we're seeing more and more institutions come and sign up and follow our onboarding process. And they're not necessarily bringing in huge amounts of capital yet, but they're integrating and waiting to see: OK, what is that trigger for them? Maybe it's because blockchain has become more scalable, maybe clearer regulation, maybe a lawsuit will happen. And I think we'll start to see different amounts of capital coming in at that point.
BRIAN SOZZI: When will there be regulation? What does it look like ?
BRIAN AMSTRONG: Well, this is already happening all over the world. You know, I mentioned Europe, the UK, Australia, Canada and Brazil. These regions – the UAE – have all been actually very forward-thinking. 83% of G20 countries now have this crypto legislation, either already in place or in progress.
It's really… Sorry, I don't know if you're just talking about the United States. But in the United States, I think it will happen…
BRIAN SOZZI: In the USA.
BRIAN AMSTRONG: Yeah. This will happen in several ways. The courts are therefore a solution. The courts can be the ones to provide clarity regardless of the outcome of the case. Creating case law is one way to do this if regulators are unwilling to provide it.
Another way to do this is through Congress. Congress is now very engaged in this area. By the way… he's looking at this Fit 21 bill that just got bipartisan approval in the House. The stablecoin market structure bill also won bipartisan approval in the House. So we'll see how this plays out in the Senate and the executive branch.
The CFTC could step up its efforts and assert more authority. I also think it's possible that we'll just get a different SEC chairman in 2024 or beyond. So we're going to try all of these things in parallel. One way or another, one of them will make it.
BRIAN SOZZI: Before we let you go, I don't think investors realize how much time you spend arguing with regulators and other politicians. How's it going ? Did you expect this when you founded Coinbase?
BRIAN AMSTRONG: Well, the role of a CEO is always evolving towards what is most important. So I started the company as an engineer just typing on my laptop and built the initial version of the app. And then as something grows, it starts to play a very important role in society.
And so yes, you start to engage with governments, world leaders, banks. And we're now at this phase where we need to make sure that we're an educational resource, that we're actually bringing the crypto community together to make sure that our voice is heard.
And there are these great websites like standwithcrypto.org that are helping the crypto industry come together and say, hey, look, about 56 million Americans have used crypto now. This is 5 times more than electric vehicles, for example. And we are voters.
We want to donate to candidates who support crypto. We want to run for town halls. I don't think everyone in Washington fully realizes how powerful the crypto voting block is. And I think 2024 is an election where American voters are really going to hold candidates with their feet to the fire and say, what's your position on crypto?
Will you continue these existing policies that have been unnecessarily hostile, or will you allow this technology to flourish and ensure America's leadership as a technology powerhouse?
BRIAN SOZZI: Do you consider certain people in the political sphere to be friendly? Are there any candidates to whom you say, “Wow, if they're elected, my job could get a lot easier?”
BRIAN AMSTRONG: Yeah. So I mean, I don't want to come out and personally support anyone, but yeah. If you look at the presidential candidates running today, they're talking about crypto. And as far as I know, all their comments have been positive.
They see it as an opportunity to challenge the current administration's policies that have had downstream effects on regulators. This, they say, is not what the American people want. So I think this could become a hot topic in the 2024 presidential race.