Coinbase CEO: SEC leadership has 'very hostile' view of crypto regulation

In June, the U.S. Securities and Exchange Commission sued Coinbase Global (COIN), alleging the company broke securities law by acting as an unregistered exchange, broker, and clearing agency. It was the one of the many actions by the SEC that has the crypto world frustrated by the agency. In an interview with Yahoo Finance, Coinbase Global CEO Brian Armstrong says his company has "good relationships" with SEC staff, but that "leadership there has taken a very hostile view towards crypto...regulation by enforcement posture instead of just engaging in rule making as they're required to by law." Armstrong believes ultimately the issues facing the company will be resolved. He also says it "would certainly help" the company someone other than Gary Gensler were leading the SEC.

Despite the regulatory hurdles, Armstrong says Coinbase will stay in the U.S., but "we do look at everywhere around the world and we look for regulatory clarity, and that helps us prioritize our investments." That being said, Armtrong says "Coinbase is gonna be a U.S. company with a multi-national reach."

Click here for more of Yahoo Finance's coverage from the Goldman Sachs Communacopia + Technology Conference.

Video Transcript

- With SEC filing lawsuits against the several big names in the space from Ripple Labs, to FTX, of course, and it's having significant impacts on crypto investments. It might be why some crypto exchanges have started for searching for more regulatory clarity around the globe. At least, that's what Coinbase chairman and CEO Brian Armstrong told our executive editor, Brian Sozzi, at the Goldman Sachs community and tech conference.

BRIAN ARMSTRONG: Well, we're not going-- going anywhere out of the US. The US is our biggest market. But we do look at everywhere around the world. And we look for regulatory clarity. And that helps us Prioritize our investments. So you know a really interesting stat. 83% of the G20 countries now either already have crypto legislation or it's in progress.

And that's attractive for us. That's where we're going to go invest. The US is a little bit of a laggard here. But I'm sure the US is going to get there, too. We were seeing Congress have a couple of bills go through the House. We're seeing the courts come out with favorable rulings. We're-- we're going to get there eventually in the US, too. So yeah, Coinbase is going to be a US company with a multinational reach.

BRIAN SOZZI: What countries are you focused on overseas?

BRIAN ARMSTRONG: Well, we just launched

in canada last month. That was great. We did a pre-registration statement with the regulator. And Canada has been really great to work with. We launched a payment rail integration Interac in Canada. We also launched, in May, our international derivatives exchange, which is important. Derivatives trading is a big piece of the crypto ecosystem. We need to make sure we're playing there. So we launched that.

So we're going to keep going country by country in major markets. We're also going to make sure that the US has taken care of-- we just got approved with our FCM license in the US for derivatives trading. So those will be big.

BRIAN SOZZI: Why are these other countries more open to what you do than the United States.

BRIAN ARMSTRONG: That is a good question. You know, the political environment is tough, sometimes, in the US. People each have their own interests. But the good news is that there's rule of law in the US. And that has to be followed. So the courts are making sure that that's being enforced. When I go meet with members of Congress, I think there's broad recognition that this technology is important. It's not going anywhere.

And it needs to be done in a safe and trusted way for American consumers to make sure this doesn't go offshore. There's important national security implications of that, too, for the US. I mean, look what happened with 5G and semiconductors. This stuff moved offshore. And now, we're trying to fight like how to get it back onshore. And so, in the US, we need to make sure we've got the legislation in place that other places like Europe have already done.

BRIAN SOZZI: As a founder or co-founder, you just get frustrated having to deal with all this. Don't you just want to be able to get your technology out there and help people and bring your vision to life?

BRIAN ARMSTRONG: Well, one important part of being a founder is to never give up. And there's always some new challenge that's being presented in front of you. Sometimes, those are technology challenges. And those are important, and, you know, frankly, I'd rather we were just focusing on the product and the technology. But if it comes in the form of we don't have regulatory clarity or there's hostility, anytime you enter a new market, there's going to be entrenched incumbents that they have some resistance to that.

That's the history of all technology, whether it was the internet, the electric car, like you go back when the bicycle was introduced into American society. People were skeptical of it. And it's because it changes the way society works. And it brings about a lot of improvements. But it's a shift. And the old guard, sometimes, doesn't like those kinds of shifts in society.

BRIAN SOZZI: We've gotten this question before from investors. Now that we finally were able to talk to you, let me ask you this. I mean, do you think the-- the SEC just doesn't want you to succeed?

BRIAN ARMSTRONG: You know, I don't want to comment too much personally and the SEC by the way, is made up of many different people. We have really good relationships I think with the staff that are at the SEC, many of the commissioners. I do think the leadership there has taken a very hostile view towards crypto regulation by enforcement posture, instead of just engaging in rulemaking, as they're required to by law under the Administrative Procedures Act.

And so you know that's-- the courts have now pushed back, which is good. But I think somehow, this is going to be resolved, whether it's the CFTC stepping up, Congress creating new legislation, the courts creating that clarity, or maybe, next year, we'll have a different SEC chair.

Somehow, this is going to get resolved in the US. And it's like that old Winston Churchill quote, right, it's that the US always does the right thing, but only after exhausting every other option.

BRIAN SOZZI: Do you-- to realize your ultimate vision for this company, does someone else besides Gary Gensler, need to be in that seat?

BRIAN ARMSTRONG: I don't think so. I mean, that would certainly help. But in this environment right now in the US, for us, it's kind of business as usual. You know we're continuing to operate. There's more developers entering the crypto ecosystem every year, even if the prices are down. And you know, frankly, if you look at the last 11 years of Coinbase's history, we've gone through four cycles now like this where the prices go up, the prices come down. But every time, it's at a new plateau. I mean, if you look at trough to trough, we're way up over 2019. It's hard for us-- if you zoom out, it's kind of hard for us to feel like we're really in a crypto winter when Bitcoin is still over $20,000.

And you know, we take a long term perspective on these things. So we're unfazed. We're unflappable. We're-- We're not going anywhere. We're going to keep building. And this technology is going to benefit, hopefully, a billion or more people around the world, someday.

BRIAN SOZZI: What's your take on the spot Bitcoin ETF? Is that something that will ignite the next move higher in crypto and end the crypto winter?

BRIAN ARMSTRONG: Yeah, it's been great to see so many ETF applications being filed, especially by these blue chip firms, Fidelity, BlackRock, the biggest names in traditional financial services. So and, by the way, Coinbase has been named as the custodian on all but one of these ETF applications that's been filed. So we have an important role to play here in the ecosystem. But you know, it shows that new pools of capital could come in when these ETFs get approved. That's exciting.

I personally think it's very additive. Sometimes, people think, oh, that is not going to be competitive with Coinbase. We want crypto to be integrated into all aspects of the financial services industry, every bank, every ETF, every payment channel. We just saw this week Visa said they're going to be having USD coin, move over the Rails. We want it to be integrated into all aspects of the financial services industry.